Press Release - 21.11.2006

PPC’s consolidated 9M 2006 financial results

PRESS RELEASE
PPC’s CONSOLIDATED 9M 2006 FINANCIAL RESULTS

ATHENS NOVEMBER 21,2006

  • Total Revenues increased by more than 10% and amounted to € 3.58 bil versus € 3.24 bil in 9M 2005.
  • Financial expenses decreased by 9.6% and amounted to € 89.8m, compared to € 99.3m in 9M 2005.
  • Net income for 9M 2006 amounted to € 72.2m, a decrease of 53.4% compared to € 154.8m in 9M 2005, a reduction mainly attributed to exogenous factors.
  • Capital expenditure amounted to € 493m, versus € 534.4m in 9M 2005.

More specifically,

REVENUES

Revenues from energy sales, increased by 10.4%, from € 3,004.6m to € 3,318.5m, as a result of an increase in sales by approximately 6%, of an average electricity tariff adjustment of 3,2% in September 2005 and of a change in the sales mix.

OPERATIONAL EXPENSES

Operational expenses (excluding depreciation) increased by 17.4%, from € 2,508.2m in 9M 2005, to € 2,943.4m in 9M 2006, an increase mainly attributed to the increase in expenditure for liquid fuel, natural gas and energy purchases. More specifically, the rise in liquid fuel and natural gas prices, compared to 9M 2005, resulted in an increase of the corresponding expenditure by € 210.9m. In addition, expenditure for energy purchases marked a significant increase, from € 169.1m in 9M 2005 to € 365.9m in 9M 2006, an increase of 116.4%, due to the sale of larger quantities of electric energy from third parties to the Pool and to the increase of the System Marginal Price. Thus, increased expenditure for liquid fuel, natural gas and energy purchases, were the main reasons that led to a reduction of Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) by 13.5% with respect to 9m 2005, to € 632.5 m given that the electricity tariff adjustment of 3.2% in September 2005 did not cover the negative impact from the sharp rise in fuel prices and in the expenditure for energy purchases. The average tariff increase of 4.8% effective August 1, 2006, did not in effect influence 9M2006 results.

Payroll expenses increased by 7.4% from € 928.4m in 9M 2005, to € 997.5m in 9M 2006. This increase, is attributed to the impact of the new collective agreement retroactive to February 2006, to seniority salary adjustments and to the decrease of payroll capitalized. Total payroll expenses in 9M 2006, amounting to € 997.5m, include an amount of the order of € 6.3m, related to a one off expense, to date, for a limited voluntary retirement scheme for PPC’s cadres.

Based on the actual CO2 emissions during 9M 2006, as well as on the projected generation for the October-December 2006 period, it is estimated that the Company will not incur, during 2006, a deficit of CO2 emission rights. Consequently, 9M 2006 results have not been affected by a relevant expenditure, while the respective expenditure in 9M 2005 amounted to € 69m.

EBITDA margin reached 17.7%, compared to 22.6% in 9M 2005.

FINANCIAL EXPENSES.

Financial expenses decreased to € 89.8m, versus € 99.3m in 9M 2005 (- 9.6%).

Despite the increase in debt to € 3,861.7m from € 3,838.3m at the end of 9M 2005 and the significant increase of lending rates in the european capital markets between 9M 2006 and the corresponding period in 2005, net financial expenses increased by 3%, from € 94.1m to € 96.9m.

PARTICIPATION IN ASSOCIATED COMPANIES.

The share of loss in associated companies decreased to € 4.8m from € 8.3m in 9M 2005 and corresponds to PPC΄s investment in Tellas S.A, the telecommunications company.

The share of profit in associated companies reflects the fact that LARCO, a nickel producing company, in which PPC holds a 28,6% stake, is achieving an improvement of its equity, due, to the significant rise in nickel prices, is kept at € 11,2m as it was recorded in 1H 2006 financial statements. The corresponding magnitude in 9M 2005 was equal to zero.

Headcount, excluding personnel assigned to HTSO, was reduced to 26,529 employees as compared to 27,503 at the end of 9M 2005.

