Report on Review of Interim Financial Information

To the Shareholders of Helesi PLC

Introduction

We have reviewed the accompanying interim consolidated condensed financial information of Helesi PLC (the "Company") and its subsidiaries (the "Group"), which comprise the statement of financial position and the consolidated statement of financial position of the Company and the Group, as at 30 June 2011, and the respective statements of comprehensive income, the statements of changes in shareholders' equity and the statements of cash flows for the six-month period then ended, and the notes thereon.  Management is responsible for the preparation and fair presentation of this interim condensed consolidated financial information in accordance with the International Financial Reporting Standard 34 'Interim Financial Reporting' as issued by International Financial Reporting Standard Board (IASB) and adopted by the European Union.  Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity".  A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the Helesi Group and of Helesi PLC, as at 30 June 2011, and of their financial performance and their cash flows for the six-month period then ended, in accordance with the International Financial Reporting Standard 34 'Interim Financial Reporting'.

Emphasis of matter - Going concern

We draw attention to note 4 to the interim condensed consolidated financial statements which indicates that the Group's current liabilities exceed its current assets by €14.8 million. The Group also incurred a loss of €5.4 million for the period ended 30 June 2011and as explained in note 10 is in breach of various loan covenants. The Group's ability to continue as a going concern is dependent upon receiving the continuing support of domestic and other financial institutions. These factors together with the continuing financial crisis of the Greek economy and public sector indicate the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern.

Other Matter

This report, including the conclusion, has been prepared for and only for the Company's members as a body in accordance with Section 34 of the Auditors and Statutory Audits of Annual and Consolidated Accounts Law of 2009 and for no other purpose. We do not, in giving this report, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. 

BDO Ltd

Certified Public Accountants (CY) and Registered Auditors

Nicosia, Cyprus

September 2011

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Shareholders' Equity

Statements of cash flows

Notes to the Interim Condensed Financial Statements

1.    Accounting Policies

These interim financial statements have been compiled and are presented in accordance with IAS 34 Interim Financial Reporting.  The accounting policies used in the preparation of the interim financial statements are consistent with those used in the compilation of the audited financial statements for the year ended 31 December 2010 and the six months ended 30 June 2010.

Costs that occur evenly during the financial year are anticipated or deferred in the interim financial statements, only if it would be appropriate to anticipate or defer such costs at the end of the financial year.

Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year.

2.    Capital Structure

The Helesi PLC Group operates an employee share options scheme (ESOS) under which employees of any of the entities forming part of the Group may be given the option to purchase shares of Helesi PLC.  These options are exercisable not earlier than three years and not later than seven years after the grant date, at an exercise price which is specified, in Euros, at the time of granting the options.

The Board of Directors is empowered to grant options on a maximum of 10% of the outstanding shares.  As at 30 June 2009 and 31 December 2008, the options granted under this scheme, which were outstanding, covered a total of 618,100 shares.

The terms under which these options were granted, in the year ended 31 December 2007, are described in the notes to the audited financial statements as of 31 December 2008.

3. Economic Environment

The downgrade of the Greek State has resulted in a liquidity crisis and fall in consumer and business confidence. The Greek state has been forced to implement austerity  measures that include Greek budget cuts and the postponement of public sector projects.  Banks have generally ceased providing new finance to Greek businesses since 2010 and some foreign banks operating in Greece have been instructed not to undertake "state risk". These factors have resulted in fall in revenues, deteriorating cash flows and increased finance costs.

4. Going concern

As at 30 June 2011 the Group's current liabilities exceed its current assets by €14.8 million (H1 2010: €12.8 million) and the Group was in breach of various of its loan covenants. Despite of that, the Group rescheduled part of long term debt by extending maturities. The Group is presently re-negotiating the restructuring of  part of short loans to long term and re-organizing the debt structure among the companies of the group. Management considers the going concern assumption to be appropriate having regard to its business plan which anticipates an increase in revenues from municipal projects released from 2011 onwards and the collection of already delayed government receivables. However management cannot predict the full consequences in any significant further deterioration of the Greek economy.

5.  Earnings per Share

The basic earnings per share in a given period are calculated by dividing the net profit attributable to the Group by the weighted average number of issued and outstanding shares in that period.

The calculation of the diluted earnings per share takes into consideration the options on shares granted to employees of the Group.  The equivalent of these share options to shares is quantified by

reference to the exercise price of the options granted and the average listed price (in the accounting period reported upon) of the shares on which the options have been granted.

6.  Segmental Analysis

As from 2007, the Helesi PLC Group recognises two business segments: the environmental products segment and the environmental services segment. The financial results and the financial position of these two business segments are set out below.

The Helesi PLC Group now operates    two production units  - one in Greece and one in Italy, under the corporate umbrellas of Helesi SA  and Helesi Italia srl, respectively. The third production unit in UK closed production in March 2010. The financial results and the financial position of these operations are set out below. 

The third-party sales and the value of the related trade receivables outstanding at period-end, on the basis of the location at which the customers operate (inclusive of the balances that are doubtful of collection and have been provided for), are analysed as follows:

7.    Persons Employed and Related Costs

8.    Income Taxes

9.   Property, plant and equipment

          The Group

10. Interest-bearing loans and borrowings

The bank loans and other bank financing facilities (including the debenture loan) contracted by the Helesi PLC Group are analysed as follows:

The interest charges generated in relation to the above loans, in the six month period ended 30 June 2011, amounted to €2.449 thousand  (H1 2010 : €1.781 thousand). On 30 June 2011, bank borrowings are secured by fixed charges over the company's property plant and equipment for  amount of € 51,4 million  (31 Dec 2010 : €51,4 million).

In September 2011 the group has successfully rescheduled two bond loans with Alpha Bank of €4.1 million and €5 million. According to the new schedule of payments, the installments due for 2011 and 2012 have been rescheduled extending maturities up to 2015 and 2016 respectively. The cash flow benefit from the reschedule is €2.960 thousand and €1.280 thousand. According to interim results Helesi was in breach of covenants of these loans. No waiver was obtained from this bank in respect of the breach of these covenants.

At the fourth quarter of 2010, Bank of Cyprus approved the extension of the maturity of €4.3 million up to 2017. According to interim results Helesi was in breach of covenants in respect on this 100. No waiver was obtained from this bank in respect of the breach of these covenants.

11. Earnings per share and proposed dividends

Earnings per share are calculated by dividing the profit attributable to the shareholders of Helesi PLC by the weighted average number of issued and outstanding shares in the accounting period covered by the financial statements.