Financial Report (January 1, 2010 - December 31, 2010)

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In December 2010 decided:- To initiate procedures for the transfer of all the activities of the Transmission Division, in order to transfer andintegrate in its wholly owned subsidiary “PPC Telecommunications” the personnel, currently in place in theDivision’s units – and the fixed assets. By the same Decision, 01.01.2011 was set as the date for the census of theassets to be transfered to the Transmission subsidiary.- The activities of Distribution of Electricity, General Division of Distribution and the Non – Interconnected Islands’Operator, the personnel assigned to them as well as the fixed assets (with the exception of the network’s fixedassets which will remain PPC’s ownership) will be conceded to PPC’s wholly owned subsidiary “PPC Rhodes S.A.”.Also, determined 01.01.2011 as the date of the census of the fixed assets to be transfered to the DistributionSubsidiary as well as the preparation of the respective balance sheet.- To convene PPC’s Extraordinary Shareholders’ General Assembly in order to a) approve the transfer of the activity ofthe General Division of Transmission to a wholly owned subsidiary and b) approve the transfer of the GeneralDivision of Distribution as well as the activities of the Operator of the Non – Interconnected Islands to a whollyowned PPC subsidiary.On December 30 th , 2010 PPC’s Extraordinary Shareholders’ General Assembly was convened and the following wasdecided:- It has approved, in principal, the transfer of all activities of the Transmission of Electricity, currently exercised byPPC’s General Division of Transmission to its wholly owned subsidiary “PPC Telecommunications” (whose articlesof incorporation will be amended accordingly), as well as the initiation of the appropriate procedures.- It has also approved, in principal, the transfer of all activities of the Distribution of Electricity, currently exercised byPPC’s General Division of Distribution and the Operator of the Non Interconnected Islands to its wholly ownedsubsidiary “PPC Rhodes S.A.” (whose articles of incorporation will be amended accordingly), as well as the initiationof the appropriate procedures.The implementation of the new Directive 2009/72 is leading to the change of PPCs’ organisational structure, with the legalunbundling of the transmission and distribution activities. The Parent Company considers that completion, ratification andimplementation of the Law will define the structure and the activities of the new companies as well as relations with theParent Company and consequently will then be in a position to evaluate whether IFRS 5 can be applied.Amendments in the current legal framework during 2010All the amendments in the current legal framework are analytically presented in Note 2 of the Financial Statements.2010 Financial Data• EBT in 2010 amounted to € 740.7 m, compared to € 993.1 m in 2009, a decrease of € 252.4 m (-25.4%), while netincome amounted to € 557.9 m, versus € 693.3 m respectively, a reduction of € 135.4 m (-19.5%).• Total electricity demand (including exports) remained flat in 2010 at 61,817 GWh vs 61,842 GWh in 2009.• PPC’s total electricity sales (including exports) decreased by 1,450 GWh (-2.7%) to 51,587 GWh, while thecorresponding revenues declined by 5.0%. Exports increased by 233 GWh (456 GWh vs 223 GWh in 2009) whileelectricity sales and revenues in the domestic retail market decreased by 1,683 GWh (-3.2%) and by 5.2%respectively.• Turnover reached € 5,811.4 m, versus € 6,030.4 m in 2009, a reduction of € 219.0 m (-3.6%). Turnover includesan amount of € 194.5 m reflecting network users’ contributions for connections to the network (2009 : € 168.9 m).• In 2010, PPC’s electricity generation, including electricity imports, covered 77.3% of total demand, while, thecorresponding percentage in 2009 was 85.6%, a reduction of 5,123 GWh. The respective percentage in theInterconnected System, being the market segment practically open to competition was 76.1% vs 85.1% theprevious year.• Τhird party thermal generation increased by 2,709 GWh, from 1,614 GWh in 2009 to 4,323 GWh in 2010, anincrease of approximately 168%. In 2010, thermal capacity of approximately 850 MW was installed by twoindependent power producers.• Third party electricity imports increased by 51.7% from 3,987 GWh in 2009, to 6,049 GWh, while PPC importsdecreased to 2,255 GWh from 2,774 GWh in 2009 (-18.7%).• Concerning RES generation, in 2010 PPC RENEWABLES generated 274 GWh compared to 247 GWh in 2009, anincrease of 27 GWh. RES generation from third parties amounted to 3,658 GWh in 2010, compared to 3,331 GWhin 2009, an increase of 327 GWh (+9.8%). Pre tax profits of PPC RENEWABLES amounted to € 11.9 m versus €5.6 m in 2009.7
