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Newsletter November 2014


Real Estate Investment—Optimism

Grivalia Properties, former Eurobank Properties, on October 15 unveiled investment plans worth 500 million Euro in Greece over the next three years.

Presenting its plans, during a new conference, George Chrysikos, Grivalia’s chief executive, said the investments will focus on commercial property, logistics units and state-owned properties due for exploitation, with the aim to raise the value of its asset portfolio to more than 1.3 billion euros in the coming years.

Mr. Chrysikos expressed his optimism over the course of the real estate development market in Greece and over the inflow of new capital from domestic and foreign sources. Fairfax is the largest shareholder in Grivalia with an equity stake of 41.5 percent. Eurobank holds a 20 percent equity stake.

Creta Farms in Australian Deal
The owners of Greek company Creta Farms, Takis and Manolis Domazakis, have signed an “industrial franchising” deal with a top charcuterie company in Australia. The agreement, secured amid the difficult times that the Greek market currently faces, shows the range of domestic and international opportunities available to Greek food companies.
The alliance of Creta Farms with Australian Primo Meats is based on a licensing agreement which gives authorisation to the Australian company to use the intellectual property of Creta Farms (know-how, patents, trade name). Under Australian Primo Meats’ oversight, Creta Farms will achieve maximum performance, capitalizing on investments of the last 10 years to guarantee the establishment of its products around the world.

The cooperation will last for at least 5 years. Creta Farms sales during this period are expected to reach 400 million Australian dollars. Furthermore, the deal has a guaranteed execution rate and includes royalties. It also includes a 5 million dollar plan for the local promotion of Creta Farms products.

International Agencies Commend OTE After the Announcement of the First Half Results
After the announcement of the positive first half results, the management of OTE (Hellenic Telecommunications Organization) stated their optimism for the positive trends of the second half of 2014 and stated that investments will continue through the second half of the year. OTE management believes that the reduction in revenue will slow further, as the first signs of recovery of the Greek economy will positively affect it. Positive signs include the performance in the previous year in terms of successive reductions in mobile termination rates, the increasing penetration of new OTE services, especially in television, and the ARPU (average revenue per user) stabilisation in mobile telephony. Morgan Stanley points out that the results of the second quarter are aligned with analysts' assessments and further improvement is expected in the coming quarters.

Intracom: The Day After the Sale of HOL
The sale of two Intracom subsidiaries this year radically improve the liquidity of Intracom Holdings, leaving definite room for major changes. 49% of Intracom Telecom was sold for over 47 million Euro. Recently Intracom Holdings SA and Vodafone-Panafon signed a binding agreement for the acquisition of Intracom Holdings' stake in HOL by Vodafone–Panafon, at a total price of 57.2 million Euro.

Given that at the end of 2013 the group's net debt stood at 254.1 million Euro, Intracom will collect about 104 million Euro after these two divestitures and will ensure liquidity and the opportunity to significantly leverage its balance sheet in order to develop and expand existing and new projects. On the other hand, however, through the sale of HOL, Intracom loses its largest source of revenues and operating profits.

After the sale of Intracom Telecom and HOL, the main activities of the group are Intrasoft (integrated solutions) with an annual turnover of 134.5 million Euro, Intracom Defense Systems with 49.85 million Euro in sales, and Intrakat (construction activity) with sales of 105 million Euro.

The First Haas Technical Education Center (HTEC) in Greece
The first Haas Technical Education Center (HTEC) was launched in Greece on May 28, 2014 at CNC Training Center in Paiania, Athens. This is the first Greek HTEC showroom and the 150th in the world. The CNC Training Center has the remit of delivering skilled CNC (Computer Numerical Control) technicians, helping them to find work and assisting in their integration into the high technology manufacturing sector. The launch event introduced HTEC and also served as a networking opportunity, attracting many people from the local manufacturing community and trade press journals, all keen to see how HTEC plans to influence the future of Greek machining endeavor. The newly certified HTEC at CNC Training Center will help Greece get a workforce that is skilled and committed to working hard and working smart through the provision of practical CNC training excellence at the highest international level.

Green Light for New Tourism Investments
The Ministry of Environment recently approved the creation of two major tourism resorts on the islands of Milos and Kea. The 100 million Euro investment on Milos Island (by the Axsite company) involves the construction of a resort in the area of Ammoudaraki with a total capacity of 216 beds. The resort will include a five-star hotel unit, holiday homes and a spa centre, and is expected to create 200 new jobs. A second resort with a total capacity of 230 beds will be created on Kea in the area of Vroskopos. This is an investment of 60 million Euro by the Therissos Hills company and Special Purpose 24 of Dolphin Capital Investors, and includes a five-star hotel unit (the second Aman resort in Greece), holiday homes, a 100-person thalassotherapy centre, and a diving centre. The project in Vroskopos is expected to create 500 new jobs. Both investments will include supporting projects for the creation of private parking areas, swimming pools and sport facilities.

Nestle Coffee and Water in First Place
Coffee and bottled water appear to be 2014's best sellers for Nestle in Greece. According to company management, coffee continues to play an important role in the Greek market. New packaging and new production lines of Greek coffee Loumidis, within an investment of 3.6 million Euro, also gave the company a boost. Products Nescafé Dolce Gusto and Nespresso coffee as well as Korpi bottled water are recording growth, while there is also an increase in exports.

At the same time the initiative “Nestlé needs YOUth” aims to provide 500 job opportunities for young people under the age of 30 in 2014-2016 in Greece. During the first half of 2014 there were 108 new recruits, while 39 young people carried out their internship at the company.

Overall, the Nestle group recorded sales of 43 billion Euro during the first half of 2014.

Net Sales Revenue Growth for Coca-Cola Hellenic
Coca-Cola sales have recently been on a downward trajectory in some emerging markets due to economic and political developments. On the other hand, according to recent reports, Coca-Cola seems to be recovering in the first half of 2014 in some European markets, compared to the first years of the crisis. Coca-Cola Hellenic officials report an encouraging performance in the Greek market as well. There has been a single-digit drop in sales volumes in the second quarter of 2014, whereas in the first quarter of 2013 a double-digit decline had been recorded. Water was the main category in terms of volume growth, while carbonated soft drinks remained at a low single-digit level drop rate. "While we are pleased with the stabilization in volumes in Greece, after consecutive quarters of double-digit decline, we remain skeptical. The trading conditions remain challenging, unemployment levels remain near the historically high levels of 26% and no increase in income before 2015 can be foreseen," says Coca-Cola HBC.