ANNUAL ANALYST’S PRESENTATION Transforming the Enterprise Athens, May 3 2006 Public Power Corporation S.A. 1
AGENDA � What is PPC – attractive assets in advantaged market � 2005 results – year of transition � Looking ahead – transforming the enterprise and creating value for shareholders 2
AGENDA � What is PPC – attractive assets in advantaged market � 2005 results – year of transition � Looking ahead – transforming the enterprise and creating value for shareholders 3
PPC IS A VERTICALLY INTEGRATED UTILITY IN UNIQUELY ADVANTAGED POSITION WITH HIGHLY ATTRACTIVE ASSETS Vertically integrated value chain spanning mining, generation, transmission, distribution and supply The market leader in all its core businesses... ...in one of the fastest growing electricity markets in Europe Among the largest industrial companies in Southern Europe Also with interests beyond Greek power including Balkans, telecoms, gas, renewables and real estate One of the strongest brands in Greece and highest credit ratings in Greece Significant potential value yet to be exploited 4
INTEGRATED BUSINESS SPANNING POWER VALUE CHAIN Market-Leading Position in all Activities Mines Generation Transmission Distribution Supply 2 lignite centers Interconnected system 11,400 km transmission 206,000 km distribution 7.1 M customers lines lines • Western Macedonia • Lignite (5,245 MW) 277 branches • 2,600 400 kV lines • 109,000 km LV • Megalopolis • Oil/gas (2,331 MW) • 8,800 150 kV lines • 97,000 km MV • Hydro (3,060 MW) 68 M tons lignite p.a. Islands (1,600 MW) 65% share 96% share 100% share 100% share 97% share 5
IN ONE OF THE FASTEST GROWING BUT STILL RELATIVELY “UNDER-POWERED” ELECTRICITY MARKETS IN EUROPE Consumption per capita 8 Belgium (MWh) France Austria 7 Germany Holland Ireland Czech Denmark 6 Spain UK Italy Greece 5 Slovakia Portugal Hungary 4 Poland Fast-growing Still “under-powered” 3 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 % annual consumption growth 2000-2005 Source(s): Economist Intelligence Unit 6
INTERESTS BEYOND GREEK POWER INCLUDING BALKANS TELECOMS, GAS, RENEWABLES AND REAL ESTATE PPC SA Domestic power and Tellas SA Regional power Renewables 1 3 5 mining 12,240 MW installed capacity Fixed telephony services Internet 630 MW Bobov Dol plant (under Wind parks: access services arbitration in Bulgarian court) • 41.6 MW in operation 11,400 km HV/MV transmission • Licenses for 109 MW (+ 47 capacity Broadband services Participating in tender for majority MW pending approval) stake in lignite plant in 206,000 km MV/LV distribution Montenegro Small hydro plants: capacity For all market segments • 18.7 MW in operation 52.6 TWh generated power • Residential, small enterprises. • Licenses for 14.8 MW large companies, etc. 50.0 TWh sold power Photovoltaic systems: • 0.3 MW in operation 7.1 M customers Geothermic plants: Second-largest lignite producer in • Licenses for 8 MW Europe 8.1% share in Greek RES market 68 M tons lignite p.a., enough for ~ 32 TWh power p.a. Real estate Regional mining DEPA 2 4 6 6,800 buildings (1,850 K m 2 ) Participating in tender for majority Option to buy 30% of DEPA stake in lignite mine in 413,200,000 m 2 land Montenegro 7
AGENDA � What is PPC – attractive assets in advantaged market � 2005 results – year of transition � Looking ahead – transforming the enterprise and creating value for shareholders 8
2005 – YEAR OF REBUILDING Financial Results 2003 2004 2005 ’04-05 ∆ (%) Revenues (€ mil) 3,898 4,095 4,291 4.8 Costs (€ mil) 2,760 2,888 3,384 17.2 EBITDA (€ mil) 1,138 1,207 907 -24.9 Net profit (€ mil) 305 293 136 -53.6 Total assets (€ mil) 10,460 11,208 12,663 13.0 Net debt (€ mil) 3,892 3,635 3,755 3.3 Number of employees (1) 28,100 27,921 27,246 -2.4 (1) Year end employees 9
CHANGING ENVIRONMENT IMPACTED PROFITABILITY EBITDA Evolution 2003-2005 EBITDA 1,600 (€ mil.) 1 2 3 1,400 • Public Service 196 Obligations (PSOs) (2) 389 1,200 495 - Islands - Other 1,000 107 800 • Oil price from $38 to $56/bbl • Natural gas from €0.17 to €0.23/ Ν m 3 1,207 600 • Increased costs of: 1,138 - lignite 907 - CO 2 emissions 400 - energy purchases 200 0 Revenue growth Fuel/energy Others 2003 2004 2005 impact (1) 2005 (1) With comparable power generation, fuel mix and plant thermal efficiency (2) Do not include "stranded costs” estimated at ~ € 1.5 bn Source(s): PPC financial data, business plan model 10
