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






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


ROE 17.44% 21.06% 21.66% 55.30%(RETURN ON EQUITY)




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)


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)


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





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





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)


EBITDA 658,890,000 713,639,000 738,200,000 397,000,000



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



EBITDA 726,000,000 812,800,000 905,400,000 483,800,000



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



EBITDA 674,533,000 754,535,000 876,208,000 463,559,000



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



EBITDA 1,210,000,000 900,000,000 740,000,000 450,000,000



‘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



EBITDA 319,000,000 389,200,000 480,700,000 221,800,000


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






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


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



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


2004 2005 2006 H107



EBITDA 343,900,000 670,500,000 501,500,000 501,500,000



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



EBITDA 33,900,000 96,800,000 90,000,000 58,000,000



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


2004 2005 2006 H107


ROE -13.31% 10.17% -24.65% n.a.(RETURN ON EQUITY)


EPS -1.28 0.80 -1.77 1.00(EARNINGS PER SHARE, euros)


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


ROE -28.52% 35.60% 15.05% n.a(RETURN ON EQUITY)


EPS -0.08 0.24 0.21 0.15(EARNINGS PER SHARE, euros)


‘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



EBITDA 196,100,000 230,300,000 270,000,000 148,000,000



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.

greek economy & markets - issue 4

Documents

greek banks

greek economy markets

thestrong growth rate

companies pages

turnover index

producer price index

strong organic growth

year pages