DEVIN_AD_-_unconsolidated

8/7/2019 DEVIN_AD_-_unconsolidated

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”Devin” EAD

Company’s unconsolidated financial statements

For the year ended 31 December 2006

With Independent Auditors' Report Thereon



Devin EADUnconsolidated financial statements as at 31 December 2006

Unconsolidated income statement


In thousands of BGN Note 2006 2005

(restated)

Revenue 1 29,836 21,032

Cost of sales 2 (21,522) (15,988)

Gross Profit 8,314 5,044

Other operating income 3 322 129Distribution expenses 4 (6,242) (4,075)Administrative expenses 5 (2,232) (663)Other operating expenses 6 (151) (193)

Profit from operations 11 242

Finance income 7 5 293

Finance expense 7 (476) (290)

Net finance expense (471) 3

Profit/(loss) before tax (460) 245

Income tax expense - -

Net profit/(loss) for the year (460) 245

The unconsolidated income statement is to be read in conjunction with the notes to and forming part of thefinancial statements set out on pages 5 to 38.

The unconsolidated financial statements were approved on 8 June 2007 by:

Executive Director Chief Accountant

2




Unconsolidated statement of changes in equity


Note Share

capital

Other

reserves

Revaluation

reserve

Retained

earnings

Noti

c

Balance at 1 January 2005 56 1,271 13 394Adjustments in relation to transition toIFRS 24(d) (146)

367

Balance at 1 January 2005 (restated) 56 1,125 13 761

Recognised profit for 2005 24(d) - - - 245Dividends - - - (216)Revaluation of property, plant andequipment and intangible assets

9,10 - - 7,154 -

Balance at 31 December 2005 56 1,125 7,167 790

Balance at 1 January 2006 56 1,125 7,167 790Recognised net assets and liabilities fromthe merger of Wing Equity Devin Ltd. 25 13,644 -

- -

Recognised loss for 2006 - - - (460)

Balance at 31 December 2006 13,700 1,125 7,167 330

The unconsolidated state of changes in equity is to be read in conjunction with the notes to and forming part of the financial statem






Unconsolidated balance sheet As at 31 December 2006


(restated)

Assets

Property, plant and equipment 9 14,129 12,275

Intangible assets 10 618 584

Investments 11 620 53

Total non-current assets 15,367 12,912

Inventory 12 1,618 1,827Trade and other receivables 13 1,591 1,595

Receivables from related parties 15 2,155 983Cash and cash equivalents 14 63 476Prepayments 13 23

Total current assets 5,440 4,904

Total assets 20,807 17,816

Equity

Share capital 13,700 56Reserves (27,403) 8,292Retained earnings 330 790

Total capital and reserves (13,373) 9,138

Liabilities

Liability for retirement compensation 17 44 32Interest-bearing loans and borrowings 18 24,954 4,431

Total non-current liabilities 24,998 4,463

Liability for retirement compensation 17 1 -

Interest-bearing loans and borrowings 18 2,845 1,655Payables to related parties 15 2,341 349Trade and other payables 19 3,995 2,211

Total current liabilities 9,182 4,215

Total liabilities 34,180 8,678

Total equity and liabilities 20,807 17,816

The unconsolidated balance sheet is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 5 to 38.



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5

Unconsolidated statement of cash flows For the year ended 31 December 2006

In thousands BGN Note 2006 2005

Cash flows from operating activities

Cash receipts from customers 35,890 24,754Cash paid to suppliers (27,908) (22,613)Cash receipts related to personnel 62 27Cash paid to employees (3,182) (1,553)VAT and one-off taxes received - 85VAT and one-off taxes paid (951) (146)Other receipts from operating activities - 6Other payments from operating activities (473) (634)

Interest received 5 -Income taxes paid - -

Net cash from operating activities 3,443 (74)

Investment activities

Acquisition of property, plant and equipment (2,080) (2,311)Proceeds from sale of property, plant and equipment 132 288

Net cash flow from investing activities (1,948) (2,023)

Financing activities

Proceeds from borrowings 2,325 4,325Repayment of borrowings (4,150) (1,730)Dividends paid (82) (127)Payments of foreign exchange differences (1) -

-

Net cash flow from financing activities (1,908) 2,468

Net increase /(decrease) of cash and cash equivalents (413) 371

Cash and cash equivalents at the beginning of the year 476 105

Cash and cash equivalents at the end of the year 14 63 476

The unconsolidated statement of cash flows is to be read in conjunction with the notes to andforming part of the financial statements set out on pages 5 to 38.






Notes to the unconsolidated financial statements

6

Reporting entity

Devin EAD (the Company) is registered in the Trade Register of the Smolyan District Court t. 218, p.88,with decision 592 from 15.06.1999 under Company case № 412/1999. The company is situated in Devin,

municipality Smolyan, 6, Vasil Levski str.

Company’s business activity: Bottling of mineral water and soft drinks. The unconsolidated financialstatements were approved by the Board of Directors on 8 June 2007.

Significant accounting policies

(a) Statement of compliance

These unconsolidated financial statements are prepared in accordance with IFRS, approved by the EUCommission. In addition to unconsolidated financial statements, Devin EAD prepares consolidatedfinancial statements. These financial statements are part of the consolidated financial statements.

These are the Company’s first unconsolidated financial statements, prepared in accordance with IFRS,and IFRS 1 “First time adoption of International Financial Reporting Standards” has been applied. In

previous periods, the Company has prepared its financial statements in accordance with the nationallegislation. The differences arising due to the transition to IFRS have been analyzed and recalculationsare done in these unconsolidated financial statements for the comparative period. Description of how thetransition to IFRS affects the financial status and the results of the activity is presented in note 24.

IAS 8 “Accounting policies, changes in accounting estimates and errors” requires the Company todisclose the fact that it has not applied standards and interpretations to published International FinancialReporting Standards that are not yet effective, as well as information about the possible effect fromapplication of the respective standards and interpretations in the period of the first time application (seenote 26)

(b) Basis of preparation

The unconsolidated financial statements are presented in Bulgarian Leva (BGN), rounded to the nearestthousand. Historic cost has been used as a basis for preparation, with the exception of non-current assets,which are presented at revalued amount (see significant accounting policy (e)).

The preparation of the financial statements in compliance with IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based onhistoric experience and various other factors that are believed to be reasonable under the circumstances,the results of which form the basis of making the judgments about carrying values of assets andliabilities that are not readily apparent from other sources. Actual results may differ from these

estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognized in the period in which the estimate is revised if the revision affects only that

period or in the period of the revision and future periods if the revision affects both current and future periods.

(b) Basis of preparation (continued)

In particular, information about significant areas of estimation uncertainty and critical judgments inapplying accounting policies that have the most significant effect on the amount recognised in thefinancial statements are described in the following notes:

• Notes 9 – Property, plant and equipment;• Note 12 – Inventories;

• Note 13 – Trade receivables.





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Significant accounting policies (continued)

(c) Going concern

The unconsolidated financial statements are prepared under the going concern assumption, based onaccruals accounting and through keeping the accepted accounting policy unchanged for the reporting

period. The validity of going concern assumption depends on the active financial support from the soleowner of the capital, as well as on the structure of receivables, which are mainly with related parties.

