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

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o Generationo Distribution networko Supply• Network Administrator of non-interconnected islands (Crete and other non-interconnected islands)• CorporateMines include the lignite extraction activity carried out in the Lignite Centers of West Macedonia and Megalopolis.Generation includes the electricity generation activities in the interconnected system, the system of Crete and thesystem of non interconnected islands.Transmission is responsible for the monitoring, the maintenance and the repair of high tension grid, which is usedfor the transmission of electricity, and is compensated, as the owner of the grid by the Hellenic TransmissionSystem Operator (“HTSO”).Distribution Network includes the operation of electricity distribution to medium and low voltage customers in theinterconnected system, the system of Crete in and the system of non interconnected islands.Supply reflects the Company’s activity which monitors relationships with final customers in the interconnectedsystem, the system of Crete in and the system of non interconnected islands.Network Administrator includes the operation of the network in order to distribute electric power to the consumersof low and medium voltage of the interconnected system and the system of non-interconnected islands.The Corporate acts as the lender (funding source) of all activities and retains in its balance sheet all investmentsin subsidiaries, associates and joint ventures and in its liabilities and shareholders’ equity all equity accounts,funding and provisions of a financial nature. The capital funding account which is also presented in the liabilitiesside of Corporate reflects the funds that have been made available to activities in order to finance their operations.The balance sheet and statement of income of the Corporate is further allocated based on certain allocation ruleswhich are described in detail in the following pages.Related parties are reflected as a separate activity in the unbundled financial statements.Preparation of unbundled trial balancesIn the Company’s accounting system, each cost centre represents an organizational entity, in which the assetsand liabilities are recorded.General and Cost Accounting trial balances, through the codification of each cost centre, provides the ability ofdetection and grouping of data which are directly ascribed to activities, and of composition of activities trialbalances.These trial balances include the balances of all balance sheet and statement of income accounts per activity.In order for these trial balances to be generated, the following tasks are performed (this process is applied peraccount and cost centre for the minimum account degree in General and Cost Accounting):• Cost centers are recorded in order to identify the boundaries of activities and then all cost centers to beassigned to activities with which they are related to.• It is ensured that all cost centers are subordinate to one of the predefined activities and, at the same time,there is no possibility that two distinct activities include the same cost centre.• The sum totals of the cost centers and accounts are reconciled with the comprehensive trial balance of theCompany.• Each modification in cost centers and trial balance accounts is detected and recorded in order to beembedded in the proper activities or balance sheet and income statement accounts respectively.• The trial balance accounts are codified and grouped into sections of the balance sheet and of the incomestatement based on company’s needs and its published financial statements.• The amounts that are depicted in the Corporate trial balance (which include the central financial serviceswhere a significant amount of the accounting entries is performed) and relate to the activities (e.g. significantbalances of suppliers and contractors, taxes etc), are identified and ascribed in the activities based on theinformation extracted through the peripheral subsystems (subsystem of beneficiaries’, fixed assets,constructions etc).• The account balances, which, due to their nature, do not relate to activities into which have been ascribed,are reclassified and ascribed into the correct activities.137
• The account balances which relate to activities and have not been directly ascribed or correlated with specificactivities, are concentrated separately, in order to be allocated based on allocation criteria per fourth-degreeaccount (the lowest account degree where the accounting entries are performed).The allocation criteria, which are used for the first level of allocations and derived from trial balances amounts, arethe following:• Payroll: applies for the allocation of account balances related either with payroll or with general personnelissues (e.g. various payroll receivables and obligations, social securities funds, personnel loans etc). Thespecific allocation criterion is defined based on the payroll of employees who were actually employed in thisactivity (allocated payroll). According to this criterion, each activity proportionally receives an amount from theallocated Corporate accounts, based on the percentage of its participation in the total payroll amount ofactivities.• Material consumption: applies for the allocation of account balances which are related to the materialsconsumption and suppliers cycle (e.g. orders from abroad, purchases in transit, suppliers etc.). According tothis criterion, each activity’s proportion depends on the total amount of activity’s material consumptions interms of total consumption.• Net book value of assets: applies for the allocation of the account balances that are related to the fixedassets cycle (e.g. projects receivables, projects advances, subsidies, contractor works beneficiaries,contractors taxes etc) and reflects the total amount of assets net book value for each activity in terms of totalnet book value.