Α. REPORT OF THE "HELLENIC REPUBLIC ASSET DEVELOPMENT FUND S.A. (HRADF) FOR THE PERIOD 01/01/ /09/2015

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1 Α. REPORT OF THE "HELLENIC REPUBLIC ASSET DEVELOPMENT FUND S.A. (HRADF) FOR THE PERIOD 01/01/ /09/2015 Overview of the period Summary During 2015 two privatisation contracts were signed and a total of 5 new tender processes were launched. Furthermore, progress has been noted in tender processes already completed, in order for the signing of the final contracts to be accelerated. Progress of the Privatisation Programme The following points can be made regarding the privatisation contracts for the infrastructure and corporate portfolio: On 24 April 2015 the contract for the concession of the exclusive right to organise sweepstakes was signed by HRADF and "Horseracing S.A.", for a period of 20 years, for a final price of 40.2 million. The concession agreement was ratified by the Hellenic Parliament on 23 October 2015 by Greek Law 4338/2015, which entered into force on 8 January HRADF has already received the two initial instalments corresponding to 50% of the price, while the remaining amount will be paid on 8 January Finally, on 21 December 2015, HRADF, as the sole shareholder, convened an Extraordinary General Meeting of Horse Racing S.A. at which it was decided wind up and liquidate the company. The first races under the new management team took place on 22 January On 14 December 2015 the concession contracts for the right to use the two groups of regional airports were signed: Group A: Thessaloniki, Kavala, Corfu, Cephalonia, Zakynthos, Aktio and Hania Airports. Group B: Mytilene, Skiathos, Samos, Mykonos, Santorini, Kos and Rhodes Airports. The contracts, signed by the Greek State, HRADF and the Concessionaire Consortium FRAPORT AG-SLENTEL Ltd, provide for the concession of use, management, development, expansion, maintenance and operation of the said airports, as well as commercial or other sites located within the airports. It should be noted that ownership of the land, infrastructure and facilities remains with the Greek government. The FRAPORT AG-SLENTEL Ltd consortium was preferred investor for the two groups of regional airports on 25 November 2014 as part of an international open tender process conducted by HRADF, and its bid was a billion one-off price and 22.9 million annual guaranteed payable rent, adjusted annually to inflation, along with a fluctuating variable fee, estimated annually at 28.6% of the airports EBITDA. The aggregated amount of the aforementioned revenues will exceed 10 billion. Further to the above one-off and annual (fixed and variable) price, the Greek government expects additional 1

2 cumulative fiscal, social and other benefits, amounting to approximately 4.6 billion. The private investor has been granted the right to use, operate, develop and run the airports for a period of 40 years. Ownership of any infrastructure and facilities to be constructed will devolve to the Greek government and will be returned to it upon expiry of the concession. On 21 December 2015, binding offers for a 67% stake in Piraeus Port Authority s share capital were submitted. Cosco Group (Hong Kong) Limited submitted an Offer. The financial offer was opened on 12 January 2016 on which date the HRADF s Board of Directors asked for an improved offer to be submitted. Cosco Group (Hong Kong) Limited s improved offer, which was presented to HRADF on 20 January 2016, provides for a 22 euro/share price, i.e million. The total value of the agreement is estimated at 1.5 billion and includes, inter alia, the aforementioned million offer, mandatory investments amounting to 350 million over the next decade and the expected revenues from the Concession Agreement for the Hellenic Republic (a concession consideration of 3.5% of PPA s turnover) expected to total 410 million overall. That total also includes the expected dividends and the interest to be received by HRADF as well as the estimated investments (that go beyond the minimum mandatory ones) up until the end of the concession in The transaction consists of two stages: in the first stage, Cosco Group (Hong Kong) Limited will pay HRADF million and will acquire a 51% stake in PPA. Within five years, should it fulfil certain conditions set out in the Share Purchase Agreement (SPA), including the successful completion of the mandatory investments, Cosco Group (Hong Kong) Limited will pay HRADF an additional amount of 88 million, thus increasing its stake in PPA from 51% to 67%. HRADF s Board of Directors declared Cosco Group (Hong Kong) Limited the successful bidder and asked it to submit the documents required in order for it to be designated as "Preferred Investor" in line with the terms of the tender procedure. On 3 September 2015, HRADF s Board of Directors decided to modify the structure of the tender process for the acquisition of 67% of Thessaloniki Port Authority S.A. s share capital. In the first phase, 51% of the share capital will be allocated, while the remaining 16% will be transferred to the highest bidder of the tender five years later should the required investments be completed. The amended conditions were communicated to all the investors in the second phase of the tender process. Under the current timetable, binding bids are expected in the first half of Marinas: The tender process relating to the 40-year concession of the Pylos marina is under way. Under the current timetable, this tender process is expected to be completed in the first half of Moreover, during 2015, tender processes relating to concessions for a) the marinas of Alimos, Poros, Hydra and Nea Epidavros and b) the marina and part of the port of Hios were cancelled due to lack of interest. 2