(d) Foreign currency transactions

Transactions in foreign currencies are translated to BGN at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheetdate are translated to BGN at the foreign exchange rate ruling at that date. Foreign exchange differencesarising on translation are recognised in the income statement.

(e) Property, plant and equipment

(i) Initial recognition and subsequent measurement

Property, plant and equipment are presented at revalued amount less accumulated depreciation andimpairment losses (refer to accounting policy (j)). Acquisition cost of property, plant and equipment andintangible assets in previous periods includes their historical cost and revaluations performed using thecoefficient method for the period 1997 – 2001 in compliance with Bulgarian legislation applicable at that

period. Revaluation of property, plant and equipment and intangible assets has been carried out as at 31December 2005 so that assets fair value is brought down to their deemed cost in compliance withInternational Financial Reporting Standards. The increase in the value of the assets as a result of revaluation is recognised in the statement of changes of equity, as an increase in revaluation reserve.

When the net book value of an asset is decreased as a result of revaluation, the decrease is recognized asa decrease of the existing revaluation reserve. When the decrease is greater than the balance of theexisting revaluation reserve, the difference is recognized as expense

Property, plant and equipment are stated at cost at the date of their acquisition. Cost includes the purchase price, the unrecoverable taxes for the purchase, as well as any other costs directly attributable to bringing the asset to a working condition for its intended use.

The acquisition costs of property, plant and equipment are formed from expenses for materials andexpenses in relation to the contracts of construction, stated at cost.

Leased assets

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership areclassified as finance leases. Upon initial recognition the leased asset is measured at an amount equal tothe lower of its fair value and the present value of the minimum lease payments at the beginning of thelease period, decreased by the accumulated depreciation and impairment losses.





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(e) Property, plant and equipment (continued)

Subsequent expenditure

Expenditure incurred to replace a component of an item or property, plant and equipment is capitalized inthe asset value if it is probable that the future economic benefits embodied with the item will flow to theCompany and the cost of the item can be measured reliably. All other expenditure is recognized in theincome statement as an expense as incurred.

(ii) Depreciation

Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of theassets.

Land and assets under construction are not depreciated. The depreciation rates are based on the estimated

useful live, as follows:Buildings 40 - 60 yearsMachinery 5 - 15 yearsEquipment 25 yearsFixtures and fittings from 5 to 10 years

Purchased assets are depreciated from the month following the date when they are put into use andinternally generated assets are depreciated from the month they are put into use.

(f) Intangible assets

Intangible assets acquired by the company are presented at revalued amount, less accumulateddepreciation and impairment losses (refer to accounting policy (j)). Acquisition cost of intangible assets

in previous periods includes their historical cost and revaluations performed using the coefficient methodfor the period 1997 – 2001 in compliance with Bulgarian legislation applicable at that period.Revaluation of intangible assets has been carried out as at 31 December 2005 so that assets fair value is

brought down to their deemed cost in compliance with International Financial Reporting Standards.

Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the futureeconomic benefits embodied in the specific asset to which it relates. All other expenditure is expensed asincurred.

Amortisation

Amortisation is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. Licences are amortized on the basis of their validity terms.

The estimated useful lives are as follows:

Software 5 yearsConstruction rights for the specific periodOther for the specific period

(g) Investments in subsidiaries

(i) Subsidiaries

Subsidiaries are entities controlled by another entity (called the parent company). Control exists when the parent company has the power to govern the financial and operating policies of an entity so as to obtain

benefits from its activities. The investments in subsidiaries in the unconsolidated financial statements,which are not classified as held for sale (or included in a disposal group, which is classified as held for sale) in accordance with IFRS 5, are recognized at cost.





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(g) Investments in subsidiaries (continued)

(ii) Business combination, involving the parent company, which is in common control together with

the reporting entity.

A business combination involving entities or businesses under common control is a business combinationin which all of the combining entities or businesses are ultimately controlled by the same party or parties

both before and after the business combination, and that control is not transitory.

On 31 December 2006 Wing Equity Devin EOOD, the sole owner of the capital of Devin EAD mergedinto the reporting entity (Devin EAD). This merger represents restructuring of entities in the group(restructuring) and it does not fall into the scope of IFRS 3 “Business combinations”. In theseunconsolidated financial statements, the merger of the parent company in the reporting entity isrecognized using the fair value of the net assets of Wing Equity Devin EOOD, representing a notional

capital contribution, excluding the investment of Wing Equity Devin EOOD in Devin EAD. Using thisapproach the assets and liabilities of the reporting entity, as well as the existing investment in thesubsidiary before the merger are recognized at historical cost. The difference between the fair value of the net assets of Devin EAD and the historical cost is recognized as notional capital contribution in thestatement of changes in equity. Accordingly the adjustments are not recognized at their fair valuesdetermined in the deal of the initial acquisition of the reporting entity from the present sole owner of thecapital in these unconsolidated financial statements (see note 25).

(h) Inventories

Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimatedselling price in the ordinary course of business, less the estimated costs of completion and selling

expenses.The cost of inventories at their consumption is based on the weighted average principle and includesexpenditure incurred in acquiring the inventories and bringing them to their existing location andcondition.

(i) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognized initially at fair value. Subsequent to initialrecognition non-derivative financial instruments are measured as described below.

A financial instrument is recognized if the Company becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized if the Company’s contractual rights to the cash flows fromthe financial assets expire or if the Company transfers the financial asset to another party withoutretaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Company commits itself to purchaseor sell the asset. Financial liabilities are derecognized if the Company’s obligations specified in thecontract expire or are discharged or cancelled.





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(i) Financial instruments (continued)

Held-to-maturity investments

If the Company has the positive intent and the ability to hold debt securities to maturity, then they areclassified as held-to-maturity. Held-to-maturity investments are measured at amortized cost using theeffective interest method less any impairment losses (refer to significant accounting policy (j)).

Available-for-sale financial assets

The Company’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein,other than the impairment losses (refer to significant accounting policy (j)), and foreign exchange gains andlosses and available-for-sale monetary items, are recognized directly in equity. When an investment isderecognized, the cumulative gain or loss in equity is transferred to profit or loss.

Investments at fair value through profit and loss

An investment is classified as at fair value through profit or loss if it is held for trading or is designated assuch upon initial recognition. Financial instruments are designed at fair value through profit and loss if theCompany manages such investments and makes purchase and sale decision based on their fair value. Uponinitial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financialinstruments at fair value through profit and loss are measured at fair value, and changes therein arerecognised in profit or loss.

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interestmethod, less any impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable ondemand and form an integral part of the Company’s cash management are included as a component of cashand cash equivalents for the purpose of the statement of cash flows.

Trade and other receivables

Trade and other receivables are stated at their amortised cost less accumulated impairment losses (refer toaccounting policy (j)). Short-term receivables are stated at nominal cost.

Interest-bearing borrowings

Interest-bearing borrowings are recognized initially at cost, less attributable transaction costs. Subsequent toinitial recognition, interest-bearing borrowings are stated at amortized cost with any difference between costand redemption value being recognized in the income statement over the period of the borrowings on an

effective interest basis.

Trade and other payables

Trade and other payables are stated at their amortised cost. Payables with short-term maturity are statedat nominal cost.

