Headquarters: 81 Spaton Avenue Gerakas Attica Registration Nr 23791/04/Β/91/136(01)

Transcription

1 Headquarters: 81 Spaton Avenue Gerakas Attica Registration Nr 23791/04/Β/91/136(01) ANNUAL FINANCIAL STATEMENTS IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS THAT HAVE BEEN ADOPTED BY THE EUROPEAN UNION FOR THE PERIOD 1 JANUARY 31 DECEMBER 2007 FOR THE COMPANY ENA-UNITED MARKETS-SOCIETE ANONYME AND SUPPORTING COMPANY (distinctive title: ENA S.A.) Headquarters: 81 Spaton Avenue Gerakas Attica

2 TABLE OF CONTENTS a) Income Statement of the year ended on page 2 b) Balance Sheet as of page 3 c) Statement of Recognized Income and Expenses of the year ended on page 4 d) Cash Flow Statement of the year ended on Page 5 e) Notes to the Financial Statements for year ended on page 6-26 f) Board of Directors Report on the Financial Statements of page 27 g) Auditor s Report page The annual financial statements were approved by the Board of Directors May 9, 2008, 2008 and are subject to the approval of the Ordinary General Meeting of Shareholders. The Board of Directors authorized the following to sign the financial statements on its behalf: The Chairman of the Board of Directors The Member of the Board of Directors Konstantinos D. Macheras Petros Trahanas Identity Card no Θ Identity Card no ΑΒ The Executive Financial Director Maria V. Kuhkalani Identity Card no AB License no Α' Class 1

3 INCOME STATEMENT (amounts in thousand EUR except for earnings per share) Note Turnover (sales) Cost of Sales ( ) (90.648) Gross Profit Other operating income Distribution expenses (10.756) (9.117) Administrative expenses (1.136) (1.527) Profit from operations Finance costs (9) Income from investments Profit before taxes Income tax expense 9 (1.112) (1.195) Profit after tax The notes set out on pages 6 to 26 constitute an integral part of the financial statements. 2

4 BALANCE SHEET AT DECEMBER 31, 2007 ASSETS Non-Current Assets Note Property, plant and equipment Investment property Intangible assets Long-term receivables Deferred tax asset Total Fixed Assets Current Assets Inventory Trade receivables Prepayments Other receivables- accrued income Cash and cash equivalents Total Current Assets TOTAL ASSETS LIABILITIES Shareholders Equity Share Capital Share Premium Reserves Retained Earnings /(Losses) 22 (16.713) (19.817) Total Equity Long-term Liabilities Retirement benefit plans Provisions Other long-term liabilities 1 1 Total Long-term Liabilities Short-term Liabilities Trade payables Accrued expenses Income tax payable Other short-term liabilities Total short-term Liabilities TOTAL LIABILITIES & SHAREHOLDERS EQUITY The notes set out on pages 6 to 26 constitute an integral part of the financial statements. 3

5 STATEMENT OF RECOGNIZED INCOME AND EXPENSES Actuarial gain/(loss) on defined benefit plans 109 (49) Deferred tax on actuarial gain/(loss) on defined benefit plans taken directly to Equity (27) 12 Net income/(expense) recognized directly in Equity 82 (37) Profit of the year Total recognized income/(expense) for the year The notes set out on pages 6 to 26 constitute an integral part of the financial statements. 4

6 CASH FLOW STATEMENT Note Operating activities Profit before tax Plus / (minus) adjustments for: Depreciation and amortization Provisions 30 (38) 72 Losses / (Gains) on disposal of fixed assets (2) 1 Income from investments (657) (423) Finance Cost 9 - Plus / (minus) adjustments for changes in working capital Decrease of inventory (72) (163) Decrease / (increase) of receivables (223) (519) (Decrease) of liabilities (excluding bank loans) Less: Tax paid (1.381) 21 Net cash provided by (used in) operating activities (a) Investing activities Purchase of tangible and intangible fixed assets (946) (1.158) Proceeds on disposal of tangible and intangible fixed assets 2 4 Interest received Net cash used in investing activities (b) (287) (731) Net increase in cash and cash equivalents of the year (a)+(b) Cash and cash equivalents beginning of the year Cash and cash equivalents end of the year The notes set out on pages 6 to 26 constitute an integral part of the financial statements. 5

