S.A. REGISTER NUMBER 45340/1NT/B/00/230(00) REGISTERED OFFICE: 34, AMFITHEAS AVENUE, P. FALIRO

Transcription

1 FINANCIAL STATEMENTS IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS FOR YEAR 2006 (1 JANUARY 31 DECEMBER 2006), FOR THE COMPANY FORTH-CRS S.A. COMPANY FOR THE RESEARCH, DEVELOPMENT AND TRADE OF SOFTWARE PRODUCTS ELECTRONIC MANAGEMENT, DISTRIBUTION AND PROVISION OF TOURISM RELATED SERVICES S.A. REGISTER NUMBER 45340/1NT/B/00/230(00) REGISTERED OFFICE: 34, AMFITHEAS AVENUE, P. FALIRO

2 CONTENTS Page 1. Independent Auditor's Report 2 2. Statement of Income for the year ended December 31, Balance Sheet as at December 31, Statement of Changes in Shareholders Equity for the year ended December 31, Cash Flow Statement (Indirect Method) for the year ended December 31, Notes to the Annual Financial Statements

3 1. INDEPENDENT AUDITOR S REPORT To the Shareholders of FORTH-CRS S.A. COMPANY FOR THE RESEARCH, DEVELOPMENT AND TRADE OF SOFTWARE PRODUCTS ELECTRONIC MANAGEMENT, DISTRIBUTION AND PROVISION OF TOURISM RELATED SERVICES Report on the Financial Statements We have audited the accompanying Financial Statements of FORTH-CRS S.A., which comprise of the balance sheet as at 31 December 2006, the statement of income, the changes in shareholder s equity and the cash flow statement for the year then ended, as well as a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Greek Auditing Standards, which are based on International Standards of Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2006 and of its financial performance and its cash flow for the year then ended in accordance with International Financial Reporting Standards that have been adopted by the European Union. Report on other Legal and Regulatory Requirements The Board of Directors Report is consistent with the aforementioned financial statements. Athens, March 07, 2007 The Certified Auditor STAVROS K. SALOUSTROS SOEL REG. NO

4 2. Statement of Income Revenues 4,296,011 3,359,537 Cost of sales 3,463,765 2,051,044 Gross profit 832,246 1,308,493 Other operating income 4,349 27,818 Selling and Distribution expenses 897, ,211 General Administrative expenses 226, ,914 Net financial results (income/expenses) (38,322) (5,263) Profit/(loss) before taxes (325,720) 238,922 Income taxes (27,715) 53,093 Net profit/(loss) (298,005) 185,829 Earnings/(loss) per share (Basic) (0.217) Average Weighted Number of Shares (Basic) 1,373,133 1,373,133 The accompanying notes are an integral part of the Annual Financial Statements. 3

5 3. Balance Sheet ASSETS Non-Current Assets Property, plant and equipment 555, ,575 Intangible assets 1,002, ,615 Other non current assets 31,420 38,890 Available for sale financial assets 49,727 35,700 Deferred Income taxes 198, ,088 Total non-current assets 1,838,006 1,742,868 Current assets Inventories 119,465 72,384 Trade accounts receivable 2,166,201 2,672,809 Prepayments and other receivables 212, ,637 Cash and cash equivalent 925, ,038 Total current assets 3,423,012 3,442,869 TOTAL - ASSETS 5,261,018 5,185,737 EQUITY AND LIABILITIES Share Capital 2,883,579 2,883,579 Share premium (18,714) (18,714) Other reserves 53,839 53,839 Accumulated Profit/(loss) (268,165) 129,840 Total Equity 2,650,539 3,048,544 Non-current liabilities Finance lease obligations 61, ,842 Reserve for staff retirement indemnities 54,436 33,430 Total non-current liabilities 115, ,272 Current liabilities Trade accounts payable 988,696 1,501,975 Short-term borrowings 1,000,000 - Short-term portion of finance lease obligations 50,002 47,362 Income tax payable 37,031 37,031 Accrued and other current liabilities 419, ,553 Total current liabilities 2,495,026 1,982,921 TOTAL LIABILITIES AND EQUITY 5,261,018 5,185, Statement of Changes in Equity Share Capital Share Results Carried Other Reserves Premium Forward Total Balance, 1 January ,883,579 (18,714) 44,548 (46,699) 2,862,714 Profit - Year , , ,829 Balance, 31 December ,883,579 (18,714) 53, ,840 3,048,544 Extraordinary Reserve (100,000) (100,000) Loss - Year (298,005) (298,005) Balance, 31 December ,883,579 (18,714) 53,839 (268,165) 2,650,539 The accompanying notes are an integral part of the Annual Financial Statements. 4

