New Economy Development Fund S.A.
(“TANEO”)
Financial Statements for the year ended 2008
(01/01/2008 – 31/12/2008)
The present Financial Statements, from page 1 to page 48 have been approved by the Board
of Directors in their meeting dated April 24, 2009 and are subject to the approval by the
Ordinary General Meeting of Shareholders. The Board of Directors has authorised the
following persons to sign the Financial Statements.
Athens, April 24, 2009
The President of the Board.
Ioannis Papaioannou
I.D. ΑΒ049161
The Vice-President &
Managing Director
Nikolaos Haritakis
I.D. Ρ093479
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
The Finance Manager
George Saperas
I.D. N031359
License. 28154 Α΄Class
2
Table of Contents…………………………………………………………………….…..Page
BOARD OF DIRECTORS MANAGEMENT REPORT............................................ 5
INDEPENDENT AUDITOR’S REPORT.................................................................. 5
Α. Income Statement for the period ended 31st December 2008 ................................ 5
Β. Balance Sheet for the period ended 31st December 2008 ....................................... 5
C. Cash Flow statement for the period ended 31st December 2008 ............................. 5
D. Statement of changes in equity for the period ended 31st December 2008.............. 5
1. General Information........................................................................................... 5
2. Significant accounting policies .......................................................................... 5
2.1.
Basis of Preparation of Financial Statements .......................................... 5
2.2.
Revenue recognition............................................................................... 5
2.3.
Leasing .................................................................................................. 5
2.4.
The Company as lessee .......................................................................... 5
2.5.
Borrowing costs ..................................................................................... 5
2.6.
Employee benefits .................................................................................. 5
2.7.
Taxation................................................................................................. 5
2.8.
Tangible assets ....................................................................................... 5
2.9.
Intangible assets ..................................................................................... 5
2.10.
Impairment of tangible and intangible assets .......................................... 5
2.11.
Financial instruments ............................................................................. 5
2.12.
Provisions .............................................................................................. 5
2.13.
New and amended accounting standards and interpretations of IFRIC .... 5
3. Risk Management .............................................................................................. 5
3.1.
Market risk............................................................................................. 5
3.2.
Liquidity risk ......................................................................................... 5
3.3.
Credit Risk ............................................................................................. 5
4. Notes and analysis of the financial statements .................................................... 5
4.1.
Credit Interests and related expenses ...................................................... 5
4.2.
Gains from FVTPL Investments ............................................................. 5
4.3.
Increase / (Decrease) in Fair Value Investments ..................................... 5
4.4.
Debit Interest and related expenses......................................................... 5
4.5.
Provisions .............................................................................................. 5
4.6.
Other Operating expenses....................................................................... 5
4.7.
Income tax (Deferred tax)....................................................................... 5
4.8.
Tangible assets ....................................................................................... 5
4.9.
Investments carried at fair value through the income statement .............. 5
4.10.
Other Non-Current Assets ...................................................................... 5
4.11.
Investments available for sale................................................................. 5
4.12.
Other receivables.................................................................................... 5
4.13.
Cash and cash equivalents ...................................................................... 5
4.14.
Share Capital.......................................................................................... 5
4.15.
Retained Earnings / (Accumulated loss) ................................................. 5
4.16.
Preferred Stock....................................................................................... 5
4.17.
Bond issue.............................................................................................. 5
4.18.
Deferred Tax Liabilities ......................................................................... 5
4.19.
Provisions .............................................................................................. 5
4.20.
Other Liabilities ..................................................................................... 5
4.21.
Contingent Liabilities ............................................................................. 5
4.22.
Commitments......................................................................................... 5
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
3
4.23.
Operating lease agreements .................................................................... 5
4.24.
Liabilities for employee’s retirement benefit plans ................................. 5
4.25.
Related party transactions....................................................................... 5
5. Events occurring after the 31/12/2008................................................................ 5
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
4
BOARD OF DIRECTORS MANAGEMENT REPORT
Dear Shareholders,
It is our pleasure to submit to the General Meeting the company’s financial statements for the
7th financial year from 1/1/2008 to 31/12/2008 in accordance with the provisions of Article
136 of Codified Law 2190/1920. This Report includes an analysis of those statements and
further explanations which are necessary or useful in order for you to form an opinion and for
the General Meeting to take a decision on whether or not to approve them in line with the
proposal of the Board of Directors.
1. Significant Events Review 2008
During 2008 the international macroeconomic environment deteriorated significantly as a
consequence of the “credit crunch” and major economies (USA, Europe etc) entered into
recession. During the 4th quarter of 2008, this downturn started to influence Greece as well.
Nevertheless 2008 was probably the most strong and fruitful year for TANEO since its
inception.
Following a period of several investment proposals investigations, negotiations and due
diligences, TANEO achieved to set up 8 new Venture Capital Funds. The following table
summarizes TANEO’s investments:
Fund Name
In operation
on 31
December
2007
Investors
Investment Focus
Investment Portfolio
24
TANEO 49,9%, Private Investors
from shipping sector 50,1%
Greek SME’s in early and
development stage
Micrel Medical Devices S.A., Tyres Herco S.A,
Mavin S.A, Krokos Kozanis Products S.A.
2004
40
TANEO 49,9%, Attica Bank 50,1%
Greek SME’s in early and
development stage
e-Global, Medittera S.A., Doppler S.A.,
Performance Technologies S.A., Advanced
Network Technologies S.A., ENEP S.A.,
CRAFT S.A., Foodlink S.A. Evridamantos SA
IBG Hellenic Fund II
2004
17
TANEO 49,9%, Private Investors
& Marfin Investment Group 50,1%
Greek SME’s in early and
development stage. Focus on
energy & technology
Ionia Energiaki S.A. - Aigeas Anaptyxiaki
Energeiaki S.A.- Mobile Technology S.A.- Solar
Cells Hellas S.A., Autostop S.A.
THERMI-TANEO
2008
24
TANEO 49,9%, Piraeus Bank
50,1%
Greek SME’s in early and
development stage
No investments yet
AXON-TANEO
2008
40
TANEO 49,9%, AXON Holdings
50,1%
Greek SME’s in early and
development stage
No investments yet
TANEO 49,9%, Alpha Bank 50,1%
Greek SME’s in early and
development stage
Upstream SA
No investments yet
No investments yet
Capital Connect
Venture Partners
2003
Zaitech Fund
ALPHA –TANEO
Set-up
during 2008
Vintage Fund size
Year
(€ m.)
2008
30
G.I.V.E.-TANEO
2008
20
TANEO 49,9%, Ashby Investments
S.A. & Private Investors 50,1%
Greek SME’s in early and
development stage. Focus on
Technology
OXYGEN-TANEO
Neoventures
2008
30
TANEO 49,9%, Restis Group &
Private Investors 50,1%
Greek SME’s in early and
development stage. Focus on eBusiness
PIRAEUS-TANEO
2008
30
TANEO 49,9%, Piraeus Bank
50,1%
New Mellon TANEO
2008
15
TANEO 49,9%, Private Investors
50,1%
TANEO FG RES
2008
24
TANEO 49,9%, Private Investors
50,1%
Greek SME’s in early and
development stage
Greek SME’s in early and
development stage. Focus on
renewable energy
Greek SME’s in early and
development stage. Focus on
renewable energy
No investments yet
No investments yet
No investments yet
The total commitments to Venture Capital Funds on 31 December 2008 amounted to €140,5
m. versus €38,5 m. on 31 December 2007. The amount of Invested capital on 31 December
2008 reached the amount of €24.084 Thous. versus €11.816 Thous on 31 December 2007
(contributions during the year amounted to €12.268 Thous). The realizations from Venture
Capital Funds and distributions to TANEO reached €1.383 Thous while the total Gains from
Investments posted in the Income statement were €594 Thous.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
5
2. Investment Review
A summary of TANEO’s Venture Capital Funds performance is provided below:

“Capital Connect Venture Partners”, a €24 m. Fund Size where TANEO participated
with a stake of 49,999%. During the 2nd quarter of 2008, the fund has completed its
second realization by selling its stake in Krokos Kozanis (IRR:47,4%, Multiple to
cost: 1,6x). The start-up projects of the Fund (i.e Mavin and Herco) are performing
satisfactorily. During the 4th quarter Herco bought-out the €500K bond loan from the
Fund (IRR:14,1%, Multiple to cost: 1,1x). In October 2008 the investment period of
the fund expired. Therefore the total commitments are not expected to exceed €11,5m
(i.e. €8m actual draw downs plus €3,5m maximum planned draw downs for following
on investments). Its management examines different alternatives for following on the
above-mentioned remaining portfolio companies.

“Zaitech Fund”, a €40 m. fund. TANEO’s commitment to the fund is €20m. for a
49,9998% interest. At September 2008 Zaitech proceeded to its second closing,
raising its committed Capital from €30m. to €40m. The investors and their % stake
remained the same. The Fund’s portfolio consists of eight companies. Three of them
are listed in the Alternative Market of Athens Stock exchange and they are
performing satisfactorily despite the negative climate in global stock markets i.e:
o
Mediterra S.A., entered the market on February 2008 with an initial market
capitalization of € 14,2 m.As per 31st December 2008 its capitalization was
up by 33%.
o
Doppler was listed in Athens Stock Exchange Alternative Market on May
2008 with an initial market capitalization of € 26,7m. As per 31st December
2008 its capitalization was up by 23%)
o
Performance Technologies is the third investment of the fund which entered
the Alternative Market on September 2008 with an initial market
capitalization of € 11,7 m. As per 31st December 2008 its capitalization was
up by 5,5%.
Regarding new investments, the fund invested in three companies i.e:
o
Craft SA a beer bottling firm with an investment of €1,5m.(February 2008)
and further commitment of €0,6m,
o
Foodlink SA a company operating in logistic sector with an investment of
€1,5m.(July 2008)
o
Evridamantos SA a company operating in Business apartments development
sector with an investment of
€1,5m. (September 2008) and further
commitment of €1,5m.

“IBG Hellenic Fund II”, a €17m. fund managed by IBG Management S.A. TANEO
participated in the Fund with an investment of €8,5m. for a 49,9997% interest. The
fund proceeded to a significant upside revaluation of its investments in the renewable
energy sector due to the maturation of these investments (i.e applications will turn to
permits with some degrees of confidence).Regarding new investments, the fund
proceeded to an investment in “Autostop SA” (a company operating in automobile
accessory sector) with a total amount of €1,5m

“AXON-TANEO (former Pancreta Development Fund)” had its second closing on
June 2008 raising its total committed capital from €6m. to €40m. The restructuring
which took place in the fund is expected to give a boost in its performance.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
6

“Thermi - TANEO Venture Capital Fund” a €24 m. fund where TANEO participated
with a stake of 49,99%. The fund is currently screening a number of investment
proposals mainly in Northern Greece area. An investment to a company operating in
the development of seasonal residences has been approved.

