EASTNETS EUROPE S.A IFRS DIRECTORS’ REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2012

Our MissionEASTNETS DELIVERS FINANCIAL SOLUTIONS THAT ARE RESILIENT, COMPLIANT AND CONVENIENT.

Copyrights

Copyright© EastNets, 2004-2012. All rights reserved.No parts of this document may be copied or reproduced, even temporarily, in whole or in part, in any manner or form, or on any medium, nor sold, licensed, distributed or transferred to any person, or used, adapted, translated, without the prior written permission of EastNets.

The recipient is, however, authorized to copy or reproduce this publication within its own organization if necessary for the purpose for which it is supplied. Any such copy or reproduction will include the following: acknowledgement of the source, reference and date of publication, and all notices set out on this page.

DisclaimerAlthough EastNets has made every effort to make this document accurate, up-to-date, and complete, EastNets offers no warrants, express or implied, related to this document. In no event shall EastNets be liable for any loss of profits, loss of business, loss of use or data, interruption of business, or for indirect, special, incidental, or consequential damages of any kind arising from any error in this document.

Send us commentsEastNets welcomes your comments and suggestions on the content quality and usefulness of this document. Your input is an important part of the revision process.

If you find any errors or have any other suggestions to improve the document quality and clarity, please send comments to info@eastnets.com and please indicate the chapter and page number you are referring to.

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KEY FIGURES 2012

Total Income

EBITDA

Profit for the year

Normalised Equity

Number of employees (head count at year end)

Number of FTE (at year end)

KEY FIGURES:

OTHER KEY FIGURES

2012

8.545

4.412

357

12.523

58

57

2011

8.441

3.694

598

12.108

58

57

IN THOUSANDS EUR

IN THOUSANDS EUR

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Total Income EBITDA Profit for the year

2012

2011

3

I.Foreword by Hazem Mulhim, CEO of EastNets Group 5II.Our Company and strategy 6III.Our Customers 6IV.Our Products 8V.Our People 10VI. Directors’ Report 13SECTION 2: Audited Consolidated Financial Statements I. Independent Audit Report 14II. Consolidated Financial statements of EastNets Europe under IFRS 16III. Notes and disclosures to the consolidated Financial statements 211.Legal status and activities 212.Going concern 213.Summary of significant accounting policies 214.Financial Risk Management 325.Critical accounting estimates and judgements 356.Property and Equipment 357.Intangible Asset & Goodwill 368.Investment in an associate 379.Income Tax expense and liability 3710.Trade and other receivables 3811.Related party transactions and balances 3912.Cash and cash equivalents 3913.Share capital 4014.Retained earnings 4015.Legal reserve 4016.Other reserves 4017.Provisions 4018.Bank Borrowings 4119.Trade and other payables 4120.Revenue and Revenue Recognition 4121.General and administrative expenses 4222.Other (losses)/gain - net 4323.Financial Income 4324.Financial costs 4325.Staff costs 4426.Contingencies and commitments 4427.Changes or additions to the accounting principles and policies and revenue recognition 4428.Events after the balance sheet date 4429.Government grants and loans 4430.Cash generated from operations 4531.Loan granted to associates 4532.Proceeds from borrowings 4533.Repayments of borrowings 4534.Prepaid expenses and accrued income 4635.Accrued charges and deferred revenue 46

SECTION 1: The company in a nutshell

CONTENTS

4

FOREWORDby Hazem Mulhim

I.Foreword by Hazem Mulhim, CEO of EastNets Group

To Our Shareholders:

EastNets has completed another year of energetic growth and strong returns in 2012 following a series of important milestones and strategic initiatives. The 7 per cent increase in turnover highlighted the exceptional performance we have achieved in 2012,providing the thrust to further expand our growth objectives as we enter the new fiscal year.

As always, EastNets continued to build on its excellent track record in customer satisfaction and service excellence to anchor our robust business performance in 2012. In this regard, we are pleased that en.MoRes had been certified for the SWIFTRemit live service, which guarantees that it complies with the most stringent industry standards.

EastNets has also strengthened its strategic partnerships to further expand the range and scope of our services. In partnership with Qtel, Qatar’s telecoms service provider, we are now offering mobile money transfer services to Nepal through en.MoRes,in addition to India, Pakistan, the Philippines, and the rest of the Middle East. The new service benefits more than 200,000 Nepalese who reside in Qatar.

It is certainly evident that 2012 had been a very busy and eventful year for EastNets. This is further highlighted when EastNets was ranked 35th in the 2012 edition of the RiskTech 100 survey released byChartis Research, jumping two slots higher in the most comprehensive and prestigious study of the 100 top technology firms involved in the risk management market.

These important breakthroughs have certainly given us the confidence to look forward to another productive and profitable performance in 2013 and beyond.

Hazem MulhimChief Executive Officer of EastNets

SECTION 1: The company in a nutshell

5

StrategicVISIONfor the future

6

II.Our Company and strategy

Mobile Remittances

III.Our CustomersEastNets is committed to providing its customers with ongoing, responsive and superior customer service.

Customer Communication and Feedback

EastNets strategy is to extend current business into new geographies and markets; to evolve solutions to adapt to new regulations and technology changes; and to anticipate market needs by developing innovative solutions that deliver incremental value to customers.

For the Compliance Solutions, EastNets growth strategy is to move from point solutions to an integrated approach to anti-money laundering (AML) and enterprise risk and compliance management. As part of this integrated solution set, EastNets has developed a fraud prevention solution, to meet the growing threat of online, ATM, wire and payment card fraud. It is fully integrated with EastNets SafeWatch Filtering and Profiling anti-money laundering solutions – with shared and integrated databases and workflow processes. Today, over 500 customers in 80 countries rely on EastNets Compliance Solutions.

EastNets has also expanded its outsourced en.Service Bureau offering to enable ASP / SaaS for anti-money laundering (watch list filtering), reconciliation (operational risk) via our partnership with SmartStream, disaster recovery, and various SWIFT messaging support capabilities.

EastNets Remittance Company Ltd. (ENR), a company fully owned by EastNets Holding, is a payment service provider licensed by the UK Financial Services Authority. ENR specializes in the remittance market, explicitly in enabling international person to person (P2P) remittance services. ENR will provide a complete business solution that is based on an innovative technological solution. This solution is built on the en.MoRes platform aimed at mobile money transfer. The en.MoRes platform enables mobile subscribers to send payment instructions over payment networks cross border, through their mobile phone, conveniently and securely to a beneficiary, through an over the counter setting and/or into a bank account. The en.MoRes service obtained the SWIFTRemit conformance label in 2011. The SWIFTRemit is designed to support financial institutions’ needs for low-value, cross-border person-to-person payments - otherwise known as remittances.

en.MoRes will also launch a new online remittance service as part of its mission to provide a multi-channel platform for supporting international person-to-person (P2P) remittance services based on the innovative en.MoRes techno-logical solution. The ultimate goal is to cater to the estimated 200 million migrant workers around the globe that send money to their homeland on a regular basis.

