GREECE | EQUITY RESEARCH | WATER UTILITIES April 16, 2013

EYDAP EYATH Recommendation BUY HOLD Target Price €6.60 €5.70 Prior Target Price €7.40 €5.45

Closing Price (15/04) €5.19 €5.81

Market Cap (mn) €552.7 €210.9

Expected Return 24.3% -4.7% Expected Dividend 2.9% 2.8%

Expected Total Return 27.2% -1.9%

EYDAP & EYATH Share Price

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Apr-12 Jul-12 Oct-12 Jan-13 Apr-13

Stock Data

Reuters RIC EYDr.AT TWSr.AT

Bloomberg Code EYDAP GA EYAPS GA

52 Week High (adj.) €6.40 €6.75

52 Week Low (adj.) €2.30 €2.65

Abs. performance (1m) -10.5% -2.2%

Abs. performance (YTD) -0.2% -4.0%

Number of shares 106.5mn 36.3mn

Avg Trading Volume (qrt) 38.0k 16.6k

Est. 3yr EPS CAGR 4.2% -4.5%

Free Float 29% 20%

Analyst

Katerina Zaharopoulou

Research Analyst

Tel: +30 210 37 20 252 E-mail: kzaharopoulou@eurobankequities.gr Head of Research

Tel: +30 210 37 20 118 Sales

Tel: +30 210 37 20 119 Trading

Tel: +30 210 37 20 168/110

See Appendix for Analyst Certification and important disclosures

WATER UTILITIES SECTOR

Corrective measures speed up

Q4 2012 Review – EYDAP reported Q4 revenues 2.5% lower yoy, in line with our expectations, impacted by the negative macro environment which has led to a decline in both water consumption and the demand for new connections. EBITDA posted a 66% increase to EUR16.9mn on 825 bps better margins owing to a significant opex decline in line with a headcount reduction and wage cuts across state run enterprises (6% reduction in personnel, 28% reduction in salaries, 33% decline in total personnel costs in 2012, broadly in line with our forecasts). Operating cash flows stood at EUR41.4mn from EUR13.5mn last year while receivables posted a 3.5% yoy decline to EUR310mn, but this is attributed to an increase in provisions for doubtful receivables rather than a faster collection of receivables. EYATH reported a 1.5% decline in revenues in Q4, on decreased water consumption and a decline in the demand for new connections. EBITDA stood at EUR4.7mn, down 35%. Adjusting for EUR3.9mn one-off expenses (provisions) recorded in Q4, EBITDA stood 3.5% higher yoy to EUR8.6 on a mild decline in opex attributed to wage cuts and a reduced headcount (-3% qoq, -10% yoy). Operating cash flow stood at EUR7.2mn, compared to marginal cash flows last year. Net cash stood at EUR32.8mn, up from EUR26.0mn in Q3 (EUR22.5mn in 2011).

Valuation – We decrease our target price for EYDAP to EUR6.60 per share from EUR7.40 previously to reflect a series of water tariff cuts that are implemented in 2013e. Our target price implies c.20% upside from current levels and we retain or Buy recommendation for the company. At the same time, we set our target price for EYATH to EUR5.70 per share from EUR5.45 previously on higher sales and profitability forecasts in line with recently announced water and sewage tariff increases. Our target price implies a limited upside from current levels and we retain our Hold recommendation on the shares. We have reached to our new TP for both companies using a blended valuation methodology, applying a 50% weight to our DCF (base case scenario) and a 50% weight to an assumed exit multiple of 2014e EV/EBITDA of 6.9x. This represents a 20% discount to the 2014e EV/EBITDA multiple of EYDAP and EYATH’s global peers.

Q4 2012 REVIEW

EYDAP Estimates (EUR mn) 2011a 2012a 2013e 2014e 2015e Revenues 358.6 353.3 336.0 335.1 341.0 EBITDA 90.6 110.7 115.1 116.2 117.9 Net Profit 26.1 46.8 46.0 50.1 52.8 EPS 0.24 0.43 0.43 0.47 0.49 DPS 0.17 0.15 0.15 0.16 0.17 Valuation 2011a 2012a 2013e 2014e 2015e P/E 21.2 11.9 12.1 11.1 10.6 EV/EBITDA 8.1 6.3 5.6 5.0 4.6 EBIT/Interest Expense 3.8 4.4 6.9 14.3 42.1 Yield 3.3% 2.9% 2.9% 3.1% 3.3% ROE 3.1% 5.3% 5.0% 5.3% 5.4%

EYATH Estimates (EUR mn) 2011a 2012a 2013e 2014e 2015e Revenues 75.4 73.9 75.6 78.2 81.1 EBITDA 30.7 28.6 26.6 26.6 26.5 Net Profit 20.6 17.8 17.7 18.0 18.0 EPS 0.57 0.49 0.49 0.50 0.50 DPS 0.12 0.16 0.17 0.17 0.17 Valuation 2011a 2012a 2013e 2014e 2015e P/E 10.2 11.9 11.9 11.7 11.7 EV/EBITDA 6.1 6.2 6.1 5.4 4.9 EBIT/Interest Expense nm nm nm nm nm Yield 2.0% 2.8% 2.9% 3.0% 3.0% ROE 16.6% 13.1% 12.1% 11.3% 10.6%

