HELLAS TELECOMMUNICATIONS I, S.àr.l. Condensed Consolidated Interim Financial Statements 30 June 2009

Transcription

1 . Condensed Consolidated Interim Financial Statements 30 1

2 . INDEX TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Page Condensed Consolidated Interim Statement of Financial Position 3 Condensed Consolidated Interim Statement of Comprehensive Income 4 Condensed Consolidated Interim Statement of Changes in Equity 5-6 Condensed Consolidated Interim Statement of Cash Flow 7 Notes to the Condensed Consolidated Interim Financial Statements Reporting entity 8 2. Statement of compliance 8 3. Significant accounting policies 9 4. Significant accounting judgments, estimates and assumptions 9 5. Financial risk management Liquidity risk of financial liabilities Revenues Other income Purchases and services Other expenses Personnel expenses Depreciation and amortization Net finance costs Income taxes Property, plant and equipment Intangible assets Financial assets Deferred tax assets and liabilities Impairment testing of goodwill and intangibles with indefinite lives Trade receivables Other receivables Equity Financial liabilities Other payables Amounts due from/ to related companies Commitments and contingencies Subsequent events 29 Independent Auditors Report on Review of Interim Financial Information 30 2

3 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION December December 2007 Notes (restated) (restated) Assets Property, plant and equipment , , ,292 Intangible assets 15 1,736,569 1,798,423 1,803,544 Financial assets 16 6,212 5,336 4,544 Deferred tax assets 17 61,438 57,464 27,147 Total non-current assets 2,464,967 2,537,952 2,472,527 Inventories 10,598 11,160 12,838 Trade receivables , , ,019 Financial assets 16 15,686 8,156 67,031 Assets for current taxes 15,990 15,157 26,325 Other receivables 20 33,775 49,290 34,445 Cash and cash equivalents 31,869 36, ,126 Total current assets 325, , ,784 Total assets 2,790,909 2,878,381 2,976,311 Equity and liabilities Equity attributable to equity holders of the parent Issued capital 21 1,873 1,577 1,577 Share premium ,134 - Reserves 27,142 28,948 32,695 Accumulated deficit (1,376,925) (1,261,314) (1,142,123) Total (1,168,776) (1,230,789) (1,107,851) Non-controlling interest ,986 Total equity (1,168,776) (1,230,789) (1,044,865) Liabilities Financial liabilities 22 3,210,710 3,141,753 3,124,268 Employee benefits 7,085 6,559 5,670 Provisions 20,218 19,954 33,624 Other non current liabilities 5,278 3,846 19,428 Deferred tax liabilities , , ,181 Total non-current liabilities 3,425,331 3,360,506 3,418,171 Financial liabilities , , ,465 Trade payables 273, , ,250 Other payables 23 91, ,661 94,025 Tax payable 5,224 8,665 37,265 Total current liabilities 534, , ,005 Total liabilities 3,959,685 4,109,170 4,021,176 Total equity and liabilities 2,790,909 2,878,381 2,976,311 The notes on pages 8 to 29 are an integral part of these condensed consolidated interim financial statements. 3

4 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME For the three and the six month period and 30 Notes Revenues 6 273, , , ,038 Other income 7 5,852 1,605 8,365 3,057 Total revenue 279, , , ,095 Purchases and services 8 (167,296) (186,456) (330,402) (364,738) Other expenses 9 (9,998) (10,637) (18,662) (17,382) Personnel expenses 10 (18,900) (22,114) (38,316) (44,399) Depreciation and amortization 11 (64,710) (66,785) (127,059) (128,187) Gains (losses) on disposal of non current assets 784 (5) 709 (53) Operating income 18,941 26,190 31,386 56,336 Finance income 7,257 38,795 8,695 45,237 Finance expenses (65,322) (46,391) (165,415) (167,176) Foreign exchange gains Net finance costs 12 (57,894) (7,517) (156,625) (121,750) (Loss) Profit before tax (38,953) 18,673 (125,239) (65,414) Income tax (expense) benefit 13 (1,177) (22,124) 9,628 (10,190) Loss for the period (40,130) (3,451) (115,611) (75,604) Other comprehensive income (loss) for the period, net of income tax Total comprehensive loss for the period (40,130) (3,451) (115,611) (75,604) Total loss/ comprehensive loss attributable to: Owners of the Company (40,130) 7,640 (115,611) (58,653) Non-controlling interest - (11,091) - (16,951) Total loss/ comprehensive loss (40,130) (3,451) (115,611) (75,604) The notes on pages 8 to 29 are an integral part of these condensed consolidated interim financial statements. 4

5 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the six month period and 30 Attributable to equity holders of the Company Share capital Share premium CPECs Contribution from shareholders Cash flow hedge reserve Accumulated deficit Total Non controlling interest Total Equity 31 December ,577-6,436 9,571 12,941 (1,261,314) (1,230,789) - (1,230,789) Total comprehensive loss for the period: Loss for the period (115,611) (115,611) - (115,611) Other comprehensive income (loss) for the period, net of income tax Total 1,577-6,436 9,571 12,941 (1,376,925) (1,346,400) - (1,346,400) Release to income statement, net of income tax (1,806) - (1,806) (1,806) Transactions with owners, recorded directly in equity Issue of ordinary shares (note 21) , , , , ,134 6,436 9,571 11,135 (1,376,925) (1,168,776) - (1,168,776) The notes on pages 8 to 29 are an integral part of these condensed consolidated interim financial statements. 5