(j) Impairment

Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events hadnegative effect on the estimated future cash flows of that asset. Individually significant financial assets





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(j) Impairment (continued)are tested for impairment on individual basis. The remaining financial assets are assessed collectively ingroups that share similar credit risk characteristics.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as thedifference between its carrying amount, and the present value of the estimated future cash flowsdiscounted at the original effective interest rate. An impairment loss in respect of an available-for-salefinancial asset is calculated by reference to its current fair value.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for sale financial asset recognised previously in equity is transferred profit or loss.

Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories (refer to significantaccounting policy (h)) and deferred tax assets (refer to significant accounting policy (p)), are reviewed ateach reporting date to determine whether there is any indication of impairment. If any such indicationexists then the asset’s recoverable amount is estimated.

For intangible assets that have indefinite lives or that are not yet available fro use, recoverable amount isestimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceedsits recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cashflows that largely are independent from other assets and groups.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the unitsand then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed.

(k) Share capital

The capital of the Company is presented at historical cost at the date of registration.

(l) Provisions

A provision is recognized if, as a result of a past event the Company has a present legal or constructiveobligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be

required to settle the obligation. If the effect is material, provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money. Where it is appropriate, other specific risks, specific to the liability are taken into consideration.

(m) Employee benefits

(i) Defined contribution plans

The Bulgarian government is responsible for providing the minimum pension according to definedcontribution plans. The expenses that the Company has for those retirement plans are recognized in theincome statement as incurred.

(ii) Annual paid leave

The Company recognizes as a liability the undiscounted amount of the expenses for annual paid leave,expected to be paid to the employees for their work in the previous reporting period.





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(m) Employee benefits (continued)

(iii) Retirement compensation to employees

In accordance with the requirements of art. 222, paragraph. 2 of the Labor code, on termination of thelabor contract of an employee due to sickness or becoming entitled to retirement, the Company is obligedto pay him compensation amounting to double his gross monthly salary if the employee has beenemployed in the Company for at least five years, and for the last five years has not receivedcompensation for the same reason. These payments to the employees are classified as long-term incomeof the personnel.

In accordance with the requirements of art.222, paragraph.2 Labor code, on termination of the labor contract of an employee, who has become entitled to retirement, the Company is obliged to pay himcompensation amounting to double his gross monthly salary. If the employee has been employed in theCompany for the last ten years, the amount of the compensation due is six times his gross monthlysalary. These payments to the employees are classified as defined contributions after retirement.

In the unconsolidated financial statements, a liability for retirement compensation to employees has beenaccrued on the basis of actuarial calculations and assumptions based on which the present value of theliability for payment of defined income has been determined. The projected unit credit method has beenused for the calculation of the present value of the liability

When determining the present value of the liability for defined personnel contributions, actuarialincome/loss is not recognised, when such liabilities are included in 10% of the present value of thedefined benefit obligation at that date.

When determining the present value of liabilities for other long-term personnel contributions due tosickness retirement, actuarial income/loss are recognised in the income statement, in the period theyarise.

(n) Revenue

Revenue from sale of goods is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer.

Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the balance sheet date.

The stage of completion is assessed by reference to surveys of work performed. No revenue isrecognized if there are significant uncertainties regarding recovery of the consideration due.

(o) Finance income and expense

Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profitor loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss.Interest income is recognised as it accrues, using the effective interest rate method. Dividend income isrecognised on the date that the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions,dividends on preference shares classified as liabilities, foreign currency losses, changes in the fair valueof financial assets at fair value through profit or loss, impairment losses recognised on financial assets,and losses on hedging instruments that are recognised in profit or loss. All borrowing costs arerecognised in profit or loss using the effective interest method.





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(p) Income tax

Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the

income statement except to the extent that it relates to items recognised directly to equity, in which caseit is recognised in equity.

Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantially enacted at the balance sheet date.

Deferred tax is provided using the balance sheet method, for the temporary differences between thecarrying amounts of assets and liabilities for the financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profitdifferences related to investments in subsidiaries to the extent that they are expected not to be realized inthe foreseeable future.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the

carrying amount of assets and liabilities, using the tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognized only to the extent that is probable that future taxable profits will beavailable against which the unused tax losses and credits can be utilized. Deferred tax assets are reducedto the extent that it is no longer probable that the related tax benefit will be realized.

The Company meets the requirements based on the Bulgarian national tax legislation for transferringcorporate income tax in previous as well as current year. Having this in mind no accrual of income taxhas been done as well as its corresponding deferred tax assets and liabilities.





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Page Page

1 Revenue 15 14 Cash and cash equivalents 20

2 Cost of sales 15 15 Related parties 21-22

3 Other operating income 15 16 Share capital 22

4 Cost of materials 15 17 Liability for retirement compensation 23

5 Administrative expenses 16 18 Interest-bearing loans and borrowings 24-25

6 Other operating expenses 16 19 Trade and other payables 25

7 Net finance expense 16 20 Financial instruments 26-27

9 Property, plant and equipment 17-18 21 Contingent liabilities 27-28

10 Intangible assets 19 22 Subsequent events 28

11 Investments 20 23 Mineral water concession agreement 29-30

12 Inventory 20 24 Description of transition to IFRS 30-36

13 Trade and other receivables 20 25 Business combination involving the parent company which is under common control together with thereporting entity

36-37

26 List of published International

Financial Reporting Standards that arenot effective as at the balance sheetdate

38





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1. Revenue from sale

In thousands of BGN 2006 2005

(restated)

Bottled water 25,903 17,478Soft drinks 816 957Merchandise – bottled water 3,387 2,245Other 1,223 1,015Discounts (1,493) (663)

29,836 21,032

2. Cost of sales


(restated)

Bottled water 17,405 12,356Soft drinks 638 854Merchandise – bottled water 2,391 1,916Other 1,088 862

21,522 15,988

3. Other operating income


(restated)

Sales of materials 1,777 1,081Other income 83 127

Cost of sales (1,624) (1,082)Gain on sale of property, plant and equipment 86 3

322 129

4. Cost of materials


(restated)

Materials 10 9

Hired services 3,952 2,932Depreciation 423 305Salaries 407 47Expenses for social security and other socialexpenses

92 13

Taxes 611 117Other 747 652

6,242 4,075





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5. Administrative expenses


(restated)

Materials 56 59Hired services 1,286 263Depreciation 40 75Salaries 584 159Expenses for social security and other social expenses 79 52Taxes 27 11Other 160 44

2,232 663

6. Other operating expenses


(restated)

Impairment of receivables 151 -Impairment of property, plant and equipment 9 - 164

Other - 29

151 193

7. Net finance expense


(restated)

Interest income 5 -Dividend income - 293Finance income 5 293

Interest expense (435) (249) Net foreign exchange loss (4) (5)Finance expense (37) (36)

(476) (290)

Net finance income / (expense) (471) 3





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9. Property, plant and equipment

In thousands of BGN Land

and

buildings

Plant

and

equipment

Vehicles Fixtures

and

fittings

Assets

under

construction

Total

Cost

Balance at 1 January 2005 1,339 5,931 367 1,399 61 9,097Recognised assets – transition to IFRS 36 63 - 130 - 229Balance at 1 January 2005 (restated) 1,375 5,994 367 1,529 61 9,326Acquisitions - 995 355 502 1,165 3,017Disposals - (172) (3) - - (175)Transfers 95 250 - - (345) -Recognised assets – transition to IFRS - 7 - 405 - 412Revaluation in relation to the transition to IFRS