• Total Operating Expenses: used for the allocation of general nature’s accounts balances and expressestotal value of operating expenses of every activity expressed in terms of total operating expenses.• Compensation and third party fees: applies for the allocation of the corresponding category of accountsand reflects the ratio of Compensation and third party fees of every activity expressed in terms of total.• Third party allowances: used for the allocation of the trial balance accounts that relate to third partyallowances (apart from contract works), such as rentals, water supply, postage, etc.• Various expenses: used for the allocation of various expenses accounts balances except for travelexpenses, which relate to payroll; it is quantified as the ratio of every activity’s various expenses expressed interms of total various expenses.• Depreciation Expense: applies for the allocation of depreciation expense accounts balances. The value ofevery activity’s depreciation expense expressed in terms of total depreciation expense represents thecorresponding percentage from the allocation.• Sales: it is used for the allocation of accounts balances that relate to the Company’s sales.The account balances of financial nature included in the balance sheet and income statement (cash and cashequivalents, loans, derivatives etc), are aggregated separately, in order to be further allocated in the activities.Preparation of unbundled balance sheets and establishment of «Capital Funding» accountThe balances of balance sheet accounts of financial nature are allocated in the activities according to eachactivity’s capital funding, which equals the capital employed of every activity including the provisions of liabilitiesand excluding the investments in affiliates of assets.Then, the balance sheet accounts’ balances are allocated in the activities, which have still remained to theCorporate (fixed assets, inventories, cash & cash equivalents etc.), based on total of assets and liabilities of eachactivity. Corporate keeps in its balance sheet only investments in subsidiaries, joint ventures and affiliates as wellas total equity and liabilities of the entity.Upon completion of the aforementioned allocations, the balance sheets per activity are prepared.Capital Funding, presented in separate line of liabilities, represents capitals been granted from the Company toevery activity for the achievement of its business goals.Total Capital Funding equals total equity, liabilities and provisions of the whole Company excluding theinvestments in related parties (subsidiaries, joint ventures and affiliates)The allocated assets and liabilities of Corporate in activities are presented in a separate line item in each activity’sfinancial statement.Preparation of the unbundled statements of incomeIncome statement accounts of financial nature are allocated to activities based on Capital Funding of everyactivity, as calculated above.Then, income statement account balances that have remained in Corporate are allocated in the activities. For theallocation of expenses the following procedure is applied:138
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A. STATEMENT OF MEMBERS OF THE BOAR
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STATEMENT OF MEMBERS OF THE BOARD O
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B. EXECUTIVE SUMMARY OF THE BOARD O
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In December 2010 decided:- To initi
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• € 18 m. have been expended in
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After this outcome basic technical
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With the actions mentioned above, D
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• Installation of priority system
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S&P reports that the current PPCs
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3 rd Quarter of 2011Fully implement
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Compensation to members of the Boar
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4. Information required in accordan
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(a) Amendments of the Articles of I
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5.4 Participation in the General Me
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General Meeting, the amounts paid b
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Corporate Functions Management Boar
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6.7 Chief Executive Officer1. The C
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3016/2002 regarding corporate gover
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6.15 Board of Directors’ MembersP
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Ilias Antoniou, memberIlias Antonio
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6.16 Outside Professional Engagemen
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EXPLANATORY REPORT OF BOARD OF DIRE
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j) Agreements with members of the B
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C. AUDITOR’S REPORT48
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ERNST & YOUNG (HELLAS)Certified Aud
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PUBLIC POWER CORPORATION S.A.Consol
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PUBLIC POWER CORPORATION S.A.STATEM
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PUBLIC POWER CORPORATION S.A.BALANC
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PUBLIC POWER CORPORATION S.A.STATEM
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D.2 NOTES ΤΟ THE FINANCIAL STATEM
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PUBLIC POWER CORPORATION S.A. AND S
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Financial Report (January 1, 2010 - December 31, 2010)

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