WATER UTILITIES

April 16, 2013

2

ATHENS WATER & SEWERAGE CO (EYDAP)

WATER UTILITIES

April 16, 2013

3

Q4 2012 results review

Fourth quarter revenues stood 2.5% lower yoy, in line with our expectations, impacted by the negative macro environment which has led to a decline in both water consumption and the demand for new connections. EBITDA posted a 66% increase to EUR16.9mn on 825 bps better margins (vs. Eurobank est. For EUR17.8mn) owing to a significant opex decline in line with a headcount reduction and wage cuts across state run enterprises (6% reduction in personnel, 28% reduction in salaries, 33% decline in total personnel costs in 2012, broadly in line with our forecasts). Net profit stood at EUR2.3mn compares to losses of EUR1.2mn during the same period last year. The company reported operating cash flows of EUR41.4mn in the quarter compared to EUR13.5mn in the same period last year, higher than our EUR15.3mn forecast. As a result, net debt stood EUR142mn from EUR190mn in Q3 and EUR37mn lower year-to-date. Receivables posted a 3.5% yoy decline to EUR310mn (EUR348mn in Q3), but this is attributed to an increase in provisions for doubtful receivables (at EUR85.6mn vs. EUR56.5mn last year) rather than a faster collection of receivables. In fact, household-related receivables increase 12% yoy while state& municipalities-related receivables stood 4% higher. Regarding the integration of municipalities in EYDAP’s direct water supply network (one of the corrective measures we have long argued about), the company has undertaken the municipalities of Panorama and Aharnes and is in negotiations with several municipalities (Vari-Voula-Vouliagmeni, Aspropyrgos, Amarousion). Recall that EYDAP’s BoD has approved as of last year a plan according to which EYDAP is to undertake the distribution networks of a number of municipalities, without undertaking ownership of the assets, which also includes the settlement of any associated claims (receivables) during the period of the concession agreement (20-40 years).

EYDAP | Q4 2012 summary results

EUR mn Q4 2012 Q4 2011 yoy

Eurobank est. Actual vs. Eurobank

Turnover 84.7 86.9 -2.5%

83.9 1.0%

Gross Margin 17.8% 32.2% -1,441 bps

40.0%

EBITDA 16.9 10.1 66.4%

17.8 -5.1%

EBITDA Margin 19.9% 11.7% 825 bps

21.2%

EBT 3.3 -0.7 -603.5%

3.7 -12.0%

EBT Margin 3.9% nm

nm

Net Profits 2.3 -1.2 -293.2%

-0.1 nm

Net Profit Margin 2.8% nm

nm

Operating Cash Flow 41.4 13.5 207.7%

15.3 170.5%

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

4

Highlights from annual analysts’ presentation

The mgt commented that the privatization process is programmed to commence within the first semester of 2013. The stake that is to be sold has not been decided yet, but it is our understanding that the State would not be willing to sell a 51% stake at this point. The privatization process could be combined with an extension of the concession agreement, which ends in 2020. Recall that State, through the Asset Development Fund (TAIPED), controls a 61.3% of EYDAP while Piraeus Bank holds a 10.0% stake (previously owned by ATE Bank, which recently merged with Piraeus). On the subject of tariffs, the mgt proposes a series of cuts, mainly towards small household consumers, which are under approval by the relevant authorities and are discussed in more detail later (see page 5). The company also elaborated on the subject of receivables from Municipalities, commenting that although the municipal networks aren’t loss making and Municipalities have been collecting in time, they have refrained from making the relevant payments to EYDAP. As a result, receivables have reached c. EUR190mn (not accounting for interests from arrears).

EYDAP | Receivables from Municipalities

EUR mn Total Accounting for interests from payments in arrear

Recognized Receivables 51.4

(39 municipalities)

Under negotiation 101.5

(8 municipalities)

Without progress 36.5 44.0

(25 municipalities)

Grand Total 189.4 233.4

Source: Company, Eurobank Equities Research. Data as of March 31

st, 2013

With the plan described previously (the undertaking of municipalities’ network), EYDAP has a threefold benefit:

positive impact on revenues stemming from the price differential between bulk and retail tariffs

higher profits due to operating leverage and huge positive impact on cash flows since retail customers tend to pay much sooner in

relation to municipalities (at 4 months on avg). On our numbers, the aggregate population of the aforementioned municipalities is approximately 300k, which implies c150k connections or 7% of total.

Privatization process to

commence in H1 2013

Mgt proposes a series of

tariff cuts

Municipalities-related receivables

WATER UTILITIES

April 16, 2013

5

On the matter of State-related receivables, little progress has been made. We present below a breakdown of on-balance sheet and off-balance sheet receivables from the State (mainly EYDAP Fixed Assets and the Ministry of Infrastructure).