– increase against revaluation reserve 1,451 4,678 139 346 - 6,614Revaluation in relation to the transition to IFRS

– decrease against accumulated depreciation (226) (5,404) (222) (857) - (6,709)Impairment in relation to IFRS (145) (19) - - - (164) Balance at 31 December 2005 (restated) 2,550 6,329 636 1,925 881 12,321 Balance at 1 January 2006 2,550 6,329 636 1,925 881 12,321Acquisitions 113 1,295 223 1,238 389 3,258Disposals - (25) (111) - - (136)Transfers 1,177 26 - 67 (1,270) -Balance at 31 December 2006 3,840 7,625 748 3,230 - 15,443

Depreciation and impairment lossesBalance at 1 January 2005 166 4,811 143 596 - 5,716Depreciation on recognised assets – transitionto IFRS - - -

8 - 8

Balance at 1 January 2005 (restated) 166 4,811 143 604 - 5,724Depreciation charge 60 593 79 264 - 996Depreciation charge on recognised asset inrelation to transition to IFRS - - -

38 - 38

Depreciation on disposals - - - (3) - (3)Revaluation in relation to the transition to IFRS

–written off against book value (226) (5,404) (222)

(857) - (6,709)

Balance at 31 December 2005 (restated) - - -

46 - 46Depreciation charge 83 731 55 401 - 1,270Depreciation on disposals - - (2) - - (2)Balance at 31 December 2006 83 731 53 447 - 1,314

Carrying amount

At 1 January 2005 (restated) 1,209 1,183 224 925 61 3,602

At 31 December 2005 (restated) 2,550 6,329 636 1,879 881 12,275

At 1 January 2006 2,550 6,329 636 1,879 881 12,275

At 31 December 2006 3,757 6,894 695 2,783 - 14,129





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9. Property, plant and equipment (continued)

The Company has pledged property, plant and equipment under an investment credit received fromRaiffeisenbank Bulgaria AD with the carrying amount of BGN 9,358 thousands, distributed as follows:

• Land – BGN 995 thousands;

• Buildings - BGN 1,663 thousands;

• Plant and equipment – BGN 5,486 thousands;

• Fixtures and fittings – BGN 1,214 thousands.





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10. Intangible assets

Note Software Other Total

Cost

Balance at 1 January 2005 4 40 44Additions 4 38 42Disposals - - -

Balance at 31 December 2005 8 78 86Revaluation in relation to the transition to IFRS

– increase against revaluation reserve24 (а) 3 537 540

Revaluation in relation to the transition to IFRS – decrease against accumulated depreciation

(6) (36) (42)

Balance at 31 December 2005 (restated) 5 579 584

Balance at 1 January 2006 5 579 584Additions 1 66 67

Disposals - - -Balance at 31 December 2006 6 645 651

Depreciation and impairment losses

Balance at 1 January 2005 4 28 32Depreciation charge 2 8 10Depreciation on disposals - - -Balance at 31 December 2005 6 36 42Revaluation in relation to the transition to IFRS

–written off against book value(6) (36) (42)

Balance at 31 December 2005 (restated) - - -

Balance at 1 January 2006 - - -Depreciation charge 2 31 33Depreciation on disposals - - -Balance at 31 December 2006 2 31 33

Carrying amounts

At 1 January 2005 - 12 12

At 31 December 2005 (restated) 5 579 584

At 1 January 2006 5 579 584

At 31 December 2006 4 614 618

11. Investments


Subsidiaries

Atlantic Divine EAD 100% 50 50

Devin Royal EAD 100% 567 -

617 50

Other investments

Ecopack Bulgaria 5.20% 3 3

620 53





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12. Inventory

In thousands of BGN 2006 2005 (restated)

Materials 1,304 1,513Finished goods 263 294Merchandise 51 20

1,618 1,827

13. Trade and other receivables


(restated) Trade receivables 1,616 1,475Impairment of trade receivables (151) -

Guarantee for execution of liability to protect themineral water spring from pollution and depletion 54

47

Guarantee for execution of liability for payment of the concession fee 54

57

Other 18 16

1,591 1,595

14. Cash and cash equivalents


(restated)

Cash in hand 30 459Cash at bank 33 17

63 476





21

15. Related parties

The Company has a related party relationship with other companies from the economic group.

During the period ended 31 December 2006, the following transactions have taken place:

Related party Relation Transactions during the period Balance as

at 31

December

2006

Balance as

at 31

December

2005

Sales

Devin Royal EAD Subsidiary of Devin EAD

Mineral water and other soft drinks -BGN 7,323 thousand

Invoiced expenses - BGN 18 thousand

1,333 672

Loan given - BGN 110 thousand 110 - Atlantic DivineEAD

Subsidiary of Devin EAD

Dividends received 293

Building services - BGN 23 thousand

Sold materials - 1,687 thousand

Invoiced expenses - BGN 597 thousand

712 18Total receivables from related parties 2,155 983

Purchases

Soravia Equity

GmbH

Subsidiary of

DevinBeteiligungs

GmbH

Loans – EUR 500 thousand equals to

BGN 978 thousand

978 -

Devin Royal EAD Subsidiary of Devin EAD

Purchased machinery -BGN 13 thousandPurchased materials – BGN 28 thousand

Invoiced spare parts and services – BGN 91thousand

364 213

Atlantic DivineEAD

Subsidiary of Devin EAD

Purchased bottled mineral water – BGN782 thousand

Soft drinks - BGN 2,433 thousand

999 136

Total payables to related parties 2,341 349

Loan agreement with Soravia Equity GmbH

A loan agreement between Wing Equity Devin EOOD and Soravia Equity GmbH was made inDecember 2006. Subsequently, with the merger transaction between Wing Equity Devin EOOD andDevin EAD, the loan was transferred to Devin EAD. Terms and conditions:• Negotiated amount – EUR 500,000 ( BGN 978 thousand);• Outstanding principal– EUR 500,000 (BGN 978 thousand);• Interest rate – six month EURIBOR + 3% per annum. The interest shall be paid on the outstanding

principal and together with the principal must be paid not later than June 30th, 2007.

• The full outstanding principal amount of the loan, plus interest must be paid not later than June30th,2007

• The loan is uncollateralized.





22

15. Related parties (continued)

Loans from related parties

Transactions with directors and executive officers

The Company is a related party with executive directors and executive officers.


(restated)

Remuneration of the Board of Directors 122 27Social security on remuneration of the Board of Directors 8 8

130 35

16. Share capital

In number of shares 2006 2005

Issued at 1 January 5,560 5,560Cancellation of shares (5,560) -Issued new shared in result of merger and based on the net assets valueof Wing Equity Devin EOOD transferred to Devin EAD 1,370,000 -

1,370,000 5,560

The share capital of Devin EAD consists of 5,560 ordinary shares (2005: 5,560 shares) with a par valueof 10 BGN. Change in the share capital of the Company from BGN 55,600 to BGN 13,700,000 (newshares with par value of BGN 10) and a merger of Wing Equity Devin Ltd. with Devin EAD areregistered with Smolyan District court decision №2 on 03 January 2007. The date of the merger in thecontract 31 December is also accepted for accounting purposes. In these financial statement, the sharecapital has been stated according to the clauses in the contract for merger of 31 December 2006 (seenotes 22 and 25).