“ALPHA – TANEO Fund” a €30 m. fund where TANEO participated with a stake of
49,00%. The fund proceeded to its first investment at a mobile marketing company
named “Upstream, with a total amount of €1,5m and 2,3% stake holding.

“OXYGEN – TANEO Fund” a €30 m. fund where TANEO participated with a stake
of 49,99%. The shareholder’s agreement was signed on September 2008 and the first
draw down occurred on October 2008. No investment took place so far.

“GIVE – TANEO Fund” a €20 m. fund where TANEO participated with a stake of
49,99%. The shareholder’s agreement was signed at early October 2008 and the first
draw down occurred on the same month. No investment took place so far.

“Piraeus – TANEO Fund” a €30 m. fund where TANEO participated with a stake of
49,99%. The shareholder’s agreement was signed at late December 2008 and the first
draw down occurred on the same month.

“New Mellon – TANEO Fund” a €15 m. fund where TANEO participated with a
stake of 49,99%. The shareholder’s agreement was signed at late December 2008 and
the first draw down occurred on January 2009.

“TANEO - FGRES Fund” a €24 m. fund where TANEO participated with a stake of
49,99%. The shareholder’s agreement was signed at late December 2008 and the first
draw down occurred on January 2009.
3. Financial Review
The financial year 1/1/2008-31/12/2008 was the 5th during which International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS) were applied, the
company being obliged to do so as its bonds are listed on the Irish Stock Exchange in Dublin,
which is a regulated financial market in accordance with the meaning given in Article 134 of
Codified Law 2190/1920. The financial statements submitted for approval to the General
Meeting are, as such, prepared in accordance with these standards.
In 2008 the pre tax profit reached €3.504 Thous. versus pre tax losses of €614 Thous. in 2007.
Regarding the income from operating activities the significant rise of interest rates in
Eurozone until the 3rd quarter of 2008 had a positive effect in the credit interests deriving
from the invested money in Money Market Funds. These credit interests went up by 8% in
2008 amounting to €5.512 Thous. versus €5.089 Thous. in 2007. The average return from
these investments during 2008 was 4,4% versus 3,9% during 2007.
However the significant improvement at the Company’s financial results is mostly due to the
increase in Fair Value Investments by €6.446 Thous. The break down of these gains is as
follows a) €872 Thous. derive from the increase in Zaitech Fund’s Fair Value, which is
mainly due to the listing of three of its portfolio companies (Mediterra, Doppler &
Performance Technologies) to the Alternative Market of the Athens Stock Exchange and b)
€5.574 Thous. derive from the increase in IBG Hellenic Fund’s Fair Value due to the
maturation of its projects in the renewable energy sector.
Gains from Investments in Venture Capital Funds reached €594 Thous. in 2008 versus €701
Thous. in 2007. These gains derived from venture capital Funds’ distributions due to portfolio
companies realizations, dividends, bond interests etc. It must be noted that the company’s
main source of income shall be the returns that are expected to derive from its participation in
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
7
Venture Capital Funds. These returns will be given to the company over time, due to the
nature of the investments. Given the very recent start to TANEO investment activities, the
small size of such returns in the period examined here is considered to be reasonable.
Regarding the expenses, debit interests on the bond loan increased due to the abovementioned
rise of interest rates. More specifically debit interests rose to €5.063 Thous. in 2008 versus
€4.296 Thous. in 2007 (increase of 17,8%). The average interest rate (6m Euribor) was about
4,8% in 2008 versus 4,0% in 2007.
The expenses from the issuing and the restructuring of the bond loan are amortized on
a 10-year period which is the duration of the bond. The amortization charge for 2008 was
€626 Thous., the same as 2008.
Payroll costs for the current year went down by 9% since 2007 payroll included an one-off
bonus given to resigned executives according specific provisions in their contracts.
The “decrease in FVTPL Investments” refers to the decrease of the Net Asset Value of
TANEO’s Venture Capital Funds due to a) the management fees b) the fact that some of the
Venture Capital Funds valued their portfolio companies in historical cost.
Other operating expenses went up by 25% mostly due to lawyers fees and “marketing and
promotion expenses” that were charged during the year.
Finally, the recording of the income for deferred taxation of the amount of €312 Thous. that
was charged in the income statement as well as the related accumulated liability of €628
Thous. that is included in the balance are figures obligated by the correct application of the
IAS-IFRS. The company believes that there will be no further obligation to pay income tax
from its activities thus far.
Due to the implementation of IAS and IFRS and following last year’s treatment, the preferred
stock with a nominal value of €45,000,000 that the company has issued, were posted as
liabilities instead of equity. Therefore the total equity of the company is a negative figure
Even so, there is no question of implementing Articles 47 and 48(1)c of Codified Law
2190/1920 on the obligatory holding of a General Meeting of the shareholders to take
measures and revoke the company’s license by the Ministry of Trade. According to the
opinion of Professor Evangelos Perakis, professor of commercial law at the University of
Athens, for the purposes of Articles 47 and 48(1)c of Codified Law 2190/1920, preferred
stock must be calculated as equity capital, even if, according to IAS and IFRS, these shares
must be calculated as liabilities for the preparation of the annual financial statements. The
statutory auditors did not express any opposition to the above. As such, the calculation of the
company’s equity capital for the application of Articles 47 and 48(1)c of Law 2190/1920 must
be done by calculating these preferred stock as part of the equity capital. Given that the
company’s deposited and certified share capital comes to €46,000,000 (namely €1,000,000
divided into twenty thousand (20,000) ordinary registered shares with a registered value of
€50 each, and €45,000,000 divided into 900,000 registered preference shares without a voting
right at a registered value of €50 each), the company’s equity capital at 31/12/2008 was not
less than half the share capital or even of one tenth of it. As such, the preconditions are not
satisfied for calling an obligatory General Meeting of the shareholders in order to take certain
measures, in accordance with Article 47 of Codified Law 2190/1920, nor is there any question
of the Ministry of Trade revoking the company’s licence, in accordance with Article 48(1)c of
the same law. The Board of Directors underlines that in each case, the company has enough
liquidity in order to fulfill its obligations and, as such, the issue of not being a going concern
does not arise.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
8
In line with the terms of the information memorandum and the documentation signed as part
of the bond issue of €105 m., any cash in the accounts maintained by the company with
Deutsche Bank AG London may be invested in Eligible Obligations. Eligible Obligations
means money market funds and similar investment schemes expressed in euros with a credit
rating equal to AAA. Consequently, the securities held by the company on 31/12/2008
amounted to €115.965 thous. and related to cash invested in the Deutsche Global Liquidity
Series – Deutsche Euro Managed Fund.
4. Risks & Uncertainties
The Company is exposed to various financial risks, the most important being market risk, in
other words the risk of changes in interest rates and market prices, liquidity risk and credit
risk. The general risk management policy of the Company focuses on credit risk and market
risk management. Risk management is performed through the various business operations of
the Company. The approval of the executives that bind the company is required prior to
carrying out transactions.
Market risk
Foreign Currency Risk
Exchange rate risk means the investment risk assumed, which arises from unfavourable
changes in currency prices, when there is exposure to a specific currency.
It does not affect Company’s operations significantly as foreign currency transactions do not
exist.
Interest Rate Risk
Interest rate risk means the investment risk assumed, which arises from changes in the market
in money interest rates. Such interest rate changes can affect the Company’s financial position
since the following can also change:
- The net interest rate result
- The value of income and expenses sensitive to interest rate changes
- The value of assets and liabilities since the present value of future cash flows (and
frequently the cash flows themselves) change as interest rates change.
Liquidity risk
Liquidity risk means the possible inability of the Company to fully repay in due time its
current or future financial obligations –when they become due- due to a lack of necessary
liquidity. This risk includes the possibility of a need to refinance amounts at a higher interest
rate and the need to sell off assets. It is also related with the bond that the Company issued.
More specifically it is related to the 6-month payment of the guaranteed interest and the
repayment of the principal balance of the note at June 2013. Liquidity is also related to the
timing and the amount of returns from the investments in venture capital funds (AKES).
The Company carefully monitors its long term financial liabilities and liquidity needs and it
maintains adequate funds to cover its current and future needs.
Credit Risk
Credit risk derives from breach of obligations by debtors to repay all or part of their debt
within contractual deadlines The main financial assets of the company refer to bank balances
and receivables from non-Greek mutual funds (money market funds). The credit risk on
liquid funds is limited because the counterparties are banks with high credit-ratings assigned
by international credit-rating agencies of mutual funds traded in stock exchange markets.
Consequently, the company has no significant concentration of credit risk.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
9
5. Significant Events in 2009
Due to the current financial crisis and in order to relieve the state aid rules, the European
Commission amended one of the restrictions in relation to the size of the investments. More
specifically the size of investment tranche is increased from €1,5m to €2,5m for a twelve
month period. This provision has been approved by the Hellenic Republic and will be
applicable until the end of 2010. TANEO considers this relief to be of great importance since
it expands the range of possible investments.
TANEO works together with various institutions and corporations in order to enhance the
deal pipeline of its underlying funds. A non exhaustive list includes scientific parks,
Association of young entrepreneurs, Federation of Greek Companies, Greek Communities in
USA Universities, consulting firms etc.
In January 2009 Mr Mageirou expressed his intention to resign from the board of TANEO, for
personal reasons. The Board proposed to replace Mr Mageirou with Mr Dimitriou, a lawyer,
who has been TANEO’s legal counsel since December 2007. Following approval by the
Investment Adviser and further consultation with the Trustee, the appointment of Mr
Dimitriou was effected in February 2009. The appointment is temporary until proper
ratification, as required by the Greek law and the relevant TANEO’s documentation
Dear shareholders, these were the results of the 7th financial year and we hereby submit this
brief Report on the company’s financial position for your approval. Please find attached the
company’s financial statements for the financial year 1/1/2008 – 31/12/2008, and we would
ask that you approve these and release the members of the Board of Directors and auditors
from all liability to pay compensation for the 7th financial year.
