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10-Q - Financial Statement - Full Notes INTRACOM S.A. HOLDINGS (2005,Nine-Month Statement,Both)

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**Hellenic Telecommunications and Electronics Industry** 

**Interim condensed financial statements in accordance with International Financial Reporting Standards endorsed by the European Union** 

*.* 

**30 September 2005** 

#### **Contents Page**

|     | Balance Sheet                                                  | 2  |
|-----|----------------------------------------------------------------|----|
|     | Income Statement for the period 1 January to 30 September 2005 | 3  |
|     | Income Statement for the period 1 July to 30 September 2005    | 4  |
|     | Statement of changes in equity                                 | 5  |
|     | Cash flow statement                                            | 7  |
|     | Notes to the interim condensed financial statements            | 8  |
| 1.  | General information                                            | 8  |
| 2.  | Summary of significant accounting policies                     | 8  |
| 3.  | Transition to IFRS                                             | 9  |
| 4.  | Segment information                                            | 16 |
| 5.  | Finance costs – net                                            | 16 |
| 6.  | Investment in subsidiaries / associates                        | 17 |
| 7.  | Trade and other receivables                                    | 17 |
| 8.  | Inventories                                                    | 17 |
| 9.  | Share capital                                                  | 18 |
| 10. | Derivative financial instruments                               | 18 |
| 11. | Capital expenditure                                            | 18 |
| 12. | Operating cash flows                                           | 19 |
| 13. | Dividends                                                      | 19 |
| 14. | Commitments                                                    | 20 |
| 15. | Contingencies                                                  | 20 |
| 16. | Related party transactions                                     | 20 |
| 17. | Earnings per share                                             | 21 |
| 18. | Unaudited tax years                                            | 21 |
| 19. | Number of employees                                            | 22 |
| 20. | Transfer of segments to subsidiaries                           | 22 |
| 21. | Post balance sheet events                                      | 22 |

# <span id="page-2-0"></span>**Balance Sheet**

|                                                                                    |      | Group                |                      | Company              |                      |
|------------------------------------------------------------------------------------|------|----------------------|----------------------|----------------------|----------------------|
| ASSETS                                                                             | Note | 30/9/2005            | 31/12/2004           | 30/9/2005            | 31/12/2004           |
| Non-current assets                                                                 |      |                      |                      |                      |                      |
| Property, plant and equipment                                                      |      | 300.981              | 323.114              | 227.093              | 257.381              |
| Intangible assets                                                                  |      | 60.941               | 51.022               | 44.889               | 43.893               |
| Investments in subsidiaries                                                        | 6    | -                    | -                    | 47.572               | 34.995               |
| Investments in associates and joint ventures                                       | 6    | 28.889               | 1.387                | 25.563               | 319                  |
| Other investments                                                                  |      | -                    | 10.619               | -                    | 13.647               |
| Available - for - sale financial assets                                            |      | 7.268                | -                    | 9.177                | -                    |
| Investment property                                                                |      | 40.175               | 6.106                | 30.868               | 4.843                |
| Deferred income tax assets                                                         |      | 13.718               | 12.543               | 7.550                | 11.210               |
| Trade and other receivables                                                        | 7    | 37.453               | 64.340               | 24.528               | 51.955               |
|                                                                                    |      | 489.425              | 469.131              | 417.240              | 418.243              |
| Current assets                                                                     |      |                      |                      |                      |                      |
| Inventories                                                                        | 8    | 160.921              | 149.801              | 138.607              | 129.399              |
| Trade and other receivables                                                        | 7    | 514.470              | 509.178              | 469.468              | 449.437              |
| Construction contracts                                                             |      | 31.470               | 28.983               | -                    | -                    |
| Available - for - sale financial assets                                            |      | 1.781                | -                    | -                    | -                    |
| Financial assets at fair value through profit or loss                              |      | 3.496                | -                    | -                    | -                    |
| Other investments                                                                  |      | -                    | 11.530               | -                    | 3.899                |
| Current income tax assets                                                          |      | -                    | -                    | 3.234                | -                    |
| Cash and cash equivalents<br>Assets classified as held for sale                    |      | 75.092<br>-          | 139.516<br>3.493     | 53.238<br>-          | 108.836<br>-         |
|                                                                                    |      |                      |                      |                      |                      |
| Total assets                                                                       |      | 787.230<br>1.276.656 | 842.501<br>1.311.633 | 664.548<br>1.081.788 | 691.571<br>1.109.814 |
|                                                                                    |      |                      |                      |                      |                      |
| EQUITY                                                                             |      |                      |                      |                      |                      |
| Capital and reserves attributable to the Company's equity holders<br>Share capital | 9    | 467.570              | 455.395              | 467.570              | 455.395              |
| Reserves                                                                           |      | 166.366              | 196.916              | 127.252              | 153.267              |
|                                                                                    |      | 633.936              | 652.311              | 594.822              | 608.662              |
| Minority interest                                                                  |      | 31.910               | 31.053               | -                    | -                    |
| Total equity                                                                       |      | 665.846              | 683.364              | 594.822              | 608.662              |
| LIABILITIES                                                                        |      |                      |                      |                      |                      |
| Non-current liabilities                                                            |      |                      |                      |                      |                      |
| Borrowings                                                                         |      | 35.368               | 144.805              | 1.956                | 120.943              |
| Deferred income tax liabilities                                                    |      | 4.885                | 5.605                | 3.100                | 4.560                |
| Retirement benefit obligations                                                     |      | 6.399                | 4.922                | 5.738                | 4.266                |
| Grants                                                                             |      | 589                  | 569                  | 87                   | 413                  |
| Derivative financial instruments                                                   | 10   | 12.772               | -                    | 12.772               | -                    |
| Provisions for other liabilities and charges                                       |      | 3.393                | 3.491                | 1.600                | 1.912                |
|                                                                                    |      | 63.406               | 159.392              | 25.253               | 132.094              |
| Current liabilities                                                                |      |                      |                      |                      |                      |
| Trade and other payables                                                           |      | 211.795              | 243.504              | 172.255              | 203.135              |
| Current income tax liabilities                                                     |      | 5.261                | 5.303                | 1.961                | 958                  |
| Construction contracts<br>Borrowings                                               |      | 3.135<br>296.365     | 3.529<br>202.855     | -<br>266.283         | -<br>154.771         |
| Derivative financial instruments                                                   | 10   | 17.997               | -                    | 17.997               | -                    |
|                                                                                    |      |                      |                      |                      |                      |
| Provisions for other liabilities and charges                                       |      | 12.849               | 10.928               | 3.217                | 10.193               |
| Liabilities associated with assets classified as held for sale                     |      | -<br>547.404         | 2.758<br>468.877     | -<br>461.713         | -<br>369.057         |
| Total liabilities                                                                  |      | 610.809              | 628.269              | 486.966              | 501.151              |
| Total equity and liabilities                                                       |      | 1.276.656            | 1.311.633            | 1.081.788            | 1.109.814            |

