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Transcript of Greek Economy & Markets - Issue 4
07GreekEconomy&Markets
A dream team in entrepreneurialplaying
Two years of PPPs in Greece
An unprecedented show of solidarity
Shopping centers in Athens
4th issue - September 2007
(23.93%*)
4
Themes
The boom of the banking sectorThe dominance of the Greek banks over the Athens StockExchange (page 28)
An unprecedented show of solidaritySummer’s fires triggered a comforting showing of corporatesocial responsibility (pages 30 – 31)
Valuable knowledgeAfter two years the society is ready to embrace the advantages of PPPs (pages 40 – 41)
Shopping centers in Athens New malls have attracted the attention of foreign investors
(pages 44 – 46)
Greek Economy & Markets 07A publication of the “Agora Ideon” forum.
Project manager: BusinessOnMedia118 Kremou str, Kallithea, 17675
Athens, Greece
tel: +30-210.953.3095
fax: +30-210.953.3096
Greek Economy & Markets 07 is also distrib-
uted along with the International Herald Tribune
(IHT) and Kathimerini English Edition newspa-
pers in Greece, Cyprus and Albania. The content
of the magazine does not involve the reporting or
the editorial departments of the IHT.
Cover Story
20 champions: The impressive profitability of the FTSE 20 companies during the first half of the year (pages 9 – 26)
Markets
The FTSE 20 companies (pages 34 – 35)
6 market players with strong organic growth (pages 36 – 38)
Contents
4th issue - September 2007
Interview
Transformation through transition for Emporiki BankCEO A. Crontiras expresses confidence in a dynamic comeback for the Bank (page 29)
5
Facts & figures
In August, the Consumer Price Index of the Greek economy increased by2.5 percent in comparison to August 2006. In the first quarter of 2007,
the average unemployment rate was 9.1 percent. Also, in the firstquarter of 2007, gross domestic product expanded by 4.6 percent
whereas in the second quarter the growth rate decreased to 4.1 percent. According to the OECD’s Economic Outlook 2007, despite the
strong growth rate of the Greek economy and the reduction ofthe public deficit, further action must be taken, mainly, in the
direction of fiscal consolidation. Furthermore, the competition innetwork industries must be fostered and the labor market
rigidities should be reduced to sustain strong economic growth.
Period Value
Consumer Price Index (CPI)1 August 07/August 06 2.5
Harmonized Index of Consumer Prices (HICP)1 August 07/August 06 2.7
Producer Price Index in Industry1 July 07/July 06 1.6
Industrial Production Index (excluding construction)3 July 07/July 06 3.5
Turnover Index in Retail Trade1 June 07/June 06 7.6
Gross Domestic Product (provisional data)1 Q2 2007 4.1
Unemployment Rate2 Q1 2007 9.1
Population (2001 Population Census)4 2001 10,964,020
Building Activity3 June 07/June 06 -7.9
1Annual rate of Change, 2Rate, 3Periodical rate of change, 4Value
Latest Statistical Data
The profile of the Greek economy
6
An effective partner in project financeAn effective partner in project finance
NBG GROUP
National Bank of Greece heads the strongest
financial group in the country and boasts a
dynamic profile internationally, particularly in
Southeastern Europe and the Eastern Mediterranean.
Today, after recent acquisitions, the Group is present
in 12 countries and owns eight banks and 65 companies
in the financial services sector.
The retail network comprises 561
branches in Greece and 939 over-
seas, and constitutes the largest
Greek network for the distribution
of financial products international-
ly. NBG was the only Greek firm
included in the FT Global 500 (list
of the 500 largest firms in the
world), recently published in the
Financial Times.
NBG Group provides a full
range of financial products and
services to corporate clients, including corporate lending,
investment banking services, insurance, asset manage-
ment, brokerage, leasing and factoring. In addition, the
Group has been mandated as arranger and underwriter
for some high-profile infrastructure projects in Greece
and abroad.
The Group currently maintains a leading position in
project finance and Public-Private Partnerships among
Greek financial institutions. NBG is in 25th position in
the ‘Global Advisory Mandates won in 2006’ League
Table and in 23rd position in the
‘Europe, Middle East & Africa
(EMEA) Advisory Mandates won in
2005’ League Table according to
the Project Finance International
Magazine.
The Bank’s services in this
field are provided by a team of
experienced and highly qualified
professionals who have actively
participated in the evolution of
Public-Private Partnership / Pri-
vate Finance Initiative (PPP/PFI)
practice in Greece. The involvement of NBG Group in
project finance dates back to 1994, when NBG was
assigned to advise the Ministry of National Economy on
the evaluation of the offers that had been submitted for
The Group currentlymaintains a leadingposition in projectfinance and public-
private partnershipsamong Greek financial
institutions.
7
Contact: C. Stavridis ñ tel + 30-210.8897.060 ñ e-mail: [email protected] ñ fax + 30-210.8897.100 ñ www.nbg.gr
the design, financing, construction and operation of
the new International Airport in Spata.
The NBG team continued successfully advising
the ministry during the negotiations, the signing of
the concession agreement, the financial close and
finally until the commencement of the airport’s oper-
ation in March 2001.
To date, three more large infrastructure projects
have already been completed on a BOT basis in
Greece, namely the Rio-Antirrio Bridge, the Elefsina-
Stavros-Spata Airport Highway & Western
Hymettus Peripheral Highways (ESSI Highway
or Athens Ring Road) and the Thessaloniki
Submerged Tunnel. In all these projects, the
NBG team has provided its advisory expertise
to the Ministry of Environment, Physical Plan-
ning and Public Works throughout the whole
process, from the invitation for tenders and the
signing of the concession agreements, to their
implementation and the operation of the proj-
ects. Currently, the NBG team is advising the
Greek state on the Greek Highways concession
Project (six Concession schemes), which is one
of the largest highway projects in Europe, to be
implemented on a concession basis, with a
total cost exceeding 8 billion euros. Namely
these schemes are:
ñ Northwestern Axis (Ionia Odos) & PATHE: Athens
- Maliakos / Schimatari - Halkis
ñ PATHE: Maliakos - Kleidi
ñ PATHE: Athens - Corinth - Patras & Southwestern
Axis: Patras - Pyrgos - Tsakona
ñ Corinth - Tripolis - Kalamata
ñ Central Greece Highway
ñ Urban Projects in Attica Region
Moreover, NBG has contributed via its experience
and know-how to the evolution of the new legal
framework for Public-Private Partnerships in Greece
(Act 3389/2005). The new law is expected to facili-
tate significantly the process for the implementation
of projects on a PPP basis and maximize efficiency,
thus strengthening the incentives of all parties
involved. NBG has been appointed jointly with Grant
Thornton as Financial Adviser, along with its legal
and technical partners, to the first two projects that
are putting the law into practice after its enactment
last year and involve the design, construction, finance
and operation of 27 schools in the Attica district and
six buildings of the University of the Peloponnese.
The integrated services offered by the Project
Finance team include:
ñ Formulation of preliminary studies and economic
models;
ñ Review and assessment of the bankability of the
project;
ñ Preparation of tender documents and planning of
project implementation;
ñ Assistance in the preparation of offers for submis-
sion in tenders;
ñ Arrangement of financing;
ñ Negotiation of the economic terms included in
concession agreements and other legal docu-
ments;
ñ Supervision and coordination of the financial clos-
ing;
ñ Support of the contracting authority during the
implementation of the project.
NBG takes a complete view in project finance,
providing clients with well-integrated services both
in project advice and financing. Along with our
advisory services, we provide specialized financing
solutions for PPP/PFI projects at the stage of
structuring a financial deal as well as at the
stage of arranging, participating or manag-
ing medium- to long-term syndicated loans.
This specialized package of products is sup-
plemented by the full spectrum of an inter-
national bank, offering our corporate clients
not only standard products, but also capital
and international banking services. NBG’s
key focus areas regarding involvement in
Project Financing are Infrastructure Pro-
jects, as well as Energy Projects and pri-
mary market of industry projects. The Bank
has participated in the financing of all the
projects that have been implemented in
Greece on a PPP basis, as well as many
other important projects in Greece and abroad
(Romania, Turkey, Kuwait, Germany, the USA and
the United Kingdom). Internationally, the financing
services are facilitated by NBG’s dense network of
units and branches in foreign countries, mainly in
Southeastern Europe.
NBG Group, capitalizing on its unique know-
how, efficiency and financial strength, will seek to
maintain its position as a partner of choice for PPP
and PFI projects, and will further assist in creating
a context for steady growth in this field in Greece
and abroad, especially in the Southeastern Europe
region.
NBG Group, capitalizing on its uniqueknow-how, expertise and efficiency, willseek to maintain its position as a partner
of choice for PPP and PFI projects, andwill further assist in creating a context forsteady growth in this field in Greece and
abroad, especially in the SoutheasternEurope region.
Publi
8
Facts & figures
The impressive profitability almost all Greek banking groups showed, as well as the satisfactory,bordering on spectacular results from the rest of the companies listed in the Athens StockExchange FTSE 20, motivated the increase of the index by 23.93% in the last 12 months.
The FTSE 20 index results
Period Low Price High Price Change %
Last 7 days 2591.71 2687.44 2.38
Last 30 days 2533.82 2687.44 4.38
Last 3 months 2369.48 2734.73 3.84
Last 6 months 2369.48 2734.73 5.00
Last 12 months 2119.47 2734.73
FTSE 20
(23.93*)Source: www.ase.gr
National Bank of Greece 20.912.637.636,00
Alpha Bank 9.972.057.728,88
Eurobank 9.965.068.361,28
OTE 9.080.035.956,23
Piraeus Bank 8.463.859.352,34
Bank of Cyprus 7.017.207.699,84
OPAP 6.225.285.000,00
Marfin Popular Bank 5.760.016.383,72
Coca-Cola HBC 3.452.856.753,82
Cosmote 3.213.909.120,00
Public Power Corporation 2.934.800.000,00
TITAN 2.773.599.758,64
Postal Savings Bank 1.652.367.212,10
Intralot 1.555.392.790,14
Hellenic Petroleum 1.337.459.569,56
Elliniki Technodomiki TEB 1.157.997.021,12
Viohalco 1.127.028.614,15
Emporiki Bank 826.122.760,32
Motor Oil 813.590.205,12
ATE Bank 695.381.332,99(in euros)
The records that the 20 bigger in capitalization Greek
companies have been showing accurately reflect the ever
growing Greek economy. The Greek banks’ profitability during
the first half of this year has been impressive. So impressive,
in fact, that some banks’ board of directors had to re-evaluate
their beginning of the year projections for this year’s profits.
FTSE 20 includes not just the top banks in Greece, but also
telecommunication companies and construction companies.
Their announced first half of the year financial data depict a
robust entrepreneurial activity, which is not contained to
Greece, but has expanded to include Southeastern Europe.
The companies’ expansion beyond the Greek borders
contributes greatly to the annual reports’ positive results and
also to the strengthening of Greek entrepreneurship in Europe
and of the competitiveness of the Greek economy as a whole.
Compiled by Natasa Mastorakou & Dimitris Pappas
10
Cover
In 2007 National Bank of Greece (NBG) became,
according to the FT Global 500 published by the
Financial Times, the first Greek company ever to
be included in the list of the top 500 global com-
panies, holding the 363rd place. The FT Global
500 ranking provides an annual snapshot of the 500
largest companies worldwide in terms of market capi-
talization. According to the same list, NBG has also
been ranked among the strongest banking groups for
2007. On a European level, NBG has been ranked as
the 27th strongest banking group.
NBG was founded in 1841 and has been listed on the
Athens Stock Exchange since 1880. In over 160 years of
successful operation, the Bank has expanded into a mod-
ern diversified financial group that today services its
clients’ constantly growing needs. Until the establishment
of the Bank of Greece in 1928, in addition to its com-
mercial banking services, NBG was also responsible for
issuing currency in Greece, and since October 1999 it
has been listed on the New York Stock Exchange.
The NBG Group provides a full range of financial
products and services that meet the constantly chang-
ing needs of corporate customers and private individu-
als, including investment banking services, brokerage,
insurance, asset management, leasing and factoring.
NBG, present in Bulgaria, Serbia, Romania and Alba-
nia. In 2006 NBG announced the acquisition of a 46
percent stake in Turkey’s Finansbank. Today the
Finansbank network includes 371 branches and over
8,500 employees.
Following this acquisition, the Group’s banking
business both in Greece and the markets of Turkey and
Southeast Europe grew rapidly. In particular the ally
group net profit rose to a record 878 million euros in
H1 2007, up 61 percent from last year. The net profit
from domestic business increased by 35 percent year-
on-year, excluding profits from the sale of the Bank’s
shareholding in AGET Herakles. The contribution of
Finansbank to Group net profit in H1 2007 amounted
to 244 million euros, or 31 percent of total Group prof-
itability. Group subsidiaries operations in SE Europe
posted a 29 percent growth in core profit, which
totaled 76 million euros.
Group interest income stood at 1,443 million euros
in H1 2007 while net interest margin in Q2 2007
attained another record high (4.22 percent compared
with 4.19 percent the previous quarter). Finansbank
was the key contributor to this performance, as its
interest margin remained at 7 percent. The Group’s SE
European subsidiaries also posted substantial growth
in interest margin, reaching 5 percent in Q2 2007.
Retail business in Greece continued to grow at a
brisk pace. Total retail lending in H1 2007 amounted
to 23.2 billion euros, up 20 percent year-on-year. As a
result of this performance, Group net profit in Greece in
H1 2007 grew by a substantial 35 percent y-o-y,
excluding profits from the sale in Q2 of the Bank’s
shareholding in AGET Herakles. Recurring income
stood at 1.2 billion euros compared with 1 billion euros
in H1 2006, with net interest income growing by 21
percent. Total Group expenditure in Greece amounted
to 691 million euros, up 9 percent on an annual basis,
with staff costs totaling 492 million euros (up 15 per-
cent) while administrative expenses remained
unchanged on H1 2006 (161 million euros).
Following completion of the acquisition of Finans-
bank in Turkey and Vojvodjanska Banka in Serbia,
NBG’s strategic priority is to achieve full operational
integration of its overseas subsidiaries. In particular, it
aims to make Finansbank one of the leading banking
groups in Turkey, with a double-digit retail banking
market share and doubling profits by 2009. Further-
more, after a dynamic organic expansion of NBG in the
countries of SE Europe, one of the main goals is to con-
solidate a leadership role in the banking environment in
Southeast Europe, which is developing rapidly with the
rest of Europe. NBG plans to send its shares more than
3 percent higher and the annual profit will grow at
least 30 percent in 2007-2009, meaning its earnings
will exceed the 1-billion-euro threshold this year.
The development of the Group’s new operational
model is rapidly reaching completion. With regard to
the use of new practices in the provision of products
and services, results from the first phase of implemen-
tation are very promising. Likewise, the integration of
IT systems and computer infrastructures across all the
units of SE Europe and the redesign of credit card pro-
cessing are all progressing well.
General priorities of NBG for the years 2007-2009
are, among others, to maintain a robust operational
framework, through best practices in risk manage-
ment, internal control, corporate governance and HR
management.
‘NBG’s excellent performance dur-
ing the past three years (2004-
2006), with profits tripling and
the market capitalization increas-
ing from 8 billion to 21 billion
euros, is a reflection of the
Group’s consistent execution of its
business plan and a validation of
the management’s strategic choic-
es. In this regard, I would like to
point to our withdrawal from
mature markets such as Western
Europe and North America, where
our presence reflected an outdated
business model, concurrently
shifting our emphasis to SE
Europe. NBG currently has more
than half its branches, 52 percent
of its staff and 36 percent of its
earnings coming from SE Europe,
including Turkey. I would like to
underline the addition of Finans-
bank to our Group, a move that
was questioned initially by some
but is now universally regarded as
a clear success, as it entails the
acquisition of Turkey’s most
dynamic bank, in a market which
has been consistently witnessing
solid and fast growth. Regarding
the domestic business, the Group
seeks to maintain brisk growth in
lending, by leveraging up on the
deposit franchise. It is important
to understand that NBG is one of
the few banks worldwide that has
excess liquidity (loans-to-deposit
ratio significantly below 100 per-
cent). This competitive advantage
provides added security, which is
often overlooked until market tur-
bulence strikes, as it has recently,
as well as a tremendous funding
advantage, in addition to cross-
selling opportunities.’
Yiannis Pehlivanidis
Vice Chairman, Deputy CEO
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 12.05% 17.16% 15.30% n.a.(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 0.87 2.19 2.51 1.82(EARNINGS PER SHARE, euros)
SALES (euros) 2,078,652,000 2,491,846,000 3,065,374,911 2,086,000,000Source: P&K Securities
National Bank of Greece1
11
Alpha Bank is continuing its developing course
regarding Southeastern Europe, aiming at sta-
bilizing its foundations for international expan-
sion. Established in 1897, Alpha Bank now
covers the whole spectrum of economic serv-
ices, particularly after the expansion of its activities
into the shipping sector.
With 652 branches in Southeastern Europe, Lon-
don and New York, the Alpha Bank Group aims at the
creation of a powerful organization that will yield
important profits for shareholders and customers.
According to the operational program Agenda 2010,
the growth of the Bank’s work is absolutely aligned
with its objectives for retail banking in Greece as well
as for expansion into Southeastern Europe.
The results for the first half of this year confirmed
the Bank's forecasts, with an increase of 48.4 percent.
The efficiency of funds increased by 30.7 percent
against 28.4 percent in the previous year and the
income indicator stood at 45.9 percent, reflecting high
effectiveness. Pre-tax profits from retail banking in the
first half of 2007 increased by 31.4 percent and credit
loans to households maintained their dynamics despite
the important increase of competition. Increased prof-
itability, as well as the higher rate of growth, allow the
achievement of the objective for an annual increase in
profits by 20 percent from this year onward.
Consumer credit balances reached 3.7 billion
euros, up 25.7 percent, with consumer loans and
credit card balances rising by 33.8 percent and 9.7
percent respectively. Loans to small businesses
(defined as companies with a turnover below 2.5 mil-
lion euros or credit limits up to 1 million euros)
increased by 12.1 percent, as Alpha Bank attracted
over 7,000 new customers during the last 12 months
while loans to very small businesses (those with up to
a 90,000-euro credit limit) rose by 17.4 percent.
In line with its activities in Greece, Alpha Bank
aims to expand its network in Southeastern Europe.
The total income of the H1 period presents an
increase of 16.4 percent, while the income from
Southeastern Europe stands at 29 percent. In the cur-
rent year 35 new shops have been opened in South-
eastern Europe — 305 in total — of which 84 are in
Romania, 58 in Bulgaria, 108 in Serbia, 16 in Alba-
nia, 10 in the Former Yugoslav Republic of Macedonia
and 29 in Cyprus. By the end of the year it is calcu-
lated that 97 shops will be launched in Southeastern
Europe and 45 in Turkey.
Alpha Bank's third investment meeting recently
took place in Bucharest, in which foreigner institu-
tional investors and analysts participated. The choice
of the meeting place underlines Alpha Bank's strategy
to develop its banking activities in Southeastern
Europe, highlighting the importance of Romania for
the successful application of the Group’s operational
growth in the region.
The objective of the meeting was the annual increase
of the Bank’s profits by 20 percent, so that net profits in
2010 exceed 1.3 billions euros. The records of the half-
year period in combination with the prospects of domes-
tic markets, mainly those of SE Europe where the bank
is strengthening its presence, confirm the Bank's esti-
mate for an increase of profitability at least by 20 per-
cent at year-end. Because of the dynamic expansion of
the Bank in the region, increasing activities in a constant
and effective way was judged necessary, but without
undertaking high-risk works.
Given the positive prospects in the fast-growing
Southeastern Europe region, Alpha Bank has decided
to revise upward its investment plans, accelerating the
expansion plans by opening 870 branches, including
100 in Turkey, by 2010.
Regarding Greece, the opening of outlets in regions
of increased interest was announced, due to demo-
graphic developments as well as the reorganization of
the stores network in order to provide specialized serv-
ices to households and small enterprises. In the frame-
work of these statements, the Agenda 2010 was
revised with an increase in the number of shops from
1,200 to 1,300 by 2010 and from 14,500 workers to
17,000. According to the revised plan, by the end of
2010 the bank aims to employ more workers in South-
eastern Europe (9,000) than in Greece (8,000).
The positive developments in the dynamically
developing region of SE Europe have allowed the Bank
to revise its investment plans too, seeking for a rapid
infiltration in the region. Consequently, the objective
for a 10 percent share of the market in the region,
excluding Turkey, with 25 percent of total Group prof-
its by the end of the decade to come from Southeast-
ern Europe, is confirmed.
‘Alpha Bank is implementing an
ambitious plan of organic expan-
sion in Southeastern Europe —
that is targeting a global pres-
ence of about 1,300 branches by
2010, of which two-thirds will
be outside Greece. This is taking
place in an environment of
strong economic growth both in
Greece and Southeastern Europe,
underpinning the transformation
of Alpha Bank into a regional
banking force, delivering top-
quality service and innovative
and competitive products to a
market of more than 60 million
people.