3 Moreover, during 2015, despite the general recession in the market, all ports have continued to be profitable. They returned to profitability when they started restructuring their financials after they were included in HRADF s portfolio at the end of 2012, a move which has already yielded dividends for the Greek State. Hence, the average earnings of the country s major regional ports, excluding those of Piraeus and Thessaloniki (meaning the ports of Alexandroupoli, Patra, Igoumenitsa, Volos, etc.), rose by 20% in This rise follows the 40% surge recorded in The Fund continues to manage them until they can be developed. On 30 November 2015, the RfP to appoint an independent valuer for TRAINOSE S.A. and ROSCO S.A. was published. A two-year process of evaluating the Underground Natural Gas Storage project in South Kavala was launched by the European Commission in January 2015, in order to determine whether to keep it in the European Commission s list of Projects of Common Interest. The evaluation was completed in September 2015, with the project not qualifying for that list. HGTSO provided its support and expertise to HRADF throughout the evaluation process. In November 2015, the State signed the 4 th amending agreement on the exploitation of hydrocarbons in the maritime region of the Thracian Sea, extending the Energean Oil & Gas South Kavala operating license, which expired on 23 November 2015, for two years and extendable for an additional year. The extension was granted, due to the fact that, after the expiry of the license, the operation and maintenance cost of the facility should have been undertaken by the Greek government. Publication of the relevant decision in the Government Gazette is still pending. In January 2016, the Minister for Energy, Panos Skourletis, announced the establishment of a Working Group which will explore the possibility of developing the South Kavala Underground Gas Storage facility. Neither HRADF nor Energean will participate in that working group. It should be noted that according to HRADF s Asset Development Plan, dated and approved in August 2015, the aforesaid project is no longer included in the portfolio of assets to be developed by HRADF; a plan that was approved by the current Government and, in particular, by a decision of the Government Economic Policy Council (Government Gazette 93/A), which forms an integral part of Law 4336/2015 (Government Gazette 94/A). In the real estate sector, during 2015, 5 new tender processes were launched: On 21 August 2015, an international tender process was launched for the sale of Greek government properties abroad. In particular, these are: a) a property of c. 1,400m2 in New York, b) a property c. 750m2 in Washington, c) a property c. 1,200 m2 in Ljubljana, d) a property c. 400 m2 in Pretoria, South Africa and e) a property of c. 1,600 m2 in Rome. 3

4 The tender process was completed in October 2015 with binding offers being submitted for the properties in New York, Washington and Rome. HRADF s Board of Directors only selected a Preferred Investor for the properties in New York and Washington, accepting a total price of c. 12 million, however, the Rome offer was below the minimum indicative price which had been set. On 30 September 2015 an electronic auction with the right to submit counteroffers was launched via the website for 14 properties in Halkidiki, the Dodecanese, Fthiotida, Halkida, the Argolid, Attica, Messinia and Imathia (e-auction V) and a call for expressions of interest was also published to attract an independent valuer to value those 14 properties. On 21 December 2015 the international tender procedure to develop the properties in Rome, Ljubljana and Pretoria was relaunched, with offers to be submitted by On 23 December 2015 an international tender was launched for the development of a property covering 950,000 m 2 in the Thinnes area of Vartholomio of Ilea. The property will be converted into an 18-hole golf course with a range of suitable tourist facilities. On 23 December 2015 another international tender was also launched for the development of a property in Porto Heli in the Argolid, on a plot of c. 630,000m2. This property will be developed as a private airport, 9-hole golf course, and suitable tourist facilities. The tender for the development of the property at Poseidi near Kalandra in Halkidiki is currently under way. The property is suitable for holiday homes, top class hotels and leisure facilities. As far as the tender procedure to develop the property at Afantos is concerned, following report No. 26/2016 on the draft Presidential Decree containing the relevant Special Plan (ESCHADA), and the establishment of the Central Committee to manage the development of public assets, the amended draft Presidential Decree was presented to the Central Committee at its first meeting on On 31 December 2015, after negotiations with the Investors, an agreement was signed with Jermyn Street Real Estate Fund IV LP, as an Addendum to the existing Shares Purchase Agreement, regarding the modified Special Plan (ESCHADA) for development of the Astir Pallas Vouliagmenis. That agreement ensures the Plan has been adjusted to reflect the opinion from the Council of State (No. ΠΕ28/2015) and that the necessary administrative procedures can be followed. The price of 400 million remains unchanged. 4

