EIB Report and Accounts Year

RNS Number : 5594X

Equest Investments Balkans Ltd

17 August 2009

Equest Investments Balkans Limited

Year Ended 31 December 2008

Report and Financial Statements

Equest Investments Balkans Limited ('EIB' or 'the Company'), a holding company for investments in the Balkan region, today announces its results for the year ended 31 December 2008.

As a result of the change from a fund to a holding company structure in 2008, EIB has been required to prepare its consolidated financial statements for the first time in accordance with International Financial Reporting Standards ('IFRS'). The delay in publishing these financial statements, in the main, was caused by the first time consolidation of all the Company's subsidiaries, as well as the need to restate prior year accounts as a result of the required change of accounting policy from US GAAP to IFRS. This delay was compounded by the restructuring of certain loan facilities for TechnomarketDomo, details of which were announced by the Company on 16 July 2009.

Highlights for Year 2008

Amounts used for the EIB group (the 'EIB Group') profit and loss analysis are from the continuing operations only. The balance sheet analysis includes held for sale assets and liabilities.

EIB's first published IFRS group based consolidated revenue of Euro 649.3 million for the year ended 31 December 2008 (2007: Euro 483.1 million)

TechnomarketDomo, EIB's largest holding, had consolidated sales of Euro 621.5 million (31 December 2007: Euro 444.3 million), positive EBITDA of Euro 21.5 million (31 December 2007: 36.0 million) and pre tax profit of Euro 840,000 (31 December 2007: Euro 28.6 million)

Total net assets at 31 December 2008 of Euro 159.7 (31 December 2007: Euro 288.9 million)

Net asset value per share of Euro 8.74 (31 December 2007: Euro 16.68)

Underlying operating loss, as adjusted for one-off costs and impairment charges, is Euro 8.0 million (2007: operating profit of Euro 31.0 million)

Pre-tax loss of Euro 127.0 million (2007: profit of Euro 86.7 million), 2008 loss materially impacted byimpairment of past investments and a write down of property investments to independent valuations

Loss per share from continuing operations of Euro 7.13 (2007: earnings per share Euro 4.29)

EIB's strategic stake in the Borovets Investments development project valued at Euro 44.05 million

EIB internalisation process and strategic review undertaken for future core focus on TechnomarketDomo and Borovets with subsequent non-core asset disposal programme for other assets initiated

Post Year End Events

Appointment of Ian Schmiegelow as Non-executive Chairman, and of representatives of major shareholders, the State General Reserve Fund of the Sultanate of Oman ('SGRF') and Kairos Investment Management (with an aggregate shareholding of 53.81% of EIB shares in issue), as Non-executive Directors on the Board

Sale of remaining 37.71% stake in UNIQA Bulgaria for a consideration Euro 23.1 million

Sale of 80% stake in Avto Union AD for Euro 8.0 million

Sale of select land and property assets, including Castle Golf Properties and minority stake in Boyana Park for Euro 1.4 million; in addition a number of other non-core property assets are in the process of disposal

Novera's outstanding balance of Euro 12.97 million under the senior loan to Investkredit Bank AG has been settled by, and the loan transferred to, a new senior lender

Significant refinancing and deleveraging of TechnomarketDomo NV's debt facilities in July 2009; with repayment of Euro 20 million and an additional guarantee of repayment for a further Euro 20 million

Commenting on the results, Ian Schmiegelow, Non-executive Chairman of EIB, said:

'The economic outlook for South East Europe and Bulgaria in particular is anything but encouraging and we remain very concerned at its impact on the value of EIB's holdings and loan obligations. We are making progress with our non-core asset disposal programme to generate funds to meet debt obligations and we are hopeful that, even in this severe economic downturn, we shall be able to reduce debt in certain subsidiaries to sustainable levels as well as to protect the value of our core holdings'.

For further information please contact:

Equest Investments Balkans Limited

Petri Karjalainen
Roger de Bazelaire

Naomi Kora

Tel: + 44 20 7240 7600

Collins Stewart Europe Limited (Nomad)

Hugh Field

Adam Cowen

Tel: +44 20 7523 8350

KBC Peel Hunt Limited (Broker)

Capel Irwin

Tel: +44 20 7418 8900

Financial Dynamics (PR adviser)

Ed Gascoigne-Pees
Nick Henderson

David Cranmer

Tel: +44 20 7269 7132

Copies of the report and accounts are being posted to shareholders later today and may be downloaded from the Company's website www.equestinvestmentsbalkans.com.

Important Notice

Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser and broker to the Company and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Collins Stewart Europe Limited nor for providing advice in connection any other matter referred to herein

CHAIRMAN'S STATEMENT

Overview

The operating climate in the Balkan region for EIB's companies and their underlying assets is extremely challenging and the current economic crisis has had a notable impact on our operations and investments in retail, financial services and infrastructure as well as in land and property development. In particular our retail companies, including TechnomarketDomo, the market leader in the Balkan region in electronics retail, and Avto Union, a Bulgarian wholesaler and distributor of automobiles and automotive products and services, have felt the negative impact of the economic crisis. As a result, EIB's investment in Avto Union was sold after the year end and the bank facilities of TechnomarketDomo were partly refinanced.

As announced on 16 July 2009 EIB renegotiated TechnomarketDomo's debt facilities with its bankers, Raiffeisen Zentralbank Österreich AG ('RZB'). The Board of EIB held lengthy discussions both internally and with RZB concerning an undertaking given by EIB's subsidiary, Axis Retail, to facilitate a prepayment of up to Euro 40 million of the Refinancing Loans to RZB and the consequences of a failure to meet it. Rather than being forced to cede control of TMD to RZB, and the likely loss to EIB of all of TMD's value, the Board took the decision that it was in EIB shareholders' best interests for the Company to provide security over other assets in the EIB Group in order to allow the Company further time to realise assets and refinance TMD and thereby seek to retain control and protect the value of its investment in TMD. The refinancing arrangements included a partial prepayment by TMD of Euro 20.0 million under the debt facilities, partially financed by a new loan from a Bulgarian bank, and the provision of a letter of guarantee by Citibank to TMD's lenders (thereby securing payment of a further Euro 20.0 million to the lenders no later than 31 December 2009). The provision of the new facility and the guarantee was facilitated by the Company's 33.3% shareholder, the State General Reserve Fund of the Sultanate of Oman ('SGRF'), to whom, in return, guarantees and security have been given by EIB.

Our property holdings have also been adversely affected and EIB has subsequently discontinued most of its development activities and has sold certain properties and related projects. EIB also sold its remaining shareholding in Uniqa AD after the year end.

Quite separately from the worsening economic climate and as previously announced, the Company encountered significant problems at Novera, its waste management investment, during the year, which culminated in the cancellation after the yearend of Novera's waste management licenses by the Sofia Municipality. EIB does not consider the termination as either lawful or in any other way justified and is now reviewing its options in the matter.

Strategy

In the latter part of 2008 and more recently under the new Board, the Company has undertaken a thorough review of its strategy and has refocused its resources on two core holdings; namely TechnomarketDomo (including the Technomarket branded operations in the Former Yugoslavian Region) and the large scale Borovets mountain resort development project. Simultaneously, the Company has been actively pursuing the disposal of its non-core assets in order to release funds to facilitate, primarily, the reorganisation of the TechnomarketDomo Group's debt facilities.

As part of the strategic review, the Company has also examined its operating costs with a view to their reduction and to improving efficiency. In 2008 EIB prepared a plan for simplifying its holding structure by liquidating and merging BVI and Dutch NV / BV holding companies. This plan will continue to be implemented throughout 2009 resulting in associated cost savings. It is the intention not only to continue the implementation of this plan but also to enhance it by way of even greater simplification.

In light of this review, the Board is now refocused on its key objectives of stabilising and securing the business within its core operations and recovering asset value. Further disposals of non-core assets will be required during the remainder of 2009 to meet loan repayments due by the year end, particularly in respect to TechnomarketDomo and Immofinance development projects. Recovering asset value is largely dependent on an improved economic climate in South East Europe and especially Bulgaria, the expectation being that this is unlikely to occur much before 2011.

Results

In line with the change from an externally managed private equity fund structure to an internally managed holding company structure, approved by shareholders at a meeting held on 25 April 2008, EIB has been required to prepare its consolidated financial statements for the first time in accordance with International Financial Reporting Standards ('IFRS').

Also as a result of its internalisation, the Company's shares were de-listed from trading on the Irish Stock Exchange with effect from 17 June 2008.

In the twelve months to 31 December 2008, the Company had consolidated revenue of Euro 649.3 million (2007: Euro 483.1 million) and made a pre tax loss of Euro 127.0 million (31 December 2007: pre-tax profit Euro 86.7 million), basic loss per share including both continuing and discontinuing operations of Euro 7.75 (31 December 2007: earnings per share Euro 4.35).

NAV under IFRS decreased 47.6% to Euro 8.74 per share from Euro 16.68 at 31 December 2007.

Total assets of the Company were Euro 569.4 million (31 December 2007: Euro 661.6 million), and total liabilities of Euro 409.7 million (31 December 2007: Euro 372.7 million).

Financing

While the Board is confident that EIB has the resources to meet its obligations as they fall due, it is also cognisant that in the current economic climate the Company will be reliant, for this purpose, on making significant asset disposals in line with EIB's redefined business strategy. The challenging market conditions may have an impact on our planned disposals in terms of realised prices and timing.

It follows that on an asset by asset basis there are circumstances in which defaults could potentially arise. Working with our lenders in this environment is essential and this is no more so than in the case of the new TechnomarketDomo facilities referred to below which require repayment or refinancing by the end of 2009, as well as in respect of certain debt obligations of Immofinance's development projects.

Emphasis of Matter

The independent auditors report highlights the issue of going concern. The issue is associated with the refinancing of TechnomarketDomo NV's loan with Raiffeisen Zentralbank Osterreich AG, as well as the Group's commitment to concentrate on the non core asset disposal programme, without adjustments having been made in the accounts to reflect possible timing and pricing impacts in the current economic climate. Shareholder's attention should be drawn to the auditor's report, and note that their report is not qualified in this respect.

Changes in Non-executive Chairman and Directors

Mr. Kari Haataja and Mr. George Krumov were appointed to the Board on 23 June 2008, and Mr. George Krumov subsequently resigned on 3 November 2008. Mr. James Ede-Golightly and Mr. Kieron O'Rourke resigned with effect from 17 October 2008 and 4 February 2009 respectively. On 25 February 2009, the Company appointed to the Board of Directors Mr. Warith Al-Kharusi, Mr. Faisal Al-Riyami, Mr. Kalim Aziz and Mr. Guido Brera, with Mr. George Krumov being re-appointed on the same day. Mr. Ian Schmiegelow was appointed Non-executive Chairman of the Company, replacing Mr. John Carrington, on 31 March 2009.

The Board would like to thank all these former Directors for their support and for their contribution to the Company's development.

Outlook

The backdrop to the recent strategy review which I have outlined is the uncertain outlook, at least in the near term, for the economies in South East Europe and Bulgaria in particular. Based on our steady progress with the non-core asset disposal programme, we remain hopeful that, even in this severe economic downturn, we will be able to reduce debt in select subsidiaries to sustainable levels and protect the value of our core holdings.

The Board and EIB's management are committing significant time and effort in order to secure continued operations for EIB companies with an aim of protecting the value of EIB's assets for all shareholders.

Ian Schmiegelow

Non-executive Chairman
Equest Investments Balkans Limited

17 August 2009

MANAGEMENT REVIEW

While the global economic crisis was slow to reach the South East European region, its impact was felt heavily in the last quarter of 2008 and more so in 2009. Our largest holdings are located in Bulgaria and the country's GDP, according to the IMF, has been revised from previous growth estimates of 3.5% for 2009 to a decrease of 3.5% in 2009. The IMF forecast for Bulgarian GDP in 2010 is currently negative 1.00%. In the consumer growth driven industries including retail, insurance and property development, this has resulted in a significant drop in retail sales, varying from 20% to 40% compared with previous years. Land and property valuations have suffered equally as property development activity has ground to a halt amidst a lack of available financing from the banking market. We expect that the market conditions will remain challenging for 2009 and we are focusing on asset disposals and deleveraging our holdings, so that we may recover some of the lost value when the economic climate in the region starts to improve.

Operating Result

The Group delivered underlying loss before tax of Euro 8 million (2007: profit of Euro 31.0 million). This is arrived at after adjusting the reported operating (loss)/profit by the following amounts.

	2008	2007
	€ '000	€'000

Operating (loss)/profit	(80,606)	66,763
Add back non-underlying items:
Business impairment charge relating to Novera operations	47,310	-
Operating loss/(profit) of Novera	9,782	(1,487)
Termination payment to former investment manager	18,487	-
Gain on the part disposal of Uniqa	(2,960)	(16,352)
Gain on deemed disposal of Borovets	-	(17,881)

Underlying operating (loss)/profit	(7,987)	31,043

Review of EIB Core Holdings

Retail and Wholesale

TechnomarketDomo

75% HOLDING AS AT 31 DECEMBER 2008

TechnomarketDomo Group BV (TMD) is the Dutch parent company for the Company's investments in the retail electronics sector in South East Europe, which includes 100% of the Bulgarian Technomarket retail and wholesale operations and 75% of the Romanian Domo retail operations, as at year ended 31 December 2008.

TMD is the largest player in the sector in the South East European region with a consolidated turnover in 2008 of Euro 621.5 million (2007: Euro 444.3 million), and profit before tax of Euro 840,000 (2007: Euro 28.6 million).

TMD operates a dual brand strategy. Large format stores operate in both Bulgaria and Romania under the Technomarket brand and smaller stores under the Domo brand. At the end of the year the TMD network consisted of 215 stores.

In Bulgaria, TMD's retail market share amounted to 44% making it the number one retailer of electronics and other household electrical goods in 2008, while market share in Romania was 22%, a clear number two position.

The major strategic objective for TMD in 2009 is to complete the integration of the operations of the Technomarket and Domo businesses so as to realise synergies in between the two operations within TMD and to further restructure and refinance TechnomarketDomo's debt facilities.

Post Year End Events

EIB and the founding shareholders of Domo Retail SA agreed on 19 November 2008 on a 'flip up arrangement' whereby the founding shareholders have converted their 25% minority shareholding stake in Domo Retail and an associated put option, into a 13% shareholding in TechnomarketDomo NV, the Dutch based holding company. This transaction was finalised on 31 March 2009. Following this agreement, EIB holds a controlling 61.83% strategic holding in TechnomarketDomo.

As announced on 16 July 2009, EIB has restructured TechnomarketDomo's Euro 65.0 million debt facilities with Raiffeisen Zentralbank Österreich AG ('RZB'). Following discussions between RZB, TMD and Axis, RZB agreed to accept Euro 20.0 million in cash and a bank guarantee from an international bank for the remaining Euro 20.0 million (the 'Citibank Guarantee'). RZB holds security over Axis Retail's holding in TMD. Further details of the debt restructuring are set out in 'Bank Debt' below.

Associates and joint ventures

Technomarket Serbia and Montenegro (Harwood Limited)

23% HOLDING IN HARWOOD AS AT 31 DECEMBER 2008

In May 2007 the Company acquired a 23% stake in the Technomarket branded operations in Serbia, and a 50% stake in the Technomarket branded operations in Montenegro, through Harwood Limited. The company has been established and managed by Technomarket's founder, Nikolay Kitov, who is also an Executive Director of TMD.

In 2008 the consolidated sales of Harwood amounted to Euro 107.0 million (2007: Euro 73.5 million) and a negative EBITDA of Euro 3.2 million (2007: Euro 0.5 million). EIB's investment in Harwood Limited amounts to Euro 12.1 million in shareholder loans and Euro 2.7 million in equity.

Techno-mobile NV

50% HOLDING AS AT 31 DECEMBER 2008

The Company owns a 50% indirect investment in Technomobile Serbia, a chain of stores selling GSM sets, small consumer electronic devices and complimentary services. In 2008 sales amounted to Euro 7.9 million (2007: Euro 3.9 million), through a chain of 63 shops, and a negative EBITDA of Euro 1.7 million (2007: negative Euro 1.9 million).

Borovets

33.5% HOLDING AS AT 31 DECEMBER 2008

In June 2007 EIB acquired a 33.5% indirect investment in Rila Samokov, which owns 1,977,131 sq m of land for development in the large-scale Borovets mountain resort development project. EIB invested Euro 25.9 million in cash, comprising a payment for the equity purchase and a capital contribution into Rila Samokov.

EIB owns 50% of Borovets Invest BV, a holding company, which in turn owns 100% of Borovets Investments EAD, which in turn owns 67% of Rila Samokov. EIB's partner in Borovets Invest BV is the State General Reserve Fund of the Sultanate of Oman ('SGRF'). The other shareholders in Rila Samokov are the Municipality of Samokov (25% shareholding) and Bulgaria's leading construction company Glavbolgarstroy (8% shareholding).

The advisors, including EC Harris (development management), KPMG (leisure and resort analysis, real estate consultancy), Faber Maunsell (infrastructure development), Bates Bulgaria (cost and Bulgarian development consultancy), Mmd (communication strategy) and Denkstatt (environmental consultancy), were appointed to deliver a new business plan which complies with the highest standards of environmental and ecological regulations.

Subsequently, the project has been divided into six sub-projects that can be individually developed, thus lowering the development risk of this large scale Euro 800 million project. The first sub-project comprises the development of the lower Borovets area, which is expected to be started in the current year upon an agreement by all shareholders of an updated development plan adjusted for the current economic conditions. Whilst no major construction works have been started, the project remains debt free.

EIB's 33.5% indirect ownership in the development property owned by Rila Samokov 2004 AD as at 31 December 2008 has been valued at Euro 44.05 million by an independent valuer.

Post Year End Event

As part of the refinancing of TechnomarketDomo post year end, EIB has granted a guarantee to SGRF and a second ranking pledge over EIB's shares in Borovets Investments.

Review of EIB Non-core Holdings

Infrastructure

Novera

94% HOLDING AS AT 31 DECEMBER 2008

EIB acquired the three concession holding companies for waste collection and transportation in Sofia through Novera in May 2007.

In March 2009 Novera and its operating subsidiaries received letters from the Municipality of Sofia informing them that it was terminating with immediate effect the Concession Agreements. As grounds for such termination, the Municipality cited a letter from the local Environmental Inspectorate raising health and safety hazards and claimed 'non-performance' of the Concession Agreements by the Concessionaires. On 31 March 2009 Novera received a notice dated 27 March 2009 from its senior lender to the effect that termination of the Concessions constitutes an event of default under the senior lender facility. Novera also received a notice dated 1 April 2009 from its mezzanine lender that an event of default, according to the mezzanine lender facility, had occurred due to the termination of the concessions.

Novera has now ceased its waste collection operations as the Municipality has contracted other parties to perform these operations. As a consequence, the process of winding up Novera's operations has started.

EIB continues to reject the basis for the Municipality terminating the Concession Agreements and is consulting with its lenders, as well as both its own and its lenders' international and local legal counsel, with a view to seeking redress of the situation.

Novera reported turnover of Euro 24.2 million for the year ended 31 December 2008 and a loss before tax of Euro 13.8 million before an impairment cost of Euro 47.3 million. As a result of the Municipality terminating the Concession Agreements, the business was tested for impairment. The loss reflects the impairment charge of Euro 47.3 million in the year together with expenses related to interest payments on loans for the acquisition of subsidiaries, finance lease agreements for the acquisition of waste collection trucks, and depreciation of assets.

Automotive

Avto Union

80% HOLDING AS AT 31 DECEMBER 2008

As part of its non-core asset disposal programme, EIB sold its 80% holding in Avto Union AD in April 2009.

Avto Union, a Bulgarian wholesaler and distributor of automobiles and automotive products and services, had an approximate 6.7% share of the new car sales market in Bulgaria in 2008. It also sells motorbikes, holds the Avis Rent a Car franchise, and distributes Castrol and BP lubricants. Additionally Avto Union owned the Avto Union Centre building, a 28,000 sq m mixed use show room and office building.

Avto Union reported sales to 31 December 2008 of Euro 68.9 million (2007: Euro 52.1 million) and EBITDA of Euro 2.7 million (2007: Euro 3.1 million).

Post Year End Event

Avto Union operations suffered from a significant drop in sales and Avto Union was not in a position to service the debt associated with the Avto Union Centre, due primarily to the large amount of vacant office space in Sofia. Subsequently, EIB began to actively market this asset in 2008 and completed the sale in April 2009 to Eurohold Automotive Group, the automotive subsidiary of Eurohold Bulgaria Inc, a publicly listed company on the Sofia Stock Exchange.

The total consideration for the sale was Euro 8.0 million, of which Euro 0.8 million was used for payment of overdue interest payments and other operative costs of Avto Union. Euro 5.2 million was received in cash by EIB in June 2009 and a final Euro 2.0 million payment is due, conditional upon an orderly transfer of the operations, no later than 15 December 2009.

Associate

Uniqa AD (Bulgaria)

37.71% HOLDING AS AT 31 DECEMBER 2008

EIB sold the residue of its 37.71% stake in Uniqa Bulgaria in June 2009 to Uniqa International, Austria's largest insurance company, under a pre-agreed arrangement whereby Uniqa Insurance would purchase all remaining EIB shares in the Company by the year 2010.

The sale of the stake was brought forward from 2010 as part of EIB's non-core asset disposal programme and in order to secure EIB's planned forward share sales proceeds.

Uniqa Bulgaria, which has both life and non-life operations, is the fifth largest insurance company in Bulgaria. Set up as a private company in 1994, it has been built up to more than 100 branches across the country and it is now ranked 3rd in life insurance and 7th in non-life insurance (Source: Bulgarian Financial Supervisory Commission).

Further growth was achieved in 2008 in both life and non-life business, with premiums growing by 21.36% and 5.72% respectively. Overall, gross premium income was up by 13.3% to Euro 68.4 million in 2008 (2007: Euro 60.5 million) with reported operating profit of Euro 3.3 million in 2008 (2007: Euro 1.7 million).

Post Year End Event

EIB sold its remaining holding in Uniqa AD in two tranches between June and July 2009 to Uniqa International for an aggregate consideration of Euro 23.1 million. The first sale was for 21.19% of the shares in Uniqa AD, with proceeds used for repayment of a Serdika related debt (discussed below) to Uniqa Real Estate, and a second sale of 16.52% of the shares in Uniqa AD for cash.

