ATTIKI ODOS SA DIRECTORS REPORT OF THE COMPANY ATTIKI ODOS SA ON THE FINANCIAL STATEMENTS FOR 2009 ATTIKI ODOS SA 41.9 KM OF ATTIKI ODOS 190 02 PEANIA Tax ID No.: 094421389 Tax Office: ATHENS FABE SA Reg.No. 35711/04/B/96/43(02) 1
DIRECTORS REPORT OF THE COMPANY ATTIKI ODOS SA ON THE FINANCIAL STATEMENTS FOR 2009 1. Overview Attiki Odos SA operates in concessions. Over the period 1996-2004 (period T1) the company operated in the design, construction, self-financing of the Elefsina-Stavros-Spata Motorway, and Western Imitos Ringroad ( Motorway ), under the relevant Concession Agreement made and legally signed with the Greek State on 23 May 1996, and validated by Law 2445/96, as in force and effect and as interpreted, and since 2004 (period T2) it has operated in the organisation, management, administration, operation, development and exploitation of the Motorway, and includes all activities or actions and the development of all manner of business activities stipulated or arising from the Concession Agreement. Attiki Odos is one of the cofinanced projects under public-private sector partnership. On 1 March 2000 Attiki Odos SA (hereinafter the Contractor) entered into an operation and maintenance agreement with the company Attikes Diadromes SA, a company which operates and maintains the Elefsina-Stavros-Spata Motorway and the Western Imitos Ringroad (Motorway) (hereinafter the Operator), under which the Attiki Odos SA appointed the operator, pursuant to article 43.1.10 of the Concession Agreement, as its subcontractor for the provision of administrative support and services. In the performance of services related to the collection of tolls and the delivery of revenues from tolls, the Operator acts as a direct assign in the name and on account of the Contractor. In the field of concessions, both Attiki Odos SA and the Operator have gained valuable experience in the management of similar projects. 2. 2009 highlights This annual report of the Board of Directors pertains to the twelve-month period of the fiscal year 2009 ended (01.01-31.12.2009) and provides summary financial information about the financial standing and operations of the Company ATTIKI ODOS SA, a description of important events which took place during this fiscal year, and the effect that such events had on the annual financial statements, a description of the most important risks and uncertainties looking ahead into 2010, and a presentation of qualitative information and estimates with regard to the outlook of the Company s operations into 2010. This past year has been particularly challenging for the Greek economy as a whole. The consequences of the global financial crisis were aggravated by the particularly adverse conditions in the domestic economy, which resulted in the development of an adverse environment in all areas of economic and business activity in Greece. Nevertheless, the company s sales retained the levels of 2008 and appeared slightly improved, indicating that performance is relatively firm given the current financial circumstances. 3. Share Capital of Attiki Odos SA 2
No change was made to the Share Capital of Attiki Odos SA. The Share Capital is analysed as follows: SHAREHOLDERS Share Capital Percentage % Share Capital value (in EUR) 1 AKTOR CONCESSIONS 1,402,084 59.24966% 102,912,965,60 2 J & P AVAX SA 497,045 21.00427% 36,483,103,00 3 ATTI-KAT SA 233,817 9.88070% 17,162,167,80 4 ETETH SA 232,454 9.82311% 17,062,123,60 5 TRANSROUTE INTERNATIONAL 1,000 0.04226% 73,400,00 Total 2,366,400 100.0000% 173,693,760,0 0 4. Financial Statements The Company s Board of Directors hereby presents all documents of the Annual Financial Statements for the 13 th fiscal year (01/01/2009 31/12/2009), i.e. the Balance Sheet, the Statement of Comprehensive Income, the Statement of Changes in Equity, the Cash Flow Statement and the disclosures accompanying the Financial Statements of 31 December 2009. The financial statements have been prepared according to the International Financial Reporting Standards (IFRS), including the International Accounting Standards (IAS), and any amendments and interpretations issued by the International Financial Reporting Interpretations Committee, as adopted by the European Union, and the IFRS issued by the International Accounting Standards Board (IASB). The financial statements of the company for the year ended on 31 December 2009 are the third annual financial statements in compliance with IFRS. The annual financial statements have been prepared in accordance with the provisions of Codified Law 2190/20, and clearly and fairly present the assets and financial standing of the Company as of 31.12.2009. 5. Financial Results for 2009 and Outlook The results for 2009 and outlook can be summarised as follows: 2009 is included in the Operation-Maintenance Period (T2). Income for the period is mainly generated from the operation of the motorway, operating leases and credit interest from banks. Income for the period from motorway operation reached 248,552,133 euro compared to 247,569,109 euro in 2008. Credit interest amounted to 17,313,853 euro compared to 20,002,947 euro in 2008. 3