Athens, 24 April 2009
On behalf of the Board of Directors,
the Chairman
_______________________________
Ioannis Papaioannou
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
10
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of THE NEW ECONOMY DEVELOPMENT FUND S.A
“TANEO S.A”
-
Report on the Financial Statements
We have audited the accompanying Financial Statements of THE NEW ECONOMY
DEVELOPMENT FUND S.A- “TA.NE.O S.A” (“the Company”), which comprise the
balance sheet as at December 31, 2008, and the income statement, statement of changes in
equity and cash flow statement for the year then ended, and 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 that have been
adopted by the European Union. This responsibility includes designing, implementing and
maintaining an internal control system relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
This responsibility also includes selecting and applying appropriate accounting policies and
making accounting estimates that are reasonable for 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
the 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 abovementioned Financial Statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2008, and of its financial
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
11
performance and its Cash Flows for the year then ended in accordance with International
Financial Reporting Standards that have been adopted by the European Union.
Without qualifying our opinion, we would like to draw your attention to Notes 4.16 and 4.17
in the abovementioned Financial Statements, referring to matters of the fair value of
liabilities.
Report on Other Legal Matters
We verified the agreement and correspondence of the content of the Board of Directors’
Report with the abovementioned Financial Statements, in the context of the requirements of
Articles 43a and 37 of Law 2190/1920.
.
P. Faliro, April 27th 2009
The Chartered Accountant
Pavlos Stellakis
SOEL Reg. No 24941
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
12
Α. Income Statement for the period ended 31st December 2008
Notes
1/1 - 31/12/2008
1/1 - 31/12/2007
Amounts in thousands Euro
Credit interests & other finance income
4.1
5.542
5.117
Gains from FVTPL Investments
Increase in fair value investments carried at fair
value through the income statement
4.2
594
701
4.3
6.446
111
Other operating income
Income from operating activities
8
1
12.589
5.932
(4.935)
Debit interests & other finance expenses
4.4
(6.130)
Provision expenses
4.5
(742)
Payroll expenses
-
(342)
(374)
(5)
(7)
(586)
Depreciation
Decrease in fair value investments carried at fair
value through the income statement
4.3
(1.058)
Other operating expenses
4.6
(808)
(644)
Total Operating expenses
(9.085)
(6.546)
Profit / (Loss) before taxes
3.504
(614)
312
(223)
3.817
(837)
Income tax (Deffered tax)
Profit / (Loss) after taxes
4.7
Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the
present Financial Statements.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
13
Β. Balance Sheet for the period ended 31st December 2008
Notes
31.12.2008
31.12.2007
Amounts in thousands Euro
Assets
Non-Current Assets
Tangible Assets
4.8
Intangible Assets
25
9
0
1
Investments carried at fair value through the income statement
Other Non-Current Assets
4.9
4.10
24.335
12
24.372
7.468
16
7.493
Current Assets
Investments available for sale
4.11
115.965
128.234
Other receivables
Cash and cash equivalents
4.12
4.13
421
2.832
119.219
543
2.655
131.431
143.591
138.924
1.000
(6.084)
1.000
(9.900)
(5.084)
(8.900)
Total Assets
Equity and liabilities
Equity
Share capital
Retained Earnings / (Accumulated losses)
4.14
4.15
Total Equity
Long term liabilities
Preferred stock
4.16
45.000
45.000
Bond loan
4.17
101.883
101.257
0
0
Deferred taxes
4.18
628
941
Provisions
4.19
751
148.262
12
147.209
4.20
412
412
615
615
Total liabilities
148.674
147.824
Total Equity and Liabilities
143.591
138.924
Liabilities for emloyees' retirement benefits
Short term liabilities
Other liabilities
Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the
present Financial Statements.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
14
C. Cash Flow statement for the period ended 31st December 2008
1/1 - 31/12/2008
1/1 - 31/12/2007
Amounts in thousands Euro
Operating Activities
Profit / (loss) for the period
Adjustments:
Credit interests & other finance income
(5.542)
(5.117)
Debit interests & other finace expenses
6.130
4.935
Depreciation of tangible assets
5
6
Amortization of other intangible assets
0
1
Increase / (decrease) in the fair value of investments carried at fair
value through the income statement
3.817
(5.384)
(837)
475
Gains from finacial transactions
Increase / (decrease) in provisions
(594)
739
3
Decrease / (increase) in receivables
46
14
Increase / (decrease) in liabilities
(313)
(701)
192
Interests paid
(5.566)
(4.224)
Net Cash Flows from operating activities
(6.661)
(5.255)
Investing activities
Interests received
Proceeds from the disposal of invetsments available for sale
Increase of investments available for sale
Proceeds from the sale of investments carried at fair value through
the income statement
5.621
5.078
12.268
1.448
-
-
1.383
1.701
(12.273)
(1.434)
Increase of investments at fair value through the income statement
Purchases of property, plant and equipment
Net Cash Flows from invetsing activities
(21)
6.979
Financing activities
Payments of Bond Loan restructuring expenses
Proceeds from issue of loan notes
Proceeds from issue of preferred stock
(140)
(0)
Net Cash Flows from finacing activities
(140)
-
(7)
6.788
(650)
0
(650)
Net increase / (decrease) in cash and cash equivalents
178
883
Cash and cash equivalents at the beginning of the period
2.655
1.772
Cash and cash equivalents at the end of the period
2.832
2.655
Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the
present Financial Statements.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
15
D. Statement of changes in equity for the period ended 31st December 2008
Retained Earnings /
Share Capital (Accumulated losses)
Total Equity
Amounts in thousands Euro
2007
Balance 1.1.2007
Profit / (loss) for the period
Balance 31.12.2007
1.000
-9.063
-8.063
0
-837
-837
1.000
-9.900
-8.900
1.000
-9.900
-8.900
0
3.817
3.817
1.000
-6.084
-5.084
2008
Balance 1.1.2008
Profit / (loss) for the period
Balance 31.12.2008
Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the
present Financial Statements
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
16
1
General Information
Incorporation and Name
The Company was incorporated on the 18th of May 2001 under the name “New Economy
Development Fund SA” (Tameio Anaptyxis Neas Economias AE) and the registered title
TANEO AE. For the Company’s transactions abroad, the name of the company is used in a
literal translation or in latin characters.
Official Seat
The official seat of the company has been determined to be the Municipality of Athens
The entrepreneurial objectives
The Articles of Incorporation of the company foresee that:
The purpose of the company is the minority participation in closed-end venture capital funds
(AKES), venture capital companies (EKES) and similar venture capital organizations
(hereafter referred to as "investment organizations"), which will be established specifically
for this purpose and will operate in accordance with the laws of any Member State of the
European Union. These investment organizations must be managed by private entities in
conformity with private sector financial criteria and must invest exclusively in innovative
small and medium-size enterprises in Greece.
The specific terms and conditions for effecting such participations and the technical details
that are required to be determined thereon are determined by a Joint Decision of the
Ministers of National Economy and Finance.
The purpose of the Company entails also the management of enterprises and funds that
participate in closed-end venture capital funds (AKES) referred to in article 7 of law
2992/2002 (Govt. Gaz. A 54), in venture capital companies (EKES) referred to in article 5 of
law 2364/1995 (Govt. Gaz. A 261) and in similar venture capital organizations governed by
the laws of a foreign State and investing in Greece or abroad, the management of investment
organizations and the provision of advisory services associated with the management of such
investment organizations.
The company may exercise any activity relating to the above purposes and the promotion of
the venture capital activity in Greece and abroad, including the organization of events and
activities for that purpose.
The company may form or participate in legal entities having similar objects. With the
purpose to achieve its entrepreneurial objectives, the company may be financed by the Public
Investments’ Program.
Any amendment in the company’s entrepreneurial objectives may be made only by law.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
17
Duration of the company
The duration of the company has been determined to be fifty (50) years commencing the date
of its registration, by the competent authorities, with the Registry of Societe Anonymes, and
ends on the corresponding date in the year 2051. The duration of the company may be
extended or lessened by a decision of the General Meeting of Shareholders and the
amendment in the Articles of Incorporation.
Share capital
According to the Articles of incorporation, the share capital of the company amounts to forty
six million Euro (Euro 46,000,000) represented by nine hundred and twenty thousand
(920,000) registered shares of par value Euro 50 each. The above share capital comprises of
twenty thousand (20,000) shares of common stock and nine hundred thousand (900,000)
shares of preferred stock without voting rights. Information on the rights of the preferred
stock
and
its
accounting
treatment
are
provided
in
Note
4.14.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
18
2
Significant accounting policies
2.1 Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with the International Financial
Reporting Standards (I.F.R.S).
The amounts in the Notes to the Financial Statements are expressed in thousands of Euro
unless otherwise indicated.
The financial statements have been prepared on a historical cost basis with the exception
of the “Investments carried at fair value through the income statement” and the “Investments
available for sale”. The key accounting policies which have been used are described below
2.2 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and
represents amounts receivable for goods and services provided in the normal course of
business, net of discounts and sales related taxes.
Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on a time basis, by reference to the principal outstanding and the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that asset’s net carrying amount.
Dividend income from investments is recognised when the shareholders’ rights to receive
payment have been established.
2.3 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially
all the risks and rewards of ownership to the lessee. All other leases are classified as
operating leases.
2.4 The Company as lessee
Assets held under finance leases are recognized as assets of the company at their fair value at
the inception of the lease or, if lower, at the present value of the minimum lease payments.
The corresponding liability to the lessor is included in the balance sheet as a finance lease
obligation.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
19
Lease payments are apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged to profit or loss.
Rentals payable under operating leases are charged to income statement on a straight-line
basis over the term of the relevant lease. Benefits received and receivable as an incentive to
enter into an operating lease are also spread on a straight-line basis over the lease term.
2.5 Borrowing costs
All borrowing costs are recognized in profit or loss in the period in which they are incurred.
2.6 Employee benefits
Short-term benefits: Short-term benefits to employees (except for indemnities for
termination of the employment relation) in money or in kind are recognized as an expense
when they are accrued. Any outstanding amounts are classified as a liability, while in case the
amount already paid exceeds the amount of the benefits, the company recognizes the
excessive amount as an asset (prepaid expense) only to the extent that the prepayment will
lead to a reduction of future or in return payments.
Benefits on retirement: The benefits on retirement include a lump sum pension indemnity or
other benefits (social security or medical coverage) that the company provides upon
retirement to its employees in exchange for their service. Therefore, they include both defined
contribution plans and defined benefit plans. The accrued cost of the defined contribution
plans is recorded as an expense in the period to which it refers.
