ANNUAL ANALYST S PRESENTATION

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Transcription:

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 Western Macedonia Megalopolis Interconnected system Lignite (5,245 MW) Oil/gas (2,331 MW) Hydro (3,060 MW) 11,400 km transmission lines 2,600 400 kv lines 8,800 150 kv lines 206,000 km distribution lines 109,000 km LV 97,000 km MV 7.1 M customers 277 branches 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 (MWh) 8 Belgium France Austria 7 Germany Holland 6 5 UK Denmark Italy Czech Spain Greece Ireland Slovakia Portugal 4 Hungary Source(s): Economist Intelligence Unit 3 Poland Fast-growing Still under-powered 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 6

INTERESTS BEYOND GREEK POWER INCLUDING BALKANS TELECOMS, GAS, RENEWABLES AND REAL ESTATE PPC SA Domestic power and mining 1 Tellas SA 3 Regional power 5 Renewables 12,240 MW installed capacity 11,400 km HV/MV transmission capacity 206,000 km MV/LV distribution capacity 52.6 TWh generated power 50.0 TWh sold power 7.1 M customers Second-largest lignite producer in Europe 68 M tons lignite p.a., enough for ~32 TWh power p.a. Fixed telephony services Internet access services Broadband services For all market segments Residential, small enterprises. large companies, etc. 630 MW Bobov Dol plant (under arbitration in Bulgarian court) Participating in tender for majority stake in lignite plant in Montenegro Wind parks: 41.6 MW in operation Licenses for 109 MW (+ 47 MW pending approval) Small hydro plants: 18.7 MW in operation Licenses for 14.8 MW Photovoltaic systems: 0.3 MW in operation Geothermic plants: Licenses for 8 MW 8.1% share in Greek RES market 2 Real estate 4 Regional mining 6 DEPA 6,800 buildings (1,850 K m 2 ) 413,200,000 m 2 land Participating in tender for majority stake in lignite mine in Montenegro Option to buy 30% of DEPA 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 ( mil.) 1,600 1 2 3 1,400 1,200 196 389 495 Public Service Obligations (PSOs) (2) - Islands 1,000 107 - Other 800 600 400 1,138 1,207 Oil price from $38 to $56/bbl Natural gas from 0.17 to 0.23/ Νm 3 Increased costs of: - lignite -CO 2 emissions - energy purchases 907 200 0 2003 2004 Revenue growth Fuel/energy impact (1) Others 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 2005 10

1 FUEL PRICE INCREASES NOT PASSED TO ELECTRICITY USERS IN GREECE Price increases between January 2004 and January 2006 Increase (%) (3) 80% 73% Industrial tariffs (1) Residential tariffs (2) Increase (%) (3) 30% 70% 25% 24% 60% 50% 20% 17% 17% 40% 30% 20% 10% 0% 33% 32% Average: 24% 17% 13% 12% 7.1% 3% UK SE NL IT AT GE GR ES 15% 10% 5% 0% 10% Average : 11% 8% 4.5% 4% 1% 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 Index 180 Jan-01=100 (1) 160 140 Jan 01 Jan 04 fluctuating fuel prices Jan 04 present steeply-rising fuel prices Heating oil (2) (ex. taxes) Super 95 fuel (retail prices) Change Jan-04 to Jan-06 +57.3% (12xelectricity price growth) +22.5% (5x electricity price growth) 120 Electricity (residential rates) +4.5% 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 15 EU-15 average: 14.3 10-52% 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" utility Profit expectations Monopoly Competition Low energy cost High energy cost Managing technology/ assets Managing change 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 Fuel Investments Payroll costs Tariffs CO2 emissions Inventory Salary levels Service rates Materials Receivables Overtime Market model Maintenance Payables Shifts Third party cost Benefits Other addressable Financial motives Immediate priority: 190 M (implementation) 5 6 7 8 9 10 11 12 Procurement re-organization IT strategy Communications strategy Regulatory strategy Risk management Generation strategy Corporate development strategy International strategy 17

TRANSFORMATION CAN ADD ~ 2.2B CUMULATIVE EBITDA IN NEXT 5 YEARS M 800 2006-2010 additional EBITDA 600 400 200 390 480 580 680 0 40 2006 2007 2008 2009 2010 18

TRANSFORMING DOMESTIC POWER CAN ADD ~ 680M TO 2010 EBITDA M Sources of additional EBITDA (2010) 150 190 680 340 Immediate priority (implementation) Increased revenues Reduced non-personnel costs Reduced personnel costs Total Top-line growth Note: Assumes oil price at $65/bbl Source(s): Business plan model; PPC company information Cost base rationalization 19

CORPORATE DEVELOPMENT OPPORTUNITIES TO BE PURSUED SELECTIVELY International Generation, T&D, commercial Upstream PPC bringing substantial assets to table Many opportunities with clear window of attractive prices and high growth/restructuring potential Attractive opportunities in regional coal/lignite mines Ability to hedge demand/market risk by importing to Greece an advantage Gas PPC owns option to purchase 30% stake in DEPA Domestic Telecoms Renewables Opportunity to capture growth upside Current investments both profitable and fulfill also social-responsibility objectives Real estate Investigating option to establish an independent real estate subsidiary and 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 ΙII. Corporate development 21