2015 ANNUAL REPORT REPORT REPORT L JUNE 2016 2015 ANNUA PUBLIC POWER CORPORATION S.A. 30 Chalkokondyli - 104 32 Athens Call center: +30 210 5230301 Fax: +30 210 5234379 www.dei.gr ANNUAL REPORT 1 JANUARY 2015 31 DECEMBER 2015 2015 PUBLIC POWER CORPORATION S.A. 3 TABLE A | PART 1. SELECTED FINANCIAL DATA 7 OF 2. COMPANY INFORMATION 9 3. ORGANIZATIONAL STRUCTURE, MANAGEMENT-CORPORATE GOVERNANCE, CONTENTS EMPLOYEES 15 4. SHARE CAPITAL - DIVIDEND 19 5. SUBSIDIARIES AND ASSOCIATES 21 Β | PART 1. FINANCIAL REPORT 25 A. STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS 27 B. EXECUTIVE SUMMARY OF THE BOARD OF DIRECTORS 31 C. CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 95 D. NOTES TO THE FINANCIAL STATEMENTS 113 APPENDIX I • Unbundled Financial Statements 199 • Notes to the Unbundled Financial Statements 221 2. DISTRIBUTION OF PROFITS FOR THE YEAR 2015 229 3. FINANCIAL DATA AND INFORMATION FOR THE YEAR JANUARY 1, 2015 - DECEMBER 31, 2015 231 4. RELATED PARTIES TRANSACTIONS 241 5. STOCK NEWS 2015 243 PART A 7 1 | S ELECTED FINANCIAL data Summary Financials (€ mil.) GROUP PARENT COMPANY 2015 2014 ∆% 2015 2014 ∆% Total Revenues 5,735.7 5,863.6 -2.2% 5,675.4 5,796.7 -2.1% EBITDA 828.4 1,022.1 -19.0% 591.7 783.2 -24.5% EBITDA Margin 14.4% 17.4% 10.4% 13.5% Profit/(Loss) before Taxes & Fin. Expenses 90.7 355.5 -74.5% (71.5) 214.0 -133.4% (EBIT) EBIT Margin (%) 1.6% 6.1% -1.3% 3.7% Net Income/(Loss) (102.5) 91.3 -212.3% (152.5) 34.2 -545.9% EPS/(Loss) (in €) (0.44) 0.39 -212.8% (0.66) 0.15 -540.0% No of Shares (mil.) 232 232 232 232 Summary Balance Sheet & Capex (€ mil.) GROUP PARENT COMPANY 2015 2014 ∆% 2015 2014 ∆% Total Assets 17,314.6 17,373.4 -0.3% 15,935.3 16,138.5 -1.3% Net Debt 4,788.9 4,991.9 -4.1% 4,552.6 4,723.8 -3.6% Total Equity 5,911.6 6,134.7 -3.6% 5,723.2 5,968.4 -4.1% Capital expenditure 753.6 628.0 20.0% 617.0 528.4 16.8% PART A SELECTED FINANCIAL DATA 9 2 | Company InformatION 2.1 GENERAL InformatION PPC was incorporated as a Societe Anonyme on January 1st 2001, under the Liberalisation Law (2773/1999). Until January 2001, PPC was wholly owned by the Hellenic Republic. The corporate seat is in the Municipality of Athens, Greece. PPC’s executive offices are at 30, Halkokondili Street, 104 32 Athens, Greece. In accordance with article 3 of the Articles of Incorporation, currently the objective of the Company is: a) The engagement in commercial and industrial activities in the energy sector, in Greece and abroad. These activities shall include, but not be limited to: • the engagement in commercial and industrial activities in the electricity sector, in Greece and abroad, • the design, supervision, construction, exploitation, maintenance and operation of power plants, • the supply and sale of electricity as well as of energy products and services, • the extraction, production, supply and sale of energy raw materials, • the assignment to third parties, by virtue of contract, of any activity similar to those set forth herein above, • the operation or management of privately-owned vessels or vessels owned by third parties, under Greek or foreign flag having as sole objective the transportation of liquid fuels. b) The engagement in commercial and industrial activities in the telecommunications sector, the provision of services to third parties related to Projects’ design, management and supervision, the provision of services to third parties related to training and occupational health and safety, the provision of services to third - party Companies on organization and information technology issues, the design, construction, maintenance, management, exploitation and operation of waste treatment units, including power generation from or / and in relation to waste management, as well as the development of all kinds of assets held by the Company. c) The establishment of companies, the participation in joint ventures, as well as the acquisition of shares of other companies, Greek or foreign, and, in general, the participation in enterprises pursuing aims similar to those under a) and b) of the present paragraph or the activities of which (enterprises) are directly or indirectly related to the objective of the company or whose objective is the profitable use of the movable or immovable assets of the company and the development of its resources, including the participation in public tendering procedures of Contracts for Public - Private Partnerships (PPPs), as well as the establishment or participation in the share capital of Special Purpose Companies within the framework and in execution of PPPs. In order to attain the objectives referred to in the preceding paragraph, PPC S.A. may, in particular, a) sign any kind of contracts or agreements with domestic or foreign individuals or legal persons and inter-state PART A Company information 10 11 2.2 HISTORICAL