‘Alpha Bank continues to rapidly
increase its business both in
Greece and in Southeastern
Europe, while enjoying strong
profitability. At the end of June
2007, Alpha Bank increased its
loan portfolio in excess of 21
percent, driven by significant
growth in consumer credit and
mortgages in Greece while more
than doubling its lending in the
Balkans, in line with its strategic
objectives. The outlook for 2007
remains very positive leading to
earnings per share rising by more
than 20 percent.’
Demetrios P. Mantzounis
Managing Director
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 19.78% 23.19% 20.18% n.a.(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 1.03 1.25 1.40 1.15(EARNINGS PER SHARE, euros)
SALES (euros) 1,577,159,000 1,688,652,000 1,942,575,000 1,055,309,000Source: P&K Securities
Alpha Bank 2
12
Cover
‘The capital increase of 1,229
million euros, is dictated by the
necessity to further strengthen
our Group strategy. Our strategy
aims to create a strong, interna-
tional financial group with an
active role and a competitive and
successful presence in a wide
geographic region that stretches
from Central Europe to the
Eastern Mediterranean. The capi-
tal to be raised will enhance our
capacity to act on opportunities
emerging in our wider geographic
area. Our region experiences
globalization and rapid growth,
fosters opportunities for those
who are capable and ready to
exploit them. Within this frame-
work, we will continue our
dynamic growth through targeted
acquisitions and faster organic
growth, both in the countries
where we are already present
and in other countries that offer
great growth potential and
opportunities that we can exploit.
We look at the conditions, ana-
lyze the economic conjuncture
and seek the most promising
options in each country, thus
achieving our goals in the best
possible way”.deliver strong prof-
itability.’
Nicholas Nanopoulos CEO
(at the Repeat ExtraordinaryGeneral Meeting)
The EFG Eurobank group was established in
1990 as Euromerchant Bank, aiming at pro-
viding mainly investment services. Today, the
Group commands leading market positions in
all areas of the Greek banking industry and
achieves growth rates above the market average, con-
stantly gaining market shares and new clients. The
Bank enjoys strong market shares in the entire range
of the financial products and services it offers to its
client base. Its targeted client base comprises retail
clients, small and medium-sized enterprises and com-
panies, large corporations, high net worth individuals,
private and institutional investors, etc.
In the wider area of Southeastern and Central
Europe, the EFG Eurobank Group ranks among the top
banks in all countries where it is present, namely Bul-
garia, Romania, Serbia and Montenegro. Moreover,
the group is active in equity brokerage in Turkey while
in 2006 it established a banking presence in Poland,
Turkey and Ukraine. The aim of EFG Eurobank is to
achieve a leading position in a market comprising over
200 million people, by implementing its successful
business model abroad.
The EFG Eurobank Group continued to demon-
strate strong business growth in the first six months of
2007. Consolidated net profit increased by 31 percent
year-on-year and reached 416.7 million euros. Net
profit stemming from international activities of the
whole Group stood at 21.7 million euros, whereas net
profit from the operations in Bulgaria, Romania, Ser-
bia and Turkey quadrupled and amounted to 42 mil-
lion euros, from 9.7 million a year earlier. The expan-
sion of the loan portfolio in ‘New Europe’ was also
substantial in the first six months of the current year,
with total loans climbing by 109 percent on a compa-
rable basis to 6.2 billion euros. At the end of H1
2007, the network of EFG Eurobank in Greece and
abroad reached 1,400 branches, points of sale and
business centers, of which 900 were in New Europe.
Total assets advanced by 28.3 percent y-o-y and
stood at 61.3 billion euros at the end of June 2007,
mainly due to accelerated credit growth. Group total
loans expanded by 33.1 percent and amounted to
40.5 billion euros, with total loans rising by 22 per-
cent in Greece and 109 percent in New Europe. On a
quarterly basis, net loan additions in Greece and New
Europe reached record levels and stood at 1.9 billion
euros and 1.3 billion respectively. In the same quarter
of 2006, net loan additions were 1.3 billion euros in
Greece and 428 millio euros in New Europe.
EFG Eurobank has successfully completed its
share capital increase in cash, in favor of existing
shareholders, at a ratio of two new shares for every 15
shares at 20 euros per share. The overall proceeds
from the share capital increase amount to approxi-
mately 1,229 million euros. In the context of the cap-
ital increase, a total of 61,444,496 new shares of
nominal value 2.75 euros each will be issued, for
which approximately 97.47 percent of shareholders
subscribed. Out of the 1,554,008 unsubscribed new
shares, 754,178 were allocated to employees who
applied for up to 200 remaining new shares each, at
20 euros per share.
The remaining unsubscribed new shares were allo-
cated on a pro-rata basis to shareholders who exer-
cised their over-subscription right. More specifically,
shareholders over-subscribed for 16,410,085 remain-
ing new shares amounting to 328.2 million euros and
will receive 4.87 percent of the shares they subscribed
for, on a pro-rata basis. As a result, the total demand
from employees and shareholders exceeded the
unsubscribed new shares by approximately 11 times.
The success of the capital increase proves the strong
confidence of institutional and individual shareholders
in the development and prospects of EFG Eurobank.
Following its capital enhancement, the EFG
Eurobank Group will accelerate its organic growth and
will continue to expand its presence in countries
where it is already active as well as into new countries
that demonstrate significant development prospects.
The business plan for the years 2007-2009 was
announced in March and after the results of the sec-
ond trimester it extended to 2010 anticipating net
profits of at least 820 million euros in 2007 and 1.55
billion euro in 2010. In SE Europe the goal of 60 mil-
lion euros remains and they anticipate the amount of
550 million euros in 2010, so that it corresponds to
the 35 percent of total profitability of the Group. In
2010, the bank aspires to achieve an indicator of
income cost under 45 percent and efficiency of prop-
er funds higher than 25 percent.
Eurobank
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 17.44% 21.06% 21.66% 55.30%(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 0.76 1.08 1.24 0.87(EARNINGS PER SHARE, euros)
SALES (euros) 1,488,800,000 1,860,900,000 2,233,000,000 1,339,000,000Source: P&K Securities
3
13
Competition in the telecommunications market,
especially in the last 10 years, is a struggle for sur-
vival. The companies must constantly be looking
ahead, using new technologies and tapping new
markets. One of the pre-eminent players in South-
eastern Europe and the leading telecommunications com-
pany in Greece is the Hellenic Telecommunications Orga-
nization (OTE). It went into operation in 1949 and now has
grown into a group of companies offering services across
the telecommunications spectrum. During the past decade
OTE has started operations in six countries of the region
and today employs over 30,000 people.
The main characteristics of OTE’s financial course
are its stability and adaptability to new conditions. This
is reflected in the priorities of the company, which are:
ensuring competitive fixed telephony in Greece focusing
on broadband development; developing mobile telepho-
ny and the internet; restructuring international activities;
and achieving effective financial performance for the
OTE Group.
Recently Hellenic Telecommunications Organization SA
presented its 2007-2009 Business Plan. For the next three
years, the company will focus on consolidating its leading
position in the domestic market, expanding customer-ori-
ented philosophy, providing integrated solutions to all cus-
tomers and attaining profitable new investments.
However, revenues from Greek fixed-line activities are
expected to decline by about 4 to 5 percent per annum,
while total operating expenses should drop about 6 percent
per year. As a result, Greek fixed-line operating income
before depreciation and amortization (OIBDA) is expected
to increase by 0.5 to 1.5 percent per annum over the peri-
od of the plan.
As mentioned previously, survival in the telecommuni-
cations market and profitability should not be taken for
granted and the company should be consistently innovative
regarding its decisions and policies. Such is the case with
new retail packages and services, like the combining of
fixed-line, broadband and mobile telephony. These prod-
ucts and services are expected to further enhance OTE’s
service offerings in telephony as well as broadband.
In the first interim of 2007 total fixed-line operations
decreased by 4.3 percent compared to the same period
last year, reaching 1,318.4 million euros. This decline was
caused by the reduction of income from domestic calls by
5.6 percent (monthly telephone rates, income from fixed-
to-fixed calls and fixed-to-mobile calls) which was com-
pensated partially by the increase in ADSL income and the
deconsolidation of OTE Globe.
OTE’s total operating expenses during the first six
months of the year amounted to 1,171.3 million euros,
down 7 percent compared to same period last year. A
reduction of operating expenses was also evident in the
second quarter of 2007. According to the company’s fig-
ures, total operating expenses amounted to 586.5 million
euros, down 6.0 percent from the Q2 06 level. Payroll and
employee benefits declined by 12.5 percent to 182.9 mil-
lion euros, largely reflecting the positive impact of the vol-
untary retirement program.
In 2007 second-quarter total fixed-line revenues
decreased by 5.1 percent compared to the same period
last year, reaching 657.5 million euros. The decline in
fixed-to-mobile revenues is attributed to lower termina-
tion rates implemented by mobile operators. Other rev-
enues were down 4.4 percent, as the rise in ADSL rev-
enues was offset by reductions in other categories,
notably prepaid cards. The drop in monthly rentals
reflects PSTN line disconnections. As of the end of June
2007, there were approximately 4.7 million PSTN lines
in service, down 2.5 percent from the previous year’s
level. Conversely, the number of ISDN lines rose by 0.4
percent to a total of nearly 1.4 million.
At the end of June, OTE had approximately 675,000
ADSL customers, as compared to nearly 593,000 at the
end of March 2007, with retail customers accounting for
over two-thirds of the total. The drop in OTE’s overall
broadband market share reflects the rapid growth of local
loop unbundling (LLU). Due to the rapid increase in broad-
band penetration and active promotion by OTE as well as
competitors, the company now estimates that the total
Greek ADSL market should exceed 1.05 million by year-
end 2007, with the number of OTE customers passing the
800,000 mark.
Commenting on the quarter results, Panagis Vour-
loumis, chairman and CEO of OTE, noted that the com-
pany’s performance during that period was mixed. ‘OTE
is now feeling the impact of local loop unbundling both
in rental revenues and in our share in broadband expan-
sion. Mobile operations are continuing to gain market
share in all countries and to deliver strong profitability.
We remain moderately optimistic for the second half,
insofar as the continued launch of competitive new prod-
ucts and efforts to reduce our cost base should enable us
to overcome tough market conditions, particularly in the
Greek fixed-line market.’
‘The financial results of the
Group, especially those of the
second quarter of 2007, validate
our cautious business plan. In
the Greek fixed-line market, the
impact of local loop unbundling
and the continuous rise of broad-
band are shaping the revenue
line. Nevertheless and in spite of
the continuing pressure from the
national regulator, OTE’s fixed-
line operations stand on a solid
base and are delivering good
financial performance. The
recent launch of competitive new
products and services, together
with ongoing efforts to reduce
costs, allow us to be moderately
optimistic for the remaining two
quarters of 2007. Meanwhile,
Romtelecom's efforts to retain
customers through improved
quality and broader services are
producing encouraging results,
while mobile operations are con-
tinuing to gain market share in
all countries and to deliver
strong profitability.’
Iordanis Aivazis
Chief Operating Officer
2004 2005 2006 H107
EBIT 614,100,000 962,505,800 1,088,300,000 513,100,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 3.26% 14.55% 16.47% n.a.(RETURN ON EQUITY)
EBITDA 1,681,700,000 2,069,905,800 2,216,800,000 1,084,000,000
EPS 0.24 -0.44 1.17 0.56(EARNINGS PER SHARE, euros)
SALES (euros) 5,219,300,000 5,475,000,000 5,891,300,000 3,059,900,000Source: P&K Securities
OTE4
14
Cover
The main aim of Piraeus Bank’s four-year busi-
ness plan, which was implemented this year, is
to double its volumes by the end of 2010. No
one can call this an unrealistic dream, because
the actions of the company, especially during the
last 15 years, have proved that Piraeus Bank is one of
the most dynamic and active financial organizations in
Greece. After its privatization in 1991, Piraeus Bank has
continued to grow in both size and activities.
Along with its organic growth, Piraeus Bank has
also made a series of strategic moves. These include
the acquisition of Xiosbank and the Hellenic Industri-
al Development Bank (ETBAbank) and the alliance
agreement with ING Group. The milestone of its
expansion strategy in Southeastern Europe and
Eastern Mediterranean markets was 2005, when
Piraeus Bank Group acquired the Bulgarian Eurobank
(renamed Piraeus Bank Bulgaria), the Serbian Atlas
Bank (renamed Piraeus Bank Beograd), and the
Egyptian Commercial Bank (renamed Piraeus Bank
Egypt).
In the middle of September 2007, Piraeus Bank
completed the acquisition of 99.6 percent of the
Ukrainian International Commerce Bank (ICB). The
price of this buy amounted to US$75.3 million. ICB’s
acquisition further enhances Piraeus Bank’s interna-
tional operations by expanding into the promising
Ukrainian market.
Now the Group is present in the USA, the UK,
Albania, Romania, Bulgaria, Serbia and Egypt. At the
end of June 2007, Piraeus Bank Group had a network
of 574 branches and employed 10,227 people.
This summer the procedure of the acquisition of
Olympic Emporikes and Touristikes Epicheriseis SA,
an affiliate of Avis Europe Group Holdings BV in
Greece, was completed. The price for the 100 percent
acquisition of the company’s share capital was 25.5
million euros. Now the total car fleet of the Group
comprises more than 26,000 vehicles.
This is the first year of the Bank’s four-year busi-
ness plan. By the end of 2010, according to Piraeus
Bank Group Chairman Michalis Sallas, the Group aims
to reach assets of 65 billion euros with organic
growth, 52 billion euros in loans and after-tax profit of
1 billion euros. The network is expected to count more
than 900 branches in Greece and abroad, while inter-
national operations are expected to contribute at least
25 percent of the Group’s total profits. Furthermore,
3,000 to 4,000 new job positions are expected to be
created. The Group chairman pointed out that Piraeus
Bank Group’s net profit for 2007, based on first-quar-
ter data and estimates for the full year, will exceed
550 million euros. This includes net profit after
expenses amounting to 153 million euros from the dis-
posal of the Bank of Cyprus stake.
Generally, Piraeus Bank’s increased financial
strength and its strong position in the banking market
have been approved by the upgrade of the long-term
foreign currency deposit rating of the Bank from
Moody’s Investors Service. So the Bank upgraded by
three notches to A1 from Baa1. According to Moody’s,
the largest rating upgrade was for Piraeus Bank (three
notches), reflecting a one-notch upgrade of the Bank’s
BFSR (bank financial strength rating) to C as well as
the very high probability of systematic support given
the Bank’s sizable domestic market share.
Lastly, it cannot be ignored that Piraeus Bank suc-
ceeded in a 1.35-billion-euro share capital increase
last month. Now that the Bank has significantly
enhanced its strength, it can continue the growth of its
operations and volumes at an even faster pace, both in
the domestic and international markets.
The first-half results for 2007 show that profitabil-
ity continued to grow at a high pace and business
growth rates accelerated. Group profit after tax and
minority interests increased by 43 percent to 372.3
million euros compared with 260.6 million in the
same period last year. Core profit increased by 49 per-
cent to 219.0 million euros from 147.1 million in H1
2006. The increase in loans during the last six months
was 4.7 billion euros, almost as high as the loan
increase for the whole of 2006, which was 4.9 billion.
At the end of June, the Group’s total assets increased
by 40 percent to 37,276 million euros compared with
26,645 million in June 2006. Deposits increased by
25 percent on a yearly basis to 20,735 million euros.
Savings and sight deposits posted an annual increase
of 8 percent, while term deposits, repos and retail
bonds grew by 40 percent.
‘Piraeus Bank Group’s business
volumes growth rates accelerated
during the first half of 2007, while
profitability continued to grow at a
high pace, both in Greece and
abroad, thus continuing the suc-
cessful course of the previous
years. In the first half of 2007 the
loan portfolio grew by 37 percent
on an annual basis, while net prof-
it attributable to shareholders
reached 372 million euros, up by
43 percent. These positive devel-
opments led to an upward revision
of our estimate for the full year
2007 both for business volumes
and net earnings.
‘Business volumes, which signifi-
cantly exceeded those contained
in the Group’s business plan, as
well as the favorable prospects
that have emerged for the forth-
coming period, led to the decision
to proceed with a share capital
increase of the Bank by 1.35 bil-
lion euros. Through this share
capital increase, which was suc-
cessfully completed in early
September, achieving an oversub-
scription of 1.8 times, Piraeus
Bank reinforces significantly its
capital base, enabling it to accel-
erate its pace both in the Greek
as well as the foreign markets.’
George Provopoulos
Vice Chairman
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 13.27% 23.17% 22.49% n.a.(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 0.52 1.07 1.63 1.31(EARNINGS PER SHARE, euros)
SALES (euros) 740,618,000 900,826,000 1,224,000,000 809,000,000Source: P&K Securities
Piraeus Bank 5
15
The year of 2007 could be easily characterized
as the year of expansion for Bank of Cyprus. In
March, the Bank started to operate in Romania
with the provision of leasing services and, in
June, the first banking branch became opera-
tional in Bucharest. The Bank is set to establish seven
branches, two business centers, and one corporate
center in Bucharest and two more business
centers/branches will go into operation in other major
cities.
In the same period the Bank of Cyprus acquired
the relevant banking license from the Russian central
bank for the provision of banking services in the coun-
try. The Bank is the holding company of the Bank of
Cyprus Group and was founded in 1899. Today the
Group offers a wide range of financial products and
services, which include banking services in Cyprus,
Greece, the United Kingdom, Australia, Romania,
Russia and the Channel Islands, and finance, leasing,
factoring, brokerage, fund management, investment
banking, general and life insurance services in Cyprus
and Greece. The Bank has been operating in Greece
since 1991, and has a network of 123 branches.
This is not only a year of network growth, but also
one of economic growth. The Bank characterizes the
profits increase as ‘spectacular’ and the growth of
operations as ‘dynamic.’ ‘The spectacular growth of
the Group’s operations continued during the second
quarter of 2007. In addition to the strengthening of its
leading presence in the domestic market and its
expansion in the Greek market, the Group is dynami-
cally expanding in markets with attractive growth
potential and solid macroeconomic fundamentals. The
commencement of operations in Russia is a major pil-
lar for the achievement of the Group’s strategy. Bank
of Cyprus is the first Greek banking group to enter the
Russian market,’ Chairman of the Board of Directors
Eleftherios Ioannou said.
His comments were based on the increase by 58
percent of Group profit after tax for the first half of
2007 to 230 million euros. There was a significant
improvement in all of the Group’s performance indica-
tors during the first six months, with return on equity
increasing to 27.7 percent and the cost-to-income
ratio improving to 43 percent. The fast growth rate of
the Group’s business in all the geographic markets in
which it operates and the positive development of its
insurance operations contributed to this improvement.
The quality of the loan portfolio has improved fur-
ther and the ratio of non-performing loans to total loans
has improved from 8.1 percent on June 30, 2006 to
4.6 percent on June 30, 2007. This development is
the result of efficient management of credit risk,
achieved though the revised procedures and systems
which have been implemented in the last two years.
The profitability of the Greek operations also regis-
tered a substantial increase in H1 2007 with profit
after tax increasing by 83 percent to reach 51 million
euros and the return on equity increasing to 19.5 per-
cent from 13 percent in H1 2006.
Also very significant is the annual rate of increase in
the Group’s loans in Greece which reached 23 percent,
a higher growth rate than the corresponding rate for the
Greek banking system. The Group’s Greek loan portfolio
reached 7.27 billion euros at June 30, 2007 and the
market share stood at 3.7 percent in April 2007. Group
deposits in Greece increased at an annual rate of 19
percent, reaching 8.10 billion euros. At the end of April
2007 (latest available data) the Group’s market share in
deposits in Greece stood at 3.7 percent.
The Group expects that its profit after tax for the full
year 2007 will be higher than the target of 415 million
euros which was announced early this year. This is one
of the strategic priorities which the Bank of Cyprus
Group has set for the three-year plan to December
2009. Further expansion of the Group’s presence has
been scheduled in the Greek banking market in light of
the strong macroeconomic fundamentals and the per-
sisting low banking penetration of the Greek market rel-
ative to the eurozone. To this end, the Group plans the
expansion of the branch network to 190 branches by
2009, with particular emphasis on the Athens metro-
politan area and other urban centers.
The basic targets of the three-year plan are: annual
growth rate of profit after tax of at least 25 percent,
increase of return on equity to greater than 25 percent,
reduction of cost-to-income ratio to 40 percent, annual
growth rate of loans of at least 20 percent, and reduc-
tion of non-performing loans ratio to less than 4 percent.
‘Bank of Cyprus is a compelling
growth story in Cyprus and
Greece, together with its attrac-
tive expansion plan in SEE.
During 2007 the Group strength-
ened its leading presence in the
domestic market and continues
to gain market share. Bank of
Cyprus is the largest Cypriot
bank with a market share of
32.0 percent in deposits and
28.3 percent in loans.
International business banking
has become a core part of its
business mix benefiting from its
low corporate tax rate and
advantageous tax treaties with
ex-CIS countries. Bank of
Cyprus, with an unblemished,
high-integrity reputation of more
than 100 years’ banking pres-
ence, remains the key player
with a market share of more
than 40 percent.