23

17. Liability for retirement compensation

Present value of liability for retirement compensations with respect to age and lengthof service retirement

In thousands of BGN 2006

Present value of obligations at 1 January 2006 22

Interest expense 1Current service cost 12Gain from curtailment of personnel -Actuarial gain -Paid to employees retirement compensations in 2006 (1)Present value of obligations at 31 December 2006 34

Liability for retirement compensation with respect to illness

Present value of obligations at 1 January 2006 9

Interest expense 1Current service cost 3Actuarial gain (1)Gain from curtailment of personnel -

Paid to employees retirement compensations in 2006 (1)Present value of obligations at 31 December 2006 11

Liability for retirement compensation 45

Long-term part 1

Short-term part 44





24

18. Interest-bearing loans and borrowings

This note provides information about the terms of the Company’s interest-bearing loans and borrowings.For more information about the Company’s exposure to interest rate and currency risk, refer to note 20

“Financial instruments”.


(restated)

Non-current liabilities

Bank loans 24,363 4,189

Finance lease 18 (а) 591 242

24,954 4,431Current liabilities

Bank loans 2,367 1,500

Finance lease 18 (а) 478 155

2,845 1,655Total 27,799 6,086

Conditions of the Company’s interest-bearing loans and borrowings

1.) The Company has signed loan agreement with Raiffeisenbank Bulgaria EAD for EUR 2,500thousand, which will be used for new investments in long-term assets and construction. As at 31December 2006, the remaining principal amounts to EUR 1,636 thousand (BGN 3,198 thousand),which is distributed as follows:

• Under limit A– EUR 420 thousand (BGN 822 thousand);• Under limit B – EUR 1,215 thousand (BGN 2,376 thousand);

The principal is paid out in equal monthly installments up till 15.07.2009 including.

Annual interest rate is determined at monthly EURIBOR + 3 p.

2.) The Company has an overdraft agreement with Raiffeisenbank Bulgaria EAD with limit of EUR 2,600 thousand. As at 31 December 2006 the liability of the company amounts to BGN 2,454thousand. The overdraft must be repaid by July 2009.

Annual interest rate is determined for the overdraft at monthly SOFIBOR + 3p.

The company has pledged own real estate - property, plant and equipment as collateral under the creditand overdraft agreement with net book value BGN 9,358 (see note 9). As a collateral are pledged alsonon-current assets – plant and equipment for bottling mineral water, owned by Atlantic Divine EAD.Promissory notes have been issued, one amounts to BGN 2,600 thousand together with interest of 12%annually over this amount since the date of the signing of the promissory note (04 July 2006); andanother – for the amount of EUR 2,500 thousand (BGN 4,890 thousand) together with the legal interestover the amount since the date of the promissory note (29 July 2004). The liabilities on both promissorynotes are accepted from Atlantic Divine EAD (subsidiary, 100% from the capital of which is owned byDevin EAD).

3.) Priority credit agreement for acquisition with Raiffeisen Zentralbank ÖsterrecihAktiengeseltschaft – Austria, with the following terms and conditions:

• Negotiated amount of EUR 6,000 thousand ( BG 11,735 thousand) – credit for acquisition;• Outstanding principal (nominal value) – EUR 5,777 thousand (BGN 11,299 thousand);• The shares of the capital of Devin Beteiligungs GmbH owned by Soravia Equity GmbH are pledged

as collateral of the credit facility, which are the first pledge over the shares of Devin EAD and all thereceivables originating from these shares – dividends, revenues from sale, liquidation notes, as wellas other receivables originating from these shares. A guarantee has been issued from Soravia EquityGmbH amounting to 100% of the credit liability.





25

18. Interest-bearing loans and borrowings (continued)

• Interest rate – three month EURIBOR + sum of margin and mandatory expenses, which sum reaches

up to 4%;The principal is paid out in equal monthly installments, starting from December 2006 untill September 2012.

4.) Mezzanine acquisition facility agreement for loan with Accession Eastern Europe Capital AB, withthe following conditions:• Negotiated amount EUR 5,000 thousand ( BGN 9,779 thousand) – loan for acquisition;• Outstanding principal – EUR 5,000 thousand ( BGN 9,779 thousand);• The credit facility is collateralized with a second pledge over the shares of Devin EAD and all

receivables originating from these shares – dividends, revenues from sale, liquidation notes, as wellas other receivables originating from these shares

• Interest – 8%;The principal is paid out till December 2013.

18 (а). Finance lease liabilities

Total

Less

than 1

year

1-2

years

2-5

years

Over 5

years

Finance lease 1,069 478 387 204 -

Finance lease liabilities are payable as follows:

In thousands of BGN 31 December 2006 31 December 2005

Total Interest Minimum leasepayments

Total Interest Minimum leasepayments

Less than 1 year 562 84 478 264 22 2421-5 years 660 69 591 173 18 155

1,222 153 1,069 437 40 397

19. Trade and other payables


(restated)

Payables to suppliers 3,046 1,693Payables to employees 179 65Liability for unused paid leave, including social security 304 81Payables to the budget 159 130Social security payables 68 38Deferred income - 60Payables based on the concession agreement(concession fee and penalty)

193 61

Other short-term liabilities 46 83

3,995 2,211





26

20. Financial instruments

Exposure to credit, interest rate and currency risk arises in the normal course of the Company’s business.

Foreign exchange risk

The Company is not directly exposed to foreign exchange risk because it carries out its activity on the localmarket and the purchases of raw materials are made in BGN. The prices of finished goods are also in BGN.

A significant part of the loans is denominated in EUR. The Euro has a fixed exchange rate to the Bulgariancurrency 1 Euro=1.95583 BGN. That is why, presently the Company is not directly exposed to significantforeign exchange risk on the received loans.

Interest rate risk

During the reporting period the Company has been exposed to interest rate risk, to the extent that it operateswith necessity for working capital.

Effective interest rates and reprising analysis

In respect of income-earning financial assets and interest-bearing financial liabilities, the following tableindicates their average effective interest rates at the balance sheet date and the periods in which they matureor, if earlier, re-price.