 Defined contribution plan
According to the defined contribution plan, the company’s obligation (legal or
inferred) is limited to the amount agreed to be contributed to the entity (e.g. social
security entity), which manages the contributions and grants the benefits. Therefore,
the amount of benefits received by the employee is defined by the amount
contributed by the company (or the employee as well) and the paid investments of
these contributions. The contribution paid by the company in a defined contribution
plan is recognized either as a liability after deducting the contribution paid or as an
expense.
 Defined benefit plan
The liability recorded in the balance sheet for the defined benefit plans constitutes the
present value of the liability for the defined benefit less the fair value of the assets of
the plan (if any) and the changes that result from any other actuarial profit or loss and
the cost of the work experience. The commitment of the defined benefit is calculated
on a yearly basis from an independent actuary with the projected Fiscal Year-end
Financial Statements for the year-end from January 1st to December 31st 2006 41
unit credit method. For the discounting, the exchange rate of the long-term Greek
Government bonds is used. The actuarial profits and losses are items of the
company’s rendering obligation and the cost which will be recognized in the Income
Statement. Those arising from adjustments based on historical data that are higher or
lower than the 10% margin of the accumulated obligation are recorded in the Income
Statement within the anticipated average insurance time of the participants to the
plan. The cost of previous service is recognized directly in the Income Statement,
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
20
except for the case where the changes in the plan are dependent upon the remaining
time of service of the employees. In this case, the cost of previous service is recorded
in the Income Statement using the straight-line method within the maturity period.
Employee termination benefits: Benefits due to termination of the employment relationship
are paid when employees leave before their normal retirement date. The Group records such
benefits when it is committed, either when it actually terminates the employment of current
employees based upon a detailed formal plan for which there is no possibility of withdrawal,
or when it provides these benefits as an incentive for voluntary (early) redundancy. When
these benefits are due for payment in periods exceeding twelve months from the Balance
Sheet date, then they should be discounted according to the returns of high quality company
bonds or government bonds. In case of an offer made to encourage voluntary redundancy, the
valuation of employment termination benefits should be based upon the number of employees
expected to accept the offer. In case of an employment termination where the number of
employees that will be using those benefits cannot be determined, no recording takes place
but a notification as a contingent liability instead.
Finally, some of the employees as well as the Investment advisor are entitled to a bonus
payment based on the company’s performance as it is described in the ”priority of payments”
as described in the documentation for the private placement of the employer through the issue
of € 105 mln of Bonds and € 45 mln of Preferred shares. This contingent liability will be
recognized when the returns from the investments in the venture capital funds derive.
2.7 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit as reported in the income statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The company’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is recognized 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 recognized for all taxable temporary differences and deferred tax
assets are recognized to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilized. Such assets and liabilities are
not recognized if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences arising on
investments in subsidiaries and associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
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 that are expected to apply in the period when the
liability is settled or the asset realized. Deferred tax is charged or credited to profit or loss,
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
21
except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the company intends to settle its current tax assets and
liabilities on a net basis.
As provided by article 28 paragraph 9b of the law 2842/2000 the company is relieved from
taxation from any kind of income which derives from its investment in venture capital funds
as these are defined in paragraph 2a of the same article (closed-end venture capital funds
(AKES), venture capital companies (EKES) and similar venture capital organizations which
will be established specifically for this purpose and will operate in accordance with the laws
of any Member State of the European Union.
2.8 Tangible assets
Building installations on third parties’ immovable property, held for use in the production or
supply of goods or services, or for administrative purposes, are stated in the balance sheet at
their historic cost, less any subsequent accumulated depreciation and subsequent accumulated
impairment losses.
Furniture and fittings, are stated in the balance sheet at their historic cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Depreciation on the aforementioned tangible assets is charged to the income statement so as
to write off their cost, over their estimated useful lives, using the straight-line method.
Assets held under finance leases are depreciated over their expected useful lives on the same
basis as owned assets or, where shorter, the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an item of tangible assets is
determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognized in profit or loss.
2.9 Intangible assets
Intangible assets, are stated in the balance sheet at their historic cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
22
2.10 Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognized immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case the impairment loss is treated
as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cashgenerating 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 recognized for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
23
2.11 Financial instruments
Financial assets and financial liabilities are recognized on the company’s balance sheet when
the company becomes a party to the contractual provisions of the instrument.
Trade Receivables.
Trade receivables are measured at initial recognition at fair value, and are subsequently
measured at amortized cost using the effective interest rate method. Appropriate allowances
for estimated irrecoverable amounts are recognized in profit or loss when there is objective
evidence that the asset is impaired. The allowance recognized is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the effective interest rate computed at initial recognition.
Investments.
Investments are recognized and derecognized on a trade date basis where the purchase or sale
of an investment is under a contract whose terms require delivery of the investment within the
timeframe established by the market concerned, and are initially measured at fair value, plus
directly attributable transaction costs.
Investments are classified as either investments carried at fair value through
income
statement or investments available-for-sale, and are measured at subsequent reporting dates at
fair value. For available-for-sale investments, gains and losses arising from changes in fair
value are recognized directly in equity, until the security is disposed of or is determined to be
impaired, at which time the cumulative gain or loss previously recognized in equity is
included in the profit or loss for the period. For investments carried at fair value though the
income statement, originating from changes in the fair value are included in the profit or loss
for the period.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term
highly liquid investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the company are classified according to
the substance of the contractual arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of its liabilities.
Preferred stock
A derivative is embedded in preferred stock, since the payment of the additional return
depends on the return of investments in venture capital mutual funds in which part of the
issue has been invested to. It is not possible for the company to measure the embedded
derivative since the value of the financial instrument does not depend on the market price of
economic units quoted in an organised market, in which case there would have been a distinct
measurement for the derivative and the preferred stock.
In view of the fact that the embedded derivative does not depend on the market price of
economic units quoted in an organised market and it is not possible to proceed with a reliable
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
24
estimate for the whole financial instrument (i.e. preferred stock and the embedded derivative),
the whole financial instrument is reflected in the financial statements at historic cost.
Bond issue
A derivative is embedded in the bond issue, since the payment of the additional return
depends on the return of investments in venture capital mutual funds in which part of the
issue has been invested to. It is not possible for the company to measure the embedded
derivative since the value of the financial instrument does not depend on the market price of
economic units quoted in an organised market, in which case there would have been a distinct
measurement for the derivative and the bond issue.
In view of the fact that the embedded derivative does not depend on the market price of
economic units quoted in an organised market and it is not possible to proceed with a reliable
estimate for the whole financial instrument (i.e. the bond issue and the embedded derivative),
the whole financial instrument is reflected in the financial statements at historic cost.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at
amortized cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct
issue costs.
2.12 Provisions
Provisions are recognized when the company has a present obligation as a result of a past
event, and it is probable that the company will be required to settle that obligation. Provisions
are measured at the Board’s best estimate of the expenditure required to settle the obligation
at the balance sheet date, and are discounted to present value where the effect is material
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
25
2.13 New and amended accounting standards and interpretations of IFRIC
2.13.1. Standards, adjustments and explanations for existing standards used , that are
not applicable for the Company.
The following standards, adjustments and revisions are in effect for 2008, but are not
applicable for the Company.
IFRIC 11: IFRS 2- Group and Treasury Share transactions
IFRIC 11 provides instructions on whether grants agreements depending on shares value must
be considered as payments in cash or equity instruments in the financial statements. This is an
important distinction as there are significant differences in the accounting treatment required.
For example, payments in cash are measured at fair value on each balance sheet date. On the
contrary, in the equity instruments payments fair value is established on the date of the grant
and recognized in the period in which the relevant service is provided.
Despite the fact that IFRIC 11 focuses on payments to the personnel based on equity
instruments its logic can also be applied to other similar transactions with goods and services
providers. Entities ought to implement this interpretation for periods starting on or post March
1st 2007.
IFRIC 12: Service Concession Agreements
IFRIC 12 provides instructions on accounting handling of agreements in which (i) a public
sector entity (‘grantor’) grants contracts for public services provision to private sector
professionals (‘operators’) and (ii) these services provided presuppose the use of
infrastructure by the operator (private business). IFRIC 12 does not cover all types of
concession services. It only applies for agreements between the public and private sector in
the framework of which the operator uses the infrastructure. Consequently, it does not cover
concession agreements between private sector corporations. The Guide to the Application of
IFRIC 12 clarifies that these regulatory authorities or the service control do not condition that
the grantor has full control of the pricing or the infrastructure mode of use. Therefore,
subjective judgment is required for some cases in order to define if these fall within the
Interpretation scope.
Agreements not falling within the scope of IFRIC 12 shall have to be handled according to the
rest of the IFRS.
Agreements within the framework of which the operator controls the infrastructure may lead
to a recognition of its assets according to IAS 16 or constitute a lease (according to IFRIC 4).
IFRIC 12 applies for annual periods beginning on or post January 1st 2008.
IFRIC 13: Customer Loyalty Programmes
Customer loyalty programmes provide customers with incentives in order to purchase a
corporation's products or services. If the customer purchases products or services, the
corporation grants him award credits, which the customer can buy off in the future to acquire
products or services free of charge or at a reduced price. These programmes may be applied
by the corporation itself or a third party. IFRIC 13 may apply to all customer loyalty
programme award credits a corporation can grant to its customers as part of a sale transaction.
IFRIC 13 shall apply mandatorily for periods beginning on or post July 1st 2008.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
26
IFRIC 14: IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
IFRIC 14 covers the interaction between the minimum funding requirements (usually
enforced by laws and regulations) and the defined benefit asset measurement. The issue of
IFRIC 14 is only related to few cases of defined retirement benefits programmes which are
"in surplus" or are subject to minimum funding requirements. Among others, it deals
specifically with the concept "available" used in IAS 19. In general, the Interpretation
explains that a financial benefit is available if the corporation has the unreserved right to
recognise the benefit during or upon the defined benefits programme arrangement. The asset
recognition does not depend on whether the financial benefits are immediately recognisable
on the balance sheet date or on how it intends to use any surplus. The Interpretation also deals
with the accounting management of a liability for the minimum funding requirements
resulting from services already received by the corporation. IFRIC 14 applies for periods
beginning on or post January 1st 2008.
Amendments in I.A.S. 39 and IFRIC 7 – Reclassification of Financial Assets
Amendments in I.A.S. 39 allow in some cases the reclassification of non derivative financial
assets from the trade investments category to other categories, as well as the reclassification
of financial assets from the category available for sale to loans and receivables. The
amendments to IFRIC 7 require additional disclosures in the financial statements of
organizations that apply the previously mentioned amendments in I.A.S. 39.The amended
version of IAS 39 and IFRIC 7 are in effect for year beginning on or after 1st July 2008.