EastNets communicates on a regular basis with its customers in order to improve customer satisfaction. People, Processes, Products, Policies and Premises are measured periodically to ensure customer satisfaction and to align and expand new solutions and services to meet their needs. As such, customer feedback is essential to guide our product and company strategies and performance. We value our customers for their insight and guidance as customer feedback is an integral component of EastNets strategy development and improvement.

CustomerCOMMITMENT

and partnership

III. Customer SupportIn 2012, a total of 4.208 tickets (compared to 3.017 in 2011) have been handled by the customer service team which translates into an average of 19,5 tickets per working day. Around 33% of the tickets have been resolved within 24 hours thanks to the committed efforts of the customer service team. This focus on customer service activities is best proof of EastNets dedication towards its customer satisfaction.

EastNets Support Testimonials – Selected Survey Comments 2012• “You are doing the best, please keep it up.” Commercial bank Int'l, UAE• “What I feel, the engineer's are very proficient and knowledgeable. Happy and very satisfied with the service :) Thanks” Oman International Bank SAOG, Oman

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IV.Our Products

8

For over 25 years, EastNets has been committed to helping businesses transform the way they manage risk and complexity. With EastNets suite of Compliance and Payments solutions and services customers benefit from enhanced risk control with solutions that strengthen processes for improved financial crime protection, transparency, resilience and regulatory controls.

For over 28 years, EastNets has been committed to helping businesses transform the way they manage risk and complexity. With EastNets suite of Compliance and Payments solutions and services customers benefit from enhanced risk control with solutions that strengthen processes for improved financial crime protection, transparency, resilience and regulatory controls.

Solutions that reduce

COMPLEXITYand risk

EastNets three solution areas include:

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• Compliance EastNets delivers a suite of compliance solutions and services that can be leveraged through a single platform for improved fnancial crime management and regulatory control. Over 500 customers in 80 countries rely on EastNets anti-money laundering solutions.

• Resilience EastNets offers first-in-its-class solutions for financial institutions and SWIFT users to strengthen processes for improved connectivity, transparency, and resiliency. Over 366 customers benefit from EastNets SWIFT plug-ins for improved message reporting, disaster recovery and duplicate message detection. In addition, EastNets Service Bureau provides outsourced SWIFT connectivity to over 272 banks and corporates around the world.

• Convenience EastNets provides mobile remittance solutions with en.MoRes to enable secure, compliant mobile money transfer, and electronic fund transfer (EFT) point of sale (POS), and identity management solutions designed to make it faster, more secure and convenient for customers to process and deliver transactions through electronic channels.

Compliance Resilience Convenience

en.SafeWatch Filtering Pro�ling Anti-FraudReconciliation

HOSTED SERVICES

en.PaymentSafeTLM Reconciliation

en.MoresMobile POS

HOSTED SERVICEMobile Wallet

en.Reportingen.Recoveryen.Duplicate Detectionen.PaymentSafeDouble-Take

HOSTED SERVICES

en.Service Bureau SWIFT SafeWatch Reporting Dudplicate Detection

10

TalentTEAMWORK

and commitment

In an IP and services related company like EastNets, relying on our people, their enthusiasm, talent and commitmentis key to building our company and business success for high value creation.

EastNets depends on the quality of its people to deliver excellent service to its customers. EastNets strongly believes that better services towards our customers can be reached by well trained and experienced individuals.

With the support of the Walloon region, EastNets has been able to receive funding to finance part of its R&D employees. EastNets believes that the more experienced and trained its people are, the better service they will giveto our customers. That’s why EastNets Europe invested about 41% of its turnover on Research & Development activities in 2012, relating mainly to investments in human capital and training.

EastNets Europe employed in 2012 approximately 58 people in Europe and in the USA. EastNets wants to enhanceits reputation as an employer of choice that provides excellent career development, equipping employees with the necessary skills and experience they need to help EastNets compete successfully.

EastNets results are to be seen as an achievement, considering the financial crisis. This success is the fruit of the achievements of the following Management team:

V.Our People

Michel CorthoutsManaging Director

Mohamed El BakkaliFinance & Administration Director

Hanadi SalameDevelopment Director

Michel has a Masters Degree in Law from Katholieke Universiteit Leuven, MBA from Vlerick Leuven-Gent Management School, and another MBA (CEPAC) from Solvay Business School.

Michel has a track record of success and during his career, Michel held many leading Business Development and Managerial position with top financial institutions including SWIFT, JPMorgan, Chase Manhattan, Bank of America, Credit Lyonnais, and Banco Europeo para America Latina, Argentina (BEAL).

Michel spent 14 years with SWIFT and the last position he held was Director for SWIFT Latin America and Member of the Americas Management Team.

Mohamed El Bakkali is the Finance & Administration Director of EastNets Europe, he joined from the EU institutions where he was in charge managing the finance of the an EU-funded programme aiming to set up a Free Trade Area between Europe and the Southern Mediterranean countries. With proven abilities to manage finance, his specialist skill areas include budgeting, cash management, reporting and tax.

He started his career in the United States in the Telecom business, after he graduated in Business administra-tion with a major in Accountancy and another one in International Business from the Brussels Business School ICHEC. His educational background has been corroborated with a Master in Business Administration, a Master in European Tax Law and a degree on Strategy from the prestigious Harvard University.

Hanadi Salameh is a USA national holding a Doctorate in Business Administration of Information Systems from Argosy University, California and a Master degree in Computer Science, California.

She brings with her over 15 years of experience in software engineering and management, as well as IT management and development. She previously has held positions as Director of Solution Architecture, Project Manager, Chief Software Architect, and Development Manager. Hanadi has worked at various US compa-nies before joining EastNets such as J. D. Power and Associates, The McGraw-Hill Companies, CBS Market-Watch and Bank of America.

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Our HR values are:

1. Team Work

2. Commitment

3. Customer Focus

4. Innovation

5. Accountability

6. Respect

. We work towards common goals through open communication, mutual supports, trust, and understanding.

. We respect each other and build upon our strengths and experience.

. We are an enthusiastic and self motivated team who are committed to providing solutions and quality service to our valued customers.. We are emotionally and intellectually close to our clients, products, work, employees, and the community at large.

. Our success depends on the success of our customers.

. We provide our customers with our comprehensive experience and solutions so they can achieve their objectives quickly and effectively.

. We encourage Innovation to shape our future.

. We strive to create an open and friendly environment.

. We recognize creativity and original thinking.