In thousands of BGN Note

Effective

interest rateTotal

6

months

or less

6-12

months

1-2

years

2-5

years

Financial instruments with fixed interest %

Cash at bank 14 0,25 % 33 33 - - -Cash at bank in relation to the guarantee for execution of liability to protect the mineralwater springs from pollution and depletion

13 0,25 %54 54 - - -

Mezzanine facility agreement for loan withAccession Eastern Europe Capital AB

18 8 % (9,779) - - - (9,779)

Contract for finance lease with PiraeusLeasing 113/2005 , Annex 1

18 8,40 % (10) - - - (10)

Contract for finance lease with PiraeusLeasing 113/2005 , Annex 2-11

18 5,75 % (130) - - - (130)

Contract for financial lease with Krones AGfrom 08.06.2005

18 8% (37) - - - (37)

Contract for financial lease with SibexGmbH 05020/01.12.2005

18 6% (20) - - - (20)

(9,889) 87 - - (9,976)





27

20. Financial instruments (continued)

In thousands of BGN

Note

Effective

interest rate Total

6

monthsor less

6-12months

1-2years

2-5years

Financial instruments with fixed interest %

Contract for bank loan with Raiffeisenbank Bulgaria EAD

18 6,63% (3,198) (3,198) - - -

Contract for overdraft with Raifeisenbank Bulgaria EAD

18 6,18% (2,454) (2,454) - - -

Priority agreement for loan for acquisitionwith Raiffeisen Zentralbank OesterreichAktiengeseltshaft - Austria

18 5,79% (11,299) (11,299) - - -

Soravia Equity GmbH 15 6.853% (978) (978) - - -

Contract for finance lease with InterleaseAuto EAD – 150А _auto 189,23% (9) (9) - - -Contract for finance lease with InterleaseAuto EAD – 150B_auto

18

8,23 (39) (39) - - -Contract for finance lease with InterleaseAuto EAD – 150D1

18

9,23% (21) (21) - - -Contract for finance lease with InterleaseAuto EAD – 150E1

18

8,23% (20) (20) - - -Contract for finance lease with InterleaseAuto EAD – 150G1

18

8,23% (173) (173) - - -Contract for finance lease with InterleaseAuto EAD – 150F1

188,23% (126) (126) - - -

Contract for finance lease with InterleaseAuto EAD – 150H1

188,23% (484) (484) - - -

(18,801) (18,801) - - -

(28,690) (18,714) - - (9,976)

Credit risk

The Company is exposed to credit risk as it has significant exposure of trade receivables and receivables fromrelated parties. The Company has accounted for a reversal of impairment losses of trade receivables at theamount of BGN 1,408 thousand The impairment of trade receivables from sales of bottled mineral water amounts to BGN 151 thousand (2005:impairment was not accrued) (refer to note 13).

The management of the Company has a credit policy in place and the exposure to credit risk is monitored onan ongoing basis (refer to accounting policy (j))

21. Contingent liabilities

21 (i). Promissory notes

The Company has signed promissory notes for the total amount of BGN 7,490 thousand in favor of Raiffeisenbank Bulgaria EAD. The liability on both promissory notes is accepted by Atlantic DivineEAD (subsidiary, 100% of the capital of which is owned by Devin EAD), (see note 18).





28

21 (ii). Liabilities for capital investments

The company uses tax preference based on the Corporate Income tax act for 100% allowances inaccordance with conditions of the act. One of these conditions that has to be fulfilled (together with other

conditions, which are applicable to the Company) is the transferred tax to be used for acquisition of non-current tangible and intangible assets, used for production for the period of three years after the year when the transfer is used.

Based on the above conditions, for transfer of corporate income tax for 2006 amounting to BGN 35thousand the Company is oblige to acquire non-current assets for this amount by 2009.

22. Subsequent events

22 (i). Court registration of the increase of registered capital

With decision No 2 from 03 January 2007 of the Smolyan District court an increase of the share capital

of the company is registered from BGN 56 thousand to BGN 13,700 thousand.

With decision No574 from 08 May 2007 of the Smolyan District court an increase of the share capital of the company is registered from BGN 13,700 thousand to BGN 14,891 thousand through issuance of newshares. The nominal value of the shares is changed from 10 BGN to 1 BGN. The value of the issuedshares is 1.38 BGN per share.

22 (ii). Change in the members of the Board of Directors

A new member of the Board of Directors has been elected – Mr. Erwin Soravia. Mr. Martin Oneberg has been elected as the new chairman of the Board of Directors, who previously was a member of the Boardof Directors. Mr. Kristian Wiemer has been removed as a member of the Board of Directors.

22 (iii). Contract for distribution of the product: Red Bull@Energy Drink

A contract has been signed, based on which Devin EAD acquire the ultimate right to distribute the product on the territory of Bulgaria, which the Company buys and sells in its own name and ownaccount. The Company is engaged to distribute the product through its own distribution organization andown qualified personnel. The Contract commenced on 01 January 2007, and its term is unlimited.





29

23. Mineral water concession agreement

The Company is a part in the contract from 14.04.1999 for concession of mineral water from Borehole No 5 of Devin source. The contract is signed between Republic of Bulgaria, represented by the Minister

of Environment and Water (Coincident) and Devin OOD – (Concessionaire). The term of the contract is15 years, since the date of signing of both sites.

The Company has a special right of use of the mineral water of Devin source, which is with nationalimportance and is situated on the territory Devin municipality. Mineral source Devin is exclusively state

property, and the assets for the Borehole No 5 are national state property.

The Concessionaire has the right to extract and use mineral water from the Devin source, Borehole No 5 – object of the concession, as acquirer:

• A right of ownership over the extracted quantity of mineral water but not more than 90,000 cubic mannually and annual average extraction of 3.83 l/sec.;

• A right of use of extracted quantity of mineral water for bottling;• A right of use of operating water source – Borehole No 5 and its equipment.

The Company has an obligation based on the concession contract:

• To stay within the allowed limits for extraction of mineral water, and in case of exceeding the limit, penalty payment is owned.;

• To present to the Coincident for approval and to execute a program for cleaning of the equipment ,monitoring of mineral water and execution of security of the source annually;

• To execute the program for security and monitoring of the mineral water;

• To execute the necessary activities on its behalf for validation of operating resources of the source;

• To transfer to the Coincident Borehole No5 and its equipment in working condition at the end of the

concession.

Concession payments

The Company pays an annual concession fee, which is determined based on the used quantity of mineralwater with price per 1 cubic m of USD 2,5 using the exchange rate on the day of the payment, but notless than 2.5% of net revenues from the concession activities. The minimal annual concession fee shouldnot be calculated on less than 10,000 cubic m

Guarantees of the concession contract

1) The company maintains a cash guarantee for the execution of the liabilities for payment of theconcession fee which is determined as ¼ оf the annual concession fee of the previous year (see also note13).

2) The Company maintains a cash guarantee related to the execution of its liability of protecting themineral water and the source from depletion and pollution. A special bank account has been opened bythe Concessionaire as a pledge of execution of the liabilities connected to the depletion of the source and

pollution of the mineral water and the land, from which on a quarterly basis 10% of the concession fee isreturned (see also note 13). The Company has right to execute on its behalf purchase of equipment andupgrade of the equipment for Borehole No5 after having it approved by the Coincident.





30

23. Mineral water concession agreement (continued)

Penalties according to the concession contract

For improper use of the water source, the Company is obligated to pay penalties up to the amount of 25%of the annual concession fee.

24. Description of transition to IFRS

As described in significant accounting policy (a), these unconsolidated financial statements are preparedin accordance with IFRS, approved by the EU Commission. The presented significant accounting

policies described in notes (а) – ( р) are applied in preparation of the financial statements for the year ended 31 December 2006, as well as presenting the comparative information as at 31 December 2005and the beginning balances as at 01 January 2005. When preparing the beginning balances transformedin accordance with IFRS, the Company has adjusted the information of the financial statements prepared

in accordance with Bulgarian legislation. Descriptions of how the adoption of IFRS has affected thefinancial status and results from operations are described below, and in the applied notes.





