New Economy Development Fund S.A. (“TANEO”)2009/05/05 · Business No investments yet PIRAEUS-TANEO 2008 30 TANEO 49,9%, Piraeus Bank 50,1% Greek SME’s in early and development

New Economy Development Fund S.A.

(“TANEO”)

Financial Statements for the year ended 2008 (01/01/2008 – 31/12/2008)

Financial Statements for the year ended 2008 (1/1/2008 – 31/12/2008) 2

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.

The Vice-President & Managing Director

The Finance Manager

Ioannis Papaioannou I.D. ΑΒ049161

Nikolaos Haritakis I.D. Ρ093479

George Saperas I.D. N031359

License. 28154 Α΄Class


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


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


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 Vintage Year

Fund size (€ m.) Investors Investment Focus Investment Portfolio

Capital Connect Venture Partners 2003 24 TANEO 49,9%, Private Investors

from shipping sector 50,1%Greek SME’s in early and

development stageMicrel Medical Devices S.A., Tyres Herco S.A,

Mavin S.A, Krokos Kozanis Products S.A.

Zaitech Fund 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

ALPHA –TANEO 2008 30 TANEO 49,9%, Alpha Bank 50,1%Greek SME’s in early and

development stageUpstream SA

G.I.V.E.-TANEO 2008 20 TANEO 49,9%, Ashby Investments S.A. & Private Investors 50,1%


TechnologyNo investments yet

OXYGEN-TANEO Neoventures 2008 30 TANEO 49,9%, Restis Group &

Private Investors 50,1%

Greek SME’s in early and development stage. Focus on e-Business

No investments yet

PIRAEUS-TANEO 2008 30 TANEO 49,9%, Piraeus Bank 50,1%

Greek SME’s in early and development stage No investments yet

New Mellon -TANEO 2008 15 TANEO 49,9%, Private Investors

50,1%


renewable energy No investments yet

TANEO FG RES 2008 24 TANEO 49,9%, Private Investors 50,1%


renewable energy No investments yet

In operation on 31

December 2007

Set-up during 2008

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.


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.


“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


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.


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.


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


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


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


Α. Income Statement for the period ended 31st December 2008

Notes 1/1 - 31/12/2008 1/1 - 31/12/2007Amounts in thousands Euro

Credit interests & other finance income 4.1 5.542 5.117

Gains from FVTPL Investments 4.2 594 701Increase in fair value investments carried at fair value through the income statement 4.3 6.446 111Other operating income 8 1

Income from operating activities 12.589 5.932

Debit interests & other finance expenses 4.4 (6.130) (4.935)

Provision expenses 4.5 (742) -

Payroll expenses (342) (374) Depreciation (5) (7) Decrease in fair value investments carried at fair value through the income statement 4.3 (1.058) (586) Other operating expenses 4.6 (808) (644) Total Operating expenses (9.085) (6.546)

Profit / (Loss) before taxes 3.504 (614)

Income tax (Deffered tax) 4.7 312 (223)

Profit / (Loss) after taxes 3.817 (837) Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the present Financial Statements.


Β. Balance Sheet for the period ended 31st December 2008 Notes 31.12.2008 31.12.2007

Amounts in thousands Euro

Assets

Non-Current AssetsTangible Assets 4.8 25 9Intangible Assets 0 1Investments carried at fair value through the income statement 4.9 24.335 7.468Other Non-Current Assets 4.10 12 16

24.372 7.493

Current AssetsInvestments available for sale 4.11 115.965 128.234Other receivables 4.12 421 543Cash and cash equivalents 4.13 2.832 2.655

119.219 131.431

Total Assets 143.591 138.924

Equity and liabilities

EquityShare capital 4.14 1.000 1.000Retained Earnings / (Accumulated losses) 4.15 (6.084) (9.900) Total Equity (5.084) (8.900)

Long term liabilitiesPreferred stock 4.16 45.000 45.000Bond loan 4.17 101.883 101.257

Liabilities for emloyees' retirement benefits 0 0

Deferred taxes 4.18 628 941

Provisions 4.19 751 12148.262 147.209

Short term liabilities

Other liabilities 4.20 412 615412 615

Total liabilities 148.674 147.824

Total Equity and Liabilities 143.591 138.924 Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the present Financial Statements.