6 5. Cash Flow Statement (Indirect Method) Cash Flows from Operating Activities Profit/(Loss) before Income taxes (325,720) 238,922 Adjustments: Depreciation - Tangible Assets 260, ,926 Depreciation - Intangible Assets 351, ,157 Gains on disposal of investments Gains on disposal of financial assets - (241) Financial (income)/expenses 38,322 5,504 Provisions 249,146 - Operating profit/ (losses) before working capital changes 574, ,268 (Increase)/Decrease: Inventories (47,081) 5,159 Trade accounts receivable 550,951 (876,633) Increase/(Decrease) in: Trade accounts payable 139, ,081 Income taxes paid - - Interest paid (32,124) (2,062) Payment of staff retirement indemnities (21,006) 16,932 (Increase)/Decrease in other non-current assets 7,470 (28,379) Net Cash from Operating Activities 1,171, ,366 Cash Flows from Investing Activities Purchase of property, plant and equipment (300,688) (470,605) Purchase of intangible assets (991,812) (345,978) Sales of assets 3, Interest and related income received 2,267 1,987 Proceeds from sale of financial assets Net Cash used in Investing Activities (1,286,514) (813,519) Cash Flows from Financing Activities Net change in short-term borrowings 1,000,000 - Proceeds from finance lease creditors - 199,935 Repayments of finance lease creditors (57,185) (31,732) Distribution of Extraordinary Reserve (100,000) - Net Cash from Financing Activities 842, ,203 Net increase/(decrease) in cash and cash equivalents 728,041 (277,950) Cash and cash equivalents at the beginning of the year 197, ,987 Cash and cash equivalents at the end of the year 925, ,038 The accompanying notes are an integral part of the Annual Financial Statements. 5