31

24 (а). Recalculation of the balance sheet in relation to the transition to IFRS

31 December

2005

Effect in relation

to the transition toIFRS

31 December

2005

In thousands of BGN Note National

accounting

standards

IRFS

Assets

Property, plant and equipment 24 (c), (vi) 5,230 7,045 12,275Intangible assets 10 44 540 584

Investments 24 (b) 56 (3) 53

Total non-current assets 5,330 7,582 12,912

Inventories 1,827 - 1,827Trade and other receivables 24 (c), (v) 1,600 (5) 1,595

Receivables from related parties 983 - 983Cash and cash equivalents 24 (b) 523 (47) 476Prepayments 24 (c), (i) 63 (40) 23

Total current assets 4,996 (92) 4,904Total assets 10,326 7,490 17,816

Equity and reserves

Share capital 56 - 56Reserves 24 (d) 1,315 6,977 8,292

Retained earnings 24 (d) 292 498 790

Total equity and reserves 1,663 7,475 9,138

Liabilities

Liability for retirementcompensation

24 (c), (iv) - 32 32

Interest-bearing loans and borrowings

24 (c), (i) 4,441 (10) 4,431

Total non-current liabilities 4,441 22 4,463 Liability for retirementcompensation

- - -

Interest-bearing loans and borrowings

24 (c), (i) 1,685 (30) 1,655

Payables to related parties 349 - 349

Trade and other payables 24 (c), (iii) 2,188 23 2,211Total current liabilities 4,222 (7) 4,215

Total liabilities 8,663 15 8,678

Total equity and liabilities 10,326 7,490 17,816





32

24 (b). Reclassifications in the balance sheet

Reclassifications are made in the balance sheet as at 31 December 2005 in relation to transition to IFRS,

with regards to comparability of the presented information and subsequent application of accounting policies in accordance with IFRS.

The reclassifications are presented below:

Balance sheet item Note Effect in relation to the

transition to IFRS

In thousands of BGN

Investments

Investment in Royal Group OOD (3)

24 (а) (3)


Investment in Royal Group OOD 3

Guarantee for execution of liability to protect the mineral water springs from pollution and depletion

47

24 (c), (v) 50

Cash and cash equivalents

Guarantee for execution of liability to protect the mineral water springs from pollution and depletion

(47)

24 (а) (47)

24 (c). Other balance sheet adjustments

24 (c), (i) Elimination of the interest based on the contract for financial lease

Elimination of the interest owed for the entire period of the lease contract, which have been stated asdeferred expenses and respectively the financial lease liabilities have reflected the total investment as per contract stated in the financial statements prepared in accordance with Bulgarian Accounting legislation,have been done in relation to the transition to IFRS. With the elimination of the amount of the owedinterest based on the financial lease contracts, the liabilities in the balance sheet are stated with theamount equal to the minimum lease payments.


transition to IFRS

In thousands of BGN Prepayments

Interest in relation to the contracts for finance lease presented asdeferred expenses

(40)

24 (а) (40)

Long-term interest loans and credits

Liabilities in relation to the contracts for finance lease (10)

24 (а) (10)

Interest bearing loans and borrowing

Liabilities in relation to the contracts for finance lease (30)24 (а) (30)





33

24 (c), (ii) Adjustments related to the valuation of recoverable amount of the receivables

Valuation of the recoverable amount of receivables has been done in relation to transition to IFRS,

resulting in written-off receivables of BGN 9 thousand. Also the bonuses paid to clients for realized salesduring December have been recognized as a decrease in revenues for January 2006 instead of for December 2005.The effects on trade and other receivables are stated below.


transition to IFRS

In thousands of BGN


Write off of receivables 24 (c), (v) (9)

Client bonuses for sales made in December 2005 24 (c), (v) (46) 24 (c), (v) (54)

24 (c), (iii) Adjustment of accrual of social securities over the liabilities for unused paid leave of the personnel

In relation to the transition to IFRS a calculation and accrual of social securities has been done over theliabilities for unused paid leave of the personnel amounting to BGN 23 thousand.

24 (c), (iv) Accrual of liabilities for retirement compensation

When preparing the financial statements in accordance with Bulgarian National Standards no valuationand accrual has been made for liabilities for retirement compensation. In relation to the transition to IFRS

actuarial calculations of the present value of the liability for retirement compensation and accordinglysuch accruals have been made.

Present value of defined retirement compensation liability due to working life

In thousands of BGN 2005

Present value of the liability as at 1 January 2005 -

Interest expense -Expenses for current service 22Income from lay off of personnel -Actuarial income -

Retirement compensation paid to the employees that have been retired during 2005 -Present value of the liability as at 31 December 2005 22

Present value of retirement compensation liability due to sickness

Present value of the liability as at 1 January 2005 -Interest expense -Expenses for current service 10Actuarial loss -Income from lay off of personnel -Retirement compensation paid to the employees that have been retired during 2005 -Present value of the liability as at 31 December 2005 10

Retirement compensation liability 32





34

24 (c), (v) Effects on determining of valuation of trade and other receivables in the balance sheet as at 31 December 2005

Balance sheet item Note Effect in relation to thetransition to IFRS

In thousands of BGN


Investment in Royal Group OOD 24 (b) 3

Guarantee for execution of liability to protect the mineral water springs from pollution and depletion 24 (b) 47Write off of receivables 24 (c), (ii) (9)

Client bonuses for sales made in December 2005. 24 (c), (ii) (46)

24 (а) (5)

24 (c), (vi) Adjustment in relation with the valuation of property, plant and equipment


transition to IFRS

In thousands of BGN

Property, plant and equipment

Recognised as assets dispensers and refrigerators, which wererecognised as a current expense for the period 31 December

2004 in accordance with the national legislation

9 130

Depreciation on recognised as assets dispensers andrefrigerators for the period 31 December 2004

9 (8)

Recognised non-current assets, which were recognised as acurrent expense for the period 31 December 2004 inaccordance with the national legislation

9 99

Recognised as assets dispensers and refrigerators, which arerecognised as a current expense in 2005 in accordance with thenational legislation

9 412

Depreciation on recognised non-current assets for 2005. 9 (38)

Revaluation of property, plant and equipment in relation to thetransition to IFRS deemed cost

9 6,614

Impairment in relation to the transition to IFRS deemed cost 9 (164)

24 (а) 7,045





35

24(d). Effects on recalculation of accumulated retained earnings in transition to IFRS

In thousands of BGN Note Nationalaccounting

standards

Effect inrelation to thetransition to

IFRS

IFRS

Reclassification on reserves of tax allowance for the period until 31 December 2004 (which wasrecognised according to the national legislation)andrecognised as retained earnings

146

Recognised equipment during 2005, which arerecognised as an expense according to the nationallegislation

24 (c), (vi) 229

Accumulated depreciation of equipment as at 1January 2005

24 (c), (vi) (8)

Total effects on retain earnings as at 1 January2005

Statement of changes in

equity

394

367 761

Recognised equipment during 2005, which inaccordance with national legislation are recognisedas an expense

24 (c), (vi) 412

Depreciation on recognised equipment for 2005 24 (c), (vi) (38)

Impairment in relation to transition to IFRSdeemed cost

24 (c), (vi) (164)

Retirement compensation 24 (c), (iv) (32)

Write off of receivables 24 (c), (ii) (9)

Client bonuses for sales made in December 2005 24 (c), (ii) (46)

