Hellastat Industry Snapshots

1. Contents: Strategic Review 2 Summary of Financial Indicators 5 The Major Companies 6 Industry Financial Ratios 7 Industry Financial Statements 8 Hellastat Industry Snapshots CATERING October 2008 Λ. Βουλιαγμένης 579, 164 51 Αργυρούπολη t: +30210 9625100 f: +30210 9622400 e: info@hellastat.com

2. Major points of the sector: Strategic Review • The catering sector consists of three sub-sectors: event catering, business and industry catering (B&I) and in-flight catering and services. • 3.000 companies operate in the Greek market, the size of which is estimated at €392,5 mn. • The sub-sector of event catering accounts for the biggest share of the total market (51%), the B&I catering accounts for 32% and the share of the in-flight catering and services is 17%. • Event catering is estimated at €200 mn. The majority of the sector’s companies operate in this sub-sector, as the barriers to entry are particularly low. In particular, the sub-sector compromises of few big companies based in the two main urban centres (Athens and Salonica) and numerous small and medium sized enterprises (SMEs) that are, for the most part, limited partnerships, general partnerships or individual entrepreneurs. Due to the large number of companies, the sub-sector’s concentration is low. The 4 biggest firms control 11% of the market. • Companies that operate in similar sectors (confectioneries, bakeries and restaurants) also offer event catering services. In addition, there are plenty, usually big, hotels that offer catering services outside their premises (outside catering). • In the B&I sub-sector only a small number of firms operate, as the demands in initial capital and equipment are particularly high. Consequently, these firms are big in terms of turnover. The market is around €124,5 mn. and the biggest 4 companies control 53% of the market. Competition is mainly focused in pricing policy and less in meal quality, advertising and quality management certifications. • Finally, in-flight catering and services is a particular sub-sector that is characterized of high barriers to entry, as by definition the demands of specialization and capital are extremely high. The Greek market is an oligopoly with total value around €68 mn. The dominant enterprises control 80% of the total market. • As far as the development of the sector is concerned, event catering and B&I catering sub-sectors have grown in the recent years and this trend is expected to continue for the next 3 years, thanks to favourable demand conditions. • On the contrary, in-flight catering and services sub-sector has shown stability. However, in the near future the sub-sector is expected to fall, due to particular conditions that affect the airline sector (e.g. rising cost of fuels). • Event catering companies’ costs compromises of labour costs (40%), raw material costs (35%) and various costs (25%). On the contrary, the B&I companies have higher expenses in raw materials and less in labour. • Due to the direct relation of the companies’ activities to food safety and hygiene, a strong legal framework is essential. The current legal framework tries to meet the sector’s needs, but fails to do so, as it is very complicated, it is not strictly applied in practise and has several deficiencies.

3. Strengths & Opportunities: Strategic Review The dynamic environment of the sector features the following aspects: • Substantial investments in equipment and infrastructure. • Collaborations with important enterprises. • Development of both the meals and the services offered. • Increased demand for events by individuals and the private sector. • Increase of sales and earnings before taxes (EBT) for most companies. • Negative surplus trading cycle. The rising opportunities for the companies of the sector are summarised in the following: • Substantial development of the B&I sub-sector. • Significant growth potential in chilled meals. • New themes for events making. • Increasing number of services offered. • Cooperation of numerous companies for mass ordering of raw materials to achieve reduction of cost. • Offer of catering services in low prices in periods of low demand to fight seasonality. • Development of corporate websites for better recognition from the public. • Cooperation of event catering companies with hosting venues. • Increasing number of enterprises that offer meals to their employees.

4. Weaknesses & Threats: Strategic Review The weak points of the sector are the following: • Small market size. • Lack of unskilled personnel and lack of training faculties for the essential specialized labour force. • Important seasonality that raises difficulties for the financial planning and the attractiveness of suitable human capital. • Important raise of raw materials costs. • Complicated and vague legal framework. • Barriers to entry to different sub-sectors. • High concentration in B&I and in-flight catering and services sub-sectors. • Hotels have a comparative advantage to the event catering companies, as they combine both catering services and venue. • Catering services offered by companies of other sectors (e.g. confectioneries etc). • Limited size of the market of chilled meals in comparison with abroad. The major threats of the sector are the following: • The fuels’ rising prices put a burden on the in-flight catering and services companies. • The high levels of concentration result to oligopoly conditions that result in defining the prices as well as the quality of the services offered. • The financial crisis leads to a reductions of events hosting by both individuals and private firms. • Unfair competition may lead to problems for the sector’s companies.

5. Summary of financial indicators • The turnover of the 35 companies in the sample increased by 6,9% to €280,93 mn. in 2007. 66,7% of the enterprises improved their turnover in comparison with last year. • The gross results were €97,02 mn., increased by 9,3% since 2006. The gross profit margin further improved to 34,7%. • EBITDA reached €60,56 mn. in 2007, increased by 53,7%, while particularly increased were EBT (€16,94 mn. from €5,52 mn. in 2006). Finally, the sector’s companies have a low margin of EBT (2,0% in 2007). 19 companies were profitable in 2007 and 11 had losses. • The trading cycle was -86 days in 2007 and this has also been the case in the previous years. • Quick ratio is constantly falling and in 2007 it was 0,82. On the contrary, the acid test improved to 0,73 (from 0,61 in 2006). • The debt to equity ratio improved in 2007 (3,40 from 3,53 the previous year).

6. The major companies

7. Industry financial ratios

8. Industry financial statements