EUROBANK FACTORS ar 2006 CORECTED - Factoring, Forfaiting · Export Factoring and Forfaiting...

HEAD OFFICE3, ∫apodistriou St. & Messogion Ave.

GR 153 43 Athens

Tel.: +30 210 6078 000

Fax: +30 210 6078 010 -020 -030

www.efgfactors.com

www.eurobank.gr

NORTHEN GREECE BRANCH 13, Karolou Ntil

GR 546 23 Thessaloniki

Tel.: +30 2310 376 980

Fax: +30 2310 376 960

www.efgfactors.com

BULGARIAN BRANCH135, Tsarigradsko Sh. Blvd.,

Office Express Building,

1784 Sofia, Bulgaria

Tel.: + 359 2 4015000

Fax: + 359 2 4015010

www.efgfactors.com

www.postbank.bg ∞ N N U A L R E P O R T 2006

ñ Δ

ËÏ.:

210

3615

000

∞ N N U A L R E P O R T 2006

Sofia

Thessaloniki

Athens

Contents

μoard of Directors 4

Management - Members of the Executive Committee 5

Financial Highlights 6

Review of the Year 7

Eurobank Factors Performance 2006 8

ñ Greek Factoring Market 8

ñ Bulgarian Factoring Market 9

Financial Statements 10

Auditor’s Report 47

Board of Directors

1. George Marinos, President

2. Panagiotis Mantas, Vice President

3. Evaggelos Kavvalos, Member

4. Andreas Chasapis, Member

5. Constantin Couroussis, Member

6. Nikolaos Aliprantis, Member

7. Christos Adam, Member

8. George Karagiannopoulos, Member

George Karagiannopoulos General ManagerTel: +30-210 6078 012e-mail: [email protected]

Constantin Couroussis Deputy General ManagerFinance, Administration & ControlTel: +30-210 6078 009e-mail: [email protected]

Charalampos Kanaloupitis Deputy General ManagerBusiness DevelopmentTel: +30-210 6078 016e-mail: [email protected]

Spiros Tsolis International Factoring and Forfaiting ManagerTel: +30-210 6078 028e-mail: [email protected]

Socratis Tsigaras Client Relations ManagerTel: +30-210 6078 043e-mail: [email protected]

Athanasios Ntaflos IT ManagerTel: +30-210 6078 054e-mail: [email protected]

Yiannis Koutsoumpos Deputy Business Development ManagerNorthern Greece Branch ManagerTel: +30-2310 376 980e-mail: [email protected]

Zoe Spyridaki Credit Risk ManagerTel: +30-210 6078 024e-mail: [email protected]

μULGARIA

George Lilianov Bulgarian Branch - ManagerTel: +359-2 4015001e-mail: [email protected]

Member of International Forfaiting Association 5

Management -Members of the Executive Committee

Financial Highlights

Purchased A/Rs0

500

1.000

1.500

2.000

1.354

1.634

Export Factoring Import Factoring Forfaiting0

30

60

90

120

150

International Activity

105

139,6

28,738,9

11

85

Profits before tax0

2.000

4.000

6.000

8.000

6.0356.417

20,7%

33%

35,6%

6,3%

673%

Purchased A/Rs Bulgarian Branch Annual T/O0

5

10

15

5,01

10,07

101%

2005

2006

increase %

Eurobank Factors, 100%

subsidiary of Eurobank EFG

Group, was ranked 6th in the

world and 3rd in Europe for

Product Know-How, Business

Communication, Quality of

Services and Overall

Performance in "Export-Import

Factoring" for year 2005,

among 212 members of F.C.I.

(June, 2006)


Review of the Year

Eurobank Factors, actively

participating in the

development of Factoring in

Eastern Europe, was one of

the sponsors of the VI Annual

Conference of East European

Factoring Association

(E.E.F.A.) that was held in

Sofia, Bulgaria.

(September, 2006)

Microsoft ranked the

Eurobank Factors “¡-Factor”

System, a tailormade factoring

services software developed

by the in-house IT dept.,

among the 4 best Software

systems in Europe at the

Financial Services Leadership

Award Contest.

(November, 2006)

Eurobank Factors upgraded

its representative office in

Sofia, to a full-service branch

while still remaining the only

Greek factor in Bulgaria.

(November 2006)

The Company completed

the UAT operation of the new

N-Factor and CRM module,

an in-house developed

information system based on

the Microsoft Navision ERP,

especially designed for

Factoring operations.

(March 2006)

Eurobank Factors was the

main sponsor of the Northern

Greece Exporters Association

in Thessaloniki during the

“Money Show” Forum.

Eurobank Factors also held an

Export Factoring and Forfaiting

presentation promoting the

benefits companies could

enjoy by the use of such

services.

(December 2006)

Eurobank Factors Performance 2006

Greece

Eurobank Factors’ turnover reached to ú1.635 mio in 2006, showing a 20,3% increase compared to ú1.359 mio in

2005. A market share of 34% was accomplished in the domestic market. Respectively, Export Factoring market

share reached 45,95% and Import Factoring market share went up to 55,29%.

Contribution by product

Key financial HighlightsIn ‘000ú Year End 2006/2005

ñ Commission Income: 4.829,98/4.693,83 = +2,90%

ñ Interest Income: 4.924,86/4.553,48 = +8,16%

ñ Net Profit: 6.417,33/6.035,27 = +6,33%

ñ Op. Ex. / Gross Income: 32,84%

8 ∞ N N U A L R E P O R T 2006

Forfaiting 5%

πnvoice Discounting 6% ∂xport Factoring 13%

Import Factoring 2%

Domestic with-Resource Factoring 36%

Domestic non-Recource Factoring 38%

Bulgaria

Eurobank Factors, offering full factoring services in Sofia, Bulgaria, strengthened its position in the market of New-

Europe. Eurobank Factors Branch Bulgaria, the first Greek mover in the country, achieved 103% growth in factoring

turnover in 2006 and it remained the only member of FCI (Factors Chain International) and IFA (International Forfaiting

Association) covering the needs of the Bulgarian market.

Contribution by product

Eurobank Factors Branch Bulgaria aims at further developing its factoring know-how and expertise in international

factoring, while launching factoring services to meet the growing needs of the domestic market.


Export Factoring 83%

πmport Factoring 17%

Direct Import 7,04% 2 Factors Import10,26%

2 Factors Export 57,62%

Direct Export25,09%

∂FG FACTORS S.A. (Eurobank Factors)S.A. REG. No. 44428/01∞Δ/μ/99/39/03

Financial Statementsfor the year ended December 31st, 2006

Contents

Director’s Report 12

Income Statement 14

Balance Sheet 15

Statement of Changes in Equity 16

Cash Flow Statement 17

1 General Information 18

2 Summary of Significant Accounting Policies 18

3 Financial Risk Management 24

4 Critical Accounting Estimates and Assumptions 25

5 Net Interest Income 26

6 Net Commission Income 26

7 Other Income 27

8 Payroll and Staff Costs 27

9 Administrative Expenses 28

10 Impairment of Trade Receivables 28

11 Income Tax Expense 29

12 Cash and Cash Equivalents 30

13 Trade Receivables 30

14 Intangible Assets 31

15 Property, Plant and Equipment 32

16 Deferred Income Tax Assets-Liabilities 33

17 Other Assets 33

18 Due to Banks 34

19 Due to Customers 34

20 Corporate Bonds 34

21 Financial Derivative Instruments 35

22 Current Income Tax Liabilities 35

23 Retirement Benefit Obligations 35

24 Other Liabilities 36

25 Share Capital 36

26 Statutory Reserve 36

27 Retained Earnings 36

28 Credit Risk 37

29 Currency Risk 38

30 Interest Rate Risk 40

31 Liquidity Risk 42

32 Operational Lease Commitments 43

33 Related Party Transactions 44

34 Contingent Liabilities 46

35 Events after the Balance Sheet Date 46

Auditor’s Report 47


DIRECTORS’ REPORT FOR THE YEAR 2006FOR THE SOCIETE ANONYME ∂FG FACTORS S.A. (Eurobank Factors)To the Annual General Assembly of the Shareholders of “EFG FACTORS S.A. (Eurobank Factors)”

Ladies and Gentlemen,

We hereby present information concerning the Company’s activity during the financial year 2006.

FINANCIAL CONDITION OF THE COMPANY

This is the seventh consecutive financial year for the Company and includes the period from January 1st, 2006 to

December 31st, 2006.

The financial statements for the aforementioned year that are published and submitted to the General Assembly have

been prepared in accordance with the International Financial Reporting Standards. Detailed information about the

principal accounting policies pursued is presented in the Notes to the Financial Statements as per December 31st,

2006. The Company’s Board of Directors authorized these financial statements for issue on March 12th, 2007.

The Board of Directors announces the following:

In 2006, the total turnover of the Greek Factoring market rose to ú4.600.000 thousand from ú4.370.000 thousand

in 2005, i.e. it increased by 5%.