7 1. GENERAL INFORMATION ENA UNITED MARKETS AND SUPPORITING COMPANY is a societe anonyme incorporated in Greece according to the provisions of C.L. 2190/1920, situated at Gerakas Attica. The Company operates in the food wholesale and retail sector and its main object is the support and advancement of its shareholders and its affiliate enterprises, in relation to the wholesale and retail sale, of all consumer goods and the activities relating to that purpose. Object of the Company is also the establishment and operation of wholesale and retail stores for food and generally consumer products, the direct and indirect commerce of all types of merchandise, especially those belonging to the food commerce, including non food, and on its own behalf or on behalf of a third party. The recital of the objects is indicative. The sales network of ΕΝΑ S.Α. numbers 10 wholesale stores under the banner ENA Cash-and-Carry. The staff of the Company at the end of the fiscal year 2007 numbered 299 people while in the prior year comparative period numbered 296 people. 2. Adoption of New & Revised International Financial Reporting Standards (IFRS) New standards, interpretations and revised standards 2.1 Standards and Interpretations effective in the current period In the current year, the Company has adopted IFRS 7 Financial Instruments: Disclosures which are effective annual reporting periods beginning on or after 1 January 2007, and the consequential amendments to IAS 1 Presentation of Financial Statements. The impact of the adoption of IFRS 7 and the changes to IAS 1 have been to expand the disclosures provided in these financial statements regarding the Company s financial instruments and management of capital. Four Interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period. These are: IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies; IFRIC 8 Scope of IFRS 2; IFRIC 9 Reassessment of Embedded Derivatives; and IFRIC 10 Interim Financial Reporting and Impairment. The adoption of these Interpretations has not resulted in any changes in the Company s accounting policies. 2.2 Early adoption of Standards and Interpretations In addition, the Company has elected to adopt the following in advance of it s effective date: IFRIC 13 Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 July 2008). The adoption of IFRIC 13 has had no impact on the Company s accounting policies as the Company s policy conformed to IFRIC 13. 6

8 2. Adoption of New & Revised International Financial Reporting Standards (IFRS) Continued 2.3 Standards and Interpretations in issue not yet adopted The following standards and interpretations were in issue but not yet effective : 1. IFRS 8, Operating Segments (effective for accounting years beginning on or after ). 2. IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009). 3. IFRIC 12, Service Concession Arrangements, (effective for accounting years beginning on or after ). The interpretation outlines an approach according to which entities providing public services should apply IFRS. IFRIC 12 is not relevant to the Company s operations. 4. IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective 1 January 2008). The directors anticipate that all of the above, except for IFRIC 12 which is not relevant to the Company, will be adopted in the Company s financial statements in the period they become effective. The Company is currently evaluating the impact of the adoption of these but believes that their implementation is unlikely to have a material impact on the financial position of the Company. 3. Summary of Accounting Principles The Accounting Principles applied are the following. 3.1 Basis of Preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board (IASB) effective at the date of preparation of the Financial Statements and as adopted by the European Union. The Company is not affected by the specific sections of IAS 39 related to hedging of deposit portfolios, which have not been adopted by the European Union. All amounts are expressed in thousand Euros, unless otherwise stated. 3.2 Property, plant and equipment Tangible Fixed Assets Tangible assets are stated at cost less depreciation and any impairment losses, except for land which is stated at cost less any impairment losses. Depreciation is charged so as to write off the cost of assets, other than freehold land and properties under construction, over their estimated useful lives, using the straight-line method as follows: Tangible fixed asset Owned buildings Buildings installations Plant and machinery Vehicles Electronic equipment Furniture-other equipment Estimated useful life 40 years years 5-10 years 4-9 years 1-10 years 1-10 years 7