7 6. Additional data and information relating to the Financial Statements 6.1 General Information about the company The limited company entitled FORTH CRS S.A. COMPANY FOR THE RESEARCH, DEVELOPMENT AND TRADE OF SOFTWARE PRODUCTS ELECTRONIC MANAGEMENT, DISTRIBUTION AND PROVISION OF TOURISM RELATED SERVICES was established in Greece in December 1999 (GG 1461/ ) as a Societe Anonyme, by FORTHNET S.A. The Company s registered office is at number 34, Amfitheas Avenue, P. Faliro , Athens. The Company s term, according to its Articles of Association, is 30 years starting from its date of establishment; which can be extended following a decision of the General Assembly of its Shareholders. The company s main activities include the provision of integrated tourism services through the research, development, use and trade of modern, high-technology electronic products and services for the distribution and management of tourism content, including reservations and ticketing and all other related material, produced by entities such as shipping companies, airlines and other transport enterprises, combined transport, hotels, event and entertainment companies, sports enterprises, hospitals and all other entities involved in electronic reservations. At , the company employed 50 employees. At , the corresponding number was 46 employees. 6.2 Basis of presentation of Financial Statements (a) Basis of Drafting of Financial Statements The attached Financial Statements have been prepared according to the historic cost method, except for the Financial Data on Financial Assets for Sale, which were valued at their reasonable value. The attached financial statements have been drafted in accordance with IFRS for the first time, applying IFRS 1 First Application of International Financial Reporting Standards"; transition date: 1 January (b) New Standards, Interpretation and amendments of existing standards: The International Accounting Standards Board, as well as the Interpretation Committee, have already issued a series of new accounting standards and interpretations whose application is mandatory for the accounting periods starting from 1 st January 2006 and thereafter (unless otherwise mentioned below). IFRS 7, Financial means: Notification and additional adaptation of IAS 1, Presentation of Financial Statements Capital Notifications (applicable to annual accounting periods beginning on or after 1 st January 2007) IFRS 7 requires further notifications with respect to financial means, in order to improve the information provided, and specifically requires the notification of qualitative and quantitative information in relation to risk exposure relating to financial means. In particular, it determines minimum required notifications in relation to credit risk, liquidity risk, and market risk (sensitivity analyses on market risks are mandatory). IFRS 7 replaces IAS 30 (Notifications in Financial Statements of Banks and Financial Institutions) and the notification requirements of IAS 32 (Financial Means: notifications and Presentation). It is applicable to all companies drafting financial statements in accordance with IFRS. The relevant adaptation of IAS 1 concerns notifications in relation to the value of an enterprise s capital and how it manages capital. IFRS 8, Operating segments (applicable to annual accounting periods beginning on or after 1 st January 2009) IFRS 8 replaces IAS 14 Financial Information per sector and adopts an administrative approach with respect to the financial information provided per sector. The information provided will be the information used internally by the administration in order to evaluate the performance of operational sectors and the allocation of funds to such sectors. This information may be other than that presented in the balance sheet and the profit and loss account, and companies must provide explanations and agreements with respect to the differences in question. The Company is currently evaluating the impact of this standard on its financial statements. IFRS 8 has not yet been adopted by the EU. Interpretation 7, Application of the reform approach for IAS 29 Financial statements in over-inflated economies,(applicable to annual accounting periods beginning on or after 1 st March 2006). Interpretation 7 requires that, when a company observes the existence of over-inflation in the economy of its operating currency (without there having been over-inflation in the previous period), then that company should apply the provisions of IAS 29 in that period, as if it had always operated in an over-inflated economy. Interpretation 7 is not applicable to the Company. Interpretation 8, Field of application of IFRS 2, (applicable to annual accounting periods beginning on or after 1 st May 2006). Interpretation 8 clarifies that IFRS 2 (Provisions dependent on the value of shares) is applicable to transactions in which a company grants holding titles or undertakes the obligation to transfer cash or other assets (based on the price of its shares), when the definable exchange received appears to be lower than the reasonable value of the holding titles granted or the obligations undertaken. Interpretation 8 is not applicable to the Company. Interpretation 9, Revaluation of incorporated derivatives, (applicable to annual accounting periods beginning on or after 1 st June 2006). Interpretation 9 requires that companies estimate whether as contract contains an incorporated derivatives at the time of contract execution; in this case, any later revaluation is prohibited unless there are changes to the terms of the contract that have a material effect on cash flows. Interpretation 9 is not applicable to the Company. 6

8 Interpretation 10, Intermediate Financial Report and Devaluation, (applicable to annual accounting periods beginning on or after 1 st November 2006). Interpretation 10 may have an effect on financial statements if a devaluation loss is acknowledged in an intermediate period with respect to goodwill or investments in holding titles available for sale or non-listed holding titles kept at cost, as this devaluation cannot be offset in subsequent intermediate or annual financial statements. Interpretation 10 has not yet been adopted by the EU. Interpretation 11, IFRS 2 Transactions with Own Shares and between Group companies, (applicable to annual accounting periods beginning on or after 1 st March 2007). This Interpretation requires that transactions in which an employee is granted stock option rights are, for accounting purposes, considered as remuneration determined at the value of the share and settled with holding titles, even in the event that the company chooses or is obligated to buy such titles from third parties or the company s shareholders provide the titles to be granted. The Interpretation also extends to the way in which subsidiary companies handle, in their simple financial statements, plans whereby employees are granted stock option rights to the parent company. Interpretation 11 is not applicable to the Company as it has not yet been adopted by the EU. Interpretation 12, Service Concession Arrangements,(applicable to annual accounting periods beginning on or after 1 st January 2008). Interpretation 12 handles the way in which concessionaries should apply existing International Financial Reporting Standards (IFRS) in order to register the obligations they undertake and the rights conceded to them in the relevant concession agreements. According to the Interpretation, concessionaries should not acknowledge the relevant infrastructure as tangible assets, but recognize one financial asset or one intangible asset. Interpretation 12 is not applicable to the Company. This Interpretation has not yet been adopted by the EU. (c) Approval of Financial Statements The company s Board of Directors approved the Financial Statements for the year ending on 31 st December 2006, on March 06, (d) Use of Estimates Drafting of Financial Statements as per IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, notify possible assets and liabilities as at the date of the financial statements, as well as the amounts of revenue and expenses during the year/period. Actual results may differ from those estimates. 6.3 Basic accounting Principles The main accounting principles adopted for drafting the attached consolidated financial statements, and applied systematically by the company are as follows: Tangible Assets (Property, Plant and Equipment) Property, plant and equipment is stated at cost, less accumulated depreciation and any accumulated impairment losses. Repairs and maintenance are entered as expenses within the year in which they are carried out. The cost and related accumulated depreciation of assets retired or sold are removed from the financial statements during the year in which they occurred, and any losses or profits are included in the statement of income. Depreciation Depreciation is calculated on the basis of the straight line method. The rates used are as follows: Classification Annual Rates Buildings 10% Network Equipment 15% Transportation Equipment 12.50% Computers & Printers 30% Furniture and Fixtures 12.50% 7