‘In Greece, the Group continued
its dynamic expansion with a
branch network today of 123
branches.
‘The commencement of opera-
tions in Russia and Romania in
2007 is a very important step in
the further longer-term growth of
the Group both in terms of size
and profitability.
‘The results of H1 2007 well
exceeded analyst consensus
recording a record-high return on
equity of 27.7 percent. On
September 13, 2007 the Group
revised their specific profit target
for the full year 2007 upward.
They expect profit for the full
year to clearly exceed 415 mil-
lion euros.’
John Kypri
Group Chief General Manager
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 7.11% 10.98% 22.00% n.a.(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 0.14 0.27 0.58 0.42(EARNINGS PER SHARE, euros)
SALES (euros) 630,000,000 725,081,287 918,000,000 538,000,000Source: P&K Securities
Bank of Cyprus 6
16
Cover
The strong increased profitability during the first
half of the year satisfied the management of
OPAP. One of the biggest betting firms in
Europe succeeded in increasing the net profit
for the first half of 2007 by 25.1 percent to
285 million euros compared to 228 million in the
same period last year. The result beat analyst consen-
sus forecasts of a 14 percent rise to 261 million euros.
OPAP’s revenues for the period grew to 2,375.3 mil-
lion euros, up by 3.7 percent, primarily due to Kino’s
very strong performance throughout the period, which
more than offset a reduction in Stoichima’s revenues
in the second quarter of 2007 as compared to Q2
2006, which at the time was particularly strong fol-
lowing the 2006 World Cup.
EBITDA for the period amounted to 396.9 million
euros, an increase of 20.6 percent compared to the
same period in 2006 due to reduced costs following
the expiration of the contract with Intralot.
The EBITDA margin also increased to 16.7 percent
from 14.4 percent in H1 2006 despite increased pay-
outs to Stoichima winners during the second quarter of
the period. The upward trajectory of profits continued
in the second quarter and EBITDA increased by 32.2
percent (201.1 million euros). Net profit for Q2 2007
amounted to 141.9 million euros, an increase of 34.5
percent.
Total revenues increased by 3.7 percent to 2,375.3
million euros in H1 2007 from 2,289.8 million in H1
2006. Sports betting revenues for this period
decreased by 15.9 percent as a result of the lack, as
the company announced, of the strong additional
income that had been generated during the World Cup.
Sports betting games (Stoichima, Propo, Propo-
goal) represented 43.5 percent of OPAP’s total rev-
enues compared to 53.6 percent last year. Revenues
from numerical games (Kino, Joker, Lotto, Proto,
Super3, Extra3) in H1 2007 increased by 26.4 per-
cent, reaching 1,342.1 million euros from 1,062.1
million in H1 2006. Numerical games represented
56.5 percent of the company’s total revenues in H1
2007. Only the revenues from Super3 and Extra5
decreased, by 7.7 percent and 16.6 percent respec-
tively.
OPAP’s largest cost item relates to the payouts to
lottery and betting winners, which in H1 2007
increased by 6.0 percent to 1,629.2 million euros.
Overall payouts as a percentage of operating revenues
increased to 68.6 percent from 67.1 percent in H1
2006, primarily due to: a) the higher payout in Sto-
ichima, which increased to 71.5 percent from 68.3
percent in H1 2006, and b) the increased contribution
of Kino in the company’s revenue mix. Reflecting the
abovementioned factors, profit from operational activ-
ities increased by 18 percent to 374.2 million euros,
while an increase of 26.9 percent to 185.3 million
was recorded in Q2 2007.
‘We are pleased with the particularly strong
increased profitability during the first half of 2007.
The ongoing strong performance of our two major
games, Stoichima and Kino, together with the addi-
tional operational capabilities that were recently
ensured, both in terms of technological infrastructure
and supporting services, allow us to be optimistic
about our future operational performance,’ OPAP CEO
Basile Neiadas noted at the presentation of the inter-
im results.
OPAP has reached a new 96.5-million-euro agree-
ment with the lottery systems provider Intralot. ‘Under
the deal, OPAP will secure a total of 29,400 terminals
of new technology, the continuous transfer of know-
how and the training of its personnel in the operation
and management of its system,’ OPAP reported.
Intralot will also upgrade the lottery's data center
hardware and software under the three-year deal,
which also provides for support services and new bet-
ting options for OPAP’s flagship sports betting game
Stoichima.
OPAP said the agreement will help the firm offer
new services through its 5,400 agents, such as the
payment of utility bills and ticket selling. The previous
65-million-euro agreement with Intralot ended last
July and analysts said it was important for OPAP to
secure more terminals and upgraded hardware for its
future growth and the smooth operation of its games.
It should be added that OPAP, 34 percent state-
owned, has exclusive rights to organize sports betting
and lotteries in Greece until 2020.
In recent months institutional investors have been
examining the company’s international expansion.
Their proposals to OPAP include consultancy for Kino
and participation in European numerical games. As
the company said, decisions will made in the follow-
ing months.
‘The gaming and lottery company
OPAP is positioned as the mar-
ket leader in the Greek gaming
industry. Its operations have a
significant impact on the public’s
gaming activities and are carried
out in a socially responsible
manner that reflects the Hellenic
Republic’s public interest objec-
tives relating to the gaming and
wagering industry.
‘To this end, OPAP has split its
marketing strategy between
sponsorship of sports and cultur-
al activities and selective adver-
tising and promotional activities.
OPAP believes that this will
enhance trust in its brand while
directing the public’s gaming
activity away from the illegal
sector.
‘OPAP has recently announced
an important three-year agree-
ment, which underlines the man-
agement’s efforts for reinforce-
ment of the operational capabili-
ties of the company. The new
added-value services that OPAP
will obtain, such as new termi-
nals of different types, new bet-
ting features and the application
of new technology, ensure con-
stant and continuing customer
satisfaction.
‘OPAP also intends to diversify
its operations by capitalizing on
the strength of its online net-
work, by providing commercial
services to the public in addition
to those related to gaming.’
Basile Neiadas
Chief Executive Officer
2004 2005 2006 H107
EBIT 629,824,000 690,225,000 712,600,000 374,000,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 254.20% 253.80% 273.85% n.a.(RETURN ON EQUITY)
EBITDA 658,890,000 713,639,000 738,200,000 397,000,000
EPS 1.59 1.44 1.60 0.89(EARNINGS PER SHARE, euros)
SALES (euros) 3,177,208,000 3,695,243,000 4,633,400,000 2,375,000,000Source: P&K Securities
OPAP7
17
Consolidating of the three modern and dynamic
banks Egnatia, Laiki and Marfin sets new stan-
dards in the Greek banking market with the cre-
ation of a new powerful bank, Marfin Egnatia
Bank. The bank is the 95 percent-owned Greek
subsidiary of Marfin Popular Bank. Marfin Egnatia has
advanced technological infrastructures, an extended
and ever-growing branch network, and highly trained
officers to cater for any banking needs and provide inno-
vative products and services to customers. Its goal is to
provide continuous support to its customers by provid-
ing integrated services that cover all banking needs. The
extended network of 150 branches and more than 180
ATMs, and the Marfin Direct electronic and phone serv-
ices ensure fast, integrated and immediate customer
service.
On August 29, 2007, Marfin Popular Bank
announced its financial results for the third time. The
very high growth was the perfect encouragement for
the future. Specifically, operating income rose by 135
percent to 590 million euros on June 30, 2007 from
250.9 million euros for the corresponding period last
year. Net interest income increased by 103 percent to
333.6 million euros mainly stemming from the strong
volume growth in Greece and Cyprus and to a lesser
extent the recoveries of previously suspended interest
resulting from the continuous efforts to improve the
collection of interest in arrears in Cyprus. The financial
and other income of the Group was also boosted by
the good performance of the capital markets and the
insurance division of the Group, as well as from the
sale of the stakes in Hellenic Bank and Universal Life
(profit of 50.4 million euros).
The growth rate of operating expenses was 76 per-
cent in the six months ending June 30, 2007 and the
costs of the Marfin Egnatia Groups are now included
in the Group results. Expenses in Cyprus rose by 9
percent. Staff costs grew by 10 percent on the back of
the existing collective agreements and new staff
recruitments from the beginning of the year. Other
operating expenses grew by 8 percent, mainly due to
the expansion of business. The Group’s cost-to-income
ratio dropped to 39.9 percent compared to 53 percent
reported in the first six months of 2006.
The dynamic created from the integration of the
three Groups is much stronger than originally antici-
pated. The revenue and cost synergies have already
started to materialize and it can foresee an accelerat-
ed asset and revenue growth coupled with a contain-
ment of costs and a continuous improvement in asset
quality. These dynamics are present in all the high-
growth geographical areas that the Group operates
making the future profitability prospects of the Group
extremely positive.
Marfin Popular Bank
The Coca-Cola Hellenic Bottling Company (CCHBC) is the largest Coca-Cola bot-
tler in Europe. It operates in 28 countries serving a population of 540 million and
manages to balance a stable source of revenues and cash flows with significant
growth opportunities. CCHBC group the countires into three segments. The coun-
tries included in each segment share similar levels of political and economic sta-
bility and development regulatory environments, growth opportunities, customers and
distribution infrastructures. CCHBC is listed on the Athens Exchange, with a secondary
listing on the London and Australian stock exchanges.
During the year ending December 31, 2006, the company made acquisitions in Serbia,
Italy and Hungary. In September 2007, it completed the acquisition of 100 percent of Aqua-
vision, a production facility in Russia. The plant is located in close proximity to Moscow, the
largest consumer market in Russia. The new site provides CCHBC with immediate incre-
mental installed production capacity, as well as available space for the future installation of
additional lines. The total net consideration for the transaction is 191.5 million euros.
On August 9, 2007, CCHBC announced the results for the six months ending June 29,
2007. According to the results, CCHBC delivered solid growth, driven by strong organic vol-
ume growth, effective revenue growth management and ongoing operation cost efficiencies.
These factors, combined with the benefit of improved operating leverage, contributed to high-
er operating margins versus the year-earlier period. In more detail, the net profit reached 222
million euros, 16 percent above the prior year, and the solid progress in operating profit to
331 million euros, 19 percent above the prior year. Also the volume run to 970 million unit
cases, 16 percent above 2006.
Finally, the company’s innovation plans are being successfully rolled out. Results in
the three strategic initiatives, route to market, customer-centric capabilities and work-
ing capital management are
driving continuous improve-
ments to further strengthen
for the company. The finan-
cial target for the end of
2007 is: volume growth of
11-13 percent and EBIT
growth of 18-20 percent.
The effective tax rate for the
full year 2007 is expected to
be approximately 22 percent
and the net capital to be 525
million euros.
Coca-Cola HBC
‘We are pleased to report another strong quarter of robust volume growth and
operating margin expansion, despite higher raw material costs and additional
investment in our sales capabilities in the established markets. Based on the
strong momentum we have seen in the first half of the year, we are confident
in our prospects for the balance of the year and, accordingly, are raising our
full-year guidance. The second quarter also marked improved and sustainable
margin expansion in the developing markets, continued strong profitability in
Bulgaria and Romania post EU accession as well as further investments in
Russian production capacity to further extend our market leadership in this
high-growth market.’
Doros Constantinou
Managing Director
2004 2005 2006 H107
EBIT 435,200,000 501,200,000 576,300,000 331,100,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 13.12% 14.73% 15.25% n.a.(RETURN ON EQUITY)
EBITDA 726,000,000 812,800,000 905,400,000 483,800,000
EPS 1.07 1.34 1.58 0.91(EARNINGS PER SHARE, euros)
SALES (euros) 4,247,500,000 4,780,300,000 5,616,300,000 3,099,900,000Source: P&K Securities
8 9
18
Cover
As clearly illustrated by its per-
formance, be it operational or
financial, Cosmote continues to
deliver superior growth through-
out its presence. With Group
subscribers reaching 13.1 mil-
lion in a market of approximately
46 million people, Cosmote is
well on track to meet its ambi-
tious target of more than 15 mil-
lion subscribers by 2009. Our
operations are expanding at rates
significantly faster than the mar-
kets they are present in, leading
to overall Group growth rates
well in excess of the sector. At
the same time, the Germanos
acquisition, which has led to
very strong subscriber additions
proves, quarter by quarter, the
value it brings to the company
and the effectiveness of our
strategic decisions.
Cosmote is on a path of dynamic
growth, widely acknowledged by
both investors and consumers.
We are committed to continue
delivering on our targets, improv-
ing our performance and creating
further added value for all our
stakeholders.
Cosmote sets and meets high
goals, aiming at constant growth
and corporate innovation.
Cosmote Group
Cosmote
Having delivered superior growth in a very short
period of time, Cosmote could be considered a
model company. Although it started commer-
cial operations five years after its competitors
(1998), it managed, within only three-and-a-
half years, to conquer and still maintain the leading posi-
tion in the Greek mobile market. Today, Cosmote is one
of the major telecom players in Southeast Europe, having
extended its presence to four countries in the region:
Albania, Bulgaria, the Former Yugoslav Republic of
Macedonia (FYROM) and Romania.
The company continually strives to strengthen the rela-
tionship with its customers, responding to their needs and
providing high-quality communications services that exceed
expectations. Since 2006, when it acquired the retailer
Germanos, subscriber generation figures have gained new
momentum, giving Cosmote an even stronger potential for
future growth.
Cosmote trades on the Athens and London stock
exchanges with approximately 66.8 percent of shares
owned by OTE SA.
The company continues to deliver superior growth, as a
result of strengthening operations and the Group’s unique
distribution capabilities. Consolidated revenue growth for
the first half of 2007 reached 37.5 percent and 14 percent
excluding the Germanos impact. In Greece, Cosmote’s per-
formance exceeded the rate of market growth significantly,
in terms of both subscriber additions and revenue growth.
An important part of the growth has come as a result of the
firm’s performance in Southeast Europe and especially in
Romania, where Cosmote continues its strong perform-
ance, getting the highest share of net additions in the coun-
try for the third quarter in a row and improving significant-
ly its financial results. But the key to the Group’s growth in
all regions is Germanos, having more than doubled its net
additions to Cosmote in both Q1 and Q2 2007 compared
to the respective periods in 2006.
In more detail, consolidated revenues for H1 increased
by 37.5 percent (1,426 million euros) and Group EBITDA
(earnings before depreciation, net financial expenses and
other non-operating expenses and revenues, tax and minor-
ity interests) increased by 17.5 percent (463.6 million
euros) the Group net income amounted to 176.3 million
euros marking a rise of 12.5 percent. Total subscribers
added in all markets in H1 reached 1.9 million customers.
Overall, the Cosmote Group’s customer base reached 13.1
million, a 39.4 percent increase compared to year-ago lev-
els and well on target to exceed 15 million by 2009.
In Greece Cosmote had a strong H1 performance with
a 5.6 percent increase of revenue. This result is particular-
ly encouraging as it was achieved in a period of significant
termination rate decline and a fiercely competitive environ-
ment. Cosmote’s subsidiary in Albania, AMC achieved a ca.
19.1 percent increase of net income (25.9 million euros)
and in Bulgaria GLOBUL increased its income by 59.3 per-
cent. Cosmote Romania is continuing on the successful
course set in Q1, having captured the majority of market
net additions with 990,862 net new subscribers in H1
2007, of which 357,442 came in Q2 2007. The total cus-
tomer base has reached 2.22 million, corresponding to an
estimated market share of ca. 11 percent.
Germanos has been the key driving force for the
Group's growth. During Q2, Germanos contributed over
half a million customers to the Group, bringing the total
during H1 to ca. 1.04 million. This performance has
been critical to gaining the market share in Romania,
becoming an ever closer challenger in Bulgaria and
expanding the leading position in Greece.
One year after the strategic agreement and nine
months after consolidation, the Germanos acquisition is
proving its rationale and performing well in excess of ini-
tial expectations:
During the past 12 months, Germanos has added 1.8
million customers, resulting in Cosmote having the lead in
net customer additions in the four countries of joint opera-
tion almost uninterruptedly throughout the past three quar-
ters. The number of Group total net additions through Ger-
manos has more than doubled, from just over 200,000 in
Q2 06, to over 500,000 in Q2 07, accounting for 63 per-
cent of Group net additions in Q2 2007, compared to 38
percent a year ago. Particular emphasis has been placed on
post-paid customer additions: Compared to H1 2006, in
H1 2007, net post-paid customers through Germanos in
Greece have increased by 132 percent, in Romania by 443
percent, in Bulgaria by 181 percent and in FYROM by 64
percent. This success indicates that Germanos, despite the
change in its operational model has maintained its cus-
tomer acquisition capabilities unaltered.
By 2009, Cosmote aims at exceeding 15 million cus-
tomers, with Germanos as the main driver of this growth.
With a comprehensive plan that projects approximately
800 own-branded stores by the end of 2007 and a total of
over 1,000 shops within the Germanos network in South-
east Europe, Germanos is expected to significantly enhance
Cosmote’s momentum.
The company’s goal is to sustain its position among the
most profitable mobile operators in Europe.
2004 2005 2006 H107
EBIT 486,375,000 525,344,000 557,558,000 291,291,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 33.62% 41.78% 58.08% n.a.(RETURN ON EQUITY)
EBITDA 674,533,000 754,535,000 876,208,000 463,559,000
EPS 0.91 1.02 1.08 0.53(EARNINGS PER SHARE, euros)
SALES (euros) 1,587,775,000 1,797,608,000 2,382,349,000 1,425,997,000Source: P&K Securities
10
20
Cover
Public Power Corporation is the largest electricity generator in Greece. It was
established in 1950 and incorporated as a societe anonyme on January 1,
2001. Until January 2001, PPC was wholly owned by the Hellenic Republic.
In December 2001, following an increase of share capital and an offering of
existing shares held by the Hellenic Republic, PPC’s shares were listed on the
Athens Exchange. The Hellenic Republic further reduced its stake in PPC through sec-
ondary offerings in December 2002 and October 2003 and now holds 51.12 percent
of the company’s share capital. In 2001, the Company, as part of its transformation
into a commercial entity capable of competing in a liberalized market, adopted an
organizational structure which more closely reflects the Company’s core business
operations.
On August 28, 2007, PPC announced the financial results of the first half of 2007.
According to the results, the total revenues amounted to 2.47 billion euros versus 2.33
billion in H1 2006, an increase of 6 percent. Very low snow and rainfall levels during
the past winter caused a sharp decrease in hydro generation by approximately 64 per-
cent in H1 2007, compared to H1 2006, resulting in a 157 million euros in expendi-
ture for substitute fuels. Other operating expenses, including lignite operating expens-
es, amounted to 268.5 million euros, from 315.6 million in H1 2006, a decrease of
One of the few Greek companies whose name fully matches its lengthy business
activities both in Greece and abroad is the Titan Cement Company. Titan, the
sole Greek-owned cement maker, has ranked high among the country’s 10
largest industries since its foundation in 1902. A firm grasp of market needs,
combined with state-of-the-art technology, have established the company as a
strong presence in building materials in Greece and abroad. Titan is traditionally a people-
oriented company and in recent years the focus has been on the concept of corporate
social responsibility. As a result of the above, Titan was named Leading Company of
Greece in 2006, chosen from among 206 businesses.
Titan Group incorporates 40 companies and the annual cement production capacity is
estimated at 15 million tons. The Group owns 11 cement production facilities: four in
Greece, two in the USA (Virginia, Florida), three in Southeastern Europe (Bulgaria, Serbia
and the Former Yugoslav Republic of Macedonia) and two in the Middle East (Egypt).
Recently Titan signed a contract for the construction of a new cement plant in Alba-
nia, which is expected to be operational by December 2009. The expansionary policy of
the company had already started early in the year, when Titan America LLC purchased
the outstanding shares of Mechanicsville Concrere Inc.
Titan Group’s turnover for 2006 totaled 1,568 million euros, a 17 percent increase
compared to 2005. Net profit for the Group, after minority interests and taxes, reached
259 million euros, up by 23 percent year-on-year.
For the first six months of 2007 the Group’s turnover had a marginal decrease of 1
percent (757.3 million euros); nevertheless EBITDA grew by 3 percent to 221.8 million
The Greek Postal Savings Bank has been active in banking for over a century and is swift-
ly modernizing. With 1,219 members of staff, the Bank has a branch network spread
throughout Greece, including 138 branches, and is allied with 820 collaborating Hel-
lenic Post Offices and a dynamically evolving ATM network. The bank has a very wide
client base with 2.8 million active accounts, and at the end of the third quarter of 2006
it had assets of 13.27 billion euros and equity amounting to 856.18 million.
Postal Savings Bank continued during the second quarter of 2007 with successful growth
by increasing both the basic balance sheet figures as well as its results. In parallel, it further
expanded its market share in retail banking.
The continuously successful materialization of the main strategy for the restructuring of the
Bank’s assets and for the reinforcement of recurring revenue sources, in conjunction with the
successful offering of a further 20 percent of shares from the main shareholder, the Greek
state, create a clear dynamic of acceleration of the management’s planning, particularly in the
fields of strategic synergies development, more efficient operating cost control, further quali-
tative systems and human resources upgrade, stronger reinforcement of corporate identity,
activity in new business sectors and ultimately more effective management for the accom-
plishment of the targeted transformation and market share.