# <span id="page-3-0"></span>**Income Statement for the period 1 January to 30 September 2005**

|                                                                                                                                    | Note | Group         |               | Company       |               |
|------------------------------------------------------------------------------------------------------------------------------------|------|---------------|---------------|---------------|---------------|
|                                                                                                                                    |      | 1/1-30/9/2005 | 1/1-30/9/2004 | 1/1-30/9/2005 | 1/1-30/9/2004 |
| Continued operations                                                                                                               |      |               |               |               |               |
| Sales                                                                                                                              |      | 373.982       | 449.155       | 252.579       | 359.808       |
| Cost of goods sold                                                                                                                 |      | (265.937)     | (302.273)     | (177.036)     | (251.291)     |
| Gross profit                                                                                                                       |      | 108.045       | 146.882       | 75.543        | 108.516       |
| Other operating income - net                                                                                                       |      | (2.538)       | 3.451         | 1.107         | 5.011         |
| Selling and research costs                                                                                                         |      | (43.707)      | (57.473)      | (36.375)      | (49.774)      |
| Administrative expenses                                                                                                            |      | (50.825)      | (47.382)      | (28.330)      | (25.084)      |
| Operating profit                                                                                                                   |      | 10.976        | 45.478        | 11.945        | 38.669        |
| Finance costs - net                                                                                                                | 5    | (3.992)       | (14.117)      | 401           | (11.691)      |
| Share of profit of associates and joint ventures                                                                                   |      | 1.017         | 2.225         | -             | -             |
| Profit before income tax                                                                                                           |      | 8.000         | 33.586        | 12.345        | 26.978        |
| Income tax expense                                                                                                                 |      | (3.441)       | (14.510)      | (2.248)       | (9.543)       |
| Profit for the period from continued operations                                                                                    |      | 4.559         | 19.075        | 10.097        | 17.435        |
| Discontinued operations                                                                                                            |      |               |               |               |               |
| Loss for the period from discontinued operations                                                                                   |      | -             | (568)         | -             | -             |
| Profit for the period                                                                                                              |      | 4.559         | 18.508        | 10.097        | 17.435        |
| Attributable to:                                                                                                                   |      |               |               |               |               |
| Equity holders of the Company                                                                                                      |      | 5.251         | 17.495        | 10.097        | 17.435        |
| Minority interest                                                                                                                  |      | (693)         | 1.013         | -             | -             |
|                                                                                                                                    |      | 4.559         | 18.508        | 10.097        | 17.435        |
| Earnings per share for profit attributable to the equity<br>holders of the Company during the period (expressed in € per<br>share) |      |               |               |               |               |
| Basic                                                                                                                              | 17   | 0,04          | 0,14          | 0,08          | 0,14          |
| Diluted                                                                                                                            | 17   | 0,04          | 0,14          | 0,08          | 0,14          |

# <span id="page-4-0"></span>**Income Statement for the period 1 July to 30 September 2005**

|                                                                                                                                    | Note | Group         |               | Company       |               |
|------------------------------------------------------------------------------------------------------------------------------------|------|---------------|---------------|---------------|---------------|
|                                                                                                                                    |      | 1/7-30/9/2005 | 1/7-30/9/2004 | 1/7-30/9/2005 | 1/7-30/9/2004 |
| Continued operations                                                                                                               |      |               |               |               |               |
| Sales                                                                                                                              |      | 115.808       | 154.424       | 69.803        | 120.486       |
| Cost of goods sold                                                                                                                 |      | (92.364)      | (112.352)     | (58.074)      | (94.635)      |
| Gross profit                                                                                                                       |      | 23.444        | 42.072        | 11.729        | 25.850        |
| Other operating income - net                                                                                                       |      | (1.065)       | 2.229         | (154)         | 5.002         |
| Selling and research costs                                                                                                         |      | (8.526)       | (17.094)      | (6.195)       | (14.334)      |
| Administrative expenses                                                                                                            |      | (15.565)      | (14.069)      | (9.361)       | (7.223)       |
| Operating profit                                                                                                                   |      | (1.711)       | 13.139        | (3.981)       | 9.295         |
| Finance costs - net                                                                                                                | 5    | (2.804)       | (4.184)       | (4)           | (3.412)       |
| Share of profit of associates and joint ventures                                                                                   |      | 647           | 1.001         | -             | -             |
| (Loss) / profit before income tax                                                                                                  |      | (3.868)       | 9.956         | (3.985)       | 5.882         |
| Income tax expense                                                                                                                 |      | (1.342)       | (4.178)       | (254)         | (2.111)       |
| (Loss) / profit for the period from continued operations                                                                           |      | (5.210)       | 5.778         | (4.239)       | 3.771         |
| Discontinued operations                                                                                                            |      |               |               |               |               |
| Loss for the period from discontinued operations                                                                                   |      | -             | (207)         | -             | -             |
| (Loss) / profit for the period                                                                                                     |      | (5.210)       | 5.571         | (4.239)       | 3.771         |
| Attributable to:                                                                                                                   |      |               |               |               |               |
| Equity holders of the Company                                                                                                      |      | (5.557)       | 5.065         | (4.239)       | 3.771         |
| Minority interest                                                                                                                  |      | 347           | 507           | -             | -             |
|                                                                                                                                    |      | (5.210)       | 5.571         | (4.239)       | 3.771         |
| Earnings per share for profit attributable to the equity<br>holders of the Company during the period (expressed in € per<br>share) |      |               |               |               |               |
| Basic                                                                                                                              |      | (0,04)        | 0,04          | (0,03)        | 0,03          |
| Diluted                                                                                                                            |      | (0,04)        | 0,04          | (0,03)        | 0,03          |

# <span id="page-5-0"></span>**Statement of changes in equity**

#### **Group**

|                                                             |         | Attributable to Company´s shareholders |                      | Minority interest | Total equity |
|-------------------------------------------------------------|---------|----------------------------------------|----------------------|-------------------|--------------|
|                                                             |         | Share capital Other reserves           | Retained<br>earnings |                   |              |
| Balance at 1 January 2004                                   | 455.182 | 227.130                                | (37.637)             | 28.636            | 673.311      |
| Restatement as per IAS 8                                    | -       | (1.631)                                | -                    | -                 | (1.631)      |
| Balance at 1 January 2004 - Restated                        | 455.182 | 225.499                                | (37.637)             | 28.636            | 671.681      |
| Currency translation differences                            | -       | -                                      | (295)                | -                 | (295)        |
| Net income recognised directly in equity                    | -       | -                                      | (295)                | -                 | (295)        |
| Profit for the period                                       | -       | -                                      | 17.495               | 1.013             | 18.508       |
| Total recognised income for the period                      | -       | -                                      | 17.200               | 1.013             | 18.213       |
| Change in investment in subsidiary due to increase in share |         |                                        |                      |                   |              |
| capital                                                     | -       | (3.062)                                | 3.079                | 7.654             | 7.670        |
| Treasury shares                                             | (1.355) | -                                      | -                    | -                 | (1.355)      |
| Expenses on issue of share capital                          | (43)    | -                                      | -                    | -                 | (43)         |
| Dividend                                                    | -       | -                                      | (12.820)             | (1.109)           | (13.929)     |
| Transfer                                                    | -       | 89.005                                 | (84.001)             | (5.004)           | (0)          |
| Balance at 30 September 2004                                | 453.784 | 311.442                                | (114.180)            | 31.191            | 682.238      |

