State firms drive ASE

The past couple of years, the Athens Stock Exchange (ASE) has been dominated by state-owned companies or, if you like, by public utilities and their subsidiaries. It is to them that investors have turned. This may be a paradox in a market that, above all, is supposed to showcase private sector companies, which form the great majority of listed firms. It can easily be explained, however, by the fact that state-controlled companies give away generous dividends and free shares. At present, state-controlled companies are hogging even more of the limelight as everyone expects new appointments by the recently elected conservative government. However, OPAP, CosmOTE and General Bank are the exception in a rather disappointing picture. More than half of public companies have seen their shares decline in early 2004. OPAP a magnet The stock of state betting firm OPAP attracts many domestic and foreign investors. The company is continuing to expand abroad and will shortly introduce even more games of chance domestically. Its share has risen 22.45 percent so far in 2004. OPAP’s net profits, after minorities, rose to 235.1 million euros in 2003, from 206.11 million euros. OPAP’s financial statement was compiled using International Accounting Standards (IAS), one of the first Greek firms to do so. The use of IAS will become obligatory for all listed companies beginning with financial statements for the year 2005. OPAP’s consolidated turnover was 2.28 billion euros in 2003, up from 1.97 billion in 2002. Operating profits (before interest, taxes and amortization) rose 16.5 percent, to 472.8 million euros. OPAP had included in its 2003 statement a provision for 82.5 million euros related to the court dispute with games systems and software company Intralot over a contract never fulfilled for betting on horse and dog races. Now it seems that OPAP may win the court battle and not have to compensate Intralot. OPAP had also included a provision of 3.6 million euros against money owed to social security and pension funds. OPAP’s management will propose to the shareholders’ Annual General Meeting the distribution of a dividend of 73 cents per share, up from 67 cents in 2002. At yesterday’s closing price of 13.96 euros, this represents a hefty 5.23 percent return. «Pame Stoichima» (Let’s Bet) was by far OPAP’s most lucrative game, with a turnover of 1.65 billion euros in 2003, up 9.2 percent from 2002. Number lotteries brought in 546.6 million euros from 393.8 million, a 38.8 percent rise mainly attributable to the success of new games Super 3 and Extra 5. OPAP’s latest game, Kino, which appeared on November 3, 2003, had brought in 10.8 million euros by the end of the year. Profitable CosmOTE Mobile telecommunications company CosmOTE is one of the big gainers on the ASE, having risen 19.06 percent in 2004. The sale of the 9 percent stake held by Norway’s Telenor to, mainly, foreign institutional investors and the resulting greater spread of its shares will result in the increase of its weighting on the FTSE/ASE-20 blue chip index and the FTSE/ASE-140 composite index to 40 percent, from 20 percent previously. The new weighting will be in force from Monday’s session. Since May 1, CosmOTE’s stock is part of the Morgan Stanley Capital International (MSCI) Greece index. General Bank’s share price has increased 17.21 percent in 2004, a development attributed to a large extent to its privatization and acquisition of its management by France’s Societe Generale. The new management wants to expand the bank’s network and modernize it. Disappointing OTE Apart from the big three gainers, the other 15 state-controlled companies have not done so well. There is a group of four rather marginal gainers and the others are losers, six of whom show double-figure losses. Despite the fact that its stock began the new year strongly, Hellenic Petroleum has risen just 4.89 percent. Immediately below is OTE, which has risen a disappointing 4.02 percent. At least it has the second lowest price-to-earnings per share (P/E) ratio, at 8.29, among the 18 state-controlled companies. With a total capitalization of 6.138 billion euros it is the ASE’s top heavyweight. The share of electricity giant Public Power Corporation has only advanced 3.74 percent this year. The company’s net pretax profits in 2003 were 474 million euros, up 36.2 percent from the previous year. After-tax profit was 299 million euros and earnings per share were 1.3 euros, up from 1.01 euros in 2002. The company’s net liabilities were 3.895 billion euros, 295 million less that at the end of 2002, reflecting net cash inflows. Earnings before interest taxes and amortization (EBITDA), rose 11.8 percent, to 1,149 billion euros. The EBITDA margin was 29.5 percent, slightly less than the 30 percent margin in 2002. Operating profits were 595 million euros, up 17.8 percent from 2002. The operating profit margin rose slightly, to 15.3 percent, from 14.8 percent in 2002. Net financial expenditure was 135 million euros in 2003, down from 215 million in 2002, due mainly to lower debt and lower interest rates. PPC’s telecommunications subsidiary, Tellas, jointly owned with Italy’s WIND, cost the company some 27 million euros in its first 11 months of operation. PPC also spent 718 million on various investment projects. Its personnel was reduced to 28,100 from 28,698 at the end of 2002. National Bank’s shares have advanced just 0.37 percent since the start of the year. The firms whose shares have lost ground in 2004 are Emporiki Bank (0.99 percent), Agricultural Bank (1.64 percent), Ethniki Insurance (4.65 percent), Piraeus Port Authority (8.17 percent), Thessaloniki Port Authority (9.14 percent), Athens water and sewage company EYDAP (11.47 percent), its Thessaloniki counterpart EYATH (13.64 percent), Astir Palace Hotel (23.53 percent), Agrotiki Insurance (26.49 percent), Emporiki subsidiary Phoenix Insurance (27.69 percent), and Ethniki Real Estate (37.74 percent). The latter was one of the prime beneficiaries of the 1999 bull market when it had advanced over 6,000 percent despite being largely inactive.

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