Final Results -24-

average 3 month Euribor rates to be a flat 8% per annum. 
 
 
On 27 March 2006, the agreement with Bulgarian Property Management LLP was 
terminated and a management agreement between the Company and Bulgarian Property 
Management Limited ("BPM") was entered into on the same terms and conditions as 
the agreement with Bulgarian Property Management LLP (as amended). 
 
 
. 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2008 
 
 
24RELATED PARTY TRANSACTIONS (continued) 
 
 
On 4 June 2007, this management agreement was amended to increase the annual 
return to be achieved by the Company before a performance fee became payable to 
BPM from 8% per annum to 10% per annum and to change the annual administration 
fee to a flat rate of 2% of the Group's audited net assets 
 
 
BPM is entitled to receive an annual administration fee at a rate of 2 per cent 
on the audited net asset value of the Company. For the purpose of calculating 
the administration fee, the net asset value of the Company, is the value 
attributed to shareholders' funds (i.e. share capital plus the balance on profit 
and loss account and any other reserves) as disclosed in the audited accounts of 
the previous accounting period. 
 
 
In addition to the administration fee, BPM is entitled to an annual performance 
fee of 20 per cent of the amount by which annual audited realised profits before 
tax of the Company exceeds an amount representing a cumulative annual return on 
the share capital invested in the Company. The annual return is currently equal 
to an annual interest rate of 10 per cent multiplied by the Company's 
outstanding share capital (including share premium account) (the "Annual 
Return"). To the extent that the Company does not have any realised profits in a 
particular year, or the realised profits are less than the Annual Return, the 
amount of such Annual Return and of the realised profits will be carried forward 
and added to the Annual Return and the realised profits for the following year 
respectively. 
 
 
In the event of termination of the agreement the Company shall also procure that 
each of its assets is valued as at the date of termination by an independent 
valuer. To the extent that the valuation is greater than historical cost then 
the BPM shall be entitled to be paid a sum equal to 20% of the increase minus 
the Annual Return (the "Payment"). If after two years from the date of 
termination any amount of the Payment remains outstanding the Company shall have 
one month in which to satisfy the payment in full. As at 31 December 2008, in 
the opinion of the directors, no accrual for payment is deemed to be required. 
 
 
Bulgarian Property Management LLP and Bulgarian Property Management Limited are 
controlled by Ivo Hesmondhalgh and Philip Pashov, who are both directors of the 
Company. In the year to 31 December 2008, the Company was charged GBP738,000 by 
Bulgarian Property Management Limited (in the period to 31 December 2007, 
GBP400,000 was charged). At 31 December 2008 GBP81,000 is due from Bulgarian 
Property Management Limited to the Company (31 December 2007, GBP24,000). 
 
 
Brisk Consulting 
Bulgarian Property Developments EOOD entered into agreements in Bulgaria with 
Brisk Consulting, which is 100% owned and managed by Galchev and Co. Nikolay 
Galchev is a director and shareholder of Galchev and Co. and director of the 
Company. 
 
 
Transactions 
+-----------------------------------------------+--------------+--+--------------+ 
|                                               |  31 December |  |  31 December | 
|                                               |         2008 |  |         2007 | 
+-----------------------------------------------+--------------+--+--------------+ 
|                                               |      GBP'000 |  |      GBP'000 | 
+-----------------------------------------------+--------------+--+--------------+ 
|                                               |              |  |              | 
+-----------------------------------------------+--------------+--+--------------+ 
| Galchev and Co. EOOD                          |            - |  |            - | 
+-----------------------------------------------+--------------+--+--------------+ 
| Brisk Consulting                              |           70 |  |            - | 
+-----------------------------------------------+--------------+--+--------------+ 
 
 
For amounts owed by the Group's joint venture operations to Bulgarian Property 
Developments EOOD as at 31 December 2008, please refer to note 14. These 
balances represent short term loans, together with accrued interest on those 
loans. 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2007 
 
 
24RELATED PARTY TRANSACTIONS (continued) 
 
 
Transactions (continued) 
The related party is the subsidiary Bulgarian Property Development EOOD which is 
100% owned by the Company. 
 
 
Transactions between the two companies in the period were as follows: 
 
 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               | Year ended  |  |   Six months | 
|                                               | 31 December |  |           to | 
|                                               |        2008 |  |  31 December | 
|                                               |             |  |         2007 | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |     GBP'000 |  |      GBP'000 | 
+-----------------------------------------------+-------------+--+--------------+ 
| Transactions                                  |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Loan provided by Bulgarian Property           |           - |  |        1,756 | 
| Development Plc to Bulgarian Property         |             |  |              | 
| Development EOOD                              |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Interest charged by Bulgarian Property        |         117 |  |           32 | 
| Development Plc to Bulgarian Property         |             |  |              | 
| Development EOOD                              |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Management fee charged by Bulgarian Property  |          60 |  |           54 | 
| Development Plc to Bulgarian Property         |             |  |              | 
| Development EOOD                              |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               | 31 December |  |  31 December | 
|                                               |        2008 |  |         2007 | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |     GBP'000 |  |      GBP'000 | 
+-----------------------------------------------+-------------+--+--------------+ 
| Receivables                                   |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Loan from Bulgarian Property Development plc  |       1,756 |  |        1,756 | 
| to Bulgarian Property Development EOOD and    |             |  |              | 
| interest                                      |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Interest                                      |         153 |  |          789 | 
+-----------------------------------------------+-------------+--+--------------+ 
| Management fee                                |           - |  |           65 | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |       1,909 |  |        2,610 | 
+-----------------------------------------------+-------------+--+--------------+ 
|                                               |             |  |              | 
+-----------------------------------------------+-------------+--+--------------+ 
| Payables                                      |           - |  |            - | 
+-----------------------------------------------+-------------+--+--------------+ 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 
for the year ended 31 December 2008 
 
 
25    SUBSEQUENT EVENTS 
 
 
Dispute with FairPlay Commercial EAD ("FPC") over Varna Logistics AD Sale and 
Purchase Agreement ("Varna SPA") 
On 8 December 2008, FPC failed to complete on the purchase of Bulgarian Property 
Developments EOOD's ("BPD EOOD")  50% shareholding in Varna Logistics in 
accordance with the terms of the agreement with FPC dated 9 June 2008. Through a 
notary certified notification dated December 5, 2008, FPC has informed BPD EOOD 
that on 4 December 2008, it has appealed to the Arbitration Court of the 
Bulgarian Industrial Association claiming "economic impossibility". BPD EOOD 
received FPC's arbitration complaint on 19 January 2009. The term "economic 
impossibility" is provided for under the provisions of Article 307 of the 
Commercial Act of Bulgaria. According to the notification, FPC has made two 
requests to the Court of Arbitration: (i) to rescind the contract and receive 
back the advance payment of EUR3.9 million or (ii) to amend the contract price to 
EUR9.3 million (this price would include the EUR3.9 million payment already paid).