1 FUEL PRICE INCREASES NOT PASSED TO ELECTRICITY USERS IN GREECE Price increases between January 2004 and January 2006 Industrial tariffs (1) Residential tariffs (2) Increase Increase 80% 30% (%) (3) (%) (3) 73% 70% 25% 24% 60% 20% 50% 17% 17% 40% 15% 33% 32% Average : 11% 30% 10% Average: 24% 10% 8% 20% 17% 4.5% 12% 13% 5% 4% 10% 7.1% 1% 3% 0% 0% UK SE NL IT AT GE GR ES AT NL UK GE IT GR ES SE (1) Based on1.5 GWh consumption (2) Based on3.5 MWh consumption (3) Increase over Jan 2004 tariffs Source(s): Energy Advice Ltd; Eurostat 11
1 GREEK CONSUMERS ACCEPT HIGHER COSTS FOR OTHER FORMS OF ENERGY 180 Index Jan-01=100 (1) Change Jan-04 to Jan-06 Jan 04 – present steeply-rising fuel prices Heating oil (2) +57.3% 160 (ex. taxes) (12xelectricity price growth) Jan 01 – Jan 04 – fluctuating fuel prices 140 +22.5% Super 95 fuel (5x electricity price growth) (retail prices) 120 Electricity +4.5% (residential rates) 100 80 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 (1) Average of previous 6 months (2) Data for Jul-05 and Jan-06 are estimates Source(s): Eurostat; EIU 12
1 THE LOWEST RESIDENTIAL ELECTRICITY PRICES IN THE EU-15 Residential tariffs (€/100kWh, July 2005) 25 20 EU-15 average: 14.3 15 -52% 10 5 0 DK IT NL GE LU IE BE AT PT SE FR ES FI UK GR Note: Data for Luxemburg not available Source(s): Eurostat, Economist Intelligence Unit 13
2 LABOR PRODUCTIVITY RISING DUE TO RESTRAINED HIRING MWh sold per FTE (1) 2003-2005 +6% +3% (2) p.a. Target: reduce personnel 1,500 to 1,600 by 2010 (from 27,300 to 25,800) 2003 2004 2005 2006 (1) End of year employees (2) Average annual increase Source(s): Historic data; PPC estimates; business plan model 14
IMPLICATION: ENVIRONMENT CHANGING – SO MUST PPC "Social" Profit utility expectations Monopoly Competition Low energy High energy cost cost Managing Managing change technology/ assets 2005 & 2006: Transition years 15
AGENDA � What is PPC – attractive assets in advantaged market � 2005 results – year of transition � Looking ahead – transforming the enterprise and creating value for shareholders 16
12 INITIATIVES FOR TRANSFORMATION – PROGRAM HERCULES 1 2 3 4 Non-personnel costs Assets Personnel costs Markets Payroll costs Tariffs Fuel Investments Service rates Inventory Salary levels CO2 emissions Overtime Market model Receivables Materials Shifts Payables Maintenance Benefits Third party cost Financial motives Other addressable 5 Procurement re-organization 6 IT strategy Immediate priority: €190 M 7 Communications strategy (implementation) 8 Regulatory strategy 9 Risk management 10 Generation strategy 11 Corporate development strategy 12 International strategy 17
TRANSFORMATION CAN ADD ~€2.2B CUMULATIVE EBITDA IN NEXT 5 YEARS 2006-2010 additional EBITDA € M 800 600 400 680 580 480 200 390 40 0 2006 2007 2008 2009 2010 18
TRANSFORMING DOMESTIC POWER CAN ADD ~€680M TO 2010 EBITDA Sources of additional EBITDA (2010) € M 150 190 680 Immediate priority 340 (implementation) Increased revenues Reduced non-personnel Reduced personnel Total costs costs Top-line growth Cost base Note: Assumes oil price at $65/bbl rationalization Source(s): Business plan model; PPC company information 19
“CORPORATE DEVELOPMENT” OPPORTUNITIES TO BE PURSUED SELECTIVELY PPC bringing substantial assets to table Generation, T&D, Many opportunities with clear “window” of attractive prices and high commercial growth/restructuring potential International Attractive opportunities in regional coal/lignite mines “Upstream“ Ability to hedge demand/market risk by importing to Greece an advantage Gas PPC owns option to purchase 30% stake in DEPA Telecoms Opportunity to capture growth upside Domestic Current investments both profitable and fulfill also social-responsibility Renewables objectives Investigating option to establish an independent real estate subsidiary and Real estate monetize underlying value Clearly profitable opportunistic investments will be pursued, where possible with strategic partner – ensuring no distraction from domestic power restructuring 20
CONCLUSION: THREE STRATEGIC IMPERATIVES FOR VALUE CREATION In Order of Priority I. Transformation of domestic power II. Investing to renew the asset base Ι II. Corporate development 21
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