. We are obliged to demonstrate and take responsibility for performance in light of agreed expectations and also bear the consequences. Our Executive Management is obliged to answer the Board for an action. Managers are obliged to answer the Executive Management for an action. Employees are obliged to answer the Managers for an action

. Our cultural diversity provides strengths, as well as challenges, and we strive to turn uncomfortable situations into learning opportunities . We do not tolerate cultural or ethnic stereotyping and promote openness, knowledge sharing, and tolerance.

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VI. Directors’ ReportThe Directors submit their report together with the audited consolidated financial statements of EastNetsEurope and its subsidiaries for the year ended 31 December 2012.

Principal activityEastNets is a global leading provider of compliance and payment solutions and services with headquartersin Dubai, and 16 offices across Europe, North America, the Asia-Pacific and Middle East.

Results and appropriationsThe results of the Group for the year ended 31 December 2012 are set out under section III “Consolidatedfinancial statements”.

DirectorsThe following members of the board of EastNets Europe were directors throughout the financial year and each remains a member of the Board as at 31 December 2011:

• Hazem Mulhim - Managing Director• Pierre Goffinet - Director• Dominique Fontaine - Director

AuditorsThe consolidated financial statements have been audited by Moore Stephens.

On behalf of the Board

Hazem Mulhim

…………………................

14 February 2013

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VII. Independent Audit Report

Report of the independent auditorto the shareholders of EastNets Europe SA9, Route des Trois Cantons Longwy 370, L-83991941 Luxembourg

Consolidated Financial Statements as at 31 DECEMBER 2012

Respective responsibilities of management and auditorsManagement is responsible for the preparation and the fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes maintaining internal control relevant to the μpreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies that are consistent with IFRS accounting rules; and making accounting estimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable, but not absolute, assurance whether the consolidated financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The audit procedures selected depend on the auditor’s assessment of the risks of material misstatement of the consolidated financial statements.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by management, aswell as evaluating the overall consolidated financial statement presentation and disclosures.

Blue TowerAvenue Louise 326, Box 32

B-1050 BrusselsBelgium

T +32 (0)2 640 07 96F +32 (0)2 640 53 43

www.moorestephensbrussels.com Moore Stephens A S SC SPRL

RPM BruxellesTVA BE 0831.408.873

An independent member firmof Moore Stephens International Limited

– members in principal cities throughout the world

SECTION 2: Audited Consolidated Financial Statements

In accordance with our contract, we have audited the accompanying consolidated financial statements of EastNets Europe SA set out in section 2 of this documente annual report, which comprise the balance sheet as at 31 December 2012 and the income statement and the cash flow statement for the year then ended, the statement of changes in equity, and a summary of significant accounting policies and other explanatory notes. We stamped the audited documents in order to identify them. We have not audited any other document that can be distributed with these consolidated financial statements.

14

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a reasonable basisfor our opinion on the financial statements.

Basis for Qualified OpinionThe company’s revenue in the consolidated income statement amounts to EUR 8.545.079. Management has recognisedin the company’s revenue a contract of EUR 704.000 for which only a letter of intent was received, which constitutes a departure from International Financial Reporting Standards. Accordingly, the company’s revenue would have been decreased by EUR 704.000 to EUR 7.841.079 and shareholders’ equity would have been reduced from EUR 12.522.776 to EUR 11.818.776.

Qualified OpinionIn our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraphIn our opinion, the financial statements give a true and fair view of the financial position of Eastnets Europe SA as of 31 December 2012 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

The accompanying consolidated financial statements have been prepared assuming that the company will continue asa going concern. As discussed in Note 2 to the financial statements, the company has also suffered recurring losses fromoperations of its subsidiary in the USA affecting its cash flow situation that raise substantial doubt about its ability to continue as a going concern. Management's plans in connection with these matters are also described in Note 2. In addition, we have received the comfort from the parent company that they will support EastNets Europe SA.

Without questioning the opinion expressed above, we draw the attention that directors have approved the financial statements on a going concern basis and they justify the application of accounting rules in the context of continuity.

Moore Stephens AS SC ScprlBrussels, 15 February 2013Represented by:

Christopher Thubron FCAPartner

Explanatory Paragraph

15

VIII. Consolidated financial statements of EastNets Europe under IFRS

A.Consolidated balance sheet (2012-2011)

AssetsAssetsAssetsAssets Notes 2012 2011 Non-current assets Property, plant and equipment 3.4, 6 205.471 270.680 Intangible assets 3.6, 7 11.525.641 10.877.763 Investments in associates 0 0 Deferred income tax assets 0 0 Available-for-sale financial assets 0 0 Trade and other receivables 10 3.530.450 1.800.595 Goodwill 3.7 7.981.544 7.981.544 Total non-current assets 23.243.106 20.930.582 Current assets Inventories 0 0 Trade and other receivables 3.101, 10 4.987.596 5.628.189 Available-for-sale financial assets 0 0 Derivative financial instruments 0 0 Financial assets at fair value through profit or loss 0 0 Cash and cash equivalents 3.11,12 2.435.085 2.294.318 Assets of disposal group classified as held for sale 0 0 Prepaid Expenses and accrued income 343 37.666 65.437 Total current assets 7.460.346 7.987.944 Total Assets 30.703.452 28.918.526

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These consolidated financial statements were approved by the board of directors on 14 February 2013 and were signed on their behalf by:

Hazem MulhimChief Executive Officer

Liabilities and equityLiabilities and equityLiabilities and equityLiabilities and equity Notes 2012 2011 Equity attributable to owners of the parent Ordinary shares 13 6.100.000 6.100.000 Share premium 0Other reserves 0 0Retained earnings 14 6.066.256 5.409.584 Earnings 2011 356.520 598.125 Minority interest Total equity 12.522.776 12.107.709 Non-current liabilities Borrowings 4.1 6.329.658 6.398.702 Derivative financial instruments 0Deferred income tax liabilities 0Retirement benefit obligations 0Provisions for other liabilities and charges 3.15, 16 92.709 1.138.915 Total non-current liabilities 6.422.367 7.537.617 Current liabilities Trade and other payables 3.14,18 2.804.982 2.182.802 Current income tax liabilities 9 828.548 736.254 Borrowings 4.1 4.788.428 3.067.351 Derivative financial instruments 0 0 Provisions for other liabilities and charges 0 0 Liabilities of disposal group classified as held-for-sale 0 0 Accrued charges and deferred revenues 354 3.336.351 3.286.792 Total current liabilities 11.758.309 9.273.200 Total Liabilities 30.703.452 28.918.526

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B. Consolidated income statement (2012-2011)