|                                                            | Attributable to Company´s shareholders |                              | Minority interest | Total equity |          |
|------------------------------------------------------------|----------------------------------------|------------------------------|-------------------|--------------|----------|
|                                                            |                                        |                              | Retained          |              |          |
|                                                            |                                        | Share capital Other reserves | earnings          |              |          |
| Balance at 31 January 2004                                 | 455.395                                | 243.283                      | (44.673)          | 37.189       | 691.195  |
| Restatement as per IAS 8                                   | -                                      | 88.699                       | (90.394)          | (6.136)      | (7.831)  |
| Balance at 31 December 2004 - Restated                     | 455.395                                | 331.982                      | (135.067)         | 31.053       | 683.364  |
| Adoption of IAS 32 and IAS 39                              | -                                      | (667)                        | (24.693)          | -            | (25.360) |
| Balance at 1 January 2005                                  | 455.395                                | 331.316                      | (159.759)         | 31.053       | 658.004  |
| Fair value gain on available - for - sale financial assets | -                                      | 423                          | -                 | -            | 423      |
| Currency translation differences                           | -                                      | -                            | 1.263             | -            | 1.263    |
| Net income recognised directly in equity                   | -                                      | 423                          | 1.263             | -            | 1.686    |
| Profit for the period                                      | -                                      | -                            | 5.251             | (693)        | 4.559    |
| Total recognised income for the period                     | -                                      | 423                          | 6.514             | (693)        | 6.245    |
| Expenses on issue of share capital                         | (11)                                   | -                            | -                 | -            | (11)     |
| Disposal of treasury shares                                | 12.186                                 | 1.452                        | 1.254             | -            | 14.892   |
| Increase in investment in subsidiary                       | -                                      | 9                            | (1.095)           | (1.002)      | (2.088)  |
| Changes from disposal of investments                       | -                                      | (375)                        | -                 | -            | (375)    |
| Impairment of investment                                   | -                                      | (28)                         | -                 | -            | (28)     |
| Dividend                                                   | -                                      | -                            | (13.126)          | (1.444)      | (14.570) |
| Revaluation of building                                    | -                                      | 2.682                        | -                 | 1.096        | 3.778    |
| Transfer                                                   | -                                      | 4.157                        | (7.057)           | 2.900        | -        |
| Balance at 30 September 2005                               | 467.570                                | 339.635                      | (173.269)         | 31.910       | 665.846  |

# **Statement of changes in equity**

#### **Company**

|                                        |               |                | Retained |              |
|----------------------------------------|---------------|----------------|----------|--------------|
|                                        | Share capital | Other reserves | earnings | Total equity |
| Balance at 1 January 2004              | 455.182       | 207.755        | (63.002) | 599.934      |
| Profit for the period                  | -             | -              | 17.435   | 17.435       |
| Total recognised income for the period | -             | -              | 17.435   | 17.435       |
| Treasury shares                        | (1.355)       | -              | -        | (1.355)      |
| Expenses on issue of share capital     | (43)          | -              | -        | (43)         |
| Dividend relating to 2003              | -             | -              | (12.820) | (12.820)     |
|                                        | (1.398)       | -              | (12.820) | (14.218)     |
| Balance at 30 September 2004           | 453.784       | 207.755        | (58.388) | 603.151      |

|                                                            | Share capital | Other reserves | Retained<br>earnings | Total equity |
|------------------------------------------------------------|---------------|----------------|----------------------|--------------|
| Balance at 31 January 2004                                 | 455.395       | 219.295        | (66.028)             | 608.662      |
| Adoption of IAS 32 and IAS 39                              | -             | (667)          | (23.778)             | (24.445)     |
| Balance at 1 January 2005                                  | 455.395       | 218.628        | (89.806)             | 584.218      |
| Fair value gain on available - for - sale financial assets | -             | 34             | -                    | 34           |
| Net income recognised directly in equity                   | -             | 34             | -                    | 34           |
| Profit for the period                                      | -             | -              | 10.097               | 10.097       |
| Total recognised income for the period                     | -             | 34             | 10.097               | 10.132       |
| Expenses on issuance of ordinary share capital             | (11)          | -              | -                    | (11)         |
| Impairment of available - for - sale financial assets      | -             | (28)           | -                    | (28)         |
| Transfer                                                   | -             | (2.293)        | 2.293                | -            |
| Disposal of treasury shares                                | 12.186        | 1.452          | -                    | 13.638       |
| Dividend relating to 2004                                  | -             | -              | (13.126)             | (13.126)     |
|                                                            | 12.175        | (869)          | (10.833)             | 473          |
| Balance at 30 September 2005                               | 467.570       | 217.794        | (90.542)             | 594.822      |

