Greek Capital Market & Hellenic Exchanges by Alexandros Moraitakis Jan 2005

Greek Capital Market Greek Capital Market & &

Hellenic ExchangesHellenic Exchanges

byby

Alexandros MoraitakisAlexandros Moraitakis

Jan 2005Jan 2005

AgendaAgenda

Greek Capital Market Greek Capital Market 3-73-7

Market DataMarket Data 8-138-13

Market ConditionsMarket Conditions 14-1514-15

ASE- HELEX Group ASE- HELEX Group 16-2816-28

Concluding RemarksConcluding Remarks 29-3029-30

3

Greek Capital Market Greek Capital Market

► Investment opportunities in the Greek capital market

► Objectives of Athens Exchange: market depth, high standards, participation in the single European capital market

► Vision: Strong, safe and reliable

► Significant progress in Greek capital market in the context of financial liberalisation

► Internationalized market as, currently, foreign investors participate by about 35% in total ATHEX capitalization

4


► Qualitative and quantitative changes led to the upgrading of the Greek capital market, which was declared a developed-mature market by international investors, in May 2001

► Certain economic developments at the background. Economic stability, economic growth, structural reforms

► Sound regulatory framework, transparency, disclosure, corporate governance

► Efforts for a more efficient market continue

5


► Main market

► Parallel market

► New market

► Secondary listing of equities

► GDRs, and units of mutual funds for emerging markets

Greek Equities MarketGreek Equities Market

6


► Stock Indices

► Stocks

► Bonds

► Currency

Futures and OptionsFutures and Options

7


► General Index ► Parallel market index► Sectoral indices

► FTSE/ASE 20► FTSE/ASE Mid 40► FTSE/ASE Small 80

► FTSE/ASE 140► FTSE Med 100

IndicesIndices

8

Market Data - SpotMarket Data - Spot

169

107

141 141

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004

Daily Value of Transactions

Following a significant decline in 2000-02, volumes in 2003 and 2004 stabilized at a much higher level

€

mill

ion

9

Market Data - DerivativesMarket Data - Derivatives

5,259

2,111

1,146109 62

8,403

1,049

4,102

180826

11,327

315

5,538

76

1,917

11,116

513

3,643

125

3,624

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

2001 2002 2003 2004

FTSE/ASE 20 Futures FTSE/ASE Mid 40 Futures FTSE/ASE 20 Options

FTSE/ASE Mid 40 Options Stock Futures

Derivatives Daily Volume

(#

con

trac

ts)

Total: 9,118

Total: 14,921

Total: 19,463

Derivatives market has good growth prospects

Total: 19,496

10

Equity Market Indicators Equity Market Indicators

2002 2003 200431 Dec 31 Dec 31 Dec

ASE Composite Index 1.748,4 2.263,6 2.786,2FTSE/ASE 20 863,9 1.170,0 1.547,5FTSE/ASE 40 187,5 237,7 231,1FTSE/ASE 80 464,5 597,4 470,6Market Cap (€ bln) 66,1 84,9 85,6Market Cap / GDP (%) 50% 61.7% 61%Avg. Daily Volume (€ m) 107,4 141,4 141,0

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Equity Market Indicators Equity Market Indicators

YEAR CAP (bil. euro) GDP (bil. euro) % of GDP1990 6,7 27,1 24,7%1991 6,5 32,5 20,0%1992 5,7 36,8 15,5%1993 9,0 42,3 21,3%1994 10,5 65,6 16,0%1995 11,8 79,9 14,8%1996 17,5 87,9 19,9%1997 28,9 97,2 29,7%1998 66,6 105,8 62,9%1999 192,9 112,7 171,2%2000 118,0 121,5 97,1%2001 97,3 124,9 77,9%2002 66,1 132,2 50,0%2003 84,9 153,2 61,7%2004 85,6 164,4 61,0%

MARKET CAP AS % OF GDP

0,0

50,0

100,0

150,0

200,0

250,0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

0,0%

20,0%

40,0%

60,0%

80,0%

100,0%

120,0%

140,0%

160,0%

180,0%

CAP (bil. euro) % of GDP

12

Key sectors in Greek capital Key sectors in Greek capital marketmarket

Sector Market cap MSCI Greece Financials 29.1% 47.5% Consumer goods 12.7% 5.5% Telecoms 16.8% 15.9% IT – Technology - Internet 2.5% 2.2% Media 0.8% 0.0% Industry – Energy 11.7% 6.2% Leisure 8.3% 7.7% Utilities 7.1% 3.9% Other 11.0% 11.1%

13

MAJOR STOCK EXCHANGES RETURNSMAJOR STOCK EXCHANGES RETURNS June June 20042004

Ranking YTD %

14

Certain conditions seem to establish Certain conditions seem to establish favorable market conditions for the favorable market conditions for the foreseeable future foreseeable future

► Significant prospects for many economic sectors, such as banking, construction, refineries and cement, among others.