Notes 2012 2011 Revenue 20 8.545.079 8.440.564 Cost of sales (64.334) ( 624.491) Gross Profit 8.480.745 7.816.074 Distribution costs 0 0Administrative expenses 21 (7.003.233) ( 6.617.859) Other Income 0 Other (losses)/gains Ð net 24 (576.700) (79.558)Loss on expropriated land 0 0 Operating profit 900.812 1.118.657 Financial income 23 44.900 156.114 Financial costs 24 (414.293) (336.880) Financial costs Ð net (369.393) (180.765 )Share of (loss)/profit of associates 0 0 Profit before income tax 531.419 937.892 Income tax expense (174.899) ( 339.766) Profit for the year from continuing operations 356.520 598.125 Discontinued operations 0 0Profit for the year from discontinued operations 356.520 598.125 Profit attributable to: Owners of the parent 356.520 598.125 Minority interest 0

3.18,9

18

C. Consolidated statement of comprehensive income (2012)

Note 20122011 20112010EUREUR EUREUR

Profit for the year 356.520598.125 598.125856.950

Other comprehensive income:Gain on revaluation of landCurrency translation differences 58.547(95.116) (95.116)(62.407)

------------------------------ ------------------------------Total other comprehensive income 415.067(95.116) 503.010(62.407)

------------------------------ ------------------------------Total comprehensive income for the year attributable to equity holders of the Company

415.067503.010 503.010794.543

============== ==============

D. Consolidated statement of changes in equity (2012)

NotesNotesShare

capitalRevaluation

evreser Capital reserve

Legal reserve

Translation reserve

Retained earnings Total

EUR EUR EUR EUR EUR EUR EUR

1 January 20101 January 20101 January 2010 6.100.000 6.007.709 12.107.709

Capital IncreaseCapital Increase

Comprehensive incomeComprehensive income

Profit for the yearProfit for the year 356.520 356.520Other comprehensive incomeOther comprehensive

income

- Revaluation surplus - Revaluation surplus - Currency translation difference

- Currency translation di�erence 58.547 58.547

---------------- ------------------ -------------- ------------- ---------------- ------------ ------------

At 31 December 2012At 31 December 2010At 31 December 2010 6.100.000 6.422.776 12.522.776

Year ended 31 December

19

E. Consolidated Cash flow statement (2012)

Note 2012 Cash flows from operating activities Cash generated from operations 29 4.363.167Interest paid 23 (327.380)Income tax paid 9 (174.899)Net cash generated from operating activities 3.860.888 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired Purchases of property, plant and equipment (PPE) 3.4,6 (74.606)Proceeds from sale of PPE Capitalised development 7 (3.569.001)Purchases of intangible assets 7 (2.725)Purchases of available-for-sale financial assets Loans granted to associates (1.731.462)Loan repayments received from associates Loans granted to subsidiary undertakings Loan repayments received from subsidiary undertakings interest received 22 4.836Dividends received advances to other parties 1.607Net cash used in investing activities (5.371.351) Cash flows from financing activities Proceeds from issuance of ordinary shares Purchase of treasury shares Proceeds from issuance of convertible bonds Proceeds from borrowings 30,31 2.016.554Repayments of borrowings 32 (1.517.916)Proceeds from loan from subsidiary undertaking Dividends paid to companyÕs shareholders Dividends paid to holders of redeemable preferences shares Dividends paid to minority interests Net cash used in financing activities 498.639 Net (decrease)/increase in cash, cash equivalents and bank overdrafts (1.011.824) Cash, cash equivalents and bank overdrafts at beginning of year12 695.216Exchange gains/(losses) on cash and bank overdrafts (803) Cash and cash equivalents at the end of the year - continuing operations12 (317.411)

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IX. Notes and disclosures to the consolidated financial statements

1. Legal status and activities

EastNets Europe is a Limited Liability Company incorporated in 2007 under Luxemburg Law and have moved its registered office in Luxemburg to - 9, Route des Trois Cantons, 8399 Windhof.

The principal activity of the Company and its subsidiaries (together, “the Group”) is the development and delivery of compliance and payment solutions and services mainly in Europe, USA and the rest of the worldthrough its global resellers.

The Company is 100% owned by EastNets Holding Ltd (“the Parent Company”).

The Group holds participations in the following principal subsidiaries:

- EastNets Americas Corp (USA)

- 100%- EastNets R&D S.A (Belgium)

- 100%

- EastNets France S.A.S (France)

- 100%

- EastNets Nederland B.V (Netherlands)

- 100%

No change in the ownership has occurred during 2012.

2. Going concernAt 31 December 2012, EastNets Europe had net current liabilities of KEUR 11.756 (2011: KEUR 9.273). Based on the attached figures of our financial statements and our market potential, we have sufficient comfort that EastNetsEurope and its subsidiaries have sufficient resources to continue to operate existence for the foreseeable future.

We would like to remind our shareholders that we have taking the following facts to justify the application of the going concern aspects:

- We continue intensively to invest in research & development to improve the quality of our product (cost for this year is EUR 3.569k) and this could not be financed fully by our operating activities ;- We also had to face significant losses in the US subsidiary affecting its cash flow situation totalling for the year ended 2011: USD 3.858.075, - We have also short term liabilities due to the Belgian and Luxembourg social securities amounting to EUR 350.000 and to the tax and VAT administrations amounting to EUR 450.000

Our budget for next year showing total cash in flows from sales amounting to EUR 9.500.00 and a positive net cashflow of EUR 4.319 which will allow EastNets Europe to face all his obligation towards all our creditors.

Accordingly, EastNets Europe continues to use the going concern basis in preparing its financial statements.”

3. Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

3.1. Basis of preparationThe consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS). These consolidated financial statements have been prepared under the historical cost convention.

21

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.It also requires management to exercise its judgment in the process of applying the Group’s accounting policies.

(a) New and amended standards adopted by the Group:

The Group has adopted the following new and amended IFRSs as of 1 January 2012:• IFRS 7 ‘Financial Instruments’: Disclosures- Amendments resulting from May 2011 Annual Improvements to IFRSs. The amendment will not result in a material impact on the Group’s financial statements. • IFRS 7 ‘Financial Instruments’ (for the annual periods beginning on or after 1 July 2011) Disclosures- Amendmentsenhancing disclosures about transfers of financial assets. The amendment will not result in a material impact on the Group’s financial statements.• IFRS 7, ‘Financial Instruments’. Disclosures - Amendments enhancing disclosures about offsetting of financial assets and financial liabilities beginning on or after 1 January 2013 and interim periods within those periods. IFRS 7 is not expected to have a material impact on the Group’s financial statements.• IFRS 7, ‘Financial Instruments’. Disclosures - Amendments requiring disclosures about the initial application of IFRS 9 beginning on or after 1 January 2015 (or otherwise when IFRS 9 is first applied). IFRS 7 is not expected to have a material impact on the Group’s financial statements.