Income from operating leases amounted to 5,104,391 euro compared to 4,022,134 in 2008. Depreciation of intangible assets stood at 39,362 thousand euro in 2009 compared to 39,255 thousand in 2008. Depreciation of other fixed assets amounted at 1,880 thousand euro, compared to 2,744 thousand euro in 2008. The income statement prepared by the company demonstrates earnings of 85,795,148 euro before taxes, and 59,949,603 euro after taxes. Deferred tax is calculated using the new tax rates arising from article 19(1) of Law 3607/25.09.2008. The only unaudited year for the Company is 2009. Tax liabilities for this year have not been finalized yet and therefore additional charges may arise when the relevant audits are performed by the tax authorities. The company has not made provisions for the unaudited year 2009. The ordinary tax audit performed on 2008 and completed on 27.01.2010 indicated accounting discrepancies of 2,189,758.35 euro. Of these accounting discrepancies the company acknowledged the amount of 93,057.69. With regard to the goodwill of 2,096,700.66 resulting from the absorption of the motorist service stations, the company has sought recourse against the Greek State, as it considers such goodwill to be rebatable, as it is posted under formation expenses, pursuant to the provisions of article 31(1)(l) of the Income Taxation Code (Law 2238/1994). Equity stood at 399,829,003 euro, while cash on hand stood at 369,910,355 euro and include cash, sight deposits, and highly liquid and low risk short-term investments up to 3 months. There are litigations pending against the company for accidents which occurred during operation of the motorway by companies or individuals. Because the company is insured against accidents, no encumbrances are anticipated from a potentially negative outcome, given the insurance coverage in place. Other disputes in litigation or in arbitration, as well as any pending decisions by judicial or arbitration bodies are not expected to have a significant impact on the financial standing or operation of the company. The imposition of municipal cleaning and lighting duties, and electrified area tax by the Municipalities of Aspropyrgos, Acharnes, Ano Liosia and Zefyri on the Company for the period 2002-2009 is pending hearing. Said debt of 9,458 thousand euro in total relate to the Company s facilities in the respective Municipalities; however, the Ministry of Enironment, Physical Planning and Public Works has granted a certificate whereby Attiki Odos SA has no obligation to pay municipal duties for cleaning and lighting nor any electrified area municipal taxes in relation to the motorway. Estimates for the future are quite conservative, since 2010 is expected to be another difficult year. According to our estimates, income and turnover are expected to move slightly lower compared to the previous year. 6. Company borrowing In 2009 the Company proceeded to the issue of a twenty seven million euro bond loan. The bondholder creditors are ALPHA BANK SA, with registered office in Greece ( 26,500,000.00) and ALPHA BANK LONDON LTD ( 500,000.00) with registered office in the United Kingdom. ALPHA BANK SA was designated the Representative or Paying Agent. The Bond Loan proceeds will be used by the company exclusively to repay the existing debt undertaken by the company after the absorption in 2008 of the subsidiary MOTORIST SERVICE STATIONS ATTIKOI STATHMOI SA trading as SEA ATTIKOI STATHMOI SA, pursuant to the provisions of articles 68(2) and 78 of Codified Law 2190/1920. The loan was granted for a ten-year period and expires on 31.12.2018. The Bond Loan is divided into 270 Bonds with the face value and an offer price of 100,000.00 each. The contractual rate is equal to the floating 4
rate, i.e. the sum of (i) Euribor, and (ii) the Spread. The bond loan interest is due and payable on the last day of each calendar quarter. Consequently, short-term loan obligations of the company were reduced compared to 2008, due to the bond loan agreement signed on 25 February 2009 with Alpha Bank SA for the amount of 27,000,000.00 euro, converting the aforementioned short-term loan into a longterm loan. In 2009 the company proceeded to capital repayment of 2,000,000.00 to bondholder creditors. As a result, the company s current loan obligations stand at 25,000,000 euro, of which 1,600,000 euro will be repaid in 2010 and has been posted as a short-term obligation. The company also made a loan repayment to the European Investment Bank of 13,547,509 euro, while in 2008 it had made a similar loan repayment to the European Investment Bank of 6,585,505.73 euro. As a result, the current loan obligations stand at 625,624,753 euro to the European Investment Bank, of which 28,401,938 euro will be repaid in 2010 and has been posted as a short-term obligation. A large part of the company s borrowing has been taken out at fixed or periodically revised rates for the amount of 564,880,193, and the remaining amount of 85,744,560 is subject to floating rate, exclusively denominated in euro. Therefore, the interest rate risk is mainly connected to fluctuations of euro rates. The company constantly monitors interest rate trends, as well as the duration and nature of its financing needs. Decisions on loan terms as well as the relation between variable and fixed interest rate are considered separately on a case by case basis. 