2.13.2. Accounting standards, amendments and interpretations in existing accounting
standards which are not yet in effect and have not been adopted.
A brief overview of new Standards, Revisions of Standards and interpretations on the current
standards that have been published but are not compulsory for the presented financial
statements, and which have not been adopted earlier by the company is presented below:
IAS 23: Borrowing Costs
The revised IAS 23 abolishes the designation of the immediate recognition as a borrowing
cost expense regarding the acquisition, construction or production of a fixed asset. The
characteristic of this fixed asset is that a significant time period is required in order to reach a
ready for use or sale status. A corporation, however, is required to capitalise such borrowing
costs as part of the fixed asset costs. The revised standard does not require borrowing costs
capitalisation related to fixed assets and measured at the fair value and reserves manufactured
or produced in large quantities systematically, even if a significant time period is required in
order to reach a ready for use or sale status. The revised Standard applies for borrowing costs
related to fixed assets meeting the conditions and its effective date shall be on or post January
1st 2009.
IAS 1: Presentation of Financial Statements
The main changes of this Standard consist in the separate presentation of the net worth
changes due to transactions with the shareholders in their capacity as shareholders (e.g.
dividends, capital increases) from the other net worth changes (e.g. conversion reserves).
Furthermore, the improved version of the Standard brings changes to the terminology, as well
as to the financial statements presentation. The new Standard definitions, however, do not
change the recognition, measurement or disclosure rules of certain transactions or other
events required by the other Standards. IAS 1 amendment is mandatory for the periods
starting on or post January 1st 2009, while these requirements shall also apply to IAS 8
"Accounting Policies, Changes in Accounting Estimates and Errors".
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
27
-IFRS 2, Share based payment: “vesting conditions and cancellations” – Amendment
The amendment clarifies two issues: The definition of ‘vesting condition’, introducing the
term ‘non-vesting condition’ for conditions other than service conditions and performance
conditions. It also clarifies that the same accounting treatment applies to awards that are
effectively cancelled by either the entity or the counterparty. The Company expects that this
Interpretation will have no impact on its financial statements. The amended IFRS 2 becomes
effective for financial years beginning on or after January 2009.
-IFRS 3, ‘Business Combinations’ and IAS 27-28 & 31 ‘Consolidated and Separate
Financial Statements’ –Revised
As regards IFRS 3, this will apply to business combinations occurring in those periods and its
scope has been revised to include combinations of mutual entities and combinations without
consideration (dual listed shares). IFRS 3 and IAS 27, inter alia, require greater use of fair
value through the income statement and cement the economic entity concept of the reporting
entity. Furthermore, these standards also introduce the following requirements (i) to
remeasure interests to fair value when control is obtained or lost, (ii) recognizing directly in
equity the impact of all transactions between controlling and non-controlling shareholders
where loss of control is not lost and, (iii) focuses on what is given to the vendor as
consideration rather than what is spent to achieve the acquisition. More specifically, items
such as acquisition related costs, changes in the value of the contingent consideration, sharebased payments and the settlement of preexisting contracts will generally be accounted for
separately from the business combination and will often affect the income statement. The
revisions to the Standards have not yet been endorsed by the EU. The revised IFRS 3 and IAS
27 become effective for financial years beginning on or after January 2009.
I.A.S. 27 Consolidated Financial Statements and Accounting for Investment in
Subsidiaries
The revised standard brings changes to the accounting treatment concerning the loss of
control in a subsidiary and to the financial cost in subsidiaries. Management does not expect
this to have a material impact on the Company’s financial statements.
-IAS 32 and IAS 1 Puttable Financial Instruments - Amendment
The amendment to IAS 32 requires certain puttable financial instruments and obligations
arising on liquidation to be classified as equity if certain criteria are met. The amendment to
IAS 1 requires disclosure of certain information relating to puttable instruments classified as
equity. The Company does not expect these amendments to have an impact on its financial
statements. The amendment to IAS 32 becomes effective for financial years beginning on or
after January 2009.
-IAS 39 Recognition and Measurement
The amendment clarifies that an entity is permitted to designate a portion of the fair value
changes or cash flow variability of a financial instrument as a hedged item. An entity can
designate the changes in fair value or cash flows related to a one-sided risk as the hedged item
in an effective hedge relationship. The Company does not expect this amendment to have an
impact on its financial statements. The amendment to IAS 39 becomes effective for annual
periods beginning on or after 1st July 2009.
-IFRS 8, Operating Sectors
IFRS 8 replaces IAS 14 and sets different disclosure requirements regarding the information
by activity sectors. IFRS 8 is effective from the 1st January 2009 and is not expected to be
adopted by the Company.
Annual Improvements in 2008
The IASB issued in 2008 the publication “Improvements to IFRS 2008” The majority of these
amendments are effective for periods beginning on or after January 1, 2009. The Company
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
28
does not expect that the amendments to IAS 23 Borrowing Costs will affect the Company’s
accounting policies. The amendment clarifies the definition of borrowing costs in relation to
the effective interest rate method. This amendment comes into effect on January 1,
2009,onwards, however management’s estimations indicate that the effect will not be
significant. Minor amendments have been made to several Standards but the management
does not expect that there will be any material impact on the Company’s financial statements.
-IFRIC 15, Agreements for the Construction of Real Estate
IFRIC 15 is effective for annual periods beginning on or after 1 January 2009 and must be
applied retrospectively. IFRIC 15 provides guidance on how to determine whether an
agreement for the construction of real estate is within the scope of IAS 11 'Construction
Contracts' or IAS 18 'Revenue' and, accordingly, when revenue from such construction should
be recognized. The IFRIC is not expected to be applied by the Company. This Interpretation
has not yet been endorsed by the EU.
-IFRIC 16, Hedges of a Net Investment in a Foreign Operation
IFRIC 16 clarifies three main issues:
Whether risk arises from (a) the foreign currency exposure to the functional currencies of the
foreign operation and the parent entity, or from (b) the foreign currency exposure to the
functional currency of the foreign operation and the presentation currency of the parent
entity's consolidated financial statements.
IFRIC 16 concludes that the presentation currency does not create an exposure to which an
entity may apply hedge accounting. Consequently, a parent entity may designate as a hedged
risk only the foreign exchange differences arising from a difference between its own
functional currency and that of its foreign operation.
Which entity within a group can hold a hedging instrument in a hedge of a net investment in a
foreign operation and in particular whether the parent entity holding the net investment in a
foreign operation must also hold the hedging instrument.
IFRIC 16 concludes that the hedging instrument(s) may be held by any entity or entities
within the group.
How an entity should determine the amounts to be reclassified from equity to profit or loss for
both the hedging instrument and the hedged item when the entity disposes of the investment.
IFRIC 16 concludes that while IAS 39 must be applied to determine the amount that needs to
be reclassified to profit or loss from the foreign currency translation reserve in respect of the
hedging instrument, IAS 21 must be applied in respect of the hedged item.
IFRIC 16 is effective for annual periods beginning on or after October 1st 2008. An entity
may choose to apply IFRIC 16 retrospectively or prospectively. Earlier application is
permitted.
IFRIC 17: Distributions of Non-cash Assets to Owners
When an entity announces the distribution of dividends and has the obligation to distribute a
part of its assets to its owners, it should recognize a liability for those dividends payable. The
purpose of IFRIC 17 is to provide guidance on when a company should recognize dividends
payable, how to calculate them and how it should record the difference between the book
value of the net assets distributed and the book value dividend payable when the dividends
payable are paid by the entity. IFRIC 17 “Distributions of Non-cash Assets to Owners” is
effective prospectively for annual periods starting on or after 01/07/2009. Earlier application
of the Interpretation is allowed provided that it will be disclosed in the notes to the financial
statements and at the same time applies IFRS 3 (as revised in 2008), IFRS 27(as revised in
May 2008) and IFRS 5 (as revised by the present Interpretation). Retrospective application is
not allowed. The Company is in the process of assessing the impact of this interpretation on
its financial statements. This Interpretation has not yet been endorsed by the E.U
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
29
IFRIC 18: Transfers of Assets from Customers
IFRIC 18 mainly applies to entities or organizations that provide services of general interest.
The purpose of IFRIC 18 is to clarify the IFRS requirements regarding the agreements where
an entity receives from a client part of a tangible asset (land, buildings, equipment) which the
entity must use in order for the customer to be part of a network or in order for the customer
to acquire continuous access to the supply of products or services (i.e. supply of water or
electricity).In some cases, the entity receives cash from a customer which must be used only
to acquire or construct the item of a facility in order to connect the customer to a network or
provide the customer with ongoing access to a supply of goods or services (or to provide
both).The IFRIC clarifies the circumstances under which the definition of an asset is met, the
recognition of the asset and the measurement of its initial cost. Furthermore it sets the method
for the determination of the obligation for the provision of the said services in return for the
asset as well as the method of recognition of the revenue and the accounting for cash
collections from customers.
IFRIC 18 Transfers of Assets from Customers is effective for annual periods starting on or
after 01/07/2009.
All of the above new and amended accounting standards and interpretations of IFRIC are not
expected to have a significant influence on TANEO’s financial statements.
3 Risk Management
The Company is exposed to various financial risks, the most important being market risk, in
other words the risk of changes in interest rates and market prices, liquidity risk and credit
risk.
The general risk management policy of the Company focuses on credit risk and market risk
management.
Risk management is performed through the various business operations of the Company.
The approval of the executives that bind the company is required prior to carrying out
transactions
3.1 Market risk
Foreign Currency Risk
Exchange rate risk means the investment risk assumed, which arises from unfavourable
changes in currency prices, when there is exposure to a specific currency.
It does not affect Company’s operations significantly as foreign currency transactions do not
exist.
Interest Rate Risk
Interest rate risk means the investment risk assumed, which arises from changes in the market
in money interest rates.
Such interest rate changes can affect the Company’s financial position since the following can
also change:
- The net interest rate result
- The value of income and expenses sensitive to interest rate changes
- The value of assets and liabilities since the present value of future cash flows (and
frequently the cash flows themselves) change as interest rates change.
This kind of risk is related with the bond that the Company issued and is analyzed in
paragraph 4.17. The bond issue is guaranteed by the Greek State and may be traded in the
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
30
Dublin Stock Exchange. The guaranteed interest rate is floating and, thus, the company is
exposed to cash flow interest rate risk.