# <span id="page-7-0"></span>**Cash flow statement**

|                                                                         | Note | Group         |               | Company       |               |
|-------------------------------------------------------------------------|------|---------------|---------------|---------------|---------------|
|                                                                         |      | 1/1-30/9/2005 | 1/1-30/9/2004 | 1/1-30/9/2005 | 1/1-30/9/2004 |
| Cash flows from operating activities                                    |      |               |               |               |               |
| Cash generated from operations                                          | 12   | 21.954        | 14.523        | (8.230)       | 8.294         |
| Interest paid                                                           |      | (15.007)      | (15.557)      | (11.894)      | (13.629)      |
| Income tax paid                                                         |      | (7.662)       | (4.089)       | (4.490)       | (1.822)       |
| Net cash generated from operating activities                            |      | (716)         | (5.123)       | (24.613)      | (7.157)       |
| Cash flows from investing activities                                    |      |               |               |               |               |
| Purchase of property, plant and equipment (PPE)                         |      | (13.694)      | (6.853)       | (4.277)       | (3.701)       |
| Purchase of intangible assets                                           |      | (11.396)      | (4.812)       | (10.959)      | (3.546)       |
| Proceeds from sale of PPE                                               |      | 353           | 5.360         | 194           | 77            |
| Dividends received                                                      |      | 3.702         | 5.951         | 2.803         | 5.739         |
| Loans granted                                                           |      | 4.418         | 2.236         | -             | -             |
| Purchase of financial assets at fair value through profit or loss       |      | (2.499)       | (1.658)       | -             | -             |
| Sale of other investments / available - for - sale financial asstes     |      | 5.538         | 7.271         | 5.717         | 7.271         |
| Purchase of other investments / available - for - sale financial assets |      | (1.233)       | -             | -             | (392)         |
| Increase in investment in subsidiaries / associates                     |      | (45.113)      | (5.144)       | (35.481)      | (506)         |
| Sale of subsidiaries                                                    |      | -             | -             | 200           | -             |
| Sale of financial assets at fair value through profit or loss           |      | 2.826         | -             | -             | -             |
| Interest received                                                       |      | -             | -             | 238           | 95            |
| Receipts from loan repayments                                           |      | 1.038         | 1.727         | -             | -             |
| Other                                                                   |      | (306)         | 244           | -             | -             |
| Net cash from investing activities                                      |      | (56.366)      | 4.320         | (41.564)      | 5.037         |
| Cash flows from financing activities                                    |      |               |               |               |               |
| Proceeds from issuance of ordinary shares                               |      | 17.809        | 11.507        | -             | -             |
| Sale / (purchase) of treasury shares                                    |      | 20.204        | (5.347)       | 13.638        | (1.355)       |
| Expenses on issue of share capital                                      |      | -             | -             | -             | (43)          |
| Expenses on disposal of treasury shares                                 |      | -             | -             | (11)          | -             |
| Dividends paid to shareholders                                          |      | (17.590)      | (22.788)      | (13.240)      | (13.136)      |
| Proceeds from borrowings                                                |      | 23.686        | 42.859        | -             | -             |
| Repayments of borrowings                                                |      | (58.213)      | (69.268)      | -             | (35.500)      |
| Grants received                                                         |      | -             | -             | 87            | -             |
| Repayments of finance leases                                            |      | (1.957)       | (4.688)       | (883)         | (839)         |
| Other                                                                   |      | 1.888         | (688)         | -             | -             |
| Net cash used in financing activities                                   |      | (14.173)      | (48.413)      | (409)         | (50.872)      |
| Net decrease in cash and cash equivalents                               |      | (71.255)      | (49.216)      | (66.586)      | (52.992)      |
| Cash and cash equivalents at beginning of period                        |      | (19.305)      | 17.882        | (44.809)      | (5.017)       |
| Exchange gains on cash and cash equivalents                             |      | 1.018         | (149)         | -             | -             |
| Cash and cash equivalents at end of period                              |      | (89.541)      | (31.483)      | (111.394)     | (58.009)      |

# <span id="page-8-0"></span>**Notes to the interim condensed financial statements**

# **1. General information**

INTRACOM SA Hellenic Telecommunications and Electronics Industry ("The Company") and its subsidiaries ("The Group") develops products, provides services and undertakes complex, integrated and advanced technology projects in the telecommunications, defence, public administration, and banking & finance industries and has also activities in the construction sector.

The Group has operations in Greece, USA, Bulgaria, Romania, and various other countries. The Company's shares are listed on the Athens Stock Exchange.

The Company's registered office is at 19,5 km Markopoulou Ave., Peania, Athens, Greece. Its website address is www.intracom.gr.

The Board of Directors has approved these interim condensed financial statements for issue on 28 November 2005.

# **2. Summary of significant accounting policies**

These interim condensed financial statements of INTRACOM S.A. are for the nine months ended 30 September 2005. They have been prepared in accordance with IAS 34, Interim Financial Reporting, and are covered by IFRS 1, First-Time Adoption of IFRS, because they are part of the period covered by the Group's first IFRS financial statements for the year ended 31 December 2005.

The accounting policies used for the preparation and presentation of these interim condensed financial statements are consistent with those applied for the preparation of the financial information of the Company and the Group for the year ended 31 December 2004. These interim condensed financial statements must be examined together with the interim condensed financial statements for the six months to 30 June 2005 and the IFRS transition report for the year 2004, as published on the Group's website *[www.intracom.gr.](http://www.intracom.gr/)* 

 According to the provisions of IFRS1 and other relevant standards, the Group has applied the Standards that are applicable for the year ended 31 December 2005 to the comparative information (as of 1 January 2004), except for IAS 32 and IAS 39. IAS 32 and IAS 39 have been applied from 1 January 2005, in accordance with IFRS 1, and as a result comparative figures have not been adjusted. The IFRS standards and IFRIC interpretations that will be applicable at 31 December 2005, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing these interim financial statements. As a consequence, the Group has prepared these financial statements based on standards and interpretations that have been issued by the International Accounting Standards Board and endorsed by the European Union up to the time of preparation.

Financial statements were prepared in accordance with Generally Accepted Accounting Principles in Greece (Greek GAAP) until 31 December 2004. Greek GAAP differ in some areas from IFRS. In preparing these financial statements, management has amended certain accounting, valuation and consolidation methods applied in the Greek GAAP financial statements to comply with IFRS. The comparative figures in respect of 2004 were restated to reflect these adjustments.

Reconciliations and descriptions of the effect of the transition from Greek GAAP to IFRS on equity and net income are provided in Note 3.

<span id="page-9-0"></span>These financial statements have been prepared under the historical cost convention, as modified by the revaluation of shares listed on the Athens stock exchange and as of 1 January 2005 of available-for-sale financial assets, and financial assets (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements, in conformity with IFRS, requires the use of critical accounting estimates and requires management to exercise its judgement in the process of applying the accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates.

Accounting policies used in the preparation of the financial information of subsidiaries, associates and joint ventures, are consistent with those applied by the parent company.

# **3. Transition to IFRS**

According to the provisions of IFRS 1, the Group has applied the accounting policies retrospectively to prepare its opening IFRS balance sheet at the date of transition (1 January 2004). The reconciliations between Greek GAAP and IFRS for the period 1/1-30/9/2004 are presented below. The reconciliations for 1 January and 31 December 2004 are presented in the interim financial statements of 30 June 2005.

#### **Group**

- Reconciliation of equity at 30 September 2004
- Consolidated balance sheet at 30 September 2004
- Consolidated income statement and reconciliation of net income for the period 1/1-30/9/2004

#### **Company**

- Reconciliation of equity at 30 September 2004
- Company balance sheet at 30 September 2004
- Company income statement and reconciliation of net income for the period 1/1-30/9/2004