9 3. Summary Of Accounting Principles-Continued Tangible Fixed Assets-Continued Installations- improvements on third party property are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on a straight-line basis over the sorter of the useful life or the relevant lease term. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recorded in profit or loss. At the end of each period, the Company s Technical Support Department reviews the estimated useful life of tangible fixed assets and amends the useful life if necessary, the effect of any change is accounted for on a prospective future basis Intangible Assets Intangible assets are stated at historical cost less accumulated amortization and any accumulated impairment losses, where necessary. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful lives of intangible assets, are stated below: Intangible fixed asset Software serving the Central System and stores network Software serving PCs function exclusively Estimated useful life 3 years 1 year The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective future basis Investment Property Investment property which is property held to earn rentals and/or for capital appreciation, is stated at cost less accumulated depreciation. The Company does not provide depreciation on Investment Property when the net realizable value is equal or higher than the book value Impairment of Assets At each balance sheet date, the Company reviews the carrying amounts (net book value) of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. An indication of impairment loss exists if the carrying amounts of tangible and intangible assets are estimated to be higher than their recoverable value. The recoverable value is the higher between the fair value reduced by the selling costs and the value in use. At each balance sheet date, the Company tests whether there is any indication of impairment of the cash generating units (stores). The Company considers as an indication of impairment loss of tangible and intangible assets when the cash generating units (stores) show negative operating cash flows during the last three consecutive years provided that they are not stores opened or rebranded in the last year. For these stores, at the balance sheet date, the Company evaluates the recoverable value of the cash generating unit (store) using a twenty year discounted cash flow method with the general assumptions that inflows will increase by the estimated inflation rate plus one base point, the structure of cash flows based on historical data and a discount rate equal to the Company s weighted average cost of capital (WACC). In parallel, the Company estimates the fair value of the stores examined for an impairment loss taking into consideration any extra gains or losses arising from a probable closing of these stores. The Company proceeds to impairment when both of the following conditions apply: the carrying value of the cash generating unit (store) is higher than its value in use, and the carrying value of the cash-generating unit (store) is higher than its fair value. 8

10 3. Summary Of Accounting Principles-Continued Impairment of Assets-Continued Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. 3.3 Inventories Inventories are stated at the lower of cost or net realizable value. Cost of inventory includes the costs of purchase, and other specific costs incurred in bringing the inventories to their present location and condition (transportation costs, insurance premiums etc.) less discounts and vendor allowances. Cost is determined using the weighted average cost method. 3.4 Financial Instruments Financial assets and financial liabilities are recognized on the Company s balance sheet when the Company becomes party to the contractual provisions of the instrument. 3.5 Trade receivables and Trade payables Trade receivable are recorded at their nominal value less a provision for any doubtful receivable. Provisions for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The provision recognised is calculated as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Trade payables are interest free and are recorded at their nominal value reduced by any receivables arising from vendor allowances. 3.6 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, as well as other short-term highly liquid investments (up to 3 months) that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 3.7 Provisions Provisions are recognized when: a) there is a present legal or constructive obligation as a result of past events, b) it is probable that an outflow of resources will be required to settle the obligation c) this outflow can be estimated reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. 9

11 3. Summary Of Accounting Principles-Continued 3.8 Revenue Recognition Sales of goods are recognized at the consideration received or receivable and when goods are received by the customer and the title has passed. Sales are reduced for estimated discounts and similar allowances. Interest income is recognized on the accrual basis, by reference to the principal outstanding and at the effective applicable interest rate. 3.9 Cost of Sales Purchases are recorded net of cash discounts and other supplier discounts and allowances. Cost of sales includes all costs associated with the delivery of the products to the retail sales points, including buying, warehousing and transportation costs. Funding from suppliers to the customers, if available, is recognized as a reduction of cost of sales at the time the related products are sold Leases Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Company. All other leases are classified as operating leases. The Company has operating leases only. The Company as lessee Rents paid on operating leases are charged to income on a straight-line basis over the term of the lease. Revenues from operating leases are recognized based on the straight-line method throughout the duration of the respective lease. The Company as lessor Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease 3.11 Foreign Currencies The functional and business currency of the economic environment in which the Company operates, is the Euro.Transactions in currencies other than Euro are initially recorded at the rates prevailing on the dates of transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the official rates prevailing on the balance sheet date. Gains and losses arising on exchange differences are included in the net profit or loss for the period Government Grants Government grants for staff training are recognized as revenue over the periods necessary to match them with the related costs. 10

12 3. Summary of Accounting Principles-Continued 3.13 Employee Benefits Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Company s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. The Company applies the amendment to IAS 19 issued Employee Benefits, that provides an option to recognize actuarial gains and losses in full in the statement of recognized gains and losses in the period in which they occur. Past service costs are recognized immediately to the extent that the benefits are already vested, and otherwise are amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation and the unrecognized past service costs reduced by the fair value of plan assets, if any Taxation Income tax expense represents the sum of the current and deferred tax. The tax currently payable is based on taxable profit of the year. Taxable profit differs from profit as reported in the income statement as it excludes items of income or expense that are taxable or deductible in future years, or expenses that are permanent and non-deductible.the Company s liability for current tax is calculated using the tax rates that have been enacted at the balance sheet date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that there will be taxable profits available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a probable business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates, which are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to amounts charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. 11