The table below presents the income statement and equity sensitivity at a normal rate
volatility by +0,5% or -0,5%. Changes in interest rates are set to be on a rational footing in
relation to recent market conditions.
2008
Amounts in thousands Euro
0,5%
-0,5%
Income Statement
Equity
2007
Amounts in thousands Euro
0,5%
-0,5%
99
-99
131
-131
99
-99
131
-131
3.2 Liquidity risk
Liquidity risk means the possible inability of the Company to fully repay in due time its
current or future financial obligations –when they become due- due to a lack of necessary
liquidity. This risk includes the possibility of a need to refinance amounts at a higher interest
rate and the need to sell off assets.
This kind of risk is also related with the bond that the Company issued and is analyzed in
paragraph 4.17. More specifically it is related to the 6-month payment of the guaranteed
interest and the repayment of the principal balance of the note at June 2013. Liquidity is also
related to the timing and the amount of returns from the investments in venture capital funds
(AKES).
The Company carefully monitors its long term financial liabilities and liquidity needs and it
maintains adequate funds to cover its current and future needs.
st
st
The financial liabilities maturity on December 31 2008 and December 31 2007 for the
Company was the following:
31-12-08
Amounts in thousands Euro
Short term
Long term
Within 6 mothns
6-12 months
1-5 years
Later than 5
years
Preferred stock
Bond loan
Other liabilities
45.000
45.000
105.000
105.000
412
412
31-12-07
Amounts in thousands Euro
Short term
Long term
Within 6 mothns
6-12 months
1-5 years
Later than 5 years
615
0
0
150.000
615
0
0
150.000
3.3 Credit Risk
Credit risk derives from breach of obligations by debtors to repay all or part of their debt
within contractual deadlines
The main financial assets of the company refer to bank balances and receivables from nonGreek mutual funds (money market funds).
The credit risk on liquid funds is limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating agencies of mutual funds traded in stock
exchange markets.
Consequently, the company has no significant concentration of credit risk.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
31
4
Notes and analysis of the financial statements
4.1 Credit Interests and related expenses
31.12.2008
31.12.2007
Amounts in thousands Euro
Interest from securities (Money market
funds)
Interest from securities (Repos)
5.512
29
5.542
5.089
28
5.117
The aforementioned interest revenue amounting to Euro 5.512 thous. originates from
investments in non-Greek mutual funds. More information is provided in note 4.11.
4.2 Gains from FVTPL Investments
31.12.2008
31.12.2007
Amounts in thousands Euro
Capital Connect
Zaitech Fund
IBG Hellenic Fund II
323
212
58
594
330
0
371
701
The Gain from Capital Connect refer to a distribution due to a realization of one of its
portfolio companies named “Krokos Kozanis”. The capital part of this distribution is
deducted from the book value of the fund.
The Gain from IBG Hellenic Fund II is analyzed as follows:
a) Distribution of Euros 13 thous. concerning credit interest. b) Distribution of Euros 29
thous. concerning bond interests from one of its portfolio companies named Mobile
Technologies c) Distribution of Euros 16 thous. concerning bond interests from one of its
portfolio companies named Autostop
The Gain from Zaitech Fund is analyzed as follows:
a) Distribution of Euros 90 thous. concerning credit interest. b) Distribution of Euros 15
thous. concerning capital gains from secondary sale of 17.000 stocks of one its portfolio
companies named Mediterra c) Distribution of Euros 77 thous. concerning dividends from
one of its portfolio companies named Doppler, d) Distribution of Euros 30 thous.
concerning capital gains from secondary sale of 38.534 stocks of Doppler.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
32
4.3 Increase / (Decrease) in Fair Value Investments
31.12.2008
31.12.2007
Amounts in thousands Euro
Zaitech Fund
IBG Hellenic Fund II
Increase in Fair Value
872
5.574
6.446
111
0
111
IBG Hellenic Fund II
Capital Connect
AXON - TANEO
Thermi - TANEO
Alpha - TANEO
Oxygen - TANEO
Give - TANEO
Pireos - TANEO
New Mellon - TANEO
FG RES - TANEO
Decrease in Fair Value
0
(185)
(54)
(273)
(296)
(91)
(159)
0
0
0
(1.058)
(316)
(242)
(29)
0
0
0
0
0
0
0
(586)
5.388
(475)
Net Result from Valuation of
Investments
The increase in Fair Value Investments is due to unrealized gains and is analyzed as follows:
a) The increase in Zaitech Fund is mainly due to the listing of three of its portfolio
companies (Mediterra, Doppler & Performance Technologies) to the alternative market of
the Athens Stock Exchange
b) The management team of IBG Hellenic Fund II proceeded to a significant upside
valuation of its investments in the renewable energy sector due to the maturation of these
projects. The fund’s management believes that applications will turn to permits with some
degrees of confidence. The valuation is based on a thorough DCF technique for each
project. The annual report of the fund is audited by the Fund’s external auditor. TANEO’s
management would like to notice that due to the nature of such projects the final outcome
retains the limitations of the applied valuation techniques.
The decrease in Fair Value Investments is due to the charge of management fees of the
aforementioned funds.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
33
4.4 Debit Interest and related expenses
The “Debit Interest and related expenses” amount is analyzed as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Interest expenses on the
bond issue
5.063
4.296
Amortization on the
issue and restructuring
expenses of the bond
626
626
Additional Return on the
bond issue
430
Other expenses
11
6.130
12
4.935
The additional return charge refers to 2008 and 2007 periods. This amount has been actually
disbursed from TANEO’s accounts during 2008.See also paragraph 4.16
4.5 Provisions
The amount of Euro 742 thous. refers to additional return charges for the period 2003-2006
according the bond contract. See also paragraph 4.17
4.6 Other Operating expenses
The “Other operating expenses” amount is analyzed as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Investment advisor fees
Trustee fees
Cash management fees
BOD fees
Lawyers fees
Auditors fees
Accountants fees
Communication expenses
Leasing expenses
Travel expenses
Advertising and promotion expenses
Insurance fees
Other Overheads
146
13
22
123
75
30
24
18
106
33
148
11
59
808
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
150
8
22
151
7
28
23
15
81
26
58
11
63
644
34
4.7 Income tax (Deferred tax)
31.12.2008
31.12.2007
Amounts in thousands Euro
Current tax
Deferred tax (Release) / Burden
Income tax for the period
0
(312)
(312)
0
223
223
The income tax for the period reconciles to the period’s profit/loss as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Profit / (Loss) before taxes
Income tax rate
Income Tax according to the applied
tax rate
Tax Effect from the change of tax rates
Deffered tax difference from previous
years
Tax Effect on tax-exempt income
Tax effect on non-deductible expenses
Income tax expense / (gain) for the
period
3.504
25%
(614)
25%
876
(154)
(156)
0
0
379
(3.147)
(1.483)
2.115
1.480
(312)
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
223
35
4.8 Tangible assets
Leashold
Improvements
Furniture and
office equipment
Total
Amounts in thousands Euro
Book Value
1st Januray 2007
Additions
1st Januray 2008
Additions
31st December 2008
63
0
63
16
79
138
6
144
5
149
201
6
207
20
227
63
0
63
0
63
129
6
135
5
140
192
6
198
5
203
31st December 2007
0
9
9
31st December 2008
15
9
25
Accumulated Depreciation
1st Januray 2007
Additions
1st Januray 2008
Additions
31st December 2008
Net Book Value
The following rates are used for the depreciation of tangible assets:
Building installations on third parties’ immovable property: 33.33%.
Furniture and fittings: 20-30%.
4.9 Investments carried at fair value through the income statement
31.12.2008
31.12.2007
Amounts in thousands Euro
Investments in venture capital funds
(AKES)
24.335
7.468
An analysis of the participations in venture capital funds (AKES) is provided below:
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
36
Distributions from realized
investments (Capital part)
Contributions to Funds
Fund Name
Untill
31.12.2008
2008
Untill
31.12.2008
2008
(1)
Capital Connect
Increase / (decrease) in Fair
Value
2008
(2)
Untill
31.12.2008
Investments
Carried at
Fair Value at
31.12.2008
(3)
4=(1)-(2)+(3)
250
4.017
750
1.250
-185
-1.933
834
Zaitech Fund
2.625
7.739
39
39
872
307
8.007
IBG Hellenic Fund II
1.980
4.463
0
719
5.574
4.914
8.658
AXON - TANEO
2.550
3.000
0
0
-54
-209
2.791
Thermi - TANEO
599
599
0
0
-273
-273
326
2.940
2.940
0
0
-296
-296
2.644
75
75
0
0
-91
-91
-16
Give - TANEO
500
500
0
0
-159
-159
341
Piraeus - TANEO
750
750
0
0
0
0
750
0
0
0
0
0
0
0
Alpha - TANEO
Oxygen - TANEO
New Mellon - TANEO
TANEO FG RES
Fund Name
0
0
0
0
0
0
0
12.268
24.084
789
2.009
5.388
2.260
24.335
Commitments
as 31.12.2008
Total
Contributions
untill
31.12.2008
(1)
(2)
Total
Distributions
untill
31.12.2008
Remain to be
invested as
31.12.2008
% Particip.
Closing Date
49,99%
May-03
5.767
4.017
1.904
1.750
Zaitech Fund
49,99%
Sep-08 (2nd
Closing)
20.000
7.739
252
12.261
IBG Hellenic Fund II
49,99%
Nov-04
8.530
4.463
1.347
4.067
AXON - TANEO
49,99%
Jun-08 (2nd
Closing)
19.999
3.000
0
16.999
Thermi - TANEO
49,90%
Mar-08
11.976
599
0
11.377
Alpha - TANEO
49,00%
Jun-08
14.700
2.940
0
11.760
Oxygen - TANEO
49,99%
Nov-08 (2nd
Closing)
14.998
75
0
14.923
Give - TANEO
49,99%
Sep-08
10.000
500
0
9.500
Piraeus - TANEO
49,99%
Dec-08
15.000
750
0
14.250
New Mellon TANEO
49,99%
Dec-08
7.500
0
0
7.500
TANEO FG RES
49,99%
Dec-08
Capital Connect
3=(1)-(2)
11.997
0
0
11.997
140.466
24.084
3.502
116.383
Notes:
(1) Capital Connect's investment period ended at October 2008. The "remain to be invested" amount refers to potential follow on existing invesments
of the fund and does not constitute a contractual obligation for TANEO.