6 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the six month period and 30 Attributable to equity holders of the Company Share capital Share premium CPECs Contribution from shareholders Cash flow hedge reserve Accumulated deficit Total Non controlling interest Total Equity 31 December ,577 6,436 9,571 16,688 (1,142,123) (1,107,851) 62,986 (1,044,865) Total comprehensive loss for the period: Loss for the period (58,653) (58,653) (16,951) (75,604) Other comprehensive income (loss) for the period, net of income tax Total 1,577-6,436 9,571 16,688 (1,200,776) (1,166,504) 46,035 (1,120,469) Release to income statement, net of income tax (1,882) - (1,882) - (1,882) 30 1,577-6,436 9,571 14,806 (1,200,776) (1,168,386) 46,035 (1,122,351) The notes on pages 8 to 29 are an integral part of these condensed consolidated interim financial statements. 6

7 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOW For the three and the six month period and 30 Cash flows from operating activities Notes Loss for the period (40,130) (3,451) (115,611) (75,604) Adjustments for: Depreciation and amortization 11 64,710 66, , ,187 Amortization of arrangement fees cost 2,633 2,241 5,105 4,423 Net change in provisions and employee benefits ,085 (Gain) loss on disposal of non-current assets (784) 5 (709) 53 Impact of cash flow hedge (904) (1,038) (1,806) (1,882) Changes in current assets 1,468 12,256 13,111 2,242 Changes in current liabilities (27,676) (9,715) (63,270) (47,412) Net cash (used in) from operating activities (134) 67,792 (35,331) 11,092 Cash flows from investing activities Acquisition of property, plant and equipment 14 (25,824) (31,277) (37,685) (48,458) Proceeds from sale of property and equipment Acquisition of intangible assets 15 (5,654) (6,069) (9,903) (7,423) Net cash used in investing activities (30,713) (37,220) (46,746) (55,718) Cash flows from financing activities Proceeds from (repayments of) loans and banks facilities Changes in other financial assets and liabilities Net cash from (used in) financing activities 22 50,000 15,000 48,500 (20,000) (9,783) (62,680) 28,645 (4,995) 40,217 (47,680) 77,145 (24,995) Net increase (decrease) in cash and cash equivalents 9,370 (17,108) (4,932) (69,621) Cash and cash equivalents at the beginning of the period 22,499 57,613 36, ,126 Cash and cash equivalents at the end of the period 31,869 40,505 31,869 40,505 Additional cash flow information: Interest paid (65,176) (67,976) (123,482) (122,645) Income tax paid (2,154) (10,451) (3,557) (13,059) The notes on pages 8 to 29 are an integral part of these condensed consolidated interim financial statements. 7

8 1. REPORTING ENTITY: Hellas Telecommunications I S.àr.l ( Hellas I ) was incorporated for an unlimited period of time under the laws of Luxembourg on 25 March 2005 as a société à responsabilité limitée. Hellas I is a wholly owned subsidiary of Hellas Telecommunications S.àr.l ( Hellas ). Hellas I has its registered office at L 1882 Luxembourg, 12, rue Guillaume Kroll and its main purpose is the acquisition, transfer, sale and maintenance of its investments in Luxembourg and foreign countries, by purchase, subscription or in any other manner. Hellas I may also borrow, in any form, and proceed with the issuance of bonds (convertible and nonconvertible), without a public offer, and debentures. It may also carry out any commercial, industrial, or financial activities which it may deem useful in accomplishment of its purpose. The condensed consolidated interim financial statements of Hellas I as at 30 comprise of Hellas I and its subsidiaries (together referred to as the Company and individually as Company entities ) and are detailed below. Name Country of incorporation 2009 Hellas Telecommunications II (Luxembourg) ( Hellas II ) Luxembourg % Hellas Telecommunications (Luxembourg) III ( Hellas III ) Luxembourg % Hellas Telecommunications IV ( Hellas IV ) Luxembourg % Hellas Telecommunications (Luxembourg) V ( Hellas V ) Luxembourg % Hellas Telecommunications (Luxembourg) ( Hellas VI ) Luxembourg % WIND Hellas Telecommunications S.A. ( WIND Hellas ) Greece % Hellas II, Hellas III, Hellas IV, Hellas V and Hellas VI are wholly-owned subsidiaries of Hellas I and were established for the sole purpose of holding the Company s financial liabilities. The operating subsidiary WIND Hellas provides mobile, fixed telecommunication and internet access services in the Hellenic Republic ("Greece"). The consolidated financial statements of the Company as at and for the year ended 31 December 2008 are available from the Company s website 2. STATEMENT OF COMPLIANCE: The accompanying condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. They do not include all the information required for full annual consolidated financial statements, and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended 31 December These condensed consolidated interim financial statements were approved by the Board of Directors of the Company on 25 August