7. Efficiency ratios The Company is exposed to various financial risks, such as market risks, credit risk, liquidity risk, currency risk and interest rate risk. Risk management is monitored by the finance division and in particular the Central Financial Management Division of the ELLAKTOR Group to which the company belongs, and is determined by rules approved by the Board of Directors. The Finance Division determines and estimates the financial risks in collaboration with the services managing those risks. The Board of Directors provides directions on the general management of the risk as well as specialised directions on the management of specific risks such as interest rate risk, credit risk, and short-term investment of cash. (a) Market Risk Market risk is related to the business sectors where the Company operates. Indicatively, the company is exposed to risk from the change in the market value of parts and materials destined for motorway repair and maintenance. The Company s departments are closely monitoring the trends in the individual markets in which it operates and plan actions for prompt and efficient adaptation to the individual markets new circumstances. (b) Credit Risk The company has no significant credit risk concentrations from transactions with customers. It has developed policies in order to ensure that transactions are conducted with customers of sufficient credit rating. The company has procedures in place so as to limit exposure to credit risk from individual credit institutions. The company collects post-payment money guarantees or guarantee letters from customers. 5
Cash and cash equivalents, and time deposits potentially involve credit risk as well. In such cases, the risk may arise from counterparty failure to fulfil their obligations towards the Company. Also, with respect to deposit products, the Company only performs transactions with accredited financial institutions with high credit ratings. (c) Liquidity Risk The company demonstrates high liquidity as a result of motorway toll collection. To manage liquidity risk, the Company makes estimates of and monitors its cash flows and takes appropriate actions to ensure availability of liquid assets. (d) Currency risk The Company is not exposed to currency risk since transactions in foreign currencies are only few and are mainly related to the provision of technical consultancy services on the construction project. (e) Interest rate risk With regard to long-term loans, the Company s Management monitors rate fluctuations systematically and on an ongoing basis and evaluates the need to assume hedging positions, if such risks are considered to be significant. A large part of the company s borrowing has been taken out at fixed or periodically revised rates for the amount of 564,880,193, and the remaining amount of 85,744,560 is subject to floating rate, exclusively denominated in euro. Therefore, the interest rate risk is mainly connected to fluctuations of euro rates. The company constantly monitors interest rate trends, as well as the duration and nature of its financing needs. Decisions on loan terms as well as the relation between variable and fixed interest rate are considered separately on a case by case basis. The following table shows the development of the most important ratios: TABLE OF RATIOS A. General liquidity Year ended Previous year Current Assets Short-term liabilities B. Quick liquidity Cash Short-term liabilities C. Capital structure ratio % Equity Total Assets D. Net profit ratio % Earnings after taxes Turnover 9.77 6.26 6.07 3.91 33.20 30.31 24.12 30.59 6
E. Ratio of subscriber increase ΕΤC % 25.78 27.48 8. Post 31.12.2009 events No significant event has occurred since the end of fiscal year 2009 to date. Throughout this fiscal year and during the term of office, the Board of Directors have worked meticulously to achieve the Company s goals, and promises to keep making their best efforts in the future. Finally, the Board of Directors invites the meeting to approve the Balance Sheet, the Income Statement, the Statement of Changes in Equity, the Cash Flow Statement, and the disclosures accompanying the Financial Statements of 31 December 2009. Finally, the Board of Directors has authorised Mr. Dimitrios Ath. Koutras, Chairman of the Board of Directors, to publish the Balance Sheet, as stipulated by law. Peania, 12 May 2010 The Managing Director Leonidas Bobolas This report comprises eight (8) pages and is the one mentioned in the audit certificate granted today. Athens, 14 May 2010 THE CERTIFIED AUDITOR- ACCOUNTANT Dimitrios Sourbis Reg.No. SOEL 16891 PriceWaterhouseCoopers Auditing Firm Certified Auditors - Accountants 7
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