EYDAP | Receivables from the State

EUR mn 2011 2012

Receivables from EYDAP Fixed Assets (network investments) 45.6 46.0

Receivables from Ministry of Infrastructure (Anti-flooding projects) 65.0 65.0

Other State-receivables 62.4 68.8

Receivables in arrear * 31.7 30.8

Total on-balance sheet receivables 204.8 211.7

Subsidies relating to 2000-2008 Investment program

1 250.4 250.4

Subsidies relating to 2009-2010 Investment program 1 63.2 63.2

Total off-balance sheet receivables 313.6 313.6

Grand Total 518.4 525.3

Source: Company, Eurobank Equities Research. Data as of March 31

st, 2013

1

Upon its establishment, EYDAP signed an agreement with the Greek State, according to which the State committed to finance 60% of the capital expenditure that EYDAP will spend for maintenance, renovation, improvement and expansion of the water supply and sewerage networks for a period of 8 years (2000 to 2008). Against this investment program, which amounts to ca. EUR1.2bn, EYDAP has incurred capital expenses of EUR432mn for which it should have received a subsidy of EUR 259mn (EUR 432*60%). Instead, it has only received EUR9mn. The remaining amount (ca. EUR 250mn) has not been accounted as a receivable yet and therefore has not been transferred on the balance sheet. Note as of 2004, the company has modified its investment program, however this modification has not affected EYDAP’s claim against the Greek State. We think that as long as the financial position of the Greek State remains constrained and/or EYDAP remains under state control, we may have no developments in that front. However, getting closer to privatization, the state may opt to close part of its past obligations as it has done in other similar cases. Compensation in kind (i.e. extension of existing contract) should not be excluded as an alternative option.

State-related receivables

WATER UTILITIES

April 16, 2013

6

Estimates revision

Following the successful implementation of an opex reduction program, relating mainly to a headcount reduction and wage cuts, the mgt of EYDAP recently proposed series of tariff cuts, mainly relating to household consumers, which are subject to approval by the relevant authorities (Ministries of Infrastructure and Environment) for a Ministerial Decision to be issued. More specifically, the company has suggested a 15.4% reduction in tariffs for the 1

st class of

household consumers (water consumption of 2-5 m3 per month), a 1.1% reduction for the 2

nd

class (5-20 m3 per month), a 1.4% reduction for the 3

rd class (20-27 m

3 per month), a 1.5%

reduction for the 4th

class and a 1.1% reduction for the 5th

class. We estimate that the weighted average water tariff cut for household consumer’s amounts to 5.4%. The fixed tarrif for household consumers is set at EUR1.0/month. At the same time, the mgt proposes a 1.0% and a 0.7% water tariff cut for industrial consumers and large corporates respectively and a 1.7% cut for the State and municipalities (provided there are no arrears). No changes are proposed regarding sewage tariffs. We highlight that the integration of municipalities in EYDAP’s direct water supply network is already included in our valuation exercise so we have made no related changes in our model. We have reflected the aforementioned tariff changes however and accordingly set our sales estimates for 2013e-2015e 5% lower on average. In terms of profitability, we revise our EBITDA forecasts 10% lower on average due to negative operating leverage. Finally, we increase our operating cash flow estimate for 2013e on better than initially projected working capital assumptions due to a smoother receivables collection as a result of the company’s upcoming agreements with municipalities, while we lower our operating cash flow estimates post 2013e by 15% on average.

EYDAP | Estimates Revision

EUR mn 2013e 2014e 2015e

Sales old est. new est. Revision old est. new est. Revision old est. new est. Revision

Sales 350.3 336.0 -4.1% 356.3 335.1 -6.0% 362.5 341.0 -5.9%

EBITDA 123.6 115.1 -6.9% 130.6 116.2 -11.0% 132.3 117.9 -10.9%

EBITDA Margin 35.3% 34.3% -29 bps 36.6% 34.7% -53 bps 36.5% 34.6% -53 bps

EBT 74.9 71.0 -5.3% 83.7 76.7 -8.3% 86.7 80.5 -7.2%

EBT Margin 21.4% 21.1% -12 bps 23.5% 22.9% -25 bps 23.9% 23.6% -13 bps

Net Profit 48.1 46.0 -4.4% 54.4 50.1 -7.9% 56.6 52.8 -6.6%

Net Profit Margin 13.7% 13.7% -3 bps 15.3% 15.0% -21 bps 15.6% 15.5% -7 bps

Operating Cash Flow 64.5 93.1 44.3% 122.8 104.7 -14.7% 120.5 100.9 -16.3%

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

7

Valuation

Following our earnings downgrade, we set our target price to EUR6.60 from EUR7.40 previously. Our new target price implies a c. 30% upside from current levels and we retain our Buy recommendation on the shares. We have reached to our target price using a blended valuation methodology, applying a 50% weight to our DCF (base case scenario) and a 50% weight to an assumed exit multiple of 2014e EV/EBITDA of 6.9x. This represents a 20% discount to the 2014e EV/EBITDA multiple of EYDAP’s global peers

2. On our target price, the

group trades at a 6.9x 2014e PE and a 4.9x EV/EBITDA.