9 3. SIGNIFICANT ACCOUNTING POLICIES: Except as disclosed below, the accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements as at and for the year ended 31 December Presentation of financial statements: The Company applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as at 1 January As a result, the Company presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed consolidated interim financial statements as at and for the. Comparative information has been represented so that it also is in conformity with the revised standard. Customer loyalty programs: The Company applies IFRIC 13 Customer Loyalty Programs (2007) which became effective for annual periods beginning on or after 1 July As a result, the Company has reclassified for the and 2008 the amounts of 2.0 million and 2.0 million, respectively, from the caption Purchases and services to the caption Revenues. Furthermore for the three months and 2008, the amounts of 0.9 million and 1.2 million, respectively were reclassified from the caption Purchases and services to the caption Revenues. Comparative information has been represented so that is also is in conformity with the interpretation. Segment reporting: As at 1 January 2009 the Company determines and presents operating segments based on the information that is provided internally to the CEO, who is the Company s chief operating decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously, operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The adoption of the new accounting policy in respect of segment operating disclosures does not have any impact on the presentation of the condensed consolidated interim financial statements since the Company operates in one segment. 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS: The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may be different from these estimates. Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Company s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December During the, management re-assessed its estimates in respect of: a. Impairment of goodwill, indefinite and definite life intangible assets and tangible assets as the Company has one CGU (see note 18). b. Recoverability of deferred tax assets relating to tax losses carried forward (see notes 13, 17). c. Valuation of financial instruments and assets (see notes 16, 19, 22). 9

10 5. FINANCIAL RISK MANAGEMENT LIQUIDITY RISK OF FINANCIAL LIABILITIES: During the second quarter of 2009, the Company experienced a significant revenue decline as a result of the following factors: (1) the significant competitive market environment leading to price reductions, (2) the regulatory reduction in interconnection tariffs and (3) the existing economic crisis. These factors have not allowed the Company to generate sufficient revenues and cash flows to sustain its operations and therefore the Company has had to rely on financing activities to supplement cash from operations. Furthermore, due to the fact that the Company is highly leveraged, the above factors may constrain the Company s ability to meet its broader strategic objectives as well as its future interest payments. The Company needs to restructure its debt and continue to reduce corporate overhead expenses in order to alleviate future potential liquidity restrictions, so that the Company s strategic objectives may be met and the Company s revised business plan may be advantageously executed. The Company s internal projections of expected cash flows from operations currently indicate that there may be insufficient cash to cover the debt interest payments, and there is a risk of default of its financial covenant under the Revolving Credit Facility. Due to the above issues, the Company has initiated a process to evaluate strategic alternatives to address its capital structure. The financial information included in the condensed consolidated interim financial statements has been presented on a going concern basis. However, until the outcome of the Company s evaluation of its strategic alternatives and the implications of this for the Company s future debt structure are known, there may be a material uncertainty about the appropriateness of this basis of presentation. The financial information presented above does not reflect any adjustments which would be required if the going concern assumption was not appropriate. Given the possible material uncertainty described above, it is not currently possible to determine the extent and quantification of any such adjustments. 6. REVENUES: Revenues from sales of handsets and accessories 12,552 15,389 25,095 32,906 Telephony services 202, , , ,182 Interconnection traffic 51,271 67, , ,537 International roaming 6,105 7,353 7,535 9,155 Other income from services ,613 3,258 Total 273, , , ,038 10

11 7. OTHER INCOME: Income from various charges to customers 1, ,550 1,579 Income from co-operative agreements Income from reversal of personnel accruals 3,100-3,100 - Other ,123 1,124 Total 5,852 1,605 8,365 3, PURCHASE AND SERVICES: Cost of sales of handsets and accessories 26,256 28,238 50,537 58,806 Interconnection traffic 52,902 66, , ,693 Customer acquisition costs 20,732 21,753 39,676 42,936 National and international roaming 3,535 2,497 6,245 6,824 Advertising and promotional services 11,624 19,138 26,101 34,331 Rental of civil and technical sites 9,957 9,475 19,229 18,654 Rental of circuits 10,396 8,545 21,893 16,156 Outsourced services 2,890 2,846 4,463 5,354 Maintenance costs 10,340 10,873 22,042 22,433 Consulting and professional services 12,552 6,079 17,082 9,044 Other service expenses 6,112 10,755 19,165 22,507 Total 167, , , ,738 11

12 9. OTHER EXPENSES: Write-down of current receivables (note 19) 4,550 4,732 9,276 7,161 Annual contributions for licences ,345 1,333 Taxes and duties 4,042 3,891 6,567 6,798 Other operating expenses 768 1,359 1,474 2,090 Total 9,998 10,637 18,662 17, PERSONNEL EXPENSES: Wages and salaries 14,451 17,504 30,494 36,178 Social security 3,461 3,612 6,411 6,542 Defined benefit pension costs Other personnel costs ,085 Total 18,900 22,114 38,316 44, DEPRECIATION AND AMORTIZATION: Depreciation of property, plant & equipment: -Buildings 919 1,961 1,816 3,063 -Plant and machinery 22,999 21,923 44,435 40,764 -Other tangible assets 3,920 5,029 7,502 8,666 Amortization of intangible assets: -Software 9,463 8,979 18,908 17,736 -Licenses 6,872 9,478 13,744 19,129 -Other intangible assets 20,537 19,415 40,654 38,829 Total 64,710 66, , ,187 12

13 12. NET FINANCE COSTS: Finance income Interest income on bank deposits Cash flow hedges, transfer from equity (note 22) 1,205 1,383 2,408 2,509 Fair value gains on derivative instruments 5,847 31,986 5,847 31,986 Derivatives related accrued interest - 4,905-9,776 Others Total 7,257 38,795 8,695 45,237 Foreign exchange gain Finance expenses Interest expense on bonds and bank borrowings (note 22) (57,197) (76,395) (123,804) (152,506) Unwinding of discount on asset retirement obligation (113) (85) (227) (170) Fair value losses on derivative instruments 4,999 30,891 (24,125) (13,023) Other financial expenses (13,011) (802) (17,259) (1,477) Total (65,322) (46,391) (165,415) (167,176) Net finance costs (57,894) (7,517) (156,625) (121,750) 13. INCOME TAXES: Current income tax expense Current period 50 6, , , ,502 Deferred income tax expense Origination and reversal of temporary differences (note17) 1,127 16,052 (9,727) (312) 1,127 16,052 (9,727) (312) Total income tax expense (benefit) 1,177 22,124 (9,628) 10,190 13