#### **Reconciliation of equity at 30 September 2004 - Group**

| Total equity under Greek GAAP                                                                                         | 802.257   |
|-----------------------------------------------------------------------------------------------------------------------|-----------|
| Write off of intangible assets that do not meet the IFRS definition                                                   | (34.426)  |
| Recognition of other provisions                                                                                       | (44.394)  |
| Restatement of accumulated depreciation to reflect PPE's and intangibles'<br>useful lives rather than their tax lives | 44.241    |
| Impairement of investments in subsidiaries and other investments                                                      | (8.440)   |
| Deferred tax adjustments                                                                                              | 4.318     |
| Effect of adjustments to work in progress under IFRS                                                                  | (16.987)  |
| Adjustment to value of trade and other receivables                                                                    | (36.063)  |
| Write-off of income tax receivable                                                                                    | (5.397)   |
| Transfer of treasury shares to equity                                                                                 | (8.962)   |
| Restatement of the provision for post-employment/ termination benefits                                                | 2.445     |
| Warranty provision                                                                                                    | (5.042)   |
| Revenue recognition adjustments                                                                                       | (11.833)  |
| Provision for income tax                                                                                              | (7.839)   |
| Reversal of proposed dividends payable                                                                                | 8.602     |
| Change in group structure and consolidation exchange differences                                                      | (120)     |
| Other                                                                                                                 | (121)     |
| Total adjustments                                                                                                     | (120.019) |
| Total equity under IFRS                                                                                               | 682.238   |

#### **Consolidated balance sheet at 30 September 2004**

|                                              | GREEK GAAP | IFRS Adjustments | IFRS      |
|----------------------------------------------|------------|------------------|-----------|
| ASSETS                                       |            |                  |           |
| Non-current assets                           |            |                  |           |
| Property, plant and equipment                | 301.883    | 7.244            | 309.127   |
| Intangible assets                            | 39.806     | (3.025)          | 36.781    |
| Investments in associates and joint          |            |                  |           |
| ventures                                     | 10.104     | (2.994)          | 7.110     |
| Other investments                            | 27.867     | (7.687)          | 20.180    |
| Investment property                          | -          | 6.381            | 6.381     |
| Deferred income tax assets                   | -          | 10.151           | 10.151    |
| Trade and other receivables                  | 108.259    | (42.022)         | 66.237    |
|                                              | 487.920    | (31.952)         | 455.968   |
| Current assets                               |            |                  |           |
| Inventories                                  | 193.037    | (37.470)         | 155.567   |
| Trade and other receivables                  | 608.438    | (76.989)         | 531.449   |
| Construction contracts                       | -          | 36.713           | 36.713    |
| Other investments                            | -          | 5.139            | 5.139     |
| Cash and cash equivalents                    | 127.325    | (5.164)          | 122.161   |
|                                              | 928.800    | (77.771)         | 851.029   |
| Total assets                                 | 1.416.720  | (109.723)        | 1.306.997 |
| EQUITY                                       |            |                  |           |
| Share capital                                | 466.619    | (12.835)         | 453.784   |
| Reserves                                     | 297.341    | (100.079)        | 197.262   |
|                                              | 763.960    | (112.913)        | 651.047   |
| Minority interest                            | 38.296     | (7.105)          | 31.191    |
| Total equity                                 | 802.257    | (120.019)        | 682.238   |
| LIABILITIES                                  |            |                  |           |
| Non-current liabilities                      |            |                  |           |
| Borrowings                                   | 125.876    | (2.913)          | 122.963   |
| Deferred income tax liabilities              | -          | 5.828            | 5.828     |
| Retirement benefit obligations               | 7.393      | (3.219)          | 4.174     |
| Grants                                       | -          | 905              | 905       |
| Provisions for other liabilities and charges | 7.073      | (2.136)          | 4.937     |
|                                              | 140.341    | (1.535)          | 138.806   |
| Current liabilities                          |            |                  |           |
| Trade and other payables                     | 266.109    | (11.710)         | 254.399   |
| Current income tax liabilities               | -          | 8.366            | 8.366     |
| Construction contracts                       | -          | 3.089            | 3.089     |
| Borrowings                                   | 208.013    | 5.615            | 213.628   |
| Provisions for other liabilities and charges | -          | 6.471            | 6.471     |
|                                              | 474.122    | 11.830           | 485.953   |
| Total liabilities                            | 614.464    | 10.295           | 624.759   |
| Total equity and liabilities                 | 1.416.720  | (109.723)        | 1.306.997 |

#### **Consolidated income statement for the period 1/1 – 30/9/2004**

|                                                  | GREEK GAAP | IFRS Adjustments | IFRS      |
|--------------------------------------------------|------------|------------------|-----------|
| Sales                                            | 447.730    | 1.425            | 449.155   |
| Cost of goods sold                               | (296.657)  | (5.616)          | (302.273) |
| Gross profit                                     | 151.073    | (4.191)          | 146.882   |
| Selling and research costs                       | (56.762)   | (711)            | (57.473)  |
| Administrative expenses                          | (47.921)   | 539              | (47.382)  |
| Other operating income - net                     | (1.041)    | 4.492            | 3.451     |
| Operating profit                                 | 45.350     | 128              | 45.478    |
| Finance costs - net                              | (15.802)   | 1.686            | (14.117)  |
| Share of profit of associates and joint ventures | -          | 2.225            | 2.225     |
| Profit before income tax                         | 29.548     | 4.038            | 33.586    |
| Income tax expense                               | -          | (14.510)         | (14.510)  |
| Profit for the period from continued operations  | 29.548     | (10.472)         | 19.075    |
| Discontinued operations                          | -          | -                | -         |
| Loss for the period from discontinued operations | -          | (568)            | (568)     |
| Profit for the period                            | 29.548     | (11.040)         | 18.508    |
| Attributable to:                                 |            |                  |           |
| Equity holders of the Company                    | 28.384     | (10.889)         | 17.495    |
| Minority interest                                | 1.163      | (150)            | 1.013     |
|                                                  | 29.548     | (11.040)         | 18.508    |

#### **Reconciliation of net income for the period 1/1 – 30/9/2004 - Group**

| Profit before tax under Greek GAAP                                                | 29.548   |
|-----------------------------------------------------------------------------------|----------|
| Write off of intangible assets and reversal of depreciation of assets written off | (1.431)  |
| Effect of change in depreciation rates of tangible and intangible assets          | 9.800    |
| Revenue recognition adjustments                                                   | 2.817    |
| Transfer to cost of goods sold                                                    | (11.615) |
| Other adjustments                                                                 | 3.900    |
| Profit before income tax under IFRS                                               | 33.018   |
| Income tax expense                                                                | (14.510) |
| Profit for the period under IFRS                                                  | 18.508   |

**Reconciliation of equity at 30 September 2004 – Company** 

| Total equity under Greek GAAP                                                                                         | 712.300   |
|-----------------------------------------------------------------------------------------------------------------------|-----------|
| Write-off of intangible assets that do not meet the IFRS definition                                                   | (26.053)  |
| Recognition of other provisions                                                                                       | (38.057)  |
| Restatement of accumulated depreciation to reflect PPE's and intangibles' useful<br>lives rather than their tax lives | 28.244    |
| Impairement of investments                                                                                            | (6.849)   |
| Deferred tax adjustments                                                                                              | 5.700     |
| Effect of adjustments to work in progress under IFRS                                                                  | (15.164)  |
| Adjustment to value of trade and other receivables                                                                    | (28.500)  |
| Write-off of income tax receivable                                                                                    | (5.397)   |
| Transfer of treasury shares to equity                                                                                 | (12.122)  |
| Restatement of the provision for post-employment/ termination benefits                                                | 2.198     |
| Warranty provision                                                                                                    | (5.042)   |
| Provision for income tax                                                                                              | (4.493)   |
| Adjustment to cost of goods sold                                                                                      | (11.430)  |
| Other adjustments                                                                                                     | 7.816     |
| Total adjustments                                                                                                     | (109.149) |
| Total equity under IFRS                                                                                               | 603.151   |