EYDAP | Blended Valuation

Weight Equity Value

(EUR mn ) Current Value

Per Share (EUR) Prior Value

Per Share (EUR) DCF Valuation (base case) 50% 766 7.20

8.17

Multiples Valuation 50% 631 5.93

6.58

Target Valuation

699 6.60

7.40

Upside / Downside

27%

21%

Source: Eurobank Equities Research

Recall that our base case valuation incorporates three scenaria, stemming from three much-needed corrective measures: (1) the integration of municipalities in EYDAP’s direct water supply network, (2) a sewage tariffs increase so as to better reflect the company’s cost base (Psytalia’s maintenance cost) and (3) a tariffs increase to reach a fair return on RAB, close to the European average (EYDAP’s ROA currently stands at 3.5% vs. 8.0% on average in other European utilities). Note however that under our Blue Sky scenario, where EYDAP collects some EUR755mn State & Municipal receivables, its value could increase further, to as high as EUR10.6 per share under our assumptions. We highlight however that there is no indication that such a scenario could take place in the near future.

Sum of the Parts Valuation

Value (EUR mn)

Base Case Scenario

Enterprise Value 511

+ Cash & Securities 43

- Debt 185

- Pension Liabilities 26

Equity Value As Is 342

Recuperation of Psytalia's cost (PV, post tax) 112

Integration of municipalities(PV, post tax) 228

Water & Sewerage Tariff Increases(PV, post tax) 85

Base Case Target Equity Value 766

Value (EUR) per share 7.20

Blue Sky scenario

Collection of State receivables 364

Blue Sky Target Equity Value 1,130

Blue Sky Value (EUR) per share 10.60

Source: Eurobank Securities Research

2 Market cap weighted average of Suez Environment, Veolia Environment, United Utilities Group, Severn

Trent and Pennon Group.