9 Intangible Assets Intangible assets include costs for software purchased or produced internally. Intangible assets purchased externally are included at their acquisition value, while intangible assets originating from consolidation of enterprises are entered at their reasonable value at acquisition. Software produced internally includes expenses such as the payroll, materials and services used, as well as any other direct expense required for the development and promotion for use thereof. Amortization of intangible assets is calculated on the basis of the fixed method. The coefficients used are as follows: Asset type Annual Rate Software 30% Research and Development Expenses Research expenses are entered in expense accounts as they arise. Development costs refer mainly to software development. Development expenses for individual projects are acknowledged as intangible assets only if the conditions of IAS 38 "Intangible assets are fulfilled. After initial acknowledgement, development expenses are transferred to the fixed asset s cost, and when the item is ready for use, its amortization begins on the basis of its useful life. Impairment of Assets Registered asset values are reviewed for any devaluation whenever events or changes of circumstance indicate that their registered value may not be retrievable. When an item's registered value exceeds its retrievable value, an impairment loss is identified in the profit and loss account. The retrievable amount is calculated as the greatest value between the net sales price and the value in use. The net sales price is the amount that arises from the sale of an item in an independent transaction between informed and willing parties, after the deduction of all direct additional sales expenses, while the value in use is the current value of the estimated future cash flow expected to arise from continued use of the item and its disposal at the end of its useful life. In order to estimate devaluation, asset items are categorised at the lowest level for which there are separate identifiable cash flows. Investments All Investments are initially identified at cost, i.e. at the reasonable value of their price, including acquisition expenses relating to the financial item. After initial identification, the financial items classified as withheld for commercial purposes" and available for sale, are entered at their reasonable value. Profits or losses from investments to be withheld for commercial purposes are entered in the profit and loss account. Profits or losses from financial items available for sale are entered as a separate item in capital and reserves until the sale, receipt or other appropriation of the financial asset, or until it is considered that the financial asset has been devalued, in which case the cumulative profit or loss included in capital is included in the profit and loss account. With respect to financial items traded on organised stock exchanges, the reasonable value is established on the basis of stock exchange prices as at the balance sheet date. For financial items with no trading price, the reasonable value is established on the basis of forecasted cash flows for that financial asset. Financial assets Financial creditor accounts and financial debtor accounts in the balance sheet include cash at bank and in hand, lease debtors, other debtors, participating interests, long-term debts and current liabilities. Financial assets are presented as debtor accounts, creditor account or net position items, on the basis of the essence and content of the relevant contracts from which they arise. Interest, dividends, profits or losses arising from financial products characterised as debtor or creditor accounts are entered as profits or losses respectively. The payment of dividends to shareholders is entered directly in the net position. Financial means are offset when the Company, according to the law, has the legal right to do so and intends to offset them on a net basis (among themselves) or to recover the asset and offset the debt at the same time. The Company does not use derivatives to counterbalance risks or for profit-making purposes. Inventories Inventories are stated at the lower of cost or net realizable value. The cost is determined from the cost of purchase, using the FIFO method. Net realizable value is the estimated sales price less production and distribution costs. Provisions for slow-moving or devaluated stocks are made if necessary. Trade and Other Accounts Receivables Trade accounts receivables are recognized at their original invoice amount and are usually collected within 60 to 120 days. Provisions for doubtful debts are made if necessary. Provisions for doubtful debts are included in the profit and loss account and are readjusted when necessary. Bad debts that have become impossible to collect are written off and the relevant amount is deducted from the provision. 8