Public Power Corporation
Titan
Postal Savings Bank
11
12
13
21
approximately 15 percent. EBITDA was 456.4 million
euros, compared to 475.8 million in H1 2006, a
decrease of 4.1 percent and net income for H1 2007
amounted to 99.4 million euros, compared to 95.3 mil-
lion in H1 2006, an increase of 4.3 percent.
The share of profits in associated companies of 11.5
million euros corresponds to the fact that LARCO, in
which PPC holds a 28.6 percent stake, is improving its
profitability. The share of loss in associated companies of
0.2 million euros, corresponds to SENCAP SA — PPC’s
joint venture with Contour Global — while the amount of
2.5 million euros loss in H1 2006 corresponds to PPC’s
investment in Tellas SA, the telecommunications compa-
ny. Dr Takis Athanasopoulos, PPC’s chairman and CEO,
comments, ‘In the second quarter of 2007, despite the
severe hydro conditions and high system marginal
prices, we were able to come in with a better perform-
ance than the corresponding period one year before.
‘However, it appears that these negative factors will
remain with us for the rest of the year, and coupled with
the very high temperatures and catastrophic fires that we
experienced this summer, are challenging our ability to
keep up this pace.’
2004 2005 2006 H107
EBIT 655,000,000 337,000,000 163,000,000 169,000,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 7.61% 2.77% 0.43% 0.43%(RETURN ON EQUITY)
EBITDA 1,210,000,000 900,000,000 740,000,000 450,000,000
EPS 1.26 0.56 0.09 0.26(EARNINGS PER SHARE, euros)
SALES (euros) 4,095,000,000 4,307,000,000 4,788,000,000 4,788,000,000Source: P&K Securities
‘In the second quarter of 2007,
despite the severe hydro conditions
and high system marginal prices,
we were able to come in with a
better performance than the corre-
sponding period a year before.
However, it appears that these neg-
ative factors will remain with us for
the rest of the year, and coupled
with the very high temperatures
and catastrophic fires that we expe-
rienced this summer, are challeng-
ing our ability to keep this pace.’
Dr Takis Athanasopoulos
Chairman and Chief Executive Officer
euros and net profit for the Group — after minority inter-
ests and taxes — reached 124.6 million euros, up by 4
percent compared to the same period last year. Results
were affected by currency movements, especially the
weakening of the US dollar against the euro. At constant
exchange rates, Group turnover would have increased by
2 percent and EBITDA by 5 percent.
The contribution of the USA to the Group's operating
results declined by 27 percent in USD terms, despite the
positive contribution of recent acquisitions. The pronounced
weakness in the US housing market continued to affect sales
volumes across all lines of products. The decline has been
harsher in the previously buoyant Florida market.
In Greece, following a strong first quarter character-
ized by an unusually mild winter, demand during the
second quarter receded slightly from recent record levels,
especially in Athens and Thessaloniki. Solid fuel prices
reached unprecendented levels, although their effect was
partially mitigated by continuous investment in improv-
ing energy efficiency.
Southeastern Europe was the fastest-growing region
during the first half of the year, with strong volume
growth in all markets. In Egypt, profitability declined by
almost 17 percent. For the remainder of 2007, the com-
pany anticipates that demand in Greece will be below
last year's high levels, despite the increase in public
works consumption. Demand is expected to continue to
grow in Southeastern Europe and Egypt. In the USA, the
depth and duration of the slowdown in construction
activity remain unknown.
2004 2005 2006 H107
EBIT 255,000,000 317,200,000 400,200,000 176,359,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 29.97% 26.70% 25.88% n.a.(RETURN ON EQUITY)
EBITDA 319,000,000 389,200,000 480,700,000 221,800,000
EPS 2.11 2.50 3.07 1.48(EARNINGS PER SHARE, euros)
SALES (euros) 1,142,000,000 1,342,000,000 1,568,109,000 757,300,000Source: P&K Securities
The results after taxes in the financial statements of the
first half of 2007 are particularly positive and increased by
25.03 percent compared to H1 2006, which is due both
to the increase of interest income as well as to the contain-
ment of operating expenses, thus improving the cost-to-net
earnings ratio to 40.61 percent from 45.87 percent during
the previous year’s relevant period.
It is encouraging and reflective of the successful devel-
opment of the Bank’s asset restructuring that, excluding the
financial results, the provisions and depreciation, profits
before taxes on a consolidated basis reached an increase in
the order of 63.79 percent in comparison to H1 2006,
which demonstrates the continuously increasing trend in
earnings from recurring operations.
Despite the fact that market conditions remain particu-
larly competitive in the banking sector, the development of
the Bank’s figures confirms the estimate that the goals set
by management, primarily for the increase of the loans-to-
deposits ratio to 80 percent and secondly for the increase
of the market share to 10 percent, will materialize in a
shorter timeframe than initially anticipated.
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 22.59% 12.06% 15.82% 29.90%(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS 0.88 0.87 0.97 0.47(EARNINGS PER SHARE, euros)
SALES (euros) 256,822,179 296,381,361 417,330,760 224,000,000Source: P&K Securities
22
Cover
On September 6, Intralot became one of the
top 125 new-generation companies that are
expected to change the global competitive
landscape. As an active member of the glob-
al business community and a leader in its
industry, Intralot was selected to be a member of the
newly founded Global Growth Companies Community
of the World Economic Forum. During his participation
in the WEF, Constantinos Antonopoulos, Intralot CEO,
stated: ‘It is a privilege and a great honor for Intralot
to be recognized as a Global Growth leader and active-
ly participate in the World Economic Forum’s Commu-
nity of Global Growth Companies. This prestigious and
thought-provoking forum was an excellent opportunity
to exchange ideas and best practices with global lead-
ers.’
Intralot is the leading supplier of integrated gaming
and transaction processing systems, innovative game
content and sports betting management to state-
licensed gaming organizations worldwide. Its broad
portfolio of products and services, its know-how of lot-
tery, betting and video lottery operations and its lead-
ing-edge technology give Intralot a competitive advan-
tage which contributes directly to customers’ efficien-
cy, profitability and growth. With a presence in over
40 countries, with more than 3,600 people and rev-
enues of 791.4 million euros for 2006, Intralot has
established its presence on all five continents.
Intralot was recently voted among the 20 Best
Places to Work in Greece for 2007. The ‘Best Work-
places Hellas 2007’ competition is organized by the
‘Great Place to Work’ international institute and pub-
lished in Kathimerini Special Edition - The Economist.
This distinction recompenses Intralot’s HR strategy
and practices and justifies its main objective, which
concerns staff retention and the amelioration of their
living status. One of its basic objectives, and a key-
stone of its corporate culture, is to operate on all lev-
els as a winning team, distinguished by its passion for
achieving challenging goals and excellence across the
entire range of our business activities, as well as
integrity and responsibility toward our shareholders,
customers, employees and the general public.
Following an international tender process Intralot
continues to proliferate. A characteristic example is
the expansion in New Mexico, New Zealand and Ham-
burg in recent months. On July 30, 2007, Intralot was
announced as the successful vendor for the contract
with the New Mexico Lottery, regarding the supply of
the Lottery’s new Online Gaming System. Pending
final contract negotiations, the term of the contract
would be for seven years with a three-year extension
option. LOTTO Hamburg is the state lottery of Ham-
burg and has been operating for more than 50 years in
the state. LOTTO Hamburg generated 209.6 million
euros in sales in 2006.
In August, Intralot SA announced its financial
results for the six-month period ending June 30,
2007, prepared in accordance with IFRS. Consolidat-
ed revenues for the period reached 378.8 million
euros, posting a 0.8 percent decrease compared to H1
06. EBITDA decreased by 1.7 percent to 120.6 mil-
lion euros, compared to the same period last year.
Earnings before taxes (EBT) recorded a decrease of
9.1 percent by reaching 103.7 million euros com-
pared to 114.1 million euros in H1 06. Earnings after
taxes and after minorities (EAT-am) increased by 4.3
percent to 57.6 million euros from 55.2 million euros
in H1 06. Total international revenues for the Intralot
Group amounted to 317.1 million euros, or 83.7 per-
cent of total Group sales, compared to 73 percent in
H1 06. The cash balance reached 345.8 million euros
in H1 07, while the net debt position is low and reach-
es 12.8 millon euros. The decrease of the company’s
net cash position is a result of the financing required
for all the major projects that the company has been
undertaking recently. Revenues for the parent compa-
ny were 102.5 million euros, compared to 106.7 mil-
lion in H1 06. Earnings before taxes (EBT) were 85.4
million euros, compared to 62.6 million, posting a
36.4 percent increase. Earnings after taxes (EAT)
reached 74.9 million euros in H1 07, posting a 65.3
percent increase (H1 06: 45.3 million euros).
Intralot’s management has announced that it is
very pleased as the Group delivered robust financial
results in H1 07. The above developments, together
with other major projects under way, will fuel
Intralot’s continuous global expansion and demon-
strate the company’s ability to take advantage of the
significant upcoming opportunities in the gaming sec-
tor internationally.
‘Intralot’s growth story is one of
hard-working visionaries. Since
its creation, the company has
had no alternative but to expand
and evolve abroad. In less than
15 years of presence in its
industry, Intralot managed to
become the leading technology
provider in the global gaming
sector and currently manages the
world’s largest sports book, cov-
ering bets exceeding US$6 bil-
lion worldwide.
‘Intralot has been awarded con-
tracts by the most well-estab-
lished lottery operators on the
five continents. The company’s
portfolio recently flourished with
contracts in Taiwan, South
Africa, Russia and South Korea,
which have been the four largest
projects to be tendered over the
past two years in the internation-
al gaming industry.
‘We have succeeded into making
Intralot a powerful global compa-
ny that sets the trends in the
industry and the establishment of
the gaming sector not only as a
lucrative but mainly as an alter-
native entertainment getaway.
Our four pillars for future growth
are the liberalization of the Euro-
pean market, the privatization of
the American lotteries, the need
for legal gaming in Asia and the
so-called new media. Intralot’s
vision for the years to come is to
strengthen its already established
presence globally and continue
its innovative course.’
Constantinos Antonopoulos
Vice President and CEO
2004 2005 2006 H107
EBIT 96,500,000 142,220,000 222,300,000 150,300,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 54.01% 51.90% 58.39% n.a. (RETURN ON EQUITY)
EBITDA 97,362,000 160,010,000 243,300,000 120,600,000
EPS 0.70 0.90 1.33 0.73(EARNINGS PER SHARE, euros)
SALES (euros) 326,990,000 522,900,000 791,400,000 105,260,000Source: P&K Securities
Intralot14
23
Exceeding analysts’ expectations, Hellenic Petrole-
um SA increased its net income by 4 percent,
reaching 181 million euros in the first half of
2007. Adjusting for inventory effects, clean net
income was up 22 percent to 147 million euros
in the first half of the year. These figures are not unusual
for the largest oil-refining company in Greece, which
holds a leading position in the Greek energy sector as well
as in the greater area of Southeastern Europe. The Group
includes 10 subsidiaries, seven associated companies
with management control, seven affiliated companies
with holdings of between 6.6 and 50 percent and is a
part of five consortiums with contractual rights of
between 20 and 49 percent.
Refining is the core of the Hellenic Petroleum Group’s
business, accounting for the greatest part of assets and
investments and generating most of its profit. In Greece,
the Group owns and operates three refineries, with nomi-
nal annual refining capacity of 7.5 million tons, 5 million
tons and 3.4 million tons crude oil per year respectively.
The three refineries combined cover 73 percent of the
country’s total refining capacity.
With each passing year the company puts more and
more emphasis on electric power. A result of this new stat-
ed strategy is the signing of a memorandum of agreement
between Hellenic Petroleum and Edison SpA, Italy’s sec-
ond-largest electricity producer and gas distributor. The
‘alliance’ will take the form of a joint venture, in which the
Greek company will provide its T-Power subsidiary, which
owns a 390-megawatt, combined-cycle natural gas-fueled
power plant already operational in Thessaloniki, and Edi-
son will provide its 65 percent investment in a project for
a 420MW combined-cycle facility that is being developed
in Thisvi, in central Greece.
The joint venture’s objective is to develop a generating
capacity of more than 1,400MW, achieving a level of out-
put equal to about 12 percent of the Greek market, mak-
ing it the second-largest electric power operator in Greece.
The agreement also includes the construction of
hydroelectric and wind power facilities. Edison will pay
Hellenic Petroleum 55 million euros to account for the
difference in the value of the assets being contributed to
the joint venture.
At the same time Hellenic Petroleum places empha-
sis on new markets and the development of a portfolio of
deposits and exploratory regions such as the Middle East.
Recently the company announced the signing of a con-
tract granting hydrocarbon exploration and exploitation
rights in West Obayed, Egypt. The West Obayed region
covers 1,841 square kilometers, where a gas field oper-
ated by Shell is in production. Hellenic has committed
itself to a total of seven years of exploration, with five
drillings at a cost of US$26 million. The first three years
of the exploratory phase in West Obayed include the exe-
cution of seismic surveys and drilling of three exploratory
wells. It’s the first Hellenic Petroleum operation in Egypt
and the first time that it is undertaking the exclusive
operation of a concession.
In the Balkans, the Greek refiner’s Bulgarian unit Eco
Elda will invest 100 million euros to increase its market
share. The unit intends to increase its share to 10 per-
cent in 2010 from 1.5 percent in 2005. Eco Elda is the
fifth-largest retail fuel distributor in Bulgaria. Hellenic
Petroleum plans to invest about 200 million euros in its
Balkan operations.
The company is also proceeding with domestic invest-
ments such as the modernization and upgrade of its refin-
ery installations at Elefsina. Hellenic Petroleum will invest
850 million euros in four new production units that will
stretch across 160,000 square meters. The initial plan of
the Group is the completion of this investment by 2010.
The company suggested that with this investment, it aims
to produce fuel with virtually no concentration of sulfur.
Hellenic Petroleum improved its overall operating prof-
itability in the first half of the year. Clean EBITDA increased
by 3 percent to 260 million euros, with petrochemicals and
power continuing to drive improvements compared with
the same period last year. Core refining, supply and trad-
ing clean EBITDA grew 5 percent to 129 million euros in
the second quarter. DEPA made a significant contribution
to Group results, accounting for approximately 7 percent of
net income in interim results. EKO sales volumes in Greece
were up 3 percent to almost 2 million tons, as the
increased sales of gasoline, bunkers and aviation in the
second quarter more than offset the weather-driven lower
heating gasoil volumes of the first half of the year.
Finally, the company will continue its efforts to
strengthen its capabilities and control its cost base,
together with favorable refining margins, which have had
a positive impact on both its underlying and reported
profitability.
‘We reported record net income for
the quarter ending June 30, 2007,
with positive results across all
business units and countries we
operate in. Continued efforts to
strengthen our capabilities and
control the cost base, together
with strong Mediterranean bench-
mark refining margins, have had a
positive impact on both underlying
and reported results. Second-quar-
ter reported net income increased
24 percent year-on-year to 127
million euros, while adjusting for
inventory effects, clean net income
and EBITDA were up 27 percent
to 94 million euros and 3 percent
to 160 million euros respectively.
Looking ahead, we are proceeding
as planned with our capital expen-
diture plans, which in total are
seen topping 2 billion euros in the
2007-2011 period and mainly
relate to the upgrades of our
refineries in Elefsina and Thessa-
loniki. With regards to E&P, our
Libyan drilling campaign is pro-
gressing on track and we have
already started seismic reprocess-
ing/acquisition work in Egypt.
In addition, we recently signed a
memorandum of agreement with
Italy’s Edison to form a joint ven-
ture that aims to create Greece’s
second-largest electricity operator,
with a power generation portfolio
of 1,500-2,000MW.
‘Finally, we continue with our
restructuring and operating effi-
ciency measures, aiming to com-
plete the transformation of Hellenic
Petroleum into an internationally
competitive energy group.’
Panos E. Cavoulacos
Chief Executive Officer
2004 2005 2006 H107
EBIT 211,000,000 526,400,000 355,300,000 248,000,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 7.18% 17.10% 11.72% 11.72%(RETURN ON EQUITY)
EBITDA 343,900,000 670,500,000 501,500,000 501,500,000
EPS 0.43 1.12 0.85 0.52(EARNINGS PER SHARE, euros)
SALES (euros) 4,907,300,000 6,653,100,000 8,121,500,000 3,800,000,000Source: P&K Securities
Hellenic Petroleum15
24
Cover
Elliniki Technodomiki TEB
Elliniki Technodomiki TEB SA is a holdings and
concessions company that provides project
management and consulting services in the
fields of infrastructure, real estate and energy.
2007 will be a successful year for Elliniki
Technodomiki according the economic results of the first
six months. Consolidated turnover for H1 2007 reached
415.4 million euros compared to 303.6 million euros in
the respective period last year, posting an increase of
36.8 percent. Consolidated EBITDA amounted to 58
million euros (40.7 million euros in H1 06), marking an
increase of 42.28 percent and consolidated EBIT
amounted to 47.3 million euros versus 29.6 million in
the same period last year, increased by 59.7 percent.
For the first six months of 2007, the Group's con-
struction sector presented a turnover of 339 million euros,
increased by 30.5 percent. Operating results stood at
12.6 million euros and net profit at 7.8 million. As the
company said, the construction sector was formed in H1
2007 at 3.7 percent (standing at 4.6 percent in Q2 of
2007 compared to 2.7 percent in Q1), demonstrating
continued growth attributed to: a) the decrease in forma-
tion expenses for the penetration of the Group's operations
in the international market and b) the cost reduction of the
bidding process in large co-financed projects.
The projects that the Group has been awarded are
already in progress, among which are the Thessaloniki
Submerged Tunnel, the Corinth-Tripolis-Kalamata high-
way, the Maliakos-Kleidi highway and the Elefsina-
Corinth-Patras-Pyrgos-Tsakona highway, while the Group
will bid for new highway construction projects in the Atti-
ca urban area. Elliniki Technodomiki’s also has a presence
in the Middle East. Recently it was announced that the
Greek company with Enka of Turkey has been appointed
contractors for the first phase of the construction of the
Blue City in Oman. It’s a unique project, an entirely new
city of more than 250,000 people and represents an esti-
mated US$15-20 billion total investment.
‘Starting with the construction
field, where it has been active
for over 50 years, the Elliniki
Technodomiki TEB Group of
companies is today the leader in
the Greek construction and con-
cessions sector having also a
strong portfolio in the energy,
environment and real estate
development fields. With more
than 3,000 employees and
activities in eight countries, with
a financial robustness that can
be demonstrated by its soaring
turnover, strong capital base
and large-capitalization, the
Group is placed among the
most powerful entrepreneurial
forces of the country.
‘The Group is also expanding its
construction activities in foreign
countries, the primary regions
being Southeastern Europe and
the Middle East.
‘Moreover, in the interest of
maximizing shareholder value
and providing more opportuni-
ties for its employees, the Group
is taking steps to expand in
other strategic sectors similar to
the construction sector. This can
be seen by its participation in
major concession projects that
are under way in Greece, which
create significant construction
activity and offer higher return
on invested capital. Further-
more, taking advantage of the
new conditions that are being
created in the European and
subsequently the Greek market,
the Group is expanding into the
renewable energy sources and
waste management sectors, in
which it already has significant
know-how and expertise.’
The Elliniki Technodomiki TEB
Board of Directors
2004 2005 2006 H107
EBIT 12,300,000 78,500,000 68,000,000 47,300,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 10.35% 10.14% 9.70% n.a.(RETURN ON EQUITY)
EBITDA 33,900,000 96,800,000 90,000,000 58,000,000
EPS 0.39 0.38 0.43 0.57(EARNINGS PER SHARE, euros)
SALES (euros) 775,000,000 582,000,000 695,000,000 415,361,000Source: P&K Securities
Viohalco SA is the parent company of the
largest Greek metals group of companies.
Established in 1937, Viohalco SA has been
listed on the Athens Exchange since 1947.
Today the Group incorporates approximately
90 companies, six of which, Elval, Halcor, Sidenor,
Hellenic Cables, Etem and Fitco are pioneers in their
sectors and are listed on the Athens Exchange. It also
owns urban real estate in Athens and significant land
holdings in various parts of Greece.
Viohalco specializes in the manufacture of copper,
aluminum and steel products, as well as cables, gener-
ating an annual turnover of more than one billion. The
Group is active in Greece, Bulgaria, Romania and the
United Kindom and its products are sold in more than
60 countries worldwide.
The companies of the Viohalco Group are highly
export-oriented and are continuously enhancing their
presence abroad. As a result of this, more than two-
thirds of the turnover is achieved abroad, while Group
exports correspond to approximately 9 percent of total
Greek exports.
The company recently reported consolidated earn-
ings results for the six months ending June 30, 2007
along with marked higher turnover and profits. Turnover
increased by 23 percent (1,931 million euros). Consol-
idated profits before taxes, interest and depreciation
(EBITDA) for the same period amounted to 240 million
euros, increasing by 23.5 percent, while profits before
taxes and minority rights amounted to 151.5 million
euros, increasing by 42 percent compared with 2006.
