Public Power Corporation S.A (Public Power) has reported total revenues of EUR1.49 billion for the first quarter of 2009, up 6%, compared with the total revenues of EUR1.41 billion in the year-ago quarter. It also reported net income of EUR219.5 million, or EUR0.95 per share, for the first quarter of 2009, compared with the net income of EUR30 million, or EUR0.13 per share, in the year-ago quarter.

In first quarter of 2009, 30% of total revenues covered the expenses for imported fuels, energy purchases and CO2 emission rights. The corresponding magnitude in first quarter of 2008 was 49% of total revenues.

Due to the significant drop in oil prices and lower electricity demand by 3.1% compared to first quarter of 2008, the expenditure for liquid fuels, natural gas and energy purchases, decreased by EUR232.8 million, a reduction of 36 %.

First quarter of 2009 financial results were impacted by a provision of EUR20.9m to cover for the estimated deficit of CO2 emission rights for the respective period, while the corresponding magnitude in first quarter of 2008 was EUR23.5 million.

The valuation at March 31, 2009 prices of the liability to cover the CO2 deficit of the previous year, had a positive impact on the financial results of first quarter of 2009 of EUR25.6 million. Based on 15/5/2009 prices the positive impact would be reduced by EUR8.9 million, to EUR16.7 million, due to the increase of CO2 emission rights prices, in second quarter of 2009.

In first quarter of 2009, hydro generation increased by 464,000 MWH (58%), compared to first quarter of 2008, which was a period of very poor hydro conditions.

Electricity generation from lignite power stations increased by 1,021,000 KWH (15.2%).

Total revenues amounted to EUR1,495.8 million versus EUR1.410,5 million in first quarter of 2008 an increase of EUR85.3 million (6%).

EBITDA amounted to EUR471,8 million compared to EUR205.5 million in first quarter of 2008, an increase of EUR266.3 million. EBITDA margin reached 31.5 %, compared to 14.6 % in first quarter of 2008.

First quarter of 2009 pre tax profits amounted to EUR292.7 million, compared to pre tax profits of EUR34.3 million in first quarter of 2008, an increase of EUR258.4 million.

Revenues

Revenues from energy sales increased by EUR99.1 million (7,6 %), from EUR1,306.6 million in first quarter of 2008 to EUR1,405.7 million, as a result of an average tariff increase of 7.3 % from 1.7.2008 and a change in the sales mix while, on the contrary, the the volume of sales decreased by 1.4 % ( 188,000 MWH).

Operating Expenses

Total operating expenses, excluding depreciation, decreased by EUR181 million (-15 %), from EUR1,205 million in first quarter of 2008 to EUR1,024 million, mainly due to the decrease in the expenditure to cover energy demand.

Due to the decrease in power generation from natural gas by 1.273.000 MWH (- 43.5%) the relevant expenditure decreased by EUR56 million (-29 %), from EUR193.2 million in first quarter of 2008 to EUR137.2 million in first quarter of 2009, despite the increase of natural gas prices by 27.3%.

Expenditure for energy purchases decreased by EUR98.7 million (-42.2 %), from EUR233.8 million in first quarter of 2008 to EUR135.1 million, due to the purchase of fewer quantities of electric energy from the System and the Network by 877.000 MWH (-42.7 %), the decrease of the System Marginal Price by 34.3%, the decrease in Public Power import prices by 17.1%, while, on the other hand, Public Power imports increased by 130,000 MWH (17%).

The impact from the decrease in oil prices by 34.6 %, combined to the partial substitution of diesel generation by heavy fuel oil resulted in an decrease of the respective expenditure by EUR78.1 million (35.5%), from EUR219.7 million in first quarter of 2008 to EUR141.6 million, despite the increase in oil powered generation by 60.000 MWH (3%).

Payroll expense increased by EUR45.5 million (14.7%), from EUR308.9 million in first quarter of 2008, to EUR354.4 million. This increase is attributed to the reduced first quarter of 2008 payroll cost by EUR18.3 million due to the March strike, the carry over from the 2008 collective bargaining agreement payroll increases and the corresponding 3% increase as of 01/02/09. On the other hand, payrolls reduction by 878 full time employees between March 31, 2008 and March 31, 2009 counterbalanced payroll cost increase. Excluding the effect of the March 2008 strike and assuming that the 3.5% salary increase valid from 01/02/2008, had been booked in from the same date and not retroactively, then first quarter of 2008 payroll cost would amount to EUR332.2 million resulting in a first quarter of 2009 payroll cost increase of 6.3%.

Provisions for bad debt, litigation and slow moving materials increased by EUR12 million from EUR5.7 million to EUR17.7 million.

Depreciation expense in first quarter of 2009 amounted to EUR131 million compared to EUR125.6 million in first quarter of 2008, an increase of EUR5.4 million (4.3%).

Capital expenditure amounted to EUR219.3 million compared to EUR160.9 million in first quarter of 2008, an increase of EUR58.4 million (36.3%).

Net debt amounted to EUR4,448.6 million, compared to EUR3,954 million in first quarter of 2008, an increase of EUR494.6 million (12.5%), but reduced compared to 31/12/2008 by EUR95,7million.

Full time payrolls were reduced to 23,454 compared to 24,332 at the end of first quarter of 2008.

Financial Expenses

Gross debt amounted to EUR4,554.6 million in first quarter of 2009, from EUR4,152.7 million in first quarter of 2008 while net financial expenses increased to EUR48.3 million from EUR43.8 million in first quarter of 2008, an increase of EUR4.5 million (10.3 %).

Participation In Associated Companies

?he share of profit in associated companies of EUR0.5 million in first quarter of 2009, refers to Public Powers’ RENEWABLES participation in associated companies (EUR0.6 million profit) and to SENCAP SA. – Public Power’ s joint venture with Contour Global – (EUR0.1 million loss).

In first quarter of 2008 the share of loss in associated companies includes also the impact (EUR3.4million loss) of Public Power’s participation in LARCO in which Public Power holds a 28.6% stake. In first quarter of 2009 there is no corresponding magnitude since in 31.12.2008 Public Power’s participation in LARCO was fully impaired.

Takis Athanasopoulos Public Power chairman and chief executive officer, said:

“Contrary to 2008, a year with losses resulting from the unprecedented rise in fuel and energy purchase prices and the new CO2 emissions expense, 2009 began with quite positive prospects, as 1Q 2009 financial results are satisfactory, mainly attributed to factors outside PPC’s control, namely the sharp drop in oil and energy purchase prices and the increased hydro generation due to significant snowfalls and rainfalls.”

“It is therefore evident that PPC’s profitability is, to a very large extent, exposed to fluctuations of external factors.”

“These factors are highlighting inside and outside the Company, the vulnerabilities and weaknesses of both PPC’s business model and the Greek electricity market’s environment. Exposing these weaknesses as well as dealing with them will ensure the long term perspective of PPC.”

“Although in 1Q 2009 there are some initial positive developments in the field of containing directly controllable costs compared to Budget, we have to intensify our efforts for internal financial discipline in order to secure the required cash flows to finance our investment programme, taking into consideration that PPC is operating in an continuously increasing competitive environment in the sectors of generation and supply of electricity. PPC’s management team is focused in taking the necessary initiatives to achieve cost reduction and productivity enhancement.”

“I’m pleased to note, that for the first three months of 2009, EBITDA margin reached 31.5% compared to 21.8% in the Budget and 14.6% in the corresponding period of 2008. EBITDA margin for the full year is estimated at around 26% vs 21% budgeted, assuming that for the rest of the year fuel prices and hydro conditions will be at budgeted levels.”