#### **Company balance sheet at 30 September 2004**

|                                              | GREEK GAAP         | IFRS Adjustments      | IFRS               |
|----------------------------------------------|--------------------|-----------------------|--------------------|
| ASSETS                                       |                    |                       |                    |
| Non-current assets                           |                    |                       |                    |
| Property, plant and equipment                | 242.670            | 15.697                | 258.367            |
| Intangible assets                            | 44.920             | (14.535)              | 30.385             |
| Investment property                          | -                  | 4.908                 | 4.908              |
| Investments in subsidiaries                  | 39.907             | (4.986)               | 34.921             |
| Investments in associates                    | 319                | -                     | 319                |
| Other investments                            | 11.973             | 3.180                 | 15.153             |
| Trade and other receivables                  | 79.345             | (28.500)              | 50.845             |
| Deferred income tax assets                   | -                  | 8.408                 | 8.408              |
|                                              | 419.134            | (15.829)              | 403.305            |
| Current assets                               |                    |                       |                    |
| Inventories                                  | 145.867            | (17.547)              | 128.320            |
| Trade and other receivables                  | 430.546            | 50.245                | 480.791            |
| Other investments                            | 13.893             | (12.122)              | 1.771              |
| Cash and cash equivalents                    | 101.494            | (5.858)               | 95.636             |
|                                              | 691.800            | 14.718                | 706.519            |
| Total assets                                 | 1.110.935          | (1.111)               | 1.109.824          |
|                                              |                    |                       |                    |
| EQUITY                                       |                    |                       |                    |
| Share capital                                | 466.619            | (12.835)              | 453.784            |
| Reserves                                     | 245.681<br>712.300 | (96.314)<br>(109.149) | 149.367<br>603.151 |
| LIABILITIES                                  |                    |                       |                    |
| Non-current liabilities                      |                    |                       |                    |
| Borrowings                                   | 118.000            | 3.185                 | 121.185            |
| Provisions for other liabilities and charges | 11.006             | (8.916)               | 2.090              |
| Grants                                       | -                  | 413                   | 413                |
| Retirement benefit obligations               | 5.655              | (2.198)               | 3.457              |
| Deferred income tax liabilities              | -                  | 2.708                 | 2.708              |
|                                              | 134.661            | (4.808)               | 129.853            |
| Current liabilities                          |                    |                       |                    |
| Trade and other payables                     | 107.293            | 105.991               | 213.284            |
| Borrowings                                   | 153.645            | 1.170                 | 154.815            |
| Current income tax liabilities               | 3.037              | 1.497                 | 4.534              |
| Provisions for other liabilities and charges | -                  | 4.187                 | 4.187              |
|                                              | 263.974            | 112.846               | 376.820            |
| Total liabilities                            | 398.635            | 108.038               | 506.673            |
| Total equity and liabilities                 | 1.110.935          | (1.111)               | 1.109.824          |

#### **Company income statement for the period 1/1 – 30/9/2004**

|                                                     | GREEK GAAP | IFRS Adjustments | IFRS      |
|-----------------------------------------------------|------------|------------------|-----------|
| Sales                                               | 354.966    | 4.842            | 359.808   |
| Cost of goods sold                                  | (244.722)  | (6.570)          | (251.291) |
| Gross profit                                        | 110.244    | (1.728)          | 108.516   |
| Other operating income - net                        | 685        | 4.634            | 5.318     |
| Selling costs                                       | (21.594)   | 420              | (21.174)  |
| Administrative expenses                             | (27.843)   | 2.759            | (25.084)  |
| Research and development costs                      | (25.306)   | (3.294)          | (28.600)  |
| Other operating expenses                            | -          | (307)            | (307)     |
| Operating profit                                    | 36.186     | 2.483            | 38.669    |
| Finance costs - net                                 | (7.553)    | (4.138)          | (11.691)  |
| Extraordinary gains and non-operating income        | 3.320      | (3.320)          | -         |
| Prior year's income                                 | 435        | (435)            | -         |
| Extraordinary losses and non-operating expenses     | (3.099)    | 3.099            | -         |
| Prior year's expenses                               | (962)      | 962              | -         |
| Depreciation expense not included in operating cost | (840)      | 840              | -         |
| Profit before income tax                            | 27.486     | (508)            | 26.978    |
| Income tax expense                                  | -          | (9.543)          | (9.543)   |
| Profit for the period                               | 27.486     | (10.051)         | 17.435    |

### **Reconciliation of net income for the period 1/1-30/9/2004 – Company**

| Profit before income tax under Greek GAAP                                         | 27.486   |
|-----------------------------------------------------------------------------------|----------|
| Write off of intangible assets and reversal of depreciation of assets written off | (184)    |
| Effect of change in depreciation rates of tangible and intangible assets          | 7.761    |
| Transfer to cost of goods sold                                                    | (12.066) |
| Revenue recognition adjustments                                                   | 4.842    |
| Other                                                                             | (861)    |
| Profit before income tax under IFRS                                               | 26.978   |
| Income tax expense                                                                | (9.543)  |
| Profit for the period under IFRS                                                  | 17.435   |

# <span id="page-16-0"></span>**4. Segment information**

The segment results for the period 1/1-30/9/2005 were as follows:

|                                   | Telecommunications<br>systems | Technology<br>solutions for<br>government and<br>banking sector | Defence<br>systems | Construction | Other | Unallocated | Total   |
|-----------------------------------|-------------------------------|-----------------------------------------------------------------|--------------------|--------------|-------|-------------|---------|
| Sales                             | 187.023                       | 82.829                                                          | 48.563             | 46.728       | 8.142 | 698         | 373.982 |
| Operating profit                  | 5.448                         | 2.494                                                           | 4.102              | (2.037)      | 399   | 570         | 10.976  |
| Share of profits of<br>associates | (2)                           | (62)                                                            | -                  | 1.077        | 3     | -           | 1.017   |

The segment results for the period 1/1-30/9/2004 were as follows:

|                                   | Telecommunications<br>systems | Technology<br>solutions for<br>government and<br>banking sector | Defence<br>systems | Construction | Other | Unallocated | Total   |
|-----------------------------------|-------------------------------|-----------------------------------------------------------------|--------------------|--------------|-------|-------------|---------|
| Sales                             | 251.708                       | 76.459                                                          | 54.378             | 55.620       | 8.398 | 2.592       | 449.155 |
| Operating profit                  | 21.948                        | 4.368                                                           | 10.720             | 7.915        | 339   | 188         | 45.478  |
| Share of profits of<br>associates | -                             | 3                                                               | -                  | 2.195        | 27    | -           | 2.225   |

### **5. Finance costs – net**

Fair value gains of €7.584 thousand on derivative financial instruments and hedged loan are included in finance costs for the period ended 30 September 2005. The Group has elected to apply the exemption given by IFRS 1 from restating comparatives for IAS 32 and IAS 39 and therefore the results for 2004 do not include the effect of derivatives.