14 The reconciliation of the effective tax rate is as follows: Loss for the period (40,130) (3,451) Total income tax expense (benefit) 1,177 22,124 Loss for the year before taxes (38,953) 18,673 Income tax using the Company's domestic tax rate 29.6% (11,568) 29.6% 5,534 Effect of tax rates in foreign jurisdictions (1.8%) 684 (5.6%) (1,050) Non-deductible expenses 1.7% (660) 11.0% 2,056 Expiration of taxable losses previously recognised (26.0%) 10, Recognition of previously unrecognized (3,686) temporary differences 9.5% - - Current year losses for which no deferred 6,265 tax asset was recognized (16.1%) 83.5% 15,584 (3.0%) 1, % 22,124 Loss for the period (115,611) (75,604) Total income tax (benefit) expense (9,628) 10,190 Loss for the year before taxes (125,239) (65,414) Income tax using the Company's domestic tax rate 29.6% (37,108) 29.6% (19,381) Effect of tax rates in foreign jurisdictions (2.6%) 3,198 (0.2%) 110 Non-deductible expenses (2.0%) 2,448 (4.8%) 3,152 Expiration of taxable losses previously recognised (8.1%) 10, Recognition of previously unrecognized temporary differences 2.9% (3,686) - - Current year losses for which no deferred tax asset was recognized (12.3%) 15,378 (40.2%) 26, % (9,628) (15.6%) 10,190 14

15 14. PROPERTY, PLANT AND EQUIPMENT: The major classes of property, plant and equipment are as follows: December 2008 Cost: Land and buildings 78,172 76,895 Plant and machinery 772, ,840 Commercial and industrial equipment 5,935 5,657 Other tangible assets 84,223 72,271 Tangible assets in progress 54,506 55, , ,117 Accumulated depreciation (334,396) (284,388) Net book value 660, ,729 Additions in the normal course of operations for the and 2008 amounted to approximately 37.7 million and 48.5 million, respectively. Write-offs of fully depreciated property, plant and equipment and other movements for the and 2008 amounted to approximately 3.7 million and 1.7 million, respectively. Depreciation for the and 2008 amounted to approximately 53.8 million and 52.5 million, respectively. Write-offs of fully depreciated assets and other movements for the and 2008 amounted to approximately 3.7 million and 1.7 million, respectively. 15. INTANGIBLE ASSETS: December 2008 Cost: Software 198, ,172 Licenses 326, ,309 Other Intangible assets 737, ,692 Prepayments for purchases of software 6,449 6,495 Goodwill (note 18) 995, ,457 2,264,642 2,253,125 Accumulated amortization (528,073) (454,702) Net book value 1,736,569 1,798,423 15

16 Additions in the normal course of operations for the and 2008 amounted to approximately 9.9 million and 7.4 million, respectively and mainly related to software licences and connection fees for leased lines. Other movements for the and 2008 amounted to approximately 1.5 million and nil, respectively. Amortization for the and 2008 amounted to approximately 73.3 million and 75.7 million, respectively. Other intangible assets relate to the following finite and indefinite intangible assets as follows: Useful life December 2008 Cost: Q brand name (note 18) Indefinite 67,100 67,100 Tellas brand name (note 18) Indefinite 65,450 65,450 Customer relationships Finite 533, ,658 WIND Italy - Tellas contract Finite 5,020 5,020 PPC backbone contract Finite 51,100 51,100 Other Finite 15,580 11, , ,692 Accumulated amortization (280,595) (239,875) Net book value 457, , FINANCIAL ASSETS: December 2008 Non-current Current Non-current Current Derivative financial assets - 15, Security deposits and other 6, ,336 8,156 Total 6,212 15,686 5,336 8,156 The derivative financial assets relate to two foreign exchange forward swap contracts with notional amounts of US$275 million. The notional amounts indicated are effective for settlement on 15 January The Company entered into these contracts in January 2009, considering that the two cross-currency interest rate swap contracts (note 22) called for a final exchange of principal on 15 January 2010 at an original fixed exchange rate. This created an open foreign exchange position for the Company, and as a result, in order to hedge this existing foreign exchange risk, the Company entered into these two new contracts. 16

17 17. DEFERRED TAX ASSETS AND LIABILITIES: December 2008 Deferred tax assets: Provision for liabilities and charges 3,190 2,906 Deferred airtime revenue 4,893 6,006 Derivative financial instruments 14,411 3,554 Roaming discounts 4,859 7,268 Tax loss carry-forward 24,903 30,228 Other 9,182 7,502 Deferred tax assets 61,438 57,464 Deferred tax liabilities: Property, plant and equipment, intangible assets (147,580) (157,494) Deferred charges for financial liabilities (16,795) (18,276) Derivative financial instruments (4,641) - Other (13,024) (12,624) Deferred tax liability (182,040) (188,394) Net deferred tax liability (120,602) (130,930) Movement in net deferred tax liability 30 Balance at 1 January 2009 (130,930) Charged directly to equity (relates to derivative financial instruments) 601 Benefit for the period (note 13) 9,727 Balance at period end (120,602) 17