Property Development

Pelican Retail Holdings

100% HOLDING AS AT 31 DECEMBER 2008

Pelican is a developer and owner of five sites that are to be redeveloped for commercial use and let to tenants upon completion. Four of the sites are located in the centre and densely populated area of Sofia and were formerly used as cinemas, whilst the fifth is a former car factory located by the entrance to Varna, Bulgaria's second city. All Pelican properties are included in the non-core asset disposal programme and are being prepared for disposal.

1. Serdika is a 26,300 sq m mixed office and retail scheme with underground parking for 200 cars adjacent to the Vasil Levski monument in the centre of Sofia. The development is being undertaken jointly between EIB and Equest Balkan Properties plc ('EBP') and is currently marketed for sale following non completion of a planned sale to Uniqa Real Estate ('Uniqa RE').

Uniqa RE provided Pelican with a Euro 15.0 million loan as part of the planned sale process, with loan proceeds to be distributed between EIB and EBP in accordance with the respective ownership in the project.

Post Year End Event

EIB repaid Uniqa RE's Euro 15.0 million loan in relation to the planned sale of Serdika to Uniqa RE on 3 June 2009. The Company has signed an agreement with EBP for the re-payment of the loan payable to EIB, of which EBP has re-paid an initial Euro 4.25 million, and agreed upon the ownership split of the asset to be 80:20 to EBP and EIB respectively, as well as the strategy for the joint ongoing disposal of the asset.

2. Rodacar is a former factory in Varna with a built up area of 12,300 sq m. A detailed urban plan for the construction of approximately 85,000 sq m was approved in January 2008. EIB is in detailed negotiations with an institutional buyer on the Rodacar property and is expecting completion of a sale in 2009.

EIB's investment in Pelican as at 31 December 2008 has been valued at Euro 23.1 million by an independent valuer. Pelican's development portfolio is currently debt free.

Immofinance AD

100% HOLDING AS AT 31 DECEMBER 2008

Immofinance is a residential property development company focusing on first and second homes in Bulgaria. Immofinance development projects are currently in the non-core asset disposal programme, and the Company is only seeking to complete the late stage developments in Sozopol and Banya, subject to successful agreements with the banks providing the construction debt for these projects.

The Immofinance portfolio consists of land holdings and development projects as listed below.

1. Sozopolis is a complex of second home properties being constructed in two phases, which will consist of apartments, restaurants, a spa centre and a supermarket on the Black Sea coast. Construction started in November 2007 and the first phase, comprising 111 second home apartments, is expected to complete in Q3 2009. The gross floor area for Immofinance in the project is projected at 41,715 sq m, of which 35,646 sq m is for residential apartments and 6,068 sq m is for the spa area. The first phase of the project has been fully launched for sale and active marketing in Bulgaria, continental Europe and Russia.

The project has been financed by a Euro 8.2 million equity investment from EIB and a Euro 38.0 construction loan from Alpha Bank. The current drawdown on the construction loan is Euro 27.3 million (of which Euro 1.5 million has been repaid) and a Euro 5 million VAT facility (of which Euro 1.2 million has been repaid), and the Company is currently in negotiations with the bank on a further debt draw down in order to enable a staged completion of the project and deleveraging of the project by further sales of the residential units. EIB's stated aim is to repay the construction debt from the sales proceeds as well as seeking to recover its Euro 8.6 million equity investment in the project.

2. Banya Spa & Wellness Resort, a complex of residential apartments, hotel, spa and sports facilities located in the Bulgarian Pirin Mountains, started in September 2006. The gross floor area for Immofinance in the project is 18,924 sq m of which 12,029 sq m is for residential apartments and 6,895 sq m is for the hotel and spa.

The project has been financed by a Euro 7.5 million equity investment from EIB and a Euro 10.5 million construction loan from DSK Bank (Bulgaria). The loan is currently in arrears and Immofinance is in negotiations with the bank on available options, including the rental of Banya Spa & Wellness Resort to a tour operator, provided that an agreement on the funding of the completion of the project is reached. The project is expected to be completed six months after funding is received. Immofinance's partner in the project is the Municipality of Razlog which holds a 33% equity interest in the Banya Spa & Wellness project.

3. Boyana Park is a modern gated community in Sofia which will consist of functional apartments, sports facilities, a community centre and retail premises. Immofinance sold 70% of the project in February 2008 to a Greek investor. Construction is expected to commence in 2009. The gross floor area is projected at 42,500 sq m, of which 26,438 sq m is for residential apartments and 3,490 sq m is for commercial use.

Post Year End Event

EIB sold its remaining 30% holding in Boyana Park in June 2009 for Euro 0.6 million in cash.

4. Boyana Diplomatic Club is a land plot adjacent to the Boyana Diplomatic Club in Sofia for high end condominium apartments, with a total gross floor area projected at approximately 5,000 sq m. EIB is actively marketing this asset in 2009 and is in detailed negotiations with select buyers.

5. Kavarna Blue Lagoon is a land plot for a vacation complex for second homebuyers by the Black Sea, in which Immofinance is a 50% owner of the development. Immofinance is in the process of disposing of the asset to its joint venture partner and has recouped some of its initial investment of Euro 3.2 million, with a remaining amount expected to be recovered during 2009.

Additionally, Immofinance has completed the development of the Embassy Suites residential development in Sofia and has just three unencumbered apartments totalling 830 sq m that are in the process of sale. The Company has also decided to discontinue the development of Banya II, an adjacent land plot concession to the Banya Spa & Wellness development.

EIB's investment in Immofinance as at 31 December 2008 has been valued at Euro 21.7 million by an independent valuer.

Castle Golf Properties

100% HOLDING AS AT 31 DECEMBER 2008

Castle Golf Properties is a land holding company which has acquired 127 hectares of unconsolidated agricultural farming land in the Ilfov area in Romania.

EIB's investment in Castle Golf Properties as at 31 December 2008 has been valued at Euro 1.3 million.

Post Year End Event

EIB sold its holding in Castle Golf to an Israeli investment group in June 2009 for Euro 0.8 million paid in cash.

Valuations

EIB conducts regular valuations of certain assets and properties to provide reference valuations for the operating companies. CB Richard Ellis has been engaged to provide reference valuations for EIB's property holdings. The valuations provided by these independent valuers provide a basis for the valuation of investment properties.

Bank debt

A table of the principle bank debt of EIB and its subsidiaries as at 31 December 2008 is set out below. A detailed analysis of loans including related party debt is included in note 25 on Loans and Borrowings.

Subsidiary	Currency	Nominal interest rate	Year of maturity	Carrying amount €'000 2008

Recourse Bank Financing
Novera AD1	Euro	1.75%-2.75%	2014	12,412
TechnomarketDomo2	Euro	Euribor + 2.5%-3.5%	2011	20,000

Non-recourse Bank Financing
Immofinance EAD	BGN	Euribor + 2%	2013	20,010
Immofinance EAD	BGN	Euribor + 2.95%	2013	4,442
Immofinance EAD	BGN	Euribor + 2%	2014	1,386
Immofinance EAD	BGN	Euribor + 2%	2014	5,480
TechnomarketDomo2	Euro	Euribor + 2.5%-3.5%	2011	40,959
KKE (Technomarket Bulgaria)3	Euro	Euribor + 2%	2013	3,422
KKE (Technomarket Bulgaria)3	Euro	Euribor + 2%	2013	16,256
Novera AD	Euro	Mezzanine 7% + PIC 5%	2013	21,816

1 post period end, Novera's outstanding balance of Euro 12.97 million under the senior loan to Investkredit Bank AG has been settled by, and the loan transferred to, a new senior lender

2 reflects 100% debt amount to TMD and KKE (Technomarket Bulgaria), EIB's attributable ownership was 75% of TMD as at 31 December 2008. Post period end Euro 20 million of the Euro 61 million debt was refinanced and is now recourse to EIB

3 reflects 100% debt amount to TMD and KKE (Technomarket Bulgaria), EIB's attributable ownership was 75% of TMD as at 31 December 2008

Novera Facilities

EIB's holding in Novera was acquired with Euro 20.0 million in mezzanine debt and Euro 15.0 million in senior debt, both of which are in default as a result of the Sofia Municipality cancelling the waste concessions of Novera. The Euro 15.0 million senior debt has been repaid to Investkredit Bank since the year end.

TechnomarketDomo Facilities

The largest subsidiary debt is in TechnomarketDomo, resulting from active use of debt in the acquisition of this holding. The debt facility of Euro 65 million with Raiffeisen Zentralbank Österreich AG ('RZB'), as described below, is currently being restructured.

In December 2008, Axis Retail, TMD and its operating subsidiaries, K & K Electronics EOOD ('KKE') and Domo Retail SA, entered into agreements with RZB pursuant to which TMD assumed Euro 65.0 million of the loans provided to other EIB group companies for the purposes of acquiring holdings in TMD (the 'Refinancing Loans'). RZB also provided a Euro 25.0 million loan facility to KKE (the 'KKE Loan' together with the Refinancing Loans, the 'RZB Loans'). Security for the RZB Loans includes a pledge by Axis Retail of all of its shares in TMD to RZB. Axis Retail and Lyra also gave an undertaking to RZB (the 'Undertaking') to facilitate a prepayment of up to Euro 40.0 million of the Refinancing Loans.

Following discussions between RZB, TMD and Axis, RZB agreed to accept Euro 20.0 million in cash and a bank guarantee from an international bank for the remaining Euro 20.0 million. RZB holds security over Axis Retail's holding in TMD (the 'Citibank Guarantee').

The repayment of Euro 20.0 million by TMD was financed by an Euro 8.0 million advance by EIB to TMD, by way of a shareholder loan, which TMD used to prepay part of the Refinancing Loans and a Euro 12.0 million bridge facility to EIB repayable within 12 months (the 'Bridge Loan') by a Bulgarian bank (the 'Bank'). The Bridge Loan was drawn down on 15 July 2009 and advanced by EIB to TMD by way of a shareholder loan so as to enable TMD to prepay the other Euro 12.0 million of the Refinancing Loans required to be provided to RZB by 15 July 2009.

EIB and the State General Reserve Fund of the Sultanate of Oman ('SGRF') each hold 50% shareholdings in Borovets Investments EAD. As security under the Bridge Loan, EIB and SGRF each agreed to pledge their 50% shareholdings in Borovets Investments EAD in favour of the Bank. Borovets Investments EAD indirectly owns a 67% shareholding in a holding company which owns 1,977,131 sq m of land for development in the large scale Borovets (Bulgaria) mountain resort development project (the 'Borovets Project').

In consideration for agreeing to grant a pledge over its share in the Borovets Project in favour of the Bank and to protect SGRF from potential losses in the event that the Bank takes enforcement action under the Bridge Loan and as security in relation to the bank guarantee mentioned below, EIB has granted a guarantee to SGRF and a second ranking pledge over EIB's shares in Borovets Investments EAD.

The Citibank Guarantee provides that, if TMD is unable to prepay another Euro 20.0 of the Refinancing Loans by 31 December 2009, RZB will be entitled to draw Euro 20.0 million under the Citibank Guarantee.

As part of these arrangements, SGRF agreed to indemnify Citibank for losses to Citibank under the Citibank Guarantee and is providing to Citibank the collateral required by Citibank to secure SGRF's indemnity obligations. EIB has agreed to indemnity SGRF against any expenses or losses in connection with the Citibank Guarantee and EIB has granted a fixed and floating charge in favour of SGRF over all of EIB's assets and undertaking (the 'SGRF Security'). The SGRF Security includes a charge over EIB's shares in Axis Retail, as well as over EIB's interests (or the proceeds thereof) in various property holdings including Rodacar, Serdika, Axis-S Retail NV and Immofinance. As from 31 December 2010, SGRF will have the right to exchange any unpaid indebtedness or liability of EIB to SGRF for EIB's indirect 61.8% interest in TMD unless (i) certain conditions related to TMD's business integration and further management appointments at TMD are not satisfied by EIB by 31 December 2009, in which case, SGRF's exchange rights will be exercisable after 31 December 2009 or (ii) an event of default occurs under any of the agreements with SGRF, in which case, SGRF's exchange rights will become exercisable immediately. For the purposes of the exchange, the value of 100% of TMD's shares has been fixed at Euro 20.0 million.

TMD and RZB have also agreed to implement amendments to the terms of the RZB Loans on the basis of an indicative term sheet. The detailed terms of the revised facilities are still under discussion and when agreed will be documented in definitive loan documentation.

EIB is in active negotiations with the lending banks for all remaining debt in subsidiaries under EIB majority control, including Immofinance and Novera.

Non-core Asset Disposal Programme

As more fully described above, since the year end EIB has sold a number of non-core holdings including its remaining holding in Uniqa AD in two tranches to Uniqa International for an aggregate consideration of Euro 23.1 million, its 80% stake in Avto Union, its automotive import and distribution operation, to Eurohold for Euro 8.0 million, and various land and properties for an aggregate consideration of Euro 1.4 million.

EIB is in discussions with potential purchasers for a number of its remaining property assets. The proceeds from these and other disposals will be used to help part refinance the TechnomarketDomo facilities of Euro 32.0 million which fall due prior to 31 December 2009 as referred to above.

The impact of the current economic crisis in the South East European region continues to have a negative impact on EIB and our subsidiaries and the Company is not expecting a recovery in these economies much before 2011. As a result, the challenging market conditions may also have an impact on our capabilities to complete our expected disposals in accordance with planned prices and timing.

Cost Savings

The Company is expecting to achieve cash cost savings in its holding company administrative costs as a result of its non-core asset disposal programme and the planned reduction in the number of intermediate BVI, NV and BV companies. Simultaneously, this will significantly simplify our corporate structure and enable us to focus on our remaining core holdings.

The Company has also embarked on a cost savings programme in our core holdings in order to maximise operational efficiency in TechnomarketDomo and optimise the timing and investment in our Borovets development project.

Hedging

The Company and its subsidiaries maintain their existing cash balances where possible in Euro; however, the debt of the subsidiaries is largely denominated in Euro and these debts have not been hedged to local currencies. The Bulgarian Leva is pegged to the Euro and the Company expects that this peg should be maintained at the current peg level, whereas the Romanian Lei is subject to significant fluctuations.

Financial Statements

Refer to the attached financial statements and related comments for details on the major account movements since 31 December 2008.

Copies of the interim accounts will be available from Equest Investments Balkans Limited c/o Equest Partners Limited, Manfield House, 1 Southampton Street, London WC2R 0LR and can be downloaded from the Company's website www.equestinvestmentsbalkans.com.

EIB Management

17 August 2009

DIRECTOR'S REPORT

The Directors of the Company ('the Directors') present their report and financial statements for the year ended 31 December 2008.

Principal Activity, Incorporation and Business Review

The Company is an investment holding company, incorporated on 10 December 2003 under the laws of the British Virgin Islands. The Company changed its name from Equest Investments Bulgaria Limited to Equest Investments Balkans Limited on 20 December 2006.

The Company invests in South Eastern Europe, primarily Bulgaria, Serbia and Romania. Its investment objectives are to invest directly or indirectly in developing enterprises organised or operating in Bulgaria, Romania, Albania, Croatia, Macedonia, Kosovo, the Republic of Montenegro, the Republic of Serbia, Bosnia and Herzegovina, Slovenia, Ukraine and Turkey.

Reviews of operations and business developments are reported in the chairman's statement and management review and within the details of the financial statements. The financial statements set out the financial position of the group.

Results and Dividends

No dividend has been declared for the year ended 31 December 2008.

Governance

The Directors recognise the value of the Principles of Good Governance and Code of Best Practice as set out in the Combined Code and, although the Company is not obliged by the AIM rules to do so, they intend, where appropriate, to comply with the main provisions of the Combined Code to the relevant extent, taking into account the size of the Company and the nature of its business.

Responsibilities of the Board

The Board of Directors is responsible for the determination of the strategy of the Company and for overall supervision of the objectives that have been set. The Board is also responsible for the Company's day-to-day operations and in order to fulfil these obligations, the Board has delegated operations to the Executive Directors and management of the Company.

At each of the regular Board meetings held, the financial performance of the Company is reviewed. In addition, the members of the Board receive regular reports from the management.

Directors and Company Secretary

The current Directors are as stated below. The Directors served throughout the year unless otherwise stated.

The Company's Secretary during the 2008 financial year was Fastnet Ireland Limited.

The Board of the Company comprises six Non-executive Directors and three Executive Directors. Of the six Non-executive Directors, two are considered to be independent. Brief biographical details of the members of the Board are set out below:

Ian Schmiegelow (Independent Non-executive Chairman)

Mr. Schmiegelow (66), following Cambridge University and practice in London as a barrister, spent sixteen years with Hambros Bank where he became the Executive Director responsible for its international banking and bond issuance activity. Thereafter, as a Senior Vice President of First National Bank of Chicago, he directed a review of its international activities and was Chairman of the management committee responsible for the bank's operations in the UK, Europe, Middle East and Africa. Mr. Schmiegelow is Chairman and Chief Executive of Hamilton Lunn which he set up, together with his then business partner, in 1988 as a regulated corporate advisory firm. Hamilton Lunn now provides corporate finance and property investment advisory and management services to its clients. His other current business activities include various Non-executive Directorships.

Warith Al-Kharusi (Non-executive Director)

Mr. Al-Kharusi (56), a resident of Oman, joined the State General Reserve Fund of the Sultanate of Oman ('SGRF') in 1985 as the Director General and is now the Chief Executive Officer of the SGRF. He holds a Diploma in Business Administration and has significant experience in investment management.

Faisal Al-Riyami (Non-executive Director)

Mr. Al-Riyami (33), a resident of Oman, joined SGRF in June 2007 as the Section Head of Direct Investments of the SGRF. Mr. Al-Riyami was previously the Finance Director of Railtech Solutions Limited, a company located in Portsmouth in the UK specializing in IT software for principally road and rail networks in the transportation sector, Financial Controller of Nawras Telecom and an Internal Auditor at Bank Muscat. Mr. Al-Riyami holds an MBA (Finance) from the University of Leicester and is a member of the Chartered Financial Analyst Institute and the Chartered Alternative Investment Analyst Association.

Kalim Aziz (Non-executive Director)

Mr. Aziz (42) joined Kairos in January 2006 and is the Co-fund Manager of the Kairos Eurasian Fund with Guido Brera, and is the primary analyst at Kairos for stocks in the Eurasian markets. Before joining Kairos, he was Head of Equity research for the EMEA Region at UniCredit Banca Mobiliare in London. Previously Mr. Aziz has specialised in Telecoms research and he held a number of senior research positions at securities houses in London and Karachi. Mr. Aziz holds a Masters in Business Administration from the University of Karachi.

Guido Brera (Non-executive Director)

Mr. Brera (39) is a Co-founder of Kairos. He graduated from Universita La Sapienza, Rome and qualified as a Dottore Commercialista (the equivalent of a chartered accountant) in 1993. In 1994, he joined Fineco SIM, concentrating on relative value trades, calendar spreads, stock index futures arbitrages and the establishment of structured products for institutional clients. In 1996, he joined Cisalpina Gestioni as manager of the Cisalpina Bilanciato and Cisalpina Indice funds. In 1997, he joined Giubergia Warburg as Director, Head of Proprietary Trading, leaving to establish Kairos in early 1999. Mr. Brera has been Co-manager of Kairos Fund Limited since its inception in June 1999.

Kari Haataja (Executive Director)

Mr. Haataja (45) has more than 19 years experience working in private equity in Central and Eastern Europe, Russia and the former Commonwealth of Independent States. Prior to co-founding Equest Partners Limited, Mr. Haataja worked for over six years with the European Bank for Reconstruction and Development and its related private equity funds, where he was responsible for over Euro 500.0 million in investments into private equity funds in Russia, the Commonwealth of Independent States and Central and Eastern Europe. Prior to this, Mr. Haataja worked for a number of years, and in various locations, with PricewaterhouseCoopers in management consulting, private equity and financial advisory roles.

Robin James (Independent Non-executive Director)

Mr. James (64) is based in the Isle of Man and, until he retired in June 2005, was CEO of the banking and financial services group, Singer & Friedlander (Isle of Man) Holdings Limited. Mr. James is currently licensed by the Isle of Man Financial Supervision Commission to provide Corporate and Trust Services under section 7 of the Financial Services Act 2008 and is a Non-executive Director of a diverse number of companies including five listed companies. Mr. James spent nine years with Kleinwort Benson Limited in the UK and South Africa. He is also Chairman of the Company's Audit Committee.

Petri Karjalainen (Executive Director)

Mr. Karjalainen (47) joined the Board in December 2006. He has more than 19 years of experience in investment management and investment banking based in the City of London, having worked for ten years with Williams de Broe plc, a member of ING Group, prior to co-founding Equest Partners Limited. At Williams de Broe he built and managed a team for Central & Eastern European investment management as well as investment banking and was the founder and Managing Director of Williams de Broe Bankers Limited, the firm's investment management subsidiary, with a focus on Russia and the Baltic markets.

George Krumov (Executive Director)

Mr. Krumov (46) has more than 15 years of experience in executive positions in multinational companies operating in Bulgaria and the region such as Cable & Wireless (UK), Burmah Castrol (UK) and British Petroleum (UK). Mr. Krumov is an owner of a diversified group of companies operating in Bulgaria, one of which is Electron Progress AD, one of the country's largest suppliers in the defence communication sector, and is a Co-founder of SEE Capital Management, a joint venture with SGRF.

Interests of the Directors in Contracts with the Company

Any interests the Directors, or companies that they are connected to, had during the year under review in relation to contracts for services with the Company other than as Directors are set out in note 34 to the financial statements.

Directors' service contracts

The following Directors have entered into letters of appointment with the Company, details of which are set out below.