(2) AXON-TANEO Fund is the successor of Pancreta Fund. AXON Holdings purchased the shares of the Pancreta Bank both in the fund itself and in
the management company. The total size of the fund was raised to €40m. instead of the initial size of €6m.
The aforementioned participations amounting to Euro 24.335 thous. refer to participations in
AKES of limited duration as provided by article 7 of L.2992/2002.
The purpose of the A.K.E.S. is to invest in innovative companies, which are registered and
based in Greece and which are, preferably, active in sectors of the new economy, and in
companies whose competitive advantage arises from technology applications of the new
economy.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
37
Investments will be made exclusively in small or medium sized enterprises and preferably,
but not exclusively in their start up or early stage of operations.
No investment is allowed in enterprises that have issued securities traded in an organized
market as dictated by article 1 of the Directive 93/22/EEC. The investment in enterprises
whose securities are traded in an organized market, as above, is allowed only if the
participation has preceded the approval of the listing by the relevant authorities and the
A.K.E.S. transfers its investment within five (5) years, at the most, from the commencement
of the trading of the securities of the enterprise.
The investment policy of the A.K.E.S. aims to achieve profits for the unit holders, in
particular by enjoying a stable income on the invested capital, in the form of interest income,
by appropriating part of the profits of the investees for the benefit of the unit holders and by
realizing capital gains from the liquidation of the investments.
The net assets of A.K.E.S are allocated to equal shares.
The payment for the participation in an A.K.E.S is made in cash instalments deposited with
the Custodian of the mutual fund.
The unit holders undertake the commitment to effect the payment in cash of any outstanding
installments of their participation within ten (10) working days from the date the Manager
requests so in writing.
TANEO will deposit the amount corresponding to its contribution only after the rest of the
unit holders have deposited the amount corresponding to their contribution, as requested by
the Manager, and a written confirmation is obtained from the Custodian thereon, that will be
handed over to TANEO by the Manager.
TANEO has undertaken the commitment to participate in every capital increase of the
A.K.E.S. that takes place by existing or new unit holders. The amount of its participation will
be equal to the amount raised through the participation increase of the existing or new unit
holders minus one euro (€1).
The shares of the A.K.E.S. are transferable under certain conditions.
In the form of a penal clause, it is provided that in the case of delinquency of a unit holder to
effect the contribution of the whole or part of his outstanding commitment towards the
A.K.E.S. for a period longer than thirty (30) days after receiving notification by the
Custodian his units are passed on, with no remuneration, to the other unit holders
proportionally to their participation in the A.K.E.S.
The aforementioned investments are classified as investments at fair value through the profit
or loss at their initial recognition and subsequently are also measured at fair value. The
investments in venture capital funds are not quoted in an organized market and therefore
TANEO relies on the audited annual reports of the funds for determining their fair value. The
responsibility for the preparation of funds’ annual reports relies on the fund’s management.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
38
4.10 Other Non-Current Assets
The “ Other Non-Current Assets” amount is analyzed as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Guarantee on Leashold property
Guarantee on company cars
Other Non-Current Assets
9
6
13
6
-3
12
-3
16
4.11 Investments available for sale
Investments available for sale refer to:
31.12.2008
31.12.2007
Amounts in thousands Euro
Investments in mutual funds (Money
market funds)
115.965
128.234
The Money Market Funds are investments which are listed but not traded in a non-Greek
stock market. The mutual fund invests in fixed return securities and, consequently, the return
for the company is not subject to significant fluctuations.
The participation is effected by using cash funds deposited with the company’s bank account.
The remainder of such cash funds is restricted with the purpose to cover the payments of the
company associated to the bond issue of Euro 105 million issued on the 3rd of June 2003.
The aforementioned investments provide the company with the opportunity to derive interest
income. Such investments have fixed maturity and eligibility to interest collection. The fair
value of these mutual funds is based on market prices in an organised market.
The valuation of the aforementioned mutual funds is made at cost that approximates their fair
value. The accrued interests of these investments are included in the “Other Receivables”
account.
4.12 Other receivables
31.12.2008
31.12.2007
Amounts in thousands Euro
Accrued interest (income)
Prepaid expenses
Other debtors
386
29
6
421
464
76
3
543
The Board is of the opinion that the carrying value of the aforementioned items approximates
their fair value of such items.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
39
4.13 Cash and cash equivalents
31.12.2008
31.12.2007
Amounts in thousands Euro
Short-term Bank deposits
(Demand Deposits)
Short-term Bank deposits (1month repos)
Portfolio Income Account
46
126
850
900
1.937
2.832
1.628
2.655
The Portfolio Income Account consists of a Bank deposit maintained by Deutsche Bank. This
account receives all the amounts payable to TANEO in respect of its participation in Venture
Capital Funds plus the interest income for Money Market Funds Accounts (see par 4.11) . Its
balance is available to TANEO to meet payments in accordance with condition 3 of the Bond
Issue.
The carrying value of these assets approximates their fair value.
4.14 Share Capital
31.12.08
31.12.07
Amounts in thousand Euro
Authorised:
20,000 common shares of par value Euro 50
each
Issued and fully paid:
At the beginning of the period
At the end of the period
1.000
1.000
1.000
1.000
1.000
1.000
An analysis of the Share Capital as reflected in the Articles of Incorporation of the company
is as follows:
1.
The share capital on the establishment of the company was determined to be one
hundred million (100,000,000) drachmas represented by ten thousand (10,000 shares of par
value ten thousand (10,000) drachmas each which was issued and paid by the Greek State.
2.
On the 22nd Of January 2002 the Extraordinary General Meeting of Shareholders
decided:
(a)
the denomination of the par value and the share capital of the company in Euro,
pursuant to the provisions of article 12 of L.2842/2000 and the increase in the par value of
shares by Euro 20.652972 by cash contributions.
(b) the increase in the share capital of the company by cash contributions and for an
amount of five hundred thousand (500,000) Euro represented by ten thousand (10,000) new
registered shares of par value fifty (50) Euro each.
Thus the share capital of the company amounted to one million (1,000,000) Euro represented
by twenty thousand (20,000) shares of par value 50 each.
3.
On the 3rd of June 2003, the Extraordinary General Meeting of Shareholders decided
the share capital increase by forty five million (45,000,000) Euro by cash contributions and
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
40
the issuance of nine hundred thousand (900,000) new preferred shares without voting rights
of par value fifty (50) Euro each. Information on the accounting treatment of preferred stock
is provided in Note 4.16.
4.
Thus the share capital of the company currently amounts to forty six million
(46,000,000) Euro represented by nine hundred and twenty thousand (920,000) shares of par
value 50 Euro each, of which twenty thousand (20,000) shares represent common stock with
voting rights. The rights associated to the preferred stock are determined in article 5a of the
Articles of Incorporation.
4.15 Retained Earnings / (Accumulated loss)
Retained Earnings /
(Accumulated losses)
Amounts in thousands Euro
2007
Balance 1.1.2007
-9.063
Profit / (loss) for the period
Balance 31.12.2007
-837
-9.900
2008
Balance 1.1.2008
Profit / (loss) for the period
Balance 31.12.2008
-9.900
3.817
-6.084
Due to the adoption of I.A.S. – I.F.R.S., the preferred shares of a nominal value of
45,000,000 Euro issued by the company have been classified as liabilities instead of equity
(see below note number 4.16). As a result, the total equity of the company is negative. In
view of this, the company examined whether there arises any issue of application of articles
47 and 48§1 subpara. c of Codified Law 2190/1920 concerning the mandatory calling of the
Shareholders General Assembly in order to adopt measures and the revocation by the State of
the license of incorporation of the company (respectively). According to the company’s
management and according to a legal opinion issued by a Professor of Athens University Law
School, the preferred shares, for the purposes of articles 47 and 48§1 subparagraph c of
Codified Law 2190/1920, must be classified as equity, even if, according to IAS – IFRS,
those shares must be classified under liabilities in the annual financial statements. As a result,
the calculation of the equity of the company for the purposes of articles 47 and 48§1 subpara.
c of Codified Law 2190/1920 must include the preferred shares of the company. Given the
fact that the paid and certified share capital of the company amounts to 46,000,000 Euro (i.e.
1,000,000 Euro divided in twenty thousand (20,000) common registered shares of a nominal
value of 50 Euro each, and 45,000,000 Euro divided in nine hundred thousand (900,000)
preferred registered shares of a nominal value of 50 Euro each), the equity of the company on
31.12.2007 is not less than half nor less than one tenth of the share capital. Consequently, the
requirements for a mandatory calling of the Shareholders General Assembly in order to adopt
measures, as provided by article 47 of Codified Law 2190/1920 are not met; neither does the
issue of revocation by the State of the license of incorporation of the company, as provided
by article 48§1 subpara. c of the same law, arise. The company underlines that in any case
there is substantial liquidity to meet its obligations and, therefore, no going concern issue is
applicable.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
41
4.16 Preferred Stock
1.
The nine hundred thousand (900,000) preferred shares without voting rights which
were issued with the decision of the Extraordinary General Meeting of Shareholders dated 3
June 2003 (hereafter referred to as “Preferred Shares”) was determined to be issued at par and
be paid in instalments, pursuant to the provisions of article 12 of L.2190/1920 as follows:
(a)An amount of Euro two million six hundred thousand (2,600,000) on the date of the
issuance.
(b)The remaining amount of forty two million and four hundred thousand 42,400,000
Euro was determined to be paid as follows:
(i) an amount of nineteen million and four hundred thousand (19,400,000) Euro until
the 30th of June 2003,
(ii) an amount of eight million (8,000,000) Euro until the 30th of June 2004 and
(iii) an amount of fifteen million (15,000,000) Euro until the 30th of June 2005.
The total amount of the par value of the Preferred Shares has been paid by the Greek State.
2.
The preference rights of the Preferred Shares are as follows:
(a) The Preferred Shares are entitled to receive interest calculated per annum at a
percentage of the paid up par value of each preferred share (i.e. of the sum which is,
from time to time, paid up in accordance with the terms of payment of the value of
each Preferred Share in installments pursuant to paragraph 1 hereof). The above
percentage shall consist of the aggregate of:
(i) a rate of interest equal to the Guaranteed Interest Rate
(ii) a rate of interest equal to the Additional Return Rate
The said amount of interest shall be payable cumulatively on the Final Maturity Date
or Early Redemption Date, subject to sufficient funds being available under Condition
3 of the Bond Issue.