10 Cash and Cash Equivalents Cash and cash Equivalents include cash in hand, sight and time deposits, and other liquid investments with original maturity of three months and/or less. For the purpose of the cash flow statement, cash and cash equivalent include cash in hand and deposits as determined above. Borrowing Costs Borrowing costs are recognised as expenses in the period during which they occur, according to the IFRS 23 ( Borrowing Costs ) benchmarking method. Long term liabilities Loans are initially recognised at cost, i.e. the reasonable value of the loan received, without the issuance expenses relating to borrowing. After initial recognition, they are valued at their non-amortized cost using the effective interest rate (EIR) method. Leases Leases, which effectively transfer all the risks and benefits arising from ownership of the lease item, are capitalised upon commencement of the lease at the reasonable value of the lease item or, if less, at the current value of minimum lease payments. Lease payments are allocated to the financial cost and reduce the lease liability. Income from leases is entered directly in income accounts. Capitalised leased items are amortized during the item's estimated useful life. Leases where the lessor preserves effectively all the risks and benefits of asset ownership are included in operational leases. Operational leases are recognised as expenses in results for the year. Subsidies The company receives subsidies from the European Union, for financing special projects for the acquisition of intangible and tangible assets. Subsidies are recognised when there is reasonable assurance that the subsidy will be collected and that the relevant terms will be adhered to. Subsidies relating to assets are recognised as following years' income and amortized in accordance with the relevant asset s useful life. Similarly, amortization of the subsidy is entered and reduces asset amortizations. Subsidies concerning research expenses are recognised as expenses during the years in which they are incurred. Provisions Provisions are recognised when the company has a current legal or institutional obligation arising from events of the past, it is possible that an outflow of resources incorporating financial benefits is required for settlement of the debt, and provided a reliable estimate of the debt amount can be made. Provisions are reviewed at the date of each balance sheet and are adapted so as to represent the current value of the expense expected to be required for settlement of the debt. Contingent liabilities are not recognised in the financial statements but are notified unless the possibility of resource outflows incorporating financial benefits is small. Contingent assets are not recognised in the financial statements, unless the inflow of financial benefits is possible. Income Taxes (Current and Deferred) Income tax includes income tax for the current year on the basis of profits of each enterprise, as adapted in income tax statements and postponed income tax, at current taxation coefficients. Postponed income tax is presented with the debt method for all temporary differences between the tax basis of assets and liabilities, and their accounting values for the purposes of financial reporting. No postponed tax items are recognised if there is no possibility of the relevant tax benefit arising. For transactions recognised directly in the net position, the relevant tax effects are also directly recognised in the net position. Postponed tax is calculated in accordance with statutory tax coefficients as at the balance sheet drafting date. Revenue Recognition Revenue is recognised on the basis of the accruals principle, and only provided: a) It can be calculated reliably and b) It is possible that the financial benefits will accrue to the Group. Income includes the following services: A) Electronic Reservations and Ticketing Sea Connect and OpenSeas. B) Shipping Reservation Management System Sea on Line. C) Hotel Allotment Management and Distribution System RoomView. D) Online Ticket Sales System Ticket Shop. E) Combined Transport Service Packages Integrated Solutions. Earnings/ (Losses) per Share Basic earnings / (losses) per share are calculated by dividing net income/ (loss) with the weighted average number of shares in circulation during the relevant period. Reduced income/ (loss) per share are calculated by dividing net income/ (loss) attributable to common shareholders with the weighted average number of common shares during the year, as adapted for the consequences of devaluation rights. 9