BACKGROUND organizations, b) participate in the share capital of existing companies or in the share capital of companies PPC was established in 1950 having as purpose to generate, transmit and distribute electricity throughout to be established in the future, grant loans to the said companies and provide guarantees in their favor, c) the Greek territory. Prior to the establishment of PPC, the right to generate, transmit and distribute electricity issue any bond loans of any type whatsoever and participate in the share capital of companies to which the had been assigned by the Greek Government to private and municipal electricity companies. company has granted loans through the conversion or not of the bonds of the aforesaid loans into shares. PPC started its operation in 1953 by generating and selling electricity to the abovementioned private and The company may engage in any other action or activity in order to fulfill its objectives within the scope of municipal electricity companies. During the period 1957-1963, the Company acquired the above electricity the Articles of Incorporation and of the standing provisions, in any commercial or other activity and perform companies, including the Electric Company of Athens - Piraeus Ltd, which used to service the largest urban any material or legal act, directly or indirectly connected with its objectives. area of Greece and was generating a significant percentage of the total electricity consumed in the Greek The Company has secured the trademark No. 160076 “Public Power Corporation Societe Anonyme” and market. “PPC S.A.” The Laws 1559 and 2244, which were enacted in the years 1985 and 1994 respectively, provided for a In accordance with the classification of the Hellenic Statistical Authority (EL.STAT - STAKOD 08), the economic relevant exception from PPC’s exclusive right in electricity generation mainly in order to give the right to activity of PPC S.A. comes under: industrial companies to generate electricity for their own consumption. Moreover, said legislation allowed individuals to generate electricity from renewable sources and cogeneration exclusively for commercial use. BRANCH OF ECONOMIC ACTIVITY (STAKOD 08) TOTAL REVENUES 01.01.2015 - 31.12.2015 By virtue of Law 2773/1999 concerning the liberalization of the electricity market and pursuant to the «Generation, transmission st € 5,735.7 mil. Presidential Decree 333/2000, PPC, as of January 1 2001, was converted into a societe anonyme wholly and distribution of electricity», 35.1 owned by the Greek State having as main purpose the generation and supply of electricity. In December 2001, following an increase of share capital and an offering of existing shares held by the Hellenic Republic, PPC’s shares were listed on the Athens Stock Exchange. In parallel, GDRs were admitted to London Stock Exchange. The Hellenic Republic further reduced its stake in PPC through secondary offerings in December 2002 and October 2003 and now controls, directly or indirectly through the Hellenic Republic Asset Development Fund (HRADF), 51.12% of the Company’s share capital. The HRADF holds 17% of the Company’s share capital, which is included in the aforementioned percentage held by the Hellenic Republic, since the HRADF is 100% owned by the Hellenic Republic. After the spin-off of the Transmission and the Distribution segments, two 100% subsidiaries of PPC were created, namely IPTO S.A. (Independent Power Transmission Operator S.A.) and HEDNO S.A. (Hellenic Electricity Distribution Network Operator S.A.). IPTO S.A. is responsible for the management, operation, maintenance and development of the Hellenic Electricity Transmission System and its interconnections, while HEDNO S.A. is responsible for the management, operation, development and maintenance of the Hellenic Electricity Distribution Network. ANNUAL REPORT 2015 PART A PART A COMPANY INFORMATION 12 13 2.3 OVERVIEW OF Company’S ACTIVITIES PPC is Greece’s largest electricity generator and the principal supplier of electricity in Greece. The following table shows selected PPC’s operating data for the years 2013, 2014 and 2015: PPC currently holds assets in lignite mines, power generation, transmission and distribution. Its power portfolio consists of conventional thermal plants (lignite, gas and oil fired), and hydroelectric power YEAR ENDED 31ST DECEMBER 2015 2014 2013 plants, as well as RES installations, accounting for approximately 64% of the total installed capacity in the country. Installed Capacity (GW) 13.0 12.6 12.9 In 2015, PPC’s generation of 34.1 TWh coupled with the 3.2 TWh that it imported, covered 63.4% of total Percentage of total installed capacity demand. PPC’s energy mix comprised of generation from lignite (57%), oil (13.4%), natural gas (13%), 64.0% 63.6% 64.9% hydroelectric (15.8%) and renewable energy sources (0.8%).