13 4. Critical accounting judgements and key sources of estimation uncertainty The preparation of Financial Statements according to Generally Accepted Accounting Principles requires management to make assumptions and estimates, which may possibly affect both the reported amounts of assets and liabilities, as well as the disclosures of contingent assets and liabilities at the date of the Financial Statements and the stated amounts of revenues and expenses recognized during the period. The use of sufficient information and the application of subjective assessments are integral part of management s estimates. Actual future results may differ from the above estimates. The following are the key estimations and assumptions that may have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next fiscal year. Impairment of Assets The Company reviewed the carrying amounts (net book value) of its tangible and intangible assets to determine whether there is any indication of impairment loss. The method and estimates used to determine if there is impairment are described in note The Company concluded that there was no indication of impairment loss. Provision for Legal Cases The Company monitors pending court cases (Civil and Administrative ones) as well as the possible financial impact deriving from them and which may affect Company s financial status. Legal advisors evaluate each case and estimate the possible or probable loss. At , Company s total pending legal cases amounted to 465 Euros for which a provision of 103 Euros has been recognized of which 83 Euros were charged to the current year results. Income tax In order to determine the provision related to income tax, the Company proceeds to an analysis of taxable income (note 3.14). During the ordinary course of business, many transactions and calculations take place for which the precise estimate of tax is uncertain. In the event that the final income tax arising after the tax audit is performed is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. 5. Financial Risk Management The Company s activities expose it to certain financial risks, including the effects of changes in debt and equity market prices and interest rates. The Company s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company as a whole. Risk management is carried out by the Financial Department, which manages the financial risks relating to the Company s operations. This includes identifying, evaluating and if necessary, hedging financial risks. The Financial Department does not undertake any transactions of a speculative nature or which are unrelated to the Company s trading activities. The Company s financial instruments consist mainly of deposits with banks, trade accounts receivable and payable. 5.1 Currency risk The Company operates exclusively in Greece where the dominant currency is Euro, thus there are no exposures to exchange rate fluctuations. There are no purchases of goods from foreign countries, consequently the currency risk that may result is limited. 12

14 5.2 Interest rate risk The Company is not exposed to interest rate risk as it has not any interest bearing dept. 5.3 Credit risk The Company has no significant concentrations of credit risk. Trade accounts receivable consist mainly of the customer base of the Company. Company monitors he financial position of its debtors on an ongoing basis and control the granting of credit as well as the credit lines. Where considered appropriate, credit guarantee insurance cover is purchased. At the year-end management did not consider the existence of any material credit risk exposure that was not already covered by credit guarantee insurance or a doubtful debt provision. More information on credit risk can be found in Note 16 to the Financial Statements, Trade Receivables, p Liquidity risk Prudent liquidity risk management implies the availability of cash flows as well as that of funding through adequate amounts of committed credit facilities. The Company manages and monitors its working capital in order to minimize any possible liquidity and Cash flow risks. 5.5 Capital Management The Company is continuously optimizing its capital structure (mix between debt and equity). The capital structure s main objective is to maximize shareholder value while keeping the desired financial flexibility to execute the strategic projects. The capital structure is reviewed on a semi-annual basis. As part of this review the management considers the cost of capital and the risk associated with each class of capital. 13

15 6. TURNOVER (SALES) The Company s revenue arise from sales of goods and are as follows: Wholesales Retail sales OTHER OPERATING INCOME Other income earned, related to the Company s operations is stated below: Sales of auxiliary material 2 (3) Income from suppliers (coupons, quality control of products) 6 15 Training subsidy (ΟΑΕD) 18 - Other Income Revenue from other services Income from rents - 8 TOTAL PROFIT BEFORE TAXES Profit before taxes include also the following charging/(crediting) the following : Depreciation of tangible assets for the period Depreciation of intangible assets for the period Total depreciation of the period Foreign exchange: losses from trading activities (13) - Losses / (gains) from fixed assets disposal (2) 1 Cost of inventory sold Write-down of inventory - 25 Staff remuneration and other benefits Provision for staffretirement benefits

16 9. INCOME TAX Income Tax Corporate Income tax: (Over)/under provision of prior year income taxes (4) - Additional tax Prior years differences - 82 Deferred tax: Current year Total Income tax expenses are accounted for and charged to the income statement as follows: * % % Profit before taxes , ,0 Income tax expense calculated at 25% (2006:29%) , ,0 Tax impact arising from non-deductible expenses 16 0,4 5 0,1 Additional tax 12 0,2 12 0,4 Increase /(decrease) of prior year income taxes (4) (0,1) - - Decrease in deferred tax assets / liabilities from a decrease in income tax rate 55 1, ,4 Differences arising from previous years tax audit Income tax expenses and effective income tax rate for the period , ,8 Income tax rate on estimated taxable income has changed from 29% in 2006 to 25% for The Company has been subject to a tax audit up to the fiscal year * Α reclassification in line Decrease in deferred tax assets / liabilities from a decrease in income tax rate of 2006 has been made for comparability purpose. 15