5 Moreover, between April December 2015, contracts for the following properties were signed: A property in Kalamitsa of Kavala, sold for 400,000 in April A property in Smolensky Street, Athens, sold for 434,000 in May A property at 13 Theofilou Street, sold for 540,000, in May The Xenia Skiathos Hotel, sold for 2,628,000 in May A property in Beograd, sold for 2,400,000, in May The Mana Sanatorium, sold for 830,000 in May A property in Agios Ioannis in the Sithonia area of Halkidiki, sold for 9,610,000, in June A property in Mitropoleos Street, sold for 3,785,000, in June A property in Touzla in the Pangeo area, sold for 1,450,000 in June The Neratziotissa CSA, sold for 1,800,000 in July A property at 9 Evangelistrias Street in Athens, sold for 1,720,000, in July A property in Kala Nera in Magnesia, sold for 1,030,000 in July The former Paramythia Court of the Peace building, sold for 210,000 in October HRADF s Operations On 18 March, HRADF s new Management team was appointed, comprised of Mr. S. Pitsiorlas as Chairman of the Board of Directors and Mr. A. Leoussis as CEO, while, on 16 April 2015 HRADF announced the appointment of Mrs. Evangelia Tsitsogiannopoulou as its real estate Executive Director. B. FINANCIAL STATEMENTS FOR THE PERIOD 01/01/ /09/2015 Financial Results HRADF reported the following results in the 9-month period January to September amounts in thousands of Period 1/1-31/3 (Losses) Period 1/4-30/6 (Losses) Period 1/7-30/9 (Losses) It should be noted that the financial results of HRADF do not reflect the effectiveness of its operations, because HRADF s income, and specifically HRADF's commission, which is 0.2% of the consideration for development of the assets, is calculated based on the confirmed and collected consideration, and not the total of the completed transactions. At the same time, HRADF s operating costs, which pertain to the preparation and management of privatisations in progress, as well as impending privatisations, are also imputed to this figure. 5

6 The quarterly financial statements for the period being examined are set out below. Please note that the audit of the financial statements by certified public accountant has not yet been completed. B.A. FINANCIAL STATEMENTS FOR THE PERIOD 1/1/ /3/2015 (2015 Q1) B.A.1. STATEMENT OF FINANCIAL POSITION ASSETS Property, plant and equipment 241, ,125 Investment Property 0 0 Intangible assets 76,790 89,804 Other non-current assets 122,887, ,767,963 Receivables from customers 64,906, ,348,831 Other current assets 73,802,759 33,168,565 TOTAL ASSETS 261,914, ,645,288 EQUITY AND LIABILITIES Share Capital 30,000,000 30,000,000 Other equity items (4,332,053) (3,459,456) Total equity of company shareholders (a) 25,667,947 26,540,544 Minority interests (b) 0 0 Total Equity (c) = (a) + (b) 25,667,947 26,540,544 Staff termination liabilities 128, ,927 Provisions / Other long-term liabilities 122,855, ,736,313 Short-term loan obligations 0 0 Other short-term liabilities 113,263, ,255,504 Liabilities related to non-current assets held for sale 0 0 Total liabilities (d) 236,246, ,104,744 TOTAL EQUITY AND LIABILITIES (c) + (d) 261,914, ,645,288 6

7 B.A.2. STATEMENT OF COMPREHENSIVE INCOME Turnover - Sales 2,594,800 14,000 Cost of Sales (3,457,663) (1,084,009) Gross Profit/(losses) (862,863) (1,070,009) Other operating income 93, ,098 Other operating expenses (125,952) (184,030) Administrative expenses 0 0 Operating Profits / (Losses) (895,724) (1,019,941) Financial income 26,419 15,552 Other financial results 0 0 Financial expenses (3,292) (5,832) Net Profit / (Loss) of the period before taxes (872,597) (1,010,221) Income tax 0 0 Profit/(loss) of the period net of tax (872,597) (1,010,221) Other comprehensive income for the period net of tax Actuarial gains/(losses) from staff compensation provision 0 0 Consolidated comprehensive income for the period (872,597) (1,010,221) B.A.3. STATEMENT OF CHANGES IN EQUITY Total equity at start of period Period profits / (losses) net of tax ( ) ( ) Net income recorded directly in equity 0 0 Total equity at end of period