Social security on liabilities for unused annual paidleave

24 (c), (iii) (23)

Reversal of tax allowance for 2005, which inaccordance with the national legislation isrecognised as an expense for corporate tax againstreserves

31

Total effects on recalculation of the current profitfor 2005

114 131 245

Total effects on the retained earnings as at 31

December 2005

Statement of changes in

equity292

498 790





36

24(d). Effects on recalculation of accumulated reserves in transition to IFRS (continued)

In thousands of BGN Note Nationalaccounting

standards

Effect inrelation to thetransition to

IFRS

IFRS

Reclassification on reserves of tax allowance for the period until 31 December 2004 (which wasrecognised according to the national legislation)andrecognised as retained earnings

24(d) (146)

Reclassification on reserves of tax allowance for 2005, which according to the national legislation is

recognised as an expense for corporate tax againstreserves

24(d) (31)

Revaluation on property, plant and equipment inrelation to transition to IFRS deemed cost 9 6,614

Revaluation of intangible assets in relation of transition to IFRS deemed cost 10 540

Total effects on reserves as at 31 December 2005 24(a) 1,315

6,977 8,292

25. Business combination involving the parent company which is under common controltogether with the reporting entity

Trading company Wing Equity Devin EOOD was established on 16 March 2006 with a share capitalamounting to BGN 5 thousand, which is entered with court decision 548/6 June 2006 from SmolyanDistrict court, as a sole owner of the capital of Devin EAD. Wing Equity Devin EOOD has signed acontract for acceptance of liabilities from 11 July 2006, with which the company becomes the new debtor

based on the priority loan contract between Devin Beteilingungs GmbH and Raiffeisen Zentralbank Österreich Aktiengesetschaft-Austria and the mezzanine loan contract between Devin BeteiligungsGmbH and Accession Eastern Europe Capital AB (for the terms see note 18). With court decision No3from 15 September 2006 pledges over the shares of the capital of Wing Equity Devin EOOD were

entered in favor of the above creditors.On 21 December 2006 a final contract was signed for the merger of Devin EAD and Wing Equity DevinEOOD, according to which Wing Equity Devin EOOD (parent company, merger company) and DevinEAD (subsidiary, acquisition company) have been merged. The sole owner of the capital of Wing EquityDevin EOOD was Devin Beteilingungs GmbH. The sole owner of the capital of Devin EAD was WingEquity Devin EOOD, i.e. both companies are under the control of same company – Devin BeteilingsGmbH. The structure of the ownership was rationalized in the economical group with merger of WingEquity Devin EOOD and Devin EAD. As a result of the merger, all of the existing shares of Devin EADwere acquired from Devin EAD and were canceled, at the same time new shares in the capital of DevinEAD have been issued matching the revaluated asset value amounting BGN 13,700 thousand.

25. Business combination involving the parent company which is under common control

together with the reporting entity (continued)





37

With court decision No2/03 January 2007 of the Smolyan District court was entered the merger of WingEquity Devin EOOD and Devin EAD and the change of the capital of Devin EAD from BGN 56thousand to BGN 13,700 thousand, also the cancellation of existing 5,560 shares (with nominal of BGN10 each).

Regardless the fact that the merger is registered in the court in 2007; the parties from the final merger contract have accepted 31 December 2006 as the accounting date of the merger. As at the merger no

balancing payments have been made. The assets and liabilities of the final financial statements of WingEquity Devin EOOD as at 31 December 2006 are included in the unconsolidated financial statements of Devin EAD under the approach as described in significant accounting policy (g), (ii) of these financialstatements.

The following identifiable assets and liabilities are included in the unconsolidated balance sheet of DevinEAD as a result of the merger:

In thousands of BGN Note Fair value of recognised assets andliabilities by merger of Wing Equity

Devin EOOD and Devin EAD

Investment in subsidiary Devin Royal EAD 11 567Cash and cash equivalents 8Liabilities in relation to mezzanine facilityagreement for loan with Accession Eastern EuropeCapital

18 (9,779)

Liabilities in relation to priority agreement for loanfor acquisition with Raiffeisen Zentralbank Österreich Aktiengeseltshaft - Austria

18 (11,299)

Liability in relation to the loan agreement withSoravia Equity GmbH

15 (978)

Liabilities to Devin EAD for temporally receivedfinancial aid (eliminated against receivables in the

balance sheet of Devin EAD by the merger)

(567)

Trade payables (3)

Net identifiable assets and liabilities (22,051)





26. List of published International Financial Reporting Standards that are not effective as at the balance

sheet date

IFRS 7 “Financial Instruments: Disclosures” and amendment to IAS 1 “Presentation of Financial Statements”:require detailed disclosure of the significance of financial instruments for an entity’s financial position, as well asqualitative and quantitative information about exposure to risk. The new IRFS 7 and the amended IAS 1 will bevalid for the period beginning on 1 January 2007 and will require additional disclosures related to financialinstruments and equity.

IFRS 8 Operating Segments (effective from 1 January 2007). The standard requires disclosure of segments based oncomponents of the business, which the managements evaluates when taking operational decisions. Operatingsegments are components of an entity about which separate financial information is available that is evaluatedregularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.The Company does not expect the IFRS 8 to have an effect on the financial statements

Change in IAS 1 Presentation of financial statements(effective from 1 January 2007). As an additional change, dueto IFRS 7 (see above), IAS 1 will require more comprehensive disclosure of entity’s capital. This change willrequire more comprehensive disclosure of the equity structure of an entity.

IFRIC 7 “Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies” – will become mandatory for the Company’s financial statements for 2007. The Company does not expect theinterpretation to have an effect on the financial statements

IFRIC 8 IFRS 2 clarifies that IFRS 2 Share-based Payment applies to arrangements where an entity makes share- based payments for apparently nil or inadequate consideration. The Company does expect IFRIC 8 to have an effecton the financial statements, however there are no such payments made.

IFRIC 9 Reassessment of Embedded Derivatives (effective for annual periods beginning on or after 1 June 2006).The interpretation concludes that an entity must assess whether an embedded derivative is required to be separated

from the host contract and accounted for as a derivative when the entity first becomes a party to the contract.Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantlymodifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.The Company does not expect IFRIC 9 to have an effect on the financial statements.

IFRIC 10 “Interim Financial Reporting and Impairment” (effective from 1 November 2006) - prohibits the reversalof an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equityinstrument or a financial asset carried at cost. The Company does not expect the interpretation to have an effect onthe financial statements.

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions (effective for annual periods beginning on or after 1March 2007). The interpretation requires share-based payment, for which an entity receives goods or services for itsown equity instruments, to be accounted for as a share-based payment, based on shares, settled in shares, regardlessof the method the equity instruments are received. The interpretation directs to whether share-based payments,

where to suppliers of goods or services are issued equity instruments of the parent company, these should beaccounted in the financial statements as settled in cash or in shares. The Company does expect IFRIC 11 to have aneffect on the financial statements, because there are contracts for share-based payments in 2007.

IFRIC 12 Service concession agreement (effective for annual periods beginning on or after 1 January 2008). Theinterpretation clarifies to the private sector companies certain aspects of disclosure and valuation issues, arisingfrom the accounting for the public-private concession agreement. The Company does not expect IFRIC 12 to havean effect on the financial statements.

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