Press Release - 18.04.2013

Reduction of efficiency improvement potential of PPC S.A. from € 557 mln in 2006 to € 124 mln in 2012

PRESS  RELEASE



In 2006, a study for the efficiency improvement potential of PPC was assigned to Booz & Co, covering all its activities (Human Resources, Generation, Mines, Supply, Distribution, Transmission). This study was based on the comparison with best international practices and technologies (and not the European average). According to the findings of that study, the efficiency improvement potential of PPC Group compared to best practices amounted to a total of € 744 mln in 2006. 

                                     Basic data of the updated study 2012 

                                                  Change in the improvement potential

Mines                                          reduction of improvement potential by € 274 mln.

Generation                                  reduction of improvement potential by € 139 mln.

Administration                             reduction of improvement potential by € 33 mln.

Supply                                         increase of improvement potential by € 13 mln.

Labour                                         cost reduction of labour cost by 27%, compared to 2006,
                                                   and by 43% compared to 2009


PPC has recently requested from the same company to update said study, based on 2012 data and on the same methodology for comparative reasons. This update led to the following main conclusions:

• Out of the total improvement potential of PPC Group in 2006, amounting to € 744 mln, if one excludes the Distribution and Transmission activities, which have been spun-off and are now independent subsidiaries with regulated activities, the relevant improvement potential for the Parent company as it stands today (competitive activities) amounted to € 557 mln.

• Today, the improvement potential of PPC S.A. has decreased from € 557 mln in 2006 to € 124 mln, which is comparable to best practices of European companies with similar activities. (Chart 1)

• The reduction of the improvement potential is the result of external and structural changes, as well as of the improvement in the efficiency of the Company:
- In the Mines Division, the improvement potential has decreased by € 274 mln with lignite being now highly competitive to hard coal, which had been selected as reference fuel in the initial study.
- In the Generation Division, there was a significant productivity improvement, as well as a decrease in revenues loss due to reduced availability of generation plants. In total, the improvement potential in the Generation Division decreased by € 139 mln compared to 2006.
- In the Supply Division, there was a slight increase in the improvement potential by € 13 mln. The main reason for this increase are the - non controllable from the Company - large increases of postal charges for electricity bills.
- Finally, with respect to Administrative functions, there was also a improvement potential by € 33 mln, due to the reduction of personnel and of labour cost.

• In total, there was significant reduction of labour cost by 27% compared to 2006 and by 43% compared to 2009. Said reduction is mainly attributed to the reduction of personnel and the reduction of average labour cost. (Chart 2).

The abovementioned improvement is particularly important and it has been achieved in a highly challenging external environment. However, the Company continues to be focused in its effort to optimize its operations, having as priorities to further improve productivity, closely monitor collections under current recessionary conditions, manage its human resources, as well as adopt its strategy to regulatory issues in the new environment of the Greek electricity market that is shaping up.

Taking into account the already achieved significant productivity improvement, the long-term sustainability and growth of the Company cannot any longer rely only on internal actions for further streamlining operations, but requires also a regulatory framework which ensures healthy competition with the immediate lifting of distortions burdening, with no reason, the end consumer and the economy. In addition, it requires the improvement of the economic conditions and liquidity, as well as the Company’s ability to retain and attract experienced and skilled personnel, in accordance with corporate practices of similar European companies, which are listed and operate in competitive environment.

In a particularly difficult period for the Greek consumers and the Greek Industry, PPC makes the necessary steps for improving its operations, continues to invest in the country, and remains the only company undertaking the risk of both the wholesale and retail electricity market, providing also public services to the Greek society through the supply of electricity in the islands.



Athens, April 18th, 2013
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