(b) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group:

• Nihil

(c) Standards, interpretations and amendments to published standards that are not yet effective andhave not been early adopted by the Group (continued):

• Nihil

• IFRS 9, ‘Financial Instruments’. IFRS 9 represents the first milestone in the comprehensive IASB project to replace forannual periods starting on 1 January 2015 (mandatory application date amended December 2011). IFRS 9 is not expected to have a material impact on the Group’s financial statements.• IFRS 10, ‘Consolidated Financial Statements’. IFRS 10 will be applicable for the annual periods beginning on or after 1 January 2013. IFRS 10 is not expected to have a material impact on the Group’s financial statements.• IFRS 11, ‘Joint Arrangements’. IFRS 11 will be applicable for the annual periods beginning on or after 1 January 2013. IFRS 10 is not expected to have a material impact on the Group’s financial statements.• IFRS 12, ‘Disclosure of Interests in Other Entities’. IFRS 12 will be applicable for the annual periods beginning on or after 1 January 2013. IFRS 10 is not expected to have a material impact on the Group’s financial statements.• IFRS 13, ‘Fair Value Measurement’. IFRS 12 will be applicable for the annual periods beginning on or after 1 January 2013. IFRS 10 is not expected to have a material impact on the Group’s financial statements.

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3.2 Basis of Consolidation

(a)

Subsidiaries

(b) Transactions eliminated on consolidationIntercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated in preparing the consolidated financial statements. Unrealised losses are also eliminated. Uniform accounting policies are used for like transactions and events. Therefore, if a subsidiary or a joint venture uses different accounting policies from those applied in the consolidated financial statements, appropriate consolidation adjustments to align accounting policies are made when preparing these consolidated financial statements.

(c) Associates and Joint VenturesAssociates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. A joint venture is a contractual arrangement between the Group and one or more other parties to undertake economic activity that is subject to joint control.

Investments in associates and joint controlled entities are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than 50% of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assess-ing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group, except for acquisitions involving entities under common control, which are accounted for using the uniting of interests method. The cost of an acquisition under the purchase method is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable net assets acquired, including separately identifiable intangibles e.g. brands, and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of identifi-able net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement.

23

(d) Changes in the consolidation scopeNo change in the consolidation scope has occurred.

The consolidated companies remain the following:- EastNets Americas Corp (USA) - 100%- EastNets R&D S.A (Belgium) - 100%- EastNets France S.A.S (France) - 100%- EastNets Nederland B.V (Netherlands) - 100%

3.3. Foreign currency translation

(c) Associates and Joint VenturesThe Group’s share of its associates and joint controlled entities post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate/joint ventures.

The Group’s interests in jointly controlled operations are accounted for by proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial statements. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it sells the assets to an independent party. However a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets, or an impairment loss.

Unrealised gains on transactions between the Group and its associates/joint ventures are eliminated to the extent of the Group’s interest in the associates/joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of associates/joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses are recognised in the consolidated income statement.

(a) Functional and presentation currencyItems included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Euro, which is the Company’s functional and Group’s presentation currency.

(b) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement, except when deferred in equity as qualifying for cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated income statement within “financial income or cost”. All other foreign exchange gains and losses are presented in the consolidated income statement within “General and administrative expenses”.

(c) Group entitiesThe results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.(ii) income and expenses for each income statement are translated at average exchange rates; and(iii) all resulting exchange differences are recognised as a separate component of equity.

24

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the consolidated income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Years

The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.

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.

5553

Furniture and office equipment Tools and equipmentMotor vehiclesComputer hardware and software

3.4. Property and equipmentProperty and equipment are stated at cost less accumulated depreciation and impairment losses, if any, except land which is stated at revalued amount. The cost of property and equipment is its purchase cost together with any incidental costs of acquisition. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying value of the replaced part is taken to the consolidated income statement. All other repairs and maintenance costs are charged to the consolidated income statement during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land are credited to other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against other reserves directly in equity; all other decreases are charged to the consolidated income statement.

Land is not depreciated. Depreciation on other assets is calculated on the straight-line method, at rates calculated to reduce the cost of assets to their estimated residual value over their expected useful lives, as follows:

25

3.5 Investment property

3.6 Intangible Assets

(a) Capitalised Development

Principles

IAS 38 on Intangible Assets requires an entity to recognise an intangible asset if, and only if, certain criteria are met.

An intangible asset is an identifiable non-monetary asset without physical substance. An asset is a resource that is controlled by the entity as a result of past events (for example, self-creation) and from which future economic benefits (inflows of cash or other assets) are expected.

The three critical attributes of an intangible asset are:- identifiability- control (power to obtain benefits from the asset)- future economic benefits (such as revenues or reduced future costs)

An intangible asset is identifiable when it: - is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract) or- arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the consolidated income statement. Capital work-in-progress is stated at cost. When commissioned, capital work-in-progress is trans-ferred to the appropriate category of property and equipment and depreciated in accordance with the Group’s policy.

Investment property is defined as property held to earn rentals or for capital appreciation or both and is carried at cost less accumulated depreciation and impairment losses, if any. In addition, land held for undetermined use is classified as investment property and is not depreciated. The fair values for disclosure purposes of the investment properties are determined by external valuers.

26

IAS 38 requires an entity to recognise an intangible asset (at cost) if, and only if:

- it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and- the cost of the asset can be measured reliably.

Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. This means that the entity must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits.

Intangible assets are initially measured at cost, including direct and indirect cost.Amortisation: over useful life, based on pattern of benefits (straight-line is the default).

Subsequent expenditure on an intangible asset after its purchase or completion should be recog-nised as an expense when it is incurred, unless it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance and the expenditure can be measured and attributed to the asset reliably.

An intangible asset is recognized as an asset if it is probable that future economic benefits attributable to the asset will flow to the enterprise and if the cost of the asset can be measured reliably.

The Capitalised R&D is recognized at cost in the balance sheet (cost method), less any accumu-lated depreciation and any accumulated impairment losses.Starting this year and in line with EastNets Group requirements, the Capitalised R&D is depreci-ated on a straight-line basis at 25% per annum starting the year following its capitalisation.

Intangible assets are reviewed at each balance sheet date in order to identify indications of potential impairment that may have arisen during the fiscal year. In case such indications are noted, an estimate of the recoverable amount of the intangible assets in question is established. The recoverable amount is defined as the higher of the net fair value of an asset and its value in use.Intangible assets are impaired when their carrying amount exceeds the amount that can be recovered, as a result of obsolescence of these assets or due to economic or technological circum-stances. A review of the capitalised R&D has been done with the Product team and it has been decided that no impairment is required as all products capitalised over the past 3 years are still commercialised and enhanced.

Intangible assets with an indefinite useful life are subject to an annual impairment test, and an impairment loss is recognized when their carrying amount exceeds their recoverable amount.The useful life, the depreciation method and the potential residual value of intangible assets are reassessed at each balance sheet date and revised retrospectively, if applicable.