WATER UTILITIES

April 16, 2013

8

GROUP FINANCIAL STATEMENTS

EYDAP Balance Sheet

EUR mn 2011a 2012a 2013e 2014e 2015e

Non-current Assets

Property, Plant & Equipment (net) 1,017.9 995.2 984.2 971.4 976.6

Goodwill / Other Intangible Assets 6.5 5.1 4.5 4.1 3.9

Deferred Tax Assets 53.3 57.0 57.3 57.7 58.1

Third Party Projects 110.6 112.1 113.5 115.0 116.6

Other 26.4 37.2 38.0 37.5 36.0

Current assets

Inventory 16.3 17.6 16.7 16.7 17.0

Trade Receivables 322.0 310.0 301.0 284.6 276.0

Other Receivables 82.7 90.5 84.0 82.1 81.9

Cash, Equivalents & Securities 22.0 43.1 33.6 32.8 32.7

Total Assets 1,657.7 1,667.9 1,632.9 1,602.0 1,598.8

Share Capital & Premium 104.4 104.4 104.4 104.4 104.4

Reserves 747.7 777.1 807.0 839.6 873.9

Provisions 59.4 68.0 70.0 71.0 71.5

Pension Liabilities 224.7 211.1 213.7 216.7 219.8

LT Loans 0.0 0.0 0.0 0.0 0.0

Subsidies 231.5 229.3 226.9 224.5 222.2

Long Term Liabilities 515.6 508.4 510.6 512.2 513.5

ST Loans 201.7 185.5 123.9 59.9 20.4

Trade Payables 40.2 28.8 27.1 26.8 27.0

Other Payables 48.2 63.6 59.9 59.1 59.6

Short Term Liabilities 290.0 277.9 210.9 145.8 106.9

Total Equity and Liabilities 1,657.7 1,667.8 1,632.9 1,602.0 1,598.8

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

9

EYDAP P&L

EUR mn 2011a 2012a 2013e 2014e 2015e

Turnover 358.6 353.3 336.0 335.1 341.0

change -5.4% -1.5% -4.9% -0.3% 1.7%

Gross Profit (excl. depreciation) 180.8 180.4 179.0 179.1 182.5

Gross margin 50.4% 51.1% 53.3% 53.4% 53.5%

Selling, Administrative & Other Expenses (net) 92.2 71.4 65.4 64.4 66.1

Other Income 2.0 1.7 1.5 1.6 1.5

EBITDA 90.6 110.7 115.1 116.2 117.9

change 33.2% 22.1% 4.0% 1.0% 1.4%

EBITDA margin 25.3% 31.3% 34.3% 34.7% 34.6%

Depreciation 30.9 34.2 35.4 36.7 38.2

EBIT 59.7 76.4 79.7 79.5 79.7

change -5.4% -1.5% -4.9% -0.3% 1.7%

EBIT margin 16.6% 21.6% 23.7% 23.7% 23.4%

Interest Income 4.8 5.3 2.8 2.7 2.7

Interest Expense 15.8 17.2 11.5 5.6 1.9

Extraordinary Income -13.1 -2.6 0.0 0.0 0.0

Earnings Before Tax 35.5 61.9 71.0 76.7 80.5

change 50.9% 28.1% 4.3% -0.2% 0.1%

EBT margin 9.9% 17.5% 21.1% 22.9% 22.9%

(Tax) 9.4 15.2 25.0 26.6 27.7

Effective Tax Rate 26.6% 24.5% 35.2% 34.7% 34.4%

Net Profit 26.1 46.8 46.0 50.1 52.8

change 19.0% 74.4% 14.6% 8.1% 4.9%

Net Profit margin 9.9% 17.5% 21.1% 22.9% 23.6%

EPS 0.24 0.43 0.43 0.47 0.49

DPS 0.17 0.15 0.15 0.16 0.17

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

10

EYDAP Cash Flow Statement

EUR mn 2011a 2012a 2013e 2014e 2015e

Net Profit 26.1 46.8 46.0 50.1 52.8

Depreciation 30.9 34.2 35.4 36.7 38.2

Changes in Working Capital -48.9 -39.2 11.0 17.2 9.2

Other Adjustments 10.5 19.5 0.6 0.6 0.6

Net Inflows (Outflows) from Operating Activities 18.6 61.3 93.1 104.7 100.9

Capex 32.8 17.7 31.5 31.5 51.5

Other -14.9 -9.3 2.3 1.0 0.0

Net Inflows (Outflows) from Investing Activities 17.8 8.4 33.8 32.5 51.5

Free Cash Flow 0.7 52.8 59.3 72.2 49.4

Source: Company, Eurobank Equities Research

EYDAP Ratios

2011a 2012a 2013e 2014e 2015e

P/E 21.2 11.9 12.1 11.1 10.6

P/BV 0.6 0.6 0.6 0.6 0.6

P/Sales 1.5 1.6 1.6 1.6 1.6

EV/EBITDA 8.1 6.3 5.6 5.0 4.6

EV/Sales 2.0 2.0 1.9 1.7 1.6

EBIT/Interest Expense 3.8 4.4 6.9 14.3 42.1

Net Debt/EBITDA 2.0 1.3 0.8 0.2 -0.1

Dividend Yield 3.3% 2.9% 2.9% 3.1% 3.3%

ROE 3.1% 5.3% 5.0% 5.3% 5.4%

Cash Flow Yield 3.4% 11.1% 16.8% 18.9% 18.2%

Payout Ratio 69.5% 34.5% 35.0% 35.0% 35.0%

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

11

THESSALONIKI WATER & SEWERAGE CO (EYATH)

WATER UTILITIES

April 16, 2013

12

Q4 2012 results review

Following a 4.2% decline in Q2, and a 0.8% decline in Q3, EYATH reported a 1.5% decline in revenues in the fourth quarter (in line with our EUR19.4mn forecast), attributed to decreased water consumption as well as a decline in the demand for new connections due to the weak macroeconomic environment in the country. Reported EBITDA stood at EUR4.7mn, down 35%. Adjusting for EUR3.9mn one-off expenses (provisions for doubtful receivables) recorded in Q4, EBITDA stood 3.5% higher yoy to EUR8.6mn on a mild decline in operating expenses attributed to wage cuts across state-run enterprises and a reduced headcount (-3% qoq, -10% yoy). Operating cash flow in the quarter stood at EUR7.2mn, substantially improved compared to marginal cash flows during the same period last year (exceeding our expectations). Net cash stood at EUR32.8mn, up from EUR26.0mn in Q3 (EUR22.5mn in December 2011). It is our understanding that the company is still in negotiations so there is no further progress regarding the integration of municipalities in its direct water supply network

3. We note

however that any progress could add significant value (higher profits on the back of operating leverage, huge impact on cash flows due to working capital improvement), a fact that is reflected in our sum-of-parts valuation.

EYATH | Q4 2012 summary results

EUR mn Q4 2012 Q4 2011 yoy

Eurobank est. Actual vs. Eurobank

Turnover 19.9 20.2 -1.5%

19.4 2.8%

Gross Margin 53.3% 53.2% 15 bps

48.0%

EBITDA - reported 4.7 7.3 -35.4%

EBITDA Margin 23.7% 36.2% -1249 bps

EBITDA – adjusted * 8.6 8.3 3.5%

7.0 23.5%

EBITDA Margin 43.2% 41.1% 208 bps

35.9%

EBT 3.7 7.1 -47.8%

5.5 -32.6%

EBT Margin 18.6% 35.2% -1655 bps

28.4%

Net Profits 3.5 5.5 -36.5%

4.3 -19.2%

Net Profit Margin 17.6% 27.3% -969 bps

22.4%

Operating Cash Flow 7.2 0.3 nm

2.1 239.0%

Source: Company, Eurobank Equities Research

* Adjusted for one-off expenses (provisions) of EUR3.9mn and EUR1.0mn in 2012 and 2011 respectively.