Total own equity amounted to 1,959 million euros,
increasing by 28 percent.
The higher capacity of the production units, result-
ing from significant investments in recent years, con-
tributed to the increase in sales volumes, which, com-
bined with the increase in metals prices, led to a sig-
nificant increase in turnover. The decrease of produc-
tion costs, due to the investments as well as better prof-
it margins, had a favorable effect on 2006 results.
Among the company’s publicly stated plans are the
development of operations in Russia and Serbia and the
construction of an energy plant on mainland Greece by
early 2010.
The companies of the Group continue to invest in
new technology and equipment, with their main goals
being the high level of productivity, reduction of costs
and further improvement of the products’ quality. Pro-
tection of the environment, as well as the improvement
of working conditions regarding safety and hygiene at
installations continue to have priority in the companies’
management concerns.
Finally, Viohalco has started a development pro-
gram regarding its remarkable real estate holdings, aim-
ing at the creation of a constant income source,
enhancing its income from industrial activities.
Viohalco16 17
25
While markets in Southeastern Europe are
growing significantly and prospects for
expansion and development are becoming
more and more interesting, Emporiki Bank is
ready to follow a strong organic growth path.
Since June 2006, when Credit Agricole acquired
100 percent of the shares held by Emporiki Bank, new
business plans have been initiated and new targets
have been set. The transformation of the Bank started
this year, with the launch of its five-year business
plan. The first achievements of the plan have satisfied
the top executives of Emporiki Bank and Credit Agri-
cole, who want to transform the Bank into a modern
banking institution and recapturing its ‘natural’ market
share (10.5-11 percent on average). Emporiki’s main
financial projections for 2011 are an increase of more
than 11 percent per annum for net banking income,
reaching over 1,700 million euros, a return on average
equity reaching 22 percent, an increase by 30 percent
per annum for profit before taxes amounting to over
600 million euros, cost income ratio at below 50 per-
cent and five-year capital expenditure at 250-300 mil-
lion euros.
The transformation potential of the Bank, expan-
sion in Southeastern Europe, where Emporiki will
serve as a hub for Credit Agricole, and the sustained
growth of the Greek economy are the key sources of
value for Emporiki’s growth. In the next five years, the
Bank is expected to open 265 new branches and
increase its headcount by 2,250 people with invest-
ments of approximately 55 million euros.
Emporiki Bank’s strategy focuses on supporting
entrepreneurship in Greece to fuel economic growth,
extending financial services to the smaller companies
(personal owner) segment, differentiating offerings
based on the various needs of the sub-segments and
focusing on financing companies in new advanced
technologies. The goal is a 13 percent per annum
growth in SME business loans reaching 9.9 billion
euros in 2011 (from 5.4 billion in 2006). Main
actions include the extension of sector-specific, fee-
based product bundles (for smaller companies); the
opening of business centres dedicated to serving medi-
um enterprises, leveraging Emporiki’s banking expert-
ise; the establishment of dedicated sales force to sup-
port new client acquisition.
The Bank’s transformation plan started in the sec-
ond quarter of 2007. Among the programs which will
build the new Emporiki are its commercial and organi-
zational transformation. The first refers to the retail
network, where under review are the organization, the
processes and the working tools aiming at the improve-
ment of the Bank’s relationship with clients and the
quality of the services offered. The second program
includes the creation and implementation of modern
systems for training, development and management of
human resources. Finally, it will be examined the repo-
sitioning of the bank’s brand and logo, in a way that
will reflect the Bank’s new image and identity.
The results of the first half of 2007 are in line with
the new five-year business plan, as Emporiki Bank
announced. The positive figures are the increase by
9.8 percent of net interest income (382.7 million
euros) and by 44 percent of new mortgage loan dis-
bursements. At the same time, however, other operat-
ing income in total stood at 27.0 million euros, lower
by 50 percent compared to the same period last year
when gains from venture capital disposals and the AFS
portfolio positively impacted the results. Furthermore,
operating expenses rose by 12.3 percent (before pro-
visions) to 326.9 million euros, mainly due to trans-
formation and activity-related expenses. Gross operat-
ing income decreased by almost 16.2 percent to
161.3 million euros. Profit after tax and minorities
was estimated at 61 million euros. As a whole, net
banking income increased by 1 percent and reached
488.2 million euros. The growth rate of mortgage
loans of the Bank stood at 32.5 percent resulting in
outstanding balances of 6,277 million euros.
Mortgage loans’ market share reached 10 percent,
following a very successful campaign. In consumer
finance, the annual growth rate stood at 10.9 percent
with 383 million euros in new disbursements, driving
total outstanding balances to 2,255 million. Deposits
increased to 16,707 million, up 10.5 percent, bring-
ing Emporiki’s market share to 8.64 percent. Time
deposits increased by 34 percent (9.03 percent mar-
ket share), while sight deposits decreased by 9.9 per-
cent (6.13 percent market share) and savings deposits
decreased by 4.1 percent (9.07 percent market
share).
‘Emporiki was and remains one
of the largest banks in in Greece,
whose longstanding history is
interwoven with that of the
Greek economy and society. The
new brand image of Emporiki as
a truly commercial bank will be
largely built on this heritage,
which we all value and respect.
The process of re-establishing
Emporiki as a truly commercial,
model Greek bank by the end of
2011, i.e. within the five-year
horizon of our business plan, is
ongoing and largely based on the
consistent and dedicated efforts
of our people, as well as on our
unique competitive advantages
arising from the support of Credit
Agricole.
‘Our course to date is very posi-
tive. We have drastically raised
Emporiki’s standards, now enjoy-
ing the leading credit rating and
the highest coverage of non-per-
forming loans among Greek
banks. We also rapidly rational-
ized our activity portfolio and
achieved important commercial
successes, such as the innova-
tive deal for the distribution of
banking products through Car-
refour’s leading retail network
and our mortgage loan cam-
paign, which far exceeded its
targets. We continue with the
same dynamic pace and commit-
ment, to reach all of our busi-
ness objectives and constantly
respond to growing market
demands.’
Antony Crontiras
Chief Executive Officer
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE -13.31% 10.17% -24.65% n.a.(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS -1.28 0.80 -1.77 1.00(EARNINGS PER SHARE, euros)
SALES (euros) 787,144,000 826,337,000 988,465,000 488,000,000Source: P&K Securities
Emporiki Bank18
26
Cover
ATEbank has achieved significant growth in prof-
itability in the first six months of 2007 as con-
solidated profits after tax and minority interest
increased by 61.9 percent, reaching the level of
133.0 million euros versus 82.1 million in the
corresponding period of the previous year. Net interest
income reached 310.6 million euros, a 10.7 percent
increase, mainly due to growth in the interest income
from loans. The net interest margin, despite increasing
competition, remains at high levels, at 3.34 percent,
compared to 3.15 percent on June 30, 2006.
Operating expenses reached 264.7 million euros, an
increase of 11.0 percent from H1 2006. As mentioned
regarding the previous quarter’s results, the higher-than-
targeted percentage increase is seasonal and is expected
to be reduced significantly by the end of 2007. The Group
cost income ratio was reduced significantly to 55.1 per-
cent on a reported basis compared to 59.0 percent in H1
2006. On a recurrent basis, the cost-to-income ratio fell
to 57.3 percent from 62.8 percent. Based on the net prof-
it during H1 2007, the return on average assets stood at
1.20 percent (1.08 percent on a recurrent basis), while
the return on average equity was 19.54 percent (17.59
percent on a recurrent basis).
ATEbank is a Greece-based financial institution prin-
cipally engaged in the provision of banking and financial
services for both individual and corporate customers.
The bank has a network of 464 branches in Greece, one
in Germany and 12 branch in Romania through its sub-
sidiary MindBank.
ATEbank’s main goals according to its three-year busi-
ness plan are: to increase further market share in retail
banking, to dynamically penetrate the SMEs segment, to
further improve asset quality, to explore other possible
opportunities in the SEE region, to disengage from non-
financial and non-core participations and to improve the
return of all companies in the Group.
The results during H1 2007 are very much in line with
the targets set in the 2007-2009 business plan. ATEbank
benefits from a growing Greek market for banking products,
from its extensive network (second largest) and client base
(particularly among less banked customers), and from the
continuous efforts made by its staff and management. As a
result of the strong financial performance of the Bank and
the Group of Companies, ATEbank has revised its business
plan and has set the following financial targets for the
Group for the three-year period 2007-2009: a return on
average equity of at least 20 percent and a cost-to-income
ratio of around 52 percent by the end of 2009.
ATEbank
2004 2005 2006 H107
EBIT n.a. n.a. n.a. n.a.(EARNINGS BEFOREINTEREST & TAX, euros)
ROE -28.52% 35.60% 15.05% n.a(RETURN ON EQUITY)
EBITDA n.a. n.a. n.a. n.a.
EPS -0.08 0.24 0.21 0.15(EARNINGS PER SHARE, euros)
SALES (euros) 763,496,000 820,279,000 879,006,000 480,000,000Source: P&K Securities
‘In order to continue as a
technological leader in the
European refinery environ-
ment, the Company has
historically been commit-
ted to a ‘continuous invest-
ment’ approach.
The Company’s manage-
ment assigns priority to the
investment project of the
upgrading of the lubricants
complex of the refinery.
The front-end engineering
phase of this project was
completed recently. Upon
completion of the project,
the Company will obtain
the capacity to produce
Brightstock, a high value
added lubricant, comple-
menting its existing basic
lubricants product portfolio
and achieving an immedi-
ate contribution at the
refining margin level.
‘The Company has also
completed the necessary
infrastructure works and
the internal network con-
struction concerning the
connection of its refinery
with DEPA’s natural gas
pipeline expected by the
end of 2007. The natu-
ral gas will be converted
to hydrogen, which is
used for the desulfuriza-
tion of refinery products
in order to secure 2005
and 2009 specifications.
Furthermore, the natural
gas will be used to cover
several energy needs of
the refinery.’
Petros Tzannetakis
Deputy Managing Director
and CFO
Motor Oil Hellas, second largest refiner in
Greece, is committed to being a leader in the
petroleum refining business, thus providing
the region that it serves with a reliable and
affordable supply of energy. Through its evo-
lution the company is now considered as one of the
major contributors to the domestic economy and a key
market player in the region. The refinery with its ancil-
lary plants and offsite facilities forms the largest pri-
vately held industrial complex in Greece and is consid-
ered as one of the most modern refineries in Southeast
Europe. Due to its flexibility it can process crude oils of
various characteristics and produce a full range of
petroleum products, complying with the most stringent
international specifications, serving major petroleum
marketing companies in Greece and abroad. Apart from
fuels, Motor Oil is the only lubricants producer and
packager in Greece.
In 2007 the capital expenditure of the Company is
estimated at approximately 40 million euros, concern-
ing the connection of the refinery with the natural gas
pipeline and the subsequent internal network construc-
tion, the replacement of one of the four gas turbines
used for the cogeneration of steam and power for the
needs of the refinery, and various other small-scale
maintenance and/or upgrading projects for the installa-
tions of the refinery.
Net profits at Motor Oil Hellas dropped 40 percent
in the first quarter of the year to 25.7 million euros as
a mild winter slowed sales. Sales fell 15 percent to
808.1 million euros, while EBITDA declined to 56.1
million euros from 78.7 million in the same period of
2006. An unseasonably warm winter and low oil prices
compared to the same period last year squeezed refin-
ers’ profit margins, analysts said.
In May 2007 the Company’s Board approved the
investment project for the construction of a new Crude
Distillation Unit (CDU) with 60,000 bbl/day processing
capacity. Following the installation of the new CDU the
annual capacity of the refinery will increase to 9 million
MT (170,000 bbl/d). In addition, distinct ‘qualitative
benefits’ are anticipated, namely the minimization of
shutdowns due to programmed maintenance works, the
optimization of crude supply as a result of the refinery’s
ability to process a variety of different crude types, and
the further refining margin improvement generated
from the substitution of imported Straight Run Fuel Oil
by own-produced SRFO.
Motor Oil
2004 2005 2006 H107
EBIT 174,300,000 204,400,000 222,800,000 135,000,000(EARNINGS BEFOREINTEREST & TAX, euros)
ROE 50.51% 41.57% 37.73% n.a.(RETURN ON EQUITY)
EBITDA 196,100,000 230,300,000 270,000,000 148,000,000
EPS 1.06 1.19 1.15 0.80(EARNINGS PER SHARE, euros)
SALES (euros) 2,219,000,000 3,237,300,000 3,977,100,000 1,726,000,000Source: P&K Securities
19 20
28
Themes
The dominance of Greek banks over the local
stock exchange, the business world and the
economy in general is unquestionable. The
banks, with an extremely powerful pres-
ence abroad — stronger than any other
business sector — turning record profits which are
the envy of many and with a stock value corre-
sponding to 65 percent of the total capitalization of
the companies included in the index of the power-
ful — the FTSE/ASE-20 — are comfortably holding
onto pride of place.
Typically, the profits of National Bank of Greece
alone, during the first half of 2007, came to 878
million euros, which corresponds to the combined
total profits realized by OTE (277 million euros),
Coca-Cola HBC (221.7 million euros), Hellenic
Petroleum (181.1 million euros), Titan (124.5 mil-
lion euros) and the Public Power Organization, or
PPC (99.4 million euros).
In the first quarter of the year the combined
profits of the four biggest banks — National Bank
of Greece, EFG Eurobank, Alpha Bank and Piraeus
Bank — came to the impressive sum of 2.1 billion
euros, leaving the other business sectors far
behind. Were one to add to these the combined
profits of the mid-sized banks, such as Marfin Pop-
ular, Bank of Cyprus, Emporiki, ATEbank and
Postal Savings, which came to 870 million euros,
then one loses sight of those lagging behind.
The impressive development of the banking sector
in the last few years was based on two decisive fac-
tors: the liberalization of retail banking and the bold
expansion of the Greek banks in the SE Europe area.
The domestic market is the one that has formed
the base for the achievements of the past few years:
The liberalization of retail banking in the 1990s cre-
ated a new large market hungry for financing. For
example, home loans in 1995 came to 3.6 billion
euros, and today have reached 58.3 billion euros,
showing an increase of 1,527 percent. Equally, con-
sumer credit in 1995 came in at just 1.2 billion
euros, while today it is over 27.7 billion euros,
showing, in a little more than a decade, a rise of
2,209 percent. Over and above the emergence of a
virgin market, the banks had luck on their side, too:
The liberalization coincided with a period of drop-
ping interest rates, which led to an historical low,
thus making bank loans particularly attractive.
The second factor — which makes all the differ-
ence and which is gradually developing into consid-
erable power, in fact into the engine driving the
development of the sector — is the banks’ activities
abroad and more particularly the large investments
the domestic banks have made in the wider area of
SE Europe. They moved in early, invested consider-
able capital and today they enjoy a powerful pres-
ence in a large geographical area — that reaches
north to Ukraine and Poland, comprises all the
Balkan countries, Turkey and stretches as far south
as Egypt — and they are already reaping the fruits of
their endeavors.
For example, 40 percent of the (super) profits of
National Bank of Greece in the first half of the year
came from its activities abroad. The profits from
Turkey, where NBG bought out Finansbank, came to
244 million euros, contributing a hefty 31 percent to
the overall profits of the domestic group. EFG
Eurobank and Piraeus Bank also register high yields
from their activities abroad and, aiming mainly at
enhancing their presence outside Greece, they pro-
ceeded to increase in the share capital by 1.2 and
1.35 billion euros respectively. In the last few years
the Athens Exchange has appeared to be solely a
banking affair. The general index shows that the
bank shares yield steadily increasing profits and con-
stitute the main driver of the ATHEX.
Despite the super-profits the bank shares dis-
played in 2003 and 2004, the shares of the sector
remained at the top of the investors’ preference list
both in 2004 and in 2005, while this year they are
leading the rise, realizing profits considerably above
those of the general index.
The rebound of the Athens Exchange began after
the first quarter of 2003 and since then the general
index has followed an (almost) constantly rising
course, recovering most of its losses from the great
slump that came after 1999. The rise in prices is
solely due to the foreigners who in the last few years
insist on buying Greek shares and who are focusing
on bank shares. Today foreign investors hold approx-
imately 50 percent of National Bank of Greece
shares, 38 percent of the shares of Alpha Bank, 25
percent of the shares of EFG Eurobank, and 38 per-
cent of the shares of Piraeus Bank. The current value
of the positions foreign institutional investors hold in
the shares of the five greater domestic banks exceeds
20 billion euros, a sum that almost approximates the
total capitalization of National Bank of Greece.
The boom of the banking sector
The liberalization of retail banking and the expansion of the Greek banks in SE Europecontribute to impressive development for the sector.
By Yannis Papadogiannis
29
Transformation through transition
— Credit Agricole has said that it will use Emporiki Bank tospearhead its operations in Southeastern Europe. What kindof presence does Emporiki have in this region and what kindof growth rates are you expecting from this area?
Expansion to the rapidly growing Southeastern European mar-
kets, with Emporiki serving as the platform for the develop-
ment of the Credit Agricole Group’s business lines in this area,
will in fact be one of the three key sources of value for Empo-
riki’s growth in the years to come together with its participa-
tion in the very dynamic Greek banking market and the recap-
ture of its natural market share and cost competitiveness.
Concerning our expansion to the SEE region: These markets
are expected to grow very significantly, closing the gap with
EU penetration while maintaining higher interest margins to
Greece despite continuing market entries. Competition is
expected to intensify; EU funding will create opportunities to
finance major infrastructure projects; the Romanian and
Bulgarian markets’ growth will continue to speed up and the
Cypriot and Albanian markets will become increasingly
interesting.
Emporiki is already present with its network of subsidiary
banks in Romania, Bulgaria, Albania and Cyprus. Of course, in
order to establish Emporiki as a hub for CA’s business lines in
the broader SEE area, we are already implementing our strat-
egy of strong organic growth, and we expect volumes to
increase at an annual rate higher than 50 percent; more
specifically, we project 52 percent in retail loans, 55 percent
in corporate loans and 50 percent in deposits, in these mar-
kets. We are also in the process of opening 265 new branch-
es and increasing the total headcount by 2,250 people over
the next five years. Our investments in the area will reach
approximately 55 million euros.
— Profits in the Greek banking sector have been supportedby solid loan growth. How do you see the Greek retail bank-ing sector performing in the short to medium term?
The retail segment remains the growth engine of the bank-
ing market over the next five years. The retail portfolio is
expected to surpass corporate in the coming few years, where-
as the segment will continue to grow at a high, yet gradually
decelerating rate. New products that truly add value as well as
cross-selling are becoming increasingly significant for this sec-
tor, and so is customer service.
Emporiki aims at gradually becoming a key player in this
market environment. Our strategic objective is to achieve 21
percent annual growth in mortgages and 15 percent in con-
sumer loans over the next five years. To that end, we are build-
ing our new commercial strategy around competitive pricing,
segment-specific offerings and product innovation, as well as
improved service quality to a level worthy of a modern, dynam-
ic and truly competitive commercial bank.
We are satisfied and optimistic because our first efforts
were very fruitful; following the launch of our mortgage
loan campaign in February 2007, which not only met but
far exceeded our set targets, we achieved a 54 percent
increase in new mortgage loan disbursements during the
first quarter of 2007. We also ensured product innovation
and finalized strategic business deals, such as the joint
venture with Carrefour, which paved the way for the dis-
tribution of banking products through Carrefour’s leading
retail network in Greece. Our planned step-by-step but
dynamic comeback in the market provides solid evidence
that Emporiki can recapture its natural market share and
regain competitiveness.
— Emporiki Bank is going through a transitional phase afterits entrance to the Credit Agricole Group. How well has thisadjustment gone and what do you see as being further chal-lenges in this field?
We are going through a challenging and at the same time
extremely creative and exciting transitional period. We are all
working hard and we have managed, very quickly and within
our set timeframe, to dramatically raise Emporiki’s standards
in most key fields of our business operation. Emporiki now
enjoys the leading credit rating and the highest coverage of
non-performing loans among all Greek banks. We also estab-
lished a new organizational structure, which is flexible and
market-focused. We are rapidly rationalizing our activity port-
folio and implementing successful commercial campaigns and
innovative business deals, as mentioned earlier.
As of May 2007, we started implementing our Business
Plan 2007-2011, by moving to the actual transformation
phase, which aims at re-establishing Emporiki as a model
Greek bank within the five-year horizon of the plan. This is
an ongoing process, based on four equally important pillars
on which we are currently focusing our efforts. These are:
the operational transformation, focusing on redesigning
processes for simplicity, speed and improved service; the
organizational transformation, focusing on aligning the HR
strategy with the bank strategy and modernizing the HR
management framework; the commercial transformation, in
order to fully exploit Emporiki’s client-facing, commercial
potential and, finally, the brand repositioning, to project the
bank’s new corporate image and identity.
— Credit Agricole is a relatively new entrant to the local bankmarket. There is currently growing speculation of merger andtakeover activity in the local financial services market with thepossible entry of new foreign banks. Do you believe that mar-ket conditions are ready for this? How do you see the marketevolving?