Name	Title	Annual remuneration	Appointed	Resigned

Ian Schmiegelow	Non-executive Chairman	€40,000	31 March 2009
Warith Al-Kharusi	Non-executive Director	€30,000	25 February 2009
Faisal Al-Riyami	Non-executive Director	€30,000	25 February 2009
Kalim Aziz	Non-executive Director	N.A.1	25 February 2009
Guido Brera	Non-executive Director	N.A.1	25 February 2009
John Carrington	Non-executive Chairman	€40,000	05 December 2006	31 March 2009
James Ede-Golightly	Non-executive Director	€30,000	01 May 2007	17 October 2008
Kari Haataja	Executive Director	N.A.1	23 June 2008
Robin James	Non-executive Director	€30,000	01 May 2007
Petri Karjalainen	Executive Director	N.A.1	05 December 2006
George Krumov	Executive Director	N.A.1	23 June 2008	03 November 2008
			25 February 2009
Kieron O'Rourke	Non-executive Director	€30,000	23 February 2004	04 February 2009

1 Directors have waived their right to be paid a fee in consideration for acting as a Non-executive or

Executive Director of the Company

Directors' Interests in Shares of the Company

Save as disclosed below, as at 10 July 2009, none of the Directors nor any members of their respective immediate families nor any person connected with the Directors had any interest, whether beneficial or non-beneficial, in any share capital of the Company.

Name	Number of ordinary shares	Percentage shareholding

Mr. Kari Haataja	597,969	3.3
Mr. Petri Karjalainen	811,691	4.4
Mr. George Krumov	579,517	3.2

In February 2009, the Company appointed to the Board of Directors Mr. Warith Al-Kharusi, Mr. Faisal Al-Riyami, Mr. Kalim Aziz and Mr. Guido Brera, as Non-executive Directors.

Mr. Warith Al-Kharusi is the Chief Executive Officer and Mr. Faisal Al-Riyami Co-fund Manager of the State General Reserve Fund of the Sultanate of Oman, which holds 6,084,834 ordinary shares (33.31%) in the Company (as at 10 July 2009), and Mr. Kalim Aziz is a Fund Manager and Mr. Guido Brera a Co-founder of Kairos Asset Management, which holds 3,743,866 ordinary shares (20.50%) in the Company (as at 10 July 2009).

Share Capital

As at the date of this report, the Company has 18,265,890 ordinary shares of no par value in issue. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange plc in pounds sterling. However the Company's reporting currency is the Euro to reflect the underlying assets and liabilities in the Balkan region.

Substantial Shareholdings

In so far as is known to the Company at 10 July 2009 each of the following persons has, directly or indirectly, an interest in 3% or more of the issued ordinary shares in the capital of the Company.


	Name	Voting rights in the Company (%)

	State General Reserve Fund of the Sultanate of Oman	33.3
	Kairos Investment Management	20.5
	Lazard Asset Management	6.3
	UNIQA Financial Services	5.1
	Mr. Petri Karjalainen	4.4
	Mr. Kari Haataja	3.3
	Mr. George Krumov	3.2

Share Warrants

On 25 April 2008, as part of the reorganisation of the Company's management structure, the Company's shareholders approved the grant of warrants to Equest Capital Limited ('ECL') entitling ECL to purchase 564,925 ordinary shares in the Company. The warrants are exercisable at any time after 1 January 2009 on a condition, inter alia; that the net asset value per ordinary share reported immediately prior to the exercise of the Warrants is not less than the audited net asset value per ordinary share as at 31 December 2007. ECL is owned by Trusts set up by the Executive Directors of EIB, Mr. Kari Haataja, Mr. Petri Karjalainen and Mr. George Krumov, and ECL in turn has transferred the ownership of the warrants equally to its shareholders.

The Company does not operate any employee share option schemes.

Committees

The management committee, which comprises Mr. Warith Al-Kharusi (Chairman), Mr. Faisal Al-Riyami, Mr. Kalim Aziz, Mr. Kari Haataja, Mr. Petri Karjalainen and Mr. George Krumov, has regular monthly or weekly meetings and maintains active participation in the execution of Company strategy and overseeing operative activities together with the management.

The audit committee, which comprises of Mr. Faisal Al-Riyami, Mr. Robin James (Chairman) and Mr. Ian Schmiegelow, meet at least three times each year. The committee monitors the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance. It also reviews regular reports from management and the external auditors on accounting and internal control matters. Where appropriate, the committee monitors the progress of action taken in relation to such matters.

The Directors also monitor and plan performance, remuneration and succession of the Board, either through Board meetings or, if appropriate, through the use of appropriately constituted committees of the Board.

Auditors

A resolution will be submitted to the forthcoming Annual General Meeting of the Company to appoint the auditors of the Company for the ensuing year.

Post Balance Sheet Events

A summary of the significant transactions entered into by the Company and its subsidiaries subsequent to 31 December 2008 is included in note 36 of the financial statements.

Relations with Shareholders

The Company is committed to maintaining an effective dialogue with its shareholders. Shareholders will have the opportunity at the Annual General Meeting of the Company to ask questions about the Company's activities and performance.

Company Website

To provide a portal for investor information and in accordance with the requirements of AIM, the Company maintains a website at: www.equestinvestmentsbalkans.com.

Annual General Meeting

The Directors are proposing a number of ordinary resolutions at the 2009 Annual General Meeting of the Company to be held on 6 October 2009, including a resolution requesting approval of the Company's investment strategy as required under the AIM rules.

On behalf of the Board of Directors

Ian Schmiegelow

Non-executive Chairman

17 August 2009

Statement of Directors' responsibilities in respect of the Annual Report and the financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and Group and of the profit or loss of the Group for that period.

In preparing those financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state that the financial statements comply with International Financial Reporting Standards as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and the group and to enable them to ensure that the financial statements comply with the British Virgin Islands laws and regulations.

They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the company's website.

Legislation in the British Virgin Islands governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

On behalf of the Board of Directors

Ian Schmiegelow

Non-executive Chairman

17 August 2009

AUDITOR'S REPORT

Report of the Independent Auditor to the members of Equest Investment Balkans Limited

We have audited the Group financial statements of Equest Investments Balkans Limited ('EIB'), which comprise the principal accounting policies, the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in shareholders' equity, and notes 1 to 37. These financial statements have been prepared under the accounting policies set out in note 1.4.

This report is made solely to the Company members, as a body, in accordance with the BVI Business Companies Act 2004. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditors

The Company's Directors are responsible for preparing the Annual Report and the Group (consolidated) financial statements in accordance with BVI law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Our responsibility is to audit the Group financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, and whether they have been properly prepared in accordance with the BVI Business Companies Act 2004. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. The information given in the Directors' Report includes that specific information presented in the Chairman's Statement and the Management Review that is cross referred from the Principal Activities and the Business Review section of the Directors' Report.

In addition we report to you, if in our opinion, we have not received all the information and explanations we require for our audit work, or if information specified by law regarding Directors' remuneration and other transactions is not disclosed.

We read the other information contained in the Annual Report and consider whether it is consistent with the audited Group financial statements. The other information comprises only the Chairman's Statement, the Management Review, and the Directors' Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the Group's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Group financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Group financial statements.

Opinion

In our opinion:

the Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union, of the state of the Group's affairs as at 31 December 2008 and of its loss for the year then ended;
the Group financial statements have been prepared in accordance with the BVI Business Companies Act 2004; and
the information given in the Directors' Report is consistent with the financial statements.

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 1.2 and 36 to the financial statements concerning the Group's ability to continue as a going concern.

As explained in notes 1.2 and 36, the Group has refinanced its TechnomarketDomo NV loans with Raiffeisen Zentralbank Osterreich AG. Under the refinancing arrangement the Company is required to pay €20m by 31 December 2009. If it is unable to do so then under the terms of a guarantee, Citibank, N.A. will pay any amounts outstanding. The Company's largest shareholder, the State General Reserve Fund, has committed to finance the Citibank Guarantee of €20m for a period until 31 December 2010. In addition, as discussed in note 1.2, discussions are ongoing in respect of certain debt obligations of Immofinance's development projects.

In addition to this the Group has committed itself to concentrate on its core holdings through a non-core disposal programme which will assist EIB in meeting its obligations as they fall due. A number of assets have now been disposed of post the year-end but the challenging market conditions may have an impact on planned disposals in terms of both realised prices and timing (note 36).

These matters indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Grant Thornton UK LLP

17 August 2009

The maintenance and integrity of the Equest Investment Balkans Limited website is the responsibility of the Directors. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the British Virgin Islands governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Consolidated income statement for the year ended 31 December 2008

	Note	2008	2007
		€'000	€'000
Revenue	3	649,304	483,132
Cost of sales		(530,320)	(397,639)
Gross profit		118,984	85,493

Other income		1,536	6,569
Administration, selling and distribution costs	4	(146,080)	(69,183)
Impairment of assets	5	(53,538)	(1,035)
(Loss)/ gain from fair value adjustment on property assets		(1,176)	10,069
(Loss)/gain on sale of investments	8	(332)	34,850
Operating (loss)/profit		(80,606)	66,763

Finance income	9	3,195	2,465
Finance costs	9	(21,307)	(9,832)
Share of post tax (losses)/gains of associates
and joint ventures	18, 19	(28,288)	27,279
(Loss)/profit before tax		(127,006)	86,675

Taxation	10	(706)	(4,728)
(Loss)/profit from continuing operations		(127,712)	81,947
(Loss)/profit on discontinued operation, net of tax	11	(11,080)	1,026
(Loss)/profit for the year		(138,792)	82,973
Attributable to:
- Equity holders of the parent		(137,980)	75,419
- Minority interest		(812)	7,554
		(138,792)	82,973
Earnings per share for (loss)/ profit attributable to the equity holders of the parent during the year
(basic and diluted)	12
- Continued operations		(7.13)	4.29
- Discontinued operations		(0.62)	0.06
		(7.75)	4.35

The notes are an integral part of these financial statements.

Consolidated statement of changes in equity for the year ended 31 December 2007

	Notes	Share	Available-for-sale	Retained	Foreign exchange		Minority	Total
		capital	reserve	earnings	reserve	Total	interest	equity
		€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance at 1 January 2007	31	242,145	-	(31,703)	-	210,442	11,095	221,537

Changes in equity
Available-for-sale investments
Valuation gains/ (losses)
recognized directly in equity		-	202	-	-	202	-	202
Exchange differences arising on
translation of foreign operations		-	-	-	(3,795)	(3,795)	-	(3,795)
Net income recognized directly
in equity		-	202	-	(3,795)	(3,593)	-	(3,593)

Profit for the year		-	-	75,419	-	75,419	7,554	82,973
Total recognized income and
expense for the year		-	-	75,419	-	75,419	7,554	82,973
Decrease in minority interests
Debt push down into a subsidiary	17	-	-	-	-	-	(7,500)	(7,500)
Additional capital investment in subsidiary		-	-	-	-	-	(1,138)	(1,138)
Purchase of minority interest		-	-	-	-	-	(3,506)	(3,506)
Other		-	-	-	-	-	150	150

Balance at 31 December 2007	31	242,145	202	43,716	(3,795)	282,268	6,655	288,923

Consolidated statement of changes in equity for the year ended 31 December 2008

	Notes	Share	Available for	Warrant	Foreign exchange	Retained		Minority	Total
		capital	sale	reserve	reserve	earnings	Total	interest	equity
		€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance at 31 December 2007	31	242,145	202	-	(3,795)	43,716	282,268	6,655	288,923

Changes in equity for 2008
Available for sale investment valuation loss recognised in equity		-	(65)	-	-	-	(65)	-	(65)
Share of revaluation reserve of an associate		-	-	-	-	-	-	-	-
Deferred tax		-	(14)	-	-	-	(14)	-	(14)
Exchange differences arising on translation		-	-	-	(8,515)	-	(8,515)	(2,918)	(11,433)
Minority interest removed on disposal of subsidiary								(1,805)	(1,805)
Revaluation of shareholder loan						3,289	3,289	1,096	4,385
Other movements		-	-	-	-	33	33	-	33
Net income recognised directly in equity		-	(79)	-	(8,515)	3,322	(5,272)	(3,627)	(8,899)
Profit for the year		-	-	-	-	(137,980)	(137,980)	(812)	(138,792)

Total recognised income and expense for the year		-	-	-	-	(137,980)	(137,980)	(812)	(138,792)
Dividends		-	-	-	-	-	-	-	-
Issue of share capital	31	11,701	-	-	-	-	11,701	-	11,701
Recognition of share based payments		-		6,786	-	-	6,786	-	6,786
Balance at 31 December 2008		253,846	123	6,786	(12,310)	(90,942)	157,503	2,216	159,719

The notes are an integral part of these financial statements.

Consolidated balance sheet at 31 December 2008

	Notes	2008	2007
		€'000	€'000
ASSETS
Non-current assets
Property, plant and equipment	13	32,371	70,372
Investment property	14	11,957	35,558
Goodwill and trademarks	15	115,453	149,727
Other intangible assets	16	1,040	20,327
Investments in equity-accounted associates	18	18,313	16,082
Investments in equity-accounted joint ventures	19	49,404	74,097
Available-for-sale investments	21	-	16
Other receivables	22	19,528	16,225
Deferred tax assets	27	675	287
Total non-current assets		248,741	382,691
Current assets
Property, plant and equipment	13	7,069	-
Inventories	20	185,815	155,578
Trade and other receivables	22	70,374	53,515
Tax receivables		1,907	3,404
Available-for-sale investments	21	246	295
Cash and cash equivalents	23	11,277	66,137
Total current assets		276,688	278,929
Non-current assets classified as held for sale	28	43,989	-
Total assets		569,418	661,620
Liabilities
Non-current liabilities
Other payables	24	-	24,562
Loans and borrowings	25	53,192	97,878
Provisions	26	252	103
Deferred tax liability	27	7,966	10,625
Total non-current liabilities		61,410	133,168
Current liabilities
Trade and other payables	24	158,524	162,993
Loans and borrowings	25	151,402	73,767
Corporation tax liability		955	2,292
Provisions	26	1,433	477
Total current liabilities		312,314	239,529
Liabilities directly associated with non-current assets classified as held for sale	28	35,975	-
Total liabilities		409,699	372,697
TOTAL NET ASSETS		159,719	288,923

	Notes	2008	2007
		€'000	€'000

Capital and reserves attributable to equity holders of the parent

Share capital	31	253,846	242,145
Available-for-sale reserve		123	202
Warrant Reserve		6,786
Revaluation reserve		-	-
Foreign exchange reserve		(12,310)	(3,795)
Retained earnings		(90,942)	43,716
		157,503	282,268

Minority interest		2,216	6,655

TOTAL EQUITY		159,719	288,923

Total equity and liabilities		569,418	661,620

The financial statements were approved and authorised for issue by the Board of Directors on 17 August 2009 and were signed on their behalf by:

Ian Schmiegelow	Roger de Bazelaire	Petri Karjalainen
Non-executive Chairman	Chief Financial Officer	Executive Director

The notes are an integral part of these financial statements.

Consolidated cash flow statement for the year ended 31 December 2008

	Notes	2008	2007
		€'000	€'000
Cash flows from operating activities

(Loss)/ profit for the year		(138,792)	82,973
Adjustments for:
Depreciation	4	12,556	6,212
Amortisation and impairment	4	67,298	3,951
Change in value of non-current assets		1,176	(10,069)
Share based payment charge	32	18,487	-
Share of profit from associates and joint ventures	18,19	28,288	(27,279)
Gain on sale of:
Available-for-sale assets		-	(38)
Subsidiaries		3,235	(18,499)
Associates		(2,960)	(16,352)
Investment property		6,217	-
Gain on cancellation of liability		-	(3,909)
Gain on liquidation of subsidiary		-	-
Gain on sale of property, plant and equipment		(144)	(648)
Net finance expense	9	20,313	8,693
Income tax expense	10	806	4,957

Cash flows from operating activities before
changes in working capital and provisions		16,480	29,992

(Increase)/decrease in trade and other receivables	22	871	18,988
Increase in inventories	20	(44,911)	(16,459)
(Decrease)/increase in trade and other payables	24	8,991	33,060
Cash generated from operations		(18,569)	65,581

Income taxes paid		(4,239)	(9,177)
Interest paid		(22,373)	(8,058)
		(45,181)	48,346
Net cash flows from operating activities carried forward		(45,181)	48,346

	Notes	2008	2007
		€'000	€'000
Cash (outflow)/inflow from operating activities		(45,181)	48,346
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired		(21,272)	(90,373)
Disposal of subsidiary, net of cash disposed		6,519	(482)
Acquisition of joint ventures	19	-	(26,903)
Cash investments in associates	18	-	(4,401)
Disposal of associates	18	1,259	14,363
Purchase of other intangibles	15, 16	(691)	(221)
Sale of other intangibles	15, 16	105	25
Purchase of development property	13	-	(9,680)
Capitalised additions to development property		(10,613)	(11,990)
Sale of development property		2,606	42
Purchase of investment property	16	-	(390)
Sale of investment property		821	534
Purchases of other property, plant and equipment	13	(16,453)	(6,397)
Sale of other property, plant and equipment		2,331	299
Purchases of available-for-sale financial assets	23	(14)	(15)
Sales of available-for-sale financial assets		-	38
Investment in restricted cash		(1,306)	-
Sale of long term cash investment		-	241
Increase in other loans receivable		(17,744)	(24,683)

Net cash (outflow) from investing activities		(54,452)	(159,993)
Cash flows from financing activities
Proceeds from bank borrowings		51,626	59,579
Proceeds from other loans		16,168	16,655
Repayment of other loans		(16,222)	-
Repayment of finance lease creditors		(4,667)	(697)

Net cash inflow from financing activities		46,905	75,537

Net (decrease) in cash and cash equivalents		(52,728)	(36,110)
Cash and cash equivalents at beginning of year		66,137	102,961
Foreign exchange (losses) on cash and cash equivalents		(466)	(714)

Cash and cash equivalents at end of year	23	12,943	66,137

The notes are an integral part of these financial statements.

Statement of accounting policies and notes to financial statement

For the year ended 31 December 2008

1.1 General information

Equest Investment Balkans Ltd, a company incorporated in the British Virgin Islands, ('the Company') and its subsidiaries (together 'the Group') is a conglomerate with a portfolio of retail, infrastructure and property development investments in South East Europe. The Company commenced operations on 14 April 2004. The shares of the Company were first listed on the Irish Stock Exchange on 19 April 2004. On 20 December 2006 the shares of the Company were listed on the AIM Market of the London Stock Exchange (''AIM'). The company delisted from the Irish Stock Exchange on 17 June 2008 as part of the reorganisation of the management of the Company and the transition of the Company from an investment fund to a conglomerate.

1.2 Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), issued by the International Accounting Standards Board ('IASB') as adopted by the European Union.

This is the first time the Group has prepared its financial statements in accordance with IFRS, having previously prepared its financial statements in accordance with United States of America ('US') accounting standards. The transition took place on 1 January 2007. Details of how the transition from US accounting standards to adopt IFRS has affected the Group's reported financial position, financial performance and cash flows are given in note 37. Previously, under US Generally Accepted Accounting Principles ('GAAP') the Group was exempt from preparing consolidated financial statements on the basis that it was an investment fund. Under IFRS the Group has prepared consolidated financial statements.

The financial statements have been prepared on the historical cost basis except for the revaluation of certain non-current assets and financial instruments. The principal accounting policies are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

In assessing the going concern basis of preparation of the consolidated financial statements for the year ended 31 December 2008, the Directors have taken into account the refinancing of the TechnomarketDomo NV ('TMD') loans with Raiffeisen Zentralbank Osterreich AG ('RZB'), the provision of a 12-month bridge financing of €12,000,000 from a Bulgarian Bank, a bank guarantee from Citibank, N.A., Sofia branch in favour of RZB for €20,000,000, and a commitment from EIBs largest shareholder SGRF to finance the €20,000,000 guarantee if called for a period until 31 December 2010. The RZB refinancing was announced to market on 16 July 2009 and is described more fully in note 36.Discussions are ongoing in respect of certain debt obligations and Immofinance's development projects. The Directors have also agreed a disposal programme of non-core assets, some of which have already occurred and are disclosed in note 36.

The Group's forecasts and projections have been prepared taking into account the challenging economic environment, the mitigating factors referred to above and management commitment to reduce investment in working capital. These forecasts take into account reasonably possible changes in trading performance and the future financing of the Group. They show that the Group will have sufficient facilities for its ongoing operations. While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the consolidated financial statements for the year ended 31 December 2008.

1.3 Changes in accounting policies- first-time adoption

In preparing these financial statements, the Group has elected to apply the following transitional arrangements permitted by IFRS 1 'First-time Adoption of International Financial Reporting Standards'':

As permitted under IFRS 1, where subsidiaries have not previously been consolidated, the Group has taken advantage of the exemption from fully restating these business combinations. The acquisition accounting has therefore been carried out as explained below:

The Company's share of the net assets acquired (prepared on an IFRS basis) as at the date of transition has been compared with the historic cost of the investment. The difference between the two is treated as goodwill.
In situations where the share of the net asset value exceeded the cost of the investment, negative goodwill arises. This has been credited to retained earnings. Where positive goodwill arises, that goodwill is subject to an immediate impairment review with any adjustment also taken to equity.
Where intermediate holding companies have been set up for the purpose of acquiring controlling interests in investments, and no goodwill arose on the set-up of these subsidiaries, any excess of cost over the transition net assets is debited to retained earnings instead of goodwill.
Only those exchange differences arising on the retranslation of foreign operations since 1 January 2007 have been recognised as a separate component of equity, with the foreign exchange reserve being reset to zero at that date.

The Group has made estimates under IFRS at the date of transition, which are consistent with those estimates made for the same date under the relevant GAAP applied by the entities being consolidated (IFRS or local GAAP as appropriate), unless there is objective evidence that those estimates were in error. Therefore the Group has not reflected any new information in its opening IFRS balance sheet but reflected new information in its income statement for subsequent periods.

At the date of transition to IFRS on 1 January 2007, Equest Investments Balkans Limited took advantage of an exemption available under IFRS 1, which resulted in the cumulative translation differences for all foreign operations being deemed to be zero at the date on transition to IFRS. Any gain or loss on the subsequent disposal of those foreign operations would exclude translation differences that arose before the date of transition to IFRS and include only subsequent translation differences.

Future changes in accounting policies

Standards, amendments and interpretations to published standards not yet effective

Certain new standards, amendments and interpretations to existing standards applicable to the Group's operations have been issued, but are not effective at the 31 December 2008.

