Envipco Holding N.V. Annual Report 2006

Report of the board of directors	2
Consolidated income statement	7
Consolidated balance sheet	8
Consolidated cash flow statement	10
Consolidated statement of changes in equity	11
Notes to the consolidated financial statements	12
Separate company balance sheet	43
Separate company income statement	43
Notes to separate company financial statements	44
Other information	47
Auditor's report	50

General

Group revenues excluding discontinued operations for the year increased to €39m compared to €33m in 2005 showing an increase of about 18% over last year. However, increased costs resulted in lower margins and EBITDA for the year decreased to €5.2m, before €0.9m provision for loss on disposal of helicopter maintenance business, compared to €5.7m in 2005 for the total operations.

The reverse vending and materials handling business has shown 10% increase in the revenues in real terms. The EBITDA also increased to €2.5m compared with €1.7m for last year. The increase in revenues was mainly due to improved volumes on materials handling business and machine sales. With the addition of the materials handling business we expect steady growth for this business unit in the coming years.

The plastic recycling business performed as expected with about 5% increase in the revenues However the net profit decreased to €0.1m for 2006 (2005 profit €1.5m) with an EBITDA of €2.6m versus €4.3m in 2005. due to very significant increase in raw materials and utilities costs.

The Helicopter maintenance business remained steady and improved its operating profits due to the reduction In costs of about 8%. but the net results were negatively impacted by the exchange losses of €0.6m (2005 gain €0.6m) and €0.3m one time amount for severance provisions. The sale of this unit was completed on 7 March 2008 and as a result a provision of €0.9m for the loss on disposal of this segment has been included in the period.

Mr Garvey will be granted a further 12.000,000 share option at the strike price of €0.32 per share in the Company as an incentive bonus subject to the key performance target agreed, to be realised on a yearly basis through 31 December 2011. He will be appointed chairman of the management board with full operational responsibility for the reverse vending, related products and services segment of the business.

Mr Alexandre Boun, the current majority shareholder, has agreed to subscribe 30.022.525 new shares at €0.2486 each in the Company, representing about €7.5m (\$11 Om) in cash which would be available to the Company to fund Its initiatives and business plan. This subscription is payable in 3 instalments: €2.0m upon subscription, €2.0m by 15 February 2009, and the balance of €3.5m by 31 December 2009. Such subscription is subject to legal requirements, the rules of the Stock Exchange and the by-laws, constitution and articles of association of the Company. Pending legal formalities. Mr Bouri will immediately be granting loans to the company for it to capitalise on immediate business opportunities.

In the new capital structure, once all the share issues are completed and share options to Mr Garvey are granted, the total number of shares shall become 135.630.336 and include 24,407,811 depositary receipts. The total shares and depositary receipts owned by the parties shall be as follows: Mr Alexandre Bouri 79.98%. Mr Gregory Garvey 16.26% and the public 3.76%.

A performance based incentive tied to a share option plan for executives and employees of the Company and its subsidiaries will be implemented within 3 months subject to the usual approval of the Board of Directors and shareholders.

Outlook

With the new leadership and capital increase, we continue to remain optimistic about the future of Envipco. We foresee small growth for 2007 to be followed by greater ones in the future years as we start targeting non-deposit markets where we believe we have a good business model.

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

Principal activities

The Groups pnncipal activities during the year remained the same. These include the following:

The design, development, manufacture and sale or lease of reverse vending machines "RVM" as the foundation of recycling systems for the collection and processing of used beverage containers.
The provision of technical support. RVM maintenance and accounting services to the retail stores, bottlers and distributors for containers redeemed through these machines.
Provision of materials handling services, primarily in the Northeast part of the USA. for containers that are subject to deposits mandated by law.
The processing of used PET and HDPE plastics for recycling
Operating authorised helicopter maintenance centers for Rolls Royce Allison, Bell Helicopters. Textron. HR Textron and Honeywell in the United Kingdom, Malta and USA. In March 2006 the managing board has earmarked this business unit for disinvestment as it does not fit within the strategy of the Group.

Review of Operations

Reverse vending machines and materials handling

The reverse vending and materials handling business made good progress during the year. Revenues for the year were increased by about 10% in real terms generating an EBITDA of €2.5m compared with €1.7m for last year. The increase in revenues was mainly due to improved volumes and machine sales. Overall margins also improved by about 5.5%. Operating costs were contained and increased only by about 4.5% when compared to last year. With the full integration of the materials handling business we expect steady growth for this business unit. We are making steady progress in developing the non-deposit markets as part of the group's medium to long term growth plans.

Plastic Recycling

The plastic recycling business performed as expected despite some tough market conditions during 2006. Revenues rose by €0.9m to €20m. compared with €19.1m for 2005, but increased raw materials prices and higher utilities costs lowered the margins by about 11%. As a result, the net profit decreased to €0.1 m for 2006 compared with €1.5m for the year 2005. Continuing with its expansion plans the company further invested €2.1m in land and equipment additions during the year. The company will, in the next few years, continue to invest in creating value added products which are expected to develop a bigger market for its products at higher margins.