18 18. IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES: (I) Goodwill: For the purpose of impairment testing, goodwill of 995 million is allocated to the operating subsidiary, WIND Hellas, which represents the lowest level within the Company at which goodwill is monitored for internal management purposes. Following a decrease in revenues and an increased loss for the, the Company assessed the recoverable amount of its cash-generating unit (CGU). As a result of this test, the carrying value of the CGU was determined to be lower than the estimated recoverable amount of the Company. Also, the Company believes that no reasonable possible change in any of the key assumptions would cause the carrying value of the CGU to exceed its recoverable amount. The recoverable amount of the CGU is based on value-in-use calculations. These are determined using pretax cash flow projections based on financial budgets approved by Company management covering a fiveyear period. It reflects management s expectations of revenue growth, operating costs and margin for the CGU based on past experience. Cash flows beyond the five-year period are extrapolated using the estimated growth rates indicated in the table below. These growth rates have been determined with regard to projected growth rates for the specific market in which the CGU operates and are not considered to exceed the long term average growth rates for the market. Discount rates applied in determining the recoverable amounts of the CGUs are derived from the Company s pre-tax weighted average cost of capital and are indicated in the table below: WIND Hellas Growth rate 1 0.5% Discount rate 2 9.5% 1 Growth rate used to extrapolate cash flows beyond the budget period. 2 Pre-tax discount rate applied to the cash flow projections. Other key assumptions used in the value of use calculations were as follows: - Post-paid and prepaid customer base: The customer base is expected to grow in the period as a result of the new commercial positioning set to provide a unique selling proposition and fully-convergent offerings combining mobile and fixed broadband services with best in class customer experience and sustainable differentiation towards competition. This is also evident in the projected declining churn rates for the period , despite the increase in the churn rates in the year 2009 while at the same time a number of commercial-driven operating expenses and capital expenditures grow in order to support the increased commercial effort. - Growth in the market segment of fixed telephony customers: the growth is expected to come primarily out of the double play customer expansion whereas indirect voice customers are projected to decline steadily throughout the periods, representing the Company s shift of focus from the indirect to direct (LLU) customer base. 18

19 - Declining interconnection rates: Interconnection rates are expected to decrease significantly up to the year 2013, in line with regulator s decision for reductions in mobile termination rates. - Revenues: year 2009 total revenues are not expected to exceed the 2008 level but they are expected to increase by an aggregate of 11.3% from 2009 to Improved earnings before interest taxes, depreciation and amortization (EBITDA) margin: the fall back in EBITDA in 2009 and 2010 is mainly the result of the following factors: (i) the ongoing recessionary economic environment which adversely affects consumer behaviour, (ii) the aggressive competitive pricing in the local market which affected the profitability levels in 2009 and (iii) the imposed interconnection rates reduction. In the years 2011 onwards, EBITDA is expected to increase to a sustainable level which is based on the Company s expected expanded customer base and improved efficiency and effectiveness of the business operational model as the commercial effort is easing off from its peak in the year 2010 and increased economies and synergies are produced. (ii) Q brand name: The intangible asset relating to the brand name for Q amounted to 67.1 million and is included in Other Intangibles in the intangible assets schedule (note 15). This asset is not amortized since it has an indefinite life. The determination of the recoverable amount of the Q brand is based on the key assumptions outlined above and the Company believes that no reasonably possible change in any of the key assumptions would cause the carrying amount of the CGU to exceed its recoverable amount. (iii) Tellas brand name: The intangible asset relating to the brand name for Tellas amounted to 65.5 million, is a result of the finalization of the purchase price allocation for the Wind PPC Holdings N.V. acquisition and is included in Other Intangibles in the intangible assets schedule (note 15). This asset is not amortized since it has an indefinite life. The determination of the recoverable amount of the Tellas brand is based on the key assumptions outlined above and the Company believes that no reasonably possible change in any of the key assumptions would cause the carrying amount of the CGU to exceed its recoverable amount. 19. TRADE RECEIVABLES: December 2008 Receivables due from customers 176, ,288 Receivables due from telephone operators 62,328 63,504 Receivables due from dealers 12,028 23,274 Other trade receivables 32,534 26, , ,722 Less: Provisions for doubtful debts (65,096) (64,857) Total 218, ,865 19

20 The movement in the provision for doubtful debts is as follows: 30 Balance at 1 January ,857 Charge for the period (note 9) 9,276 Write off receivable (9,037) Balance at period end 65,096 The Company discovered that the unbilled traffic revenue and the related accrual for the years 2008 and 2007 were overstated by 3.2 million and 10.4 million net of income tax, respectively. This overstatement was a result of a technical problem identified with the report that the Company used in determining this accrual. As a result, the captions detailed below were impacted as follows: 31 December December 2007 Increase (decrease) Increase (decrease) Deferred tax assets 4,980 3,903 Trade receivables (18,596) (14,285) Accumulated deficit 13,616 10,382 All affected financial statement captions have been restated accordingly. 20. OTHER RECEIVABLES: December 2008 Receivables due from social security authority 1 1 Receivables due from tax authority ,693 Prepaid expenses 24,159 25,022 Other receivables group - 1,680 Other receivables third parties 9,458 7,894 Total 33,775 49,290 20