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2009:

IAS 1, Presentation of Financial Statements (revised September 2007; effective for annual periods beginning on or after 1 January 2009). The main change in IAS 1 is the replacement of the income statement by a statement of comprehensive income which will also include all non-owner changes in equity, such as the revaluation of available-for-sale financial assets. Alternatively, entities will be allowed to present two statements: a separate income statement and a statement of comprehensive income. The revised IAS 1 also introduces a requirement to present a statement of financial position (balance sheet) at the beginning of the earliest comparative period whenever the entity restates comparatives due to reclassifications, changes in accounting policies, or corrections of errors. The Company will apply IAS 1 from 1 January 2009.
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial statements - Puttable Financial Instruments and Obligations Arising on Liquidation (effective 1 January 2009)
IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 July 2009)
Amendments to IFRS 1 First time adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements -Costs of Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective 1 January 2009).
Amendments to IAS 39 Financial Instruments: Recognition and Measurement- Eligible Hedged Items (effective 1 July 2009)
Improvements to IFRSs (effective 1 January 2009 other than certain amendments effective 1 July 2009)
IFRS 3 Business combinations (Revised 2008) (effective 1 July 2009)
IFRS 8 Operating Segments (effective 1 January 2009)
IFRIC 15 Agreements for the Construction of Real Estate (effective 1 January 2009)
IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008)
IFRIC 17 Distributions of Non-cash Assets to Owners (effective 1 July 2009)

The Group is currently assessing the impact of these new standards and changes on the financial statements. The Group has decided not to early adopt any of the above amendments as they are not expected to have a significant impact on the reported results of the Group.

1.4 Accounting policies

The Group earns revenue through the sale of goods, rendering of services and the sale of development property.

Revenue

Revenue is recognised to the extent that it is probable that future economic benefits will flow to the Group and the revenue can be reliably measured. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts. The following specific recognition criteria must also be met before revenue is recognised:

Sale of goods: Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer with no continuing managerial involvement. This will normally be upon delivery of the goods.

Rendering of services: The amount of the income in respect of the concession contracts for waste collection is recognised as income for the period in which the cleaning and transportation of waste were provided based on certified handover protocols.

Sale of development properties: Revenue from sale of development properties is recognised on the completion of the sale contract.

Foreign currency

(a) Functional and presentation currency

Items included in the financial statements of each Group entity 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 Euros, which is Company's presentation currency. The functional currency of each entity within the Group is a key judgement of management and the Directors. This judgement prioritises primary factors, such as the source of competitive forces and the denomination of sales prices and input costs, over secondary considerations such as the source of financing, in accordance with IAS21. These considerations indicate that the functional currencies of the Balkan trading entities are local currencies, the currency of the country in which the subsidiary operates, which for a significant proportion of the Group is the Bulgarian Lev, and the functional currency of the holding and intermediary holding companies is the Euro. The value of the Bulgarian Lev was fixed at 1 January 1999 at a rate of 1.95583 BGN: 1 EUR.

(b) Transactions and balances

Foreign currency transactions, transactions denominated in a currency which is different to that of the functional currency, 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 income statement. Non-monetary items carried at fair value, which are denominated in foreign currencies, are translated at the rates prevailing at the date when the fair value was determined and the gain or loss is recognised in the income statement except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.

The result and financial position of the Group entities (none of which has the currency of a hyperinflationary 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 (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

(iii) All resulting exchange differences are recognised as a separate component of equity.

When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Borrowing costs

Interest incurred on the bank loans used to fund the construction of qualifying assets is capitalised as part of its cost, net of interest received on cash drawn down, yet to be expended. The Group does not incur any other interest costs that qualify for capitalisation under IAS 23 'Borrowing costs' and other interest costs are therefore recognised as an expense when incurred.

Retirement benefits

Contributions to defined contribution and state pension schemes are charged to the consolidated income statement in the year to which they relate.

Warrants

The Group has made use of warrants to compensate the Group's investment manager under the terms of the Termination Agreement. The fair value of the warrants issued is charged to the income statement and accounted for as an increase to the Group's share capital at the time that the services are provided to the Group. The fair value of the warrants has been determined by a third party advisor using the Black-Scholes model.

The share price volatility was assumed to be equal to 5% and the risk free rate of return was assumed to be 5.6%. The warrants in issue are exercisable for nil consideration and as such no adjustment is made on exercise. Where the exercise of the warrants is contingent on certain conditions, an adjustment for the amount charged to the income statement is made if those conditions are not met. These warrants are recorded as equity in accordance with IAS32 as they will be settled for a fixed number of the Group's own equity shares.

Taxation

(a) Income tax

There is no liability for income tax in the British Virgin Islands. The Group is liable for tax in the Netherlands Antilles, the Netherlands, Bulgaria and Romania on the activity of its subsidiaries. The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income and expenditure that are taxable or deductible in other periods and it also excludes items that are not taxable or deductible. The Group's liability for current tax is calculated using tax rates applicable at the balance sheet date.

(b) Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
investments in subsidiaries, associates and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/assets are settled/recovered. Deferred tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

the same taxable Group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Segment reporting

A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments, and the Group's share capital represents the non-par value of the issued ordinary shares of Equest Investments Balkans Limited.

Share-based payments

Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received.

Dividends

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when the dividends are declared by the Directors. In the case of final dividends, this is when the dividends are approved by the shareholders at the Annual General Meeting.

Basis of consolidation

Where the Group has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The consolidated financial statements present the results of the company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between Group companies are eliminated in full.

Business combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.

Business combinations that took place prior to 1 January 2007 have not been restated as explained above.

Associates

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. An investment of 20% - 50% in the voting rights of an entity is an indicator of such significant influence being applicable. Associates are initially recognised in the consolidated balance sheet at cost. The Group's share of post-acquisition profits and losses is recognised in the consolidated income statement, except those losses in excess of the Group's investment in the associate. These are not recognised unless the Group is liable for these losses.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Any premium paid for an investment in associate above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. The carrying amount of the investment in an associate is subject to impairment testing when there is an indication that impairment could exist.

Joint ventures

Where the Group has joint control with at least one other investor over the financial and operating policy decisions of another entity, it is classified as a jointly controlled entity ('JCE'). JCEs are accounted for using the equity method as follows:

JCEs are initially recognised in the consolidated balance sheet at cost. The Group's share of post-acquisition profits and losses is recognised in the consolidated income statement, except those losses in excess of the Group's investment in the JCE. These are not recognised unless the Group is liable for these losses.

Profits and losses arising on transactions between the Group and its JCEs are recognised only to the extent of unrelated investors' interests in the JCE. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the JCE.

Any premium paid for a JCE above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the JCE. The carrying amount of the investment in a JCE is subject to impairment testing when there is an indication that impairment could exist.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Development property held for investment is property that is being constructed or developed for future use as investment property. Development property is measured at cost and is not depreciated. Upon completion, development property held for investment is transferred to investment property and is accounted for as explained below.

Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and equipment is to write off the carrying value of items over their expected useful lives. It is applied on a straight-line basis over the following periods:

Class	Years

Freehold buildings	25-40
Plant, machinery and motor vehicles	2-10
Fixtures, fittings, equipment	Over the lease period or 2-15

The assets' residual values, useful economic lives and methods of depreciation are reviewed at each financial year end and adjusted if appropriate.

Leased assets

Group as a lessee: Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a 'finance lease'), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated income statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an 'operating lease'), the total amount of rentals payable under the lease is charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

The land and buildings elements of property leases are considered separately for the purposes of lease classification.

Investment property

Property that is held for rental yields capital appreciation or both and that is not occupied by the Group or held for sale is classified as investment property. The Group has elected to use the fair value model to measure investment property after initial recognition.

Investment property comprises freehold land, freehold buildings and land held under operating leases. Investment property is measured initially at its cost, including related transaction costs and subsequently revalued at the balance sheet date to fair value.

Subsequent expenditure is charged to the asset's carrying amount 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. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.

Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. These valuations are prepared annually by CB Richard Ellis, independent professionally qualified valuers. The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.

Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value. Changes in fair values of investment property are recorded in the income statement. Depreciation is not provided in respect of investment properties.

Rent receivable is spread on a straight-line basis over the period of the lease. Where an incentive (such as a rent free period) is given to a tenant, the carrying value of the investment property excludes any amount reported as a separate asset as a result of recognising rental income on this basis.

Goodwill

Goodwill represents the excess of the cost of a business combination over the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated income statement. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated income statement on the acquisition date.

Goodwill is not amortised but is tested for impairment annually as described below.

Impairment of non-financial assets (excluding inventory, investment property and deferred tax assets)

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest groups of assets in which the asset belongs for which there are separately identifiable cash flows). Goodwill is allocated on initial recognition to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.

Impairment charges are included in the consolidated income statement, except to the extent that they reverse gains previously recognised in the consolidated statement of recognised income and expense. An impairment loss recognised for goodwill is not reversed.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets are recognised if it is probable that economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The cost of intangible assets acquired in a business combination is measured at the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be finite or indefinite.

Intangible assets with finite lives are amortised over the period of their useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as a change in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the income statement when the asset is derecognised.

Amortisation is calculated on a straight-line basis over the estimated useful life of the intangible assets. The useful life of the intangible assets is as follows:

Class	Years

Trademarks	Indefinite
Software	2 - 7
Concessions	Contract life
Other	2 - 10

Financial assets

The Group classifies its financial assets into one of the two categories discussed below, depending on the purpose for which the asset was acquired.

(a) Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through the provision of goods and services to customers and also incorporate other types of contractual monetary assets such as loans to related parties. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less any provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty, default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms of the receivable. The amount of such a provision is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net of any provision for impairment; such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Cash and cash equivalents are classified as loans and receivables, and these include cash in hand, deposits held on call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the balance sheet.

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.

(b) Available-for-sale financial assets: Non-derivative financial assets not included in the above categories are classified as available-for-sale and comprise principally the Group's strategic investments in entities not qualifying as subsidiaries or joint venture's associates. They are carried at fair value with changes in fair value recognised directly in a separate component of equity (available-for-sale reserve). Where there is a significant or prolonged decline in the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously charged to equity, is recognised in the income statement. Purchases and sales of available-for-sale financial assets are recognised on the settlement date with any change in fair value between trade date and settlement date being recognised in the available-for-sale reserve. On sale, the amount held in the available-for-sale reserve associated with that asset is removed from equity and recognised in the income statement. Returns on corporate securities classified as available-for-sale are recognised in the income statement.

Inventories

Inventories, including development properties held for resale, are initially recognised at cost, and subsequently at the lower of cost and net realisable value using the weighted average cost formula. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make a sale.

Non-current assets held for sale and disposal groups

Non-current assets and disposal groups are classified as held for sale when:

they are available for immediate sale;
management is committed to a plan to sell;
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
an active programme to locate a buyer has been initiated;
the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and
a sale is expected to complete within 12 months from the date of classification.

Non-current assets and disposal groups classified as held for sale are measured at the lower of:

their carrying amount immediately prior to being classified as held for sale in accordance with the Group's accounting policies; and
fair value less costs to sell.

Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated.

The results of operations disposed during the year are included in the consolidated income statement up to the date of disposal.

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

Profit or loss from discontinued operations, including prior year components of profit or loss, are presented in a single amount in the income statement. This amount comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale.

Interest bearing loans and borrowings

All loans and borrowings are initially recognized at fair value less directly attributable transaction costs, and have not been designated 'as at fair value through profit or loss'. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process. Loans and 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.

Trade and other payables

Trade and other payables are non-interest bearing and are normally settled on 45-day terms. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

When continuing involvement takes the form of a written and/or purchased option (including a cash settled option or similar provision) on the transferred asset, the extent of the Group's continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash settled option or similar provision) on an asset measured at fair value, the extent of the Group's continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

Provisions and Contingent liabilities

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the time value of money is material, provisions are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.

Where the Group has a possible obligation as a result of a past event that may, but probably will not result in an outflow of economic benefits, then no provision is made. Disclosures are made of the contingent liability including where practicable an estimate of the financial effect, uncertainties relating to the amount or timing and the possibility of any reimbursement.

Other long-term service benefits

The obligation is calculated using the projected unit credit method and is discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the expected remaining period to settlement.

In accordance with the article 222, paragraph 3 of the Bulgarian Labour Code, in the event of termination of a labour contract after the employee has reached the lawfully required retirement age, regardless of the reason for the termination, the employee is entitled to a compensation as follows: 2 gross monthly salaries in all cases and 6 gross monthly salaries if the employee has been engaged with the Group for at least 10 years.

Notes forming part of the financial statements

For the year ended 31 December 2008

1.5 Critical accounting estimates and judgements

The Group makes certain estimates and judgement regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under current circumstances. In the future, actual experience may differ from these estimates and judgements. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Judgements

(a) Power to exercise significant influence

In 2007 the Group held over 50% of voting rights in Uniqa Bulgaria AD but did not have the power to control the investment. As the Group exercises significant influence, the investment is treated as an associate (note 18).

(b) Contingent liability on purchase and 100% consolidation of Domo Retail

As at 31 December 2007, the Group had a contingent liability to the vendors which was due if Domo Retail achieves certain revenue and profitability targets. The present value of the liability as at 31 December 2007, based on the fact that Domo Retail achieved all its goals, is €13,432,000. This earn out is based on the annual accounts 2007 of Domo Retail. This earn out was paid over 2008 up to a remaining obligation of €3,591,000 as per 31 December 2008.

In addition, the Group has a financial liability which, at present value at 31 December 2008, is €20,384,000 (2007: €24,250,000). This liability is based on the annual accounts 2007 and business plan 2008 of Domo Retail. The financial liability is due if the remaining shareholders of Domo Retail or the Company makes use of the right to put or call the remaining shares. The value of the liability is based on amongst others the revenues and EBITDA of Domo Retail. If these increase, the liability will increase and vice versa. Per management judgement the contingent liability and the financial liability have been considered deferred consideration under IFRS 3, Business combinations. Any subsequent adjustments to these values will therefore be recorded as an adjustment to goodwill.

Management have deemed that exercise by either party of the put or call option is virtually certain and therefore Domo Retail is accounted for as a 100% subsidiary, even though legally TMD owns only 75%.

Estimates and assumptions

The Group is required to test, on an annual basis, whether goodwill, other intangibles and non-financial assets have suffered any impairment. Where the recoverable amount is determined based on value in use calculations, the use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows.

Discount rates incorporate estimates of risk factors specific to each cash generating unit. A range of discount rates could be considered reasonable given the subjectivity of these inputs, and the impact that the choice of rate has on the quantum or existence of an impairment may be material.

Further information on impairment is provided in note 5.

(d) Determination of fair values of intangible assets acquired and put options arising in business combinations

The fair values of intangibles acquired in the 2007 financial year for the Domo Retail SA and Novera business combinations are based on the discounted cash flows expected to be derived from the use and eventual sale of the assets acquired. To the extent that the final earnings are different to the assumptions made, such differences may give rise to impairment.

(e) Income taxes

The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when, despite the Group's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.

(f) Provisions and warranties

There are certain provisions which are recognised where the actual outcome may vary from the amount recognised in the financial statements. The amounts recognised are based on management's best estimate.

The amount recognised for warranties for which customers are covered for the cost of repairs is estimated based on management's past experience and the future expectations of defects.

2 Financial instruments - Risk Management

General objectives, policies and processes

The Group has exposure to the following risks from its use of financial instruments:

credit risk
liquidity risk
market risk

This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Group's principal financial liabilities comprise interest-bearing bank loans and borrowings, finance leases and trade payables. The Group has various financial assets such as trade receivables and cash equivalents, which arise directly from its operations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and related parties.

The Group has policies in place to ensure that sales of products and rendering of services are made to customers with an appropriate credit history. The carrying amount of accounts receivable, net of the provision for impairment, represents the maximum amount exposed to credit risk. Although collection of receivables could be influenced by economic factors, management believes that there is no significant risk of loss to the Group beyond the provision for impairment already recorded. Debtors are followed and analyses based on past experience and credit quality. With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents and other financial assets, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

The Group is also exposed to credit risk from a number of related party receivables. The terms and repayment conditions of these loan receivables are monitored by management.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. See note 36 on events after the balance sheet date for further details.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange and interest rates will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. See loans and borrowings note for specific foreign exchange and interest rate risk. (note 25)

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide return for 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 the total capital. Net debt is calculated as total borrowings (including bank loans and loans from minority investors), and other long term loans 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.

Group capital risk

	2008	2007
	€'000	€'000
Loans and borrowings	204,594	171,645
less: cash and cash equivalents	(11,277)	(66,137)
Net debt	193,317	105,508

Total equity	167,219	288,923
Total capital	360,536	394,431
Gearing ratio	54%	27%

3 Revenue

	2008	2007
	€'000	€'000
Revenue arises from:
Sale of goods	606,943	441,605
Provision of services	36,074	21,212
Sale of development properties	2,504	8,959
Other revenue	3,783	11,356
Total	649,304	483,132

Further analysis of revenue is showed in the segmental analysis note 7.

4 Administrative, selling and distribution costs

	2008	2007
	€'000	€'000
Administrative, selling and distribution costs comprise the following:	146,080	69,183
Staff costs	37,231	11,110
Administration expenses	24,671	19,230
Loss on disposal of investment property	6,217	-
Operating lease expense	24,933	11,510
Depreciation	10,398	5,007
Amortisation	3,967	2,913
Advertising and marketing	4,300	10,771
Termination payment to former investment manager (note 32)	18,487	-
Transportation	3,930	2,103
Other third party services	11,946	6,539
Other separately disclosable items:
Rental income from investment property	(94)	(147)
Foreign exchange profit/ (loss)	2,575	442
Profit on disposal of property, plant and equipment	(144)	(648)

5 Impairment of assets

Impairment costs-continuing operations

This impairment has been allocated as follows:

	2008	2007
	€'000	€'000
Goodwill	13,355	174
Concessions	14,895	-
Other intangibles	13	-
Property, plant and equipment	17,137	-
Development property	5,617	-
Receivables	1,078	-
Inventory	1,443	861
Total	53,538	1,035

Of the €53,538,000 of impairment costs incurred during 2008, €47,310,000 relate to the Novera group.

As a result of the events described in post balance sheet events (note 36) in relation to the Novera infrastructure operation, the business was tested for impairment. Due to these events management assessed that the value in use of the business was €nil. The non financial assets were valued at their fair value less costs to sell with the financial assets reviewed and valued at the amounts that could be recovered. These valuations took into account the short timeframe that Novera had to realise the cash on the sale of these assets. The value of total assets valued on this basis was €10,323,000. This was compared to the carrying value of total assets of €57,633,000 which therefore gave rise to an impairment of €47,310,000. The impairment loss in Novera group has been allocated to plant and equipment (€17,137,000), concessions (€14,807,000), goodwill (€12,995,000), inventory (€1,293,000) and receivables (€1,078,000).

Impairment costs-discontinuing operations

This impairment has been allocated as follows:

	2008	2007
	€'000	€'000
Goodwill	6,054	-
Other intangibles	816	-
Property, plant and equipment	2,764	-
Inventory	111	-
Total	9,745	-

6 Staff costs - Continuing operations

	2008	2007
	€'000	€'000
Staff costs (including Directors) comprise:
Wages and salaries	33,040	9,242
Defined contribution pension scheme contributions	20	23
Employer's national insurance contributions and similar taxes	4,171	1,845
	37,231	11,110

7 Segment information

The Group operates in five main business segments:

Property development (development of properties for commercial and residential purposes)
Automotive (sale of vehicles and related products to the general public)
Infrastructure (waste management business)
Electronic (retail) (sale of electronic goods to the general public)
Electronic (wholesale) (sale of large quantity electronic goods to other retailers)

Of these, the Automotive operating segment is classified as discontinued as explained in note 11.


	Continuing operations						Dis- continued operations
	Property		Electronics
	Develop-ment	Infrastru-cture	(Retail)	(Wholesale)	Un-allocated	Total	Auto- motive	Total
	2008	2008	2008	2008	2008	2008	2008	2008
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Revenue
Total segment revenue	2,510	24,164	412,127	206,393	4,110	649,304	68,884	718,188
Revenue	2,510	24,164	412,127	206,393	4,110	649,304	68,884	718,188

Segment result	(19,106)	(57,092)	39,327	6,875	(50,610)	(80,606)	(9,245)	(89,851)
Finance income	1,322	10	1,036	-	827	3,195	382	3,577
Finance costs	(893)	(4,018)	-	-	(16,396)	(21,307)	(2,117)	(23,424)
Share of losses
in equity accounted
joint ventures and
associates (notes 18 and 19)	(26,328)	-	(1,706)	(254)	-	(28,288)	-	(28,288)

(Loss)/profit before income tax	(45,005)	(61,100)	38,657	6,621	(66,179)	(127,006)	(10,980)	(137,986)
Tax expense	1,142	22	(37)	-	(1,833)	(706)	(100)	(806)
(Loss)/profit for the year	(43,863)	(61,078)	38,620	6,621	(68,012)	(127,712)	(11,080)	(138,792)

Finance income relating to the property development, infrastructure and electronics sector are €1,150 000; €151,000 and €2,333,000 respectively. Finance expenses incurred relating specifically to the property development, infrastructure and electronics sector are €779,000; €3,924,000 and €17,103,000.

Segmental assets and liabilities as at the 31 December 2008 are as follows:

	Continuing operations						Dis continued operations
			Electronics
	Property development	Infrastru-cture	(Retail)	(Whole-sale)	Un-allocated	Total	Auto-motive	Total
	2008	2008	2008	2008	2008	2008	2008	2008
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000

Assets	85,852	10,317	153,219	36,472	171,852	457,712	43,989	501,701
Associates and joint ventures	53,422	-	2,929	198	11,168	67,717	-	67,717

Total Assets	139,274	10,317	156,148	36,670	183,020	525,429	43,989	569,418

Total Liabilities	(80,233)	(50,943)	(30,968)	-	(211,580)	(373,724)	(35,975)	(409,699)

	Continuing operations						Dis-continued operations
			Electronics
	Property development	Infrastructure	(Retail)	(Wholesale)	Un-allocated	Total	Auto-motive	Total
	2008	2008	2008	2008	2008	2008	2008	2008
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000

Other segment items included in the income statement are as follows

Capital expenditure	4,711	15,283	7,107	376	1,865	29,342	14,720	44,062
Depreciation (note 13)	143	6,365	1,634	2,256	-	10,398	2,158	12,556
Amortisation and impairment (note 13, 15 and 16)	6,235	50,905	153	212	-	57,505	9,794	67,299

During the 2008 year impairment of €47,310,000 was recognised in the infrastructure segment, €6,228,000 in the property development sector and €9,745,000 in the automotive sector. See note 5 for more details on impairment.