8 B.A.4 STATEMENT OF CASH FLOWS Operating activities EBT (from continuing operations) (872,597) (1,010,221) Plus/Minus adjustments for: Depreciation 46,353 52,973 Impairment of intangible and tangible assets 0 0 Changes in pension obligations 15,152 15,239 Foreign exchange differences 1,974 3,218 Results (income, expenses, profits & losses) from investing activities (26,419) (15,552) Interest charges and related expenses 3,292 5,832 Decrease/ (increase) in receivables 182,654,223 (6,146,561) (Decrease) /increase in liabilities (excl. debt) (165,034,876) (1,471,264) Less: Interest charges and related expenses paid (3,292) (5,832) Total inflow/(outflow) from operating activities (a) 16,783,810 (8,572,168) Investing Activities Purchase of intangible and tangible assets (4,624) (22,163) Proceeds on sale of intangible and tangible assets 0 0 Interest received 26,419 15,552 Total inflow/(outflow) from investing activities (b) 21,795 (6,611) Financing Activities Proceeds from increase in share capital 0 0 Total inflows/(outflows) from financial activities ( c ) 0 0 Net increase/ (decrease) in cash and cash equivalents (a)+(b)+(c) 16,805,605 (8,578,779) Cash and cash equivalents at the beginning of the period 8,793,103 18,862,144 Cash and cash equivalents at the end of the period 25,598,708 10,283,365 8

9 B.B. FINANCIAL STATEMENTS FOR THE PERIOD 1/4/ /6/2015 (2015 Q2) B.B.1. STATEMENT OF FINANCIAL POSITION ASSETS Property, plant and equipment 214, ,125 Investment Property 0 0 Intangible assets 68,138 89,804 Other non-current assets 121,930, ,767,963 Receivables from customers 65,043, ,348,831 Other current assets 61,920,623 33,168,565 TOTAL ASSETS 249,176, ,645,288 EQUITY AND LIABILITIES Share Capital 30,000,000 30,000,000 Other equity items (7,147,818) (3,459,456) Total equity of company shareholders (a) 22,852,182 26,540,544 Minority interests (b) 0 0 Total Equity (c) = (a) + (b) 22,852,182 26,540,544 Staff termination liabilities 71, ,927 Provisions / Other long-term liabilities 121,898, ,736,313 Short-term loan obligations 0 0 Other short-term liabilities 104,354, ,255,504 Liabilities related to non-current assets held for sale 0 0 Total liabilities (d) 226,324, ,104,744 TOTAL EQUITY AND LIABILITIES (c) + (d) 249,176, ,645,288 9

10 B.B.2. STATEMENT OF COMPREHENSIVE INCOME Turnover - Sales 182,287 2,983,947 Cost of Sales (1,118,146) (3,538,668) Gross Profit/(losses) (935,859) (554,721) 0 Other operating income 134,008 18,426 Other operating expenses (2,070,524) (8,927) Administrative expenses 0 0 Operating Profits / (Losses) (2,872,375) (545,222) Financial income 15, ,634 Other financial results 0 0 Financial expenses (6,226) (4,831) Net Profit / (Loss) of the period before taxes (2,863,398) (425,419) Income tax 0 0 Profit/(loss) of the period net of tax (2,863,398) (425,419) Other comprehensive income for the period net of tax 0 0 Actuarial gains/(losses) from staff compensation provision 47,632 (595) Consolidated comprehensive income for the period (2,815,766) (426,014) B.B.3. STATEMENT OF CHANGES IN EQUITY Total equity at start of period 25,667,947 28,151,778 Period profits / (losses) net of tax (2,863,398) (425,419) Net income recorded directly in equity 47,632 (595) Total equity at end of period 22,852,181 27,725,764 10