21 21. EQUITY: As at 30, the authorized and issued share capital amounted to 18,734 shares with a par value of 100 each. All issued shares are fully paid. In February 2009, the Company issued 2,965 shares with a nominal value of 100 per share in settlement of an outstanding payable with WIND Telecomunicazioni S.p.A amounting to million which was related to the purchase of the non-controlling interest in WIND PPC Holding N.V. in September 2008 (note 23). Also, the issued and outstanding CPECs as at 30 were 6,435,736 certificates with a par value of 1 each. 22. FINANCIAL LIABILITIES: This note provides information about the contractual terms of the Company s financial liabilities, which are measured at amortised cost. Borrowing and derivative financial liabilities The following table provides details of financial liabilities: December 2008 Current Non Current Total Current Non Current Total Bonds and bank financing 60,461 3,210,710 3,271,171 72,738 3,140,207 3,212,945 Financing from related parties (note 24) 18,916-18,916 18,881 1,546 20,427 Derivative financial liabilities 84,304-84,304 50,363-50,363 Total 163,681 3,210,710 3,374, ,982 3,141,753 3,283,735 The following table provides details of the maturity dates of financial liabilities: December 2008 < 1 year 1 to 5 years > 5 years Total < 1 year 1 to 5 years > 5 years Total Bonds and bank financing 60,461 1,813,491 1,397,218 3,271,171 72,738 1,760,966 1,379,241 3,212,945 Financing from related parties (note 24) 18, ,916 18,881 1,546-20,427 Derivative financial liabilities 84, ,304 50, ,363 Total 163,681 1,813,491 1,397,218 3,374, ,982 1,762,512 1,379,241 3,283,735 21

22 The following table provides an analysis of financial liabilities, excluding derivative financial liabilities, by currency of issuance and effective interest rate: 30 < 5% 5% - 7.5% 7.5% - 10% 10% % > 12.5% Total Euro 330,546 1,211,194 1,281, ,840-3,082,627 US Dollar 2, , ,460 Total 333,372 1,415,828 1,281, ,840-3,290,087 (a) Third party borrowings Terms and conditions of outstanding financial liabilities were as follows: Current Bond Loan Accrued interest on bond and bank financing Ref Currency (vi) Nominal interest rate 3M Euribor % Year of Maturity December 2008 Face value Carrying amount Face value Carrying amount ,312 3,312 3,312 3, ,149 57,149 69,426 69,426 60,461 60,461 72,738 72,738 Non Current Senior Secured Notes million (i) 3M Euribor , , , ,777 issue + 3.5% Senior Secured Notes million (i) 3M Euribor , , , ,414 issue + 3.5% Senior Secured Notes (i) 3M Euribor ,250 96,605 97,250 96,522 million issue + 3.5% Senior Notes million issue (ii) 8.50% , , , ,685 Subordinated Notes million (iii) 3M Euribor , , , ,902 issue % Subordinated Notes US $275 (iii) $ 3M Libor , , , ,228 million issue 5.75% Revolving Credit Facility (iv) 3M Euribor % , , , ,942 PIK Notes (v) 3M Euribor + 8% , , , ,111 Bond Loan (vi) 3M Euribor % ,313 3,313 3,313 3,313 Bond Loan (vi) 3M Euribor % ,313 3,313 3,313 3,313 3,270,103 3,210,710 3,204,709 3,140,207 Total 3,330,564 3,271,171 3,277,447 3,212,945 22

23 (i) On 7 October 2005, Hellas V issued senior secured floating rate notes (the Senior Secured Notes ) with a principal amount of million under an indenture agreement (the Senior Secured Indenture ) dated 7 October 2005, as supplemented on 31 January 2006 and amended and restated as of 18 December 2006, among itself, the guarantors party thereto and the Bank of New York, as trustee. Furthermore, on 1 February 2006, Hellas V issued additional Senior Secured Notes with a principal amount of million under the Senior Secured Indenture in connection with the financing of the Q- Telecom acquisition which occurred in Finally, on 21 December 2006, Hellas V issued additional Senior Secured Notes with a principal amount of million under the Senior Secured Indenture. As at 30 and 31 December 2008, total principal outstanding for the Senior Secured notes was 1, million. The Senior Secured Notes constitute a single class of debt securities under the Senior Secured Indenture, they mature on 15 October 2012 and bear interest at a rate per annum, reset quarterly, equal to EURIBOR plus 3.5%. The funds raised by the issuance of the Senior Secured Notes were used to settle a senior secured bridge facility agreement entered into by Hellas V on 31 January This bridge facility was cancelled following the settlement. (ii) On 7 October 2005, Hellas III issued senior notes (the Senior Notes ) with a principal amount of million. The Senior Notes mature on 15 October 2013 and bear interest at a fixed rate per annum of 8.50%. The Senior Notes were issued under an indenture dated as of 7 October 2005, as supplemented on 31 January 2006 and amended and restated as of 18 December 2006, between, among others, Hellas III and the Bank of New York, as trustee. (iii) On 21 December 2006, Hellas II issued Euro-denominated floating rate subordinated notes (the Euro Subordinated Notes ) with a principal amount of million and US dollar-denominated floating rate subordinated notes (the Dollar Subordinated Notes ) with a principal amount of US$275.0 million (collectively referred to as the Subordinated Notes ) in accordance with an indenture agreement dated 21 December 2006 among Hellas II, The Bank of New York, as trustee and Deutsche Bank AG as security agent. The Euro Subordinated Notes bear interest at a rate per annum, reset quarterly, equal to EURIBOR plus 6.0% and the Dollar Subordinated Notes bear interest at a rate per annum, reset quarterly, equal to LIBOR plus 5.75%. The Subordinated Notes mature on 15 January (iv) A senior subscription agreement (the Revolving Credit Facility ) was entered into on 3 April 2005 and subsequently amended and restated on 15 July 2005, 12 September 2005, 31 January 2006, 21 December 2006 and 20 April 2007 (the Super Priority Subscription Agreement) and most recently on 17 December 2007 between, among others, Hellas V and WIND Hellas as borrowers and J.P. Morgan Europe Limited as issuing bank, agent and security agent. The Revolving Credit Facility initially provided for commitments of up to 250 million in the form of a revolving facility and a domestic facility, which commitments were automatically reduced to 200 million upon consummation of the cash-out merger of WIND Hellas with and into Troy GAC Telecommunications S.A on 3 November The facility was further reduced to 150 million on 20 April 2007, the closing date of the acquisition of Hellas by Weather Investments S.p.A. Pursuant to the most recent amendment on 17 December 2007, the facility was increased by 100 million to a total of 250 million, in order to fund the acquisition of WIND PPC Holding N.V. The Revolving Credit Facility matures on 3 April 2012 and bears interest at a rate of EURIBOR plus a margin ranging from 1.5% to 2.25%. As of million was drawn under this facility. The Revolving Credit Facility is guaranteed by Hellas II, Hellas IV, Hellas V, Hellas VI and WIND Hellas. (v) On 21 December 2006, Hellas Finance issued new floating rate senior payment-in-kind (PIK) notes (the PIK Notes ) with a principal amount of million in accordance with an indenture agreement dated 21 December 2006 among Hellas Finance, Hellas I, The Bank of New York, as trustee, and Deutsche Bank AG, London Branch, as security agent. The PIK Notes bear interest at a rate of threemonth EURIBOR plus 8.0%. Interest on the PIK Notes is payable in the form of additional PIK Notes, or, at the election of Hellas Finance, in cash. The PIK Notes are guaranteed by Hellas I and have the 23