3 The company is in negotiations to undertake the municipalities of Delta, Pylaia-Panorama-Hortiatis,

Thermaikos and Nikopoli. These municipalities have an estimated population of over 60k, which would imply >20k new connections (c. 4% of total).

WATER UTILITIES

April 16, 2013

13

Estimates revision

In late December, the ministries of Finance and Thrace & Macedonia, which oversee EYATH’s tariffs policy, approved the company’s new tariffs for 2013e. More specifically, a 1% weighted average increase was adopted for household water tariffs (up to 120 m

3 consumption for a

period of 4 months), while no increases were adopted for industrial, state and municipal tariffs. Sewage tariffs increase to 80% of water consumption from 76% previously while a 1% weighted average increase was approved for the remaining water and sewage services (fixed fees, maintenance etc.). No tariff changes have been decided for 2014e since the company is under privatization. We have reflected the aforementioned changes in our model and as a result, we set our sales estimates 2% higher on average for 2013e-2015e. Accordingly, we revise our profitability forecasts higher (by 5% on average in terms of EBITDA), reflecting the operating leverage stemming from the aforementioned tariffs increase along with higher than initially expected headcount & wage cuts (10% reduction in personnel, 15% reduction in salaries in 2012 vs. our forecasts for -6% and -10% respectively).

EYATH | Estimates Revision

EUR mn 2013e 2014e 2015e

Sales old est. new est. Revision old est. new est. Revision old est. new est. Revision

Sales 73.9 75.6 2.3% 76.4 78.2 2.3% 80.0 81.1 1.3%

EBITDA 25.2 26.6 5.3% 25.1 26.6 5.7% 25.6 26.5 3.7%

EBITDA Margin 34.1% 35.1% 29 bps 32.9% 34.0% 34 bps 32.0% 32.7% 24 bps

EBT 21.8 24.0 10.0% 21.7 24.3 11.8% 22.2 24.4 10.0%

EBT Margin 29.5% 31.7% 75 bps 28.5% 31.1% 93 bps 27.7% 30.1% 86 bps

Net Profit 16.1 17.7 10.0% 16.1 18.0 11.8% 16.4 18.0 10.0%

Net Profit Margin 21.8% 23.5% 75 bps 21.1% 23.0% 93 bps 20.5% 22.3% 86 bps

Operating Cash Flow 24.1 26.3 9.4% 24.7 26.1 5.6% 22.7 24.9 9.8%

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

14

Valuation

Following our earnings upgrade, we set our target price to EUR5.70 from EUR5.45 previously. Our new target price implies a limited upside from current levels and we retain our Hold recommendation on the shares. We have reached to our target price using a blended valuation methodology, applying a 50% weight to our DCF (base case scenario) and a 50% weight to an assumed exit multiple of 2014e EV/EBITDA of 6.9x. This represents a 20% discount to the 2014e EV/EBITDA multiple of EYATH’s global peers

4. On our target price, the group trades at a 11.0x 2014e PE and a 5.0x

EV/EBITDA.

EYATH | Blended Valuation

Weight Equity Value

(EUR mn) Current Value

Per Share (EUR) Prior Value

Per Share (EUR)

DCF Valuation (base case) 50% 195 5.37

4.84

Multiples Valuation 50% 216 5.96

6.06

Target Valuation

206 5.70

5.45

Upside / Downside

-2%

-11%

Source: Eurobank Equities Research

4 Market cap weighted average of Suez Environment, Veolia Environment, United Utilities Group, Severn

Trent and Pennon Group.