The Greek banking market is very dynamic and has a high
growth potential. Greece’s GDP growth rate is almost double
that of other Western European countries, while lending as a
percentage of GDP is still at lower levels, growing rapidly. The
Greek banking sector will continue to benefit from the conver-
gence to Western European standards, enjoying a high growth
rate in an environment of dropping margins.
Whether the market is ready for additional foreign entries
and/or consolidation remains to be seen. What is mostly
important for Emporiki is that, with the strength of the
Credit Agricole Group, we now have the means to serious-
ly consider any opportunity in the Greek market, should it
prove consistent with our strategy.
Emporiki Bank CEO A. Cronti-
ras expresses his confidence in
a dynamic comeback for Empo-
riki in the market. He evaluates
the retail segment will remain
the growth engine of the bank-
ing sector in the years to come.
Interview
30
Themes
This summer’s unprecedented disaster and
huge loss of life, nature and infrastructure led
to an equally unprecedented rallying of cor-
porate social responsibility. Companies of all
sizes and sectors — up to now exercising
social responsibility segmentally and on a limited
scale — were mobilized enough to make a difference,
offering cash, products and services.
Their mobilization and offerings made a differ-
ence, comforting people living in disaster-stricken
areas, and at the same time laid even stronger foun-
dations for their future contribution and response to
society’s needs. The Greek companies’ show of soli-
darity is one of the positive aspects of the day after
in smouldering Greece.
The contributions listed below are indicative (and
in random order), yet this list is by no means exhaus-
tive of the actions undertaken. It came into being
during the emotional weeks that followed the fires
and one can only hope that it will, at least to some
degree, be sustained in the months to come.
Not surprisingly, the banking sector led the way
in contributions. The John S. Latsis Public Benefit
Foundation, the Latsis Group and EFG Eurobank
announced a program amounting to 60 million
euros in support of the civilians and the recon-
struction of regions affected by the fires. Referring
to the extreme circumstances the country has been
confronted with, Marianna Latsis said that ‘facing
this havoc, it is the duty of us all to contribute in a
substantial manner and wholeheartedly.’ The pro-
gram will be implemented in cooperation with the
Greek state.
Meanwhile, the Alexander S. Onassis Public Ben-
efit Foundation has announced a financial contribu-
tion of 5 million euros toward the purchasing of
equipment. ‘Beyond our feelings of anger and deep
sorrow, priority should be given to our actions. Both
the government and the citizens of Greece have a
responsibility to support, in all ways possible, the
efforts aiming at reconstruction and prevention of fur-
ther destruction,’ stated the president and board of
directors.
The National Bank of Greece offered 50 million
euros, broken down in a 25 million increment
deposited directly to NBG’s fire victims’ relief
account and 25 million for the funding of extra state
initiatives regarding the support of victims’ families,
the reconstruction effort and the rehabilitation of the
environment.
Alpha Bank announced the offering of 30 mil-
lion euros to assist in the task of addressing the
emergencies which have resulted from the fires,
and also as a contribution toward strengthening
the fire department.
The Bank of Greece contributed 5 million euros,
while at the same time setting up the central relief
account IBAN GR9801000230000002341103053.
Piraeus Bank contributed 5 million euros to the
above account and also announced a donation to the
fire service of 30 state-of-the-art firefighting vehicles,
fully equipped, with a total value of 6.5 million
euros. It also announced the suspension of loan pay-
ments for a year for families afflicted by fires in the
Ileia, Evia, Arcadia, Messinia and Laconia prefec-
tures. ATEbank offered 3.5 million euros and Attica
Bank 500,000 euros.
The Greek Postal Savings Bank provided the sum
of 2 million euros as a minimal contribution to the
work of restoring the damage done and providing
assistance to those affected by the disaster. Geniki
Bank offered 1 percent of the value of all purchases
made through Geniki's credit cards during the period
29/08-30/09, in order to finance actions and proj-
ects that will contribute to the reconstruction of the
damaged areas and the support of the distressed
families.
The Bank of Cyprus Group offered 2.5 million
euros for the needs of the fire-stricken and 1 million
to the municipalities of the Ileia Prefecture. It also
donated eight firefighting vehicles to an equal num-
ber of municipalities and offered equipment to the
Attica Volunteer Firefighters.
And then there was the aid offered by enterprises
and which was impressive in its scale and diversifi-
cation. The Hellenic Federation of Enterprises esti-
mated that the total value of aid provided by corpo-
rations had, by mid-September, exceeded the
amount of 300 million euros. Dimitris Daskalopou-
los, chairman of the Federation of Greek Industries,
ascertained that ‘enterprises are driven by a height-
ened sense of social responsibility and solidarity and
are at the vanguard for the creation of prospects and
hope in the affected areas.’
Elliniki Technodomiki TEB-AKTOR Group pro-
posed to privately fund the design studies and the
An unprecedented show of solidarity
This summer’s fires triggered a showing of corporate social responsibility unlike any otherbefore. Companies rallied to support the stricken population and contributed substantiallywith cash and diversified products and services to sustain hope in the face of adversity.
By Elisa Papageorgiou
31
reforestation and rehabilitation of the landscape on
the sacred ground of Ancient Olympia. In addition, the
Group proposed to undertake the cost for the rehabil-
itation of infrastructures and public spaces in two vil-
lages in Ileia, one in Arcadia and one in Messinia.
The Hellenic Petroleum Group donated 5 million
euros to the reconstruction of damaged areas, while
the Kostas Mitsis Hotel Group undertook the com-
plete rebuilding of up to 100 wholly or partially
destroyed buildings in a stricken village.
OPAP SA contributed 50 million euros toward the
alleviation of the consequences the unspeakable
tragedy had for the country.
The Hellenic Telecommunications Organization
(OTE) and its subsidiaries offered 6 million euros in
all, and some added relief measures for its sub-
scribers in stricken areas. Vodafone contributed 4
million euros in cash and other initiatives, including
the installation of 50 telephone booths in burned
areas of the Peloponnese and Evia. Through these
booths, all citizens will have free access and free
calls to national, fixed and all mobile companies’ des-
tinations, until at least January 2008. Vodafone,
Cosmote and Wind have given the affected sub-
scribers the ability to use 10 hours of national calls
free of charge per month for the two months. Among
other measures, Cosmote distributed in situ 10,000
mobile telephony connection kits, each credited with
50 euros’ talking time, as well as mobile devices.
The Lafarge Group and Heracles, its subsidiary in
Greece, announced the donation of 1 million euros to
the solidarity fund and also the immediate launching
of a program to support fire-affected populations and
local communities. The Group will make available
building material products and contribute to structur-
al works for the repair of water and sewage networks,
anti-flood works and reconstruction of public build-
ings and facilities. Overall, Lafarge will dedicate over
3 million euros to support fire-affected populations
and local communities.
The amount of 1 million euros was offered by
Club Hotel Casino Loutraki, and an equal amount by
Aegean Airlines. The Louis Group donated 15 fire-
fighting vehicles, while the Papapostolou Medical
Equipment Center supported villages by offering to
fully equip two town surgeries in the stricken areas.
Helexpo offered 2 million euros and Athens Inter-
national Airport 1 million. The same amount was
donated by Lamda Development, and 500,000 euros
was offered by S&B Industrial Minerals, which also
offered its know-how and infrastructure to the future
reforestation of the burned areas. Interamerican
offered 300,000 euros
AGRINO EV.GE. responded by sending 18 tons of
rice to the Ileia, Evia, Arcadia and Laconia prefec-
tures. Vivartia announced an offering of 1 million
euros in cash and is planning a 10-million-euro
investment in building two model milk-producing
farms in the Peloponnese.
Coca-Cola HBC distributed and donated an approx-
imate 400,000 liters of drinking water and soft drinks
to affected people, firefighters, emergency services and
volunteers, while its vehicles distributed food, clothing
and medicines. Employees donated 500,000 euros to
disaster relief, Coca-Cola HBC matched the donation,
and its partner Coca-Cola Hellas donated an addition-
al 1 million euros. Both companies ascertained their
deep commitment over the longer term to support spe-
cific initiatives to revive the the environmental and
economic life of the affected areas.
The above and other similar references to a
longer-term commitment bolster hopes of an even
more impressive showing of corporate social
responsibility in the months and years to come,
especially in times of crisis.
34
During July-August the market ended flat, recovering all of
the losses incurred during the subprime crisis. Negative
surprises almost offset the positive ones with the absolute
number of negative surprises increasing significantly on a
quarterly basis and with the net positive surprises having
narrowed compared to the previous quarter mainly due to low vis-
ibility rather than a change in the underlying trends. Apart from
Titan and the refineries, all negative surprises were in the small-
and mid-cap space. We remind readers that our surprise outcome
is based on the whole information package accompanying the
results and may not be linked to headline surprises. Watch list rev-
enues were up 6 percent, in line with our expectations, and net
profits were up by 23 percent, six percentage points above our
expectations. The positive surprise in earnings growth was mainly
due to the banks, PPC and OPAP.
Specifically:
Alpha Bank, one of the largest Greek banks, reported satisfacto-
ry results which were in line with its business plan, but exhibited
lower growth compared to its peers. The bank reported a net profits
increas of 48.5 percent y-o-y, beating our expectations on the back
of a lower-than-expected provision expense. The one-off gain from
the sale of its insurance operations in Q1 07 positively affected the
H1 growth rate as well.
EFG Eurobank announced very strong results and it displays signifi-
cant growth in international operations, which still is not fully reflected
in the bottom line. Part of the bank’s record profits could be attributed
to its operations in ‘New Europe,’ 900 units in six countries, as these
operations are starting to break even and begin their earnings contribu-
tion. We are very positive about the bank as it continues to retain its
leading presence domestically and is concurrently experiencing rapid
expansion in the fast-growing New Europe. The management has
revised and extended its business plan targets.
Piraeus Bank reported great H1 07 results that exceeded our esti-
mates due to strong business growth across the board. The bank
exhibits strong growth and profitability in Greece and impressive growth
in international operations with its loan portfolio increased by 37 per-
cent y-o-y and deposits by 25 percent. The bank has added 78 new
branches abroad since June 2006, reaching 270 branches. Domesti-
cally, there were also new branches added, 16 in total.
ATEbank announced strong results that were supported by trading
gains and managed to achieve to a great extent targets set by manage-
ment. The bank presented strong growth in lending volumes, implying
some market share gains while core banking revenues posted a healthy
11.3 percent increase y-o-y. The bank increased its participation in
AIKBANKA, which operates in Serbia, and plans to increase its presence
in Romania.
Bank of Cyprus reported a strong set of results for H1 on the back
of a strong increase in revenues mainly from core banking and insurance
activities, modest growth in expenses and a significant reduction in their
provision expense. The bank presented solid growth both in Greek and
Cypriot operations. We expect the revised management guidance.
Postal Savings Bank’s results were satisfactory and in line with tar-
gets. The bank is still highly dependent on trading gains. The bank con-
tinued its asset restructuring effort, liquidating part of investment port-
folios (down 17 percent y-o-y) in order to finance the significant growth
in retail lending, while core revenues posted a healthy 14.4 percent
increase y-o-y. The management gave a detailed picture of the alterna-
tive investments portfolio trying to remove market concerns.
National Bank announced strong H1 07 results without signifi-
cant surprises and with foreign operations to contribute 40 percent
of net income, maintaining its market share domestically and
increasing its margins. Turkish operations are still one of the big
advantages of the bank as it is expanding rapidly and the macroen-
vironment is benign. Finansbank presented another set of strong
results, gaining market share and, according to management, is the
fastest-growing bank in Turkey.
Emporiki Bank reported a mixed set of results on the back of higher
provision expenses compared to last year and lower growth rates than
competition. Total loans rose by 10.4 percent supported mainly by
mortgage loans, which presented an impressive growth rate of 32.5 per-
cent y-o-y. Net interest income was higher by 8 percent y-o-y, reaching
383 million euros.
Marfin Popular Bank reported H1 results above all expectations with
net profits increased by 164 percent on an annual basis.
OTE announced an in-line set of Q2 07 results aligned with our
estimates but toward the lower end of consensus estimates. Key high-
lights include: (a) high single-digit revenues growth from strong mobile
telephony that outpaced relative weakness in the domestic fixed line,
(b) weakened margin in domestic fixed line, (c) resilience in top line
at Romtelecom as new services offset retail traffic and line declines,
(d) the expected margin dilution of Cosmote from start-up mobile in
Romania and Germanos retail consolidation (e) strong uptake in
broadband connections.
Cosmote released a positive set of results with prolonged domestic
growth, well-controlled revenue and customer pickup in the region. We
highlight: the partly reversed previous quarter’s negative impact of inter-
connection rate cuts on the Greek bottom line, and less pronounced net
customer growth in Romania than in the previous quarter due to a base
cleanup and reiterated company guidance. The customer base cleanup
in Romania sustained lower net additions for the quarter, yet financials
are improving on track to achieve a key target of breaking even in
EBITDA in 2008.
OPAP reported results above expectations and this positive sur-
prise can be attributed to the strong Kino and Joker top line and to
the change of accounting of Intralot’s know-how transfer contract.
We think that the high Stoichima payout of Q2 is temporary and will
be contained in the following quarters. Kino remained strong and de-
bottlenecking and new media will support its momentum well into
2008. The new business plan includes new ventures in horse-race
betting, online poker and VLTs that if approved could add significant
value not included in our model.
Intralot headlines were below our expectations on an EBITDA
line mainly due to excess payout in Turkey, which however is not a
cash item given that payout reconciliation will take place at the end
of the contract in March 2008. Turkey was weak but very satisfac-
tory under the circumstances. We note the continued strong top line
performance in Bulgaria due to positive momentum and network
increase, solid growth in Romania due to continued increase of the
VLT’s drop, weakness in Latam, profitability growth in Malta due to
change in the game mix and increased losses in the US due to pri-
vatization-related expenses.
PPC announced surprisingly positive results with strong prof-
itability being helped by one-off items (provisions, tax credits).
Results were in line with consensus and our estimates on revenues
and EBITDA, but net profits came significantly increased. However,
this increase was not due to operational improvements but, instead,
due to reversed provisions and tax refunds. October’s business plan
will be critical for the future.
Hellenic Petroleum exhibited exceptional Q2 performance
while management continues building long-term shareholder
value. The global environment turned more positive throughout the
second quarter although it continued mixed. The overall H1 results
Markets
Research
Securities
The FTSE 20 companies
35
could have been even better, had the impact of the very
mild weather and the adverse environment throughout Q1
not been that severe.
Motor Oil released H1 07 results which were overall in
line with market expectations. The company displays solid
performance even with a significantly reduced trading activ-
ity and has important, value-enhancing catalysts ahead. The
company’s solid performance poses no worries in a volatile
environment. We have long held a positive view of the com-
pany’s solid fundamentals, competitive advantage in Greece
and SE Europe and its management team.
Titan reported a weak set of Q2 results due to the con-
tinued slowdown in US residential housing and declining vol-
umes in the Greek market in Q2 07. An adverse Lake Belt
ruling remains a key risk factor. On the positive side, we
highlight the company’s healthy fundamentals, the signifi-
cant growth potential in the Balkans and the consistently
high economic returns.
Coca-Cola HBC released a good set of results. On the back
of the strong operating performance and the successful exe-
cution of its innovation plans, the management upgraded its
guidance for 07 as following: volume growth of 11-13 per-
cent, EBIT growth of 18-20 percent, EPS growth of 17-19
percent to 1.85- 1.88 euros, ROIC improvement of ca. 100
bps and capex of 525 million euros.
Hellenic Technodomiki posted an improved performance in
Q2 with profits boosted by one-off gains. Key highlights of the
results are: healthy growth in group revenues driven by
increased construction business; construction EBIT margin
recorded an improvement on a quarterly basis due to lower
expenses associated with the group’s international expansion
and with the concession projects bidding; a positive contribu-
tion from the energy and environmental divisions on the back
of capacity additions in biogas units and increased profitability
from concessions.
The Greek benchmark general index was flat during
the review period (July-August 07) compared with
gains of 7 percent during April-May 07. Earnings
surprises, banks’ regional growth and their low cost of
funding, corporate actions and restructuring speculation
led the market higher. The continued upward trend of long-
term interest rates, share capital increases, uncertainty
over OPAP’s outlook, volatility in the environment of refin-
ers and Titan’s adverse Lake Belt ruling, had a negative
impact. M&A activity remained strong with MIG acquiring
a majority stake in Vivartia and becoming the second-
largest strategic investor in OTE, J&P Avax acquiring
Athena, Attica selling its 22 percent holding in Minoan
Lines and Hellenic Petroleum joining forces Italian Edison
to penetrate the liberalized electricity market.
The outlook for the Greek market remains positive because
of continued credit expansion, corporate actions, regional
growth and operating leverage.
Key uncertainties include decelerating loan growth and
intensifying competition for banks, a change in government
policies following the general elections, commodity prices,
input costs, regulatory environment, delays in infrastructure
projects and corporate governance. According to the Finance
minister there will be a max 0.2-0.3pp negative impact on GDP
due to the recent fires, a modest impact.
Mytilineos Holdings is a leading industrial group of companies active in:
ñ Metallurgy and mining through subsidiaries Aluminum of Greece and
Sometra (a zinc and lead producer based in Romania). The Mytilineos
Group is the leading alumina and aluminum producer in Southeastern
Europe.
ñ The domestic energy sector through Endesa Hellas (joint venture formed
by Endesa Europa and Mytilineos Group).
ñ EPC business through subsidiary Metka. The company is active in the
execution of large-scale industrial and energy projects and is the leading
EPC contractor in Greece.
ñ Vehicle manufacturing through subsidiary Elvo.
Endesa Hellas, the JV formed by Endesa Europa and Mytilineos Holdings,
recently announced the following key decisions of its board:
ñ Endesa Hellas’s initial capitalization, following the contribution of Mytili-
neos’s energy assets and the cash payments from Endesa, will reach 1.2
billion euros as was initially announced.
ñ It has been confirmed that the 334MW co-generation plant (JV’s first
thermal station) is to start operations in Q4 07.
ñ Endesa Hellas has already commenced the construction of a 430MW
gas-fired plant in Aghios Nicolaos, Viotia. Recall that Metka is the EPC
contractor.
ñ The company will also proceed with the construction of a third 400MW
CCGT plant that should be operational by H1 2010.
ñ Management has set a target of 1,400MW-installed capacity up to 2010,
according to the first phase of its business plan.
Finally, we note that Endesa Hellas aims to become the largest independent
electricity producer in the Greek market and the second largest behind Public
Power Corporation.
Metka is one of the most valuable assets of the group. Key investment posi-
tives are the following:
ñ Strong backlog (currently at ca. 640 million euros) and improved visibili-
ty following the establishment of Endesa Hellas’s business plan and the
recent assignment of the PPC Aliveri project (427.4MW, budget: 219.2
million euros). Recall that major clients of Metka are PPC and Endesa
Hellas.
ñ The strategic alliance with Alstom, the successful cooperation with GE so
far, as well as the project assignment in Pakistan provide good evidence
that Metka can successfully bid for large-scale energy projects abroad.
ñ Metka is the largest EPC contractor in Greece with an excellent track
record in the construction of energy projects. The long-term relationship
with PPC provides a competitive advantage over the allocation of future
projects, with the first being the one in Aliveri.
ñ Healthy financials and a strong balance sheet. The company operates
with high operating and net profit margins, pleasing economic returns and
low capex needs.
Key investment themes for the Mytilineos Group are:
ñ The implementation of the business plan that Endesa Hellas has already
announced. We think that Endesa Hellas has set clear and feasible tar-
gets in the energy sector, as a market share of nearly 8 percent by 2010
is achievable, in our view.
ñ The upcoming completion of the triple merger with subsidiaries Alumini-
um of Greece and Delta Project and the resulting restructuring within the
group.
ñ New energy projects for Metka going forward.
Our view of the prospects of the Mytilineos Group is a positive one as
we think that the group is one of the most attractive players in the local
market offering exposure to the base metals and the energy sector. A
key growth driver is expected to be the implementation of Endesa Hel-
las’s business plan.
Mytilineos Holdings
w w w . p ko n l i n e . g r
36
Themes
6 market playerswith strong organic growth
Although the fortunes of the Athens Stock Exchange are strongly correlated with theresults of a few big players, six smaller companies with strong organic growth and well-known brands may present noteworthy opportunity.
Despite being diverse in character and field of operation, the six companies possess some common qualities, which could very well account for their current
growth and also in all probability strengthen the foundations for their future growth.
With an eye on this future growth and expansion to markets both domestic and foreign, the companies keep striving for excellence through innovation and
through prioritization that is regularly updated to adapt to the markets’ ever-changing demands. The strategy each of the companies sets for its
development may differ, yet all six of them have already proven they are shifting to a higher gear.
