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

PUBLIC POWER CORPORATION S.A. AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDSAS ENDORSED BY THE EUROPEAN UNIONDecember 31, 2010(All amounts in thousands of Euro, unless otherwise stated - except for share and per share data)12. TRANSMISSION – DISTRIBUTION SPIN OFF (CONTINUED)In October 2010, the Parent Company’s Board of Directors decided to transfer the operation of the network, theprovision of network services throughout the country, as well as the activity of the Non –Interconnected Islands’operator, to a PPCs’ 100% subsidiary. All of PPC’s properties, as well as the pertinent to the above mentionedactivities, assets and liabilities will be transferred to the above mentioned subsidiary, with the exception of thenetwork’s fixed assets and the Distribution’s installations, which will remain in PPC’s ownership.In October 2010, PPC’s Board of Directors also decided to transfer the activities of the Transmission of Electricity(currently performed by PPC’s Transmission Business Unit) to its wholly owned subsidiary “PPCTelecommunications” (whose Articles of Incorporation will be amended, accordingly). Also approved the transferto the subsidiary of all the Parent Company’s assets, which functionally belong to the activities of theTransmission’s Division as well as assets and liabilities coherent with the activities of the above mentionedDivision.In December 2010, the Parent Company’s Board of Directors, decided to initiate the procedures for the transfer ofall the activities of the Transmission Division, in order of the personnel, currently in place in the Division’s units –and the fixed assets to be transferred and integrated in its wholly owned subsidiary “PPC Telecommunications”.By the same Decision, January 1 st , 2011 was set as the date for the census of the assets to be transferred to theTransmission subsidiary.In December 2010, PPC’s Board of Directors decided to convene PPC’s Extraordinary Shareholders’ GeneralAssembly in order to a) approve the transfer of the activity of the General Division of Transmission to a whollyowned PPC subsidiary and b) approve the transfer of the General Division of Distribution as well as the activitiesof the Operator of the Non – Interconnected Islands to a wholly owned PPC subsidiary.In December 2010, the Parent Company’s Board of Directors, has approved that the activities of Distribution ofElectricity, the General Division of Distribution and the Non – Interconnected Islands’ Operator, the personnelassigned to them as well as the fixed assets (with the exception of the network’s fixed assets which will remainPPC’s ownership) will be conceded to PPC’s wholly owned subsidiary “PPC Rhodes S.A.”. Also, determinedJanuary 1 st , 2011 as the date of the census of the fixed assets to be contributed to the Disposal group as well asthe preparation of the respective balance sheet..On December 30 th , 2010 PPC’s Extraordinary Shareholders’ General Assembly was convened and the followingwere decided:It has approved, in principal, the transfer of all activities of the Transmission of Electricity, exercised by PPC’sGeneral Division of Transmission to its wholly owned subsidiary “PPC Telecommunications” (whose articles ofincorporation 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, exercised by PPC’sGeneral Division of Distribution and the Operator of the Non Interconnected Islands to its wholly owned subsidiary“PPC Rhodes S.A.” (whose articles of incorporation will be amended accordingly), as well as the initiation of theappropriate procedures.The Parent Company considers that during the preparation of Financial Statements as of December 31 st , 2010IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” cannot be implemented taking underconsideration that the Law that will incorporate the European Directive and will define the structure as well as theactivities of the new companies (Transmission System Operator and Independent Distribution System Operator)has not yet been ratified by the Greek Parliament up to the publication of the Financial Statements.The Parent Company considers that completion, ratification and implementation of the Law will define thestructure and the activities of the new companies as well as relations with the Parent Company and consequentlywill then be in a position to evaluate whether IFRS 5 can be applied.13. INCOME TAXES (CURRENT AND DEFERRED)GroupCompany2010 2009 2010 2009Current income taxes 207,821 115,877 204,519 114,064Deferred income taxes (36,085) 142,201 (35,810) 142,737Provision for additional taxes 11,044 41,702 10,920 41,452Total income tax expense 182,780 299,780 179,629 298,253Companies of the Group that have their residence in Greece are subject to an income tax of 24%.Based on the legislative regime on December 31 st , 2010 the tax rate for the year 2014 will be reduced to 20%,decreasing by 1 percentage point every year.Tax returns are filed annually but the profits or losses declared for tax purposes remain provisional until such time,as the tax authorities examine the returns and the records of the taxpayer and a final assessment is issued.83