The financial year 01.01.06 - 31.12.06 closed with significant positive results and further growth prospects.

Factoring turnover amounted to ú1.549.956 thousand, as compared to ú1.348.787 thousand in the previous year,

registering a 14,9% increase, while Forfaiting turnover rose to ú85.487 thousand from ú10.887 thousand, registering

a 685,22% increase.

Net profits before taxes rose to ú6.417 thousand from ú6.035 thousand in 2005 (increased by 6,33%).

The Company’s share in the Greek Factoring market (Domestic and International) rose to 34% from 30,85% in 2005,

while its share in the International Factoring market, in particular, exceeded 48% (46% export and 55% import

factoring).

In 2006, EFG Factors (Eurobank Factors) continued to penetrate the Bulgarian market through its Representation

Office, in cooperation with Bulgarian Postbank A.D., expanding the Bank’s portfolio and enhancing the overall presence

of the Group in Bulgaria. In November 2006, the Bulgarian authorities approved the establishment of an EFG Factors

(Eurobank Factors) branch in the country; in the first quarter of 2007 this branch will be established as an independent

commercial entity, offering the full range of Factoring services in International market and Domestic market in Bulgaria.

The Company’s success has resulted from the coordinated utilization of its human resources, the excellent

collaboration with the corporate sector of the parent Bank, and the special attention provided to our clientele offering

quality factoring services, designed to meet their financial needs for commercial solutions.

On 31.12.06 the Company employed 61 people in Greece and 10 people at its office in Sofia, Bulgaria.

12 ∞ N N U A L R E P O R T 2006

MAJOR EVENTS

The Company completed the UAT operation of the new N-Factor and CRM module, an in-house developed

information system based on the Microsoft Navision ERP, especially designed for Factoring operations.

In November 2006, N-Factor was distinguished by Microsoft as one of the top four information systems for financial

services in Europe and was a candidate for the “Financial Services Industry Leadership Award”.

Moreover, Microsoft published a Case Study on this project, which is available at:

http://www.microsoft.com/hellas/dynamics/references/efg.mspx (In Greek)

http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=200568 (In English)

N-Factor has been adapted to the Bulgarian market since August 2006 and has been the main system of the EFG

Factors (Eurobank Factors) branch in Bulgaria since March 2007.

OUTLOOK

The Company will continue to upgrade its Factoring services, capturing a larger share of client and customer

services, through the provision of quality financial and commercial outsourcing services. Moreover, it will optimise

client and customer risk analyses, with the use of new software that enables the more precise identification of

business risks, by analysing a combination of parameters, such as customer-client relationships, product

combinations, risk reinsurance, sector risks etc.

The Company will sustain its leading role in the formation of a new Factoring market in Bulgaria and will develop new

operations in other Balkan countries, giving precedence to Serbia.

Finally, you should be informed that the Company does not hold any securities, maintains no foreign currency

deposits and does not own any real property. Furthermore, from the end of the financial year and till this date no

events have occurred that would alter the financial position of the Company, or would dictate any readjustment of

Balance Sheet items.

Given this report, and the financial statements before you, you are kindly asked to decide on the issues comprising

the agenda of this General Assembly.

Concluding our report, we consider necessary to thank all our employees for their contribution to the Company’s

success.

Ag. Paraskevi, March 12th, 2007

THE CHAIRMAN OF THE BOARD

GEORGE MARINOS


EFG FACTORS S.A.(Eurobank Factors) Income Statement7th Fiscal Year (January 1st - December 31st, 2006)(Amounts in ú)

Year ended December 31stNote 2006 2005

Interest and related income 5 14.081.357,80 11.121.955,76

Interest and related expenses 5 (9.156.490,07) (6.568.476,03)

Net interest income 4.924.867,73 4.553.479,73

Commission income 6 5.765.991,51 5.495.020,51

Commission expense 6 (936.008,61) (801.191,87)

Net commission income 4.829.982,90 4.693.828,64

Other income (expenses) 7 93.668,24 256.770,24

Total income 9.848.518,87 9.504.078,61

Impairment of trade receivables 10 (196.585,88) (529.510,31)

Payroll and staff costs 8 (2.219.738,11) (1.969.510,76)

Administrative expenses 9 (916.486,30) (826.519,65)

Depreciation 14, 15 (98.378,98) (143.271,85)

Total expenses (3.234.603,39) (2.939.302,26)

Profit before tax 6.417.329,60 6.035.266,04

Income tax expense 11 (2.052.878,47) (2.074.666,14)

Net profit after tax 4.364.451,13 3.960.599,90


THE CHAIRMAN THE MANAGING DIRECTOR THE CHIEF FINANCIALOF THE BOARD OFFICER

GEORGE MARINOS ANDREAS CHASAPIS CONSTANTIN COUROUSSIS

14 ∞ N N U A L R E P O R T 2006

EFG FACTORS S.A. (Eurobank Factors) Balance Sheet at December 31st, 20067th Fiscal Year (January 1st - December 31st, 2006)(Amounts in ú)

Note 31.12.2006 31.12.2005

ASSETS

Cash and cash equivalents 12 1.106,59 27,13

Receivables from banks 12 2.685.399,35 2.914.936,30

Advances to customers 13 489.922.821,64 387.463.765,70

Intangible assets 14 46.023,18 56.003,38

Property, plant and equipment 15 441.159,93 433.234,86

Financial derivative instruments 21 41.427,29

Deferred income tax assets 16 20.152,12

Other assets 17 76.156,58 571.484,88

Total Assets 493.214.094,56 391.459.604,37

LIABILITIES

Amounts due to banks 18 163.207.338,42 191.710.693,73

Amounts due to clients 19 1.334.008,33 1.163.200,81

Corporate bonds 20 293.650.000,00 167.901.742,65

Income tax liabilities 22 644.489,22 971.727,90

Retirement benefit obligations 23 50.530,00 49.945,00

Financial derivative Instruments 21 2.162.601,07

Deferred income tax liabilities 16 4.094,00

Other liabilities 24 4.128.453,62 1.668.963,37

Total liabilities 463.018.913,59 365.628.874,53

EQUITY

Share capital 25 13.500.000,00 13.500.000,00

Share premium 25 1.500.000,00 1.500.000,00

Statutory reserve 26 849.545,89 615.683,48

Retained earnings 27 14.345.635,08 10.215.046,36

Total equity 30.195.180,97 25.830.729,84

Total equity and liabilities 493.214.094,56 391.459.604,37


THE CHAIRMAN THE MANAGING DIRECTOR THE CHIEF FINANCIALOF THE BOARD OFFICER

GEORGE MARINOS ANDREAS CHASAPIS CONSTANTIN COUROUSSIS


16 ∞ N N U A L R E P O R T 2006

EFG FACTORS S.A. (Eurobank Factors) Statement of Changes in Equity(Amounts in ú)

Share Share Statutory Retained Totalcapital premium reserve earnings

Balance at 01.01.2005 13.500.000,00 1.500.000,00 408.005,74 6.600.655,20 22.008.660,94

Equity change due to the

implementation of IAS 32 & 39

since 01.01.2005 (138.531,00) (138.531,00)

Balance at 01.01.2005 13.500.000,00 1.500.000,00 408.005,74 6.462.124,20 21.870.129,94

Result for the year 3.960.599,90 3.960.599,90

Statutory reserve 207.677,74 (207.677,74) 0,00

Balance at 31.12.2005 13.500.000,00 1.500.000,00 615.683,48 10.215.046,36 25.830.729,84

Balance at 01.01.2006 13.500.000,00 1.500.000,00 615.683,48 10.215.046,36 25.830.729,84

Result for the year 4.364.451,13 4.364.451,13

Statutory reserve 233.862,41 (233.862,41) 0,00

Balance at 31.12.2006 13.500.000,00 1.500.000,00 849.545,89 14.345.635,08 30.195.180.97

17Member of International Forfaiting Association

EFG FACTORS S.A. (Eurobank Factors) Cash Flow Statementfor the period January 1st - December 31st, 2006(Amounts in ú)

Note 31.12.2006 31.12.2005Cash Flows from operating activities


Adjustments for:

Interest expense for the year 9.156.490,07 6.568.476,03

Depreciation 14, 15 98.378,98 143.271,85

Provisions 10, 23 201.510,88 545.905,44

Other non-cash expense (income) (131.281,33) (192.945,31)

Operating profit before changes in working capital 15.742.428,20 13.099.974,05

Decrease (increase) in receivables (102.183.577,87) (65.577.768,56)

Decrease (increase) in liabilities 1.152.500,00 250.792,48

Interest paid (7.678.692,30) (6.584.543,61)

Income tax paid (2.311.436,34) (2.316.016,00)

Net Cash Generated from operating activities (95.278.778,31) (61.127.561,64)

Cash flows from investing activities

Purchases of property, plant and equipment 14, 15 (96.323,87) (160.823,23)

Net Cash generated from investing activities (96.323,87) (160.823,23)

Cash flows from financing activities

Corporate bonds 20 253.650.000,00

Repayment of corporate bonds 20 (130.000.000,00)

Funds drawn from banks (28.503.355,31) 64.195.352,85

Share capital increase

Net Cash generated from financing activities 95.146.644,69 64.195.352,85

Net increase (decrease) in cash and cash equivalents (228.457,49) 2.906.967,98

Cash and cash equivalents at beginning of the year 12 2.914.963,43 7.995,45

Cash and cash equivalents at end of the year 12 2.686.505,94 2.914.963,43

1. General InformationThe Company was established on November 18th 1999 under the name EFG FACTORS FACTORING S.A. and the trade name EFGFACTORS.