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April 16, 2013

15

GROUP FINANCIAL STATEMENTS

EYATH Balance Sheet

EUR mn 2011a 2012a 2013e 2014e 2015e

Non-current Assets

Property, Plant & Equipment (net) 91.0 88.2 85.2 82.2 83.1

Goodwill / Other Intangible Assets 0.1 0.1 0.1 0.0 0.0

Deferred Tax Assets 1.4 3.3 3.5 3.6 3.6

Current assets

Inventory 1.8 1.5 1.5 1.6 1.6

Trade Receivables 49.2 47.7 46.3 45.4 44.1

Other Receivables 14.9 17.6 17.0 16.7 16.2

Cash, Equivalents & Securities 23.2 33.0 50.1 68.1 81.2

Total Assets 181.5 191.4 203.6 217.5 229.9

Share Capital & Premium 43.5 43.5 43.5 43.5 43.5

Reserves 81.2 92.1 103.7 115.3 127.1

Provisions 8.0 9.9 10.0 10.2 10.7

Customer Contributions 12.6 12.8 12.9 13.9 15.0

LT Loans 0.2 0.0 0.0 0.0 0.0

Subsidies 3.9 3.6 3.7 3.8 3.9

Long Term Liabilities 24.6 26.3 26.6 27.9 29.5

ST Loans 0.5 0.1 0.0 0.0 0.0

Trade Payables 6.4 5.8 5.9 6.1 6.3

Other Payables 25.4 23.5 24.0 24.7 23.5

Short Term Liabilities 32.3 29.5 29.9 30.8 29.8

Total Equity and Liabilities 181.5 191.4 203.6 217.5 229.9

Source: Company, Eurobank Equities Research

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April 16, 2013

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EYATH P&L

EUR mn 2011a 2012a 2013e 2014e 2015e

Turnover 75.4 73.9 75.6 78.2 81.1

change 5.9% -2.1% 2.4% 3.4% 3.7%

Gross Profit (excl. depreciation) 38.2 35.9 34.8 35.2 35.6

Gross margin 50.6% 48.7% 46.0% 45.1% 43.9%

Selling, Administrative & Other Expenses (net) 8.7 8.5 9.2 9.7 10.2

Other Income 2.6 3.1 3.0 3.2 3.5

Other Expenses 1.4 1.9 2.1 2.2 2.3

EBITDA 30.7 28.6 26.6 26.6 26.5

change 22.0% -6.8% -7.2% 0.1% -0.2%

EBITDA margin 40.7% 38.7% 35.1% 34.0% 32.7%

Depreciation 6.3 6.1 6.0 6.0 6.1

EBIT 24.4 22.5 20.5 20.5 20.4

change 28.6% -7.9% -8.9% 0.1% -0.7%

EBIT margin 32.4% 30.5% 27.1% 26.3% 25.2%

Interest Income 2.6 2.9 3.4 3.8 4.0

Interest Expense 0.0 0.1 0.0 0.0 0.0

Earnings Before Tax 26.1 21.5 24.0 24.3 24.4

change 24.8% -17.6% 11.6% 1.4% 0.3%

EBT margin 34.6% 29.1% 31.7% 31.1% 30.1%

(Tax) 5.4 3.7 6.2 6.3 6.3

Effective Tax Rate 20.8% 17.2% 26.0% 26.0% 26.0%

Net Profit 20.6 17.8 17.7 18.0 18.0

change 66.4% -13.9% -0.2% 1.4% 0.3%

Net Profit margin 34.6% 29.1% 31.7% 31.1% 30.1%

EPS 0.57 0.49 0.49 0.50 0.50

DPS 0.12 0.16 0.17 0.17 0.17

Source: Company, Eurobank Equities Research

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17

EYATH Cash Flow Statement

EUR mn 2011a 2012a 2013e 2014e 2015e

Net Profit 20.6 17.8 17.7 18.0 18.0

Depreciation of Fixed Assets 6.3 6.1 6.0 6.0 6.1

Changes in Working Capital -7.0 -3.4 2.6 2.1 0.7

Other Adjustments -2.9 -3.0 0.0 0.0 0.0

Net Inflows (Outflows) from Operating Activities 17.0 17.5 26.3 26.1 24.9

Capex 5.9 3.2 3.0 3.0 7.0

Other Adjustments 2.5 2.8 -0.2 0.0 -0.1

Net Inflows (Outflows) from Investing Activities 9.4 9.8 3.2 3.1 7.1

Free Cash Flow 7.6 7.6 23.2 23.0 17.8

Source: Company, Eurobank Equities Research

EYATH Ratios

2011a 2012a 2013e 2014e 2015e

P/E 10.2 11.9 11.9 11.7 11.7

P/BV 1.7 1.6 1.4 1.3 1.2

P/Sales 2.8 2.9 2.8 2.7 2.6

EV/EBITDA 6.1 6.2 6.1 5.4 4.9

EV/Sales 2.5 2.4 2.1 1.8 1.6

EBIT/Interest Expense nm nm nm nm nm

Net Debt/EBITDA nm nm nm nm nm

Dividend Yield 2.0% 2.8% 2.9% 3.0% 3.0%

ROE 16.6% 13.1% 12.1% 11.3% 10.6%

Cash Flow Yield 8.3% 12.5% 12.4% 11.8% 15.0%

Payout Ratio 35.0% 35.0% 35.0% 35.0% 35.0%

Source: Company, Eurobank Equities Research

WATER UTILITIES

April 16, 2013

18

10 Filellinon Street 105 57 Athens, Greece

Telephone: +30 210-3720 000

Facsimile: +30 210-3720 001 Website: www.eurobankequities.gr

E-mail: research@eurobankequities.gr

IMPORTANT DISCLOSURES

This report has been issued by Eurobank Equities Investment Firm S.A., a member of the Athens Exchange, a member of the Cyprus Stock Exchange and a member of EUROBANK Ergasias S.A. Eurobank Equities Investment Firm S.A.. is regulated by the Hellenic Capital Markets Commission (HCMC) with authorisation number 6/149/12.1.1999.This report may not be reproduced in any manner or provided to any other persons. Each person that receives a copy by acceptance thereof represents and agrees that it will not distribute or provide it to any other person. This report is not an offer to buy or sell or a solicitation of an offer to buy or sell securities mentioned herein. The investments discussed in this report may be unsuitable for investors, depending on their specific investment objectives and financial position. The investments discussed in this report are subject to risks and in respect of some investments there is risk for multiplied losses to be caused in respect to the capital invested. The information contained herein has been obtained from sources believed to be reliable but it has not been