The financial information contained in this statement has been prepared according to International Financial Reporting Standards, formerly International Accounting Standards

Summary Financials (€ mil )

 9M 2006 Unaudited9M 2005 Unaudited
Δ%
Total Revenues 3.575,93.239,410,4%
EBITDA632,5731,2(2)-13,5%
EBITDA Margin17,7%22,6% 
Profit before Taxes & Fin. Expenses189,7339,5(2)-44,1%
Margin5,3%10,5% 
Net Income 72,2154,8(2)-53,4%
EPS (In euro) 0,310,67-53,7%
No of Shares (m.)232232-
Net Debt3.772,33.762,10,3%

Summary Profit & Loss (€ mil)

 9M 2006 Unaudited
9M 2005 Unaudited
Δ%
Total Revenues3.575,93.239,410,4%
- Revenues from energy sales3.318,53.004,610,4%
- Other revenues257,4234,89,6%
Total Operating Expenses (excl. depreciation)2.943,42.508,2 (1)(2)17,4%
- Total Payroll Expenses997,5928,4(1)7,4%
- Total Fuel Expenses 921,8710,929,7%
- Energy Purchases365,9169,1116,4%
- Transmission System Usage216,0200,57,7%
- Other operating expenses442,2499,3(1)(2)11,4%
EBITDA632,5731,2(2)-13,5%
EBITDA Margin17,7%22,6% 
Depreciation and amortization442,8391,713,0%
Profit before Taxes & Fin. Expenses189,7339,5(2)-44,1%
Margin5,3%10,5% 
Financial Expenses 89,899,3 (1)(2)-9,6%
- Net Financial Expenses 96,994,1(2)3,0%
- Foreign Currency Gains / (Losses)7,1(5,2) 
Share of loss in associated companies 4,88,3-42,2%
Share of profit in associated companies11,20,0 
Pre-tax profits106,3231,9(2)-54,2%
Net Income72,2154,8 (2)-53,4%
EPS (in Euro)0,310,67-53,7%

Summary Balance Sheet & Capex (Euro m)

 30.09.2006
Unaudited
30.09.2005
Unaudited
Δ%
Total Assets12.840,712.630,1 (2)1,7%
Net Debt3.772,33.762,10,3%
Total Equity5.169,85.182,9 (2)-0,3%
Capital expenditure493,0534,4-7,7%

(1) Adjusted for comparison purposes.
(2) Adjusted according to the provisions of IFRIC 1.

Μr. D. Maniatakis Public Power Corporation’s Chief Executive Officer, said:

The financial results for the 9 months of 2006 clearly were effected from the considerable rise in the price of fuel and the increase of the expenditure for energy purchases while the increase by 4.8% on the electricity tariff from August 1, 2006 did not have a significant impact on our results.

The management’s main target is to control the expenditure and improve the profitability. In the first 9 months we successfully kept costs in line with the targets set by our cost-reduction and transformation program “Hercules”. Our efforts will continue and intensify.

In line with our 2006-2010 transformation program, we report that:

  • the replacement of old generation plants with new ones is progressing
  • the business plan for PPC Renewables is being formulated to allow PPC to expand into renewable energy
  • investments amounted to around 700 million euros are materialising
  • PPC has formulated with ContourGlobal and EBRD a joint venture as a vehicle for its international expansion
  • new telecom products are launched by TELLAS SA, a 50%-owned subsidiary of PPC,
  • the process for the valuation and development of PPC’s real estate is being completed etc

We remain committed to our shareholders for the complete transformation of PPC into a Dynamic Electricity Company with strong financial results.

For further information, please contact:

George Angelopoulos, Financial Manager, Acting Chief Financial Officer Tel : +30 210 5225346.

The financial data and relevant information on the Interim Financial Statements for 9M2006 shall be published in the Press on November 23, 2006.

The financial data and relevant information on the Interim Financial Statements for 9M 2006 as well as the Interim Financial Statements for 9M 2006 on a stand alone and on a consolidated basis shall be published in the Company’s web site (www.dei.gr) on November 22, 2006 after the closing of the Athens Stock Exchange session.

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