11 Own Shares Own shares are presented at the acquisition cost, as a separate item in consolidated capital and reserves. No profit or loss in entered in the profit and loss account for the purchase, sale, issuance or cancellation of own shares. The sale or purchase price and the relevant profits or losses from liquidation are entered directly in the net position. Reserve for Staff Retirement Indemnities Staff retirement obligations are calculated at the discounted value of future benefits accrued at the end of the year, based on the recognition of employee benefit rights during their expected working life. The above benefits are calculated on the basis of financial and projected assumptions and are determined using the projected unit method. Net retirement benefit costs for the period are included in payroll costs and consist of the current value of benefits accrued over the year, interest on the benefit obligation, past service costs, projected profits or losses and any other additional retirement benefit costs. Past service costs are recognised on a fixed basis over the average period until the programme s benefits are consolidated. Non-recognised projected profits and losses are recognised over the average remaining duration of active employees service provision period, and are included as part of the net retirement cost for each year if, at the beginning of the period, they exceed 10% of the projected future obligation for benefits. Retirement benefit obligations are not financed. Dividend Distribution Dividend distribution to the Company s shareholders, is recognized as liability in the Group s financial statements as a liability during the year in which payment of the dividend to shareholders is approved. 6.4 Revenues Revenues in the financial statements are analysed as follows: Shipping Reservation System 2,654,674 2,478,532 Hotel Reservation System 723,509 - Events Ticketing 182, ,158 Software Development-Maintenance 387, ,667 Other 41,162 55,849 Equipment and Consumables Sales 307, ,331 Total Income 4,296,011 3,359,537 Other Income (Subsidies etc.) 4,349 27,818 Total Other Income 4,349 27,818 Grand Total - Income 4,300,360 3,387, Payroll Cost Payroll cost is analysed as follows: Salaries and Wages 1,235, ,348 Social Security Contributions 309, ,448 Retirement Benefits 27,175 29,663 Other Personnel Expenses 22,868 21,180 Total 1,594,992 1,303,639 Less: Amount Capitalized 413, ,923 Payroll Cost 1,181,525 1,035,716 10

12 6.6 Depreciation Depreciation in the financial statements is analysed as follows: Depreciation Buildings 11,421 7,550 Depreciation Machinery & Other Equipment 4,055 3,704 Depreciation Transportation Equipment 1,233 1,216 Depreciation Furniture and Fixtures 243, ,456 Total Depreciation Tangible Assets 260, ,926 Depreciation Software & Other Intangible Assets 351, ,157 Total Depreciation Intangible Assets 351, ,157 Grand Total 611, , Financial Income/ (Expenses ) Net financial income/ (expenses) is analysed as follows: Short-term Borrowings Interest 26,872 - Finance lease Interest 8,466 5,429 Other Financial Expenses 5,251 2,062 Total Financial Expenses 40,589 7,491 Interest earned on cash at banks and on time deposits 2,267 1,972 Other Financial Income Total Financial Income 2,267 2,228 Net Financial Results - Income/(Expenses) (38,322) (5,263) 6.8 Analysis of Expenses Expenses (Cost of sales, Administrative Expenses, Selling, General, Research & Development Costs) are analysed as follows: Personnel Fees & Expenses 1,181,525 1,035,716 Third Party Fees and Benefits 1,835, ,238 Taxes and Duties 8,542 5,439 Sundry Expenses 265, ,689 Depreciation 611, ,083 Provisions for Doubtful accounts 230,000 50,000 Cost of sale of Inventory & Consumables 455, ,004 Total Expenses 4,587,758 3,143, Income Taxes Income Taxes in the Statement of Income is analysed as follows: Current income taxes - - Deferred income taxes (27,715) 53,093 Total Taxes (27,715) 53,093 According to current tax legislation, the taxation rates applied to the income of publicly traded companies are gradually reduced from 35% to 25%. In particular, the rates for years 2005 and 2006 are 32% and 29% respectively, while the income tax rate from year 2007 and thereafter will be 25%. FORTH CRS SA has not been tax audited for years 2003 to Provisions are made for the non-audited years. 11