The Company is headquartered in Ag. Paraskevi, at number 3 Kapodistriou Street, and has been entered in the Sociétés AnonymesRegister under number 44428/01∞Δ/μ/99/39/03.

The duration of the Company is ninety-nine years, starting from the date the administrative decision approving its establishmentwas officially entered in the Companies Register.

The Company’s duration can be extended, or shortened, by a decision from the General Assembly.

The sole purpose of the Company is to conduct factoring operations, in accordance with the provisions of Law 1905/1990, ascurrently in force, and, in general, all the operations factoring companies are legally allowed to perform, and more specifically:

a) The legal and/or accounting control of, existing or future, third party accounts receivable, in Greece and abroad.

b) The collection of third party accounts receivable, both in Greece and abroad, by authorization from, or on behalf of, thethird party beneficiaries.

c) The assumption of third party accounts receivable upon either payment on maturity, or discounting, with or without recourse.

d) The management of third party accounts receivable and the total, or partial, coverage of the credit risk involved.

The Company is wholly owned by the EFG EUROBANK ERGASIAS Group.

The Board of Directors has six members, appointed for a term of three years, starting from the date of the General Assembly that electedthe Board, June 30th, 2004, and ending with the election of a new Board of Directors by the General Assembly that will convened three(3) years later. The Company’s Board of Directors authorized these financial statements for issue on March 12th, 2007.

2. Summary of Significant Accounting PoliciesThe principal accounting policies applied in the preparation of these financial statements are set out below. These policies havebeen consistently applied to all the fiscal years presented, unless otherwise stated.

2.1. Basis of preparationThe financial statements have been prepared by the management in accordance with the International Financial ReportingStandards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as adopted bythe European Union and the IFRS issued by the International Accounting Standards Board (IASB).

The following policies have been consistently applied to all the fiscal years, with the exception of the cases concerning theclassification and measurement of derivative financial products. Whenever deemed necessary, comparative data have beenadjusted in order to comply with the changes in presentation adopted by the Group for this year.

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivativefinancial instruments at fair value.

The preparation of financial statements in conformity with IFRS requires the adoption of certain critical accounting estimates andassumptions. It also requires management to exercise its judgment in the process of applying the company’s accounting policies.The areas involving a higher degree of judgment, or areas where assumptions and estimates are significant to the financialstatements, are disclosed in Note 4.

The financial statements are prepared in Euro (ú), the company’s base currency.

18 ∞ N N U A L R E P O R T 2006

2.2 Offsetting of financial instrumentsFinancial assets and liabilities are offset and the net amount is reported in the balance sheet, when there is a legally enforceableright to offset recognized amounts and there is an intention to settle on a net basis.

2.3 Foreign currency transactionsAssets and liabilities denominated in foreign currency are translated into Euros using the exchange rates prevailing at the balancesheet date, and any foreign exchange gains of losses are recognized in the income statement.

Foreign currency transactions are recorded using the exchange rates prevailing at the dates of the transactions. All foreignexchange gains or losses are recorded in the income statement.

2.4 Cash and cash equivalentsCash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid and low riskinvestments with original maturities of three months or less.

2.5 Property, plant and equipmentAll property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses. Plant andequipment are periodically reviewed for impairment, and any impairment loss is directly recognized in the income statement.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated with the item will flow to the Company and the cost of the item can bemeasured reliably. Repairs and maintenance are charged to the income statement during the financial period in which they areincurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows:

ñ Improvements of third party property: over the duration of the lease contract or the estimated useful life, whichever is theshortest;

ñ Computers and software: 3-5 years;

ñ Furniture, fittings and equipment: 6-7 years;

ñ Vehicles: 5 years.

2.6 Intangible assetsCosts associated with the in-house maintenance of computer software programmes are recognised as an expense as incurred.Costs that are directly associated with the development of identifiable and unique software products controlled by the Company,and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets, and areamortised over their estimated useful lives. Computer software is amortized in 3-4 years.

2.7 Financial assets

(i) Factoring advancesThe company pays money to its clients in advance, offering management services that emanate from the factoring agreementssigned with them.

The company also discounts trading securities deriving from signed Forfaiting agreements obtained for indefinite time periods,which can be sold due to cash flow shortages or due to interest or exchange rates changes, in order to maximize returns.


(ii) Accounting treatment and calculationThe purchases and sales of financial assets are carried using the effective interest method at fair value through profit and loss.The securities are recognized on the trade date, i.e. the date that the company commits to purchase or sell the asset.

Advances are recognized whenever cash is disbursed to the beneficiaries of such credit.

Financial assets that are not presented at fair value through profit and loss, are initially recognized at fair value. Financial assetsare derecognized when the rights to receive cash flows from them have been executed, or when the company has transferredsubstantially all the risks and rewards of the assets.

2.8 Impairment of financial assetsThe company assesses at each balance date whether there is any objective evidence that a financial asset or a group of financialassets is impaired. A financial asset or a group of financial assets is impaired only, and only, when there is objective evidence ofimpairment as a result if one, or more, events that occurred after the initial recognition of the asset (“harmful event”) and thisevent (or these events) affects the expected future cash flows from the financial asset or group of financial assets and can becalculated reliably. The objective evidence that an impairment loss on a financial asset or a group of financial assets has beenincurred include the data coming in to the company’s attention regarding the following events:

a) Significant financial difficulty of the debtor;

b) breach of agreement, such as default, or delinquency in the payments of interest or capital;

c) for financial or legal reasons related to the financial difficulty of the debtor, the company is offering a settlement that itwould not offer under different conditions;

d) there is probability that the debtor will enter bankruptcy or financial reorganisation;

e) there is evidence that indicate a measurable reduction of the future cash flows from a group of financial assets, subsequentto their initial recognition, even if the reduction can not connected to specific evidence, such as:ñ deterioration of the payment status of the debtors of the group of financial assets;ñ national, or local, financial conditions that are related to delinquencies in the servicing of the group of financial assets.

f) if there is objective evidence that an impairment loss on factoring advances has been incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value of estimated future cash flows(excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.The carrying amount of the asset is reduced through use of an allowance account, and the amount of the impairment lossis recognised in the income statement. If the factoring advances bear a floating interest rate, then the discount rate for thecalculation of the impairment loss is the current effective interest rate defined in the agreement.

2.9 BorrowingsBorrowings are initially recognised at fair value, which is determined by the proceeds, including transaction costs. Borrowings aresubsequently stated at amortized cost and the difference between the proceeds and the redemption value is recognised in theincome statement over the period of the borrowings, using the effective interest method.

2.10 Derivative financial instruments that do not qualify for hedge accounting Since 01.01.05, derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered intoand are subsequently re-measured at their fair value. The fair value is their market price, taking into consideration recent markettransactions, while in the cases there is no market price, the fair value is calculated using discounted cash flow models. When thefair value is positive the derivatives are recognised as assets, while when the fair value is negative they are recognised as liabilities.

Gains and losses resulting from changes in the fair value of derivatives are recognised in the income statement of the fiscal periodin which they are incurred.

20 ∞ N N U A L R E P O R T 2006

2.11 LeasesLease accounting when the company is the lessee. Leases of assets under which the lessor effectively retains the risks andrewards of ownership are classified as operating leases. Payments made under operating leases are charged to the incomestatement on a straight-line basis over the period of the lease.

2.12 Deferred Income taxDeferred income tax is calculated using the liability method, on all temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts in the financial statements.

Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date andare expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available, against whichthe temporary differences can be utilised.

Income tax on profits is calculated in accordance with the tax laws enacted in the country that the company conducts itsoperations, and is debited or credited in the income statement, unless it concerns items directly debited or credited to equity, inwhich case deferred income tax is directly accounted for in equity.

2.13 Interest income and expenseInterest income and expense is recognised in the income statement on an accrual basis for all interest-bearing instruments, usingthe effective interest method. The effective interest rate is the one that discounts exactly the estimated future cash inflows oroutflows during the estimated life of the financial instrument or, whenever deemed appropriate, during a shorter period, on thebasis of the net carrying value of the financial asset or liability. In order to calculate the effective rate, cash flow estimation takesinto account the terms of the financial instrument agreement, albeit not any contingent credit risk losses.

The calculation includes the fees and basis points paid or collected by the counterparties to the agreement that constitute anintegral part of the effective interest rate, transaction costs and other premiums and discounts.

Whenever a financial asset or a group of similar financial assets is impaired, interest income is recognised using the rate thatdiscounts future cash flow for the purposes of calculating the impairment loss.

2.14 Fees and commissionsIn general, fees and commissions are recognized on an accrual basis. Fees and commissions concerning transactions withoverseas Factors, transfer charges and banking expenses are recognised upon completion of the relevant transaction and thedispatch of the debit note.

2.15 ProvisionsProvisions are recognised when the Company has a present legal or constructive obligation as a result of past events and it isprobable that an outflow of resources will be required to settle the obligation, the amount of which can been reliably estimated.

Provisions are reviewed prior to the preparation of the financial statements, in order to reflect optimum current estimates.Contingent liabilities that may not possibly incur cash outflows are also disclosed, unless they are immaterial. Contingent claimsare not recognized in the financial statements, albeit are disclosed if the inflow of financial gains is possible.


2.16 Employee benefits

(i) Pension obligationsThe Company participates in defined contribution pension schemes, under which it pays fixed contributions to social securityfunds. The company has no other pension obligations, apart from its contributions to the funds.

The company’s payments to the defined contribution pension plans are recognised as employee benefit expense for the periodthey concern.

(ii) Termination benefitsAccording to Greek labour law, employees that remain in service up to the usual retirement age are entitled to a lump-sumpayment, which is estimated on the basis of their years of service and their earnings upon the retirement date. A provision hasbeen made for the actuarial value of this lump-sum payment, using the projected unit credit method. In accordance with thismethod, the retirement benefit cost is recognised in the income statement during the employees service, based on the actuarialassessments performed each year. The retirement benefit obligation is calculated as the present value of the estimated future cashoutflows using interest rates of state bonds that have terms to maturity approximating the terms of the related liability. Actuarialgains or losses arising from the calculation of the retirement benefit are recognised directly in the income statement.

(iii) Profit-sharing and bonus plansPeriodically, the Company offers cash bonuses to reward highly performing employees ad lib. Cash bonuses, which have to beauthorised only by the Management, are recognised as accrued staff costs. Profit sharing, which must be authorised by theGeneral Assembly, is recognised as a staff expense for the fiscal year approved by the company’s shareholders.

2.17 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shownin equity as a deduction, net of tax, from the proceeds.

2.18 Related party transactionsRelated parties include the parent Bank, as well as the affiliated, and associated companies of the Parent Bank’s group. Alltransactions performed with related parties fall under the usual course of operations and are executed under strictly commercialterms.

2.19 New IFRS and interpretations (IFRIC interpretations)Specific new IFRS, amendments and interpretations have been published that are mandatory for accounting periods beginning onor after January 1st, 2006. The Company’s judgement concerning the impact from the implementation of these new standardsand interpretations is the following:

ñ IAS 19 (Amendment), Employee Benefits (Effective from 01.01.2006)This amendment provides companies with the option of an alternative recognition approach for actuarial gains and losses. Itmay impose additional recognition requirements for Multi-Employer Plans where insufficient information is available to applydefined benefit accounting. It also adds new disclosure requirements. The amendment is not expected to have any significantimpact on the Company.

ñ IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions (effective from January 1st, 2006)The amendment is not expected to have any significant impact on the Company.

ñ IAS 39 (Amendment), The Fair Value Option (Effective from January 1st, 2006).The amendment changes the definition of financial instruments designated as “at fair value through profit or loss” (FVTPL)

22 ∞ N N U A L R E P O R T 2006

and limits the ability of an entity to designate any financial instrument as FVTPL; the Company believes that this amendmentshould not have any impact on the financial statements. Nevertheless, the company may implement this option on fiscal yearsbeginning on January 1st, 2006, in case it will hold such financial instruments in future periods.

ñ IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (Effective from January 1st, 2006).This amendment requires financial guarantee contracts issued that are not considered to be insurance contracts, to be initiallyrecognized at fair value, and subsequently be measured at the higher of (a) the relevant fees collected and deferred lesscumulative amortization, (b) the expenditure required to settle the obligation at the balance sheet date. The Management hasreached the conclusion that this amendment is not relevant to the Company.

ñ IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards and IFRS 6 (Amendment), Explorationfor and Evaluation of Mineral Resources (mandatory after January 1st, 2006). These amendments are not relevant to the Company’s operations, since the Company does not possess any Mineral Resources.

ñ IFRS 7, Financial instruments: Disclosures, and the complementary Amendment to IAS 1, Presentation of FinancialStatements - Capital Disclosures (Effective from 01.01.2007).IFRS 7 introduces new disclosures, with the aim of improving the provided information relating to financial instruments. It requiresthe disclosure of qualitative and quantitative data about exposure to risks arising from financial instruments. More specifically, itsets the minimum required disclosure relating to credit risk, liquidity risk and market risk (requires a sensitivity analysis relatingto market risk). IFRS 7 supersedes IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutionsand the disclosure requirements of IAS 32 Financial Instruments: Presentation and Disclosure. It is applicable to all companiesthat prepare financial statements in accordance with the IFRS. The amendment to IAS 1 introduces disclosures relating to anentity’s capital, as well as the entity’s processes for managing capital; the company assessed the impact of IFRS 7 and theamendment to IAS 1 and concluded that the additional disclosures required by their implementation are the sensitivity analysisand the quantitative data about the capital. The company will implement IFRS 7 and the amendment to IAS 1 from 01.01.2007.

ñ IFRIC 4, Determining whether an Arrangement contains a Lease (effective from 01.01.2006).IFRIC 4 requires to determine whether an arrangement effectively is, or contains, a lease or not. More specifically, it requiresthe evaluation of the following facts: a) whether the fulfilment of the arrangement depends on the use of a specific fixed asset(-s); and (b) whether the arrangement gives the lessee the right to use the asset. The Management judges the IFRIC 4 is notexpected to have an impact on the accounting presentation of any existing arrangement.

ñ IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (effectivefrom December 1st, 2006).IFRIC 5 is not relevant to the Company’s operations.

ñ IFRIC 6, Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment (effective fromDecember 1st, 2005).IFRIC 6 is not relevant to the Company’s operations.

ñ IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies (effective fromMarch 1, 2006).IFRIC 7 is not relevant to the company and will have any impact on its financial statements.

ñ IFRICs 8 and 9, Scope of IFRS 2, and Reassessment of Embedded Derivatives.(Effective for fiscal years beginning on 01.05.2006 and 01.06.2006 respectively).They are not relevant to the company and will not have any impact on its financial statements.

ñ Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures. (Effective for fiscal years beginning after01.01.2007).This amendment requires additional disclosures about the methods of managing the company’s capital and relevantquantitative information.


ñ Amendment to IFRS 1, First-time Adoption of International Financial Reporting Standards and IFRS 6, Exploration for andEvaluation of Mineral Resources.(Effective for fiscal years beginning after 01.01.2006).These amendments are not relevant to the company’s operations.The International Accounting Standards Board has published the following standards and interpretations, which have not yetbeen adopted by the European Union.

ñ IFRS 8, Operating segments. (Effective for fiscal years beginning after 01.01.2009).It is not relevant to the company and will not have any impact on its financial statements.

ñ IFRIC 10, Interim Financial Reporting and Impairment. (Effective for fiscal years beginning after 01.01.2006).The adoption of this interpretation prohibits the impairment losses recognised in an interim period on goodwill, investmentsin equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date.The application of this interpretation will not have any substantial impact on the company’s financial statements.

ñ IFRIC 11, Group and Treasury Share transactions (Effective for fiscal years beginning after 01.03.2007).

ñ IFRIC 12, Service Concession Arrangements. (Effective for fiscal years beginning after 01.01.2008).Interpretations 11 and 12 are not relevant to the company and are not expected to have any impact on its financial statements.

3. Financial Risk ManagementThe Company is exposed to various financial risks such as credit risk, liquidity risk, currency risk and cash flow interest rate risk.

Risk management is carried out by the Company’s Management, with the support of specific departments of the parent company,EFG EUROBANK ERGASIAS S.A.

a) Credit riskThe Company is exposed to credit risk when a counterparty is unable to pay amounts in full when due, either as a debtor(customer of the seller) or as the recipient of an advance against the sale of the accounts receivable (seller).

The Company structures the levels of acceptable credit risk based on the financial analysis of the borrower or the group ofborrowers, their industry, their position in the market and the dispersion of their credit risks.

b) Currency riskThe Company extends advances to its clients against the accounts receivable assigned to it, denominated in the currency theassigned transactions have been invoiced. Nevertheless, the risk assumed by the Company is limited, as a result of its policy todraw the necessary cash from open accounts, denominated in the same currency with the advances extended to clients. Currencyrisk is limited to the Company’s own foreign exchange reserves from the annual period’s profits, which are converted to Euro, theCompany’s functional currency, at regular intervals.

c) Liquidity riskThe Company is daily exposed to liquidity risks arising from the management of its receivables. The analysis of client cash flowsis illustrative, and not conclusive, because it is determined by the commercial arrangements between the sellers and the debtors-customers; however, it can identify the Company's liquidity requirements in terms of adequate planning and borrowingrequirement optimization. The Company maintains sufficient liquidity from the issuance of corporate bonds, which cover thelargest part of its cash flows. Open borrowing covers the remaining liquidity requirements in the currency that the necessary cashflows are denominated, in order to enable cash flow management with the best possible returns. In case of temporary cash flowsurpluses, the Company places its cash in overnight deposits.

24 ∞ N N U A L R E P O R T 2006

d) Interest rate riskThe Company is exposed to interest rate risk that arises from changes in the prevailing market interest rates. Such changes mayincrease or decrease interest rate margins, leading to a reduction in estimated profits. The Company’s policy is to set fixed interestrate margins with its clients, for each currency, based on the rates determined by the market for certain time periods (monthly orquarterly euribor), covering its cash flows with a corresponding agreement with the lending bank. Whenever a fixed interest rateis established, the Company follows market trends and adjusts the rate at regular intervals, in accordance with parent Bank policy.

4. Critical Accounting Estimates and Assumptionsa) Main management assumptions for estimating provisionsThe Company regularly reviews its factoring advances portfolio to assess impairment. In order to determine whether animpairment loss should be recognised in the income statement, the Company uses its judgement to establish whether there areindications of an observable reduction in the cash flows arising from a group, before this reduction can be correlated to a specificclient or debtor. Such indications may include observable data that show an adverse change in the payment status of borrowersin a group, due to adverse economic conditions in a specific industry or national or local economic conditions that correlated withdefaults on assets in the group, or to random events such as floods, fires etc., which are expected to affect the repayment of theirdebts towards the Company. When estimating future cash flows, the Management uses estimates based on historical lossexperience for assets with credit risk characteristics and objective evidence of impairment similar to those in the group of loansand receivables. The methodology and assumptions used for the estimation of the amount and the timing of the future cash flowsare regularly reviewed, in order to reduce any differences between estimated and actual losses.

The provision for impairment of receivables is the difference between the receivable that has been accounted for and the estimatedrecoverable amount. The recoverable amount is the present value of the future cash flows from doubtful debts, after taking intoaccount any collateral, and discounted by the effective interest rate of the agreement.

Any event that alters and reverses prior loss estimates, affects the formed provisions accordingly and is recognized in the incomestatement.

b) Fair value of derivative financial instrumentsThe fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.Experienced and specialized executives of the parent Bank conduct any valuation methods used for determining fair value.

c) Income taxThe Company’s management makes estimates, in order to determine the income tax provision. The Company recognises liabilitiesfor anticipated tax audit issues, based on estimates of whether additional taxes will be due. Where the final tax outcome of thesematters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred taxprovisions in the period in which such determination is made.


Notes to the Income Statement

5. Net Interest Income(Amounts in ú) 31.12.2006 31.12.2005

Interest and related income 12.403.011,41 9.524.332,41

Interest income from derivatives (swap) 835.495,45 1.448.638,38

Other interest income 842.850,94 148.984,97

Total 14.081.357,80 11.121.955,76

Interest and related expenses

Amounts due to banks 2.021.181,87 632.748,01

Interest expense from derivatives (swap) 1.794.702,27 3.465.467,78

Corporate bonds issued 5.340.605,93 2.470.260,24

Total 9.156.490,07 6.568.476,03

Net interest income 4.924.867,73 4.553.479,73

6. Net Commission Income(Amounts in ú) 31.12.2006 31.12.2005

Commission income

Factoring services 5.765.991,51 5.495.020,51

Total 5.765.991,51 5.495.020,51

Fee and commission expense 936.008,61 801.191,87

Total 936.008,61 801.191,87

Net commission income 4.829.982,90 4.693.828,64

26 ∞ N N U A L R E P O R T 2006

7. Other Income(Amounts in ú) 31.12.2006 31.12.2005

Income from tax settlement 34.219,37 35.282,98

Foreign exchange gains (losses) (37.613,09) 58.656,82

Gains from the sale of securities 5.168,11

Income from derivatives evaluation 66.349,28 157.662,33

Other income 30.712,68

Total 93.668,24 256.770,24

8. Payroll and Staff Costs(Amounts in ú) 31.12.2006 31.12.2005

Salaries 1.362.407,43 1.247.862,24

Employer contributions 323.974,80 286.446,74

Pension costs 4.925,00 5.165,71

Other costs 528.430,88 430.036,07

Total 2.219.738,11 1.969.510,76

The average number of persons employed by the Company during the fiscal year 2006 was 65. (2005: 56)


Notes to the Income Statement

9. Administrative Expenses(Amounts in ú) 31.12.2006 31.12.2005

Building operating leases 316.270,44 304.478,09

Third party compensation and charges 123.617,67 110.256,34

Telephone - Postage - Information systems 77.65,01 74.654,71

Repairs - Maintenance - Insurance premiums 36.444,58 28.254,30

Electricity - Water - Cleaning 68.620,00 45.976,42

Advertising costs 85.026,83 115.054,75

Subscriptions 13.396,96 18.298,93

Office Supplies 37.168,23 17.847,97

Other overheads 158.285,58 111.698,14

Total 916.486,30 826.519,65

10. Impairment Provisions on Customer Receivables(Amounts in ú) 31.12.2006 31.12.2005

Impairment charged for the year 196.585,88 529.510,31

Total 196.585,88 529.510,31

28 ∞ N N U A L R E P O R T 2006

11. Income Tax Expense(Amounts in ú) 31.12.2006 31.12.2005

Current income tax 1.965.690,35 2.016.901,24

Prior year tax audit differences 62.942,00

Deferred tax 24.246,12 57.764,90

Total 2.052.878,47 2.074.666,14

The Greek tax rate for 2006 is 29% (2005: 32%).

(Amounts in ú) 31.12.2006 31.12.2005


Income tax expense 29,00% 1.861.025,58 32,00% 1.931.285,13

Increase or decrease arising from:

Prior year tax audit differences 62.942,00

Income not subject to tax (0,19%) (37.291,22) (0,19%) (11.290,55)

Tax from non-deductible expenses 1,61% 141.955,99 1,61% 96.906,66

Deferred tax difference 0,96% 24.246,12 0,96% 57.764,90

Income tax expense 31,38% 2.052.878,47 34,38% 2.074.666,14


Assets

12. Cash and Cash Equivalents(Amounts in ú) 31.12.2006 31.12.2005

12.1 Cash 1.106,59 27,13

12.2 Receivables from banks

Current a/cs 2.685.399,35 2.914.936,30

Total cash and cash equivalents 2.686.505,94 2.914.963,43

13. Advances to Customers(Amounts in ú) 31.12.2006 31.12.2005

Invoice discounting 42.984.272,22 26.053.971,35

Domestic factoring with recourse 134.000.931,16 135.616.912,13

Domestic non-recourse factoring 236.225.622,93 201.409.672,14

International factoring 55.050.852,58 24.402.871,96

Forfaiting deals 24.332.529,01 2.455.138,50

Total 492.594.207,90 389.938.566,08

Less: Provision for impairment of receivables (2.671.386,26) (2.474.800,38)

Total trade receivables 489.922.821,64 387.463.765,70

Provision for impairment of receivables

Provision at 01.01.2005 1.945.290,07

Provision for impairment of receivables 529.510,31

Provision at 31.12.2005 2.474.800,38

Provision at 01.01.2006 2.474.800,38

Provision for impairment of receivables 196.585,88

Provision at 31.12.2006 2.671.386,26

The concentration of risks per industry sector relating to receivables is analysed as follows:

2006 2005% %

Commerce and services 68,74% 58,15%

Industry 31,18% 39,18%

Other sectors 0,08% 2,67%

Total 100,00% 100,00%

30 ∞ N N U A L R E P O R T 2006

The geographical allocation of risks relating to receivables is the following:

2006 2005ú % ú %

Greece 444.381.975,64 90,70% 379.968.100,70 98,07%

Western European Countries 2.912.788,00 0,59% 2.977.777,00 0,77%

Eastern European Countries 42.628.058,00 8,70% 4.517.888,00 1,17%

Total 489.922.821,64 100,00% 387.463.765,70 100,00%

14. Intangible AssetsSoftware

Includes only software

Balance at 01.01.2005

Acquisition cost 137.899,61

Accumulated amortization (74.170,84)

Net book amount 63.728,77

Period 1.1.2005 - 31.12.2005

Additions 13.093,61

Disposals

Wastage

Amortisation charge (20.819,00)




Net book amount at 31.12.2005 56.003,38

Period 1.1.2006 - 31.12.2006

Additions 11.107,06

Disposals

Wastage

Amortisation charge (21.087,26)




Net book amount at 31.12.2006 46.023,18


15. Property, Plant and EquipmentImprovements of Other

third party property equipment Total


Acquisition cost 403,369,33 272.314,19 675.683,52

Accumulated depreciation (101.450,89) (166.273,06) (267.723,95)

Net book amount 301.918,44 106.041,13 407.959,57

Period 1.1.2005 - 31.12.2005

∞dditions 87.788,93 59.940,69 147.729,62

Disposals

Impairment Charge - Wastage

Depreciation charge (78.651,46) (43.802,87) (122.454,33)


Acquisition cost 491.158,26 332.254,88 823.413,14


Net book amount at 31.12.2005 311.055,91 122.178,95 433.234,86

Period 1.1.2006 - 31.12.2006

Additions 9.829,95 75.386,86 85.216,81

Disposals

Impairment Charge - Wastage

Depreciation charge (35.222,14) (42.069,60) (77.291,74)


Acquisition cost 500.988,21 407.641,74 908.629,95


Net book amount at 31.12.2006 285.663,72 155.496,21 441.159,93

32 ∞ N N U A L R E P O R T 2006

16. Deferred πncome Δax ∞ssets - LiabilitiesDeferred income tax assets Balance at Recognised in Recognised Balance at

01.01.2005 income statement in equity 31.12.2005

Intangible assets 6.552,02 (3.114,90) 3.437,12

Derivatives (swap) 71.365,00 (54.650,00) 16.715,00

Total 77.917,02 (57.764,90) 20.152,12

Deferred Income tax assets Balance at Recognised in Recognised Balance at 01.01.2006 income statement in equity 31.12.2006

Intangible assets 3.437,12 (3.437,12) 0,00

Derivatives (swap) 16.715,00 (16.715,00) 0,00

Total 20.152,12 (20.152,12) 0,00

Deferred income tax liabilities Balance at Recognised in Recognised Balance at 01.01.2006 income statement in equity 31.12.2006

Derivatives (swap) 0,00 (4.094,00) (4.094,00)

Total 0,00 (4.094,00) (4.094,00)

Grand total (24.246,12) (4.094,00)

17. Other (Amounts in ú) 31.12.2006 31.12.2005

Assets

Guarantees-advances 11.399,61 9.269,80

Prepaid expenses 33.796,89 21.251,21

Other receivables 30.960,08 540.963,87

Total 76.156,58 571.484,88


Liabilities

18. Amounts Due to BanksObligations towards banks arise from a credit agreement, concerning an open, floating interest rate account, signed by EFGFactors (Eurobank Factors) and EFG Eurobank ERGASIAS.

The above agreement allows the Company to maintain open accounts in foreign currency in order to extend advances to its clientsin the corresponding currencies.

On 31.12.06 the balance was ú163.207.338,42 (31.12.05: ú191.710.693,73). The fair value of those floating rate loansapproached their book value on the corresponding balance sheet dates.

19. Amounts Due to ClientsAmounts due to clients arise from the credit balances of client open accounts, resulting from collections that had not beenrendered on the date the financial statements were prepared. The amount due to clients on 31.12.06 amounts to ú1.334.008,33.

20. Corporate BondsIn order to cover its borrowing requirement EFG FACTORS S.A. (Eurobank Factors) issued the following Corporate bonds:

EUR: 40.000.000- ( 3-year) Date Of Issuance: 31.12.04 Date of Repayment: 31.12.07Divided to 40 Bonds of EUR: 1.000.000-Monthly calculation of interest (monthly payment of coupons)Interest rate: 1 month Euribor + margin 0,375%Current interest rate for the period 1/2-28.02.07: 4,01%

EUR: 130.000.000- ( 5-year) Date of Issuance: 02.06.06 Date of Repayment: 30.06.11Divided into 13 Bonds of EUR: 10.000.000-Monthly calculation of interest (monthly payment of coupons)Interest rate: 1 month Euribor + margin 0,375%Current interest rate for the period 1/2-28.02.07: 4,01%

EUR: 50.000.000- ( 3-year) Date of Issuance: 30.08.06 Date of Repayment: 31.07.09Divided into 50 Bonds of EUR: 1.000.000-Monthly calculation of interest (monthly payment of coupons)Interest rate: 1 month Euribor + margin 0,40%Current interest rate for the period 1/2-28.02.07: 4,26%

EUR: 23.000.000- Date of Issuance: 19.09.06 Date of Repayment: 09.07.07Divided into 23 Bonds of EUR: 1.000.000-Calculation of interest and payment of coupons on maturity.Interest rate: 3,895% fixed till maturity.

EUR: 50.000.000- ( 3-year) Date of Issuance: 29.12.06 Date of Repayment: 31.12.09Divided into 1 Bond of EUR: 50.000.000-Monthly calculation of interest (monthly payment of coupons)Interest rate: 1 month Euribor + margin 0,375%Current interest rate for the period 1/2-28.02.07: 4,01%

34 ∞ N N U A L R E P O R T 2006

EUR: 650.000- repayment in 5 equal semi-annual capital instalments. Date of Issuance: 29.12.06 Date of Repayment: 31.05.09

Divided into 65 Bonds of EUR: 10.000-Semi-annual calculation of interest (semi-annual payment of coupons)Interest rate: Fixed till maturity at 4,355%1st coupon date 31.05.07 ú130.000 and 5th 31.05.09

31.12.2006 31.12.2005

Corporate Bond in CHF - 127.901.742,65

Corporate Bond in EUR 293.650.000,00 40.000.000,00

293.650.000,00 167.901.742,65

21. Financial Derivative Instruments The Company has entered a cross currency interest rate swap agreement with EFG Eurobank Ergasias S.A. for CHF 130.000.000against EUR 198.900.000 with a duration of three years, which matured in May 2006. Moreover, in 2006 the Company entereda cross currency interest rate swap agreement for USD 5.000.000 against EUR 3.921.568,63, with a duration of 6 months andfor USD 4.000.000 against EUR 3.137.254,90 with an 11 month duration in order to hedge currency and credit risks.

The Company has entered an interest rate swap agreement, in 7 semi-annual equal instalments, the last due in February 2010 inorder to hedge interest rate risks, the outstanding amount at 31.12.06 was ú1.197.472.

The valuation of derivatives at 31.12.06 produces an asset of ú41.427,29.

22. Income Tax Liabilities31.12.2006 31.12.2005

Income tax liabilities 644.489,22 971.727,90

Total 644.489,22 971.727,90

23. Retirement Benefit Obligations31.12.2006 31.12.2005

Balance at January 1st 49.945,00 44.779,29

Provision for the period 4.925,00 5.165,71

Benefits paid (4.340,00)

Balance at December 31st 50.530,00 49.945,00

Expenses recognised in the income statement

Current service cost 4.049,00 4.246,00

Interest cost 876,00 919,00

Total, included in staff costs 4.925,00 5.165,00


2006 2005Actuarial assumptions % %

Discount rate 4,25 4,50

Future salary increases 3,50 4,00

Inflation 2,50 3,00

24. Other Liabilities31.12.2006 31.12.2005

Social security organizations 74.618,89 68.491,73

Accrued expenses 70.741,41 148.978,76

Suppliers 112.531,56 73.214,99

Other liabilities 981.952,53 226.592,76

Other tax liabilities 956,020,14 696.893,81

Bond valuation

Accrued interest 1.932.589,09 454.791,32

Total 4.128.453,62 1.668.963,37

25. Share CapitalThe extraordinary General Assembly held on June 28th 2004, approved a share capital increase of ú4.500.000, cash-financedthrough the issuance of 100.000 new ordinary registered shares, with a par value of ú45 and a sale price of ú60 each. Followingthe above increase, the Company’s share capital amounted to ú13.500.000, divided into 300.000 shares with a par value of ú45.00each. The total share premium of ú1.500.000 was booked in a special share premium reserve.