27

Intangible assets consist exclusively of the carrying amount of investment software developed by EastNets Europe S.A. This software is amortized over 4 years on a straight-line basis, starting the year after its initial capitalisation.

Major investments during the fiscal year concern software developed in relation to the AML and Swift solutions. These investments are the result of the internal developments carried out by “Center of Excellence” located in Waterloo – Belgium which has been employing Software and Q&A Engineers and Product Managers. Major investments related to the Service Bureaux have also continued in 2012.

EastNets Europe S.A emphasizes that no indications existed at the balance sheet date that the value of intangible assets may have been impaired.

On the intellectual property side, EastNets Europe believes that its success will be partly dependant on its ability to secure the intellectual rights of its product suite and by enforcing its intellectual rights are respected by third parties.

EastNets Europe uses mainly copyright to protect the intellectual property developed as a result of its R&D. These copyrights allow EastNets to prevent competitors from copying EastNets source codes, but do not prevent competition from developing products that perform the same functionalities.

Management has decided to capitalise costs incurred in the continuing development of the product line which forms the basis of the sales of the company. In the year ended 31 December 2012 the amount was evaluated by the Management at K€3.569 (2011: K€3.468), including 60 % indirect costs.

3.7. GoodwillGoodwill represents the excess, at acquisition date, of the cost of a business combination over the purchaser’s share in the net fair value of identifiable assets, liabilities and contingent liabilities. If this difference is positive, goodwill is recognized as an asset.

An impairment test is carried out each year, even when there is no indication that goodwill may have been impaired, or more frequently if events or changes in circumstances indicate that goodwill may have been impaired (IFRS 3 – Business Combinations).

If the difference is negative, any impairment would be recognized in the income statement. Impairments will exist if there is:• objective evidence of impairment as a result of a loss event that occurred after the initial recog-nition of the asset and up to the balance sheet date (“a loss event”); • the loss event had an impact on the estimated future cash flows of the financial asset or the group of financial assets; and • a reliable estimate of the loss amount can be made.

As the company continues its growth in terms of revenue and profitability the test confirms that no impairment is required at the balance sheet date.

28

3.8. Impairment of non-financial assetsAssets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.9. InventoriesInventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the weighted average method and includes all costs incurred in acquiring the inventories and bringing them to their present location and condition. Net realisable value is the estimate of the selling price in the ordinary course of business, less variable selling expenses, if any.

3.10. Trade receivables Trade receivables are amounts due from customers for merchandise sold in the ordinary course of business. If collection is expected within one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

3.11. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, current accounts and bank deposits with original maturity of three months or less.

3.12. Borrowings Borrowings are recognised at fair value, net of transaction costs incurred. Fees paid on the establishment of loan facilities are recognised as expenses.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

29

3.13. Employee benefits Provision is made for the estimated liability for employees' entitlement to annual leave as a result of services rendered by eligible employees up to the balance sheet date.

Provision is also made using actuarial techniques for the full amount of end of service ben-efits due to eligible employees in accordance with Labour Laws applicable to the individual Group companies, for their period of service up to the balance sheet date. The provision relating to annual leave and leave passage is disclosed as a current liability, while that relating to end of service benefits is disclosed as a non-current liability.

3.14. Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised at fair value.

3.15. ProvisionsProvisions are recognised when the Group 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 a reliable estimate of the amount can be made. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. Increases in provisions due to the passage of time are recognised as interest expense.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

30

Provisions decreased by €1million, mainly due to the use, following the arbitration decision, of the legal provisions made for the “reps and warranties” under the Share Purchase Agree-ment. A settlement agreement has been signed with the previous owner which stops all legal suit cases.

3.16. Revenue RecognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of returns, rebates and discounts and after eliminating sales within the Group.

Under IAS 18 revenue is recognised when the risks and advantages of the sales of the licences have been transferred to the clients. When a contract has been signed and the licence delivered, the Group policy is to recognise the revenue.

At a local company level, revenue is recognised in line with the local regulations of the coun-try in which the subsidiary is registered.

Professional services revenues are recognised in the period that the services are provided.

Support services invoiced through the maintenance are recognised within the year to which they relate, independently of when they have been invoiced or paid.

3.17. LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over the period of the lease.

3.18. TaxationThe tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated income statement;

The current income tax charge is calculated on the basis of the tax laws enacted or substan-tively enacted at the balance sheet date in the countries where the Group’s subsidiaries oper-ate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpreta-tion and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences aris-ing between the tax bases of assets and liabilities and their carrying amounts in the consoli-dated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

31

4. Financial Risk Management

4.1 Financial risk factorsThe Group’s activities are exposed to a variety of financial risks: market risk (including currency risk, price risk and cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of finan-cial markets and seeks to minimise potential adverse effects on the Group’s financial perfor-mance.

Risk management is carried out under policies approved by the Board of Directors. Key risks are identified and evaluated based on which risk management procedures are designed and implemented.

(a) Market risk (i) Foreign exchange riskThe Group operates internationally and its exposure remain limited as its products and services are invoiced in euros. Foreign exchange risks arise from future commercial transactions, recognised assets and liabili-ties and net investments in foreign operations. Management does not consider this risk as important to warrant any specific procedures to manage the exposure. (ii) Price riskThe Group is not exposed to significant price risk as it does not have investments in traded equity securities.(iii) Cash flow and fair value interest rate riskThe Group is not exposed to interest rate risk on its interest bearing assets and liabilities as main Borrowings are at fixed rates.

b) Credit riskCredit risk arises from cash and cash equivalents and deposits with banks and financial institu-tions, as well as credit exposures to customers, including outstanding receivables. The Group assesses the credit quality of the customer, taking into account its financial position, past experi-ence and other factors. This is mainly limited as the Group’s customers are mainly banks benefiting from their State guarantee.

(c) Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Group treasury maintains flexibility in funding by maintaining availability under committed credit lines. Cash flow forecasting is performed by the Group on an ongoing basis through rolling forecasts to ensure it has sufficient cash to meet the opera-tional needs. These needs are met through the utilisation of the syndicated loan facility avail-able.As at 31 December 2012, balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

32

At 31 December 2012 Less than 1 year

Between 2 and 7 years

More than 7 years

EUR EUR EUR

Grants (Sofinex and novalia) 473.750 3.405.978

Bank overdraft 2.752.495

Bank borrowings 18 1.562.182 2.923.680

-

4.788.428 6.329.658

-

Trade and other payables

Borrowings(11.118.086)

19 2.804.982

-

Current income tax liabilities 9 828.548

Total8.421.957 6.329.658At 31 December 2012

18

17

Subtotal

33

4.2 Capital risk management

The gearing ratio has remained stable.

4.3 Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables.The fair value of financial liabilities for disclosure purposes is estimated bydiscounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Other receivables and payables approximate theirfair values.