13 Tax included in the financial statements and tax foreseen by law is summarised as follows: Results before Taxes (325,720) 238,922 Relevant Tax (32% and 35% respectively) (94,459) 76,455 Tax effect of tax-free income and non-tax exempt expenses (7,067) (6,060) Tax effect from change of tax rates 73,811 (17,302) Total Tax (27,715) 53,093 Postponed tax is as follows: Balance at Start of Year ( and respectively) 171, ,181 Tax on the Year s Results 27,715 (53,093) Balance at End of Year 198, ,088 Deferred tax claims and obligations presented in the Financial Statements are analysed as follows: Differences in tangible asset depreciation Differences in intangible assets Provision for retirement benefits Taxation loss for the year Balance , , ,181 Change for the Year (32,505) (28,946) 8,358 - (53,093) Balance ,523 98,207 8, ,088 Change for the Year (43,996) (29,816) 4,787 96,740 27,715 Balance ,527 68,391 13,145 96, , Tangible Assets Tangible assets are analysed as follows: Buildings - Facilities Machinery & Mechanical Equipment Transportation Equipment Furniture & Fixtures Total Total Tangible Assets ACQUISITION VALUE Balance ,980 24,693 8,211 1,033,110 1,139,994 New Purchases Year ,747-1, , ,605 Sales / Write-offs Year 2005 (5) (5) Balance ,722 24,693 9,864 1,491,315 1,610,594 New Purchases Year ,963 12, , ,629 Transfers Year (4,525) - (24,978) (29,503) Balance ,685 32,334 9,864 1,584,837 1,748,720 DEPRECIATION Total Depreciation until ,395 8,263 2, , ,892 Depreciation Year ,550 3,704 1, , ,927 Depreciation of Sales/Write-offs Year Total Depreciation until ,945 11,967 4, , ,019 Depreciation Year ,421 4,055 1, , ,272 Depreciation of Sales/Write-offs Year (1,923) - (20,471) (22,394) Total Depreciation until ,366 14,099 5,443 1,136,989 1,192,897 NET BOOK VALUE At ,585 16,430 5, , ,102 At ,777 12,726 5, , ,575 At ,319 18,235 4, , ,823 There are no any tangible assets that have been pledged as security. The net book value of leased tangible assets, as at and amounts to 107,743 Euros and 167,723 Euros respectively. 12

14 6.11 Intangible Assets Intangible assets are analysed as follows: Software Software in progress Total Intangible Assets ACQUISITION VALUE Balance ,176, ,808 2,432,219 New Purchases Year , , ,978 Transfers Year ,453 (250,453) - Balance ,470, ,278 2,778,197 New Purchases Year , , ,812 Transfers Year ,518 (22,518) - Balance ,650, ,958 3,290,009 DEPRECIATION Total Depreciation until ,567,425-1,567,425 Depreciation Year , ,157 Total Depreciation until ,936,582-1,936,582 Depreciation Year , ,194 Total Depreciation until ,287,776-2,287,776 NET-BOOK VALUE At , , ,794 At , , ,615 At , ,958 1,002,233 There are no real burdens on intangible assets Available for Sale Financial Assets Financial assets available for sale are analysed as follows: Shares unlisted 49,727 35,700 Total 49,727 35,700 Financial assets available for sale consist of investments in ordianry shares and do not, therefore, have a fixed maturity, or coupon rate Inventories Due to the nature of its activities, the company does not keep inventories of significant value. The analysis of inventories is as follows: Merchandise 19,676 18,279 Consumables 99,789 54,105 Total 119,465 72, Trade Accounts receivable Prepayments and other receivables Trade Accounts receivable accounts are analysed as follows: Domestic Customers 1,503,877 2,168,026 Foreign Customers 123,970 56,558 Cheques and Notes receivables 937, ,124 Other 910 7,101 2,566,201 2,842,809 Less: Allowance for doubtful accounts receivable 400, ,000 Balance 2,166,201 2,672,809 Prepayments and other receivables accounts are analysed as follows: 13