17 10. PROPERTY, PLANT AND EQUIPMENT Land Owned buildings Installations in third parties' property Furniture and Fixtures Vehicle Total 2007 Cost At Additions Transfers Sales and disposals (210) (3) (213) Assets retirement obligation At Accumulated depreciation At Depreciation of the period Sales and disposals (208) (4) (212) Assets retirement obligation At Net book value At Cost At Additions Transfers (110) (110) Sales and disposals (22) (4) (26) At Accumulated depreciation At Depreciation of the period Sales and disposals (16) (3) (19) At Net book value At There are no encumbrances on the property of the Company. During the annual review of the useful life of the above tangible assets, buildings installations and plant and machinery (see note 3.2.1), no change arose. 16

18 11. INVESTMENT PROPERTY 2007 Book Value At At Book Value At At INTANGIBLE ASSETS 2006 Cost At Additions 2 Transfers - At Accumulated depreciation At Depreciation of the period 84 At Net book value As at Cost At Additions 118 Transfers 110 At Accumulated depreciation At Depreciation of the period 42 At Net book value As at The depreciation of intangible assets is recorded in the cost centers which utilize these assets based on the participation of each cost center in the Company s operation and is included in the lines of income statement as follows: Distribution expenses 9 Administrative expenses 75 Total 84 17

19 13. LONG-TERM RECEIVABLES The Company has long-term receivables, the greater part of which are guarantees given regarding rental of property, provision of power etc. Long-term receivables are analyzed as follows: Guarantees Total DEFERRED TAX ASSET Analysis for financial reporting purposes: Deferred tax assets Deferred tax liabilities (112) (59) Net deferred tax assets / (liabilities) The movements for the period in Company s net deferred tax position were as follows: Balance at 1 January Charge on the results of the year (66) (271) Deferred tax on recognized actuarial gain/(loss) in defined benefit plans taken directly to Equity (27) 12 Balance at the end of the year The calculation of the deferred tax is based on the effective tax rates: 29% for % for 2007 and onwards. 18

20 14. DEFERRED TAX ASSET - CONTINUED The following are the major deferred tax liabilities and assets recognized by the Company and movements thereon during the period: Provision for staff retirement indemnity Actuarial gains/losses recognized Accrued expenses Inventories directly in Equity Difference in net book values of assets Assessed losses utilized Other Company Balance at (52) Charge to the income of the year 18 - (14) (7) (7) (529) 268 (271) Deferred tax recorded directly in Equity for recognized actuarial gains/losses Balance at (59) Charge to income of the year 25-5 (3) (42) - (51) (66) Deferred tax recorded directly in Equity for recognized actuarial gains/losses - (27) (27) Balance at (101) Total 19

21 15. INVENTORIES Merchandise Advances for the purchase of inventories - 1 Total The average days of stock for the Company and the Company is 18,6 days in 2007 against 20,7 days in TRADE RECEIVABLES Trade receivables (from third parties) Debtors Cheques and bills receivable Receivables from suppliers Provision for doubtful receivables (1.707) (1.871) Total Changes in Provision for doubtful receivables in the year 2007 are analyzed as follows: Company Provision for doubtful receivables as at (1.871) Decrease of provision 164 Provision for doubtful receivables as at (1.707) The average collection period of trade receivables for the Company in 2007 is 11,8 days, against 14,4 days in Company s management considers that the carrying amount of trade and other receivables approximates their fair value. Credit Risk The amounts presented in the Balance Sheet include provisions for doubtful receivables, estimated by the Company s management based on prior experience and the current economic environment. The Company estimates that, except for the provisions already made, there is no further risk deriving from trade receivables. The Company estimates that it has no significant concentration of receivables from individuals. Consequently, no case of credit risk arises. 20