verified by Eurobank Equities Investment Firm S.A.. The opinions expressed herein may not necessarily coincide with those of any member of the Eurobank Group. No representation or warranty (express or implied) is made as to the accuracy, completeness, correctness, timeliness or fairness of the information or opinions herein, all of which are subject to change without notice. No responsibility of liability whatsoever or howsoever arising is accepted in relation to the contents hereof by Eurobank Equities Investment Firm S.A. or any of its directors, officers or employees. Eurobank Equities Investment Firm S.A. follows procedures under Eurobank Group policies that set up Chinese Walls, restricting communication between Research and other departments inside the Company or the Group so that Eurobank Equities Investment Firm S.A. complies with regulations on confidential information and market abuse. Eurobank Equities Investment Firm S.A., or any of its related legal persons, does not hold shareholdings exceeding 5% of the total issued share capital in EYDAP & EYATH. None of the subject companies mentioned in this report holds shareholdings exceeding 5% of the total issued share capital of Eurobank Equities Investment Firm S.A., or any of its related legal persons. Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not a market maker of EYDAP & EYATH. Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not party to an agreement relating to the production of this report with EYDAP & EYATH. EUROBANK Equities Investment Firm S.A, or any of its related investment banking services’ legal persons, has received compensation for investment banking services provided within the last twelve months from EYDAP & EYATH. This report was sent to the company for factual verification prior to publication. There have been no significant changes on the initially sent report.

Analyst Certification: This report has been written by Katerina Zaharopoulou (Equity Analyst).

Analyst Compensation: The remuneration of Katerina Zaharopoulou is not tied to the investment banking services performed by Eurobank Equities Investment Firm S.A. or any of its related legal persons. Katerina Zaharopoulou did not receive or purchase the shares of EYDAP & EYATH S.A. prior to a public offering of such shares. Katerina Zaharopoulou does not have a significant financial interest in one or more of the financial instruments which are the subject of this report or a significant conflict of interest with respect to the subject companies mentioned in this report a) that are accessible or reasonably expected to be accessible to the persons involved in the preparation of this report or b) known to persons who, although not involved in the preparation of this report, had or could reasonably be expected to have access to this report prior to its dissemination to customers or the public.

Planned Frequency of Updates: Eurobank Equities Investment Firm S.A. provides daily and monthly updates as well as updates on companies based on company-specific developments or quarterly financial results announcements or any other publicly available information.

12-month Rating History of EYDAP & EYATH

Date Rating Stock price Target price Date Rating Stock price Target price

EYDAP EYATH

16/04/2013 Buy € 5.19 € 6.60 16/04/2013 Hold € 5.81 € 5.70

15/01/2013 Buy € 5.89 € 7.40 15/01/2013 Hold € 5.98 € 5.45

06/12/2012 Buy € 4.52 € 6.00 06/12/2012 Hold € 4.90 € 5.20

05/09/2012 Buy € 3.34 € 5.80 05/09/2012 Buy € 4.10 € 5.50

18/06/2012 Buy € 2.62 € 5.80 18/06/2012 Buy € 2.94 € 5.50

11/06/2012 Buy € 2.46 € 6.10 11/06/2012 Buy € 2.90 € 4.90

02/04/2012 Buy € 3.98 € 6.10 02/04/2012 Buy € 4.06 € 4.90

Eurobank Equities Investment Firm S.A. Rating System: Stock Ratings Coverage Universe Investment Banking Clients Count Total Count Total Buy 9 31% 3 33% Hold 10 34% 1 10% Sell 2 7% 0 0% Restricted 3 10% 1 33% Under Review 5 17% 0 0% Total 29 100%

Analyst Stock Ratings:

Buy: Based on a current 12-month view of total shareholder return (percentage change in share price to projected target price plus projected dividend yield), we recommend that investors buy the stock.

Hold: We adopt a neutral view on the stock 12-months out and, on this time horizon, do not recommend either Buy or Sell. Sell: Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock. Restricted: Under Eurobank Group policy and / or regulations which do not allow ratings Under Review: Our estimates, target price and recommendation are currently under review

Eurobank Equities Investment Firm S.A. Member of Athens Exchange, Cyprus Stock Exchange and Eurobank Group. Regulated by the Hellenic Capital Markets Commission Authorisation No: 6/149/12.1.1999 VAT No: 094543092, Reg. No. 003214701000