24 benefit of first ranking security over an inter-company loan of the proceeds of the issuance of the PIK Notes from Hellas Finance to Hellas I. The net proceeds from the issuance and sale of the PIK Notes were lent by Hellas Finance to Hellas I, which lent the proceeds to Hellas II. These proceeds were pooled with the net proceeds of the offering of the Senior Secured Notes and the Subordinated Notes on 21 December 2006 which were used to repay previously outstanding PIK notes issued by Hellas Finance in April 2006 and redeemed deeply-subordinated shareholder loans from the Company s previous shareholders. The PIK Notes mature on 15 July (vi) As at 31 December 2007, WIND Hellas obtained a bond loan totalling million from a local Greek financial institution for the expansion of its network infrastructure. This bond loan bears interest at EURIBOR plus 1.75% and the principal amount is payable over a four year period in equal annual instalments. As of 30, the amount outstanding is 9.93 million. Hellas III and Hellas V obtained consents from the holders of the Senior Notes and the Senior Secured Notes, respectively, and Hellas V has obtained waivers and consent from creditors under the Revolving Credit Facility to permit the issuance of million of Senior Secured Notes and the Subordinated Notes on 21 December On 2 March 2007, Hellas II, Hellas III and Hellas V completed a consent solicitation process, having obtained consents from the holders of the Subordinated Notes, the Senior Notes and the Senior Secured Notes, respectively, to among other things, permit the one-time waiver of the change of control covenant of each of (i) the amended and restated indenture dated 18 December 2006 (the Senior Secured Indenture ), among Hellas V, the Guarantors as defined therein, The Bank of New York and others, pursuant to which the Senior Secured Notes were issued, (ii) the indenture dated 21 December 2006 (the Subordinated Indenture ), among Hellas II, The Bank of New York and others, pursuant to which the Subordinated Notes were issued and (iii) the amended and restated indenture dated 18 December 2006 (the Senior Indenture ), among Hellas III, the Guarantors as defined therein, the Bank of New York and others, pursuant to which the Senior Notes were issued which would otherwise have required the relevant company to make a change of control offer upon completion of the proposed sale by the sellers of Hellas to Weather Investments S.p.A. The Senior Secured Notes are guaranteed by Hellas II and certain of its subsidiaries, including WIND Hellas on a senior basis and are secured by liens on substantially all of the assets of Hellas II and certain of its subsidiaries, including WIND Hellas. The Senior Notes are guaranteed by Hellas II and certain of its subsidiaries, including WIND Hellas, on a senior subordinated basis and are secured by junior liens on the shares of WIND Hellas, all inter-company bond loans owed to Hellas III and the bank accounts of Hellas III. The Subordinated Notes are secured by liens over certain equity interests in Hellas II. The PIK Notes are guaranteed by Hellas I on a senior basis and are secured by a first ranking lien over an inter-company loan of the proceeds of the issuance of the PIK Notes from Hellas Finance to Hellas I. The Senior Secured Notes are guaranteed by Hellas II and certain of its subsidiaries, including WIND Hellas on a senior basis and are secured by liens on substantially all of the assets of Hellas II and certain of its subsidiaries, including WIND Hellas. The Senior Notes are guaranteed by Hellas II and certain of its subsidiaries, including WIND Hellas, on a senior subordinated basis and are secured by junior liens on the shares of WIND Hellas, all inter-company bond loans owed to Hellas III and the bank accounts of Hellas III. The Subordinated Notes are secured by liens over certain equity interests in Hellas II. Transaction costs directly related to the issuance of the Senior Notes, the Senior Secured Notes, the Subordinated Notes and the Revolving Credit Facility have been considered as reductions in the proceeds from these issuances and are amortized over the life of the debt instruments using the effective interest method. 24