C. Cash Flow statement for the period ended 31st December 2008 1/1 - 31/12/2008 1/1 - 31/12/2007

Operating ActivitiesProfit / (loss) for the period 3.817 (837) 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 (5.384) 475

Gains from finacial transactions (594) (701) Increase / (decrease) in provisions 739 3 Decrease / (increase) in receivables 46 14 Increase / (decrease) in liabilities (313) 192 Interests paid (5.566) (4.224) Net Cash Flows from operating activities (6.661) (5.255)

Investing activitiesInterests received 5.621 5.078 Proceeds from the disposal of invetsments available for sale 12.268 1.448 Increase of investments available for sale - - Proceeds from the sale of investments carried at fair value through the income statement 1.383 1.701 Increase of investments at fair value through the income statement

(12.273) (1.434) Purchases of property, plant and equipment (21) (7) Net Cash Flows from invetsing activities 6.979 6.788

Financing activitiesPayments of Bond Loan restructuring expenses (140) (650) Proceeds from issue of loan notes (0) 0 Proceeds from issue of preferred stock - -

Net Cash Flows from finacing activities (140) (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.


D. Statement of changes in equity for the period ended 31st December 2008

Share CapitalRetained Earnings / (Accumulated losses) Total Equity


2007

Balance 1.1.2007 1.000 -9.063 -8.063

Profit / (loss) for the period 0 -837 -837

Balance 31.12.2007 1.000 -9.900 -8.900

2008

Balance 1.1.2008 1.000 -9.900 -8.900

Profit / (loss) for the period 0 3.817 3.817

Balance 31.12.2008 1.000 -6.084 -5.084 Note: The Notes to the Financial Statements on pages 17 to 48 are an integral part of the present Financial Statements


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.


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.


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.


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,


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,


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.


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 pre-tax 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 (cash-generating 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.


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


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


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.


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".


-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, share-based 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


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


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


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.

0,5% -0,5% 0,5% -0,5%

Income Statement 99 -99 131 -131Equity 99 -99 131 -131

2008 2007Amounts in thousands Euro Amounts in thousands Euro

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. The financial liabilities maturity on December 31st 2008 and December 31st 2007 for the Company was the following:

Within 6 mothns 6-12 months 1-5 years Later than 5 years

Within 6 mothns 6-12 months 1-5 years Later than 5 years

Preferred stock 45.000 45.000Bond loan 105.000 105.000Other liabilities 412 615

412 0 0 150.000 615 0 0 150.000

Short term Long term

31-12-07Amounts in thousands Euro

Short term Long term

31-12-08Amounts in thousands Euro

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 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.


4 Notes and analysis of the financial statements

4.1 Credit Interests and related expenses

31.12.2008 31.12.2007

Interest from securities (Money market funds) 5.512 5.089Interest from securities (Repos) 29 28

5.542 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

Capital Connect 323 330Zaitech Fund 212 0IBG Hellenic Fund II 58 371

594 701


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.


4.3 Increase / (Decrease) in Fair Value Investments

31.12.2008 31.12.2007

Zaitech Fund 872 111IBG Hellenic Fund II 5.574 0Increase in Fair Value 6.446 111

IBG Hellenic Fund II 0 (316)Capital Connect (185) (242)AXON - TANEO (54) (29)Thermi - TANEO (273) 0 Alpha - TANEO (296) 0 Oxygen - TANEO (91) 0 Give - TANEO (159) 0 Pireos - TANEO 0 0 New Mellon - TANEO 0 0 FG RES - TANEO 0 0 Decrease in Fair Value (1.058) (586)

Net Result from Valuation of Investments

5.388 (475)


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.


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 12 6.130 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

Investment advisor fees 146 150Trustee fees 13 8Cash management fees 22 22BOD fees 123 151Lawyers fees 75 7Auditors fees 30 28Accountants fees 24 23Communication expenses 18 15Leasing expenses 106 81Travel expenses 33 26Advertising and promotion expenses 148 58Insurance fees 11 11Other Overheads 59 63

808 644



4.7 Income tax (Deferred tax)

31.12.2008 31.12.2007

Current tax 0 0 Deferred tax (Release) / Burden (312) 223 Income tax for the period (312) 223


The income tax for the period reconciles to the period’s profit/loss as follows:

31.12.2008 31.12.2007

Profit / (Loss) before taxes 3.504 (614)Income tax rate 25% 25%Income Tax according to the applied tax rate