#### <span id="page-17-0"></span>**6. Investment in subsidiaries / associates**

During the period, the Group increased its percentage holding in the subsidiary Intrasoft International SA, registered in Luxembourg, from 69,73% to 100%, through the acquisition of 1.877 shares. The consideration was €12.410.724 paid in cash. The consideration exceeded the company's carrying value by €10.083.764 during the period of acquisition. Based on valuations by international firms and based on the continuous growth of the company, the Group expects strong cash flows over the next years.

In addition, during the period group companies have set up new companies in which the Group participates as follows:

- (a) 100% in Intracom Armenia LLC, registered in Armenia, for €300.000,
- (b) 67% in Fornax Informatika DOO registered in Croatia, for €2.727,
- (c) 100% in Intracom Middle East FZ-LLC registered in United Arab Emirates, for €88.750,
- (d) 58% in Eurokat through Intrakat, for €410.000 and
- (e) 67% in Fornax Informatika S.R.O Slovensko registered in Slovakia, for €5.171.

During the period, the Company disposed of:

(a) its entire holding (60%) in ¨Galanis Sports Data SA¨, at a loss of €54 thousand,

(b) its entire holding (66%) in the Group Bulfon S.A., registered in Sofia, Bulgaria, at a loss of €111 thousand. In addition, as part of the sale agreement of Bulfon SA, the Company assumed the subsidiary's debt of €1.751 thousand. The resulting loss was included in administration expenses.

During the months August and September 2005, the Company acquired 24,8% of the share capital of FORTHnet S.A., for €22.882.917.

### **7. Trade and other receivables**

Selling costs include provisions for doubtful debts amounting to €8.750 thousand, as well as reversal of provisions for doubtful debts amounting to €12.427 thousand.

# **8. Inventories**

Inventory write-downs of €1.310 thousand have been expensed in the period to 30 September 2005.

# <span id="page-18-0"></span>**9. Share capital**

|                                    | Number of<br>shares | Ordinary | shares Share premium Treasury shares |          | Total   |
|------------------------------------|---------------------|----------|--------------------------------------|----------|---------|
| Balance at 1 January 2005          | 131.258.772         | 276.956  | 190.625                              | (12.186) | 455.395 |
| Treasury shares sold               | -                   | -        | -                                    | 12.186   | 12.186  |
| Expenses on issue of share capital | -                   | -        | (11)                                 | -        | (11)    |
| Balance at 30 September 2005       | 131.258.772         | 276.956  | 190.614                              | (0)      | 467.570 |

During the nine months ended 30 September 2005, the Company sold the treasury shares it held for €13.637.959.

# **10. Derivative financial instruments**

|                                    | 30/9/2005   |               |
|------------------------------------|-------------|---------------|
|                                    | Liabilities | Nominal value |
| Interest-rate swaps                | 4.494       | €100.000.000  |
| Forward foreign exchange contracts | 8.278       | \$29.963.000  |
| Cross-currency swaps - loan hedge  | 17.997      | €118.000.000  |
| Total                              | 30.769      |               |
| Current liabilities                | 17.997      |               |
| Non-current liabilities            | 12.772      |               |
|                                    | 30.769      |               |

# **11. Capital expenditure**

Total acquisitions of property, plant and equipment for the Company and the Group for the nine months ended 30 September 2005 amounted to €4.277 thousand and €13.694 thousand respectively. Total additions to intangible assets for the nine months amounted to €10.959 thousand and €11.396 thousand for the Company and the Group respectively.

## <span id="page-19-0"></span>**12. Operating cash flows**

|                                                                       | Group         |               | Company       |               |
|-----------------------------------------------------------------------|---------------|---------------|---------------|---------------|
|                                                                       | 1/1-30/9/2005 | 1/1-30/9/2004 | 1/1-30/9/2005 | 1/1-30/9/2004 |
| Profit for the period                                                 | 4.559         | 19.075        | 10.097        | 17.435        |
| Adjustments for:                                                      |               |               |               |               |
| Tax                                                                   | 3.441         | 14.510        | 2.248         | 9.543         |
| Depreciation of PPE                                                   | 13.078        | 13.722        | 8.038         | 8.648         |
| Amortisation of intangible assets                                     | 11.935        | 10.491        | 9.963         | 8.893         |
| Depreciation of investment property                                   | 404           | 195           | 378           | 195           |
| Impairment of assets                                                  | 350           | 51            | 350           | 51            |
| Loss / (profit) on sale of PPE                                        | 27            | (2.829)       | (71)          | (13)          |
| Fair value loss on other investments                                  | -             | 1.517         | -             | 1.812         |
| Profit on sale of other investments                                   | -             | -             | -             | (295)         |
| Gain on sale of available - for - sale financial assets               | -             | -             | (896)         | -             |
| Gain on sale of subsidiaries                                          | -             | -             | (2)           | -             |
| Fair value gains on derivative financial instruments                  | (10.588)      | -             | (10.588)      | -             |
| Interest income                                                       | (1.076)       | (1.727)       | (238)         | (95)          |
| Interest expense                                                      | 15.004        | 15.991        | 11.894        | 13.629        |
| Dividend income                                                       | (3.702)       | (5.951)       | (2.803)       | (5.739)       |
| Depreciation of grants received                                       | (421)         | (8)           | (413)         | -             |
| Share of profit from associates                                       | (1.017)       | (2.225)       | -             | -             |
| Exchange loss on loans                                                | 1.420         | 311           | -             | -             |
| Other                                                                 | (2.911)       | (114)         | -             | -             |
|                                                                       | 30.503        | 63.010        | 27.957        | 54.064        |
| Changes in working capital                                            |               |               |               |               |
| (Increase) / decrease in inventories                                  | (11.120)      | (2.148)       | (9.209)       | 7.864         |
| (Increase) / decrease in trade and other receivables                  | 18.638        | (49.994)      | 7.177         | (65.142)      |
| Increase / (decrease) in trade and other payables                     | (19.531)      | 497           | (28.337)      | 11.912        |
| Increase / (decrease) in provisions for other liabilities and charges | 1.823         | 3.418         | (7.288)       | 180           |
| Increase / (decrease) in retirement benefit obligations               | 1.477         | (349)         | 1.471         | (584)         |
| Other                                                                 | 163           | 90            | -             | -             |
|                                                                       | (8.550)       | (48.486)      | (36.186)      | (45.770)      |
| Cash generated from operations                                        | 21.954        | 14.523        | (8.230)       | 8.294         |

# **13. Dividends**

Dividends for the year 2004 amounting to €13.126 thousand (€0,10 per share) were approved at the Annual General Meeting that took place on 30 June 2005 and the initial payment date was 29 August 2005.