By Maria Vasileiou
Aegean AirlinesAegean Airlines is the largest private Greek airline company. It is a full service car-
rier since 1999 and its fleet flies to domestic and international destinations out of
the three largest Greek airports. As a result it operates 30 routes and achieved a
leading domestic market position in 2006, when it carried 4.45 million passen-
gers. As far as its financial performance is concerned Aegean has achieved a prof-
itable EBT since 2003 and strong and sustained growth in profitability. In 2006
passenger revenue reached 350.3 million euros, 18.5 percent up compared with
a year ago. Total revenue increased as well by 18.5 percent, reaching 402.2 mil-
lion euros. Last year net income increased to 26.7 million euros from 15 million
in 2005, while net income margin amounted to 6.6 percent. EBITDAR, a term
commonly used in the airline industry which refers to earnings before net interest
expense, income taxes, depreciation and amortization and rental costs, increased
to 69.9 million euros in 2006 from 53.2 million the year before.
The company, headed by Theodoros Vassilakis, places emphasis on pas-
senger safety. As a result its administration has invested in brand-new, state-
of-the-art aircraft, control systems, technical support and continuous staff
training. Extensive fleet maintenance is carried out daily at the airport facilities
by its technical department, which consists of aeronautical engineers, techni-
cians and aircraft systems experts. Every aircraft in Aegean’s fleet is equipped
with advanced safety systems such as ACAS II (Airborne Collision Avoidance
System), EGPWS (Enhanced Ground Proximity Warning System) and DFGS
(Digital Flight Guidance System). The Aegean Airlines fleet consists of three
Airbus A320s, six Boeing 737-300s, nine Boeing 737-400s, and six AVRO RJ
100 jets manufactured by BAE Systems (British Aerospace).
Aegean has ordered a total of 19 Airbus A320/321 aircraft that will be
gradually delivered by June 2009. Aegean holds an option for an additional
eight A320/321 family aircraft. Two out of the 19 aircraft belong to the A321
family, accommodate a total of 200 passengers and will be used by Aegean to
cover a wider range of destinations from 2008.
As a result of the abovementioned investment, and as of 2008, Aegean will
have the youngest fleet in the region of the Balkans and Southeast Europe. The
new A320s will replace the older aircraft and will be used for Aegean’s expan-
sion on both domestic and international routes. Aegean aims at achieving a 25
percent market share on each route, at establishing itself in emerging regional
markets and at leveraging its Lufthansa partnership. Aegean Airlines is sup-
ported by a number of dynamic and established Greek companies such as: the
Vassilakis Group of companies, the Laskaridis Group, Bank of Piraeus Group,
G. David, Dakis Ioannou and the Konstantakopoulos Group of companies.
Fourlis GroupThe Fourlis Group of companies is one of the largest commercial groups in
Greece. Its strategy is to expand through companies which focus mainly on
retail and secondarily on wholesale commerce. Each subsidiary is operat-
ed independently by professional management. However, all subsidiaries
take advantage of the group synergies which are coordinated by the hold-
ing company. The group is active in three key divisions: retail home fur-
nishings through the franchise of IKEA stores in Greece, Cyprus and Bul-
garia, retail sporting goods through the franchise of Intersport stores in
Greece, Cyprus, Romania and Bulgaria, and wholesale of electric and elec-
tronic appliances through the representation of brand names including
Samsung, General Electric, Ariston, Liebherr and Korting.
The Group’s entry into new, developing sectors like home furnishings
and accessories and sporting goods represents one of its basic strategies.
In order to accomplish its goals, the Group has set itself a list of priorities.
First, it aims at focusing on the expansion of the commercial and service
areas. The Group is focusing on the development of its companies in the
wholesale and retail business in order to further enhance the Group’s per-
formance. Second, it wants to promote synergies within the Group and
develop alliances with other companies. The Group aims to exploit the syn-
ergies developed between its companies in order to lower costs and
increase total returns. Great importance is placed upon the dynamics,
development and competitiveness of each company. Third, it aims at
adapting constantly so that the Group is always ready to face increasing
needs and new conditions arising in the market. Last, but not least, it
wants to keep the Group’s personnel aware at all times of new develop-
ments in the industry by providing ongoing professional training. The
Group’s companies give high priority to full professional personnel training,
with continuous development of the expertise of each member of staff con-
cerning the field in which they work.
The holding company Fourlis Holdings SA develops and controls the
Group’s corporate strategy and coordinates its implementation in all of its
subsidiaries. It enhances communication and cooperation among the
member companies, with the aim of achieving excellent overall perform-
ance by the Group. The core operations, including new business develop-
ment, financial management and treasury, investor relations, budgeting
planning and reporting, fixed assets and real estate management, empow-
er Group members with the advantages required in an increasingly com-
petitive environment.
37
Fourlis Holdings SA has been listed in the Athens Stock Exchange since
1988. Consolidated sales reached 125.59 million euros during the first
quarter of this year, up 35.4 percent compared to the same period last
year. Net profit increased by 191.7 percent to 12.02 million euros during
the first quarter of 2007. EBITDA also increased significantly by 121 per-
cent, reaching 20.49 million euros in the first quarter of 2007.
The Group’s future plans include the opening of the first IKEA store in
Bulgaria at the end of 2008 or at the beginning of 2009, while the Group
headed by Vassilios Fourlis aims at reaching a total of eight IKEA stores in
Greece and Cyprus and two to three in Bulgaria. During the first full oper-
ational year (2008) of the first four stores in Greece and Cyprus, the Group
is expecting 350 million euros in sales and gross profit of 145.2 million.
As far as Intersport is concerned, expansion plans include opening anoth-
er two stores in Greece (23 today), reaching 10 stores in Romania (four
today), five in Bulgaria (one today) and three stores in Cyprus within the
next three years.
Eurobank PropertiesEurobank Properties REIC is the leading real estate investment company in
Greece. It manages one of the largest real estate portfolios of commercial prop-
erties in Greece and maintains long-term lease agreements with corporate ten-
ants. The company’s management team has a deep knowledge of the Greek
real estate market, which is governed by a favorable tax regime. Needless to
say, real estate investment is a fast-growing industry in Greece. The status and
credibility of Eurobank Properties has set new standards for the industry.
The company was established in 1952. Today it intends to pursue a
strategy aimed at delivering sustainable long-term earnings growth. The key
elements of this strategy are first to actively manage the company’s current
real estate portfolio. This means that the company intends to maximize the
profitability of the real estate portfolio by leveraging the strong tenant base
and optimizing the portfolio structure. It plans to continue to strengthen its
long-term relationships with the tenants in order to (i) achieve constant
lease renewals at market levels, (ii) reduce vacancies and reletting costs,
(iii) capture any potential future expansion requirements of the company’s
existing tenants and (iv) continue to tailor lease agreements to the specific
needs of the tenants (for example, structuring certain lease agreements to
permit the tenant to undertake renovations in accordance with their busi-
ness requirements).
A second key element of the company’s strategy is to pursue selective
acquisitions of Greek commercial real estate. The company intends to
expand its real estate portfolio primarily through the selective acquisition of
real estate with some or all of the following criteria: (i) high-quality build-
ings with modern infrastructures located in prime urban areas, (ii) buildings
with existing or identified tenants and (iii) properties with attractive rental
yields. In 2006 and in 2007, the real estate market, both internationally
and in Greece, is characterized by high liquidity which has created a trend
for increasing investments in new markets, a trend from which Greece also
benefits. The Greek real estate market is one of the most attractive markets
in the eurozone, since, apart from the existing competitive yields, there is
an increasing demand, especially in the commercial market.
Even if the main characteristic of the Greek commercial real estate mar-
ket in 2006 was the further decrease of yields in all sectors (office, retail,
logistics), yields in Greece are still above the European average in the office
and logistics sectors. The company’s strategy for future growth is to contin-
ue to acquire high-quality office, retail and logistics spaces in prime loca-
tions in Greece and in New Europe as capital and real estate market condi-
tions permit. The company believes that its strategic focus on the commer-
cial real estate sector of Greece and New Europe and its substantial knowl-
edge of its regional markets offer a competitive advantage in the identifica-
tion of real estate trends and in accessing and pursuing investment oppor-
tunities of prime commercial real estate with favorable terms in Greece and
New Europe.
The public offering of Eurobank Properties shares took place on the
Athens Stock Exchange in 2006. The company’s inclusion in the FTSE
EPRA/NAREIT Global Real Estate Index provided it with significant recogni-
tion. This particular index is considered a benchmark by the majority of the
investment community, including more than 300 companies and is calcu-
lated on a daily basis by Euronext Indices BV. Eurobank Properties is the
first Greek real estate investment company to be included in the global stock
exchange index. In addition, the company is also included in the FTSE/ASE
Mid-Cap 40 of the Athens Exchange.
In 2006 the company’s investments amounted to 40 million euros,
mainly in the office sector, and were concluded with attractive terms that
exceed the current average yields of the market. In the past year, the com-
pany showed high profitability with an increase of 72.5 percent in profits
before tax compared to 2005 (32.4 million euros in 2006 vs 18.8 million
in 2005). Net profits for 2006 amounted to 31.3 million euros as opposed
to 27.1 million in 2005.
Alapis GroupThe Alapis Group was created by the merger of Veterin SA, Lamda Deter-
gent SA, EBIK SA and Elpharma SA. The group is involved in the manufac-
turing and distribution of pharmaceuticals and parapharmaceutical prod-
ucts, veterinary pharmaceuticals, cosmetics, detergents and organic prod-
ucts. At the same time, it distributes small animal accessories, medical
equipment and health equipment products.
Alapis had a headstart, drawing on the vast and significant experience
of the merged companies. With the long-term goal of becoming the most
powerful and competitive company in its sector in Southeastern Europe, it
is making new business plans, fully aware of the fact that it is already one
of the most important companies in the field.
Alapis is placed at the top of the production and distribution pyramid of
a wide range of products with high-quality standards, thanks to its know-
how, specialized experience, long-lasting cooperation with major Greek and
foreign multinational companies, and support from an extended network.
Alapis is a considerable business force, which is dynamically entering
the market. Its goal is to increase production and performance by taking
advantage of the experience and cooperation of the companies merged, in
order to achieve business objectives. The activities of the Alapis Group
include the manufacturing and distribution of detergents and cosmetics, vet-
erinary pharmaceuticals, nutritional supplements, small animal accessories
and organic products, on behalf of major multinational companies and
supermarkets. At the same, the Alapis Group is involved in the sectors of
human pharmaceuticals, medical devices and health materials. The compa-
ny's business development plan provides for the control of all activities by a
single center, which will guarantee the quality standards according to the
Alapis Group philosophy and values.
The Group’s strategy includes the following pillars of growth. In the area
of human health the company plans to implement product range enlarge-
ment, cross-selling opportunities, expansion in SE Europe, vertical integra-
tion to fuel economies of scale, potential consolidation of a fragmented sec-
tor. In the area of veterinary and animal products, it plans to implement
product range enlargement (own-branded products), contract manufacturing
for multinationals, expansion in SE Europe, and cross-selling. In the area of
detergents and cosmetics, it plans to undertake import substitution, poten-
tial growth in private label products, and expansion in SEE Europe, while its
growth strategy in organic products includes increasing health awareness in
Greece, distribution synergies, and increasing the importance of supermar-
kets. Alapis is headed by Lavrentios Lavrentiadis, who holds 37.7 percent
of the company’s stocks, Fortis Global Custody Services NV holds 6.24 per-
cent, while other shareholders hold 56.1 percent.
On a consolidated basis, Alapis reported for fiscal year 2006 revenues
of 273.5 million euros and EBITDA of 46.1 million. For the first half of
2007 it reported revenue of 163.5 million euros and EBITDA of 45.6 mil-
lion. Net income reached 20.1 million euros in 2006, while in the first half
of 2007 it amounted to 28.5 million. At the end of 2007 revenues are
expected to reach 370 million euros and EBITDA 97.5 million.
38
Themes
Iaso GroupThe Iaso Group deploys a sophisticated view of health. The Group's clinics
handle a broad range of diagnostic, therapeutic and research services and
its ambition is to expand this range in order to progressively cover more of
its customers' needs by providing innovative services in state-of-the-art hos-
pitals. The Greek health market is characterized by high fragmentation,
while the largest operator holds 15 percent of the total private market and
smaller players are less competitive due to the lack of quality services and
available resources. The Greek market is also characterized by high demand
for quality medical services, change of demand mix due to change in demo-
graphics (ageing population, immigrants’ inflow) as well as poor-quality
medical services outside the regions of Athens and Thessaloniki. Iaso’s
administration is taking into consideration the Greek health market’s char-
acteristics and believes that they offer a wide range of possibilities for fur-
ther expansion.
Iaso’s business model is based on the concept that the physician, apart
from his role in treating patients, is a shareholder and thus a key decision-
maker. Its physicians, as decision makers, ensure that the provision of med-
ical services is of the utmost level of quality and fully meets customers’
needs. The Group’s administration believes that all of the above, coupled
with the application of the principles of corporate governance and the high-
caliber management team, constitutes the cornerstone of success.
A group of doctors, who until recently cooperated with the Lito clinic,
have joined Iaso’s medical team, contributing to the increase of patients as
well as to the Group’s profitability. This business model is also applied to
the Group’s new hospitals. During 2007, international consulting firm the
Boston Consulting Group was hired to assist with the preparation of the
Group’s development plan, regarding the Group’s further expansion. The
Group’s pediatrics clinic is due to go into operation in October this year.
Iaso hospitals participate in worldwide recognized Intra-hospital
Research Programs (Harefield Hospital, Imperial College of London etc) to
ensure continuous medical advancement. They participate in a research
program named ‘MEDAS’ (Medical Assistance System). In 2006 revenues
reached 143.8 million euros versus 116.7 million a year before. Net profit
amounted to 13.1 million euros, while in 2005 net profit was 5.7 million.
Korres Natural ProductsKorres Natural Products is a Greek company with roots in the first homeo-
pathic pharmacy in Athens. Set up in 1996, Korres offers a complete skin
and hair care range, sun care products and herbal preparations all from top-
quality natural ingredients. The founder the company’s line of natural cos-
metics, Giorgos Korres, has put emphasis on delivering his products all
around the world. Today the company distributes its distinctively Greek cos-
metics to some of the finest stores in the world.
Having started in 1996, the company now lists in Greece a few thou-
sand clients, exclusively pharmacies, throughout the whole country, even in
small villages and islands. In the international market the Korres Products
company has expanded to more than 20 countries, and operates in the UK
and the USA through its own subsidiaries. Actually, in London and
Barcelona the company operates stand-alone stores, while it is active in the
USA, Canada, the UK, France, Italy, Germany, Spain, the Netherlands, Aus-
tria, Switzerland, Cyprus, Kuwait, Dubai, Singapore, Hong Kong, Malaysia,
the Philippines, Thailand, Russia, Australia and Colombia.
The company has developed an extensive distribution channel abroad. A
few indicative examples of stores that carry Korres products are: Bendel’s,
Fred Segal Essentials and Sephora in the USA. Harvey Nichols, Liberty, Sel-
fridges and John Lewis in the UK; Le Bon Marche, Sephora, La Samaritaine
and Galeries Lafayette in France; La Rinascente and Sephora in Italy; Lud-
wig Beck, Quartier 206, Apropos and Harald Lubner in Germany; De
Bijenkorf and Parfumerie Louise in the Netherlands; Nana De Bary in Aus-
tria; SaSa and Joyce in Southeast Asia, and Villa Moda in the Middle East.
The origins of the company’s success story are to be found in Greece's
oldest homeopathic pharmacy, where Giorgos Korres started working as a
pharmacist in 1988 and took it over in 1992. For him it was only natural
to invest in a laboratory for homeopathic remedies and to gradually build up
a clientele, whose demands drove him to a wider variety of natural prod-
ucts. These products were so successful that his pharmacist friends asked
to carry them in their own stores, and that signaled the start of the compa-
ny. Entering this field was not a marketing choice, but a self-evident step
for Korres, who now creates products with herbs, offering the highest qual-
ity, fully avoiding mineral oil (petroleum derivative), propylene glycol, and
silicones, and maintains reasonable prices. The Greek flora is absolutely
unique and gives the company the opportunity to use a wide variety of
herbs. The product line has recently been expanded to create a product
range based on gum mastic, a resin found only on a Greek island, in coop-
eration with the Mastiha Growers Association.
During the first half of 2007 the Korres Group reported revenues of 17.14
million euros compared to 15 million in the same period in 2006. Net prof-
it amounted to 2.1 million in the first half of 2007, while it was slightly lower
— 1.84 million euros — during the same period in 2006. The company’s
stocks have traded on the Athens Stock Exchange since April 2007.
40
Themes
Multidimensional: This is the word that
describes the institution of public-private
partnerships that was introduced to Greece
two years ago. And indeed there is no other
way to describe it, since it can be applied
to any sector of public life, reinforcing and accelerating
the realization of even the most complex public works,
which are necessary for the development of society.
The 24 pivotal projects that have already been
approved by the relevant Interministerial Committee
come under the sectors of health, civilization, educa-
tion, public sector accommodation, the environment
and ports infrastructure.
Local societies are endeavoring, through the rele-
vant authorities, to include in their planning as many
public works projects as possible, capitalizing on the
advantages offered by PPPs. When a society such as
the Greek one, which by nature is circumspect in
adopting foreign institutions, embraces PPPs, one
should realize that their application is necessary in
order to improve the quality of life of the Greek people.
Besides, it is not just by chance that public-private
partnerships seem destined to become the dominant
feature of the next four years. The further involvement
of the private sector in the construction and operation
of infrastructure projects (roads, airports, harbors) has
become the aim for all concerned, since today Greece
has developed into a transport and telecommunications
center in the wider area of Southeastern Europe.
According to our information, the majority of public
works will focus on the energy sector. It is to be expect-
ed that the liberation of the energy market and the har-
monization of Greece with the regulations issued by the
European Union will cause a veritable explosion of pro-
posals for new projects. It is almost certain that photo-
voltaic and wind parks will be included in the list of
projects, and it is equally certain that environmental
projects will be very high on the agenda of public works
that will come under the scrutiny of the PPPs Special
Secretariat. Special attention will be accorded to the
areas damaged by the recent disastrous forest fires, in
which private investments realized through PPPs will
be particularly encouraged, contributing in this way to
their reconstruction and development.
It was to be expected that the announcement of
public works to be realized through PPPs would trig-
ger the interest of large foreign concerns with long
experience in the sector. Indeed, forecasts maintain
that in the coming months the inflow of foreign cap-
ital will peak. The French company Vinci and the Bri-
tish Innisfree have already submitted their proposals
for the construction and maintenance of seven new
fire stations estimated to cost 35 million euros. The
German company Hochtief will probably soon be
included in the list of companies that are going to
play leading roles in Greek PPPs. Vinci has already
worked in Greece, since it participated in the build-
ing of the Rio-Antirrio Bridge and in the construction
of major highways. It is the first time though that Inn-
isfree, which deals exclusively in PPPs, has
expressed an interest in the Greek market.
The involvement of foreign companies in Greek
public works and their collaboration with their Greek
counterparts will also help the latter acquire know-
how, which in the future could be exported to the
Balkan countries and to Egypt. There is also notice-
able activity in the consultancy sector for the hiring
of consultants, since banks, technical companies and
foreign investors are showing a marked interest.
Proof of this is that in the bid for hiring a consulting
firm for the construction of hospitals, eight conglom-
erates, in which some 70 companies are participat-
ing, have submitted tenders.
Public works for the communityAll five public works projects that have been approved
by the relevant Interministerial Committee during its
most recent session will improve the quality of life of
Greeks, as well as services provided to citizens by the
public sector. Two out of the five are the first environ-
mental public works to be undertaken. One is the con-
struction of the sewerage networks and the sewage
treatment plant in Rafina and the other the implemen-
tation of infrastructure for the integrated waste man-
agement system in the region of Western Macedonia.
The heavy pollution of the Rafina water table
caused the Municipality of Rafina to submit a propos-
al for the construction and operation of new, modern
sewerage networks and a sewage treatment plant.
The cost of the project, which is estimated at 40 mil-
lion euros, will limit the seepage of pathogenic
microbes and other organic matter into the environ-
Two years of PPPs in Greece:Valuable knowledge
Two years after the introduction of Public-Private Partnerships, Greek society has provenready to embrace the new institution’s advantages. Environment and energy are the SpecialSecretariat’s priorities.
By Dimitris Pappas
41
ment. It is the first such pilot project to be imple-
mented in Greece and it meets a long-stated demand
by the Municipality of Rafina. The municipality covers
an extended area in which dozens of communities
established without the benefit of any town planning
are the main cause (according to the municipality) of
the problem. The rapid housing development of recent
years aggravated the problem and the solution select-
ed by the municipality as the most effective was the
construction of a sewerage network and a sewage
treatment plant. The municipality believes that, in
2007, the existence of absorbent cesspits is a dis-
grace and that they should be completely phased out.
The efforts to implement such a project had been
going on for a long time, but, as they informed us, it
was the PPPs that have put the project on the home-
stretch. According to the plan, construction will begin
with those communities that have been included in
the town planning and in the future will be extended
to those lying outside of it. End-user fees will repay
the project, but as yet there has been no announce-
ment concerning the forthcoming increase in munici-
pal levies. In the case that the final amount to be paid
is greater than the sum of the collected fees, the state
will undertake the repayment of the remaining part.
