GEK TERNA SOCIETE ANONYME HOLDINGS REAL ESTATE CONSTRUCTIONS 85 Mesogeion Ave., 115 26 Athens Greece S.A. Reg. No. 6044/06/Β/86/142 ANNUAL FINANCIAL REPORT for the period 1 January to 31 December 2009 According to article 4 of L. 3556/2007 and the relevant executive Decisions by the BoD of the Hellenic Capital Market Commission 1 TABLE OF CONTENTS Ι. STATEMENTS BY MEMBERS OF THE BOARD OF DIRECTORS.............................................. 4 ΙΙ. AUDIT REPORT BY INDEPENDENT CERTIFIED AUDITOR .................................................... 5 ΙΙΙ. ANNUAL MANAGEMENT REPORT OF THE BOARD OF DIRECTORS FOR THE FINANCIAL YEAR 2009....................................................................................................................... 7 ΙV. ANNUAL FINANCIAL STATEMENTS SEPARATE AND CONSOLIDATED OF 31 DECEMBER 2009 ................................................................................................................................ 19 1 ESTABLISHMENT AND ACTIVITY OF THE COMPANY................................................... 29 2 BASIS FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS......................... 30 3 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES ............................................. 40 4 GROUP STRUCTURE............................................................................................................... 49 5 OPERATING SEGMENTS ........................................................................................................ 55 6 INTANGIBLE FIXED ASSETS ................................................................................................ 61 7 TANGIBLE FIXED ASSETS..................................................................................................... 64 8 INVESTMENT PROPERTY...................................................................................................... 68 9 PARTICIPATIONS IN ASSOCIATES...................................................................................... 69 10 OTHER LONG-TERM RECEIVABLES................................................................................... 71 11 INVENTORIES .......................................................................................................................... 71 12 TRADE RECEIVABLES AND PREPAYMENTS AND OTHER RECEIVABLES................ 72 13 CONSTRUCTION CONTRACTS ............................................................................................. 74 14 INVESTMENTS AVAILABLE FOR SALE ............................................................................. 74 15 CASH AND CASH EQUIVALENTS ........................................................................................ 75 16 LONG-TERM LOANS AND FINANCIAL LEASES ............................................................... 75 17 PROVISION FOR STAFF INDEMNITIES............................................................................... 77 18 OTHER PROVISIONS............................................................................................................... 79 19 GRANTS..................................................................................................................................... 80 20 SUPPLIERS, ACCRUED AND OTHER LIABILITIES ........................................................... 81 21 SHORT-TERM LOANS............................................................................................................. 82 22 LIABILITIES FROM DERIVATIVES ...................................................................................... 82 23 SHARE CAPITAL...................................................................................................................... 83 24 INCOME TAX............................................................................................................................ 83 25 COST OF SALES AND ADMINISTRATION AND DISTRIBUTION EXPENSES............... 93 26 REMUNERATION OF CERTIFIED AUDITORS .................................................................... 94 27 OTHER INCOME/(EXPENSES) ............................................................................................... 95 28 FINANCIAL INCOME/(EXPENSES)....................................................................................... 95 29 PAYROLL COST ....................................................................................................................... 96 30 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ....... 96 31 ACQUISITIONS OF COMPANIES........................................................................................... 98 32 RIGHTS IN JOINT VENTURES ............................................................................................. 100 33 TRANSACTIONS WITH RELATED PARTIES..................................................................... 101 34 AIMS AND POLICIES OF RISK MANAGEMENT............................................................... 101 35 FOREIGN EXCHANGE RISK ................................................................................................ 102 36 SENSITIVITY ANALYSIS OF INTEREST RATE RISK ...................................................... 104 37 ANALYSIS OF CREDIT RISK ............................................................................................... 104 38 ANALYSIS OF LIQUIDITY RISK ......................................................................................... 105 2 39 PRESENTATION OF FINANCIAL ASSETS AND LIABILITIES PER CATEGORY......... 105 40 POLICIES AND PROCEDURES FOR CAPITAL MANAGEMENT .................................... 106 41 EXISTING COLLATERAL ASSETS...................................................................................... 107 42 CONTINGENT LIABILITIES ................................................................................................. 107 43 EVENTS AFTER THE BALANCE SHEET DATE ................................................................ 108 44 RESTATEMENT OF THE FINANCIAL STATEMENTS OF 31.12.2008............................. 108 V. DATA AND INFORMATION FOR FINANCIAL YEAR 2009 ................................................. 109 VI. INFORMATION OF ARTICLE 10 L. 3401/2005 ....................................................................... 110 3 Ι. STATEMENTS BY MEMBERS OF THE BOARD OF DIRECTORS (according to article 4 par. 2 of L. 3556/2007) We, 1. George Peristeris, Chairman of the Board of Directors 2. Nikolaos Kampas, Vice-Chairman of the Board and Managing Director and, 3. Panayiotis Pothos, Non-executive Member of the Board of Directors STATE THAT To the best of our knowledge: a. the annual company and consolidated financial statements of GEK TERNA SA HOLDINGS REAL ESTATE CONSTRUCTIONS for the period from January 1st 2009 to December 31st 2009, which were prepared in accordance with the accounting standards in effect, present a true picture of the assets and liabilities, the shareholders’ equity and the results for the period of the Group and Company, as well as of the companies included in the consolidation and considered aggregately as an entity, and b. the Board of Directors Report accurately presents the developments, the performance and position of the Company, as well as the companies included in the consolidated and considered aggregately as an entity, including the description of main risks and uncertainties such face. Athens, 29 March 2010 Chairman of the BoD Vice-President of the BoD Board Member & Managing Director George Peristeris Nikolaos Kampas Panayiotis Pothos 4 ΙΙ. AUDIT REPORT BY INDEPENDENT CERTIFIED AUDITOR INDEPENDENT AUDITOR’S REPORT To the Shareholders of GEK TERNA S.A. Report on the Separate and Consolidated Financial Statements We have audited the accompanying separate and consolidated financial statements of GEK TERNA S.A. and its subsidiaries, which comprise the separate and consolidated statement of financial position as at 31 December 2009, the separate and consolidated statement of comprehensive income, the statement of changes in equity and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Separate and Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these separate and consolidated financial statements in accordance with International Financial Reporting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these separate and consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate and consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate and consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material 5 misstatement of the separate and consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant