annual report 2010...10.12 forfaiting portfolio 27 table of contents a ac & a 2 a a 2010 10.13...

A n n u a l R e p o r t • 2010

Prepared in accordance

with the International Financial Reporting Standards

The financial report has been translated from the original financial

report that has been prepared in the Greek language. In the event that

differences exist between this translation and the original Greek

language financial report, the Greek language financial report will

prevail over this document.

The attached financial statements were approved by the Board of Directors of MARFIN FACTORS & FORFAITERS S.A.

on April 29, 2011 and have been posted on the websites www.marfinegnatiabank.gr & www.marfinfactors.gr

Annual financial statements as at 31 December 2010

1. Statement of comprehensive income 4

2. Statement of Financial Position 5

3. Statement of changes in Equity 6

4. Statement of cash flows 7

5. Annual Report of the Board of Directors 8

6. General Information 10

7. Basis of preparation 11

7.1 Compliance 11

7.2 Basis of presentation 11

7.3 New accounting principles 11

7.4 Estimates 14

8. Basic Accounting Principles 15

8.1 Foreign currency transactions 15

8.2 Financial assets 15

8.3 Property, plant and equipment 16

8.4 Intangible assets 16

8.5 Cash and cash equivalents 17

8.6 Impairment of financial assets 17

8.7 Financial liabilities 18

8.8 Employee benefits 18

8.9 Provisions 19

8.10 Leased agreements 19

8.11 Offsetting financial instruments 19

8.12 Interest income and expense 19

8.13 Fee and commision income 20

8.14 Net trading income 20

8.15 Income Tax and Deferred Tax 20

8.16 Share capital 20

9. Management estimations and assumptions 21

10. Notes to the Financial Statements 22

10.1 Net interest income 22

10.2 Net fee and commission income 22

10.3 Other income/(expense) 22

10.4 Staff costs 23

10.5 Administrative expenses 24

10.6 Impairment of advances and receivables 24

10.7 Income tax 24

10.8 Financial assets at fair value through profit or loss 25

10.9 Cash and cash equivalents 25

10.10 Advances to Factoring customers 25

10.11 Non recourse factoring assets 26

10.12 Forfaiting Portfolio 27

Table of Contents

MARFIN FACTORS & FORFAITERS ANNUAL REPORT 20102

10.13 Intangible assets 28

10.14 Property, plant and equipment 29

10.15 Deffered tax 30

10.16 Other assets 30

10.17 Due to banks 31

10.18 Dept securities in issue and other borrowed funds 31

10.19 Factoring liabilities 31

10.20 Provision for post-employment benefits 32

10.21 Other provisions 32

10.22 Current tax 33

10.23 Other liabilities 33

10.24 Share capital 33

10.25 Reserves 33

11. Related party transactions 35

12. Fair value of financial assets and liabilities 37

13. Financial Risk Management 38

13.1 Credit risk 38

13.2 Market risk 40

13.3 Interest rate risk 41

13.4 Currency risk 43

13.5 Liquidity risk 44

13.6 Operational risk 45

14. Capital Adequacy 46

15. Contigent liabilities 47

16. Auditors’ fees 48

17. Reclassifications 49

18. Events after the reporting date 50

19. Independent Auditors’ Report 51

Table of Contents


(amounts in €) Note 2010 2009

Interest and similar income 10.1 9.263.857 7.301.162

Interest and similar expense 10.1 -5.126.246 -3.699.623

Net interest income 10.1 4.137.611 3.601.539

Fee and commission income 10.2 3.899.254 3.229.765

Fee and commission expense 10.2 -512.849 -330.246

Net fee and commission income 10.2 3.386.406 2.899.519

Other income/(expense) 10.3 -79.757 -32.623

Operating income 7.444.259 6.468.435

Staff costs 10.4 -1.788.113 -2.059.377

Administrative expenses 10.5 -758.330 -974.567

Depreciation and amortization 10.13 & 10.14 -106.200 -102.775

Impairment of advances and receivables 10.6 -1.536.276 -1.923.799

Profit (Loss) before tax 3.255.339 1.407.917

Income tax 10.7 -1.252.365 -685.982

Profit (Loss) after Tax (Α) 2.002.974 721.936

Profit (Loss) after tax per share 0,54 0,19

Other comprehensive income

Foreign exchange differences (Β) 141.548 0

Total comprehensive income after Tax (Α)+(Β) 2.144.522 721.936

Athens, March 4th 2010

The Chairman The Chief Executive Officer The Chief The Head of the

οf the Board of Directors and Vice President Financial Officer Accounting Department

οf the Board of Directors

Konstantinos Ι. Vassilakopoulos Panagiotis D. Papatheodorou George Sourgiadakis Vasilios Chondros

I.D. No. Μ 310696 I.D. No. Σ 573982 I.D. No. ΑΕ 107169 License No. 69700

Statement of comprehensive income


The notes presented on pages 10 to 50 constitute an integral part of the financial statements as at 31 December 2010.

1

(amounts in €) Note 2010 2009

ASSETS

Financial assets at fair value through profit or loss 10.8 1.053.821

Cash and cash equivalents 10.9 2.258.358 3.342.448

Advances to Factoring customers 10.10 228.141.951 240.479.066

Non recourse factoring assets 10.11 9.464.443 12.720.260

Forfaiting portfolio 10.12 19.727.232 19.668.948

Intangible assets 10.13 53.437 73.042

Property, plant and equipment 10.14 273.834 353.122

Deffered tax asset 10.15 49.632 37.747

Other assets 10.16 1.001.772 583.133

Total assets 262.024.480 277.257.765

Equity and Liabilities

Due to Banks 10.17 76.265.220 112.933.367

Debt securities in issue and other borrowed funds 10.18 155.000.000 132.633.625

Factoring liabilities 10.19 10.809.286 14.070.505

Provision for post employment benefits 10.20 78.429 58.849

Other provisions 10.21 136.691 158.000

Deferred tax liability 10.15 0 63.310

Current tax 10.22 1.163.234 511.689

Other liabilities 10.23 1.384.137 1.814.333

Total liabilities 244.836.996 262.243.679

Share capital 10.24 10.870.300 10.870.300

Reserves 10.25 587.742 467.588

Retained earnings 5.729.442 3.676.199

Total equity 17.187.484 15.014.086

Statement of financial position2



(amounts in €) Share Statutory Other Retained Total

Capital Reserves Reserves earnings

Balance as at 1 January 2009 10.870.300 182.946 217.241 2.978.326 14.248.814

Net profit/(loss) for the year 721.936 721.936

Total results recognised in 2009 0 0 0 721.936 721.936

Statutory reserve 24.063 -24.063 0

Stock options 43.337 43.337

Balance as at 31 December 2009 10.870.300 207.009 260.578 3.676.199 15.014.086

Balance as at 1 January 2010 10.870.300 207.009 260.578 3.676.199 15.014.086

Net profit/(loss) for the year 2.002.974 2.002.974

Reserves from foreign exchange differences 141.548 141.548

Total results recognised in 2010 0 0 141.548 2.002.974 2.144.522

Statutory reserve 52.768 -52.768 0

Stock options 28.876 28.876

Capitalisation of reserves -103.038 103.038 0

Balance as at 31 December 2010 10.870.300 259.777 327.965 5.729.442 17.187.484

Statement of changes in Equity3



(amounts in €) 2010 2009

Cash flows from operating activities

Profit/Loss before tax 3.255.339 1.407.917

Adjustments for non-cash items

Depreciation/amortisation 106.200 102.775

Impairment of loans and provisions 1.536.275 1.923.799

Other provisions 0 100.000

Employee benefits 48.455 55.996

Transfer to investing activities 0 -798.963

4.946.269 2.791.524

Changes in operating assets

Due from banks

Forfaiting portfolio -58.284 23.244.093

Loans and advances to customers 14.056.656 -68.053.300

Other assets -418.639 -389.822

Changes in operating liabilities

Due to banks -14.301.772 44.190.110

Due to Customers -3.172.080 -271.606

Other liabilities -474.292 667.178

Net cash flow from operating activities before taxes 577.858 2.178.177

Tax paid -600.820 -464.213

Net cash flow from operating activities -22.962 1.713.965

Cash flows from investing activities -1.053.821 0

Purchase of Assets -7.307 -52.946

Net Cash flows from Investing Activities -1.061.128 -52.946

Total net Cash Flows -1.084.090 1.661.019

Net cash flow increase (decrease) -1.084.090 1.661.019

Cash and cash equivalents, opening balance 3.342.448 1.681.430

Cash and cash equivalents, closing balance 2.258.358 3.342.448

Statement of cash flows4



To the Annual General Assembly of the shareholders of “Marfin Factors & Forfaiters S.A.”

Dear shareholders,

In 2010 the Greek economy recorded a strong downturn with many difficulties in economic operations generated by

the increasing shortage of liquidity and continuing public debt crisis. Despite these circumstances, Factoring operations

presented a significant increase of about 10%, according to the sector estimates. Moreover, in the second half of the

year, Forfaiting in international markets started to recover after a sharp decline in international trade during the years

2008-2009.

Marfin Factors & Forfaiters managed receivables amounting to € 1.086 million (out of which € 977 million were

purchased and financed, an increase of 8%, as compared to 2009). In particular, the assigned domestic Factoring

receivables amounted to € 830 million, thus presenting an increase of 4,6% versus last year and constituting one more

time the main volume of the Company operations (85%). Total assets decreased by 5,5% mainly due to decrease in

financed receivables that- as of 31/12/2010- amounted to € 247,8 million as against € 260,1 million in the previous

year due to limited liquidity. At the same time, a quick pace was maintained on the utilization of available funds, due

mainly to the prolongation of the credit periods due to the recession in the Greek market, resulting a relative increase

in average funded balances by 7,9%.

The company maintained an effective portfolio management and enriched its clientele through new relations, new

markets, selecting well established collaborates. Moreover, within 2010 the company re-priced its services, adjusted

to the new prevailing conditions.

International Factoring and Forfaiting operations presented significant growth, while, at the same time, the Serbian

Branch has been substantially active, during its first full year of operations, all these despite the downturn of the Greek

economy. Export Factoring increased its operations by 42%, reaching € 78 million (from € 55 million in 2009), while

Forfaiting conducted new transactions amounting to € 29,5 million, as compared to € 13 million in 2009, recording an

increase of 125,5%.

According to the published statistics of Factors Chain International (FCI), the company captured the third position

among the Greek factors in International Factoring with a market share of 12%. Furthermore, the Company was ranked

by FCI as the 11th best company worldwide among 252 companies, in terms of International Factoring performance.

At this point, it is also worth mentioning that 2 company executives have been elected to the Executive Boards of the

international associations of both Factoring and Forfaiting. Namely, company’s CEO, Panos Papatheodorou in the

Factors Chain International (FCI), and Deputy General Manager and Head of Forfaiting, Mr. Demetris Zouzoukis in the

International Forfaiting Association (IFA).

In 2010, the Company managed to increase its net profit by 16%, as a result of substantial improvement of its Cost-

to-Income ratio (35,6% versus 48,7% in 2009) reasoned on higher human resource productivity.

Through appropriate management of its clientele, the Company has reduced its exposure to risk and preserved a normal

level of provisions. It should be noted that the company does not hold in its portfolio any receivables owed by the State

or other public entities, nor has ever acquired such receivables, being consistent with its fundamental strategic

principles and austere implementation of factoring criteria.

Company’s well targeted operations were reflected in a significant improvement in profitability, that doubled, reaching

up to € 3,25 million before tax (compared with € 1,40 million in 2009), that resulted into an impressive 22% Return-

on-Equity.

Annual Report of the Board of Directors

5


The Company holds in its trade portfolio the Bonds and GDRs of Kazakhstan banks, amounting to € 1,1 million (at fair

value), following the finalization of the relative banks debt-restructuring, and replacement of the Company Forfaiting

assets. The company has no self-owned real estate property. The net foreign currency position of the Company does

not exceed the amount of € 1,5 million. The detailed analysis of assets per foreign currency is presented in the relative

part of the Financial Statements, as well as the risk management policies, the Company’s exposure to market, interest

rate, credit, operation and liquidity risk.

All transactions with related parties are carried out within the frame of the usual business operations, are performed

according to market terms and conditions, and are approved by the authorized executives of the Company. These

transactions are presented in the respective notes to the Financial Statements, the most important one being that of

loan transactions with the parent company Marfin Egnatia Bank which covers 100% of the company’s loan payables.

For 2011, the Company forcasts a decrease in the growth rate of the Factoring market, given the limited liquidity in the

Banking system, plus the decline in consumption which causes lower production of goods, lower business turnover, and

thus deteriorating market conditions. At the same time, the demand for international Factoring will remain unchanged.

The Company intends to retain its market share and enhance its global transactions, while making the best use of credit

risk management facilities it has already developed.

As from 1/4/2011, the Company constitutes a subsidiary of Marfin Popular Bank Public Co Ltd, headquartered in

Cyprus, following the finalization of cross-border merger of Marfin Egnatia Bank S.A. with its parent bank.

There are no other events worth disclosing after the Company financial statement preparation date.

BoD Members statements

The members of the Board of Directors state that the attached company financial statements for the fiscal period

starting from 1st of January 2010 and ending on 31st of December 2010, which were prepared according to the

effective International Accounting Standards and the International Financial Reporting Standards, present fairly the

assets and the liabilities, the equity and the Income Statement of the company, and that the Board of Directors annual

report presents fairly the progress, the performance and financial position of Marfin Factors & Forfaiters including the

description of the main risks and uncertainties that the company is faced with.

Athens, 29 April, 2011

By commission of the Board of Directors

Panos Papatheodorou

Chief Executive Officer &

Vice President of Board of Directors


«MARFIN FACTORS & FORFAITERS S.A.» (“the Company”) (former LAIKI FACTORING S.A. ), has its head office is in

Marousi 20, Kifisias Avenue, and has been registered in the Societe Anonyme Registry under number

32684/01/Β/95/32.

The Company operates as a societe anonyme, in compliance with the provisions of Law 2190/20 on societe anonyme,

Law 1905/1990 on business receivables factoring companies, provisions of the Law 3601/2007 on credit

institutions as well as the requirements of other similar legislations.

The Company conducts business in the fields of domestic and international Factoring with or without recourse as well

as Forfaiting in cross border transactions and its exclusive objective is the conduct of recourse and non-recourse

Factoring operations both in Greece and abroad. The Company has a branch in Serbia and examines the potential of

expansion of its operations to other countries of South-East Europe.

The Company is a member of «MARFIN POPULAR BANK» group. Within the year, it was a subsidiary of «MARFIN

EGNATIA BANK S.A.» that participates in its share capital by 100%. Following the finalization of the cross border

merger of «MARFIN POPULAR BANK» and MARFIN EGNATIA BANK S.A. as at 1/4/2011, the company is by 100%

subsidiary of «MARFIN POPULAR BANK», incorporated in Cyprus.

ManagementAccording to the Minutes of the General Assembly of the Shareholders as at March 8th, 2010 and the Minutes of the

Board of Directors as at March 8th, 2010, registered in the Registry of Societe Anonyme on April 28, 2010, the Board

of Directors that was elected by the above GA and will manage the Company for three (3) years is a s follows:

The Chairman (Non executive member): Konstantinos Ι. Vasilakopoulos

The Vice President and

Chief Executive Officer (Executive member): Panagiotis D. Papatheodorou

Executive members: Demetris Α. Zouzoukis

Non executive members: Dionysios Κ. Papatheodorou

Efthymios T. Bouloutas

Kyriakos D. Mageiras

Iraklis G. Kounadis

The auditors of the annual financial statements are as follows:

Statutory: Leos G. Ioannis (SOEL Reg: 24881)

Deputy: Moustaki Κ. Athina (SOEL Reg: 28871)

Audit Firm: Grant Thornton S.A. (SOEL Reg: 127)

General Information6


7.1•ComplianceThe financial statements of the Company have been prepared in accordance with International Financial Reporting

Standards (I.F.R.S) as these have been adopted by the European Union, including all amendments issued by the

International Accounting Standards Board (I.A.S.B.).

The financial statements were approved for publication by the Board of Directors on 29 April and are subject to final

approval by the ordinary General Assembly of the shareholders.

7.2•Basis of presentationThe financial statements are presented in euro which is the reporting currency and they are prepared on a historic cost

basis.

7.3•New accounting principlesThe current financial statements were prepared in full compliance with the International Financial Reporting Standards

(IFRS) as well as the amendments that have been adopted by the European Union, whose adoption is mandatory for the

preparation of the financial statements covering the periods after 1.1.2010.

The accounting principles followed by the Company for the preparation of its annual Financial Statements as at

31/12/2010, are consistent with those described in the publicized financial statements for the year ended as at

31/12/2009, taking into account the following amendments to International Accounting Standards and new

Interpretations issued by IASB whose application is mandatory as starting from 1/1/2010.

1) Adoption of new standards, amendments and interpretations effective on January 1st, 2010

The following standards, amendments and revisions are not applicable to the Company financial statements:

(a) Amendment to IFRS 1 “First-time Adoption of International Financial Reporting Standards” –

Additional Exceptions for first time adopters

The amendment provides guidance on the retrospective application of the IFRSs with reference to the measurement of

financial assets in oil, natural gas and leasing sectors. The amendment is effective for annual periods starting on or after

January 1, 2010. The amendment does not apply to the Company’s financial statements.

(b) IFRS 3: "Business Combinations" (Revised) and IAS 27 “Consolidated and Separate Financial

Statements”, effective for annual periods beginning on or after 1st July 2009.

The revised IFRS introduces a number of changes in the accounting for business combinations which will impact the

amount of goodwill recognized, the reported results in the period that an acquisition occurs, and future reported

results. Such changes include the expensing of acquisition related costs and recognizing subsequent changes in fair

value of contingent consideration in the profit and loss. The amended IAS 27 requires that a change in ownership

interest of a subsidiary to be accounted for as an equity transaction. Furthermore the amended standard changes the

accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The revised IFRS 3 is

applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first

annual reporting period beginning on or after 1 July 2009, while assets and liabilities that arose from business

combinations whose acquisition dates preceded the application of this IFRS shall not be adjusted upon application of

this IFRS. The application of this revision has not affected the current financial position of the Company.

Basis of preparation7


(c) IAS 39: “Financial instruments: Recognition and Measurement - Instruments which qualify as hedging

instruments (amended in September 2009), effective from July 1st, 2009):

This amendment clarifies how the principles that determine whether a hedged risk or portion of cash flows is eligible

for designation should be applied in particular situations. This amendment did not affect the Company’s financial

statements.

(d) IFRS 2: "Share-based Payment: Vesting Conditions and Cancellations (Amendment), (effective from

January 1st, 2009):

This amendment clarifies that only service conditions and performance conditions are vesting conditions, while all other

features need to be included in the grant date fair value. The adoption of the amendment had no impact on the

Company’s financial statements.

(e) IFRIC 15 “Agreements for the Construction of Real Estate”, (effective from January 1st, 2010)

This interpretation addresses the diversity in accounting for real estate sales. Some entities recognize revenues in

accordance with IAS 18 (i.e. when risks and rewards in the real estate are transferred) and others recognize revenue as

the real estate is developed in accordance with IAS 11. The interpretation clarifies which standard should be applied to

particular. This interpretation is not applicable to the Company’s activities.

(f) IFRIC 16 “Hedges on a Net Investment in a Foreign Operation”, (effective for annual periods beginning

on or after 1st July 2009):

This interpretation applies to an entity that hedges the foreign currency risk arising from its net investments in foreign

operations and qualifies for hedge accounting in accordance with IAS 39. The interpretation provides guidance on how

an entity should determine the amounts to be reclassified from equity to profit of loss for both the hedging instrument

and the hedged item. This interpretation is not applicable to the Company’s activities.

(g) IFRIC 17 “Distribution of Non-Cash Assets to Owners”, Owners (effective for annual periods beginning

on or after 1st November 2009:

When an entity announces distribution and has the obligation to distribute assets to its owners, it must recognize a

liability for these payable dividends. IFRIC 17 specifies the following issues: a dividend payable should be recognized

when the dividend is appropriately approved and is no longer at the discretion of the entity; the company should

measure the dividend payable at the fair value of the net assets to be distributed; the company should recognize the

difference between the dividend paid and the assets’ book value distributed in profit or loss. The Interpretation is not

applicable to the Company’s activities.

(h) IFRIC 18 “Transfers of Assets from Customers”, (effective for annual periods beginning on or after 1st

November 2009):

IFRIC 18 is aimed at clarifying the requirements of IFRSs pertaining to agreements under which an entity receives from

a client a segment of fixed assets that the entity shall use either when a client constitutes a part of a network or a client

shall obtain constant access to provision of goods or services (such as, for instance, provision of electricity or water).

The IFRIC is applied mainly to utility entities and is not applicable to the Company’s activities.

2) New standards, amendments to the standards and interpretations to already existing standards that have

been issued but are not effective for the annual accounting periods starting on January 1, 2011. They have

not been earlier adopted and the Company examines their potential impact on its financial statements.

(a) IFRS 9: «Financial Instruments», effective for annual periods starting on January 1, 2013.

IFRS 9 is the first part of Phase 1 of the Board’s project to replace IAS 39. The IASB intends to expand IFRS 9 during

2010 to add new requirements for classifying and measuring financial liabilities, derecognition of financial instruments,


impairment and hedge accounting. IFRS 9 states that financial assets are initially measured at fair value plus, in the

case of a financial asset not a fair value through profit and loss, particular transaction costs. Subsequently financial

assets are measured at amortised cost or fair value and depend on the basis of the entity’s business model for

managing the financial assets and the contractual cash flows characteristics of the financial assets.

IFRS 9 prohibits reclassifications except in rare circumstances, when the entity’s business model changes. In this case,

the entity is required to reclassify affected financial assets prospectively. IFRS 9 classification principles indicate that

all equity investments, should be measured at fair value.

However management has the option to present in other comprehensive income unrealized and realized fair value gains

and losses on equity investments that are not held for trading. Such designation is available on initial recognition on an

instrument-by –instrument basis and is irrevocable. There is no subsequent recycling of fair value gains and losses to

profit and loss: however dividends from such investments will continue to be recognized in profit and loss. IFRS 9

removes the cost exemption for unquoted equities and derivatives on unquoted equities but provides guidance on when

cost may be an appropriate estimate of fair value.

(b) IFRIC 19: “Extinguishing Financial Liabilities with Equity Instruments”, effective for annual periods

starting on July 1, 2010.

IFRIC 19 addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the

entity issuing equity instruments to a creditor to extinguish all or part of the financial liability. It does not address the

accounting by the creditor.

IFRIC 19 requires that the equity instruments issued are measured at their fair value. If their fair value cannot be

reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability

extinguished. IFRIC 19 states that any difference between the carrying amount of the financial liability extinguished and

the initial measurement amount of the equity instruments issued is included in the entity’s profit or loss for the period.

As a result, IFRIC 19 will impact entities that have previously recognised the equity instruments issued in a debt for

equity swap at the carrying amount of the financial liability under par. 40 of IAS 39. Earlier application is permitted.

(c) IFRIC 14 (Amendment) “Minimum Funding Requirements Payments” (effective for annual periods

beginning on or after 01/01/2011).

The amendment has been issued to raise the limitations that an entity had on the recognition of an asset deriving from

voluntary prepaid contributions for minimum funding requirements. Earlier application is permitted.

(d) IAS 32 (Amendment) «Financial instruments: Presentation- Classification of Rights Issued for a Fixed

Amount of Foreign Currency, effective for annual periods starting from February 1, 2011.

For rights issues offered for a fixed amount of foreign currency, the amendment states that if such rights are issued pro

rata to an entity's all existing shareholders in the same class for a fixed amount of currency, they should be classified

as equity regardless of the currency in which the exercise price is denominated. Earlier application is permitted.

(e) IAS 24 (Revised): “Related Party Disclosures”, effective for annual periods starting from January 1, 2011.

The aforementioned amendment clarifies the definition of related parties and reduces disclosures regarding related

parties of the State. it rescinds the obligation of State entities to disclose details of all transactions with other State

parties, it clarifies and simplifies the definition of a related party and endorses the disclosure not only of transactions

and balances between related parties, but also undertakings, both in separate and consolidated statements.


3) New amendments that have been issued, the earliest of which is effective for annual accounting periods start-

ing from 1 July 2010. They have not been early adopted and the Company examines their potential impact

on its financial statements:

(a) IFRS 3 «Business Combinations» effective for accounting periods starting from 1 July 2010.

The amendment defines transition requirements for contingent consideration from a business combination that

occurred before the effective date of the revised IFRS, measurement of non-controlling interests and un-replaced and

voluntarily replaced share-based payment awards.

(b) IFRS 7 “Financial Instruments: Disclosures” – Transfer of Financial Assets”

(effective for annual periods beginning on or after July 1, 2011)

The amendment clarifies financial instrument disclosures requirements.

(c) IAS 1: “Presentation of Financial Statements”, effective for accounting periods starting from 1 January

2011.

The amendment allows entities a choice of presenting results of operations either in a single, continuous statement of

Changes in Equity or in the Notes.

(d) IAS 27 “Consolidated Financial Statements”, effective for accounting periods starting from 1 July

2010.

It is clarified that amendments to IAS 21, IAS 28 and 31 arising from the amendment to IAS 27 (2008) shall be applied

prospectively.

(e) IAS 34 Interim Financial Reporting, effective for accounting periods starting on 1 January 2011.

The objective of this amendment is to prescribe the minimum content of an interim financial report and to prescribe the

principles for recognition and measurement in complete or condensed financial statements for an interim period.

(f) IFRIC 13 "Customer Loyalty Programmes”, effective for accounting periods starting from 1 January

2011.

The amendment clarifies the definition of “fair value” in the context of fair value of award credits.

7.4•EstimatesThe preparation of the financial statements in conformity with IFRS requires management to make judgments,

estimates and assumptions that affect the reported amount of assets and liabilities, income and expenses. Actual

results may differ from these estimates.

The estimates and associated assumptions are based on historical experience and various other factors that are

believed to be reasonable under the circumstances, the results of which form the basis of making judgments about

carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Deviations to accounting estimates are

recognized in the period in which the estimate is revised if the revision effects only that period, or in the period of the

revision and future periods if the revision affects both the current and future periods.


8.1•Foreign currency transactionsTransactions in foreign currencies are translated to Euro the reporting currency at the foreign exchange rate ruling at

the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies, at the statements of financial position date are

translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation

are recognized in the income statement.

Assets and liabilities, including goodwill and fair value adjustments arising on the acquisition, are translated into Euro

using the exchange rates prevailing on the reporting date. Income and expenses of foreign operations are translated

into Euro using the exchange rates prevailing at the transaction dates. The exchange differences arising from translation

of foreign currency operations, namely the incorporation of the books of the branch, are recognized in other

comprehensive income as "Exchange rate differences from foreign operations conversion”.

8.2•Financial assets(a) Advances to customers

i. Classification

The Company’s financial assets are classified into two categories which are “Advances to Factoring clients” and

“Forfaiting portfolio”.

Advances to Factoring clients” consist of two subcategories, “Recourse Factoring” and “Non-recourse Factoring”.

ii. Recognition

Advances are recognized whenever cash is disbursed to the beneficiates of such credit or when non-recourse factoring

is acquired.

iii. Initial Measurement

Financial assets are measured initially at fair value plus transaction costs if any.

iv. Subsequent Measurement

After the initial measurement, in every subsequent reporting period, the financial assets are measured at amortized

cost using the effective rate method, after being tested for potential impairment under par. 8.6.

v. Derecognition

A financial asset is derecognized when the Company loses control on contractual rights that comprise the financial

instrument. This occurs when the rights to receive cash flows from these have been executed, or when the company has

transferred substantially all the risks and rewards of the assets to third party.

(b) Financial assets at fair value through profit or loss

i. Classification

The Company’s trade portfolio is classified into two categories which are “Corporate Bonds” and “Shares”.

Basic Accounting Principles8


ii. Recognition

The Company recognizes that category when it becomes one of the financial instrument beneficiaries and therefore has

the legal right to receive cash.

iii. Initial Measurement

Financial assets are measured initially at fair value.

iv. Subsequent Measurement

After the initial measurement, in every subsequent reporting period, the financial assets are measured at fair value

apart from cases when it cannot be reliably estimated, when they are measured at cost.

v. Derecognition

A financial asset is derecognized when the Company loses control on contractual rights that comprise the financial

instrument. This occurs when the rights to receive cash flows from these have been executed, or when the company has

transferred substantially all the risks and rewards of the assets to third party.

8.3•Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of property,

plant and equipment. Land is not depreciated.

The estimated useful lives are as follows:

Improvements on non owned properties: The shorter between the useful life and the lease term

Furniture and other equipment: 5 years

Computer hardware and software: 3-4 years

Transportation means: 6-7 years

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that

the carrying amount at cost may not be recoverable. An asset’s carrying amount is written down immediately to its

recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable

amount is the higher of the asset’s fair value less costs to sell and value in use.

Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate only

when it is probable that future economic benefits associated with the item will flow to the Company, and their cost can

be measured reliably. Repairs and maintenance are charged to the income statement during the financial period in

which they take place.

Gains and losses on disposal are determined by comparing proceeds with carrying amounts. These are included in the

income statement.

8.4•Intangible assetsIntangible assets include Company’s software and are stated at cost less accumulated depreciation and accumulated

impairment losses.


Amortization is charged to the income statement on a straight-line basis over the estimated useful life of the software,

which is between 3 to 4 years.

8.5•Cash and cash equivalentsCash and cash equivalents include monetary assets with an original maturity of three months or less, such as cash

balance and amounts due from financial institutions.

8.6•Impairment of financial assetsThe Company assesses at each statement of financial position date whether there is objective evidence that a financial asset

or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are

incurred and only, and only if there is objective evidence of impairment as a result of one or more events that occurred after

the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash

flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset

or group of assets is impaired includes data that comes to the attention of the Company about the following loss events:

i. Significant financial deterioration of the issuer or obligator;

ii. A breach of contract, such as a default or delinquency in meeting payments;

iii. Strong probability that the borrower will enter bankruptcy stage or other financial restructuring;

iv. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a

group of financial assets since the initial recognition of those assets, although the decrease cannot yet be

identified with the individual financial assets in the group, including:

adverse changes in the payment status of customers; or

national or local economic conditions that correlate with defaults on the assets in a group.

If there is objective evidence that an impairment loss on factoring advances carried, the amount of the loss is measured

as the difference between the assets' carrying amount and the present value of estimated future cash flows (excluding

future credit losses that have already been incurred) discounted at the financial asset's original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is

recognized in the income statement. If the factoring advance has a floating interest rate, the discount rate for measuring

any impairment loss is the current effective interest rate determined under the contract.

The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the

cash flows that may result from foreclosure less costs for obtaining and selling the collateral, in case the foreclosure

cannot be carried out.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to

an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by

adjusting the allowance account. The amount of the reversal is recognized in the income statement.

When an advance or receivables is uncollectable, it is written off against the related provision for advance/receivable

impairment. Such advances or receivables are written off after all the necessary procedures have been completed and

the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are recognized

in the income statement.


8.7•Financial liabilitiesFinancial liabilities are measured initially at fair value plus transaction costs. Subsequently they are stated at amortized

cost which occurs by the use of the effective interest method. Any difference between the initial proceeds and the

redemption value is recognized in the income statement, using the effective interest method. Due to banks and debt

securities in issue are classified in this category.

8.8•Employee benefitsShort-term benefits: Short-term benefits to personnel (except for termination of employment benefits) in cash and

kind are recognized as an expense when considered accrued. Any unpaid amount is recognized as a liability, whereas

in case the amount already paid exceeds the benefits’ amount, the entity identifies the excessive amount as an asset

(prepaid expense) only to the extent that the prepayment shall lead to a future payments’ reduction or refund.

Retirement Benefits: Benefits following termination of employment include lump-sum severance grants, pensions and

other benefits paid to employees after termination of employment in exchange for their service. The Company’s

liabilities for retirement benefits cover both defined contribution schemes and defined benefit plans.

i) Defined contribution plans

For defined contribution plans, the Company pays contributions to publicly administered pension insurance funds (i.e.

Social Security Foundation) and therefore the Company has no obligation to pay further contributions if the fund does

not hold sufficient assets to pay all employees the benefits relating to pension obligations. The regular contributions

constitute net periodic costs for the year in which they are due and as such they are included in line 'staff costs' of the

Income Statement.

i) Defined benefit plans

The Company’s defined benefit plan regards the legal commitment to pay lump-sum severance grant, pursuant to

L.2112/1920. Typically defined benefit plans define an amount of pension benefit that an employee will receive on

retirement, usually dependent on one or more factors such as years of service and compensation. The liability

recognized in the statement of financial position for defined benefit plans is the present value of the liability for the

defined benefit less the plan assets’ fair value (reserve from payments to an insurance company), the changes deriving

from any actuarial profit or loss and the service cost. The defined benefit commitment is calculated on an annual basis

by an independent actuary with the use of the projected unit credit method.

The present value of the liability which incurs from the defined benefit plan is calculated by discounting the future cash

outflows with the long-term Greek bonds’ rate.

Actuarial profits and losses form part of the Company’s commitment to grant the benefit and of the expense which shall

be recognized in the income statement. The adjustments’ outcome based on historical data, if below or above a 10%

accumulated liability margin, is recognized in the income statement within the expected insurance period of the plan’s

participants. The service cost is directly recognized in the income statement except for the case where plan’s changes

depend on employees’ remaining years of service. In such a case, the service cost is recognized in the income

statement using the fixed method during the maturity period.

Employment Termination Benefits: Benefits due to employment termination are paid when employees step down

prior to the retirement date. The Company recognizes these benefits upon committing itself that it terminate

employees’ employment according to a detailed plan for which there is no withdrawal possibility.


Remuneration based on Equity Instruments: The Group, through the Parent Company Marfin Popular Bank, grants

the personnel stock options for the acquisition of Parent Company shares. These benefits are settled by issuing new

shares from the Parent Company, on the condition that the employee fulfils certain vesting conditions linked to his/her

performance and exercises his/her options.

Services rendered by employees are measured according to the fair value of the options granted on the grant date.

Option fair value is calculated by using a widely accepted option-pricing model and taking into account the share’s

closing price on grant date. Options’ fair value, following their issue, is readjusted in case there is a modification in the

plan favorable for employees. Employees’ services residual value is recognized as an expense in the income statement

by equal credit amount in equity, in the share premium account. The relative amount is divided throughout the vesting

period and is calculated on the basis of the number of options set to vest in each year.

8.9•ProvisionsProvisions are recognized when the Company has a present legal or constructive obligation as a result of past events,

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

reliable estimates of the amount of the obligation can be made.

Contingent liabilities that cannot possibly incur cash flows are also disclosed, unless they are immaterial.

8.10•Leased agreementsFinancial assets and liabilities are offset and the net amount is reported in the statement of financial position when there

is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or

realize the asset and settle the liability simultaneously. Offsetting income with expenses is allowed only if they are part

of the same entry.

8.11•Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount is reported in the statement of financial position when there

is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or

realize the asset and settle the liability simultaneously. Offsetting income with expenses is allowed only if they are part

of the same entry.

8.12•Interest income and expenseInterest income and expense is recognized in the income statement on an accrual basis for all interest-bearing

instruments, using the effective interest method. The effective interest rate is the one that discounts exactly the

estimated future cash inflows or outflows during the estimated life of the financial instrument or, wherever deemed

appropriate, during a shorter period, on the basis of the net carrying value of the financial asset or liability. In order to

calculate the effective rate, cash flow estimation takes into account the terms of the financial instrument agreement, but

not any future losses from credit risk. Calculation includes the fees and the basis points paid or collected by the

contracting parties and which constitute an integral part of the effective interest rate, transaction costs, and other

premiums and discounts.


8.13•Fee and commision incomeFee and commission income are recognized on an accrual basis when the relevant service has been provided unless

they influence the effective interest rate.

8.14•Net trading incomeNet trading income comprises gains less losses related to Factoring receivables as well as potential changes in their

fair value.

8.15•Income Tax and Deferred TaxThe income tax charge involves current taxes, deferred ones and the differences of preceding financial years’ tax audit.

Income tax is recognized in the financial year’s income statement, except for the tax on transactions recognized directly

in equity, in which case it is recognized accordingly to equity. To assess the annual tax charge, all the required

adjustments on the accounting result are taken into account in order to establish the final taxable income.

The current income taxes include short-term liabilities or claims vis-à-vis fiscal authorities pertaining to the payable

taxes on the year’s taxable income and any additional income taxes regarding previous financial years.

Current taxes are measured on the basis of tax rates and fiscal regulations in force during the corresponding financial

years, based on the yearly taxable profit.

Deferred taxes are the taxes or the tax relieves from the financial encumbrances or benefits of the financial year in

question, which have been allocated or shall be allocated to different financial years by tax authorities. Deferred income

tax is provided by using the liability method which is determined by the temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax

is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business

combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset

is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted

by the statement of financial position date. In case it is not possible to clearly determine the time needed to invert the

temporary differences, the tax rate to be applied is the one in force on the financial year after the statement of financial

position date.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available

against which the temporary differences can be utilized.

Most of the changes in the deferred tax assets or liabilities are identified as a part of tax charges in the income

statement.

8.16•Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options

are shown in equity as a deduction, free of tax, from the proceeds.


The preparation of financial statements in accordance with the I.F.R.S. requires estimates and assumptions being made

by Management during the implementation of the Company’s accounting policies.

The following areas are affected by Management’s estimates and assumptions:

a) Impairment of Financial assets

Financial assets and liabilities fair value calculation for which there are no published market prices requires the use of

specific measurement techniques. Fair value calculation calls for various kinds of assessments. The most important

ones involve assessment of various risks an instrument is subject to, such as credit risk, interest rate risk, currency risk

etc. In the following part the segments in which estimates and assumptions by Management have a significant effect are

assessed.

b) Credit risk provisions

The Company continuously examines total Factoring advances and receivables and Forfaiting prepaid receivables in

order to decide whether their value is impaired or not.

This decision requires an exercise of significant judgment, through which the Company assesses, along with other

factors, whether a fair value of an asset is below cost, a fact that constitutes an objective evidence of impairment.

c) Estimates on fair value of financial instruments

Financial assets and liabilities fair value calculation for which there are no published market prices requires the use of

specific measurement techniques. Fair value calculation calls for various kinds of assessments. The most important ones

involve assessment of various risks an instrument is subject to, such as credit risk, interest rate risk, currency risk etc.

d) Defined benefit plans

The liability recognized in the statement of financial position for defined benefit plans is the present value of the liability

for the defined benefit less the plan assets’ fair value (reserve from payments to an insurance company), the changes

deriving from any actuarial profit or loss and the service cost. The defined benefit commitment is calculated on an

annual basis by an independent actuary with the use of the projected unit credit method.

e) Income Tax

The Company is subject to income tax in the countries in which it operates. In order to establish the current and deferred

tax, as presented in the statement of financial position, significant assumptions are required. For specific transactions

and calculations the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax

issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is

different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax

provisions in the period in which such determination is made.

Management estimations and assumptions

9


10.1•Net interest income(amounts in €) 2010 2009

Interest income

Forfaiting interest income 283.039 1.359.860

Factoring interest income 8.973.990 5.937.232

Other interest income 6.828 4.070

9.263.857 7.301.162

Interest expense

Interest expense to banks -1.456.533 -1.064.329

Interest expense on Bond loans -3.669.713 -2.635.293

-5.126.246 -3.699.623

Net interest income 4.137.611 3.601.539

10.2•Net fee and commission income(amounts in €) 2010 2009

Fee and commission income

Factoring commission 3.887.084 3.209.482

Forfaiting commission 12.170 20.283

3.899.254 3.229.765

Fee and commission expense

International Factoring commission -126.757 -117.856

Forfaiting commision -4.200 -9.011

Insurance commission -294.804 -195.908

Bank commission -87.088 -7.471

-512.849 -330.246

Net fee and commission income 3.386.406 2.899.519

10.3• Other income/(expense)(amounts in €) 2010 2009

Foreign exchange differences -63.774 -94.542

Profit / (loss) from valuation and sale of trading securities -25.542 27.118

Other income 9.559 34.801

Other income/(expense) -79.757 -32.623

For the year 2009, the item «Other income» included the amount of Euro 27.118 that was reclassified into «Profit /

(loss) from disposal and revaluation of trading portfolio», for the purposes of achieving comparability with the relative

items of the financial statements for the year 2010.

Notes to the Financial Statements10


10.4•Staff costs(amounts in €) 2010 2009

Wages and salaries -1.348.137 -1.407.348

Defined benefit plan expense – Social security contributions -265.330 -271.380

Additional fees to staff 0 -219.364

Provision for post employment benefits -19.526 -12.678

Stock options plan expense -28.876 -43.337

Additional benefits to staff -126.245 -105.271

Staff costs -1.788.113 -2.059.377

Regarding the financial statements for the year 2009, the following items have been reclassified:

a) The item «Additional benefits to staff» includes the items «Employee insurance expenses», «Vehicle leases»

and « Other expenses», separately presented in the year 2009.

b) The item «Additional fees to staff» in the year 2009 was presented in the description of «Additional

benefits to staff».

c) The amount of Euro 79.371 has been reclassified from the item «Additional benefits to staff» to the item

«Wages and Salaries».

Share based payments

In May, 2007 the Management of the parent company Marfin Popular Bank prepared a stock option plan for the

employees of all the companies of the Group, based on the as at 17/4/07 decision of the Extraordinary General

Assembly of its shareholders. Based on the criteria that were established, the options in question are provided

gradually within the five year period of 2007-2011. The Options are settled through the issue of new shares by the

parent company. The exercise price of the options was amended to (€ 4,5) four euro and fifty cents from ten euro

(€ 10) and the last exercise date in the year 2013 instead of 2011.

The fair value of the options provided to personnel has been measured as at the provision date based on the estimation

model of Black & Scholes from specialists of the parent Company MARFIN EGNATIA BANK S.A.

The employees of Marfin Factors & Forfaiters, as employees of the subsidiary of Μarfin Egnatia Bank, whose parent is

Marfin Popular Bank, can exercise these options, if they so want to. During this annual period no option was exercised.

The total fair value of all the options provided that burden the results of the year 2010, was computed as that of

€ 28.876 (2009: € 43.337).


10.5•Administrative expenses(amounts in €) 2010 2009

Rent (operating expense) -249.713 -239.372

Taxes stamps and duties -17.008 -21.064

Repairs and Maintenance -56.751 -52.032

Third party fees (legal, advisory, audits, etc.) -179.586 -345.618

Telephone and postage -32.794 -40.842

Promotion and advertisement -8.800 -23.523

Travel and transportation expenses -45.960 -60.693

Subscription – Contribution payment -40.512 -34.215

Office supplies -19.662 -23.262

Conventions Expenses -20.791 -30.602

Prior years expenses -4.892 -28

Other expenses -81.863 -103.315

Administrative expenses -758.330 -974.567

10.6•Impairment of advances and receivables(amounts in €) 2010 2009

Impairment of advances and receivables -1.536.276 -1.923.799

Impairment losses -1.536.276 -1.923.799

10.7•Income tax(amounts in €) 2010 2009

Income tax for the period -1.134.790 -511.689

Prior years income Tax -192.770 -174.292

Deferred tax 75.195

Income tax -1.252.365 -685.982

Information concerning deferred tax is provided in note 10.15.

The reconciliation of the effective tax rate is as follows:

% 2010 % 2009

Profits before tax 3.255.339 1.407.917

Tax based on tax rate 24% -781.281 25% -351.979

Not deductable expenses 11% -353.508 11% -159.710

Prior years income Tax 6% -192.770 12% -174.292

Deferred tax -2% 75.195

Income tax expense 38% -1.252.365 49% -685.982


The results reported to the tax authorities by an entity are provisional and subject to revision until such time as the tax

authorities examine the books and records of the entity and the related tax returns are accepted as final. Therefore

entities remain contingently liable for additional taxes and penalties, which may be assessed upon such examination.

The Company has been tax inspected till 31 December 2008 inclusively and has made use of the voluntary settlement

scheme of tax obligation for tax non-inspected year 2009 under the provisions of Law 3888/2010.

Prior year taxes include the extraordinary contribution for the year 2009, amounting to Euro 128.079.

10.8•Financial assets at fair value through profit or loss(amounts in €) 2010 2009

Corporate bonds 859.030 0

Shares, GDR's 194.791 0

Finanacial assets at fair value through profit or loss 1.053.821 0

Trading portfolio includes assets the Company acquired following the finalization of the restructuring procedure of

Kazakhstan banks whose receivables were included in the Company’s Forfaiting portfolio.

10.9•Cash and cash equivalents(amounts in €) 2010 2009

Sight deposits 2.257.966 3.342.238

Cash 392 210

Cash and cash equivalents 2.258.358 3.342.448

10.10•Advances to Factoring customers(amounts in €) 2010 2009

Building and Construction companies 1.663.270 857.633

Manufacturing companies 13.307.738 26.710.431

Commercial companies 138.172.910 139.207.884

Service companies 7.397.119 9.928.030

Shipping and Maritime companies 4.164 3.681

Agriculture/Fishery 29.853.481 36.707.995

Transportation / Communications 11.370.267 9.854.476

Other 28.918.857 19.223.355

Total advances to customers 230.687.806 242.493.487

Less: Impairment loss 2.545.855 2.014.421

Advances to Factoring customers 228.141.951 240.479.066


Movement in impairment:

2010 2009

Balance as at 1 January 2.014.421 3.844.596

Impairment 531.434 1.218.000

Recovered amounts -139.201

Write-offs -2.908.975

Balance as at 31 December 2.545.855 2.014.421

Maturity of advances to Factoring customers

2010 2009

Less that 3 months 47.946.464 0

Over 3 but less than 12 months 182.741.342 242.493.487

Over 1 but less than 5 years 0 0

Over 5 years 0 0

Total 230.687.806 242.493.487

2010 2009

Current 230.687.806 242.493.487

Non current 0 0

Total 230.687.806 242.493.487

10.11•Non recourse factoring assetsFactored receivables without recourse are trade receivables that the Company has purchased from third parties

(customers/sellers) during its ordinary course of operations. The Company has a right to manage the entire account and

collect these receivables from the various buyers, without however having the right of recourse to the seller, in the case

that the buyer has a financial inability to meet his obligations. The respective amounts and their analysis for the financial

period ended as at December 31st 2010 and December 31st 2009 are shown in the following table.

2010 2009

Domestic non recourse Factoring 4.897.002 4.460.184

Imported non recourse Factoring 4.567.441 8.260.076

Non recourse factoring assets 9.464.443 12.720.260

2010 2009

Current 9.464.443 12.720.260

Non current 0 0

Total 9.464.443 12.720.260


10.12•Forfaiting Portfolio2010 2009

Forfaiting receivables 19.772.232 8.805.630

Forfaiting advances to customers under revision for impairement 0 11.708.318

Total forfaiting portfolio 19.772.232 20.513.948

Less: Impairment loss 45.000 845.000

Forfaiting portfolio 19.727.232 19.668.948

Movement in impairment:

2010 2009

Balance as at 1 January 845.000 0

Impairment 1.004.842 845.000

Foreign exchange differenses 84.355 0

Write-offs -1.889.197 0

Balance as at 31 December 45.000 845.000

2010 2009

Less that 3 months 10.630.779 1.390.743

Over 3 but less than 12 months 4.255.577 5.150.934

Over 1 but less than 5 years 0 2.883.953

Over 5 years 4.885.875 11.088.318

Total 19.772.232 20.513.948

2010 2009

Current 14.886.356 6.541.678

Non current 4.885.875 13.972.270

19.772.232 20.513.948

Forfaiting portfolio consists of Forfaiting operations.

Forfaiting is a form of an export trading credit in which the Forfaiter purchases assets from the exporter, without

recourse, at 100% of its value, at full discount. Under the Forfaiting agreement, the exporter, or a Forfaiter sells to

Marfin Factors & Forfaiters a trade receivable evidenced by a commercial agreement, such as a Bill of Exchange,

Promissory Note and Letter of Credit, usually accompanied by a bank guarantee for the foreign buyer and

documentation of the commercial transaction. The seller is only responsible for the actual existence of the transaction.

These receivables have a medium-long term maturity (from 6 months up to 5 years) and can be exchanged between

Forfaiting companies in the secondary market.

The total value of the Forfaiting assets at the 31st of December 2010 amounted to € 19.727.232 while in 2009 their

respective value was € 19.668.948.


Forfating receivables as at 31/12/2010 include receivables from banks in Kazakhstan for which there were finalized

the procedures of debt restructuring. The initial receivables were replaced by new assets, a part of which, standing at

€ 4.885.875, is included in Forfaiting portfolio, as they cannot be reliably estimated at the statement of financial

position preparation date. Impairment test regarding the effective assets was performed based on information and the

Company’s management estimates available up to the statement of financial position preparation date.

10.13•Intangible assetsSoftware Total

Acquisition cost

Balance as at 1 January 2009 512.678 512.678

Additions 47.200 47.200

Disposals/Transfers 0 0

Balance as at 31 December 2009 559.878 559.878

Acquisition cost


Additions 1.920 1.920

Disposals/Transfers -197.170 -197.170


Accumulated amortization


Amortization 24.650 24.650

Disposals/Transfers 0 0


Accumulated amortization


Amortization 21.504 21.504

Disposals/Transfers -197.170 -197.170

Settlements 22 22

Balance as at 31December 2010 311.191 311.191

Amounts in the Statement of Financial Position

As at 1 January 2009 50.492 50.492

As at 31 December 2009 73.042 73.042

As at 1 January 2010 73.042 73.042

As at 31 December 2010 53.437 53.437


10.14•Property, plant and equipment(amounts in €) Improvements Furniture PPE

on third party and construction

property equipment projects Other Total

Acquisition Cost

Balance as at 1 January 2009 352.992 331.368 2.339 34.414 721.113

Additions 0 1.884 3.862 0 5.746

Disposals/Transfers 0 0 0 0 0

Balance as at 31December 2009 352.992 333.252 6.201 34.414 726.859

Acquisition Cost

Balance as at 1 January 2010 352.992 333.252 6.201 34.414 726.859

Additions 0 13.007 0 3.696 16.703

Decreases 0 -132.320 0 0 -132.320

Disposals/Transfers 0 -6.201 0 -6.201

Balance as at 31December 2010 352.992 213.939 0 38.109 605.041

Depreciation

Balance as at 1 January 2009 59.902 232.363 0 3.348 295.613

Depreciation 39.074 34.385 0 4.665 78.124

Decreases 0 0 0 0 0


Depreciation

Balance as at 1 January 2010 98.976 266.748 0 8.013 373.737

Depreciation 39.074 37.702 0 7.920 84.697

Decreases 0 -131.907 0 -131.907

Settlements 0 2.619 0 2.061 4.680


Amounts in the Statement of Financial Position

As at 1 January 2009 293.090 99.005 2.339 31.066 425.500

As at 31 December 2009 254.016 66.504 6.201 26.400 353.122

As at 1 January 2010 254.016 66.504 6.201 26.401 353.122

As at 31 December 2010 214.942 38.777 0 20.115 273.834


10.15•Deferred Tax Deferred tax assets and liabilities arise from:

(amounts in €) 2010 2009


Stock options reserves 35.402 26.200

Deffered tax asset 49.632 37.747

Tax on non-taxable reserves formed in previous years 0 -63.310

Deffered tax liability 0 -63.310

(amounts in €) Balance as at Recognition Balance as at

January 1, in the income December 31,

2009 statement 2009



Tax on non-taxable reserves formed in previous years -63.310 -63.310

Deffered tax liability -25.563 -25.563

(amounts in €) Balance as at Recognition Balance as at

January 1, in the income December 31,

2010 statement 2010

Employee benefits 11.548 2.682,28 14.230

Stock options reserves 26.200 9.202,63 35.402

Tax on non-taxable reserves formed in previous years -63.310 63.310 0

Deffered tax liability -25.563 75.195 49.632

10.16•Other assets(amounts in €) 2010 2009

Prepaid expenses 39.597 72.301

Prepaid and withholding taxes 409.894 289.046

Prepayments and credits 4.346 -1.086

Accrued income receivable 92.254 65.875

Insurance claims 378.000 124.725

Other 77.682 32.271

Other assets 1.001.772 583.133


10.17•Due to banks(amounts in €) 2010 2009

Due to Marfin Egnatia Bank 76.265.220 112.933.367

Due to banks 76.265.220 112.933.367

The total of the Company’s liabilities are due to the parent company, MARFIN EGNATIA BANK S.A.

10.18•Dept securities in issue and other borrowed funds(amounts in €) 2010 2009

Bonds 155.000.000 132.633.625

Dept securities in issue and other borrowed funds 155.000.000 132.633.625

The Company has contracted the following bond loans:

Α) The Company issued in 2008 a bond loan amounting to 50.000.000 Euro with bondholders Marfin Egnatia

Bank and IBG, of two years maturity, with 2010 opening balance of 50.000.000 Euro that was fully repaid

within the year. It has an interest rate based on Euribor one-month (1M) (Year average 0,418%).

Β) The Company issued in 2008 a bond loan amounting to 30.000.000 Dollars with bondholders Marfin

Egnatia Bank and IBG, of two years maturity, with 2010 opening balance of 18.200.000 Dollars that was

fully repaid within the year. It has an interest rate based on Libor one-month (1M) (Year average 0,273%).

C) The Company issued in March 2009 a bond loan amounting to 70.000.000 Euro with bondholder Marfin

Egnatia Bank, of two years maturity, with 2010 closing balance of 70.000.000 Euro. It has an interest rate

based on Euribor one-month (1M) (Year average 0, 568%).

D) The Company issued in May 2010 a bond loan amounting to 70.000.000 Euro with bondholder Marfin

Egnatia Bank, of three years maturity, with 2010 closing balance of 70.000.000 Euro. It has an interest

rate based on Euribor one-month (1M) (Year average 0, 661%).

Ε) The Company issued in December 2010 a bond loan amounting to 15.000.000 Euro with bondholder

Marfin Egnatia Bank, of three years maturity, with 2010 closing balance of 15.000.000 Euro. It has an

interest rate based on Euribor one-month (1M) (Year average 0,8041%).

10.19•Factoring liabilitiesThe liabilities to customers refer to the Company’s obligations of the third parties, due to its ordinary course of

operation. Such liabilities have been created by the purchase of receivables for which the Company has the right to

manage and collect from the buyer, without however having the right to pursue collection from the seller in the case

that the buyer is unable to pay his debt. The respective amounts and their analysis for the financial period ended at

December 31st 2010 and December 31st 2009 are shown in the following table.


(amounts in €) 2010 2009

Domestic non recourse Factoring 4.107.999 5.140.343

Import non recourse Factoring 5.242.670 8.473.032

Domestic with recourse Factoring 1.436.768 241.440

Import with recourse Factoring 21.850 215.690

Total 10.809.286 14.070.505

2010 2009

Current 10.809.286 14.070.505

Non current 0 0

10.809.286 14.070.505

10.20•Provision for post-employment benefits(amounts in €) 2010 2009

Obligation as at 1 January 58.849 46.190

Expenses recognized in income statement 19.580 12.659

Obligation as at 31 December 78.429 58.849

2010 2009

Expenses recognized in income statement

Service costs (payroll and staff costs) 16.951 10.393

Interest and similar expense 2.629 2.285

19.580 12.678

Principal actuarial assumptions used for 2010 and 2009 were as follows:

2010 2009

Discount rate 5.50% 5.50%

Salary increases 3.50% 4.00%

10.21•Other provisions(amounts in €) 2010 2009

Other personel provisions 36.691 30.000

Provisions for non deductable amounts 100.000 128.000

Other provisions 136.691 158.000

The above provisions refer to the Company’s long term liabilities.


10.22•Current taxIncome tax liabilities are analyzed as follows:

2010 2009

Current tax liability 1.035.155 511.689

Extraordinary tax contribution (Law 3845/2010) 128.079 0

Current tax 1.163.234 511.689

10.23•Other liabilities(amounts in €) 31.12.2009 31.12.2008

Taxes and duties (excluding income tax) 806.606 491.378

Due to social security funds 57.119 55.809

Suppliers and other creditors 66.863 131.126

Accrued expense 293.678 297.030

Interest payable 62.365 66.512

Other liabilities 97.504 772.478

Other liabilities 1.384.137 1.814.333

10.24•Share capital(amounts in €) 31.12.2010 31.12.2009

Number of ordinary shares 3.710.000 3.710.000

Nominal value 2,93 2,93

Total Share capital 10.870.300 10.870.300

10.25•Reserves2010 2009

Statutory reserve 259.777 207.009

Tax-exempt reserve 0 981

Reserves from specially taxed income (1999) 0 55.847



Reserves from discounts on one-off tax payments 0 33.765


Special reserves 9.406 9.406

Foreign currency translation differences of foreign operations reserves 141.548 0

Reserves 587.742 467.588


Statutory reserve: Under the provisions of corporate law, entities are required to transfer 5% of their annual profits

to a statutory reserve until the reserve equals one third of the issued capital. This reserve is not available for

distribution but may be applied to cover losses.

Tax exempt reserves and specially taxed reserves: In the event that the reserves are distributed they will be taxed

at the rate applicable on the date of distribution and potentially arising tax withheld at the source is offset.

«Foreign currency translation differences of foreign operations reserves” for the year 2009 were not significant.


Α) Group of Marfin Popular Bank(amounts in €) 31.12.2010 31.12.2009

Assets

Due from Marfin Popular Bank 1.742.078 2.584.114

Total assets 1.742.078 2.584.114

Liabilities

Due to Marfin Popular Bank 231.326.533 245.566.992

Total liabilities 231.326.533 245.566.992

Income

1/1-31/12/2010 1/1-31/12/2009

Interest and similar income 6.757 3.704

Fee and Commission income 3.240 2.385

Total income 9.997 6.089

Expense

Interest and similar expense 5.126.369 3.609.514

Fee and Commission expense 85.562 8.191

Other expense 1.906 25.943

Total expense 5.213.837 3.643.648

Β) Transactions with Marfin Investment Group(amounts in €) 31.12.2010 31.12.2009

Assets

Receivables 2.083.759 2.046.712

Total assets 2.083.759 2.046.712

Liabilities

Liabilities 0 0

Total liabilities 0 0

Income

1/1-31/12/2010 1/1-31/12/2009

Interest and similar income 2.767.197 1.955.845

Fee and Commission income 730.774 736.771

Total income 3.497.971 2.692.616

Expense

Interest and similar expense 0 0

Fee and Commission expense 0 0

Other expense 0 0

Total expense 0 0

Related party transactions11


The total fees and other key management compensation are as follows:

Management and Board of Directors

2010 2009

Salaries & Social Insurance payments 308.459 308.392

Extraordinary payments - 120.000

Stock option plan 19.636 29.470

Total benefits 328.095 457.862


The fair value represents the amount for which an asset could be exchanged, or a liability settled, between

knowledgeable, willing parties in an arm’s length transaction. Differences might arise between the carrying amount and

the fair value of financial assets and liabilities.

Receivables and other advances and financial liabilities are presented at amortized cost. The carrying amount of the

aforementioned items, as presented in the financial statements, does not materially differ from their fair value. In

particular:

(a) Cash and cash equivalents

Loans and advances to bank mainly include short tern interbank placements and other collectibles. The fair value of

those placements and collectibles is quite similar to their carrying amount

(b) Advanves to factoring customers

Advances to factoring customers are presented following the deduction of the corresponding provision for impairment.

All the receivables have a fluctuating interest.

(c) Non-recourse Factoring assets

Non recourse Factoring assets are measured at amortized cost. All such receivables have a fluctuating interest and are

measured at amortized cost.

(d) Forfaiting Portfolio

Forfaiting portfolio is measured at amortized cost. Such receivables may have a fluctuating interest or a fixed interest.

(e) Debt securities and other borrowed funds.

All bonds and loans bear fluctuating interest rate. Therefore, the fair value of the bonds is quite similar to their carrying

amount.

(f) Trade portfolio

Trade portfolio includes corporate bonds and equity securities for trading as part of a portfolio of identified financial

instruments for which there are short-term profit plans and which are recorded at fair value through profit or loss under

the overall management strategy and related information.

IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the source of

inputs used to derive the fair value, in compliance with the following hierarchy:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities,.

Level 2 – Inputs other than quoted prices included in level 1 that are observable for the asset or liability directly or

indirectly. The level includes the majority of OTC derivatives and various issued debts.

Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company’s items of the Statement of Financial Position as at 31 December 2010, carried at fair value are as follows:

2010 Level 1 Level 2 Level 3

Shares, GDR's 0 194.791 0

Corporate bonds 0 859.030 0

Total Trade portfolio 0 1.053.821 0

Fair value of financial assets and liabilities

12


As every credit institution, the Company is exposed to many types of risks, such as credit risk, currency risk, and

interest-rate risk, as explained below. Those risks are constantly monitored in various ways in order to avoid undue risk

concentrations. Primarily, they are monitored by the company’s Management, and secondarily by the relevant Division

of the parent company, Marfin Egnatia Bank. Below, further information on the description of extent and nature of

financial risks faced by the Company together with the comparative data concerning the prior period, is presented.

13.1•Credit riskCredit risk is the risk of loss resulting from counter party default, or when counterparty fails to meet their contractual

obligations. The counterparties may be buyers or sellers. The undertaking of credit risk is based on international

recognized practices and Factoring criteria whose purpose is the transparency of transactions and the recognition of

risk.

Credit risk management

The company structures the levels of acceptable credit risk based on the financial analysis of the borrower or the group

of borrowers, their industry, their position in the market and the dispersion of their credit risks.

During the approval process, the total credit risk for each party or group of counterparties, which are related, is

examined. In addition, a detailed description of the trade relations and trade suppliers and buyers and the market within

which they operate, with its special features, is analysed.

The determination of credit limits and charges to the customers is affected primarily by the type of factoring service

that will be provided. Factoring services are classified in terms of risk, as follows:

With recourse Factoring

In Factoring with recourse, the Company has the right to go back to the seller (borrower) to collect its claims. In this

way, the credit risk the company assumes against the debtor is mitigated.

Non recourse Factoring

The provision of non-recourse factoring services implies that the credit risk has been assumed by the Factoring

Company, in the case that the debtor (customer) becomes insolvent.

For non-recourse Factoring Services provided to its customers, Marfin Factors & Forfaiters after examining each case

accordingly, obtains insurance coverage for credit risk.

The Company reassesses the credit and advance limits approved on the basis of the customer’s creditworthiness at

regular intervals.

Forfaiting

The aforementioned procedures about Non recourse Factoring apply accordingly to Forfaiting operations with the

substitution, at some cases, of insurance coverage with bank coverage (e.g. avalised Promissory note). Internationally

recognized methods are applied to monitor the creditworthiness of the Bank providing coverage or/and of the debtor.

Financial risk management13


Maximum exposure to credit risk prior to calculation of collaterals and other credit risk protection measures

The table below presents the highest exposure of the Company to credit risk arising from financial instruments as

presented in the statement of financial position prior to the calculation of collateral and other credit risk protection

measures. As far as financial instruments presented in the statement of financial position are concerned, the exposure

to credit risk equals their carrying amount.

Maximum exposure

2010 2009

Exposure to credit risk from items on the SFP:

Commercial companies 3.992.963 575.000

Transportation / Communications 7.951.530

Manufacturing companies 2.335.506

Financial institutions 7.525.561 15.497.561

Other 257.178 1.260.881

(a) Total Forfaiting portfolio 19.727.232 19.668.948

(b) Non recourse Factoring assets 9.464.443 12.720.260

Advances to customers

Building and Construction companies 1.618.270 857.633

Manufacturing companies 13.205.979 26.665.431

Commercial companies 136.621.910 137.611.884

Service companies 7.397.119 9.928.030

Shipping and Maritime companies 4.164 3.681

Agriculture/Fishery 29.853.481 36.707.995

Transportation / Communications 11.370.267 9.854.476

Other 28.070.762 18.849.935

(c) Total advances to Factoring customers 228.141.951 240.479.066

Financial institutions 1.053.821 0

(d)Financial assets at fair value through profit or loss 1.053.821 0

Total SFP items (a+b+c+d) 258.387.447 272.868.274

Credit rating of Forfaiting portfolio and Advances to Factoring customers

The table below presents the nature of advances and Forfaiting receivables of the Company per each internal credit

rating category.

(amounts in €) 2010 2009

Low risk 102.466.331 105.104.244

Medium risk 144.742.045 143.100.555

High risk 660.807 11.943.215

Total 247.869.183 260.148.014


Advances to Factoring customers and Non recourse Factoring assets

The table below presents the nature of advances and receivables of the Company, as well as the non-recourse Factoring

activity.

2010 2009

Advances to Non recourse Advances to Non recourse

Factoring customers Factoring assets Factoring customers Factoring assets

Neither past due nor impaired (i) 227.045.455 9.464.443 238.323.151 12.720.260

Past due but not impaired (ii) 548.248 0 1.077.958 0

Impaired (iii) 3.094.103 0 3.092.378 0

Total before provisions 230.687.806 0 242.493.487 0

Provision 2.545.855 0 2.014.421 0

Total after provisions 228.141.951 9.464.443 240.479.066 12.720.260

Factoring advances and receivables past due but not impaired

The total Cash advances and Factoring receivables past due but not impaired for the year ended on 31st December

2010 have maturity over 6 months and amount to 548.248. For the year ended at 31st December 2009 they had a

maturity over 6 months and amounted to € 1.077.958.

Factoring advances and receivables past due and impaired

The Company’s estimation of impairment is performed on individual basis, taking into account all the parameters such

delays, guarantees etc. The total impaired advances as at 31.12.2010 amount to € 2.545.855 and pertain to

customer receivables, while the respective amount as at 31.12.2009 was € 2.014.421.

Concentration of credit risk

Geographical segment

The table below presents the carrying amount of financial assets of the Company exposed to credit risk per

geographical segment. For the purposes of the table, the classification of exposure of financial assets per geographical

segment has been conducted based on the country of operation of the counter parties.

2010 Greece Other countries Total

Advances to Factoring customers (after provisions) 216.999.161 11.142.791 228.141.951

Non recourse factoring assets 4.897.002 4.567.441 9.464.443

Forfaiting portfolio 10.832.123 8.895.108 19.727.232

Financial assets at fair value through profit or loss 1.053.821 1.053.821

Total 232.728.286 25.659.161 258.387.447

13.2•Market riskMarket risk is the risk of occurring possible losses caused by the fluctuation and volatility of market prices to the

transactions portfolio.

The company's portfolio includes equity shares, GDRs, bonds and debt securities and was formed following the


replacement of Forfaiting receivables with new assets due to restructuring of foreign debtors.

The limits of undertaking market risk by type of values are monitored and adjusted by the Market Risk Management

department of the parent bank.

Market risk for the company is estimated to be relatively low and pertains to the following assets:

Financial assets at fair value through profit or loss

2010 2009

Shares, GDR's 194.791 0

Corporate bonds 859.030 0

Total Trade portfolio 1.053.821 0

13.3•Interest rate riskInterest rate risk arises from interest rate fluctuations to the extent that interest-earning assets and interest –bearing

liabilities mature or reprise at different times or in different amounts.

Such fluctuations may increase or decrease interest rate margins, leading to a possible reduction in estimated profits.

The company’s policy is to set fixed interest margins to the financial assets and liabilities to manage effectively the

interest risk rate.

The Table below presents assets and liabilities of the Company at their carrying amounts classified based on interest

rate revaluation date as far as fluctuating interest rates are or maturity date as far as fixed interest rates are concerned.

Interest rate risk for the fiscal year 2010

(amounts in €) Interest Up to 1 1-3 6-12 1-5 Over

Free month months months Years 5 years Total

ASSETS

Financial assets at fair value

through profit or loss 194.791 859.030 1.053.821

Cash 392 392

Due from Banks 0 2.257.966 2.257.966

Forfaiting portfolio 0 10.585.779 4.255.578 4.885.875 19.727.232

Advances to Factoring customers 548.248 47.946.464 120.702.853 53.657.771 5.286.615 228.141.951



Intangible assets 53.437 53.437

Property, plant and equipment 273.834 273.834

Other assets 1.001.772 1.001.772

TOTAL ASSETS 11.586.549 50.204.430 131.288.632 57.913.349 5.286.615 5.744.905 262.024.480


LIABILITIES

Due to banks 0 76.265.220 76.265.220

Factoring liabilities 10.809.286 10.809.286

Debt securities in issue

and other borrowed funds 0 70.000.000 85.000.000 155.000.000

Deffered tax liability 0 0


TOTAL LIABILITIES 13.571.776 76.265.220 70.000.000 0 85.000.000 0 244.836.996

NET INTEREST RATE GAP -1.985.228 -26.060.790 61.288.632 57.913.349 -79.713.385 5.744.905 17.187.484

Share capital 10.870.300 10.870.300

Other reserves & retained earnings 6.317.184 6.317.184

TOTAL EQUITY 17.187.484 0 0 0 0 0 17.187.484

Interest rate risk for the fiscal year 2009

(amounts in €) Interest Up to 1 1-3 3-6 6-12 1-5 Over

Free month months months months Years 5 years Total

ASSETSCash 210 210

Due from Banks 3.342.238 3.342.238

Forfaiting portfolio 620.000 931.423 2.284.364 3.822.910 1.766.932 10.243.318 19.668.948

Advances to Factoring customers 1.077.958 239.401.108 240.479.066

Non recourse factoring assets 12.720.259,79 12.720.260



Property, plant and equipment 353.121,73 353.122

Other assets 583.133 583.133

TOTAL ASSETS 15.465.471 4.273.662 241.685.472 0 3.822.910 1.766.932 10.243.318 277.257.765

LIABILITIESDue to banks 112.933.367 112.933.367


Debt securities in issue and

other borrowed funds 132.633.625 132.633.625

Deffered tax liability 63.310 63.310


TOTAL LIABILITIES 16.676.687 245.566.992 0 0 0 0 0 262.243.679

NET INTEREST RATE GAP -1.211.216 -241.293.331 241.685.472 0 3.822.910 1.766.932 10.243.318 15.014.086

Share capital 10.870.300 10.870.300


TOTAL EQUITY 15.014.086 0 0 0 0 0 0 15.014.086


13.4•Currency riskCurrency risk is the risk from fluctuating values of financial instruments and other assets and liabilities caused by

changes in currency rates. Foreign currency transactions risk arises from an open position, positive or negative, which

exposes the Company to currency exchange risk. Such risk can be created in the event the assets are carried in one

currency financed by liabilities in another currency or can arise from forwards and swaps or derivatives including

options.

The Company’s policy is to borrow the same amounts and currency with the advances extended to the customers.

The Tables below present the Company’s exposure to currency risk. The Tables present assets and liabilities of the

Company at their carrying amounts classified per currency.

Currency risk for the fiscal year 2010

(amounts in €) EUR USD JPY CAD GBP RSD Total

ASSETS

Financial assets at fair value through profit or loss 460.912 592.910 1.053.822

Cash 392 392

Due from Banks 1.671.889 420.392 23.347 100.124 42.213 2.257.966


Advances to Factoring customers 225.343.710 49.166 1.627.028 30.311 1.091.736 228.141.951





Other assets 1.001.772 1.001.772

TOTAL ASSETS 251.842.970 7.266.750 1.627.028 53.658 100.124 1.133.949 262.024.480

EUR USD JPY CAD GBP RSD Total

LIABILITIES

Due to banks 67.479.905 6.234.069 1.594.114 957.132 76.265.220


Debt securities in issue and other borrowed funds 155.000.000 155.000.000

Provisions, contingent liabilities 78.429 78.429


Deffered tax liability 0 0

Current income tax 1.163.234 1.163.234

Other liabilities 1.383.322 131 698 -14 11.402 1.384.137

TOTAL LIABILITIES 236.050.866 6.234.200 1.594.114 698 -14 968.534 244.836.996

Net currency position 15.792.104 1.032.551 32.914 52.960 100.138 165.415 17.187.484

Share capital 10.870.300 10.870.300


TOTAL EQUITY 17.187.484 0 0 0 0 0 17.187.484


Currency risk for the fiscal year 2009

(amounts in €) EUR USD CAD GBP Total

ASSETS

Cash 210 210

Due from Banks 2.260.795 989.150 2.180 90.113 3.342.238


Advances to Factoring customers 240.479.066 240.479.066





Other assets 583.133 583.133

TOTAL ASSETS 264.290.581 12.874.892 2.180 90.113 277.257.765

LIABILITIES

Due to banks 112.930.885 2.483 112.933.367


Debt securities in issue and other borrowed funds 120.000.000 12.633.625 132.633.625

Provisions, contingent liabilities 58.849 58.849


Deffered tax liability 63.310 63.310

Current income tax 511.689 511.689


TOTAL LIABILITIES 249.607.572 12.636.107 0 0 262.243.679

Net currency position 14.683.009 238.785 2.180 90.113 15.014.086

Share capital 10.870.300 10.870.300


TOTAL EQUITY 15.014.086 0 0 0 15.014.086

13.5•Liquidity riskThe company is exposed daily to liquidity risks arising from the management of its receivables portfolio. The company

maintains sufficient liquidity from the issuance of corporate bonds, which cover the greatest part of its cash flows. Open

borrowing from the parent Company covers the remaining liquidity in the currency that the necessary cash flows are

denominated.

The Tables below analyze liabilities to banks, bonds issued and other borrowed funds in the corresponding periods

based on the remaining period from the statement of financial position date to their maturity date.

The presented amounts are contractual non-discounted cash flows.


Liquidity risk

2010

(amounts in €) Up to 1 month 1-3 months 3-12 months 1-5 years Total

LIABILITIES

Due to banks 76.519.437 0 0 0 76.519.437

Non recourse Factoring liabilities 9.464.443 0 0 0 9.464.443

Debt securities in issue and other

borrowed funds 0 70.285.215 0 92.516.011 162.801.226

Total liabilities 85.983.880 70.285.215 0 92.516.011 248.785.106

2009

(amounts in €) Up to 1 month 1-3 months 3-12 months 1-5 years Total

LIABILITIES

Due to banks 116.886.035 0 0 0 116.886.035

Non recourse Factoring liabilities 12.720.260 0 0 0 12.720.260

Debt securities in issue and other borrowed funds 0 0 63.629.104 72.282.066 135.911.170

Total liabilities 129.606.295 0 63.629.104 72.282.066 265.517.465

13.6•Operational riskOperational risk is the risk stemming from inadequacy or failure of internal procedures, people and information systems

or events of the external environment, including the legal framework of operations.

The company has adopted the Operational Risk Frame and procedures that the Group applies. There are procedures for

identifying, measuring, managing, follow-up and review of the operational risks while due to the size of the company

and the special-specific purpose of operation, the complexity and the range of the risks is significantly reduced.

The Operational Risk function has been outsourced to the relative department of the parent Company that applies a

wide range action plan covering all divisions of the Company. Recognition and measurement of Operational Risks is

mainly performed by risk assessment workshops, a procedure carried out in phases aiming to cover all divisions of the

Company. Significant risks that may be identified are being dealt with specific and case-by-case action plans. As an

additional recognition and estimation tool as well as the containment of risk the use of Key Risk Indicators has been

adopted.

Finally in periodical basis internal reports are being prepared for operational risk issues. The reports cover all important

issues and results of the procedures for risk management and mitigation.

The company’s information systems security is in line with the Information Systems Security Management of the Group

and is being supervised by Information Systems Security Unit of the Risk Management Department of the parent Bank.

Information Systems Security Unit is being called to face various technological and business risks that are being caused

by the rapid increase of technological weaknesses as well as the increasing dependency of the business operations in

new applications and systems. The role of the aforementioned department is the development, operation, maintenance

and monitoring of the effectiveness of an integrated Information Safety program as well as the effective materialization

of the necessary mechanisms for protection of privacy, integrity and availability of data.


Central Bank of Greece which is the central monitoring and regulatory body for financing companies in Greece sets rules

by issuing permanent decisions for advances and receivables impairment losses, risk coverage measurement as well

as assets’ coverage in general using suitable provisions and capital adequacy. The supervisory Equity of companies in

accordance with 2622/21.12.2009 Decision of the Governor of Central Bank of Greece when divided by total risk-

weighted assets forms their Capital Adequacy Ratio.

The Capital Adequacy Ratio for the years 2010 and 2009 is as follows:

(amounts in thousands €) Capital Adequacy

Ratio

2010

Tier I capital items 17.135 13,70

Regulatory to IFRS calculated provision gap -2.117

Total Tier I 15.018 12,22

Weighted assets 3.12.2010 125.049

2010

Tier I capital items 14.941 10,96

Supervisory body adjustments Τier II + III Capital -1.286

Total Tier I 13.655 10,02

Weighted assets 3.12.2009 136.293

As far as the Company’s financial statements for the year 2009 are concerned, the regulatory capital arises from No.

2053.18.3.1992 Decisions of the Governor of Central Bank of Greece.

Capital Adequacy14


Information on contingent liabilities There are no outstanding legal cases or arbitrage cases, which may have a major impact on the Company’s financial

position.

Tax non-inspected years The Company has been tax inspected up to 31 December 2008 inclusively and has made use of the voluntary

settlement scheme for the tax non-inspected year 2009 according to Law 3888/2010. Regarding tax non-inspected

years, it is possible that additional taxes and surcharges be imposed under the finalization. The company reviews

annually the contingent liabilities for tax non-inspected fiscal years and makes the necessary provisions. The provisions

formed until December 31, 2010 amount to 100.000 €.

Contingent liabilities15


For the year 2010, the total fees of the statutory auditor “Grant Thornton – Chartered Accountants – Management

Consultants” are as follows:

01.01.2010-31.12.2010

Fees for both statutory audit of 31.12.2010 and interim audit of 30.6.2010 15.400

Total Auditors’ fees 15.400

Auditors’ fees16


Minor reclassifications were made in order to facilitate better presentation of the Financial Statements. The most

significant reclassifications made are analyzed in the relative Notes.

Reclassifications17


There are no significant events after the reporting period to report.

Events after the reporting date 18


To the shareholders of «MARFIN FACTORS & FORFAITERS S.A.»

Report on Financial Statements

We have audited the accompanying financial statements of the Company “MARFIN FACTORS & FORFAITERS S.A.” which

comprise the statement of financial position as at 31 December 2010, the statement of comprehensive income,

statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant

accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with

International Financial Reporting Standards that have been adopted by the European Union as well as for internal

control procedures the Management defines as necessary to ensure the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

compliance with the International Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free

from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control procedures relevant to the entity’s preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control procedures. An

audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the abovementioned financial statements present fairly, in all material respects, the financial position of

the Company “MARFIN FACTORS & FORFAITERS S.A.” as of December 31, 2010, and its financial performance and the

cash flows for the year then ended in accordance with International Financial Reporting Standards that have been

adopted by the European Union.

Report on Other Legal and Regulatory Requirements

We verified the agreement and correspondence of the content of the Board of Directors’ Report with the abovementioned

financial statements, in the context of the requirements of Articles 43a and 37 of the Law 2190/1920.

Athens, 29 April 2011

The Chartered Accountant

Ioannis Leos

SOEL Reg. No. 24881

Chartered Accountants Management Consultants

56, Zefirou str., 175 64, Palaio Faliro, Greece

Registry Number SOEL 127

Independent Auditors’ Report19


BelgradeSerbia Branch: Bul. Mihajla Pupina 165e 11000 Belgrade, Serbia Tel.: +381 11 222 4800Fax: +381 11 222 4840 e-mail: [email protected]

ThessalonikiThessaloniki Office: 18, Leontos Sofou Str. 54625 Thessaloniki, Greece Tel.: +30 2310 386370-1Fax: +30 2310 386375e-mail: [email protected]

AthensHeadquarters: 20, Kifissias Ave. 15125 Maroussi-Athens, Greece Tel.: +30 210 680 3000Fax: +30 210 680 3070e-mail: [email protected]

annual report 2010...10.12 forfaiting portfolio 27 table of contents a ac & a 2 a a 2010 10.13...

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