26. Statutory ReserveIn accordance with Greek corporate law, the Company is obliged to retain 5% of its net annual accounting profits, as a statutoryreserve.

Retention is not mandatory if the total statutory reserve exceeds 1/3 of the paid in share capital. This reserve is not distributablethroughout the entire life of the Company and is intended to cover any debit balances of the retained earnings account.

On 31.12.2006 the Company’s statutory reserve amounted to ú849.545,89.

27. Retained Earnings This account includes the non-taxed reserves of ú62.746,33, resulting from non-taxed income that was not distributed and shallnot be distributed in the future, and therefore no deferred tax was calculated in accordance with IAS 12.

On 31.12.2006 total retained earnings amounted to ú14.345.635,08.

36 ∞ N N U A L R E P O R T 2006

28. Credit RiskCredit risk arises from the debtors’ financial inability to meet the contractual obligations against the beneficiary factoring company.

Factoring services are classified into three main categories:A. Domestic Factoring; B. International Factoring (B1. Import, B2 Export) and C. Invoice Discounting.

In terms of risk they are classified to:A) Recourse Factoring; B) Non-recourse factoring; C) Collection Only Factoring.

The right of recourse that allows the factoring company to go back to the seller (borrower) to collect its claims, mitigates thecredit risk it assumes against the debtor.

The provision of non-recourse factoring services implies that the credit risk is entirely borne by the factoring company in casethe debtor (customer) becomes insolvent. In order to provide non-recourse factoring services, EFG Factors (Eurobank Factors)performs due diligence on the debtor’s (customer’s) creditworthiness, the debtor’s commercial transactions for a long timeperiod, evaluates the debtor’s position in the market, the commercial peculiarities of the debtor’s products or services andaccordingly accepts (or rejects) the provision of the Services, setting a specific credit limit for the debtor.

On December 31st, the Company’s claims from advances extended for non-recourse factoring services amounted to291.276.475,51, which accounted for 59% of the total advances extended in 2006, and 225.812.544,10 or 58% of the totaladvances extended in 2005, respectively. If EFG Factors (Eurobank Factors) judges that there is even a slight possibility of futuredebtor insolvency, it obtains insurance coverage for the credit risk arising from the provision of non-recourse factoring services.

Risk concentration relating to individual clients does not exceed 10% of total receivables. EFG Factors (Eurobank Factors) reviewsregularly the credit and financing limits it has approved on the basis of the creditworthiness of the client and the client’s debtors,in order to establish and ascertain that these limits are appropriate for the client’s requirements and the limits of the client’s creditrating.


29. Currency RiskThe functional currency of EFG Factors (Eurobank Factors), as well as the currency in which its financial statements are presented,is the Euro. In order to meet its clients’ needs, the Company makes advances in the currency in which the invoices assigned toit are denominated. The advances made to customers are mainly funded through borrowing in the same currency, in order tomitigate exposure to currency risk from changes in currency exchange rates. Amounts in foreign currency that arise from theinvoicing of profits in the corresponding foreign currency are regularly translated to Euro by the Financial Department.

The majority of assets and liabilities are denominated in Euro.

Currency risk at 31.12.2006ASSETS CHF USD GBP OTHER F/CY EUR TOTAL

Cash and cash equivalents 168,47 938,12 1.106,59

Receivables from banks 195,42 2.685.203,93 2.685.399,35

Advances to customers 9.179.329,14 8.909.377,09 471.834.115,41 489.922.821,64

Intangible assets 46.023,18 46.023,18

Property, plant and equipment 441.159,93 441.159,93

Financial derivative instruments 41.427,29 41.427,29

Deferred income tax assets 0,00 0,00

Other assets 76.156,58 76.156,58

Total assets 0,00 9.179.329,14 8.909.377,09 363,89 475.125.024,44 493.214.094,56

Off-balance sheet accounts

Cross currency interest rate swap 8.256.296,10 8.256.296,10

Total currency position 0,00 9.179.329,14 8.909.377,09 363,89 483.381.320,54 501.470.390,66

LIABILITIES

∞mounts due to banks 2.166.321,60 7.750.383,39 153.290.633,43 163.207.338,42

Amounts due to clients 373,00 1.992,00 1.331.643,33 1.334.008,33

Corporate bonds 293.650.000,00 293.650.000,00


Retirement benefit obligations 50.530,00 50.530,00

Deferred income tax liabilities 4.094,00 4.094,00

Other liabilities 127.242,00 125.229,00 3.875.982,62 4.128.453,62

Total liabilities 0,00 2.293.936,60 7.877.604,39 0,00 452.847.372,60 463.018.913,59


Cross currency interest rate swap 7.058.823,53 1.197.472,57 8.256.296,10

Total currency position 0,00 9.352.760,13 7.877.604,39 0,00 454.044.845,17 471.275.209,69

Net currency position 0,00 (173.430,99) 1.031.772,70 363,89 29.336.475,37 30.195.180,97

38 ∞ N N U A L R E P O R T 2006

Currency risk at 31.12.2005ASSETS CHF USD GBP OTHER F/CY EUR TOTAL

Cash and cash equivalents 27,13 27,13

Receivables from banks 2.121,34 2.912.814,96 2.914.936,30

Advances to customers 277,21 3.647.401,93 383.816.086,56 387.463.765,70



Deferred income tax assets 20.152,12 20.152,12

Other assets 4.392,40 567.092,48 571.484,88

Total assets 0.00 4.669,61 3.647.401,93 2.121,34 387.805.411,49 391.459.604,37


Cross currency interest rate swap 127.901.742,65

Total currency position 127.901.742,65 4.669,61 3.647.401,93 2.121,34 387.805.411,49 519.361.347,02

LIABILITIES

Amounts due to banks (78.046,55) 3.335.433,04 188.453.307,24 191.710.693,73

Amounts due to clients 561,13 13,23 1.162.626,45 1.163.200,81

Corporate bonds 127.901.742.65 40.000.000,00 167.901.742,65



Financial derivative Instruments 2.162.601,07 2.162.601,07

Other liabilities 1.668.963,37 1.668.963,37

Total liabilities 127.901.742.65 (77.485,42) 3.335.446.27 0,00 234.469.171,03 365.628.874,53


Cross currency interest rate swap 130.000.000,00 130.000.000,00

Total currency position 127.901.742,65 (77.485,42) 3.335.446,27 0,00 364.469.171,03 495.628.874,53

Net currency position 0.00 82.155,03 311.955,66 2.121,34 23.336.240,46 23.732.472,49


30. Interest Rate RiskThe Company does not assume any interest risk relating to its assets and liabilities. In order to invoice its customers and,accordingly, to cover its financing requirements, it follows a floating rate policy. Trade receivables of ú23.650.000 have beenhedged for the same period under a fixed interest rate through the issuance of two corporate Bonds (Note. 20).

The Company’s exposure to interest rate risk is the following:

Interest rate risk at 31.12.2006ASSETS Less than 3-12 1-5 Over 5 Non-affected

3 months months years years items Total

Cash and cash equivalents 1.106,59 1.106,59

Receivables from banks 2.685.399,35 2.685.399,35

Advances to customers 457.905.573,15 8.367.248,49 23.650.000,00 489.922.821,64




Deferred Income tax assets 0,00 0,00

Other assets 76.156,58 76.156,58

Total assets 460.592.079,09 8.367.248,49 0,00 0,00 24.254.766,98 493.214.094,56

LIABILITIES

Amounts due to banks 163.207.338,42 163.207.338,42

Amounts due to clients 1.334.008,33 1.334.008,33

Debt securities issued 270.000.000,00 23.650.000,00 293.650.000,00





Total liabilities 434.541.346,75 0,00 0,00 0,00 28.477.566,84 463.018.913,59

On balance sheet

interest sensitivity gap 26.050.732,34 8.367.248,49 0,00 0,00 (4.222.799,86) 30.195.180,97

Off-balance sheet

interest sensitivity gap (8.256.295,53) (8.256.295,53)

40 ∞ N N U A L R E P O R T 2006

Interest rate risk at 31.12.2005ASSETS Less than 3-12 1-5 Over 5 Non-affected

3 months months years years items Total



Advances to customers 387.463.765,70 387.463.765,70



Deferred Income tax assets 20.152,12 20.152,12

Other assets 571.484,88 571.484,88

Total assets 390.378.729,13 0,00 0,00 0,00 1.080.875,24 391.459.604,37

LIABILITIES



Debt securities issued 167.901.742,65 167.901.742,65



Financial derivative instruments 2.162.601,07 2.162.601,07


Total liabilities 362.938.238,26 0,00 0,00 0,00 2.690.636,27 365.628.874,53

On balance sheet

interest sensitivity gap 27.440.490,87 0,00 0,00 0,00 (1.609.761,03) 25.830.729,84

Off-balance sheet

interest sensitivity gap (2.450.942,68) (2.450.942,68)


31. Liquidity RiskEFG Factors (Eurobank Factors) covers its liquidity requirements through long-term borrowing, such as the issuance of corporatebonds, as well as by borrowing from the parent company by means of an open account, in order to maintain an optimum cash-flow status with the lowest possible cost.