	Continuing operations						Dis continued operations
			Electronics
	Property development	Infrastruc-ture	(Retail)	(Whole-sale)	Un-allocated	Total	Auto-motive	Total
	2007	2007	2007	2007	2007	2007	2007	2007
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Revenue
Total segment revenue	8,962	15,418	256,371	186,327	16,054	483,132	52,063	535,195
Revenue	8,962	15,418	256,371	186,327	16,054	483,132	52,063	535,195

Segment result	27,981	1,487	30,565	8,471	(1,741)	66,763	1,867	68,630
Finance income	281	283	278	-	1,623	2,465	748	3,213
Finance costs	(940)	(2,248)	-	-	(6,644)	(9,832)	(1,359)	(11,191)
Share of profits/(losses)
in equity accounted
joint ventures and
associates	29,960	-	(545)	(22)	(2,114)	27,279	-	27,279

(Loss)/profit before income tax	57,282	(478)	30,298	8,449	(8,876)	86,675	1,256	87,931
Tax expense	(1,048)	(653)	(9)	-	(3,018)	(4,728)	(230)	(4,958)
(Loss)/profit for the year	56,234	(1,131)	30,289	8,449	(11,894)	81,947	1,026	82,973

Finance income relating to the property development, infrastructure and electronics sector are €281,000; €283,000 and €427,000 respectively. Finance expenses incurred relating specifically to the property development, infrastructure and electronics sector are €940,000; €2,248,000 and €6,317,000.

Segmental assets and liabilities as 31 December 2007 are as follows:


	Continuing operations						Dis continued operations
			Electronics
	Property Development	Infrast-ructure	(Retail)	(Whole-sale)	Unallocated	Total	Auto-motive	Total
	2007	2007	2007	2007	2007	2007	2007	2007
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000

Assets	87,819	82,699	104,945	36,609	213,576	525,648	45,793	571,441
Associates and joint ventures	73,924	-	4,741	345	11,169	90,179	-	90,179

Total Assets	161,743	82,699	109,686	36,954	224,745	615,827	45,793	661,620

Total Liabilities	(25,176)	(47,748)	(19,161)	(191)	(253,722)	(345,998)	(26,699)	(372,697)


	Continuing operations						Discontinued operations
			Electronics
	Property Development	Infrastruc-ture	(Whole-sale)	(Retail)	Un-allocated	Total		Automotive	Total
	2007	2007	2007	2007	2007	2007		2007	2007
	€'000	€'000	€'000	€'000	€'000	€'000		€'000	€'000

Other segment items included in the income statement are as follows:

Capital expenditure	10,151	53,035	1,881	55	93,726	158,848		15,396	174,244
Depreciation (note 13)	123	2,867	847	1,170	-	5,007		1,201	6,208
Amortisation and impairment (note 13, 15 and 16)	143	2,816	415	574	-	3,948		7	3,955

During the 2007 year impairment of €893,000 was recognised in the electronics segment and €142,000 in the property development segment. See note 5 for more details on impairment.

The Group's secondary reporting format for reporting segment information is geographic segments.

	External revenue		Total assets		Capital expenditure
	by location of customers		by location of assets		by location of assets
	2008	2007	2008	2007	2008	2007
	€'000	€'000	€'000	€'000	€'000	€'000

Bulgaria	513,726	465,716	482,693	569,906	38,571	169,931
Romania	204,462	69,479	86,725	91,714	5,491	4,313

	718,188	535,195	569,418	661,620	44,062	174,244

8 (Loss)/gain on disposal of subsidiaries and other investments

	2008	2007
	€'000	€'000
Loss on disposal of St George and Boyana	(3,235)	-
Gain on part-disposal of share holding in Uniqa Bulgaria AD	2,960	16,352
Other losses	(57)	617
Gain on deemed disposal on formation of Borovets Joint venture	-	17,881
	(332)	34,850

Gain on deemed disposal on formation of Borovets Joint Venture

In June 2007, the Group sold 50% of its interest in Borovets BV to a joint venture partner, ultimately owned by the State General Reserve Fund of the Sultanate of Oman ('SGRF'). Subsequently Borovets BV acquired a 66% interest in a company owning approximately 1,977,000 sq m of development property in the Rila Mountains, Bulgaria's oldest mountain resort.

Gain on part-disposal of share-holding in Uniqa

At the beginning of 2007 the Group held 79% of the voting rights in Uniqa Bulgaria AD, but did not have the power to control the investment. As the Group exercises significant influence, the investment is treated as an associate. During 2007 the Group sold 41% of its shares in Uniqa Bulgaria AD, leaving the Group with 38% of Uniqa Bulgaria AD. The sales agreements provided for a preliminary and any adjusting purchase price. The preliminary purchase price was received by the Group in 2007 based on audited 2007 and 2008 gross written premium and profit before tax. In 2007 the audited 2007 accounts were preliminary and management recorded a best estimate profit on the part-disposal of its shares in Uniqa Bulgaria AD of €16,352,000. Upon receipt of the audited 2007 an additional profit on the part-disposal of Uniqa Bulgaria AD of €2,960,000 is recognised in 2008 (note 18). In 2009 the Group's investment in Uniqa Bulgaria AD was disposed of (note 36).

Loss on disposal of Boyana Residence EOOD and St George Resort and spa

On 29 January 2008 the Group sold 70% of its shareholding in Boyana Residence EOOD. The investment in the group of Boyana Residence EOOD has been reduced to 30% as a result of the deal. The Group intends to participate in decision making related to the operative and financial policy of the company. The participation in Boyana Residence EOOD is classified as investment in associate and has been reported according to the equity method (note 18). The 50% investment in St George was sold during the year.

9 Finance income and finance costs

Finance income and finance costs include all interest-related income and expenses. The following amounts have been included in the income statement line for the reporting periods presented:

	2008	2007
	€'000	€'000

Bank and other interest receivable	708	1,938
Interest income on loans to related parties (note 34)	2,442	480
Foreign exchange gain	45	47
Total finance income	3,195	2,465

Bank loans, overdrafts and other interest payable	18,076	9,252
Finance leases	411	91
Related party interest expense (note 34)	192	-
Foreign exchange loss	2,620	489
Unwinding of discount on provisions	8	-
Total finance costs	21,307	9,832

Interest income and interest expense is calculated using the effective interest rate method. Bank loans, overdrafts and other interest payable comprises interest on bank loans and overdrafts of €10,751,000 (2007: €4,137,000) as well as other interest expense of €7,325,000 (2007: €5,115,000). Included in the other interest expense is an amount of

€2,577,000 relating to the unwinding of a put option liability and €1,001,000 relating to an earn out liability which are both held at amortised cost. See note 24 on trade and other payables and note 15 on goodwill and trademarks for details surrounding these TMD liabilities.

10 Taxation

	2008	2007
	€'000	€'000
Normal tax expense
-current	2,202	3,749
-prior year over provision	(41)	-
Withholding taxes payable	-	51
Utilisation of previously unrecognised tax losses	-	22
Deferred tax movement	(1,455)	906
Tax expense excluding tax on sale of discontinued operations and share
of tax of equity accounted associates and joint ventures
	706	4,728
Income tax expense from discontinued operation (excluding gain on sale) (note 11)	100	230
Share of tax charge of equity accounted associates and JVs	(62)	21
Total income tax expense	744	4,979

The tax on the Groups profit before tax differs from the theoretical amount that would arise using the weighted average rate of tax of the applicable profits of the consolidated companies as follows:

	2008	2007
	€'000	€'000
(Loss)/Profit for the period	(127,006)	86,675
Tax calculated at domestic rates applicable to profits in the respective countries	2,126	3,827
Expenses not deductible for tax purposes	65	2,486
Income not subject to tax	-	(1,847)
Utilisation of previously unrecognised tax losses	(46)	(36)
Tax losses for which no deferred tax asset has been recognised	(1,448)	452
Effect of change in tax rate	(4)	(2)
Difference in tax rate of equity accounted associates and joint ventures	(6)	-
Tax effect from fair valuation adjustments resulting from acquisitions	-	(74)
Tax adjustments related to prior years	(3)	-
Sponsorship expenses deductible	-	(132)
Other	22	54
Total tax expense	706	4,728

The standard rate of corporation tax used in the above reconciliation is the weighted average of the rates applicable in each of the jurisdictions in which the Group carries out its operations. The expected tax charge disclosed is therefore an aggregation of those amounts in the individual financial statements of the Group's subsidiaries.

11 Discontinued operations

In 2008 the Group took a decision to dispose of its interest in the Avto Union group. In April 2009 the Group entered into an agreement for the sale of Avto Union Holding Limited for €8,000,000. Refer to note 36 on events after the balance sheet date.

Result of discontinued operations

	2008	2007
	€'000	€'000
Revenue	68,884	52,065
Expenses	(70,119)	(50,809)
Pre tax (loss)/profit	(1,235)	1,256
Tax expense	(100)	(230)
Impairment	(9,745)	-
(Loss)/ profit for the year	(11,080)	1,026

See note 5 for breakdown of impairment amounts.

The cash flow statement includes the following amounts relating to discontinued operations:

	2008	2007
	€'000	€'000
Operating activities	11,792	(1,341)
Investing activities	(8,939)	(11,780)
Financing activities	5,664	12,116
Net cash (used in) discontinued operations	8,517	(1,005)

12 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

(Loss)/ earnings per share
	2008	2007
	€'000	€'000
Basic and diluted (loss)/ earnings
Total (continuing and discontinued operations)	(137,980)	75,419
Discontinued operations
- loss/(profit) after tax	11,080	(1,026)
- minority interest	-	-
Continuing operations	(126,900)	74,393
Basic weighted average number of shares	17,795,120	17,324,350

Basic (loss)/ earnings per share
Total (continuing and discontinued operations)	(7.75)	4.35
Less discontinued (loss)/ profit from operations	0.62	(0.06)
Continuing operations	(7.13)	4.29

During the year contingently issuable warrants of €6,786,000 were issued. The conditions relating to these warrants have not been satisfied at year end and thus there is no impact on diluted earnings per share.

13 Property, plant and equipment

	Land and buildings €'000	Plant, machinery and motor vehicles €'000	Fixtures, fittings &, equipment €'000	Development property held for investment €'000	Total €'000
Cost

Balance at 1 January 2007	11,015	9,783	2,470	8,792	32,060
Acquired through
business combinations	4,714	20,613	3,157		28,484
Additions	41	8,129	833	21,670	30,673
Disposals	(2,096)	(4,258)	(1,209)	(43)	(7,606)
Transfers to investment property	(4,101)	-	-	-	(4,101)
Transfers	(1,486)	9	(18)	-	(1,495)
Net exchange differences	(304)	(377)	(340)	(247)	(1,268)

Balance at 31 December 2007	7,783	33,899	4,893	30,172	76,747


Balance at 1 January 2008	7,783	33,899	4,893	30,172	76,747
Acquired through business combinations	-	-	-	-	-
Additions	3,696	25,138	3,708	10,804	43,346
Disposals	(3,023)	(4,599)	(691)	(2,606)	(10,919)
Transfers	-	(36)	102	-	66
Re-classified to non-current assets held for sale	(4,549)	(8,389)	(859)	(20,205)	(34,002)
Net exchange differences	(358)	(646)	(589)	(379)	(1,972)

Balance at 31 December 2008	3,549	45,367	6,564	17,786	73,266

The majority of other transfers in 2007 relate to an amount of land and buildings transferred to inventory. Included in the 2007 depreciation movements are amounts of €4,168,000 capitalised to work in progress.

	Land and buildings €'000	Plant, machinery and motor vehicles €'000	Fixtures, fittings &, equipment €'000	Development property held for investment €'000	Total €'000
Accumulated depreciation

Balance at 1 January 2007	(285)	(2,689)	(474)	(20)	(3,468)

Depreciation	(95)	(5,585)	(523)	(9)	(6,212)
Disposals	194	2,408	443	-	3,045
Transfers	(29)	-	-	-	(29)
Net exchange differences	1	175	113	-	289
Balance at 31 December 2007	(214)	(5,691)	(441)	(29)	(6,375)

Balance at 1 January 2008	(214)	(5,691)	(441)	(29)	(6,375)
Depreciation	(651)	(10,563)	(1,333)	(10)	(12,557)
Impairment	-	(19,901)	-	(5,637)	(25,538)
Disposals	113	2,603	500	-	3,216
Re-classified to non-current assets held for sale	584	5,868	310	-	6,762
Net exchange differences	13	256	198	199	666

Balance at 31 December 2008	(155)	(27,428)	(766)	(5,477)	(33,826)

Net book value


At 31 December 2007	7,569	28,208	4,452	30,143	70,372
At 31 December 2008	3,394	17,939	5,798	12,309	39,440

In March 2009 it was confirmed by the Municipality of Sofia that Novera's concession agreements were to be terminated with immediate effect. This resulted in the property, plant and equipment of the Novera group being valued at fair value less cost to sell and therefore resulted in an impairment of €17,137,000 (note 5). Due to these events the value of the plant, machinery and vehicles held by Novera is expected to be realised through their sale within the next year and have as such been reclassified to current assets.

The net book value of property, plant and equipment is split between current and non-current assets as follows:

Land and buildings €'000

Plant, machinery and motor vehicles €'000

Fixtures, fittings &, equipment €'000

Development property held for investment €'000

Total €'000

Current	-	7,069	-	-	7,069
Non-current	3,396	10,869	5,798	12,308	32,371
Total net book value at 31 December 2008	3,396	17,938	5,798	12,308	39,440

The Group's bank borrowings are secured by property, plant and equipment of €26,917,000 (2007: €31,987,000).

The net carrying amount of property, plant and equipment includes the following amounts in respect of assets held under finance lease (note 29):

	2008	2007
	€'000	€'000
Plant, machinery and motor vehicles	14,894	5,527
Fixtures, fittings and equipment	215	296
	15,109	5,823

No companies in the Group have entered into contractual commitments to purchase any material items of property, plant or equipment in the current or prior year.

In Immofinance EAD, expenses incurred of €3,721,200 (2007: €172,300) have been recognised in the carrying amount of property, plant and equipment in the course of its construction.

The Group has an accounting policy to capitalise finance costs relating to development property. The amount capitalised during the current year was €1,646,000 (2007:€1,405,000).

These borrowing costs have been capitalised to specific projects and therefore the actual bank borrowing charge has been capitalised to the qualifying asset. The capitalisation rate in both 2007 and 2008 is EURIBOR +2%.

14 Investment property

	2008	2007
	€'000	€'000
Beginning of year	35,558	21,149
Additions	25	358
Disposals	(22,398)	(536)
Other transfer	-	417
Transfer from owner occupied land & building	-	4,101
Reclassified to non-current assets held for sale	(52)	-
Net (loss)/ gain from fair value adjustments in investment property	(1,176)	10,069
End of year	11,957	35,558

The Group's investment property was revalued at 31 December 2008 and 2007 by independent professionally qualified valuers CB Richard Ellis. Valuations were prepared in accordance with RICS Appraisal and Valuation Standards. Valuations of all investment property were prepared on the market value basis. This is defined in the valuation report as the estimated amount for which a property should exchange on the date of the valuation between a willing buyer and seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

A number of different assumptions have been used by the valuers in obtaining a market value for the various properties. These relate to the lettable area, refurbishment period and costs, market rents, yield profile and purchasers costs.

During the year €94,207 (2007: €146,530) was recognised in income statement in relation to rental income from the investment properties. Direct operating expenses, including repairs and maintenance, arising from investment property that generated rental income amounted to €94,000 (2007: €41,000). Direct operating expenses, including repairs and maintenance, arising from investment property that did not generate rental income during the year amounted to €73,167 (2007: €67,692).

The majority of the rental income is earned from Rodacar AD. During the year Rodacar terminated a number of tenancy agreements. This was due to management entering into negotiations with potential buyers for the company. There are therefore no significant operating leases at year end.

There are no contractual commitments entered into to construct or develop any of the investment property held by the Group.

15 Goodwill and trademarks

A significant amount of the total intangibles assets of the Group are made up of goodwill and trademarks and are therefore separately disclosed on the balance sheet.

	Goodwill	Trademarks	Total
	€'000	€'000	€'000

Balance at 1 January 2007	61,039	6	61,045
Additions - externally acquired	-	30	30
Acquired through business combinations	46,078	46,000	92,078
Disposals	(10)	-	(10)
Net exchange differences	-	(3,240)	(3,240)
Balance at 31 December 2007	107,107	42,796	149,903

Balance at 1 January 2008	107,107	42,796	149,903
Additions - externally acquired	-	41	41
Remeasurement-put option	(6,424)	-	(6,424)
Remeasurement-earn out	330		330
Disposals	-	(4)	(4)
Reclassified to non-current assets held for sale	(6,054)	-	(6,054)
Net exchange differences	(4,777)	(4,024)	(8,801)
Balance at 31 December 2008	90,182	38,809	128,991

	Goodwill	Trademarks	Total
	€'000	€'000	€'000

Accumulated amortisation and impairment
At 1 January 2007	-	(1)	(1)
Amortisation charge for the year	-	(1)	(1)
Impairment losses	(174)	-	(174)
Net exchange differences	-	-	-
At 31 December 2007	(174)	(2)	(176)

At 1 January 2008	(174)	(2)	(176)
Amortisation charge for the year	-	(10)	(10)
Impairment losses	(19,409)	-	(19,409)
Disposals	-	3	3
Reclassified to non-current assets held for sale	6,054	-	6,054
Balance at 31 December 2008	(13,529)	(9)	(13,538)

Carrying value
At 31 December 2007	106,933	42,794	149,727
At 31 December 2008	76,653	38,800	115,453

In September 2007 the Group acquired an investment in Domo Retail SA and Domo EOOD. The total consideration payable was estimated to be €97,901,000 and was contingent upon two elements of deferred consideration - (i) an earn-out liability of €13,432,000 to the vendor and (ii) a financial liability of €23,658,000 (with a carrying value of €20,384,000) to the vendors to acquire the remaining 25% of Domo Retail SA.

Earn-out liability

In 2008 an earn-out liability of €13,762,000 was agreed - resulting in an increase of goodwill recorded on the purchase of Domo Retail SA of €330,000.

Financial liability

Initially the financial liability equalled the present value of the redemption amount of a put option entered into through the purchase agreement dated 7 July 2007 for the purchase of Domo Retail SA and its subsidiaries on 28 September 2007. On 17 November 2008 the put option liability was replaced by an agreement entitling the minority investors in Domo Retail SA to shares in Technomarket N.V. In accordance with IFRS 3 the deferred consideration was remeasured, resulting in a reduction of goodwill recorded on the purchase of Domo Retail SA of €6,424,000.

The trademark of Domo Retail SA, Romania and the management software system were recognised as intangible assets in the process of purchase price allocation in relation to the acquisition of Domo Retail SA completed by Lynx in September 2007. Lynx assigned an independent valuation of the intangible assets of Domo Retail SA as at the acquisition date. The valuation was performed as at 30 September 2007. In accordance with the valuation report, the fair value of Domo's management information system was determined under the Trended Historical Cost Method at €954,000 and it is regarded as having a five year useful life. The fair value of Domo's brand, presented under trademarks, determined under the Relief from Royalty Method was estimated at €46,000,000 and it is regarded as having an indefinite useful life because it is considered that there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows.

Included in the 2007 goodwill acquired through business combinations is an amount of € 2,494,000. This goodwill arose with the acquisition of the minority interest of Vitosha Holdings Limited. The difference relates to the consideration paid of €6,000,000 and net assets acquired of €3,506,000.

The impairment losses in goodwill during the year relate to investments held in Novera (€12,995,000), Immofinance (€360,000) and Avto (€6,054,000). See details of impairment in note 5.

Details of goodwill allocated to cash generating units (CGU) for which the amount of goodwill so allocated is significant in comparison to total goodwill is as follows:

	Goodwill carrying amount		Trademarks carrying amount
	2008	2007	2008	2007
	€'000	€'000	€'000	€'000

Avto Union	-	6,053	-	-
TMD	74,158	85,030	38,800	42,792
Novera	-	12,995	-	-
Immofinance	-	360	-	-
Other	2,495	2,495	-	2
	76,653	106,933	38,800	42,794

In March 2009 it was confirmed by the Municipality of Sofia that Novera's concession agreements were to be terminated with immediate effect. This had an adverse impact on the projected value in use of the operation concerned and consequently resulted in a full impairment to goodwill of (€12,995,000) on the basis of the loss in revenue.

The goodwill relating to Avto Union has been fully impaired at 31 December 2008 based on its recoverable amount determined by reference to the expected disposal proceeds of the sub Group which is classified as a disposal group (note 11).

The recoverable amount of the TMD cash generating unit is determined based on value-in-use calculations performed on Domo Retail and Domo EOOD. For the goodwill of TechnomarketDomo the calculations uses revenue, EBITDA and net profits of Domo Retail EOOD in comparison to the expectations on the date of the purchase. These are based on financial budgets and business plan covering a period of 6 years as management believe this is the approximate amount of time needed for the company to achieve stable growth and normalised profitability levels. The major assumptions used in the valuation of Domo Retail SA in Bulgaria and Romania are as follows:

	Romania Percentage	Bulgaria Percentage

Inflation Rate	2.60 - 6.00	2.40-4.80
Discount rate	14.31	15.08
Growth rates	2%	2.5%

Management determined budgeted margins based on past performance and its expectations of market development.

16 Other Intangible Assets

	Software	Concessions	Other Intangibles	Total
	€'000	€'000	€'000	€'000

Balance at 1 January 2007	116	-	693	809
Additions - externally acquired	183	-	8	191
Acquired through business combinations	1,210	21,219	2	22,431
Disposals	(27)	-	-	(27)
Net exchange differences	(87)	-	-	(87)
Balance at 31 December 2007	1,395	21,219	703	23,317

Balance at 1 January 2008	1,395	21,219	703	23,317
Additions - externally acquired	544	92	2	638
Additions - internally acquired	-	-	12	12
Disposals	(43)	-	(73)	(116)
Reclassified as non-current assets held for sale	(373)	-	(573)	(946)
Net exchange differences	(161)	-	-	(161)
Balance at 31 December 2008	1,362	21,311	71	22,744

	Software	Concessions	Other Intangibles	Total
	€'000	€'000	€'000	€'000

Accumulated amortisation and impairment
At 1 January 2007	(74)	-	(2)	(76)
Amortisation charge for the year	(101)	(2,816)	(1)	(2,918)
Net exchange differences	4	-	-	4
At 31 December 2007	(171)	(2,816)	(3)	(2,990)

At 1 January 2008	(171)	(2,816)	(3)	(2,990)
Amortisation charge for the year	(375)	(3,600)	(31)	(4,006)
Impairment losses	(271)	(14,895)	(558)	(15,724)
Disposals	12	-	-	12
Reclassified to non-current assets held for sale	373	-	573	946
Net exchange differences	58	-	-	58
Balance at 31 December 2008	(374)	(21,311)	(19)	(21,704)

Net book value
At 31 December 2007	1,224	18,403	700	20,327
At 31 December 2008	988	-	52	1,040

During the current year impairment losses were recognised on the concessions, software and other intangibles.