(b)In addition, the Preferred Shares shall be entitled to receive part of the net income,
as described in Condition 3 of the Bond Issue, of any nature whatsoever, resulting from
the Company’s participation in investment organizations (as defined in article 3 of the
Articles of Association and article 28 paragraph 2 of Law 2843/2000), which includes
the income from the liquidation of the relevant investments. The said income shall be
payable on each Payment Date.
3.
During such time as the Preferred Shares will be entitled to receive the income set out
in the preceding sub-paragraph 2(b), the Preferred Shares will not be entitled to participate in
the Company’s profits other than the income set out in the preceding sub-paragraph 2(b).
4.
On the Final Maturity Date or Early Redemption Date, the Company shall proceed to a
reduction of its capital by the sum of euro forty five million (45,000,000) by way of
acquisition of the entire nine hundred thousand (900,000) Preferred Shares and payment of
their par value subject to available funds being sufficient under Condition 3 of the Bond
Issue.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
42
5.
The following definitions apply for the application of the above
(a)“Bond Issue”: The bond issue in the sum of euro one hundred and five million
(105,000,000) issued by the Company pursuant to a resolution of a general meeting of
its shareholders made on the 3rd June 2003, and executed in London by virtue of
aTrust Deed dated the 3rd June 2003 between the Company, Deutsche Trustee
Company Limited, a company registered in London (as trustee), and the Hellenic
Republic (as guarantor).
(b)“Guaranteed Interest Rate”: The rate referred to under that term (in English:
“Guaranteed Interest Rate”) in Condition 5 of the Bond Issue, and which today equals
to the aggregate of (i) EURIBOR for six month deposits minus (ii) 0,02% per annum,
as will be defined in particular by the bank designated as Agent Bank (in English:
“Agent Bank”) under Condition 5 of the Bond Issue.
(c)“Additional Return Rate”: The rate referred to under that term (in English:
“Additional Return Rate”) in Condition 3 of the Bond Issue, and which today equals to
0,2%.
(d)“Payment Date”: Each date referred to under that term (in English: “Payment Date”)
in the conditions of the Bond Issue and which are defined as the 3rd June and the 3rd
December in each year up to and until the Final Maturity Date or, if Residual
Certificates are issued, up to and until the Residual Certificates Final Maturity Date.
(e)“Final Maturity Date”: The 3rd June 2013 or, if such day is not a Business Day, on
the next Business Day after such date.
(f)“Early Redemption Date”: The date which under the conditions of the Bond Issue,
wherein it is referred to as the “Early Redemption Date”, precedes the Final Maturity
Date subject to the occurrence of certain extraordinary events.
(g)“Residual Certificates”: The securities referred to by the English term “Residual
Certificates” in Condition 8 of the Bond Issue and which may be issued by the
Company in accordance with the said Condition 8 of the Bond Issue.
(h)“Residual Certificates Final Maturity Date”: The date referred to under that term (in
English: “Residual Certificates Final Maturity Date”) in Condition 8 of the Bond Issue
and is today defined at the 3rd June, 2020.
A derivative is embedded in preferred stock, since the payment of the additional return
depends on the return of investments in venture capital mutual funds in which part of the
issue has been invested to. Consequently this financial instrument (i.e. the nominal value of
the preferred stock including the derivative) can not be reliably valuated because a) the
embedded derivative is related with returns of financial organizations not listed in an
organized financial market, b) the investments in venture capital funds (AKES) as 31/12/2008
comprise only 17% of the total commitments, c) the biggest part of these investments has
been realized the last three years. The whole financial instrument is reflected in the financial
statements at historic cost as this method is considered to be the most reliable one.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
43
4.17 Bond issue
On the 30th of June 2003, the company issued a Bond Issue of par value Euro 105 million, of
ten years duration that is represented by 10,500 bonds of par value Euro 10,000 each.
The bond issue is guaranteed by the Greek State and may be traded in the Dublin Stock
Exchange. The guaranteed interest rate is floating and, thus, the company is exposed to cash
flow interest rate risk.
The return which the bond holders are eligible to is determined by (i) the guaranteed by the
Greek State interest rate equal to the six-month EURIBOR reduced by 0,02% (ii) the
additional return that is based on the 0,2% of the par value, providing that there are adequate
funds, according to Term 3 of the contract for the bond issue and (iii) the payment to be
effected by the company on the maturity date or the early redemption date, providing that
there are adequate funds, according to Term 3 of the contract for the bond issue. Term 3 of
the contract for the bond issue refers to the priority in the company’s payments.
A derivative is embedded in the bond, since the payment of the additional return depends on
the return of investments in venture capital mutual funds in which part of the issue has been
invested to. Consequently this financial instrument (i.e. the nominal value of the bond
including the derivative) can not be reliably valuated because a) the embedded derivative is
related with returns of financial organizations not listed in an organized financial market, b)
the investments in venture capital funds (AKES) as 31/12/2008 comprise only 17% of the
total commitments, c) the biggest part of these investments has been realized the last three
years. The whole financial instrument is reflected in the financial statements at historic cost
net of accumulated amortization of issue and restructuring expenses as this method is
considered to be the most reliable one.
The amount of interest expense on the bond issue, excluding the amount charged to the
income statement, is Euro 5.063 thous. and Euro 4.296 thous. for the periods 2008 and 2007
respectively
The nominal value of the bond issue and the expenses associated to the issue and
restructuring reduced by the charges to the income statement, on the basis of the duration of
the loan, as at 31 December 2008 and 2007 are as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Nominal value
Issue and restructuring costs
Carrying amount
105.000
-3.117
101.883
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
105.000
-3.743
101.257
44
4.18 Deferred Tax Liabilities
31.12.2008
31.12.2007
Amounts in thousands Euro
Asset
Liability
Asset
Liability
Long term liabilities
Bond Loan
Offsetting
Total
1.077
1.077
0
1.705
1.077
628
765
765
0
1.705
765
941
The aforementioned deferred tax assets and liabilities have been offset in accordance with the
company’s policy. During the current year the company depicts the effects of decreasing the
tax rate as far as the differed tax is concerned. According to the Greek law 3697/25.9.2008,
the tax rate for computing the income tax expense should be gradually decreased by 1% each
year, from 2010 to 2014, reaching 20%.
At the balance sheet date, the company has reported tax losses carried forward amounting to
Euro 9.015 thous. (2007: Euro 9.528 thous), which can be offset against future profits. No
deferred tax asset has been recognized on the above tax losses carried forward because it is
uncertain whether there will be any taxable profits in the future to be offset against tax losses
carried forward. Recognised tax losses can be carried forward for five years.
4.19 Provisions
Amounts in th. Euro
1st January 2008
Additional provision for the
period
Use of provision
31st December 2008
12
742
-3
751
Provisions refer to the amount of indemnity payable to the employees for providing their
services during the period of their vacations. The additional provision of the period refers to
additional return charges for the period 2003-2006 according the bond contract (See also
paragraph 4.17). The use of the provision refers to foreign exchange currency differences.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
45
4.20 Other Liabilities
31.12.2008
31.12.2007
Amounts in thousands Euro
Accrued interest (expense)
Other Accrued expenses
Liabilities from bond issue
restructuring
Other liabilities
306
378
46
38
0
60
412
128
71
615
Other liabilities comprise of liabilities to social security funds and withholding taxes payable
to the Greek State and liabilities from trading activities.
According to the Board, the carrying amount of liabilities from trading activities and other
liabilities approximate their fair value.
4.21 Contingent Liabilities
As more fully described in the relevant Notes to the financial statements, liabilities may arise
in connection with the embedded derivatives in the preferred stock and the bond issue.
Furthermore some of the employees and the Investment Advisor are entitled to incentive fee
which is related to the performance of the company, in accordance with the “priority of
payments”, as described in the documentation for the private placement of the employer
through the issue of € 105 mln of Bonds and € 45 mln of Preferred shares. The contingent
liability will be recognised when the benefits from the company’s participations in venture
capital funds (AKES) will be realised.
4.22 Commitments
31.12.2008
31.12.2007
Amounts in thousands Euro
Remain to be invested in
venture capital funds (AKES)
116.383
26.714
The analysis of the company’s commitments is provided in Note 4.9 to the financial
statements.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
46
4.23 Operating lease agreements
31.12.2008
31.12.2007
Amounts in thousands Euro
Lease payments under
operating leases recognised
as expenses during the year
106
81
During 2008 an amount of Euro 18 thous was charged as penalty for the breach of previous
premises leasehold agreement.
At the balance sheet date, the company has undertaken commitments in connection with
operating lease contracts, which may not be cancelled without any penalty, that are payable
as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Leasehold
Company
Leasehold
Company
property
Cars
property
Cars
Within 1 year
From 2 to 5 years
After 5 years
56
255
296
608
34
41
0
75
52
235
100
387
34
75
0
109
The leashold property operating lease arrangements refers to the building used for the
premises of the company. Such lease contracts have a duration of 3 years plus 9 years and the
remaining period as at 31.12.2008 is eight years and eight months. The increase in the annual
lease payments equals the annual increase in the Consumer’s Price Index (CPI) plus 2
percentage points. For the above computations, the annual increase in the CPI has been
estimated to be 3%.
4.24 Liabilities for employee’s retirement benefit plans
Defined contribution plan
The company operates a defined contribution plan with IKA. The contributions to the plan
are expensed when accrued. The total amount expensed in the year 2008 is Euro 23 thous.
(2007: 20 thous.) and represents contributions due to IKA in accordance with the latter’s
assessments. At 31 December 2008 contributions amounting to Euro 8 thous, (2007: 5 thous.)
accrued in the year 2008 were payable. Amounts payable have been settled after the balance
sheet.
Defined benefit plan
The company has the obligation to operate a defined benefit plan. According to the plan, the
employees are entitled to a retirement remuneration at the time they are eligible to pension.
The amount of the company’s liability is Euro 1 thousand. This amount has been expensed in
prior years. In view of the fact that the relevant expense amount is not significant, no
actuarial study has been made.
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
47
4.25 Related party transactions
Compensation of key management personnel
The remuneration of directors during the year was as follows:
31.12.2008
31.12.2007
Amounts in thousands Euro
Remunerations
5
265
286
Events occurring after the 31/12/2008
In January 2009 Mr Mageirou expressed his intention to resign from the board of TANEO, for
personal reasons. The Board proposed to replace Mr Mageirou with Mr Dimitriou, a lawyer,
who has been TANEO’s legal counsel since December 2007. Following approval by the
Investment Adviser and further consultation with the Trustee, the appointment of Mr
Dimitriou was effected in February 2009. The appointment is temporary until proper
ratification, as required by the Greek law and the relevant TANEO’s documentation
Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008)
48