The Greek Interministerial Committee, within the
framework of meeting the environmental targets set by
the EU concerning waste management, has approved
the implementation of infrastructure for the integrated
waste management system in the region of Western
Macedonia. The prefectures of Florina, Kastoria,
Grevena and Kozani will acquire a unit that initially
will be capable of handling some 120,000 tons of
waste matter per year, reaching 150,000 tons at the
end of the partnership.
Ambitious projectThe contracting authority of this project, DIADYMA
(Waste Management System of Western Macedonia)
SA, aims at decreasing the amount of waste going to
landfills, thus contributing to the minimizing of its
repercussions on the environment. Moreover, the
products such management will yield (recyclable
material, biogas) will be exploited commercially. The
president of DIADYMA SA, Nikos Totomidis,
describes the project as ambitious and pioneering by
Greek standards, but also as difficult and challeng-
ing. Since 2005, the area boasts the only regional
integrated waste management system in Greece —
‘putting an end to the disgraceful existence of unsan-
itary landfills,’ according to Totomidis. Now the com-
pletion of the infrastructure will be accomplished via
PPPs. The estimated construction cost amounts to
97 million euros. And the president of DIADYMA SA
did not miss the opportunity to point out that the
project will increase employment in Western Mace-
donia. ‘It is an ambitious target we are aiming at,’
concluded Totomidis, ‘but now it has a solid base.’
The two other projects that are going to be
implemented are the construction of the new build-
ings of the Ministry of Economy and Finance and
the construction of the buildings of the Administra-
tion Park in Alexandroupolis.
The buildings of the Ministry of Economy and
Finance will be erected on land belonging to the
Hellenic Public Real Estate Corporation (KED) in
the area of the Mint near Athens and will accom-
modate the majority of the ministry’s services. In
the surrounding area, modern sports infrastructure
and a recreation park belonging to the Municipali-
ty of Halandri will also be constructed. Further-
more, on land belonging to the municipality, a new
town hall and a new municipal health center will
be erected, while the partnership includes exploit-
ing the underground parking areas of the town hall.
The new building of the Ministry of Economy
and Finance will accommodate a 3,225-strong
staff, covering the ministry’s expected staff
increase over a 50-year period. The total above-
ground area of the building will come to some
55,000 square meters, while the surrounding area
under development comes to some 16,800 sq.m.
The new building will accommodate all the min-
istry’s services, with the exception of the General
Secretariat for Information Systems and the Gener-
al Secretariat of the National Statistics Service,
which have been already housed in modern build-
ings. The ministry is expected to save some 10 mil-
lion euros by terminating the leases of the build-
ings it is currently using. The operational period of
the partnership is 26 years and the estimated cost
amounts to 212 million euros.
It has been several years now that the Prefec-
ture of Evros has been looking into ways of reac-
commodating all its services in a single building. As
Helen Tsiaousis, the vice prefect in charge, has
pointed out, the prefecture’s services are spread
between 18 buildings, something that increases
their operational cost and the citizens’ discomfort.
Though the prefecture has had the complete file for
the project ready since 2000 — as Tsiaousis further
elaborated — it was only after the law governing
PPPs had been passed that the green light for going
ahead with the project was given. It is estimated
that the project will be completed 2.5 years after
the starting date selected by the private partner.
However, the Prefecture of Evros is already
preparing a new proposal, this time for the con-
struction, via PPPs, of three thematic parks. The
Administration Park building will accommodate the
major part of the prefecture’s staff, while its cost
will come to some 22 million euros.
The lack of a specialized public rehabilitation
and recovery center in northern Greece is forcing
dozens of patients and their relatives to travel either
to Athens, where there is such a center, or to seek
the services of private clinics both in Greece and
abroad. The Rehabilitation and Recovery Center of
Northern Greece, which will be erected in the Pre-
fecture of Pieria, is expected to solve this problem,
which not only discommodes the patients but also
poses a financial burden upon them. According to
the plan, the center will have 250 beds and its cost
is estimated at over 100 million euros.
42
In a world that is constantly altering and in a society that
is changing daily, the role of education constitutes a par-
ticularly decisive factor.
Under these conditions, the school infrastructures, which
include instructive, athletic and cultural installations, are
called upon to shape the essential educational environment,
to transmit to our youth knowledge and education, in a frame
of culture and social sensitivity.
The School Building Organization, which holds responsi-
bility for school infrastructures directly or indirectly across
the whole country, according to the strategic recommenda-
tions of the Ministry of Education, has fundamental objec-
tives and priorities.
The speed of the completion of our objectives, always in
line with the assembled international experience, depends on
the success of the co-financing of school infrastructures by
the public and private sectors (PPS).
The School Building Organization has achieved a great deal
of success over the last three years. Despite the Organization’s
continuous work, the needs of our country in school infrastruc-
tures are still sizable and an estimated 900 school units are still
required in order to: a) eliminate the double shift, b) eliminate
the leased school units, and finally c) to upgrade those which
already exist.
For the School Building Organization, public-private part-
nerships (PPPs) constitute an exceptional second line of pro-
duction for school infrastructures, in parallel, of course, with
the already existing strategic plan of the School Building
Organization. The basic advantage of PPPs is the participa-
tion of the private sector in financing and providing labor for
projects in parallel with the public sector.
The combination of the construction of the project and the
responsibility for maintenance constitutes a qualitative
advantage of the process.
The basic selection requirements for the integration of school
130 school units
SCHOOL BUILDING ORGANIZATION SA
through public-private partnerships
43
units in PPP projects are:
ñ The project should be absolutely necessary.
ñ The acquisition of the necessary land.
ñ The existence of designs — architectural, static, mechanical electrological
engineering — elements that fully define the physical state of the projects.
ñ The capability on behalf of the School Building Organization to repay the
availability payments, which are required for the materialization of the
project according to the timetable of the specific contract agreements.
The objective for the following six-year period is the construction of 130
new school units; this obviously will accelerate the improvement of the exist-
ing schools. At present we are developing the abovementioned program with a
PPP budget of 541.4 million euros. In more detail:
In the Region of Attica two PPP projects are under way with a budget of
150.4 million euros for the construction of 27 important school units. At pres-
ent the project is in the final phase of engagement with the legal, technical and
financial adviser, who will aid the SBO in auctioning the project.
The second PPP project is taking place in the area of Central Macedonia,
with a budget of 116 million euros, and includes the construction of 31 school
units. At present the project is in the process of selecting the financial, tech-
nical and legal adviser and evaluating the technical tender of the partnerships
that will participate in the open procedures.
The third PPP project concerns the regions of Eastern Macedonia and
Thrace, Western Macedonia and the Ionian Islands and includes the construc-
tion of 23 school units with a budget of 77 million euros. At present the proj-
ect is in the process of selecting the financial, technical and legal adviser and
evaluating the technical tenders.
The fourth PPP project is in the regions of Thessaly and Western and Sterea
Greece, and includes the manufacture of 21 school units with a budget of
71,500,000 euros. The proposal has been submitted to the Ministry of Econo-
my and Finance in order to be approved by the Interministerial Committee.
The fifth PPP project concerns the regions of the Peloponnese, the North-
ern and Southern Aegean and Crete and includes the construction of 27 school
units with a budget of 126.5 million euros. It has already been submitted for
approval by the Ministry of Economy and Finance.
With the construction of the abovementioned school units, we estimate
that: a) the double shift in the region of Attica will be decreased from 3.2 per-
cent today (from 8.2 percent in 2004) to 2 percent. Corresponding reductions
are anticipated in the rest of the Greek prefectures. In addition, those projects
will contribute to the reduction of leased schools as well as the upgrade of
those which are already in operation. At the same time, one of our basic objec-
tives is that these school units should be ‘modern bioclimatical schools.’
Specifically, the schools will include:
ñ Photovoltaic systems in order for them to produce their own required elec-
tric energy.
ñ Modern systems for the reduction of lighting energy by 30 percent.
ñ Carbon dioxide (CO2) sensors for the improvement of air quality in the
classrooms, with the removal of CO2 and airborne microparticles (PM10).
ñ More areas of shade in school grounds.
ñ More green areas in schoolyards and, probably, on rooftops.
‘One of our basic objectives is that the new school units should be “modern bioclimatical schools.” The speed of the materialization of our
objectives, always in line with the assembled international experience, depends on the success of co-financing of school infrastructures by the
public and private sector (PPS).’
Panagiotis A. PatargiasAssociate Professor, University of the Peloponnese
Managing Director of the School Building Organization
Publi
44
Themes
The successful introduction of The Mall
Athens, the Greek capital’s first large-scale
indoor shopping complex, has paved the way
for the construction of more shopping centers
in the next few years as solid returns in the
sector are drawing more attention from foreign
investors. Industry figures show that 10 shopping
centers are expected to be built in Attica by 2010,
adding 382,000 square meters of retail and enter-
tainment areas to the city.
Major projects include the conversion of two pre-
vious Athens 2004 Olympic Games sites. A multisto-
ry building used for television broadcasting (the IBC
center) will be made into a shopping mall by 2009
and the venue that hosted the table tennis and rhyth-
mic gymnastics events, the Galatsi Olympic Hall, will
be made into a retail complex by the end of 2008.
Developer Reds, a subsidiary of Greece’s largest con-
struction group Hellenic Technodomiki-Aktor, is
planning to be among those at the top the list with a
100,000-square-meter shopping complex in Kantza,
east of Athens. The property that will be used for this
project was sold to La Societe Generale Immobiliere
Espagne (LSGIE) in 2005 for 70 million euros and
the Greek company has agreed to obtain the neces-
sary licensing for its development.
The Mall Athens, built by Lamda Development,
was launched in November 2005 and introduced the
city’s consumers to the first shopping complex that
accommodates hundreds of stores, along with cafes,
restaurants and cinema theaters. ‘The Mall Athens
introduced a new concept. Its location was strategic
and it offers a good tenant mix. This is important as
it helps provide better-quality service to shoppers,’
said an industry consultant who asked not to be
named.
Currently consumers show a preference for the
center of Athens with districts such as Ermou Street
and Kolonaki being among the favorites. This has
created rising rental values as supply struggles to
match demand. The monthly price per square meter
reaches up to 250 euros in central Athens — an area
which is ranked in position number 13 on the list of
European cities in terms of retail rental value. High
demand and prices have helped stir interest in devel-
oping shopping centers out of the city center, partic-
ularly in Athens’s more affluent northern suburbs.
The new shopping malls offer retailers larger
spaces that are unavailable in the city center. The
Mall Athens in Maroussi stretches over 58,000
square meters of commercial and entertainment
choices, while the Avenue Center which is located on
Kifissia Avenue in the north of Athens covers 23,000
square meters. Upon completion of the shopping
center to be built at the IBC, Athens’s northern sub-
urb of Maroussi will accommodate over 100,000
square meters of gross leasable modern shopping
center space.
Previously undeveloped zones, such as those
near Athens International Airport, have been drawing
big box stores like IKEA and Leroy. ‘High demand
exists for both high streets and shopping centers and
available space is quickly absorbed,’ said Colliers
International in a first-half research report for 2007.
‘Professionally developed malls in Athens as well
as in other cities enjoy considerable interest from
retailers, who prefer to expand within such retail for-
mats. This trend is fueled by the multiple advantages
shopping malls offer to both consumers and opera-
tors,’ it added.
Apart from availability of retail space, shopping
centers have been providing store owners with high
rates of customer foot traffic. Improvements to
Athens infrastructure, particularly after the Athens
2004 Olympic Games, have helped make trans-
portation easier across the city. Attica Odos, which
connects parts of outer Athens, along with the
expanding metro network, are forms of public trans-
port helping Athenians get around the city faster.
Improved roads and transport links have also encour-
aged a shift in population to areas outside of Athens
— a development that further supports the construc-
tion of new malls in areas such as eastern Attica.
The expansion of the Suburban Railway (Proasti-
akos) has also helped increase interest in residences
even 50 to 100 kilometers away from Athens. The
market value for land and property lots that are well
out of the city have risen by up to 50 percent on an
annual basis, according to some estimates.
The new style of indoor shopping malls also offers
thousands of car parking spaces — a major asset for
a city with Athens’s traffic woes. ‘Previous attempts
Shopping centers in Athens
The construction of new shopping centers in Athens has attracted the attention of foreigninvestors, while more and more opportunities in the property market are appearing.
By Stelios Bouras
45
at building similar indoor shopping malls were made
in the past without offering shoppers parking facili-
ties,’ said one industry source. ‘This is a key differ-
ence between previous shopping malls and what is
being done now,’ the source added.
The changing nature of Greek retail businesses is
also seen as having an impact on the sector’s land-
scape. Franchising has had a positive impact on
retail sector property, both in terms of leases and pre-
mium prices, as many agreements force the fran-
chisee to open a certain number of stores within a
predetermined period.
Problems lingerOne of the disadvantages of expanding into new dis-
tricts is land zone restrictions. According to experts
this is one of the largest problems keeping a lid on
the sector. ‘Large organizations are scanning the
market to source development opportunities. Prob-
lems, however, with the tax system but most impor-
tantly with planning regulations persist, making local
partnerships inevitable for retail development,’ said
Danos and Associates, which is in association with
CB Richard Ellis, in a second-quarter report.
Greece is the only country in the 25-member
European Union with no national land registry. The
government has started to work on putting together a
land plan that is not expected to be complete for the
next few years. According to developers, fragmented
regulations on planning permission can involve up to
a dozen different ministries and government bodies.
Another issue seen harming growth is an 11 per-
cent transfer tax — among the highest in the EU —
which effectively acts as a barrier to entry as it is
footed by the buyer. A recent cut in the corporate tax
rate, however, has helped trim tax expenses. The
Finance Ministry has cut the corporate tax rate from
35 to 25 percent this year as part of government
plans to help draw more foreign investment. Recent
changes introduced by the conservative government
are seen by many in the sector as positively respond-
ing to the need for more development and the regen-
eration of urban areas.
High spendingSolid household spending on the back of rising wages
and strong credit expansion has kept retail spending
high. A drop in unemployment rates has also helped
keep consumer confidence high as the country’s job-
less figures have fallen to lows not seen in the last
eight years.
This in turn has helped keep Greece’s economic
growth among the highest in the European Union —
economic conditions that are drawing the attention of
large foreign retailers despite the small size of the
domestic market.
Retailers that sources say are interested in either
entering Greece or expanding their existing opera-
tions include: Fnac, Bijoux, Foot Locker, Skhuaban,
Zara Home, Kooton, Geox, Media Market, H&M,
Prince Oliver, Sprider Stores, Ikea and Jumbo.
With a national population of some 10 million
people, Greece is seen as a small market which can
offer limited gains to an investment; however, con-
sultants in the retail sector point out that the country
provides an ideal market for companies to test prod-
ucts in a European market before moving on to larg-
er countries.
One source told Greek Economy and Markets 07
(GEM) that ‘this has contributed to growing interest
in Greece from foreign retail chains. It might be eas-
ier to go through a market like Athens to test your
product rather than go through a city like London.’
More room for growthDespite the large number of planned malls, experts
are confident that there is still room for further
growth in the sector.
According to figures from independent think tank
Foundation for Economic and Industrial research
(IOBE), there are some 50 square meters of shopping
malls for every 1,000 people in Greece while the
respective figure in the EU stands higher at 150
square meters. In Portugal there are an estimated
200 square meters of shopping malls for every 1,000
people and the figure is slightly lower at 150 square
meters in Italy.
The prospect of high returns in the sector has
drawn the interest of a growing number of foreign
funds. ‘The Greek commercial property market offers
a good return on investment capital. Similar or higher
returns can also be obtained in other markets in the
region, such as Bulgaria, but Greece is seen as posing
less of a risk to investors,’ the industry source added.
Analysts estimate that Lamda Development,
which owns 50 percent of The Mall Athens, is seeing
an annual returns of investment of some nearly 6
percent on its Maroussi investment. Lamda’s high-
performing property investments are also among the
key reasons for its stock’s solid performance on the
Athens bourse. Annuals revenues from The Mall
Athens and Mediterranean Cosmos in Thessaloniki in
the first half of 2007 rose by over 20 percent on an
annual basis.
The shares, which are traded on the Athens
bourse, have gained 19 percent since the start of the
year while the Athens bourse benchmark general
index for the same time period added some 4 per-
cent. Average property returns in other European
Union states are seen at the 4.5 percent mark while
in countries such as Romania and Turkey the figures
stand between 8 and 9 percent.
‘A growing economy, increasing tourism figures,
improved infrastructure and massive regeneration of
investment carried out during the preparation for the
2004 Olympic Games are reasons why Greece is
heading to be one of the strong real estate markets of
the Mediterranean,’ said real estate company Obelisk
International.
In the next few years, the combined quantity of
space earmarked for shopping centers due to come
onto the market in Greece, Turkey, Romania and Bul-
46
Themes
garia totals more than 1.2 million square meters.
According to press reports, foreign funds placed 300
million euros in Greek property investment in the first
half of 2007, an amount that was invested for the
whole of the 12-month period in 2006. In 2005, the
figure stood at around 190 million euros.
According to industry data, 90 percent of funds
invested by foreign portfolios in the Greek property
market are in shopping centers. HSBC is among the
growing list of foreign firms that are tapping growth in
the local market. In November last year, it purchased
a 50 percent stake in The Malls Athens from Lamda
Development. Portugal’s Sonae Sierra, which operates
shopping centers in Portugal, Spain, Italy and Brazil,
is another foreign entry active in the Greek market.
Apart from being at a licensing phase for the con-
struction of the Galatsi shopping center at the previ-
ous Olympic venue, it is proceeding with the con-
struction of a shopping center in Larissa, central
Greece. McArthurglen, which operates designer out-
lets in the UK, Italy, France, Austria Germany and
the Netherlands, signed in July last year an 80-mil-
lion-euro development deal to expand its outlets
operations in Greece, with plans for its 17th location
at Yalou, east of Athens.
According to Danos, other major projects in the
sector’s pipeline include the Vovos group making a
significant entry into retail development through the
acquisition of a site in Votanikos, western Athens, in
a project that is expected to be passed on to an inter-
national open-ended fund. ‘The relevant site is situat-
ed next to the part of the regions that is under regen-
eration and has a building capacity of 70,000 square
meters. The relevant scheme will be developed in
addition to government plans to regenerate the region
of Votanikos by offering supplementary retail uses to
the stadium of Panathinaikos,’ Danos added.
Athens, with a population of 4 million people, is
drawing most of the attention of land developers but
the country’s smaller cities are also in for their own
shopping districts. One of the reasons why there is
massive developments expected in the field across
Europe is because shopping center developers are
now turning their attention to developing schemes in
cities between 400,000 to 600,000 people. In the
past, the emphasis was on cities that had popula-
tions of more than 1 million people, according to
sources. A 22,000-square-meter shopping center is
expected to be completed in Larissa, central Greece,
next year that will offer 126 total shops. Larissa has
a population of some 125,000 people.
Olympics influenceThe Athens 2004 Olympic Games had a massive
effect on the country’s property market as it changed
not only the infrastructure but also resulted in the
creation of large sports facilities that were available
for different uses after the world’s largest sporting
event left town. The Goudi sports complex, close to
the city center, that accommodated the modern pen-
tathlon and badminton events was the first venue to
be developed for other purposes.
The indoor stadium on the property, owned by
the Greek military, has been turned into a large the-
ater hall. The canoe-kayak water park, located at the
city’s old Hellenikon airport, will be developed into a
water park.
Meanwhile, the former Olympic Village in Thrako-
makedones, north of Athens, where the athletes
stayed during the competition, is expected to be
turned into a shopping center.
Suburban stores hitThe growth of shopping malls has created changes in
the retail market, leaving smaller shopping districts
with a thinning customer flow. The Athens Traders’
Association, a non-profit organization, has called on
the government to help implement controls on the
development of retail malls that it says are leading to
thousands of smaller stores being shut down.
‘The construction of shopping malls that have
been planned will result in a large blow for the oper-
ation and viability of existing suburban stores,’ it said
in a statement. ‘This new reality is leading to the clo-
sure of thousands of — mainly small — businesses
and the abandoning of thousands of leased stores that
are located on non-commercial streets,’ it added.
According to a study commissioned by the
traders’ group, a sample survey of 1,317 stores
across central parts of the capital showed that 13.4
percent of stores have been vacated with the hard-
est-hit areas being smaller streets where vacancy
rates reached as high as 60 percent. The biggest
problem was found in streets where wholesale busi-
nesses operated, it added. The group believes that
the shift of retail business activity to large shopping
centers at the cost of suburban markets will result
in harming local communities with a large history
and tradition.
Industry data show that new patterns emerging in
commercial property are having a large impact on
local economies. Although there is a shutdown of
smaller retail stores in less popular shopping dis-
tricts, investments by the foreign investors are creat-
ing jobs and breathing life into parts of Attica that up
until now had been ignored.
Companies argue that apart from the tens of mil-
lions of euros going toward constructions investment
budgets, a retail trade center can create more than a
thousand employment positions, many of which are
filled by people from the local district.