The significant impairment of the concessions is the result of the withdrawal of the Novera concessions at the beginning of March 2009. The recoverable amount of the concessions is based on fair value less costs to sell and is determined to have no value. These concessions have thus been fully impaired during the current year.

17 Subsidiaries

The Directors consider that to give full particulars of all Group subsidiaries would lead to a statement of excessive length. The following information relates to those subsidiary companies whose results or financial position, in the opinion of the Directors, principally affect the consolidated financial statements of the Group as at the 31 December 2008:

Name	Country of incorporation	Proportion of effective ownership interest at 31 December
		2008	2007
Technomarket Domo NV	Netherlands	75%	75%
K & K Electronics EOOD	Bulgaria	75%	75%
DOMO Retail EOOD	Bulgaria	75%	56%
K & K Electronics Romania	Romania	75%	75%
IBN Electronics S.R.O	Slovakia	49% *	49%*
Balkan Soft Sole EOOD	Bulgaria	75%	75%
K & K Services EOOD	Bulgaria	75%	-
Domo Retail S.A.	Romania	56%	-
DOMO Distribution Group SRL	Romania	56%	56%
Castle Golf Properties SRL	Romania	100%	100%
Immofinance EAD	Bulgaria	100%	100%
First Liquid Private House OOD	Bulgaria	100%	100%
Atia Holiday EAD	Bulgaria	100%	100%
Banya Holidays AD	Bulgaria	67%	67%
St. George Resort and Spa AD	Bulgaria	-	50%
Pelican Retail EAD	Bulgaria	100%	100%
Lexington EAD	Bulgaria	100%	100%
Rodacar AD	Bulgaria	100%	100%
Novera EAD	Bulgaria	94%	94%
Chistota-Sofia AD	Bulgaria	94%	94%
Ditz AD	Bulgaria	94%	94%
Wolf 96 OOD	Bulgaria	94%	94%
Waste Management Services EAD	Bulgaria	94%	-

The above significant investments in subsidiaries are not directly held by the Company but via intermediate holding companies. All subsidiary undertakings are included in the consolidation.

* -K & K Electronics EOOD have a 65% shareholding in IBN Electronics S.R.O. which is thus a sub-subsidiary of Equest Investments Balkans Limited.

Under the contribution agreement dated 31 December 2007, a €30,000,000 loan from RZB was pushed down to TMD NV, where there is a 25% minority interest. As a result of this debt push down the minority interest in TMD decreased by €7,500,000 in 2007, being their 25% share of the €30,000,000.

Novera EAD and Technomarket Domo BV are restricted from paying out dividends to the holding company. This is due to loan agreements entered into with various banking institutions.

18 Investments in associates

The following entities meet the definition of an associate and have been equity accounted in the consolidated financial statements:

Name	Country of incorporation	Proportion of effective ownership interest at 31 December
		2008	2007
UNIQA Bulgaria AD	Bulgaria	37.7%	37.7%
Forum Serdika Coop	Bulgaria	16%	-
Harwood BV	Netherlands	23%	23%
Biz Air OOD	Bulgaria	38%	-
Boyana Residence EOOD	Bulgaria	30%	100%
El Eco AD	Bulgaria	22%	-
Covalim S.A. Sf Gheorghe	Romania	33%	-
Environ	Bulgaria	25%	25%

Uniqa Bulgaria AD

At the beginning of 2007 the Group held 79% of the voting rights in Uniqa Bulgaria AD. Under the shareholders' agreement dated 28 July 2005, Uniqa (the outside shareholder of Uniqa Bulgaria AD) had control over the financial and operating policies by virtue of Board composition and chairmanship:

- managing Board split 1:2 in favour of Uniqa

- supervisory Board 2:3 in favour of Uniqa

The matters reserved to the Board include annual budget, business direction, capex, loans, profit sharing.

In terms of the shareholders' meetings, notwithstanding the shareholdings referred to above, a number of key matters require Uniqa's explicit consent, including amendments to Articles, changes in share capital, merger, reconstruction or sales and distribution.

EIB therefore does not have the power to control the investment. The Group does, however exercise significant influence and the investment has been treated as an associate since acquisition.

Boyana Residence EOOD

On 29 January 2008 the Group sold 70% of its shareholding in Boyana Residence EOOD. The investment in the Group of Boyana Residence EOOD has been reduced to 30% as a result of the deal. The Group intends to participate in decision making related to the operative and financial policy of the company. The participation in Boyana Residence EOOD is classified as investment in associate and has been reported according to the equity method.

	2008	2007
	€'000	€'000
Beginning of year	16,082	23,295
Additions in the year	5,826	4,803
Disposals in the year	-	(10,012)
Revaluation through equity	-
Share of (loss)	(3,595)	(2,004)
End of year	18,313	16,082

Aggregated amounts relating to associates are as follows:

	2008	2007
	€'000	€'000
Total assets	47,128	37,953
Total liabilities	(38,693)	(29,689)
Revenues	41,297	43,310
(Loss)/ profit	(1,768)	80

Uniqa AD has a contingent asset that relates to receivables under recourse for an amount of €3,583,000 (2007: €2,095,000). K&K Electronics D.O.O., Beograd, a subsidiary of Harwood BV, have letters of credit of €4,927,000, liabilities for goods received in the customer warehouse of €9,088,351 and liabilities for guarantees received of €14,717,610 outstanding at year end. There are no other contingent assets or liabilities relating to an associate as at the 31 December 2008.

There are no restrictions on dividend distributions for the associates in the Group.

19 Investment in joint ventures

The following entity meets the definition of a joint venture and has been equity accounted in the consolidated financial statements:

Name	Country of incorporation	Proportion of effective ownership interest at 31 December
		2008	2007
Borovets Invest BV	Netherlands	50%	50%
Barrowbridge BV	Netherlands	50%	50%

The joint ventures are not directly held by the Company but via intermediate holding companies.

	2008	2007
	€'000	€'000
Beginning of year	74,097	-
Additions in the year	-	52,314
Share of (loss)/ profit	(24,693)	21,783
End of year	49,404	74,097

Aggregated amounts relating to joint ventures are as follows:

	2008	2007
	€'000	€'000
Non-current assets	64,124	100,176
Current assets	10,838	10,960
Non-current liabilities	(1,626)	(1,373)
Current liabilities	(2,137)	(1,621)
Revenues	3,931	1,971
(Loss)/ profit	(37,418)	35,028

During the current year, equity accounted losses which exceeded the initial investment in the joint venture were obtained. This unrecognised share of losses amount during the year and cumulatively to €227,000 (2007: €nil).

Loans from the holding company to joint ventures consist of €5,662,000 (2007: €5,525,500), this entire amount is classified as non-current. This loan is unsecured and interest free.

There is no capital commitments entered into by any of the joint ventures as at the 31 December 2008. Technomobile DOO has contingent assets relating to guarantees received of €264,000. There are no other contingent assets or liabilities relating to joint ventures as at 31 December 2008.

There are no restrictions on dividend distributions for the joint ventures in the Group.

20 Inventories

	2008	2007
	€'000	€'000
Raw materials and consumables	160	2,190
Finished goods and goods for resale	158,744	138,403
Development property held for resale	29,407	15,931
Provision for slow-moving and obsolete goods	(2,496)	(946)
	185,815	155,578

The amount of inventories recognised as an expense and reported in cost of sales in the income statement is

€530,320,000 (2007: €397,639,000)

The amount of write-down of inventories recognised as an expense and reported in the income statement is €1,983,000 (2007: €438,000). Of this amount, €1,549,000 (2007: €862,000) relates to impairment (note 5).

The carrying value of inventories pledged as security for bank loans and borrowings is €157,100,000 (2007: €118,648,000).

21 Available-for-sale investments

	2008	2007
	€'000	€'000
Beginning of year	311	132
Additions	-	16
Disposals	-	(39)
Net gains /(losses) transferred to equity	(65)	202
End of year	246	311

Non-current portion	-	16
Current portion	246	295
	246	311

In March 2009 it was confirmed by the Municipality of Sofia that Novera's concession agreements were to be terminated with immediate effect. This resulted in the available for sale investments being valued at an amount that was expected to be recovered through their immediate sale (note 5). Due to these events the value of the available for sale investment of €16,000 held by Novera is expected to be realised within the next year and has thus been reclassified to current assets.

Available-for-sale financial assets include the following:

	2008	2007
	€'000	€'000
Quoted:
Equity securities - Euro-zone	230	295
Unquoted:
Equity securities - Euro-zone	16	16
	246	311

The fair value of quoted securities is based in published market prices. The fair value of the unquoted securities is based on costs, as their fair value cannot be determined reliably.

Available-for-sale financial assets are all denominated in Bulgarian Lev.

22 Trade and other receivables

Current portion

	2008	2007
	€'000	€'000
Trade receivables	25,467	31,349
Trade receivable with related parties	232	11
Less: provision for impairment of trade receivables	(1,371)	(105)
Trade receivables - net	24,328	31,255

Loans and receivables due from related parties	18,231	12,965
Deposits paid to suppliers	782	1,895
Other receivables	18,138	2,098
Prepayments	8,895	5,302
Current trade and other receivables	70,374	53,515

Non-current portion

	2008	2007
	€'000	€'000

Loans and receivables due from related parties	16,182	13,276
Restricted cash	1,306	-
Interest receivables	1,942	343
Other receivables	98	1,636
Prepayments	-	970
Non-current other receivables	19,528	16,225

Maturity analysis for trade and other receivables

2007	Due within	Due between	Due beyond
	1 year €'000	1 and 5 years €'000	5 years €'000	Total €'000
Trade receivables	31,255	-	-	31,255
Loans and receivables due from associates	12,965	13,772	-	26,737
Loans and receivables due from joint ventures	-	792	-	792
Deposits paid to suppliers	1,895		-	1,895
Restricted cash	-	-	-	-
Other receivables	2,098	1,636	-	3,734
Prepayments	5,302	970	-	6,272
TOTAL	53,515	17,170	-	70,685


2008	Due within	Due between	Due beyond
	1 year €'000	1 and 5 years €'000	5 years €'000	Total €'000
Trade receivables	25,406	-	-	25,406
Loans and receivables due from associates	22,771	14,665	1,569	39,005
Loans and receivables due from joint ventures	-	1,376		1,376
Deposits paid to suppliers	782	-	-	782
Restricted cash	-	1,306	-	1,306
Other receivables	17,928	115	-	18,043
Prepayments	8,895	-	-	8,895
	75,782	17,462	1,569	94,813

The majority of trade and other receivables are non-interest bearing and are generally on 30 to 90 day terms. The carrying amount of trade and other receivables approximates fair value. The Group does not have any trade receivables pledges as security over its assets.

Significant Loans and receivables due from associates

Included in the above loans and receivables balance is a loan to the Uniqa Group. This loan has a principal of €3,000,000 (2007: €3,000,000) and bears interest at a rate of SOFIBOR + 2%. This amount is repayable on the 13 November 2011.

Included is also a loan to Harwood which is broken down into three separate loans with terms as follows:

- € 6,505,000 (2007: € 6,505,000) at an interest rate of 10% which is repayable in December 2012

- €1,500,000 (2007:€0) at an interest rate of 6% which is repayable in March 2014

- €4,000,000 (2007: €4,000,000) at an interest rate of 0% which is repayable in May 2012. This loan is carried at €2,718,319 with an effective interest rate of 7.75%.

Significant Loans and receivables due from joint ventures

Included in the loans and receivables balance is a loan to Barrowbridge which is broken down into two separate loans with

terms as follows:

- € 750,000 (2007: € 750,000) at an interest rate of 9% which is repayable in December 2012

€ 500,000 (2007:0) at an interest rate of 7% which is repayable in December 2013

Other significant Loans

Included in the other receivables balance is a loan of €10,048,000 (2007:€0) to Equest Balkan Properties plc. This loan

bears interest at a rate of 3M EURIBOR + 1%. The loan is repayable within the next financial year.

Restricted cash of €1,306,000 is kept in a separate bank account in Immofinance AD with the intention to guarantee obligations under leasing agreements. Management do not consider the cash to be freed in the next 12 months.

As at 31 December trade receivables of €24,328,000 (2007: €31,255,000) were past due but not impaired. They relate to the customers with no default history. The ageing analysis of these receivables is as follows:

	2008	2007
	€'000	€'000
Less than 60 days	21,875	30,312
61 - 120 days	2,359	410
121 days and older	94	533
	24,328	31,255

The carrying values of the Group's trade and other receivables are denominated in the following currencies:

	2008	2007
	€'000	€'000
Euro	43,502	29,757
Bulgarian Lev	61,400	54,828
Other currencies	-	155
	104,902	84,740

Movements on the Group provision for impairment of trade receivables are as follows:

	2008	2007
	€'000	€'000
Beginning of year	(105)	(757)
Provided during the year	(403)	(92)
Receivable written off during the year as uncollectable	(1,078)	-
Unused amounts reversed	39	744
Reclassified to non-current assets held for sale	176	-
End of year	(1,371)	(105)

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above.

23 Cash and cash equivalents

Cash and cash equivalents comprise:

	2008	2007
	€'000	€'000
Cash available on demand	9,778	49,911
Short-term deposits	509	3,568
Restricted cash (guarantees)	775	10,251
Cash equivalents	215	2,407
	11,277	66,137
Cash and cash equivalents held for sale	1,666	-
Cash and cash equivalents shown in the cash flow statement	12,943	66,137

Cash equivalents relate to an amount in TMD which is retained from warehouse keepers as a warranty.

The long term restricted cash relates entirely to Immofinance EAD. These restrictions are due to a guarantee on leasing liabilities.

24 Trade and other payables

	2008	2007
	€'000	€'000
Trade payables	103,517	109,056
Trade payables with related parties	4,064	3,868
Refundable deposits	1,404	486
Deferred income, accruals and other payables	25,379	24,812
Interest payable	51	27
Other tax and social security taxes	134	1,312
Deferred acquisition consideration	23,975	23,432
Current trade and other payables	158,524	162,993

	2008	2007
	€'000	€'000
Deferred acquisition consideration	-	24,250
Deferred income, accruals and other payables	-	312
Non-current other payables	-	24,562

All trade and other payables are carried at amortised cost in the consolidated balance sheet. Notwithstanding this the book value approximates fair value. Interest expense is therefore calculated using the effective interest rate method.As at 31 December 2007, TMD had recorded a financial liability of €24,250,000 at amortised cost. This comprised the present value of the redemption amount of the option it entered into through the purchase agreement dated 7 July 2007 for the purchase of Domo Retail SA and its subsidiaries on 28 September 2007 of €23,658,000 and the interest accrued of €592 000 up until the 31 December 2007. In 2008 this option was revalued to €20,384,000 based on the fair value of 13% of the shares of TMD for the purchase of 25% of the shares of Domo RR. As at the 31 December 2008, the liability was reclassified as a current liability and the shares were exchanged on 31 March 2009.

This deferred acquisition consideration further includes, as at 31 December 2008 a contingent earn out liability to the vendors which was based on Domo RR achieving certain revenue and profitability targets. The discounted value of this liability as at 31 December 2008 is € 3,592,000 (2007:€13,432,000). The profitability targets were met and thus payments made to this contingent liability over 2008 were €11,270,000 (2007: €nil).

Included in the deferred acquisition consideration for 2007 is an amount for €10,000,000 relating to the acquisition of Novera.

Maturity analysis of the financial liabilities, excluding loans and borrowings, classified as financial liabilities measure at amortised cost, is as follows:

Maturity analysis for trade and other payables


2008	Due within	Due between	Due beyond
	1 year €'000	1 and 5 years €'000	5 years €'000	Total €'000
Trade payables	103,517	-	-	103,517
Trade payables with related parties	4,064	-	-	4,064
Refundable deposits	1,404	-	-	1,404
Deferred income, accruals and other payables	25,379	-	-	25,379
Interest payable	51	-	-	51
Deferred acquisition consideration	23,975	-	-	23,975
	158,390	-	-	158,390

2007	Due within	Due between	Due beyond
	1 year €'000	1 and 5 years €'000	5 years €'000	Total €'000
Trade payables	109,056	-	-	109,056
Trade payables with related parties	3,868	-	-	3,868
Refundable deposits	486	-	-	486
Deferred income, accruals and other payables	24,812	312	-	25,124
Interest payable	27	-	-	27
Deferred acquisition consideration	23,432	24,250	-	47,682
	161,681	24,562	-	186,243

	2008	2007
	€'000	€'000
Less than 60 days	87,670	108,954
61 - 120 days	15,794	91
121 days and older	53	11
	103,517	109,056

The currency profile of the Group's trade and other payables is as follows:

	2008	2007
	€'000	€'000
Euro	12,274	27,069
Bulgarian Lev	146,245	160,476
Other	5	10
	158,524	187,555

25 Loans and borrowings

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost.

							2008		2007
							€'000		€'000
	Currency		Nominal interest rate		Year of maturity		Carrying amount		Carrying amount
Subsidiary
Non-Current
TechnomarketDomo	Euro		Euribor + 2.5%-3.5%		2011		-		22,500
KKE	Euro		Euribor + 2%		2013		16,256		19,506
Immofinance EAD	BGN		Euribor + 2%		2013		20,010		-
Novera AD	Euro		1.75%-2.75%		2014		-		11,097
Novera AD	Euro		7%		2013		-		20,414
Immofinance EAD	BGN		Euribor + 2%		2014		1,386		7,478
Avto union	BGN		Euribor + 2.95%		2017		-		11,851
Related party loans (note 34)							13,505		1,815
Finance lease creditor (note 29)							2,035		3,217
							53,192		97,878

Current
Immofinance EAD		BGN		Euribor + 3.3%		2008		-		5,798
TechnomarketDomo		Euro		Euribor + 2.8%		2008		-		34,738
TechnomarketDomo		Euro		Euribor + 2.2%		2011		-		7,500
TechnomarketDomo		Euro		Euribor + 2.5%-3.5%		2011*		60,959		-
KKE		Euro		Euribor + 2%		2013		3,422		2,494
Immofinance EAD		BGN		Euribor + 2%		2013		4,442		-
Novera AD		Euro		1.75%-2.75%		2014		12,412		2,437
Novera AD		Euro		7%		2013		21,816		-
Immofinance EAD		BGN		Euribor + 2%		2014		5,480		-
Avto union		BGN		Euribor + 2.95%		2017		-		1,659

Related party loans (note 34)								15,000		16,906
Finance lease creditor (note 29)								10,421		2,235
Overdrafts								17,450		-
								151,402		73,767

*As of 31 December 2008, TMD was in default of the covenants with RZB, therefore the long term loans have been classified as current. After the year-end, RZB agreed to waive any default or event of default which occurred in 2008 (note 36).

The carrying value of the above loans and borrowings approximates the fair value of these amounts. The initial cost of loans with related parties approximates the fair value of these amounts.

The security held by the lenders of secured bank loans comprises:

The assets of Novera AD
The cash and cash equivalent of Wolf 96 EOOD
The investments cash and cash equivalent property plant and equipment trademarks, and receivables of K&K Electronics EOOD
The Groups investment in TechnomarketDomo NV
The Group investment in Domo Retail SA

Trade loans are secured over the assets of Novera AD and the movable property and trade receivables of certain of its subsidiaries. Finance lease payable are secured over the assets they relate to. See the inventory (note 20) and property, plant and equipment (note 13) notes for related amounts.

The related party loans are unsecured and carry interest at a rate of between 0% and 10%.

Maturity analysis for loans and borrowings

2008
	Due within 1 year €'000	Due between 1 and 5 years €'000	Due beyond 5 years €'000	Total €'000
Bank loans	121,775	42,874	-	164,649
Related party loans (note 34)	15,000	17,890	-	32,890
Finance lease agreements	12,118	2,247	8	14,373
Bank overdrafts	17,450	-	-	17,450
	166,343	63,011	8	229,362


2007
	Due within 1 year €'000	Due between 1 and 5 years €'000	Due beyond 5 years €'000	Total €'000
Bank loans	64,680	128,566	32,968	226,214
Related party loans (note 34)	16,906	1,815	-	18,721
Finance lease agreements	2,576	3,582	-	6,158
Bank overdrafts	-	-	-	-
	84,162	133,963	32,968	251,093

The currency profile of the Group's loans and borrowings is as follows:

	2008	2007
	€'000	€'000
EURO	143,375	137,591
Bulgarian Lev	61,224	34,054
	204,599	171,645

During the current year TMD was in default of certain loan covenants (note 36). No other breaches or defaults occurred during the year.

Sensitivity analysis

Interest rate sensitivity analysis

At year end the Group's interest bearing borrowings amount to €208,631,000 (2007: €171,645,000). The majority of these loans have a variable interest rate based on a percentage above Euribor.

The following table demonstrates the sensitivity to a reasonably possible change of 100 basis points in the interest rate, with all other variables held constant, of the Group's profit before tax (through the impact on floating rate non-current borrowings). There is no impact on the Group's equity.

	Increase	decrease
2008	831	(831)
2007	724	(724)

Foreign currency sensitivity analysis

The Group enters into transactions denominated in foreign currencies related to its financing and its activities. As a result of significant investment operations in Romania, the Group's balance sheet can be affected significantly by movements in the RON/EUR exchange rates. The Group also has transactional currency exposures. Such exposure arises from sales or purchases by its operating units in Romania and Bulgaria in currencies other than the unit's functional currency - RON or BGN. The Group does not use any special financial instruments to hedge against this risk. However, part of the Group's operations is located in Bulgaria and since BGN is pegged to EUR at a fixed rate, the foreign currency risk is considered to be low in this respect. The Group revenue and costs denominated in RON in 2008 approximately were respectively 32 % and 33 % of the total revenues and costs (2007: respectively 15% and 13%). The exchange rate with the EUR was at the first of January 2008 1 EUR = 3.6102 RON (2007: 1 EUR =3.3817 RON) and at 31 December 2008 1 EUR = 3.98570 RON (2007: 1 EUR = 3.6102 RON.