► Rising investor interest (M&A Deals, etc)► Olympic games raised country's profile, increased demand,

while we expect positive post Olympic effects.► Continuous economic growth as structural funds are to continue, until 2008 while Government’s investment spending is to continue vigorously in coming years. ► High multiplier effects in the economy due to large investment

prospects.► The research of most Greek and foreign stock brokerage houses

indicates a market P/E of 15.1x and an EV/EBITDA of 8.7x. (estimations for 2005)

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Measures to improve transparency, Measures to improve transparency, disclosure and investor protectiondisclosure and investor protection

► Emphasis on listed companies’ fundamentals transparency and disclosure

► Corporate Governance (Law 3016/2002)► International Accounting Standards (mandatory for all listed

companies for the 2004(EoY) financial statements)► Control of financial statements and external auditors (Every

year, an independent committee established, randomly selects 10% of all listed companies financial statements and review their auditors reports)

► Capital market ombudsman

16

Group StructureGroup Structure

99%

Derivatives Market Clearing & Settlement

Marketing in Northern Greece Promoting Emerging Capital Markets

Cash Market Clearing & Settlement

The Group is vertically integrated, providing trading, clearing, settlement, information services and IT

100%

Cash & Derivatives Markets Information Services

100%

100%

100%

To merge with Helex

17

Hellenic Exchanges S.A. (HELEX)Hellenic Exchanges S.A. (HELEX)

HELEX is the holding company of the Athens Exchange Group

HELEX Group operates the local cash and derivatives markets and the clearing, settlement and registry systems

HELEX is vertically integrated, as it provides trading, clearing, settlement, registry, information and IT services

HELEX is listed on the Athens Exchange and is currently capitalized at € 540 million (1)

(1) As of December 31, 2004, closing price € 7.60

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HELEX HELEX

During 2004, trading activity, in both cash/spot and derivatives markets, held positions compared to 2003, despite weak Q3 2004, while market capitalization increased by 8% mostly in the last quarter.

The Group is now fully privatised and aims for revenue and shareholder value maximization.

All supervision and control activities are removed from the Exchange.

HELEX has embarked on a successful re-engineering program, achieving significant cost reduction.

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Share performance vs ASE General Share performance vs ASE General IndexIndex

8090

100110120

130140150160170

Sep

-03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb

-04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-0

4

Aug

-04

Sep

-04

Oct

-04

Nov

-04

Dec

-04

HELEX ASE General

49,02%

26,82%

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Diversified shareholder structureDiversified shareholder structure

HELEX was fully privatized during September 2003 through a public offering

Shareholder structure 31/ 12/ 2004

20.5%

4.6%

21.2%

12.8%1.2%

35.5%

4.1%

Local Banks

Local Instirutional investors

Local Brokerage firms

International instutional investors

Retail

Other

Treasury stock

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Strategy - ObjectivesStrategy - Objectives

Develop further domestic market

New product development

More emphasis on sales, and revenue differentiation

Restructure and rationalize HELEX Group to increase

efficiency, effectiveness and reduce costs

Expansion in Southeastern Europe

Co-operation and further integration with European

markets and market participants

Maximize shareholders value

22

Domestic DevelopmentsDomestic Developments

New products and new markets

Transfer of regulatory competences to the Capital

Market Commission

Internal Rule Book

New Premises

23

Operational Re-engineeringOperational Re-engineering

Evaluate and revise the Group’s organization model

Redesign key procedures and structures

Ensure more efficiency, control and maximization of synergies

Reduction of operation expenses

Become

a leaner,

more

effective

& cost

efficient

organizatio

n

24

Expansion in the SE Europe RegionExpansion in the SE Europe Region

Co-operation with local exchanges Promotion of products, GDR’s, dual listing Information dissemination In-source IT infrastructure

25

Promotion of co-operation in the EUPromotion of co-operation in the EU

Monitor closely the new consolidation phase among the various European Exchanges

Contact with major exchanges, exchange alliances & depositories

26

Turnover drivers – 2004 (estimates)Turnover drivers – 2004 (estimates)

Turnover has become less reliant on cash market transactions. Income from securities (trading, clearing and settlement) represents 53% of group turnover, compared to 63% in 2000

The derivatives market contributes 15% of group turnover, compared to just 2% during the year 2000

7%

15%

12%4%3%6%

53% Cash transactions

Members subscription

Derivatives

Listed companies

Vendors

IT services

Other income

27

Cost Drivers 2004 (estimates)Cost Drivers 2004 (estimates)

Cost has been cut by 10% on a compounded basis, from 2001 to 2004, the reduction stemming mainly from personnel, marketing and overhead expenses

2004 estimate includes €1,9m one-off fees from the sale of stock portfolio

Full benefits of cost savings will show in the years to come

-14%

58.350.7

44.942.9

0

10

20

30

40

50

60

2001 2002 2003 2004(est)

Total Costs (€ millions)

-10%

Cost drivers 2004

4%8%

50%

3%3%17%

15%

Personnel Taxies and Levies OverheadMarketing Rent TelecomsMaintenance

28

Group PersonnelGroup Personnel

615 537

461 417

300

400

500

600

700

2001 2002 2003 2004

Staff accounts for approximately 50% of the cost structure

Approximately 32% reduction in personnel numbers since the end of 2001

Note: Personnel figures refer to end period

29

Concluding RemarksConcluding Remarks

The Country

Significant infrastructure investments

Capital inflows through the 3rd Community Support Framework

Successful completion of the Olympic Games

Good growth prospects of the local market

Improved corporate profits

Reduction of corporate taxes

HELEX

Strong Balance Sheet

Improving financials/cost structure

On going successful re-engineering process

Maximization of shareholders value

Thank youThank you

Alexandros MoraitakisAlexandros MoraitakisBoD member, HELEX BoD member, HELEX

Chairman, SMEHAChairman, SMEHA

CEO, NUNTIUS Securities CEO, NUNTIUS Securities

Tel.: +30 210 3350599Tel.: +30 210 3350599

Cell: +30 69 77 903 903Cell: +30 69 77 903 903

Email: [email protected]: [email protected]

Documents

Greek Capital Market & Hellenic Exchanges by Alexandros Moraitakis Jan 2005