22 16. TRADE RECEIVABLES - CONTINUED Company Net carrying amount as of Of which neither impaired nor past due on the reporting date Past due less than 30 days Past due between days Past due between days Past due between days Past due between days Past due more than 360 days Trade receivables (from third parties) Trade receivables (intercompany) Debtors (1) 13 - Cheques and bills receivable Receivables from suppliers Total OTHER RECEIVABLES ACCRUED INCOME Due from the Greek State - Withholding taxes Other accrued income Total CASH AND CASH EQUIVALENTS Cash and cash equivalents refer to Company s cash and short-term (up to 3 months) deposits. The Company s management considers that their carrying amount represents their fair value Banks Cash Total SHARE CAPITAL Share Capital common shares of 1,00 Euro each There were no changes in Company s Share Capital during the fiscal year SHARE PREMIUM Share premium There were no changes in Company s Share Premium during the fiscal year

23 21. RESERVES On the Company has tax free or specially taxed reserves, according to incometax regulations. In the event of distribution of the aforementioned reserves, subject to approval of the General Meeting of Shareholders, there will be a tax liability depending on the year of the distribution and the enacted tax rate ruling then. Indicatively, using the effective tax rates in a possible distribution of the above reserves of the Company, in 2007 the related tax liability would amount to 461 Euro. Legal reserves Reserves arising from special regulation and laws Total Balance at Balance at RETAINED EARNINGS/(LOSSES) Balance at (21.438) Actuarial gains/losses recognised directly in Equity (37) Net profit for the year Balance at (19.817) Actuarial gains/losses recognised directly in Equity 82 Net profit for the year Balance at (16.713) 23. RETIREMENT BENEFIT PLANS Defined Contribution Plans Employees of the Company, in accordance with the relevant legislation, for social security and retirement purposes are covered by the Social Insurance Institute (I.K.A), and other supplementary Insurance Funds. The employer contributions are charged to the income statement the fiscal year they refer to. Moreover, the Company provides to its officers a private pension plan. The obligation of the Company in this plan is in respect of the payment of a fixed amount to a private insurance company (defined contribution plan). The amount charged to the results for the year 2007 amounted to 15 Euro for the Company, while for the year 2006 the respective amount was 42 Euro, and is included in line staff remuneration and other benefits. 22

24 23. RETIREMENT BENEFIT PLANS - CONTINUED Defined Benefit Plans In accordance with Greek law 2112/1920 the Company is obliged to pay a lum sum on retirements to all employees equal to 40% of the dismissal compensation which is based on the last salary and the number of years of service. The company policy is to pay 40% of the dismissal compensation to all employees excluding middle and top management who receive 100% if thay have a service of over 10 years in the Company. This is an unfunded defined benefit plan. The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 December 2007 by Hewitt Associates S.A. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. The capitalized obligations and the transactions due to the change of recognition method are analyzed as follows: Obligations at the beginning of the year (restated) (SORIE Method) Actuarial (gains)/losses recognized directly in Equity (109) 49 Charge for the year Benefits paid (52) (74) Total at the end of the year The amounts recognized as expenses regarding the retirement benefit plan, are the following: Current service cost Interests cost Current losses recognized - - Past service cost 2 3 Additional benefits Total at the end of the year The charge for the year is included in personnel expenses in the following lines of the Profit and loss Statement: Distribution expenses Administrative expenses 13 9 Total

25 23. RETIREMENT BENEFIT PLANS CONTINUED The changes in the present value of the defined benefits are as follows: Obligations at the beginning of the year Current service cost Interests cost Actuarial (gain) / loss (109) 49 Benefits paid (52) (74) Additional costs and obligations Defined benefits obligation before the prior years unrecognized cost Prior years unrecognized cost (9) (12) Obligations at the end of the year Present value of capitalized obligations Prior years unrecognized cost (9) (12) Total The principal assumptions used are the following: Discount rate 4,9% 4,0% Expected rate of salary increases 4,0% 4,0% 24. PROVISIONS January 1, Changes during the year 118 (44) December 31, The provisions are analysed as follows: Civil and administrative cases -extraordinary Asset retirement obligation 87 - Interest from asset retirement obligation 9 - Recycle provision Balance at

26 25. TRADE PAYABLES Suppliers Creditors Cheques payable Other obligations Discounts to customers 6 6 Total The Company s management considers that the carrying amount of trade payables approximates their fair value. The average payment period of trade payables for the Company in 2007 is 86,8 days against 87,0 days in ACCRUED EXPENSES Provision for bonus and vacation leave Other obligations Total OTHER SHORT-TERM LIABILITIES Other Taxes payable (VAT, Withholding, etc.) Social security funds Salaries payable Other 21 2 Total OPERATING LEASES The Company has entered into leases and subleases of stores, the commitments are as follows: Future Liabilities Within one year In the second to fifth years inclusive After five years During 2007, lease charges amounting to 661 Euros for the Company were charged to the income statement. 25

27 29. RELATED PARTIES TRANSACTIONS The transactions for the period between ENA S.A. and related parties are the following: (a) During the period from up to between ENA S.A. and ΑLFΑ-ΒEΤΑ VASSILOPOULOS S.Α. in the share capital of which the latter participates by 99,96%, the following transactions have been effected: Purchases of ΕΝΑ S.A. from «ΑLFΑ-ΒEΤΑ» VASSILOPOULOS S.A.(net of vendor allowances) ΕΝΑ S.A. expenses arising from rental of property from «ΑLFΑ-ΒEΤΑ» VASSILOPOULOS SA ΕΝΑ S.A. receivables from «ΑLFΑ-ΒEΤΑ» VASSILOPOULOS S.A. 7 6 ΕΝΑ S.A. liabilities to «ΑLFΑ-ΒEΤΑ» VASSILOPOULOS S.A (b) During the period from up to between ENA S.Α. and DELHAIZE GROUP S.A. that participates in the share capital of the parent company ( ALFA-BETA VASSILOPOULOS SA.) by 61,28%, the following transactions have been effected: ive Expenses (services provided by DΕLΗΑΙΖΕ GROUP) Liabilities to DΕLΗΑΙΖΕ GROUP S.A CONTIGENT LIABILITIES The Company is still subject to a tax audit for the fiscal years 2005, 2006 and 2007 for which the outcome of the tax audit cannot be estimated at this stage and thus no relevant provision has been made in the financial statements. 31. NOTE ON THE CASH FLOW STATEMENT The provisions, which are included in the Cash Flow Statement, are analyzed as follows: Legal cases 23 (81) Provision for staff termination indemnity Provision for doubtful receivables (164) 32 Total (38) EVENTS AFTER THE BALANCE SHEET DATE There is no event after the balance sheet date which has an impact on the financial statements. 26

28 REPORT OF THE BOARD OF DIRECTORS To the Ordinary General Meeting of Shareholders of ENA UNIΤED MARKETS SOCIETE ANONYME AND SUPPORTING COMPANY Dear Shareholders, We present the Annual Report of the Board of Directors for Fiscal Year from 1 January until 31 December The current Report is written in compliance with the provisions of Law 2190/1920 and the Company s Articles of Association. OVERVIEW OF FINANCIAL RESULTS Turnover (Sales) in 2007 amounted to million EUR from million EUR in 2006 showing an increase by 13.3%. Gross Profit amounted to 14.8 million EUR from 12.6 million EUR in 2006 showing an increase by 18.0%, higher than that of sales. This comparison confirms that the company pursues a sound commercial policy as well as an effective inventory management. Operating Expenses amounted to 11.9 million EUR against 10.6 million EUR in 2006 showing an increase by 11.7% which is lower than that of sales and gross margin, mainly due to the overall effort to reduce expenses. Operating Profit significantly increased by 43.5% from 2.4 million EUR in 2006 to 3.5 million EUR in 2007, due to the increase of sales and gross profit as well as to the control of expenses. Profit before Tax, Financial, Investing Activities, Depreciation and Amortization (EBITDA) of the year increased by 35.4% and amounted to 4.6 million EUR against 3.4 million EUR in Profit before Tax showed a significant improvement of 44.9% compared to the previous year, amounting to 4.1 million EUR from 2.9 million EUR in Profit after Tax reached 3.0 million EUR from 1.7 million EUR in Briefly, Company s financial Results for the years 2007 and 2006, as indicated through profitability and activity ratios are stated below: Profitability Ratios (% on Turnover) Gross Profit Margin 12.7% 12.2% Operating Profit Margin 3.0% 2.4% Profit before Taxes Margin 3.5% 2.8% Profit after Taxes 2.6% 1.6% Activity Ratios (days) Average days of stock Average Payment Period of Suppliers Average Collection Period of Trade Receivables In 2007, the Company s capital expenditures amounted to 946 thousand Euros mainly for the enhancement of its sales network. Investments were funded by Company s Operating Cash flow. During the year the Company did not raise any loan. The Company sells goods mainly on credit and also pays its liabilities to suppliers on credit.. For 2007, the average collection period of trade receivables for the Company is 11.8 days while the average payment period 27