The table below demonstrates the sensitivity to a reasonably possible change in the RON and EUR exchange rates, with all other variables held constant, of the Group's profit before tax (due to changes in the fair value of monetary assets and liabilities). There is no impact on the Group's equity.

	10% increase in RON: EURO	10% decrease in RON: EURO
2008	452	(452)
2007	160	(160)

Related party loans

The terms and conditions of the related part loans are discussed in the related party note (note 34).

26 Provisions

	2008			2007
	Warranty and Other	Pensions	Total	Warranty and Other	Pensions	Total
	€'000	€'000	€'000	€'000	€'000	€'000

Beginning of year	512	68	580	-	592	592
Charged to profit or loss	664	21	685	403	65	468
Additions	-	991	991	-	-	-
Acquired with subsidiaries	-	-	-	595	3	598
Utilised in year	(585)	(65)	(650)	(486)	-	(486)
Released in year	-	-	-	-	(592)	(592)
Unwinding of discount	-	79	79	-	-	-
End of year	591	1,094	1,685	512	68	580

Due within one year or less	418	1,015	1,433	409	68	477
Due after more than one year	173	79	252	103	-	103
Total provisions	591	1,094	1,685	512	68	580

The Group has accrued provisions for pensions to its employees based on the requirements as set forth by the Labour Code in Bulgaria. The provisions are accrued to the extent that management believe that the employees will continue to be the Group's employees until the date of the retirement.

27 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using tax rates that are expected to apply when the asset or liability is recovered or settled. The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS12: Deferred tax) during the period are shown below.

	2008	2007
	€'000	€'000
Balance at the beginning of year	10,338	1,919

Current year movements through the income statement:
Temporary differences on property, plant and equipment	(292)	(56)
Other temporary differences	(60)	(59)
Revaluation of investment property	(1,084)	986
Thin capitalisation	43	60
Impairment of inventory	(34)	(13)
Impairment of receivables	(28)	(12)

Current year movements taken to equity:
Available-for-sale securities	14	-
Temporary differences on property, plant and equipment	-	7,064
Other temporary differences	(696)	507

Acquired through business combinations:
Temporary differences on property, plant and equipment	(61)	(3)
Other temporary differences	(849)	(55)

End of year	7,291	10,338

Current assets and liabilities for the year comprise the following:
Deferred tax liabilities
	2008	2007
	€'000	€'000
Temporary differences on property, plant and equipment	418	455
Temporary differences on intangible assets	6,324	6,976
Other temporary differences	147	202
Revaluations	1,063	2,992
Available-for-sale assets	14	-
Total deferred tax liabilities	7,966	10,625

Deferred tax assets
	2008 €'000	2007 €'000
Thin Capitalisation	43	108
Impairment of receivables	38	24
Impairment of inventory	111	17
Temporary differences on property, plant and equipment	322	-
Other temporary differences	161	138
Total deferred tax assets	675	287

Deferred tax assets have been recognised in respect of all such tax losses and other temporary differences giving rise to deferred tax assets where the Directors believe it is probable that these assets will be recovered.

Unrecognised tax assets on deductible temporary differences which expire within the next 12 months amount to €64,000 and expiring over a period exceeding 12 months is €2,439,000. Unrecognised deferred tax assets on unrecognised tax losses carried forward amount to €43,000. These will expire within the next 12 months.

28 Assets and liabilities classified as held for sale

The Avto-Union subsidiary within the automotive sector is presented as a disposal group held for sale following the commitment of the Group's management to a plan to sell the business. Efforts by the Board to market and sell the subsidiary commenced during the second half of 2008. At the 31 December 2008 the subsidiary was thus available for immediate sale and the sale was highly probable.

The Share Purchase Agreement was finalised and signed in April 2009 (note 36).

The following major classes of assets and liabilities relating to these operations have been classified as held for sale in the consolidated balance sheet at 31 December 2008:

	Total
	2008
	€'000
Assets classified as held for sale
Property, plant and equipment	27,240
Investment Property	51
Other non-current assets	504
Inventories	11,677
Trade and other receivables	2,421
Cash	1,666
Other current assets	430
Total assets	43,989

Liabilities classified as held for sale
Loans and borrowings	21,420
Other non-current liabilities	18
Trade and other payables	9,730
Loans and borrowings	4,571
Other current liabilities	236
Total liabilities	35,975

During the year there have been significant impairments recognised on the assets relating to the Avto Union operation (note 5).

29 Obligations under finance leases

Finance leases

The Group leases a portion of its plant, machinery and motor vehicles (net carrying value €3,315,000) and computer equipment (net carrying value €27,950,000). Such assets are generally classified as finance leases as the rental period amounts to the estimated useful economic life of the assets concerned and often the Group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount.

Future lease payments are due as follows:

Obligations under finance leases	2008		2007
	Minimum lease payment	Carrying value	Minimum lease payment	Carrying value
	€'000	€'000	€'000	€'000
Amounts payable under finance leases:
Within one year	12,118	10,421	2,576	2,235
In more than one year and not more than five years	2,247	2,027	3,582	3,217
In more than five years	8	8	-	-
	14,373	12,456	6,158	5,452
Less: Future finance charges	(1,917)	-	(706)	-
Present value of lease obligations	12,456	12,456	5,452	5,452
Less amounts due within one year	(10,421)	(10,421)	(2,576)	(2,235)
Amounts due after more than one year	2,035	2,035	2,876	3,217

30 Operating leases

Operating leases - lessee

The Group leases shops, offices and warehouses under non-cancellable operating lease agreements. The majority of the leases have varying terms, escalation clauses and renewal rights.

The total future value of minimum lease payments is due as follows:

	2008	2007
	€'000	€'000
Not later than one year	27,526	23,598
Later than one year and not later than five years	84,896	75,240
Later than five years	41,409	28,143
	153,831	126,981

31 Share capital and reserves

Authorised

The authorised share capital of the Company is 50,000,000 Ordinary shares of no par value.

Issue share capital
		2008		2007
		Ordinary shares		Ordinary shares
	Number	€'000	Number	€'000

Beginning of year	17,324,350	242,145	17,324,350	242,145
Shares issued	941,540	11,701	-	-
End of year	18,265,890	253,846	17,324,350	242,145

All issued ordinary shares are fully paid up.

The following describes the nature and purpose of each reserve within owners' equity:

Reserve	Description and purpose
Share capital	Amount subscribed for share capital at nominal value.
Warrant reserve	Amount of warrants granted at fair value.
Available-for-sale (AFS)	Gains/losses arising on financial assets classified as available-for-sale.
Foreign exchange	Gains/losses arising on retranslating the net assets of overseas operations into Euro

32 Share-based payment

Termination agreement and related warrant agreement

As described in note 34, the consideration for the Termination Agreement of 17 June 2008 in respect of Equest Capital Management Limited was the issue of 941,540 ordinary shares and warrants over 564,925 ordinary shares. The cost of the termination agreement amounted to €18,487,000 which was based on the fair value of the shares issued and warrants and is charged to the income statement. The fair value of the shares issued is the market price of the shares, and as at 17 June 2008, this amounted to €11,701,000.

The fair value of the warrants has been independently determined at €6,786,000 using the Black-Scholes pricing model, based on a share price of £9.40. The fair value of each warrant was calculated as €12.01. The share price volatility was assumed to be equal to 5% and the risk free rate of return was assumed to be 5.6%. The warrants were granted by the Company under a warrant instrument and are exercisable for nil consideration at any time after the expiry of 12 months from 1 January 2008 on the condition that (i) the net asset value ('NAV') per Ordinary Share reported immediately prior to the exercise of any Warrants is not less than the audited NAV per Ordinary Share as at 31 December 2007, and (ii) ECL is not in any material default at the date of exercise of such Warrants under the Termination Agreement, the Services Agreement or the Technical Support Agreement. Based on the NAV at 31 December 2008, no warrants are currently exercisable.

Long Term Incentive Plan

On 16 May 2008, the Company and ECL entered into a long term incentive plan (the 'LTIP') pursuant to which, ECL is entitled to an incentive fee (the 'Incentive Fee') if certain performance conditions are met. The first period for calculating an Incentive Fee began on 1 January 2008 and ended on 31 December 2008; each subsequent incentive period would be a period of twelve months ending on 31 December (an 'Incentive Period'). The LTIP shall be in place for an initial term of four years and thereafter shall remain in operation until termination of the Services Agreement.

The Company will pay the Incentive Fee in Ordinary Shares which shall be subject to certain lock-up arrangements. The Company has the right, at its absolute discretion, to pay the Incentive Fee in cash instead of in Ordinary Shares.

The performance conditions for the LTIP for the year ending 31 December 2008 have not been met and accordingly no charge has been accrued.

33 Business combinations in 2007

Acquisition of Domo Retail SA

On 28 September 2007, the Group acquired 75% of the share capital of Domo Retail SA. Due to the option of the Group to acquire the remaining 25% of the share capital, the interest in Domo Retail SA for consolidation purposes is treated as a 100% subsidiary with a liability to the remaining 25% shareholders of Domo Retail SA.

The fair value of the identifiable assets, liabilities and contingent liabilities of Domo Retail SA and its subsidiaries as at the date of acquisition and the corresponding carrying amounts immediately before the acquisition were:

	Carrying amounts €'000	Fair values recognised at acquisition €'000
Property, plant and equipment	8,362	11,025
Intangible assets	246	47,210
Investments in associates	-	398
Other non-current assets	94	94
Inventories	43,248	43,248
Trade and other receivables	10,262	10,262
Cash	1,739	1,739
	63,951	113,976
Interest-bearing loans and borrowings	162	162
Deferred tax liability	119	8,118
Payable and current liabilities	38,045	38,045
	38,326	46,325
Net assets acquired	25,625	67,651
Goodwill		30,250
		97,901
Consideration
Cash consideration		60,500
Costs directly attributed to the acquisition		311
Contingent consideration-earn out		13,432
Contingent consideration-put option		23,658
Total consideration		97,901

The cash flow on acquisition was as follows:
Net cash acquired with the subsidiary		1,739
Cash paid		(60,811)
Net cash outflow		(59,072)

The amount of the profit of Domo Retail SA and its subsidiaries included in the consolidated financial statements since the date of acquisition is €6,081,000 thousand. The profit of Domo Retail SA for the whole year is €8,500,000. The goodwill of €30,250,000 comprises the fair value of expected synergies arising from the acquisition of Domo Retail SA and its subsidiaries and the market share in the fast growing Romanian market, which is not separately recognised as it does not meet the criteria for recognition as an intangible asset under IAS 38 Intangible assets. As at 31 December 2007, the Group had a contingent liability to the vendors which was due if Domo Retail SA achieved certain revenue and profitability targets. The discounted value of its liability as at 30 September 2007 was €13,432,000. In addition, the Group had a financial liability to the remaining shareholders of €23,658,000, measured at the discounted value as at 30 September 2007 (notes 15 and 24).

In order to ensure that all the assets and liabilities were carried at fair value certain fair value adjustments were processed, the largest being to intangible assets. An independent valuation was performed on the intangible assets of Domo Retail SA at the acquisition date. In accordance with the valuation report, the fair value of Domo's management information system was determined under the Trended Historical Cost Method. The fair value of Domo's brand, presented under trademarks, determined under the Relief from Royalty Method and is regarded as having an indefinite useful life.

Acquisition of the Novera Subsidiaries

On 2 May 2007 the Group entered into an agreement through its subsidiary Novera AD to acquire three waste collection operators in Sofia with effect from 30 June 2007 (the Novera subsidiaries).

The fair value of the identifiable assets, liabilities and contingent liabilities of the Novera subsidiaries as at the date of acquisition and the corresponding carrying amounts immediately before the acquisition were:

	Carrying amounts €'000	Fair values recognised at acquisition €'000
Property, plant and equipment	3,917	17,459
Intangible assets	1	21,221
Financial assets	17	17
Deferred tax asset	-	13
Inventories	2,328	2,328
Trade and other receivables	11,439	11,439
Cash	560	560
	18,262	53,037
Trade and other payables	(8,793)	(10,868)
Net assets acquired	9,469	42,169
Goodwill		12,995
		55,164
Consideration
Mezzanine debt funding		20,000
Cash consideration		25,025
Costs directly attributed to the acquisition		139
Contingent consideration		10,000
Total consideration		55,164

The cash flow on acquisition was as follows:
Net cash acquired with the subsidiary		560
Cash paid		(25,164)
Net cash outflow		(24,604)

The amount of the loss of the Novera subsidiaries included in the consolidated financial statements since the date of acquisition until the 31 December 2007 is €1,767,000. The profit of all the underlying subsidiaries making up the Novera group for the whole year is calculated at €2,411 000. The goodwill of €12,995,000 comprises the fair value of expected synergies arising from the acquisition of the Novera subsidiaries, which is not separately recognised as it does not meet the criteria for recognition as an intangible asset under IAS 38 Intangible assets.

Other acquisitions in 2007 generated goodwill of €339,000 being whereby a cash consideration of €3,000 was paid for a company holding net liabilities of €336,000. At acquisition date the net liabilities were made up of receivables of €899,000 and payables of €1,235,000 and thus there were no fair value adjustments.

The balance of goodwill arising in the year relates to the acquisition of an intermediate holding company, Vitosha Holding Limited BVI (€2,494,000) and additions to the investment held in an intermediate holding company, Axis Retail NV.

There were no business combinations during the current year.

34 Related party transactions

Trading transactions

Sale of goods, property and other assets and rendering of services	Year ended 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	617
Associates and joint ventures	-	-
Other related parties	23,871	30,280
	23,871	30,897

Purchases of goods, property and other assets and rendering of services	Year ended 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	-
Associates and joint ventures	103	41
Other related parties	6,650	7,933
	6,753	7,974

Certain loans were made to associates and joint ventures during the year and the interest is described below. These related party transactions both those from continued and discontinued operations.

Interest expense	Year ended 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	-
Associates and joint ventures	-	-
Other related parties	192	-
	192	-

Interest income	Year ended 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	-
Associates and joint ventures	2,382	459
Other related parties	60	21
	2,442	480

Amounts owed by related parties	At 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	-
Associates and joint ventures	19,320	13,662
Other related parties	17,868	13,867
	37,188	27,529

Included in the above amounts owed by related parties are interest receivables of €2,543,000 (2007: €34,000), trade receivables of €232,000 (2007: €1,214,000) and loan receivables of €34,413,000 (2007: €26,241,000).

The Group has not made any provision for impairment in respect of related party receivables, nor have any amounts been written off.

Amounts owed to related parties

		At 31 December
	2008	2007
	€'000	€'000
Key management personnel	-	-
Associates and joint ventures	-	1,816
Other related parties	32,815	20,774
	32,815	22,590

Included in the above amounts owed to related parties are interest payables of €245,000 (2007: €nil). Trade payables of €4,065,000 (2007: €3,869,000) and loan payables of €28,505,000 (2007: €18,721,000).

Terms and conditions of transactions with related parties

Outstanding balances at the yearend are unsecured, interest free (except for loans) and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2008, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2007: €nil).

Related party loans are unsecured and bear interest at a rate of between 0% and 10%. No guarantees have been given or received during 2008 or 2007 regarding related party transactions. A loan of €15,000,000 (2007: €nil) is repayable to Uniqa Real Estate AG within one year (note 36). Loans of €13,159,000 (2007: €16,754,000) are payable to Lyra investment Holding N.V. The loan carries interest at 1% per annum, but will attract interest at market related rates from 1 January 2010.

Related Party Transactions

Messrs. Karjalainen, Haataja and Krumov, Executive Directors of the Company, are the ultimate owners of Equest Capital Management Limited, the Investment Advisor and ECL, and the Company's entry into the agreements described below (all of which became effective on 17 June 2008) constituted related party transactions. Messrs. Karjalainen, Haataja and Krumov continue to have a material interest in these agreements.

Termination agreement and related warrant agreement

At the general meeting of the Company held on 25 April 2008, the Company's shareholders voted in favour of resolutions approving, among other matters, (i) the termination of the investment management agreement between the Company and Equest Capital Management Limited (the 'Investment Management Agreement') and (ii) the termination of the investment advisory agreement between the Company, Equest Capital Management Limited and the Investment Adviser (the 'Investment Advisory Agreement'). The aforementioned agreements were terminated effective 17 June 2008 and in consideration for such termination, Equest Capital Limited (an affiliate of Equest Capital Management Limited) ('ECL') received:

941,540 Ordinary Shares (the 'Consideration Shares') valued at €11,701,000, representing 5% of the Ordinary Shares currently in issue; and
warrants entitling the holder to purchase 564,925 Ordinary Shares valued at €6,786,000 (the 'Warrants') representing approximately 3% of the Ordinary Shares currently in issue

The Warrants were granted by the Company under a warrant instrument (the 'Warrant Instrument') and are exercisable at any time after the expiry of 12 months from 1 January 2008 on the condition that (i) the NAV per Ordinary Share reported immediately prior to the exercise of any Warrants is not less than the audited NAV per Ordinary Share as at 31 December 2007, and (ii) ECL is not in any material default at the date of exercise of such Warrants under the Termination Agreement, the Services Agreement or the Technical Support Agreement (details of which are set out below).

Pursuant to the Termination Agreement, Equest Capital Management Limited is entitled to management fees under the Investment Management Agreement at the annual rate of 2.5 per cent of committed capital up to 26 February 2008. Between 26 February 2008 and 17 June 2008, Equest Capital Management Limited is entitled to management fees under the Investment Management Agreement at the rate of 2.5 per cent of committed capital subject to the following adjustment - Equest Capital Management Limited is obliged to refund to the Company the difference between:

(i) any management fees paid to Equest Capital Management Limited for the period between 26 February 2008 and 17 June 2008 at the annual rate of 2.5 per cent of committed capital; and

(ii) any fees that would have been payable to ECL under the Services Agreement and the Technical Support Agreement (based on the annual estimate of €480,000) pro-rated for the period between 26 February 2008 and 17 June 2008 had the Services Agreement and the Technical Support Agreement been in force.

Both Equest Capital Management Limited and the Investment Advisor are entitled to receive reimbursement for any expenses accrued under the Investment Management Agreement up to 17 June 2008.

The Consideration Shares and any Ordinary Shares issued upon the exercise of the Warrants are subject to certain lock-up arrangements.

Technical Support Agreement

On 16 May 2008, the Company and ECL entered into a technical support agreement (the 'Technical Support Agreement') for an initial term of one year, renewable on an annual basis thereafter. Pursuant to the Technical Support Agreement, ECL is obliged to provide or procure the provision of back office technical support and other services necessary for the Company's day to day operations such as office premises in various locations, IT, administrative and finance services. The consideration payable to ECL under the Technical Support Agreement shall represent ECL's actual cost of providing the services (without any profit or mark up in favour of ECL). The Company may terminate any of the services being provided under the Technical Support Agreement (without prejudice to the continuance in force of the remainder of the agreement in respect of the provision of any other services) if it decides that it no longer needs such a service by giving ECL not less than 3 months' written notice of termination to take effect on or at any time after the expiry of the initial period.

Services Agreement

The Company together with each of Messrs. Karjalainen, Haataja and Krumov and ECL entered into a services agreement (the 'Services Agreement') pursuant to which, ECL agreed to procure that Messrs. Karjalainen, Haataja and Krumov and other senior managers are made available to the Company to perform such services as the Company may reasonably request and that Messrs. Karjalainen, Haataja and Krumov shall devote substantially all of their professional time and attention to the affairs of the Company for an initial term of four years, which shall renew automatically for successive one year terms unless either party gives to the other written notice of termination at least six months prior to the end of each anniversary. Under the Services Agreement, save as disclosed below, Messrs. Karjalainen, Haataja and Krumov are subject to certain non-compete and non-solicitation covenants. In addition, ECL and Messrs. Karjalainen, Haataja and Krumov are obliged to present any new business opportunities they identify in the target region (which includes Bulgaria, Romania, Albania, Croatia, FYR Macedonia, Kosovo, Bosnia and Herzegovina, the Republic of Serbia, Slovenia, the Republic of Montenegro, Turkey and Ukraine) (the 'Target Region') and which are within the remit of Company's investment objective and strategy to the Company on a pre-emptive basis. If the Board of Directors (excluding for these purposes Messrs. Karjalainen, Haataja and Krumov) determines that the Company is not interested in taking up a business opportunity, ECL and/or Messrs. Karjalainen, Haataja and Krumov shall be allowed to pursue it or make arrangements for someone else to pursue it on their behalf provided that the business opportunity does not compete with the Company's business activities and provided that Messrs. Karjalainen, Haataja and Krumov are still able to devote substantially all of their professional time and attention to the affairs of the Company.

Under the Services Agreement, ECL and Messrs. Karjalainen, Haataja and Krumov are allowed to own (directly or indirectly) interests in other businesses. If these businesses could compete with the Company, these ownership interests will be subject to a cap of 5% aggregate ownership or such higher percentage as may be approved by the Board of Directors. The Board of Directors must act reasonably in considering any request for approval of ownership interests exceeding 5% and, for this purposes, any of Messrs. Karjalainen, Haataja and Krumov will not be included in the consideration of the matter by the Board of Directors.

Under the Services Agreement, Messrs. Karjalainen, Haataja and Krumov are permitted to continue to provide consulting services to Equest Balkan Properties plc, including assuming the position of Non-executive Directors and key individuals. In addition, Messrs. Karjalainen, Haataja and Krumov are permitted (i) to have executive appointments with ECL and its affiliates, (ii) to assume the position of Director of any other companies provided such companies do not compete with the Company and, further provided, that such appointments are in a Non-executive capacity and (iii) to own, directly or indirectly, and/or manage property developments in and outside the Target Region.

Under the Services Agreement, ECL is entitled to receive annual remuneration of €2,400,000 payable in advance on a semi-annual basis. The remuneration shall be reviewed annually by the Board of Directors and may be increased at the discretion of a remuneration committee to be set up by the Board of Directors. In the event that the services of any two of Messrs. Karjalainen, Haataja and Krumov are no longer procured by ECL, the total compensation payable under the Services Agreement shall be reduced by 25 per cent until such time as ECL procures the services of a suitable replacement for at least one of such individuals. In addition to the annual remuneration, the Company must reimburse ECL for any reasonable out of pocket expenses incurred in the course of performance of the services under the Services Agreement.