2012 2011EUR EUR

Total borrowings (Note 4.1) 11.118.086 9.466.054

Less: cash and bank balances (Note12) -2.435.085 -2.294.318

Net debt 8.683.001

Total equity 12.522.776

Total capital 21.205.778

Gearing ratio 41 % 37%

7.171.736

12.107.709

19.279.444

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.During 2012, the Group’s strategy was to maintain the gearing ratio within 41% to 37%. The gearing ratios at 31 December 2012 and 2011 were as follows:

34

6. Property and Equipment

During the year ended 31 December 2012, a depreciation charge of K€140 was recognised on buildings, machinery & equipment and furniture.

5. Critical accounting estimates and judgementsEstimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

5.1 Critical accounting estimates and assumptionsThe Group makes estimates and assumptions concerning the future. The resulting ccounting estimates will, by definition, seldom be equal to the related actual results.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

(a) Impairment of trade and other receivablesThe impairment charge reflects estimates of losses arising from the failure or inability of the parties concerned to make the required payments. The charge is based on the aging of party accounts, the customer’s credit worthiness and historic write-off experience. Changes to the estimated impairment provision may be required if the financial condition of the customers were to improve or deteriorate. In management’s judgment, the impairment charge on trade and other receivables is appropriate.

Land and buildings

Machineryand

Equipmentfurniture,Fittings

Formationexpenses TOTAL

At 31 december2011

Cost or valuation

188.850

516.788

124.531

70.496

accumulated depreciation

(73.629)

(416.710)

(95.163)

(44.482)

Net Book amount

115.221

100.078

29.368

26.013 270.680 During 2012

Additions

5.914

68.692

-

-

Depreciation charge

(21.418)

(76.538)

(17.251)

(24.612)

Exchange dif / cost

-

(3.794)

(476)

-

Exchange dif / deprec.

-

3.867

408

-

Closing net book amount

99.717

92.304

12.049

1.401 205.471 At 31 december2012

Cost or valuation

194.764

541.408

124.055

70.496

Accumulated depreciation

(95.047)

(449.104)

(112.006)

(69.094)

35

7. Intangible Asset & Goodwill

Intangible Asset

December 201012.819.900

accumulated depreciation -5.062.143Net book account at 31 december 2011 7.757.757

During 2012:

additions 3.569.001depreciation charge -2.905.288

exchange dif/cost exchange dif/deprec

closing net account 8.421.470

AT close dateCost of Valuation 16.388.901

accumulated depreciation -7.967.431Net book account exercice 8.421.470

Other Intangible asset cost 31 Dec 2011 6.769.518

accumulated depreciation -3.649.512Net book account at 31 december2011 3.120.006

During 2012

additions 2.725depreciation charge -18.400

exchange dif/cost (2.527)exchange dif/deprec (2.367)closing net acco unt 3.104.171

AT close dateCost of Valuation 6.769.716

accumulated depreciation -3.665.545 Net book account exercice 3.104.171

Internally generated software developedcost 31 December 2011

36

Goodwill

8. Investment in an associateInvestment in associates at 31 December 2012 and 2011 was nil.

9. Income Tax expense and liability

31 December 2011 Cost or valuation 7.981.544accumulated depreciation Net Book amount 7.981.544 31 December 2012 Opening net book amount 7.981.544 Additions depreciation charge closing net book amount 7.981.544 31 December 2012 Cost of valuation 7.981.544 Accumulated depreciation - Net Book amount 7.981.544

Income Tax expenses2012 2011EUR EUR

Current income tax 186.671 206.275

Adjustments for prior years

Deferred income tax -11.772 133.491

------------ ------------174.899 339.766

====== ======

Profit before income tax 531.419 937.892====== ======

Income Tax Liabilities 2012 2011EUR EUR

Payroll tax liability 304.399 240.809

Income tax liability 264.492 283.034

VAT liability 259.657 212.411

------------ ------------828.548 736.254

====== ======

37

More than one year2012 2011EUR EUR

10. Trade and other receivables

As at 31 December 2012, net trade receivables amounted to K€4.988 (2011: K€5.628).

As of 31 December 2012, trade receivables were impaired and for which a provision was made. The amount of the provision was K€75 at 31 December 2012. The ageing analysis of these tradereceivables is over 6 months.

2012 2011EUR EUR

At 1 January (Reversal of)/provision for receivables impairment (Note 21)

22.062 23.668

3.508.388 1.776.926

3.530.450 3.530.450

These guarantees were mainly paid in relation to the office rentals in each of the subsidiaries of EastNets Europe S.A. Other receivables (related parties) have increased due to interco transfers with headquarters.

Less than one year

4.979.470 5.622.130

(74.566) (94.560)

4.905.174 5.527.57082.421 100.620

4.987.596 5.628.189

Movement in the Group’s provision for impairment of trade receivables is as follows:

New provision for receivables impairment (Note 22)Use of provision for receivables impairment

94.560 79.669

-15.533

37.403-19.995

74.566 94.560

38

12. Cash and cash equivalents

Cash, cash equivalents and bank overdrafts at beginning of year:

11. Related party transactions and balancesRelated parties include the shareholders, key management personnel, directors and businesses including affiliates controlled directly or indirectly by the shareholders or over which they exercise significant management influence.

Related party transactionsDuring the year, the Group entered into the significant transactions with related parties in the ordinary courseof business, carried out on terms and conditions, agreed between the parties.

2012 2011

EUR EUR

2012 2011

EUR EUR

Receivables from related parties

Personnel (advances) 16.588 5.163

EastNets Dubai 3.450.409 1.713.801

Director 57.979Payables to related parties

Director 0

EastNets Dubai 0 0

Cash in hand 1.062 1.194

Bank deposit 2.207.698 1.771.199

Bank balances 226.325 521.925

-------------- --------------

Total cash and bank balances 2.435.085 2.294.318

======= =======

Short term deposit 1.771.199Cash and Cash equivalent 523.119Financial debt -1.599.101

695.216

Short term depositCash and Cash equivalent

2.207.698

Financial debt 227.387 -2.752.495

-317.411

63.125

0

at end of the year:

39

2012 2011

EUR EUR

Legal reserveConolidated retained earnings 6.522.751 6.166.231

Translation reserve -99.975 -158.522

------------- -------------

6.422.776 6.007.709

======= =======

2012 2011

EUR EUR

At 1 January 1.138.915 1.191.893Charge for the year

Payments during the year (1.105.577) (52.978)

------------ ------------

At 31 December (52.978) 1.138.915

====== ======

13. Share capitalThe share of capital of the Company comprises of 16.000.000 authorised, issued and fully paid shares withno par value for a total capital of K€6.100.

14. Retained earnings

15. Legal reserveIn accordance with Luxemburg Law, 5% of the profit for the year is to be transferred to a legal reserve which is non-distributable.