The following table presents the maturities of monetary assets and liabilities.

Liquidity risk at 31.12.2006ASSETS Up to 1 month 1-3 months 3-12 months 1-5 years Over 5 years Total

Cash and cash equivalents 1.106,59 1.106,59


Advances to customers 133.406.013,08 210.700.173,53 142.779.058,25 3.037.576,78 489.922.821,64




Deferred Income tax assets 0,00 0,00

Other assets 76.156,58 76.156,58

Total Assets 136.092.519,02 210.776.330,11 142.779.058,25 3.566.187,18 0,00 493.214.094,56

LIABILITIES



Corporate bonds 63.650.000,00 230.000.000,00 293.650.000,00





Total liabilities 164.591.876,75 4.128.453,62 64.298.583,22 230.000.000,00 0,00 463.018.913,59

Total on balance sheet

liquidity gap (28.499.357,73) 206.647.876,49 78.480.475,03 (226.433.812,82) 0,00 30.195.180,97

Total off-balance sheet

liquidity gap 3.921.568,63 3.137.254,90 1.197.472,57 8.256.296,10

42 ∞ N N U A L R E P O R T 2006

Liquidity risk at 31.12.2005ASSETS Up to 1 month 1-3 months 3-12 months 1-5 years Over 5 years Total



Advances to customers 142.089.530,97 121.257.383,71 123.934.936,18 181.914,84 387.463.765,70

Intangible Assets 56.003,38 56.003,38


Deferred Income Tax Assets 20.152,12 20.152,12

Other assets 571.484,88 571.484,88

Total Assets 145.004.494,40 121.828.868,59 123.955.088,30 671.153,08 0,00 391.459.604,37

LIABILITIES



Corporate Bonds 127.901.742,65 40.000.000,00 167.901.742,65



Financial Derivative Instruments 2.162.601,07 2.162.601,07


Total liabilities 192.923.839,54 1.668.963,37 131.036.071,62 40.000.000,00 0,00 365.628.874,53

Total on balance sheet

liquidity gap (47.919.345,14) 120.159.905,22 (7.080.983,32) (39.328.846,92) 0,00 25.830.729,84

Total off-balance sheet

liquidity gap (2.450.942,68) (2.450.942,68)

32. Operational Lease CommitmentsThe Company leases various assets under operating lease agreements, whose cancellation incurs liability for the paymentdamages. In case all lease agreements are cancelled, the liability to pay damages shall be the following:

Damages payable in case all leases are cancelled

December 31st, 2006 December 31st, 2005Buildings Vehicles Buildings Vehicles

ú ú ú ú

168.260,38 8.153,55 203.183,97 9.375,99

Future aggregate minimum lease payments under cancellable and non-cancellable operating leases

December 31st, 2006 December 31st, 2005Buildings Vehicles Buildings Vehicles

ú ú ú ú

Not later than one year 319.826,99 33.449,37 310.878,00 33.179,35

Later than one year and no later than 5 years 1.419.356,71 69.903,83 1.368.972,43 86.957,03

Later than 5 years 1.195.240,83 1.585.994,71


33. Related Party TransactionsThe Company is controlled by EFG Eurobank Ergasias (which is headquartered in Athens and is listed in the Athens StockExchange), which owns 100% of the Company’s share capital. The ultimate parent company is EFG Bank European FinancialGroup, a bank incorporated in Switzerland.

Related party transactions 31.12.2006 31.12.2006EFG Eurobank Ergasias Other related parties

Assets

Receivables from banks 1.630.387,28 3.086,51

Other assets 1.630.387,28 3.086,51

Liabilities

Amounts due to banks 163.207.338,42

Debt securities issued 293.650.000,00

Other liabilities 456.857.338,42

Income

Income from derivatives (swap) 835.495,45

Interest income 104.771,83

940.267,28

Expenses

Interest and related expenses 7.361.787,80

Interest expense from derivatives (swap) 1.794.702,27

Commission expense 31.203,00

Administrative expenses 12.914,00 4.051,00

9.200.607,07 4.051,00

44 ∞ N N U A L R E P O R T 2006

31.12.2005 31.12.2005EFG Eurobank Ergasias Other related parties

Assets

Receivables from banks 497.339,46

Other assets 74.290,60

571.630,06

Liabilities

Amounts due to banks 191.710.693,73

Debt securities issued 167.901.742,65

Other liabilities 2.162.601,00

361.775.037,38

Income

Income from derivatives (swap) 1.448.638,38

1.448.638,38

Expenses

Interest and related expenses 3.103.008,25

Interest expense from derivatives (swap) 3.465.467,78

Commission expense 13.000,00

Administrative expenses 10.400,00 4.684,80

6.591.876,03 4.684,80

Transactions with other related parties concern the companies Be-Business Exchange S.A., EFG Insurance Services S.A., andPostBank Bulgaria.

The necessary financing cash-flows of the Company are covered with open account financing from the parent company EFGEurobank Ergasias, the issuance of corporate bonds, or share capital increases.

Cash flows from financing activities 31.12.2006 31.12.2005

Cash flows from corporate bonds 253.650.000,00

Less - Corporate bond repayment (130.000.000,00)

Funds drawn from banks (28.503.355,31) 64.195.352,85

Key management compensation.

Salaries and other short-term benefits ú411.397 (375.672 in 2005).


34. Contingent Liabilities(a) Legal issuesThe Company’s Management and its Legal Department judge that there are no outstanding cases, which may have a major impacton the Company’s financial position.

(b) Taxation issuesEFG Factors (Eurobank Factors) has been tax audited for the financial years including 2004, and therefore its tax liabilities havebeen finalized. The financial years 2005 and 2006 have not been tax audited, but the Company has made an adjustment in orderto determine taxable profits in accordance with income tax legislation.

35. Events after the Balance Sheet DateThe EFG Factors (Eurobank Factors) branch in Sofia, Bulgaria, has been independently conducting Factoring operations sinceMarch 1st, offering all factoring products in the domestic and International (Import and Export Factoring) market of Bulgaria. Thereare no other events after the balance sheet date that have a significant impact on the Company’s financial statements.

46 ∞ N N U A L R E P O R T 2006

Independent Auditor’s ReportTo the Shareholders of EFG FACTORS S.A. (Eurobank Factors)

Report on the financial statementsWe have audited the accompanying consolidated financial statements of EFG FACTORS S.A. (the “Company”) which comprisethe balance sheet as of 31 December 2006 and the income statement, statement of changes in equity and cash flow statementfor the year then ended and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with InternationalFinancial Reporting Standards, as adopted by the European Union. This responsibility includes the design, implementation andmaintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error. This responsibility also includes the selection and application of appropriateaccounting policies and the formation of accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with the Greek Standards on Auditing which have been aligned with the International Standards on Auditing. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether 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 thefinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates 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.

OpinionIn our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as ofDecember 31st 2006, and of its financial performance and its cash flows for the year then ended in accordance with InternationalFinancial Reporting Standards, as adopted by the European Union.

Report on other legal and regulatory requirementsThe contents of the Directors’ Report comply with the accompanying financial statements.

Athens, March 15th, 2007

The auditorKyriakos Riris

Auditors’ Registry Number 12111

268 Kifissias Avenue – 152 32 HalandriAuditors’ Registry Number 113


HEAD OFFICE3, ∫apodistriou St. & Messogion Ave.

GR 153 43 Athens

Tel.: +30 210 6078 000

Fax: +30 210 6078 010 -020 -030

www.efgfactors.com

www.eurobank.gr

NORTHERN GREECE BRANCH 13, Karolou Ntil

GR 546 23 Thessaloniki

Tel.: +30 2310 376 980

Fax: +30 2310 376 960

www.efgfactors.com

BULGARIAN BRANCH135, Tsarigradsko Sh. Blvd.,

Office Express Building,

1784 Sofia, Bulgaria

Tel.: + 359 2 4015000

Fax: + 359 2 4015010

www.efgfactors.com

www.postbank.bg ∞ N N U A L R E P O R T 2006

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ËÏ.:

210

3615

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