• Electricity generation from lignite, decreased by 3,102 GWh vs 2009, while the contribution of lignite to the totalenergy mix of PPC, decreased to 48.0% from 51.6% in 2009.• In 2010, 32.0% of the Company’s total revenues were expensed for liquid fuel, natural gas, energy purchases thirdparties fossil fuel and CO 2 emission rights, marking an increase of 3.8 percentage points compared to thecorresponding 2009 figure, which stood at 28.2%.• The expenditure for liquid fuel, natural gas and energy purchases increased by € 199.5 m, an increase of 12.6%compared to 2009, mainly driven by the higher expense for energy purchases (€ 104.9 m) and the increase of theSpecial Consumption Tax on diesel (€ 65 m).• Following the implementation of Laws 3833/2010 and 3845/2010, total payroll reduction, including capitalizedpayroll, in 2010, is estimated at € 204 m. In addition, due to 2010 retirements significantly outnumbering hiringsand the reduction of overtime payments, the total reduction of payroll cost, including capitalized payroll between thetwo years amounts to € 294.1 m.• The EGM of 26 April 2010, decided to extend an extraordinary one off contribution to PPC’s Personnel InsuranceOrganizations, of an amount up to the payroll reduction provided for in Article 1 of Law 3833/2010. Consequently,an amount of € 99.6 m has been charged to 2010 financial results.• By the end of 2010, 1,237 employees had been hired in accordance with the 1/2007 & 2/2007 Tenders. On theother hand, 2,349 employees retired in 2010 (the reduction in the number of employees on payroll by the end of theyear was 1,974 as 375 employees retired on 31.12.2010). This development translates into a significant costreduction with, however, a negative impact from the loss of technical and financial know-how, at a time when thecompany is faced with an increasingly challenging and demanding environment.• Provisions for bad debt, litigation and slow moving materials reached € 179.5 m, an increase of € 54 m (+43.0%)compared to 2009. Due to the fact that in 4Q2010 the Company decided to adopt a more conservative approachregarding the recognition of bad debt of low and medium voltage customers, the corresponding annual provisionincreased by € 113.6 m. Based on the previous approach for the measurement of bad debt, the increase of theprovision in question would have been € 27 m. Litigation provisions decreased by € 58.1 m, while the provision forslow moving materials increased by € 6.1 m.• ΕΒΙΤDΑ amounted to € 1,497.7 m in 2010 compared to € 1,677.5 m in 2009, reduced by € 179.8 m (-10.7%).ΕΒΙΤDΑ margin reached 25.8%, compared to 27.8% in 2009.• Operational cash flow decreased by € 206 m, compared to the corresponding figure in 2009.Dividend PolicyWithin 2010, the dividends distributed, for the fiscal year 2009, to the Shareholders amounted to € 1.00 per share.For the year 2010, the Board of Directors of the Parent Company decided to suggest to the Company’s ShareholdersGeneral Assebly the distribution of dividends amounting € 183.28 m. (Euro: 0.79 per share).Debt EvolutionNet debt amounted to € 4,210.3 m, an increase of € 154 m compared to 31/12/2009 (€ 4,056.3 m).Consequently, netdebt/equity ratio reached 0.62, as at 31.12.2010.Capital Expenditure Programme of Business UnitsTotal capital expenditure for the Group amounted to Euro 962.7 million and allocated in Euro 120.6 m to Mines, Euro 246.8m to Generation, Euro 88.8 million to Transmission, Euro 462.7 m to Distribution, Euro 1.8 million to the Supply and Euro 7.4million to activities of the Administrative Divisions. Capital expenditures of the year 2010 are decreased by Euro 140.9million, compared to those of 2009, presenting an decrease of 12%.Capital expenditure of PPC RENEWABLES S.A. for the year 2010 is € 34.6 million.Mines Business UnitTotal Capital expenditure amounted to Euro 120.6 million analyzed as follows:• € 6 m. have been expended in Megalopolis out of which concern belt conveyor’s elongation and improvement and € 4m. flood preventing works.8
Page 4 and 5: A. STATEMENT OF MEMBERS OF THE BOAR
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Financial Report (January 1, 2010 - December 31, 2010)

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