In Belgium, 5% of the profit for the year is to be transferred in accordance with company law to a legal reserve which is non-distributable.

In France, 10% of the profit for the year is to be transferred in accordance with company law to a legalreserve which is non-distributable.

Transfers to the legal reserve have accordingly been made by the individual entities within the Group including the Company.

16. Other reservesThe other reserves amount to K€0. This reserve is non-distributable and will be utilised at the discretion of the shareholders.

17. Provisions

59.371

40

18. Bank Borrowings

20. Revenue and Revenue Recognition

The Group has not defaulted on any principal or interest during the year on its borrowed funds.

Borrowings are subject to the following terms and are secured as follows:

EastNets Europe with Dexia Luxemburg: Investment loan of K€5.092 (over 5 years) and Credit Facility of K€1000 with Pledge on a deposit of K€1.771.

19. Trade and other payables

2011

EUR

Non-currentTerm loan

----------------- ------------------2.923.680

CurrentTerm loan 1.077.000

-

1.077.000------------------ ------------------

Total borrowings ======== ========

2012 2011

EUR EUR

1.532.399 1.403.736

313.637 323.413

958.946 455.653

-------------- --------------

2.804.982 2.182.802

======= =======

2012 2011

EUR EUR

8.362.824 7.791.548182.256 649.016

0 0

---------------------------------- ----------------------------------

8.545.079 8.440.564========= =========

Short term loans

2.923.680 3.017.029

3.017.029

1.403.522

158.660

1.562.182

4.485.862 4.094.029

2012

EUR

Trade payablesAccrued staff benefits and holiday pay Other payables

Licences and ServicesOthers (operating)Others (non operating)

41

21. General and administrative expenses

2012 2011EUR EUR

Staff costs (Note 25)

Rent 308.659 311.904

Amortisation Depreciation (Notes 6 and 7) 3.063.508 2.523.588

Others 1.956.629

2.480.731

Charges Capitalised -3.569.000 -3.468.123

--------------------------- ---------------------------

7.003.233 6.617.859

======= =======

Total revenue in 2012 amounted to K€8.545, a small increase of K€105(1%) compared to K€8.441 in 2011.

EastNets continues to adopt at consolidated level, the same revenue recognition policy as applied to the rest of the Group.

Under IAS 18 revenue is recognised when the risks and advantages of the sales of the licenceshave been transferred to the clients. When a contract has been signed and the licence delivered,the Group policy is to recognise the revenue.

At a local company level, revenue is recognised in line with the local regulations of the countryin which the subsidiary is registered.

This principle allows EastNets Europe S.A to recognise an addition of K€1.475158 that would translate into a net profit after tax of K€359 instead of K€-1.119.

Revenue is measured at the fair value of the consideration received or to be received, in caserevenue is deemed to belong to the company and the fair value can be measured reliably.

Professional services revenues are recognised in the period that the services are provided.

Support services invoiced through the maintenance are recognised within the year they relate to independently of when they have been invoiced or cashed.

5.243.438 4.769.759

42

22. Other (losses)/gain - net

23. Financial Income

24. Financial costs

2012 2011

EUR EUR

Adjustments of other provision -59.371 52.978

Adjustments of provision for impairment of trade and other receivables

1.105.577

-21.870

Others -1.622.906 -110.666

--------------- ----------------576.700 -79.558

======= =======

2012 2011

EUR EUR

Interest received 4.836 13.671

Other revenue 40.064 142.444

-------------- --------------

44.900 156.114

======= =======

2012 2011

EUR EUR

Interest on bank borrowings 327.380 332.992

Other cost 86.913 3.887

-------------- --------------

414.293 336.880

======= =======

0

43

25. Staff costs

26. Contingencies and commitments

See guarantees (note 10) which were mainly paid in relation to the office rentals in each of the subsidiaries of EastNets Europe S.A.See also note 18 about bank borrowings.

27. Changes or additions to the accounting principles and policies and revenue recognition

During the year ended 31 December 2012, there has been no change to the accounting principlesand policies.

28. Events after the balance sheet date The following events, which should be disclosed, occurred after 31 December 2012:

Nihil

29. Government grants and loans

EastNets Europe through its subsidiary company EastNets R&D S.A has been benefiting from the Walloon Authorities grant and loans.

The long term loans defined as between one of five years (related to the Service Bureaux investments)and another of 7 years (related to the R&D activity in the Walloon Region) have been recorded aslong term liabilities.

2012 2011

EUR EUR

Salaries (included annual leave) 5.116.657

0 0

4.640.912

End of service benefitsOther benefits 126.781 128.847

-------------- --------------

5.243.438 4.769.759

======= =======

44

30. Cash generated from operations

31. Loan granted to associates

32. Proceeds from borrowings

33. Repayments of borrowings

Profit before income tax including discontinued operations 531.419Adjustments for:Adjustments for:- provision -1.046.206- amortisation depreciation (notes 6, 7) 3.063.508- Financial costs Ðnet 322.544- Foreign exchange losses/(gains) on operating activities 12.407Changes in working capital (after adjustments): -Financing required for increasing current asset 655.394- Financing required for decreasing current liabilities 824.100

Cash generated from operations 4.363.167

Loan granted to associates

Loan to Director 57.979

Loan 2011 EastNets Dubai Jordan3.450.409

Net 3.508.388

Proceeds from borrowingsGrant – Walloon RegionOther 200.000

R&D Investmentloan

So�nex – ENSB LoanR&D Loan 1R&D Loan 2Loan 3Loan 4Walloon Region

316.804

1.499.7502.016.554

Repayment holiday pay loan and income tax loan

90.000159.101202.473718.052186.950120.00041.3401.517.916

45

34. Prepaid expenses and accrued income

35. Accrued charges and deferred revenue

2012 2011

EUR EUR

Prepaid expenses 37.580

A ccrued Income 86 23.95614---------------- --------------

2012 2011

EUR EUR

A ccrued charges A ccrued charges 81.661 194.2 24168.080

De ferred revenue De ferred revenue 3.254.690 2.628.0033.118.712------------------ ----------------------------------

Total 3.336.351 3.286.792 ======== = ======== = ======== = ======== = ========

41.481

37.666 65.437

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to shareholders and bene�ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.During 2012, the Group’s strategy was to maintain the gearing ratio within 41% to 37%. The gearing ratios at 31 December 2012 and 2011 were as follows:

Total borrowings (Note 4.1)Less: cash and bank balances

Net debtTotal equity

Total capital

Gearing ratio

The gearing ratio has remained stable.

2012EUR------------------11.118.086 -2.435.085------------------8.683.001

12.522.776------------------21.205.778------------------41%=========

2011EUR------------------9.466.054 -2.294.318------------------7.171.736

12.107.709------------------19.279.444------------------37%=========

46