Contents I. THE GROUP ............................................................................................................................................. 5 Message to Shareholders ........................................................................................................................................ 5 The Group in brief ....................................................................................................................................................10 The Group in 2007 ...................................................................................................................................................15 HELLENIC PETROLEUM SA in Stock Markets ..................................................................................................18 From Past to Present ...............................................................................................................................................26 Industry Overview ...................................................................................................................................................28 Corporate Management ........................................................................................................................................29 Corporate Governance ..........................................................................................................................................31 Risk Management ....................................................................................................................................................34 II. CORPORATE ACTIVITIES ......................................................................................................................39 Oil Refining .................................................................................................................................................................40 Fuels Marketing ........................................................................................................................................................45 Production & Trading of Petrochemicals / Chemicals.................................................................................50 Power Generation Production and Trading ....................................................................................................54 Oil & Gas Exploration and Production ..............................................................................................................56 III. ADDITIONAL INFORMATION ..............................................................................................................61 Social Product ...........................................................................................................................................................61 Human Resources ....................................................................................................................................................62 Health & Safety .........................................................................................................................................................64 Environment ..............................................................................................................................................................68 Social Responsibility ...............................................................................................................................................73 ΙV. SELECTED FINANCIAL STATEMENTS ................................................................................................75 Selected Financial Data ........................................................................................................................................77 Analysis per Activity Sector .................................................................................................................................78 Group’s Consolidated Financial Statements ..................................................................................................80 Subsidiaries, Associated Companies and Participations ....................................................................82 Information per Activity Sector ..........................................................................................................................84 Parent Company Financial Statements ............................................................................................................88 General Information ...............................................................................................................................................90 Chartered Accountants ..................................................................................................................................90 Non tax-inspected Fiscal Years for Group’s Companies ......................................................................90 COMMUNICATION ...................................................................................................................................................91 Company Information ............................................................................................................................................91 Shareholders Information Desk ..........................................................................................................................92 Annual Report Feedback.......................................................................................................................................94 I. THE GROUP HELLENIC PETROLEUM [annual report 2007] The Group Ε.Ν. Christodoulou J.Α. Costopoulos Chairman of BoD Chief Executive Officer 5. Message to Shareholders Dear Shareholder, During 2007 HELLENIC PETROLEUM de- Furthermore, the weakening of the US livered sustained progress, benefiting dollar versus the euro obviously led to an from a relatively positive, though highly adverse translation effect; however, this volatile, market environment. Crude oil was mitigated by the revaluation of our prices resumed their ascent, increasing USD-denominated loans. by some 50% over 2006 levels and, thus, boosting reported profitability through positive inventory effects. In addition, Mediterranean complex refining mar- gins, although flat on a y-o-y basis, stood well above mid-cycle levels, driven by the strength in middle distillates cracks. Hy- droskimming and topping margins also fared well, despite the year-end pressure from a sharp retraction in fuel oil cracks and the persistence of high oil prices. In 2007, net earnings per share rose by At the same time, we continued to oper- Aspropyrgos and a strong balance sheet, 35% and, reflecting the quality of the ate in a socially and environmentally re- our strategy evolves along six main axes portfolio of activities, our capital disci- sponsible way. In 2007, the Lost Workday with some €2.5bn earmarked as capital pline and tight grip on costs, the Group’s Injury Frequency (LWIF) index continued expenditure over the next five years: return on capital employed improved its downward trend, thus further con- • Upgrade domestic refineries. from 9% to 11%. This performance has verging to European best-in-class refin- Refining remains the core of our busi- enabled HELLENIC PETROLEUM to in- eries. We place relentless focus on safety ness, contributing close to 80% to crease its total annual dividend per and strive for continuous improvements Group profitability. We are on track to share to €0.50, an 8.4% increase over in this area. In addition, SO2 emissions upgrade our Southern refining hub 2006. Total shareholder return, including were reduced by almost a third in 2007, via a new hydrocracker and flexicoker, dividends and share price performance, while our refineries account for just 2% which will add conversion capacity and amounted to 12.2% in 2007. of Greece’s total CO2 emissions. During increase production of white products the past five years, we have spent close at the expense of fuel oil. This €1.1 bn to €200m in environmental projects, and project, a prime example of sustain- fully comply with the latest EU-oil prod- able development, is supported by ucts specifications. HELLENIC PETRO- diverging consumption trends for die- LEUM is a fully committed partner of so- sel and fuel oil, has strong projected cieties in which it operates in addressing returns, while at the same time will sustainability challenges. produce zero-sulphur diesel and sig- nificantly reduce all emissions. Present in 11 countries and spanning across 8 activities, HELLENIC PETROLEUM aims to transform into a major region- al, internationally competitive energy Group. Building on our key competitive advantages, namely a leading domestic position in refining, marketing and pet- rochemicals, the strategic location and close integration of facilities, the supe- rior complexity of our flagship refinery at HELLENIC PETROLEUM [annual report 2007] The Group 7. • Restructure and improve efficiency. • Increase profitability of domestic Thanks to our cost discipline, we marketing operations. achieved flat operating expenses at EKO, Greece’s fuels marketing leader, the parent company level for a fourth is proceeding with a format optimi- consecutive year in 2007, deliver- sation programme, aiming to create a ing c€100m in cost savings over the network of over 400 flagship, compa- past four years. We also launched the ny-owned or -controlled retail stations “BEST50”