15 Prepayments and other Receivables Receivables due from the Greek State 1,954 55,654 Prepaid Expenses 9,605 18,876 Other Associates Third Parties 186, ,166 Other 14,435 11,941 Total Prepayments and other receivables 212, , Cash and cash equivalents Cash and cash equivalents are analysed as follows: Cash in hand Time Deposits 924, ,047 Total Cash at Bank and in Hand 925, , Share Capital FORTH CRS s share capital at establishment amounted to GRD 150,000,000 (440, Euros), divided into 150,000 common shares with a nominal value of GRD 1,000 (2.93 Euros) each. Following share capital increases, the company s Paid-up Share Capital at 31 December 2006 amounts to 2,883, Euros, divided into 1,373,133 common shares with a nominal value of 2.10 Euros each Share premium account and other reserves Reserves are analysed as follows: Legal Reserve 43,963 43,963 Other 9,876 9,876 Total Reserves 53,839 53,839 Legal Reserve: According to Greek corporate law, businesses must transfer at least 5% of their annual net profits, as shown in their books, to a legal reserve, until this reserve amounts to one third of their paid-up share capital. This reserve is not distributed while the company is still in operation Dividends According to Greek corporate law, each year companies must either declare or pay dividends from their profits, equal to at least 35% of their profit after taxes, after setting aside the legal reserve, or pay at least 6% of their paid-up share capital, depending on which amount is greater. A dividend of less than 35% of the profit after taxes and legal reserve, but more than 6% of the paid-up share capital may be declared and paid, with a 70% vote in favour by all the shareholders. However, the company may not declare any dividend, subject to unanimous consent of all shareholders. No dividends were declared or paid in the period ending on Short-term Borrowings FORTH CRS maintains short-term borrowings whose overall annual interest rate fluctuates between 5% and 6%. The following table shows the Company s approved short-term borrowing limits, as well as the amount withdrawn. Credit lines available 1,700,000 - Unused portion (700,000) - Used portion 1,000,000 - Total interest expenses on short-term borrowings for the years ending on 31 st December 2006 and 2005 amounted to 26,872 and 0 respectively, and are included in financial income/(expenses), net, in the attached financial statements. 14

16 6.20 Finance Lease Obligations Finance Lease Obligations are as follows: Current Liabilities (up to 1 year) Equipment Purchases (Printers) 50,002 47,362 Total 50,002 47,362 Long-term Debts (1 to 5 years) Equipment Purchases (Printers) 61, ,842 Total 61, ,842 Total Finance Lease Obligations 111, , Trade accounts Payable and Other Current Liabilities Trade accounts payable are analysed as follows: Domestic Suppliers 755,631 1,168,771 Foreign Suppliers 5,483 15,141 Post-dated Cheques Payable 227, ,063 Total 988,696 1,501,975 Other current liabilities are analysed as follows: Social Security 65,868 63,058 Value Added Tax 3,848 - Other Taxes & Duties 52,204 42,789 Customer Advances 50,294 22,757 Accrued Expenses for the Period 12,460 1,481 Accounts Payable 231, ,158 Other 2,801 3,310 Total Other Current Liabilities 419, , Related Parties The Company purchases products and services and provides services to certain related companies. These related enterprises are companies with a significant influence on the Group (shareholders), Subsidiaries or Affiliated Companies of the Group. Transactions and account balances with related parties are mentioned below: Sales and purchases from group companies Period Sales to related Parties Purchases from related Parties FORTHNET S.A , , ,433 98,745 Debts and obligations to and from Group companies Period ending Amounts owed by related parties Amounts owed to related parties FORTHNET S.A , , ,489 15

17 6.23 Commitments and Contingencies Rent for buildings: The company has signed commercial agreements for the rental of a building, office space and offices used as points of presence by its agents. These agreements have an average term of 5 to 8 years, and some of the contracts have renewal options. Future liabilities on the basis of rental contracts already signed at are analysed as follows: 1 YEAR 117, , YEARS 432, ,253 P. Faliro, March 06, 2007 The Chairman of the B.o.D. The Chief Executive Officer Vassilios Spitadakis Ilias Minacholias Id No. Í Id No The Financial Director The Chief Accountant Georgios Karakovounis Spyros Kosmas Id No. N Id No. Î OEE License No Class A OEE License No Class A 16