29 of trade payables for the Company is 86.8 days. This fact, secures the Company from possible liquidity and cash flow risks. Corporate Social Responsibility was and remains Company s fundamental value. The Company is subject to laws and regulations that govern activities that may have adverse environmental effects. The Company complies with evolving laws and regulations and additionally it takes initiatives such as the collection of paper and packaging materials for recycling. Additionally, the Company s centralised system for the distribution of goods has resulted in a drastic reduction in the number of truckloads of goods and consequently in the reduction of fuel used and emissions produced. PERSPECTIVE 2008 During 2007, the financial figures of ENA showed a considerable improvement. This positive evolution is mainly due to company s organizational restructure and the development of its personnel as well as to initiatives focused solely to profitable operations and sales outlets. The policy followed in 2007 which led to a significant improvement of ENA S.A. financial results, continues in 2008 with the same results. Emphasis is being given to improving stock management efficient as well as to the reduction of personnel expense and costs related to doubtful receivables. We conclude this brief Report by offering to the personnel of ENA and their families our warmest wishes and our genuine and well-earned gratitude. BASIC ACCOUNTING PRINCIPLES The Company s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). Details of the Significant Accounting principles followed, are stated in the Notes to the Accounts of December 31, DISTRIBUTION OF NET PROFIT Profit for fiscal year 2007 will be set off with prior years accumulated losses and, for this reason, no dividend will be distributed. The Financial Statements of the fiscal year are as follows: Company Information Registered Office: Athens Register of Commerce: 81, Spaton Avenue, Gerakas, Attica 23791/04/Β/91/136(01) Competent Prefecture: Ministry of Development, Department of Commerce, Division of Societes Anonymes and Trust Board of Directors: Konstantinos Macheras Nikolaos Iossipou Petros Trahanas Leonidas Vrettakos Maria Kuhkalani Date of approval of the annual financial statements (from which arose the condensed financial figures): May 9, 2008 Auditor: Tilemachos Georgopoulos Auditing company: Type of audit report: Internet address Deloitte. Unqualified opinion with an emphasis of matter 28

30 1.1 Balance Sheet Amounts in thousands EUR ASSETS Fixed Assets Inventories Trade Receivables Other Assets TOTAL ASSETS EQUITY & LIABILITIES Other long-term liabilities Other short-term liabilities Total Liabilities (a) Share Capital Other Net Equity (925) Equity attributable to the equity holders of the parent (b) TOTAL EQUITY & LIABILITIES (a)+(b) Income Statement Amounts in thousands EUR Revenue Gross Profit / (Loss) Profit / (Loss) before tax, financial, investing activities, depreciation and amortization Profit / (Loss) before tax, financial and investing activities Profit / (Loss) before tax Less Tax Profit / (Loss) after tax NET CHANGE IN EQUITY STATEMENT Amounts in thousands of EUR Equity at the beginning of the year ( and respectively) Profit / (Loss) of the year after tax Net income recorded directly to Equity 82 (37) Equity at the end of the year ( and respectively)

31 1.4 CASH FLOW STATEMENT (Indirect Method) Amounts in thousands EUR Operating activities Profit before tax Plus / (minus) adjustments for: Depreciation and amortization Provisions (38) 72 Losses / (Gains) on disposal of fixed assets (2) 1 Finance Cost 9 - Income from investments (657) (423) Plus / (minus) adjustments for changes in working capital Decrease of inventory (72) (163) Decrease / (increase) of receivables (223) (519) (Decrease) of liabilities (excluding bank loans) Less: Tax paid (1.381) 21 Net cash provided by (used in) operating activities (a) Investing activities Purchase of tangible and intangible fixed assets (946) (1.158) Proceeds on disposal of tangible and intangible fixed assets 2 4 Interest received Net cash used in investing activities (b) (287) (731) Net increase in cash and cash equivalents of the period (a)+(b) Cash and cash equivalents beginning of the period Cash and cash equivalents end of the period Additional Information (Amounts in thousands of EUR) 1. The financial statements of the Company are included in the consolidated financial statements of the parent company ALFA-BETA VASSILOPOULOS S.A., which, are prepared with the method of full consolidation. The parent company ALFA-BETA VASSILOPOULOS S.A., with its head-office in Greece, owns 99.96% of the Company s share capital. 2. For ENA S.A., the only unaudited fiscal years are 2005 till 2007 for which the outcome of the tax audit cannot be estimated at this stage and thus no relevant provision has been made in the financial statements. 3. There is no encumbrance on company s property. 4. There are no cases under court procedure for which there are pending decisions or claims for cancellation of decisions issued that may seriously affect the financial position or the operation of the Company without the related provisions. 30