CHARILAOS APOSTOLIDES PUBLIC LIMITED REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 December 2005 CHARILAOS APOSTOLIDES PUBLIC LIMITED REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 December 2005 CONTENTS PAGE Board of Directors and other officers 1 Report of the Board of Directors 2 - 3 Declaration of the members of the board of directors and the company officials responsible for the drafting of the financial statements 4 Auditors' report 5 Consolidated income statement 6 Consolidated balance sheet 7 Consolidated statement of changes in equity 8 Consolidated cash flow statement 9 Notes to the consolidated financial statements 10 - 33 CHARILAOS APOSTOLIDES PUBLIC LIMITED BOARD OF DIRECTORS AND OTHER OFFICERS Board of Directors: George Photiou (Chairman and Managing Director) Nicolaos Philippou (Executive Director) Christodoulos Matthew (Executive Director) Mikis Ioannou (Executive Director) Christos Papastavrou (Executive Director) Charis Photiou (Executive Director) Lambros Pelekanos (Non Executive Director) Company Secretary: Christodoulos Matthew Assistant Secretary: Chartac Management Services Limited Auditors: MOORE STEPHENS STYLIANOU & CO CERTIFIED PUBLIC ACCOUNTANTS - CY 58 Arch. Makarios III Avenue Iris Tower 6th Floor, Office 602 1075 Nicosia, Cyprus Legal Advisers: Panayiotou & Pelekanos Registered Office: Chapo Tower - 1st Floor 75, Athalassas Avenue 2012 Strovolos Nicosia - Cyprus Bankers: The Cyprus Popular Bank Public Company Ltd Hellenic Bank Public Company Ltd Alpha Bank Ltd Bank of Cyprus Public Company Ltd Registration number: 2518 1 CHARILAOS APOSTOLIDES PUBLIC LIMITED REPORT OF THE BOARD OF DIRECTORS The Board of Directors presents its report together with the audited consolidated financial statements of the Group for the year ended 31 December 2005. Principal activities The principal activities of the Group, which are unchanged from last year, are the following: • Building and civil engineering contracting (in Cyprus and internationally) • Property development • Operating a plant for the production and placement of asphalt products • Mechanical and electrical engineering contracting • Operating a plant for the production and distribution of ready-mixed concrete The Group during the year operated through a branch in Greece. Review of current position, future developments and significant risks The current financial position as presented in the financial statements is considered satisfactory as the Group has become profitable. The Board of Directors does not expect major changes in the principal activities of the Group in the foreseeable future. The Company Charilaos Apostolides Public Limited participates in Hermes Airports Ltd that is going to build and operate the Larnaca and Paphos airports for the next 25 years. During the next two years the Company, in addition to the construction contracts on hand and any new contracts to be obtained, will perform significant construction work at the Larnaca Airport. The group companies operating abroad are expected to continue the steady strong performance achieved during the last two years and a consecutive rise in their turnover is expected. The Board of Directors’ aim is to improve the profit margins of its overseas operations and to further extend its operations in the Gulf Area. The most significant risks to be faced by the Group during 2006 are the possibility of continuous increases in the oil price and the financial risks described in note 3 of the financial statements. Results and Dividends The Group's results for the year are set out on page 6. The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained. Share capital There were no changes in the share capital of the Company during the year. Classification of Company titles On 26 August 2004 the Company shares were enrolled in the Alternative Market of the Stock Exchange. Corporate governance code The Board of Directors, as at the date of this report has not decided to adopt the Corporate Governance Code. Board of Directors The members of the Board of Directors of the Company as at 31 December 2005 and at the date of this report are shown on page 1. All of them were members of the board throughout the year ended 31 December 2005. In accordance with the Company's Articles of Association, all directors presently members of the board, retire and, being eligible, offer themselves for re-election. There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors. Post balance sheet events There were no material post balance sheet events, which have a bearing on the understanding of the financial statements. 2 CHARILAOS APOSTOLIDES PUBLIC LIMITED REPORT OF THE BOARD OF DIRECTORS Directors' shareholdings The directors' shareholdings as at 31 December 2005 and at the date of this report were as follows: 31/12/2005 26/04/2006 % % George Photiou 59,65 59,65 Nicolaos Philippou 3,46 3,46 Christodoulos Matthew 1,56 1,56 Mikis Ioannou 1,06 1,06 Christos Papastavrou 0,06 0,06 The above percentages take into account indirect participation as defined by the Cyprus Stock Exchange Law, article 60(4). The indirect participation of George Photiou is derived from the shareholding held by Chapo Holdings Limited (47,47%) in which George Photiou is the majority shareholder. Shareholdings over 5% Shareholdings over 5% as at 31 December 2005 and at the date of this report were as follows: 31/12/2005 26/04/2006 % % Chapo Holdings Limited 47,47 47,47 George Photiou 12,17 12,17 Demetra Investment Company Limited 8,73 8,73 Significant contracts with directors and related persons On 31 December 2005, there were no significant contracts between Group companies in which the directors or other related parties had a material interest. Auditors The auditors, MOORE STEPHENS STYLIANOU & CO, have expressed their willingness to continue in office and a resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. By order of the Board of Directors, Christodoulos Matthew Secretary Nicosia, Cyprus, 26 April 2006 3 CHARILAOS APOSTOLIDES PUBLIC LIMITED DECLARATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE COMPANY OFFICIALS RESPONSIBLE FOR THE DRAFTING OF THE FINANCIAL STATEMENTS In accordance with section 140(1) of the Cyprus Securities and Stock Exchange Law, we the members of the Board of Directors and the company officials responsible for the drafting of the financial statements of Charilaos Apostolides Public Limited for the year ended 31 December 2005, based on our knowledge, which is the product of careful and conscientious work, declare that the particulars which are specified in the consolidated financial statements are true and complete. Members of the Board of Directors: George Photiou Nicolaos Philippou Christodoulos Matthew Mikis Ioannou Christos Papastavrou Charis Photiou Lambros Pelekanos Responsible for drafting the financial statements Christos Papakyriakou (Finance Director) Nicosia, Cyprus, 26 April 2006 4 AUDITORS' REPORT TO THE MEMBERS OF CHARILAOS APOSTOLIDES PUBLIC LIMITED Report on the financial statements 1. We have audited the consolidated financial statements of Charilaos Apostolides Public Limited (the Company) and its subsidiaries (the Group) on pages 6 to 33, which comprise the consolidated balance sheet as at 31 December 2005 the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and the related notes. These financial statements are the responsibility of the company's Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. This report is made solely to the Company's members, as a body, in accordance with Section 156 of the Companies Law, Cap. 113. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. 2. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Board of Directors as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. 3. In our opinion the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2005 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and International Financial Reporting Standards as issued by the IASB and the requirements of the Cyprus Companies Law, Cap. 113. Report on other legal requirements 4. Pursuant to the requirements of the Companies Law, Cap. 113, we report the following: • We have obtained all the information and explanations we considered necessary for the