### <span id="page-20-0"></span>**14. Commitments**

#### **Capital commitments**

There is no capital expenditure contracted for at the balance sheet date but not yet incurred.

## **15. Contingencies**

The Group has contingent liabilities in respect of banks, other guarantees and other matters arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities. During the normal course of business, the Company has given (a) guarantees for prepayments for €103.768 thousand, (b) guarantees for good performance for €108.162 thousand and (c) guarantees for participation in contests for €21.738 thousand.

The Company has given guarantees to banks for subsidiaries' loans amounting to €32.405 thousand.

# **16. Related party transactions**

The following transactions are carried out with related parties:

|                            |               | Group         |               | Company       |  |
|----------------------------|---------------|---------------|---------------|---------------|--|
|                            | 1/1-30/9/2005 | 1/1-30/9/2004 | 1/1-30/9/2005 | 1/1-30/9/2004 |  |
| Sales of services:         |               |               |               |               |  |
| To subsidiaries            | -             | -             | 2.112         | 1.344         |  |
| To other related parties   | 1.341         | 3.792         | 1.315         | 2.312         |  |
|                            | 1.341         | 3.792         | 3.427         | 3.656         |  |
| Purchases of services:     |               |               |               |               |  |
| From subsidiaries          | -             | -             | 3.893         | 5.374         |  |
| From other related parties | 1.654         | 4.379         | 1.654         | 4.379         |  |
|                            | 1.654         | 4.379         | 5.547         | 9.753         |  |
| Sales of goods             |               |               |               |               |  |
| To subsidiaries            | -             | -             | 14.452        | 33.861        |  |
| To other related parties   | 6.734         | 15.744        | 6.734         | 15.744        |  |
|                            | 6.734         | 15.744        | 21.186        | 49.604        |  |
| Purchases of goods         |               |               |               |               |  |
| From subsidiaries          | -             | -             | 13.854        | 31.440        |  |
|                            | -             | -             | 13.854        | 31.440        |  |
| Disposals of fixed assets: |               |               |               |               |  |
| To subsidiaries            | -             | -             | -             | 10            |  |
|                            | -             | -             | -             | 10            |  |
| Purchases of fixed assets: |               |               |               |               |  |
| From subsidiaries          | -             | -             | 1.333         | 1.983         |  |
| From other related parties | 5.355         | 649           | 5.355         | 649           |  |
|                            | 5.355         | 649           | 6.688         | 2.632         |  |
| Rental income:             |               |               |               |               |  |
| From subsidiaries          | -             | -             | 198           | 329           |  |
| From other related parties | 139           | 131           | 113           | 105           |  |
|                            | 139           | 131           | 312           | 433           |  |

Transactions with related parties are carried out on the basis of the price lists in force with non-related parties.

<span id="page-21-0"></span>Year-end balances arising from transactions with related parties are as follows:

|                                   | Group     |           |           | Company   |
|-----------------------------------|-----------|-----------|-----------|-----------|
|                                   | 30/9/2005 | 30/9/2004 | 30/9/2005 | 30/9/2004 |
| Receivables from related parties: |           |           |           |           |
| From subsidiaries                 | -         | -         | 32.883    | 31.777    |
| From other related parties        | 37.089    | 27.711    | 36.060    | 26.700    |
|                                   | 37.089    | 27.711    | 68.942    | 58.477    |
| Payables to related parties       |           |           |           |           |
| To subsidiaries                   | -         | -         | 10.825    | 14.141    |
| To other related parties          | 17.642    | 9.649     | 17.642    | 9.485     |
|                                   | 17.642    | 9.649     | 28.466    | 23.626    |

#### **Key management compensation**

For the nine months to 30 September 2005, the Company has paid the amounts of €1.557 thousand and €1.144 thousand as directors' remuneration and key management compensation respectively (nine months to 30 September 2004: €1.149 thousand and €1.139 thousand for directors' remuneration and key management compensation respectively).

# **17. Earnings per share**

Basic and diluted earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held as treasury shares.

|                                                      | Group                    |                 | Company                    |                 |
|------------------------------------------------------|--------------------------|-----------------|----------------------------|-----------------|
|                                                      | 1/1 - 30/9/2005          | 1/1 - 30/9/2004 | 1/1 - 30/9/2005            | 1/1 - 30/9/2004 |
| Basic earnings per share (€ per share)               |                          |                 |                            |                 |
| Profit attributable to equity holders of the Company | 5.251                    | 17.495          | 10.097                     | 17.435          |
| Weighted average number of ordinary shares in issue  | 131.259                  | 128.101         | 131.259                    | 128.101         |
| Basic earnings per share (€ per share)               | 0,04                     | 0,14            | 0,08                       | 0,14            |
|                                                      |                          |                 |                            |                 |
|                                                      |                          |                 |                            |                 |
|                                                      | Group<br>1/1 - 30/9/2005 | 1/1 - 30/9/2004 | Company<br>1/1 - 30/9/2005 | 1/1 - 30/9/2004 |
| Diluted earnings per share (€ per share)             |                          |                 |                            |                 |
| Profit attributable to equity holders of the Company | 5.251                    | 17.495          | 10.097                     | 17.435          |
| Weighted average number of ordinary shares in issue  | 131.596                  | 128.352         | 131.596                    | 128.352         |

# **18. Unaudited tax years**

The Company has been audited by the tax authorities up to the year 2002.

# <span id="page-22-0"></span>**19. Number of employees**

The number of employees at the end of the current period was 5.180 and 3.088 for the Group and the Company respectively (30/9/2004: 5.818 and 3.647 respectively).

### **20. Transfer of segments to subsidiaries**

On 12 September 2005, Intracom Holdings announced, in light of its overall strategic plan, its decision for its restructuring and transformation to a holdings company. This restructuring will be achieved through the spin-off of the Telecom Solutions, the Defense Electronic Systems and the IT Services and their transfer to three newly established companies.

On 17 November, the Extraordinary General Meetings of Shareholders approved the spin-off of the Telecom Solutions and the Defense Electronic Systems and their transfer respectively to the 100% subsidiaries of Intracom, Intracom ILIDA HELLAS S.A. (renamed to "INTRACOM TELECOM") and PRAXIS AYTOMATIONS S.A. (renamed to "INTRACOM DEFENSE"), in accordance with paragraphs 1-5 of Law 2166/1993. The balance sheet date for the spin-off was 30/09/2005. The relevant approvals by the authorities have not yet been announced.

## **21. Post balance sheet events**

On 14 November 2005, the Extraordinary General Meeting of Shareholders of Intrakat approved the merger of Intramet. The merger is expected to be completed until 31 December 2005.