876 (154)

Tax Effect from the change of tax rates (156) 0

Deffered tax difference from previous years 0 379

Tax Effect on tax-exempt income (3.147) (1.483)

Tax effect on non-deductible expenses 2.115 1.480

Income tax expense / (gain) for the period

(312) 223



4.8 Tangible assets

Leashold Improvements

Furniture and office equipment

Total


Book Value

1st Januray 2007 63 138 201Additions 0 6 61st Januray 2008 63 144 207Additions 16 5 2031st December 2008 79 149 227

Accumulated Depreciation

1st Januray 2007 63 129 192Additions 0 6 61st Januray 2008 63 135 198Additions 0 5 531st December 2008 63 140 203

Net Book Value

31st December 2007 0 9 9

31st December 2008 15 9 25 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 31.12.2007Amounts 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:


Fund Name 2008Untill

31.12.2008 2008Untill

31.12.2008 2008Untill

31.12.2008(1) (2) (3) 4=(1)-(2)+(3)

Capital Connect 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

Alpha - TANEO 2.940 2.940 0 0 -296 -296 2.644

Oxygen - TANEO 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

New Mellon - TANEO 0 0 0 0 0 0 0

TANEO FG RES 0 0 0 0 0 0 0

12.268 24.084 789 2.009 5.388 2.260 24.335

Contributions to FundsDistributions from realized investments (Capital part)

Increase / (decrease) in Fair Value

Investments Carried at

Fair Value at 31.12.2008

(1) (2) 3=(1)-(2)

Capital Connect 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 11.997 0 0 11.997

140.466 24.084 3.502 116.383

Remain to be invested as 31.12.2008

Commitments as 31.12.2008

Total Contributions

untill 31.12.2008

Total Distributions

untill 31.12.2008

(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.

Closing Date

Notes:

Fund Name % Particip.

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.


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.


4.10 Other Non-Current Assets The “ Other Non-Current Assets” amount is analyzed as follows:

31.12.2008 31.12.2007

Guarantee on Leashold property 9 13Guarantee on company cars 6 6Other Non-Current Assets -3 -3

12 16


4.11 Investments available for sale Investments available for sale refer to:

31.12.2008 31.12.2007

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

Accrued interest (income) 386 464Prepaid expenses 29 76Other debtors 6 3

421 543


The Board is of the opinion that the carrying value of the aforementioned items approximates their fair value of such items.


4.13 Cash and cash equivalents

31.12.2008 31.12.2007

Short-term Bank deposits (Demand Deposits) 46 126

Short-term Bank deposits (1-month repos) 850 900

Portfolio Income Account 1.937 1.6282.832 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

1.000

1.000

Issued and fully paid: At the beginning of the period 1.000 1.000 At the end of the period 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


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)


2007

Balance 1.1.2007 -9.063

Profit / (loss) for the period -837

Balance 31.12.2007 -9.900

2008

Balance 1.1.2008 -9.900

Profit / (loss) for the period 3.817

Balance 31.12.2008 -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.


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.


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.


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

Nominal value 105.000 105.000Issue and restructuring costs -3.117 -3.743Carrying amount 101.883 101.257



4.18 Deferred Tax Liabilities

31.12.2008 31.12.2007

Amounts in thousands EuroAsset Liability Asset Liability

Long term liabilitiesBond Loan 1.077 1.705 765 1.705Offsetting 1.077 1.077 765 765Total 0 628 0 941 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 12Additional provision for the period 742Use of provision -331st December 2008 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.


4.20 Other Liabilities

31.12.2008 31.12.2007

Accrued interest (expense) 306 378Other Accrued expenses 46 38Liabilities from bond issuerestructuring 0 128Other liabilities 60 71

412 615


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

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.


4.23 Operating lease agreements 31.12.2008 31.12.2007

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 31.12.2007Amounts in thousands Euro

Leasehold property

Company Cars

Leasehold property

Company Cars

Within 1 year 56 34 52 34From 2 to 5 years 255 41 235 75After 5 years 296 0 100 0

608 75 387 109 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.


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 265 286

5 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

Documents

New Economy Development Fund S.A. (“TANEO”)2009/05/05 · Business No investments yet PIRAEUS-TANEO 2008 30 TANEO 49,9%, Piraeus Bank 50,1% Greek SME’s in early and development