25 The Senior Secured Notes and the Subordinated Notes (collectively, the Notes ) have been issued under the Senior Secured Indenture and the Subordinated Indenture, respectively, among Hellas V and the Senior Secured Guarantors, and Hellas II, as applicable, the Senior Secured Trustee or the Subordinated Trustees, respectively, and the Security Agent (collectively, the "Indentures"). The Indentures contain covenants including, among others, the following restrictions: incur or guarantee additional indebtedness; pay dividends or make other distributions or repurchase or redeem the Company s stock; make investments or other restricted payments; create liens; enter into certain transactions with affiliates; enter into agreements that restrict the Company s restricted subsidiaries' ability to pay dividends; and consolidate, merge or sell all or substantially all of the Company s assets. If an event of default of the covenants and the continuance of the default, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an event of default relating to certain events of bankruptcy, insolvency or reorganization of the parent guarantor occurs and is continuing, the principal of and interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. Further to the abovementioned covenants, the Revolving Credit Facility contains various covenants substantially similar to the covenants in the indentures governing the Senior Secured Notes, the Senior Notes and the Subordinated Notes. In addition, the Revolving Credit Facility contains a financial covenant relating to the maintenance of the ratio of net senior secured debt to consolidated earnings before income taxes depreciation and amortization of Hellas II and certain of its subsidiaries which is tested quarterly. As at 30, the Company is in compliance with all covenants. The Company s assets that have been pledged as security for financial liabilities as of 30 amount to 755 million and comprise of trade receivable ( 106 million), inventories ( 11 million), cash ( 32 million) and property plant and equipment ( 606 million). For finance expenses incurred for the Company s financial liabilities for the and 2008, refer to note 12. (b) Related party borrowing The amounts included under current financial liabilities concern cash advances and payments made on behalf of the Company by related parties, and as at 30 amounted to 18.9 million (note 24). 25

26 (c) Derivatives liabilities December 2008 Interest rate swaps 65,450 32,126 Cross currency interest rate swaps 18,854 18,237 Total 84,304 50,363 As at 30, the Company had the following derivative financial liabilities outstanding which are described as follows: i. Three interest rate swap contracts with notional amounts of 1,125 million. The notional amounts indicated are effective to 14 October These amounts are subsequently reduced to 550 million effective 15 October 2010 to 15 October These contracts were entered into in October ii. Four interest rate swap contracts with notional amounts of 1, million. The notional amounts indicated are effective to 15 October These amounts are subsequently reduced to 530 million effective 15 October 2009 to 15 October These contracts were initially entered into by the Company in December 2006 with a total notional amount of 1,060 million and in January 2007, the notional amounts of two of these contracts were amended from 100 million to million, while the other terms remained unchanged. iii. Two cross-currency interest rate swap contracts with notional amounts of 210 million. The notional amounts indicated are effective to 15 January These contracts were initially entered into by the Company in December 2006 as one cross-currency interest rate swap contract and were subsequently amended in January 2007 to split them into two contracts. All other terms remained the same. The above contracts were entered into by the Company in order to mitigate its exposure to interest and exchange rate fluctuations associated with its variable rate financial liabilities. The first three interest rate swap contracts qualified for hedge accounting (cash flow hedges) up to August 2006 and the resulting gains or losses, net of tax impact, from the valuation of the derivatives up to that date (net gain of 16.5 million) were reflected directly within equity in Starting September 2006, the Company revoked the designation of the swap contracts as a cash flow hedge and any further changes in their fair value has been included in finance income in the condensed consolidated interim statement of comprehensive income (note 12). 26

27 23. OTHER PAYABLES: December 2008 Social security payables 1,550 3,345 Personnel payables 7,150 5,849 Due to local authorities 17,629 16,840 Prepaid traffic to be realized 19,934 24,024 Deferred income 22,042 21,981 Other payables due to related parties (note 24) - 187,695 Current portion of asset retirement obligation provision 1,895 1,495 Other 21,665 22,432 Total 91, ,661 Other payables due to related parties was settled by the Company with an issuance of equity amounting to million (note 21). 24. AMOUNTS DUE FROM/ TO RELATED COMPANIES: Parent and ultimate controlling party The ultimate controlling party of the Company is Weather Investments S.p.A.. The following table provides the total amount of transactions, which have been entered into with related parties for the relevant financial period. The terms and conditions of the transactions with these related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-related entities on an arm s length basis. Amounts owed by related parties included in trade receivables December 2008 Subsidiary of shareholder of Hellas - WIND Telecommunicazioni S.p.A. 4, Subsidiary of shareholder of Hellas - WIND International Services 4,226 - Subsidiary of shareholder of Hellas - Mobinil Subsidiary of shareholder of Hellas - Orascom Algeria 8 5 Subsidiary of shareholder of Hellas - Orascom Tunisia 1 1 Total 8, Amounts owed by related parties included in other receivables December 2008 Shareholder of Hellas and ultimate parent company - Weather Investments S.p.A Subsidiary of shareholder of Hellas - WIND Telecommunicazioni S.p.A. - 1,659 Total - 1,680 27