Investor Relations - 10.07.2018



Global and Greek Electricity market trends are affecting PPC's operating environment creating challenges but also opportunities for the Company.
The last 7 years there has been a significant development in Renewables and increased competition from existing companies as well as from new entrants. For the next 10 years the overall themes are expected to be electricity demand growth (due to electrification), actions to improve energy efficiencies, introduction of new techs and decarbonization. Therefore, Utilities in Europe are shifting to Renewables (RES), to Networks and especially to the electricity distribution as well as to new Downstream.
The Greek electricity market is also changing rapidly across the value chain (Lignite plants divestment, retail market opening & introduction of the new target model) whilst the Greek electricity system is expected to be very tight, mainly driven by lignite plants decommissioning.
Within this framework, PPC, with the support of its advisor, has developed its Strategic and Business Plan, which will safeguard its resilience and transform it to a modern and cutting edge utility.

Major Strategic priorities
1. Renewables (RES)
• Increase of RES participation in PPC’s generation mix by approximately 600 MW until 2022, mostly coming from Wind and Solar, given the expected attractiveness versus other sources through a significant ramp-up of the scale, pipeline and capabilities in RES with specific capacity and return targets. Target for a 20%-25% participation of RES in PPC’s total capacity until 2030-2035.

2. Distribution assets
• Focus on operational excellence and investments on distribution assets on regulated and non-regulated activities, given their stable returns.

3. Retail and New Downstream
• Reposition go-to-market strategy for PPC through focusing on retaining high priority customer segments, revising its branding, pricing, expansion of its core activities offering a wider range of energy services and products (e.g., electricity - gas double play, energy efficiency services).
• Intensification of collections and settlements effort in order to address stock and flow of unpaid bills, following both a long term strategy as wells as “quick wins”.

4. Mines & conventional generation
• Launch operational optimization and efficiency program in Mines & Thermal Units.
• Divestment of 930 MW of lignite capacity and associated mines.
• Decommissioning of 1,212 MW by 2021.
• Prudent management of conventional generation units in the non-interconnected islands, and the exploration of possible opportunities to convert existing diesel plans to small scale LNG.

5. Central & Support functions
• Redefine the operating model of support functions and capture synergies on both Company and Group level.
• Examine and address indirect third party expenses.
• PPC’s Real Estate optimization.

6. International Expansion
• Targeted development of new projects in international markets with risk-adjusted returns leveraging PPC’s capabilities and areas of expertise.

7. New Services and Products
• Assess other growth opportunities (e.g. energy services) taking into account required competitiveness and efficiency.

8. Regulatory Agenda (main topics)
• Apart from the strategic priorities set in the Business Plan, certain regulatory issues must be addressed, such as:
o Claim capacity payments for generation units in order to sustain the economically challenging thermal units required for security of supply, given their attractiveness as bridge fuel versus new builds.
o Reduction of electricity suppliers’ charge for RES (ELAPE) and eventually full abolition.
o Abolition of NOME type auctions once lignite divestment is concluded and at the latest by end 2019.
o Target Model: forward market providing necessary tools for hedging.
o Full recovery of Public Service Obligations (PSOs)
For the time horizon 2018-2022, the above strategic priorities are supported by a capex plan in the area of € 3.9 bln, with over 50% being allocated in networks and RES (31% in networks and 22% in RES), 23% to the contracted project for the completion of the construction of the new lignite-fired unit Ptolemais V and 9% for maintenance and environmental capex in conventional generation. By pursuing these priorities and implementing specific actions on an operational and regulatory front, PPC targets an EBITDA level in the range of € 1 - 1.1 bln and a Net Debt/EBITDA ratio in the order of 3x by 2022.

Athens, July 10, 2018

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