With the exception of Directors remuneration and those listed above no other transactions occurred between the Directors and any other subsidiaries.

35 Contingent assets and liabilities

The Group's contingent liabilities include:

	2008	2007
	€'000	€'000

Bank guarantees	10,876	9,237
Letters of credit	15,441	13,777
Trade guarantees	-	189
	26,317	23,203

For guaranteeing the payables in compliance with the effective commercial contracts, for collaterals connected with the execution of the customs duties of the Group and as part of the credit facility contracts, the following bank guarantees have been issued by the credit institutions servicing the Group:

Certain assets of the Group are pledged as security relating to bank loans (note 25). There are no contingent assets relating to the Group.

36 Events after the balance sheet date

Novera

On 13 March 2009 the Municipality of Sofia sent a termination letter to Novera's group companies which have concession rights for waste collection until 1 October 2014. The termination letters have immediate effect and resulted in termination of the concession agreements between the companies and the municipality.

On 09 April 2009, the Council of Ministers declared a crisis situation in Sofia because of the waste collection problems and instructed the National Crisis Headquarters (NCH) to deal with the issue. The Chairman of NCH temporarily appointed Novera to collect waste. This permission has now been withdrawn.

There was a release of EIB's Euro 15.0 million corporate guarantee obligation to Investkredit Bank AG on refinance of Novera's senior debt to a new senior lender

Avto Union

On 22 April 2009, the Group announced that it has disposed of its wholly owned subsidiary, Avto Union Holding Limited, to Eurohold Automotive Group (Eurohold') for a cash consideration amounting to €8,000,000. Avto Union Holding Limited owns an 80% shareholding in Avto Union AD. Eurohold controls the other 20% of Avto Union AD. This transaction is in line with the Group's non core asset disposal program and the adverse developments in the market.

Completion is conditional upon receipt of the necessary regulatory approval for the transaction. Consideration was payable in three instalments, namely an €800,000 deposit, followed by €5,200,000 upon receipt of the necessary regulatory approval, and €2,000,000 after the orderly transfer of operations or latest 15 December 2009. Regulatory approval was obtained in June 2009 and thus €5,200,000 of the consideration was obtained.

Vitosha

On 3 June 2009, the Group announced that it has entered into an agreement to sell 21.19% of the shares in Uniqa Bulgaria AD to Uniqa International Beteiligungs-Verwaltungs GmbH ('Uniqa International') for €15,200,000 in cash.

On the 2 July 2009, the Group announced it had entered into an agreement to sell its remaining 16.5% shareholding in Uniqa Bulgaria AD to Uniqa International for €7,900,000 in cash.

Castle Golf Properties and Boyana Park

The Group announced further disposals in line with its non-core asset disposal program on 11 June 2009. Castle Golf Properties, comprising agricultural land plots in Romania, and its remaining 30% minority holding in the Boyana Park

Development, a residential development in Sofia, was disposed of for a cash consideration of €800,000 and €600,000 respectively.

TMD NV

On 31 March 2009, the Group announced TMD has completed a reorganisation of its subsidiary shareholding structure in which the founders of Domo Retail SA (Romania) have exchanged their remaining 25% minority shareholding in the Romanian Domo retail operation for newly issued shares of TMD which represent 13% of the enlarged share capital of TMD. Following this share exchange, EIB will hold 61.8% of the shares in TMD (previously 75%) and TMD now owns 100% of both the local Bulgarian and Romanian operating companies.

In July Axis Retail NV ('Axis Retail') entered into refinancing arrangements with Raiffeisen Zentralbank Österreich AG ('RZB') in connection with debt facilities provided by RZB to Axis Retail's subsidiary TMD NV ('TMD'). TMD is a 61.8% owned subsidiary of Axis Retail with the remaining 25.17% being held by Lyra Investment Holding NV ('Lyra') and 13.03% being held by other former owners of the business and management.

The refinancing arrangements include a partial prepayment by TMD under the debt facilities and the provision of a letter of guarantee by Citibank, N.A., Sofia Branch ('Citibank') to RZB.

In December 2008, Axis Retail, TMD and its operating subsidiaries, K & K Electronics EOOD ('KKE') and Domo Retail SA entered into agreements with RZB pursuant to which TMD assumed €65 million of the loans provided to other EIB group companies for the purposes of acquiring holdings in TMD (the 'Refinancing Loans'). RZB also provided a €25 million loan facility to KKE (the 'KKE Loan' together with the Refinancing Loans, the 'RZB Loans'). Security for the RZB Loans includes a pledge by Axis Retail of all of its shares in TMD to RZB. Axis Retail and Lyra also gave an undertaking to RZB (the 'Undertaking') to facilitate a prepayment of up to €40 million of the Refinancing Loans. The EIB Group has no other exposure under the RZB Loans.

At 31 December 2008, TMD was in default of the covenants surrounding the Refinancing Loans. Following discussions between RZB, TMD and Axis in connection with the Undertaking, RZB agreed to accept €20 million in cash, payable by TMD by 15 July 2009, and a bank guarantee from an international bank for the remaining €20 million to be provided to RZB also by 22 July 2009 (thereby securing payment of a further €20 million to RZB no later than 31 December 2009), in exchange for a release of the Undertaking.

On 3 July 2009, EIB advanced to TMD, by way of a shareholder loan, €8 million which TMD used to prepay part of the Refinancing Loans. EIB primarily funded this from the sale of its remaining 16.52% stake in Uniqa Bulgaria AD which was announced on 2 July 2009.

EIB has been granted a €12 million bridge facility repayable within 12 months (the 'Bridge Loan') by a Bulgarian bank (the 'Bank'). The Bridge Loan was drawn down on 15 July 2009 and advanced by EIB to TMD by way of a shareholder loan so as to enable TMD to prepay the other €12 million of the Refinancing Loans required to be provided to RZB by 15 July 2009.

The Bridge Loan bears interest at 9% per annum and provides for an upfront flat fee of 0.5% payable to the Bank. EIB and the State General Reserve Fund of the Sultanate of Oman ('SGRF') each hold 50% shareholdings in Borovets Investments EAD. As security under the Bridge Loan, EIB and the SGRF have each agreed to pledge their 50% shareholdings in Borovets Investments EAD in favour of the Bank. Borovets Investments EAD indirectly owns a 67% shareholding in a holding company which owns 1,977,131 sq m of land for development in the large scale Borovets (Bulgaria) mountain resort development project (the 'Borovets Project'). To-date, EIB has invested over €25 million in the Borovets Project.

Citibank has entered into an agreement with Axis Retail, pursuant to which Citibank, subject to receipt of certain collateral, issued a bank guarantee for €20 million in favour of RZB (the 'Citibank Guarantee'). The Citibank Guarantee provides that, if TMD is unable to prepay another €20 million of the Refinancing Loans by 31 December 2009, RZB will be entitled to draw €20 million under the Citibank Guarantee.

As part of these arrangements, SGRF has agreed to indemnify Citibank for losses to Citibank under the Citibank Guarantee and is providing to Citibank the collateral required by Citibank to secure SGRF's indemnity obligations. EIB has agreed to pay SGRF a fee at the rate of 10% per annum of the principal amount of the Citibank Guarantee whilst the Citibank Guarantee remains in existence and uncalled. This fee will rise to a rate of 17.5% per annum on any amount called under the Citibank Guarantee. EIB has agreed to indemnity SGRF against any expenses or losses in connection with the Citibank Guarantee and EIB has granted a fixed and floating charge in favour of SGRF over all of EIB's assets and undertaking (the 'SGRF Security'). The SGRF Security will include a charge over EIB's shares in Axis Retail, as well as over EIB's interests (or the proceeds thereof) in various property holdings including Rodacar, Serdika, Axis-S Retail NV and Immofinance. As from 31 December 2010, SGRF will have the right to exchange any unpaid indebtedness or liability of EIB to SGRF for EIB's indirect 61.8% interest in TMD unless (i) certain conditions related to TMD's business integration and further management appointments at TMD are not satisfied by EIB by 31 December 2009, in which case, SGRF's exchange rights will be exercisable after 31 December 2009 or (ii) an event of default occurs under any of the agreements with SGRF, in which case, SGRF's exchange rights will become exercisable immediately. For the purposes of the exchange, the value of 100% of TMD's shares has been fixed at €20 million.

EIB, Axis, TMD and RZB have entered into a release and waiver agreement pursuant to which, , RZB has (i) released Axis, Lyra and EIB from the Undertaking, provided that the obligations of Axis and Lyra under the Undertaking shall continue in respect of the prepayment of €20 million, which shall be due and payable on 31 December 2009, (ii) agreed to waive any default or event of default under the RZB Loans which may have occurred prior to the date of the waiver, and (iii) agreed not to exercise any right of cancellation, termination, acceleration or enforcement under the RZB Loans as a result of a breach of certain key covenants under the RZB Loans until 30 October 2009. TMD and RZB have also agreed to implement amendments to the terms of the RZB Loans on the basis of an indicative term sheet. The detailed terms of the revised facilities are still under discussion and when agreed will be documented in definitive loan documentation.

SGRF currently holds 33.3% of EIB's issued share capital and as such is as a substantial shareholder and a related party. Furthermore, SGRF owns a 30% shareholding interest in the Bank and, therefore, the Bank also qualifies as a related party.

With the exception of Warith Al-Kharusi and Faisal Al-Riyami who are each executives of the SGRF, the Directors of EIB consider, having consulted with Collins Stewart Europe Limited, its nominated adviser, that, in all the particular circumstances, the terms of the Related Party Transactions are fair and reasonable insofar as EIB's shareholders are concerned. In giving advice to the Board, Collins Stewart has taken into account the Board's commercial assessments of the Related Party Transactions and that, without the Related Party Transactions, the security over Axis Retail's shares in TMD could be enforced with the consequential likely loss to EIB of all of the value of its investment in TMD.

As per March 2009 the 25% remaining interest in Domo Retail S.A. has been acquired by TMD N.V. The exchange was finalized by converting the 25% of shares held by the minority in Domo Retail S.A. into 13% of shares of TMD N.V. The conversion was completed in accordance with the settlement and flip-up agreement of 19 November 2008 by means of contribution in kind.

For the contingent earn out liability to Domo Retail S.A. shareholders as agreed on by TMD N.V. and the shareholders of Domo Retail S.A. the final payment took place in February 2009 for the total of EUR 3,640 thousand.

Serdika

On 12 August 2009, EIB and Equest Balkan Properties plc reached an agreement regarding (i) the balance and repayment of the loan EIB has granted to EBP and (ii) the effective ownership interest of both parties in the Serdika project. The balance of the loan as at the date of the agreement was established at €9,650,000 and after signing the agreement, EIB received €4,250,000 on 14 August 2009. The balance of €5,400,000 is to be paid from 80% of the proceeds of the sale of the Serdika property. Any outstanding amount after this second payment is to be settled by EBP by 15 October 2010. EIBs effective ownership interest in the Serdika project has increased from 16% to 20%.

37 First time adoption of International Financial Reporting Standards (IFRS)

Reconciliations and explanatory notes on how the transition to IFRS has affected profit and net equity previously reported under US Generally Accepted Accounting Principles are given below. The transition took place on 1 January 2007 (the 'Transition Date').

As these financial statements are the first consolidated financial statements that the company has prepared and the previously published financial information is not directly comparable, the company has decided that to present a more understandable reconciliation a headline reconciliation would be more appropriate and would still provide sufficient detail to enable the material adjustments to the balance sheet and the income statement to be explained as required by IFRS 1.

	Equity	Equity
	at 1 January	at 31 December
	2007	2007
	€'000	€'000
US GAAP basis	310,068	405,443

Adjustment (i)
- reversal of cumulative unrealized
- gains on investments	(88,971)	(182,523)
Adjustment (ii)
- effect of consolidation
- impairment of goodwill at transition date	(8,511)	(8,511)
- net adjustment to retained earnings at transition date	(2,144)	(2,144)
- profits for 2007 not previously recognised under US GAAP basis	-	75,419
- reversal of 2007 profits recognised under US GAAP	-	(1,823)
- foreign currency reserve	-	(3,795)
- valuation gains taken to equity	-	202
- minority interest in subsidiaries	11,095	6,655
IFRS basis	221,537	288,923

Profit for the year ended 31 December 2007

	€'000
US GAAP basis	1,823
Net movement in unrealised gains	93,552
Total US GAAP	95,375

Adjustment (i)
- reversal of unrealised gains on investments	(93,552)
Adjustment (ii)
- inclusion of profits/losses for the year
- subsidiaries (including minority interest share)	63,606
- share of associates/joint ventures' results	27,279
Less dividends paid to parent	(9,735)
IFRS basis	82,973

Adjustments

Explanations of the adjustments made to the US GAAP income statement and balance sheets are as follows:

Adjustment (i) - Reversal of unrealised gains on investments:

This adjustment shows the effect of the reversal of unrealised gains on investments. These unrealised gains were previously recognised under US GAAP as the company's investments were held at fair value, whereas under IFRS the underlying trading results, assets and liabilities of the investee entities are included in the consolidated accounts.

The adjustments to equity at 1 January 2007 and 31 December 2007 reflect the cumulative fair value gains in the carrying value of the company's investments. The adjustment to profit for the year ended 31 December 2007 relates to the unrealised gain recognised in 2007.

Adjustment (ii) - Consolidation of subsidiaries, associates and joint ventures:

This adjustment shows the effect of the first time consolidation of subsidiaries, associates and joint ventures which have been accounted for by acquisition accounting or equity accounting as appropriate (note 1).

The adjustment to profit for the year ended 31 December 2007 is the inclusion of both profits / losses of the subsidiaries not previously consolidated before taking out the minority interest share in the profit (which amounted to €7,555,000 for the year to 31 December 2007) and the Group's share of profits / losses of associates and joint ventures.

The adjustments to equity at both 1 January 2007 and at 31 December 2007 reflect the inclusion of the net assets of subsidiaries in the consolidated accounts together with the Group's interest in associates and joint ventures, including goodwill arising on acquisition.

To the extent the original cost of the investment in an acquired subsidiary exceeds the underlying net assets at 1 January 2007, this is shown as goodwill (note 1), less any initial impairment. Other differences between the original cost and net assets at transition date are included within retained earnings at that date.

The transition to IFRS does not affect the underlying cash flows of the Group. However no reconciliation is provided as the company's cash flow statement prepared under US GAAP is not comparable with the consolidated cash flow statement on an IFRS basis.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about the contents of this document or as to whether or not you should take action you should consult a financial advisor, stockbroker, bank manager, accountant, solicitor or other independent professional advisor immediately. If you have sold or transferred all of your ordinary shares in the Company, please forward this document, together with the accompanying Form of Proxy and Form of Direction, to the purchaser or stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

The notice should be read as a whole and in conjunction with the accompanying Form of Proxy and Form of Direction.

NOTICE OF ANNUAL GENERAL MEETING

(Sent in accordance with the articles of association of the Company and the British Virgin Islands Business Companies Act, 2004.)

Notice is hereby given that the Annual General Meeting of Equest Investments Balkans Limited will be held at the offices of Harney Westwood & Riegels, Cragmuir Chambers, PO Box 71, Road Town, Tortola, VGIII0, British Virgin Islands on Tuesday 6 October at 10.00 a.m. BVI time / 3.00 p.m. UK time, for the following purposes:

Resolution 1. To receive the accounts for the financial year ended 31 December 2008, together with the reports of the Directors and auditors thereon

Resolution 2. To reappoint as a Director Mr. Warith Al-Kharusi who was appointed since the last Annual General Meeting

Resolution 3 To reappoint as a Director Mr. Faisal Al-Riyami who was appointed since the last Annual General Meeting

Resolution 4 To reappoint as a Director Mr. Kalim Aziz who was appointed since the last Annual General Meeting

Resolution 5 To reappoint as a Director Mr. Guido Brera who was appointed since the last Annual General Meeting

Resolution 6 To reappoint as a Director Mr. George Krumov who was appointed since the last Annual General Meeting

Resolution 7 To reappoint Mr. Petri Karjalainen who retires by rotation in accordance with article 60 of the articles of association of the Company and submits himself for reappointment

Resolution 8. To authorise the Directors to appoint the auditors of the Company for 2009 until the conclusion of the next general meeting of the Company at which accounts are laid

Resolution 9. To authorise the Directors to set the remuneration of the auditors

Resolution 10. To approve the investment strategy of the Company

By order of the Board	Registered office:
Ian Schmiegelow	Harneys Corporate Services Limited
Non-executive Chairman	Cragmuir Chambers
17 August 2009	PO Box 71 Road Town
	Tortola
	British Virgin Islands

NOTES

Registered holders of ordinary shares in the Company only (other than holders of CREST Depositary

Interests ('CDI Holders'))

1. A member of the Company who is the registered holder of ordinary shares is entitled to attend and vote at the above meeting may appoint a proxy to attend and vote instead of him by completing the enclosed Form of Proxy. A proxy need not be a member of the Company.

2. Any Form of Proxy in order to be valid must reach the Company's registrar, Computershare Investor Services (BVI Limited), c/o PO Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey, JE4 8PW not later than 10.00 a.m. BVI time / 3.00 p.m. UK time on Friday 2 October 2009 or at least 24 hours before the time fixed for holding any adjourned meeting at which the vote is given.

3. A vote given by a proxy or authorised representative of a company is valid notwithstanding termination of his authority unless notice of the termination is received at the Company's registrars address as set out in note 2 above or at such other place at which the instrument of proxy was duly received by 10.00 a.m. BVI time / 3.00 p.m. UK time on Friday 2 October 2009 or at least 24 hours before the time fixed for holding any adjourned meeting at which the vote is given.

4. The appointment of the proxy will not prevent a member from subsequently attending and voting at the meeting in person.

5. The attention of member of the Company who are the registered legal owners of any ordinary shares is directed to the additional notes contained in the Form of Proxy relating to the completion and timely submission of the Form of Proxy.

6. Only those members entered in the register of members of the Company at 10.00 a.m. BVI time / 3.00 p.m. UK time on Tuesday 22 September 2009 or, if the 2009 Annual General Meeting is adjourned, in the register of members 15 days before the time of any adjourned meeting, shall be entitled to attend and vote at the 2009 Annual General Meeting or any adjournment thereof in respect of the number of ordinary shares registered in their name at that time. Changes to entries in the register of members after the relevant times shall be disregarded in determining the rights of any person to attend or vote at the 2009 Annual General Meeting or any adjournment thereof.

CDI Holders

7. A CDI Holder may instruct Citivic Nominees Limited, the registered legal owner of the ordinary shares of the Company represented by the CREST Depositary Instruments, to vote in accordance with such CDI Holder's instructions by completing and submitting the enclosed Form of Direction.

8. Any Form of Direction in order to be valid must reach the Company's registrar, Computershare Investor Services (BVI Limited), c/o PO Box, Ordnance House, 31 Pier Road, St Helier, Jersey, JE4 8PW not later than 09.00 a.m. UK time on Tuesday 29 September 2009.

9. The attention of CDI Holders is directed to the additional notes contained in the Form of Direction relating to the completion and timely submission of the Form of Direction.

Documents on Display

10. The following documents are available for inspection during normal business hours at Harneys Corporate Service Limited, Cragmuir Chambers, Russell Hill, Road Town, Tortola, British Virgin Islands VGIII0 from Tuesday 22 September 2009 until the conclusion of the Annual General Meeting and will also be available for inspection at the Annual General Meeting venue at least 15 minutes prior to and during the meeting itself:

Copy of the Company's 2008 annual report and accounts;
The register of Directors' interests in shares of the Company, together with copies of the terms and conditions of appointment of Non-executive Directors;
Copy of the articles of association of the Company;
Copy of the Company's Admission Document and Prospectus dated 14 December 2006.

EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING

Resolution 1

The Directors must present the report and accounts of the Directors, the accounts of the Company for the year ended 31 December 2008 and the report of the auditors to shareholders at the Annual General Meeting. The report of the Directors, the accounts, and the report of the Company's auditors on the accounts are contained within the Annual Report and Accounts.

Resolutions 2 - 6

Article 54 of the Articles of Association of the Company allows Directors appointed by the Board of Directors to hold office only until the dissolution of the Annual General Meeting following next after their appointment, unless reappointed at that meeting by the shareholders.

Resolution 7

Proposes the re-election of Mr. Petri Karjalainen who is retiring by rotation in accordance with the Company's Articles of Association. This re-election will take effect at the conclusion of the meeting.

Resolutions 8 and 9

The auditors of a company must be re-appointed at each general meeting at which accounts are laid, or if the auditors are not being re-appointed, new auditors must be appointed at each general meeting at which accounts are laid. Resolution 9 gives authority to the Directors to determine the auditors' remuneration.

Resolution 10

As an investment company, the Company is required to seek the consent of its shareholders for its investment strategy on an annual basis. The investment strategy of the Company was set out in detail in Part II of the Admission Document and Prospectus dated 14 December 2006, and subsequently the shareholders agreed that it shall be amended as set out in the Company's circular to shareholders dated 28 March 2008.

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Board of Directors		Registered Office
Ian Schmiegelow	Non-executive Chairman	Harneys Corporate Services Limited
Warith Al-Kharusi	Non-executive Director	Cragmuir Chambers
Faisal Al-Riyami	Non-executive Director	PO Box 71
Kalim Aziz	Non-executive Director	Road Town
Guido Brera	Non-executive Director	Tortola
Kari Haataja	Executive Director	British Virgin Islands
Robin James	Non-executive Director
Petri Karjalainen	Executive Director
George Krumov	Executive Director


NOMAD and Broker		Joint Broker
Collins Stewart Europe Limited		KBC Peel Hunt
88 Wood Street		111 Old Broad Street
London EC2V 7QR		London EC2N IPH
England		England

Independent Auditor		Custodian
Grant Thornton		Northern Trust (Ireland) Limited
24-26 City House		Georges Court
Dublin 2		54-62 Townsend Street
Ireland		Dublin 2
		Ireland

Legal Counsel to the Company		Registrar*
Harney Westwood & Riegels		Computershare Investor Services (BVI Limited) c/o
Cragmuir Chambers		PO Box 83
PO Box 71		Ordnance House
Road Town		31 Pier Road
Tortola		St Helier
British Virgin Islands		Jersey JE4 8PW