Final Results -14-

|          | flow            | 
|          | risk            | 
+----------+-----------------+ 
|          | The             | 
|          | Group           | 
|          | finances        | 
|          | its             | 
|          | operations      | 
|          | through         | 
|          | its own         | 
|          | equity          | 
|          | finance.        | 
|          | Risk is         | 
|          | mitigated       | 
|          | by              | 
|          | depositing      | 
|          | cash            | 
|          | resources       | 
|          | with banks      | 
|          | of high         | 
|          | financial       | 
|          | standing        | 
|          | and             | 
|          | spreading       | 
|          | deposits        | 
|          | amongst a       | 
|          | group of        | 
|          | banks.          | 
+----------+-----------------+ 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2008 
 
 
1ACCOUNTING POLICIES (continued) 
 
 
Impairment of financial and non-financial assets 
Financial assets 
A financial asset is assessed at each reporting date to determine whether there 
is any objective evidence that it is impaired. A financial asset is considered 
to be impaired if objective evidence indicates that one or more events have had 
a negative effect on the estimated future cash flows of that asset. 
 
 
An impairment loss in respect of a financial asset measured at amortised cost is 
calculated as the difference between its carrying amount, and the present value 
of the estimated future cash flows discounted at the original effective interest 
rate. 
 
 
Individually significant financial assets are tested for impairment on an 
individual basis. The remaining financial assets are assessed collectively in 
groups that share similar credit risk characteristics. 
 
 
All impairment losses are recognised in the income statement. 
 
 
An impairment loss is reversed if the reversal can be related objectively to an 
event occurring after the impairment loss was recognised. For financial assets 
measured at amortised cost the reversal is recognised in the income statement. 
 
 
Non-financial assets 
The carrying amounts of the Company's non-financial assets, other than 
investment property, inventories and deferred tax assets, are reviewed at each 
reporting date to determine whether there is any indication of impairment. If 
any such indication exists, then the asset's recoverable amount is estimated. 
For goodwill and intangible assets that have indefinite lives or that are not 
yet available for use, the recoverable amount is estimated at each reporting 
date. 
 
 
The recoverable amount of an asset or cash-generating unit is the greater of its 
value in use and its fair value less costs to sell. In assessing value in use, 
the estimated future cash flows are discounted to their present value using a 
pre-tax discount rate that reflects current market assessments of the time value 
of money and the risks specific to the asset. For the purpose of impairment 
testing, assets are grouped together into the smallest group of assets that 
generates cash inflows from continuing use that are largely independent of the 
cash inflows of other assets or groups of assets (the "cash-generating unit"). 
An impairment loss is recognised if the carrying amount of an asset or its 
cash-generating unit exceeds its estimated recoverable amount. Impairment losses 
are recognised in the income statement. 
 
 
Impairment losses in respect of assets, other than goodwill, recognised in prior 
periods are assessed at each reporting date for any indications that the loss 
has decreased or no longer exists. An impairment loss is reversed if there has 
been a change in the estimates used to determine the recoverable amount. An 
impairment loss is reversed only to the extent that the asset's carrying amount 
does not exceed the carrying amount that would have been determined, net of 
depreciation or amortisation, if no impairment loss had been recognised. 
 
 
Provisions, contingent liabilities and contingent assets 
A provision is recognised in the balance sheet when the Group has a legal or 
constructive obligation as a result of a past event, and it is probable that an 
outflow of economic benefits will be required to settle the obligation and a 
reliable estimate of the amount of the obligation can be made. If the effect is 
material, provisions are determined by discounting the expected future cash 
flows at a pre-tax rate that reflects current market assessments of the time 
value of money and, where appropriate, the risks specific to the liability. If 
the amount of the obligation cannot be reliably measured a contingent liability 
is disclosed. 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2008 
 
 
 
 
1ACCOUNTING POLICIES (continued) 
 
 
Contingent liabilities are not recognised in the financial statements but are 
disclosed unless the possibility of an outflow of resources embodying economic 
benefits is remote. Contingent assets are not recognised in the financial 
statements but are disclosed when an inflow of economic benefits is probable. 
 
 
Investment revenues 
Investment revenues comprise interest earned on deposits. Interest income is 
recognized as it accrues in profit or loss, using the effective interest method. 
 
 
2    REVENUE 
 
 
All revenue generated is from rendering services, comprising rental income. 
 
 
3    OTHER EXPENSES 
 
 
+--------------------------------------------+---------------+--+---------------+ 
|                                            |   Year ended  |  |    Six months | 
|                                            |   31 December |  |         ended | 
|                                            |          2008 |  |   31 December | 
|                                            |               |  |          2007 | 
+--------------------------------------------+---------------+--+---------------+ 
|                                            |       GBP'000 |  |       GBP'000 | 
+--------------------------------------------+---------------+--+---------------+ 
|                                            |               |  |               | 
+--------------------------------------------+---------------+--+---------------+ 
| Administrative expenses                    |         1,138 |  |           207 | 
+--------------------------------------------+---------------+--+---------------+ 
| Potential fines at Pleven property         |             - |  |            92 | 
+--------------------------------------------+---------------+--+---------------+ 
| Takeover defense costs                     |             - |  |           680 | 
+--------------------------------------------+---------------+--+---------------+ 
| Costs associated with creation of Special  |            85 |  |             - | 
| reserve                                    |               |  |               | 
+--------------------------------------------+---------------+--+---------------+ 
| Loss from investment in associate:         |               |  |               | 
+--------------------------------------------+---------------+--+---------------+ 
| Sofia Estate Developments EOOD             |           204 |  |           261 | 
+--------------------------------------------+---------------+--+---------------+ 
| Provision for Loss on loan to Sofia Estate |            46 |  |             - | 
| Development EOOD                           |               |  |               | 
+--------------------------------------------+---------------+--+---------------+ 
|                                            |         1,473 |  |         1,240 | 
+--------------------------------------------+---------------+--+---------------+ 
 
 
 
 
4.OTHER REVENUE 
+---------------------------------------+--------------------+--+----------------+ 
|                                       |         Year ended |  |     Six months | 
|                                       |   31 December 2008 |  |          ended | 
|                                       |                    |  |    31 December | 
|                                       |                    |  |           2007 | 
+---------------------------------------+--------------------+--+----------------+ 
|                                       |            GBP'000 |  |        GBP'000 | 
+---------------------------------------+--------------------+--+----------------+ 
|                                       |                    |  |                | 
+---------------------------------------+--------------------+--+----------------+ 
| Gain of sale of investment property   |                735 |  |              - | 
+---------------------------------------+--------------------+--+----------------+ 
| Income from compensations             |                 96 |  |              - | 
+---------------------------------------+--------------------+--+----------------+ 
| Other                                 |                 10 |  |              - | 
+---------------------------------------+--------------------+--+----------------+ 
|                                       |                841 |  |              - | 
+---------------------------------------+--------------------+--+----------------+ 
 
 
GBP735,000 was the gain made from the sale of investment property owned by 
Trakia Retail Centre EOOD. The revenue of GBP96,000 comprises a compensation 
paid by the Municipality of Sofia for using the Group's property at Airport Site 
One for municipality pipeline purposes. 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2008 
 
 
 
 
5IMPAIRMENT OF INVESTMENT PROPERTIES 
 
 
+--------------------------------------------+---------------+--+----------------+ 
|                                            |   Year ended  |  |     Six months | 
|                                            |   31 December |  |       ended 31 |