11 B.B.4. STATEMENT OF CASH FLOWS Operating activities EBT (from continuing operations) (2,863,398) (425,419) Plus/Minus adjustments for: Depreciation 48,304 57,498 Impairment of intangible and tangible assets 0 0 Changes in pension obligations (9,055) 4,540 Foreign exchange differences 15,599 3,324 Results (income, expenses, profits & losses) from investing activities (15,203) (124,634) Interest charges and related expenses 6,226 4,831 Decrease/ (increase) in receivables 26,941,612 3,561,466 (Decrease) /increase in liabilities (excl. debt) (18,261,681) 67,257,458 Less: Interest charges and related expenses paid (6,226) (4,831) Total inflow/(outflow) from operating activities (a) 5,856,178 70,334,233 Investing Activities Purchase of intangible and tangible assets (12,307) (5,710) Proceeds on sale of intangible and tangible assets 0 0 Interest received 13, ,634 Total inflow/(outflow) from investing activities (b) 1, ,924 Financing Activities Proceeds from increase in share capital 0 0 Total inflows/(outflows) from financial activities ( c ) 0 0 Net increase/ (decrease) in cash and cash equivalents (a)+(b)+(c) 5,857,205 70,453,157 Cash and cash equivalents at the beginning of the period 25,598,708 10,283,365 Cash and cash equivalents at the end of the period 31,455,913 80,736,522 11

12 B.C. FINANCIAL STATEMENTS FOR THE PERIOD 1/7/ /9/2015 (2015 Q3) B.C.1. STATEMENT OF FINANCIAL POSITION ASSETS Property, plant and equipment 182, ,125 Investment Property 0 0 Intangible assets 51,142 89,804 Other non-current assets 123,891, ,767,963 Receivables from customers 65,356, ,348,831 Other current assets 36,884,583 33,168,565 TOTAL ASSETS 226,366, ,645,288 EQUITY AND LIABILITIES Share Capital 30,000,000 30,000,000 Other equity items (7,892,172) (3,459,456) Total equity of company shareholders (a) 22,107,828 26,540,544 Minority interests (b) 0 0 Total Equity (c) = (a) + (b) 22,107,828 26,540,544 Staff termination liabilities 83, ,927 Provisions / Other long-term liabilities 123,860, ,736,313 Short-term loan obligations 0 0 Other short-term liabilities 80,315, ,255,504 Liabilities related to non-current assets held for sale 0 0 Total liabilities (d) 204,258, ,104,744 TOTAL EQUITY AND LIABILITIES (c) + (d) 226,366, ,645,288 12

13 B.C.2. STATEMENT OF COMPREHENSIVE INCOME Turnover - Sales 69, ,851 Cost of Sales (894,222) (1,588,006) Gross Profit/(losses) (824,799) (1,045,155) Other operating income 90,690 73,750 Other operating expenses (10,821) (45,286) Administrative expenses 0 0 Operating Profits / (Losses) (744,930) (1,016,691) Financial income 3,520 74,252 Other financial results 0 0 Financial expenses (2,944) (3,144) Net Profit / (Loss) of the period before taxes (744,354) (945,583) Income tax 0 0 Profit/(loss) of the period net of tax (744,354) (945,583) Other comprehensive income for the period net of tax Actuarial gains/(losses) from staff compensation provision Consolidated comprehensive income for the period (744,354) (945,583) B.C.3. STATEMENT OF CHANGES IN EQUITY Total equity at start of period 22,852,181 27,725,764 Period profits / (losses) net of tax (744,354) (945,583) Net income recorded directly in equity 0 0 Total equity at end of period 22,107,827 26,780,181 13

14 B.C.4. STATEMENT OF CASH FLOWS Operating activities EBT (from continuing operations) (744,354) (945,583) Plus/Minus adjustments for: Depreciation 51,318 41,016 Impairment of intangible and tangible assets 0 0 Changes in pension obligations 11,632 4,739 Foreign exchange differences 3,770 3,222 Results (income, expenses, profits & losses) from investing activities (3,520) (74,252) Interest charges and related expenses 2,944 3,144 Decrease/ (increase) in receivables 8,795,635 8,057,422 (Decrease) /increase in liabilities (excl. debt) (24,650,111) (72,787,507) Less: Interest charges and related expenses paid (2,944) (3,144) Total inflow/(outflow) from operating activities (a) (16,535,630) (65,700,943) Investing Activities Purchase of intangible and tangible assets (2,772) (976) Proceeds on sale of intangible and tangible assets 0 0 Interest received 5,389 74,252 Total inflow/(outflow) from investing activities (b) 2,617 73,276 Financing Activities Proceeds from increase in share capital 0 0 Total inflows/(outflows) from financial activities ( c ) 0 0 Net increase/ (decrease) in cash and cash equivalents (a)+(b)+(c) (16,533,013) (65,627,667) Cash and cash equivalents at the beginning of the period 31,455,913 80,736,522 Cash and cash equivalents at the end of the period 14,922,900 15,108,855 14