Helicopter maintenance Business

The Helicopter maintenance business remained steady. Due to reduction in costs, the operating profit increased to €0.4m (2005: - loss €0.1 m). However, the net results were negatively impacted by exchange losses of €0.6m (2005 gain €0.6m), severance provision of €0.3m and an additional provision of €0.9m for loss on the disposal of this segment. The sale of this unit was completed on 7 March 2008. For further details refer to notes 27 and 28.

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

Directors and their interests The Board of Directors consisted of the following members:

Mr. Christian Crépet

Mr. Bhajun Santchum

Mr. Guy Lefebvre

Mr. Neil Turpie

Mr. Hugues Letelller

The Directors do not have any interest in the share capital of the Group.

There are no contracts of significance between the Group and any of the Directors.

Board of Management

The Board of Management is responsible for the management of the Company and for establishing the Group strategy. In addition the Board of Management manages the operational activities of the Group, sets perfomiance targets and approves Group budgets.

Nomination

The number of members of the Board of Management, and their remuneration are adopted by the General Meeting of Shareholders. The members of the Board of Management are appointed at the Shareholders meeting.

Appointment/Suspension

The General Meeting of the Shareholders appoints one of the members of the Board of Management as chairman of the Board of Management. The General Meeting of Shareholders may at all time suspend or dismiss a member of the Board of Management. The General Meeting of Shareholders may only pass a resolution to suspend or dismiss a member of the Board of Management, with a majority of at least two-thirds of the votes cast, if that majority represents more than one-third of the issued capital.

Representation

The Company is represented by the Board of Management or by any two members of the Board of Management.

Meeting

Meetings of the Board of Management are convened upon the request of a member of the Board of Management. Resolutions of the Board of Management are passed by an absolute majority of votes.

Supervisory Board

The Company currently being relatively small and due to the costs of maintaining such Board has no Supervisory Board.

Stichting Administratiekantoor van aandelen in Envipco Holding N.V. ('the Stichting Envipco Trust/the Foundation')

The Company and the Foundation have entered into an agreement pursuant to which the Foundation acquired all the ordinary shares from the Company up to a total par value that is equal to the total par value of all issued and outstanding ordinary shares.

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

The Foundation is a non-membership organisation Incorporated under the laws of The Netheriands. Its statutory objectives are to safeguard the Interests of the Company and Its enterprise. Group companies and all other parties involved with the Group The board of the Foundation comprises two board members. The members of the Board of the Foundation are:

Mr. B. Santchum
Mr. Neil Turpie

Ordinary shares may be Issued pursuant to a resolution of the General Meeting of Shareholders, upon the proposal of the Board of Management.

The General Meeting of Shareholders may. in accordance with the Articles of Association, in each instance for a period not exceeding five years, grant the authority to issue ordinary and or cumulative preference shares to another corporate body, which may resolve upon the issue of such shares after approval of the shareholders.

Salaries and remuneration

The Board of Directors received remuneration totaling €425 and €390 during 2006 and 2005 respectively. The Board of Management sets the remuneration of the board members.

Research and development

The research and development costs are usually directed towards improving existing technologies and developing new range of solutions for both deposit and non-deposit markets including bulk handling solutions for redemption centres and material processors.

Public accountability

The company recognizes its responsibility towards the environment and is working on a number of energy saving initiatives.

Substantial shareholding

"nheGnwjplw been noified of. or !*«*• « of 1 ^ 31 df Deoember 2006 end 2005

December 31
2005 9006
Number of Shares	Parcentage	Number of Shares	Percentage
1,294.125	1.38%	1,294,125	5.30%
1.702.022 63,256.182	1.82% 88.94%	1,702,022 14,056,182	6.97% 57.59%

uue Saradar A.F.B

Wemattonal SA

nal Financial Reporting Standard-

ve 1 January 2005, under the European directive-, the financial statements ere IO be prepared using the IFRS instead of the local Accounting Principles Accordingly, the management has implemented the IFRS on all tho financial reports from 2005 onwards. Where eny Subsidiaries have prepared statutory financial under local GAAP, these RnmW l have been converted to IFRS and they ere also required U the applicable material differences between the local O AAP and IFRS

Delayed audited results

The audit of the consolidated financial statements of Envipco Holding NV and its consolidated subsidiaries for the year ended 31 December 2006 have been delayed until now mainly due to the delayed finsüsation of the 2005 audit

On 9 December 2003. the Dutch Corporate Governance C published the Dutch Corportte Governance Code ("Code") with principles of good corporate governance and best practice provisions. The Code has come into effect from 1 January 2004. Envipco Molding NV. due to its current size and additional expenses required In adopting and implementing these codes, has decided to defer its In MOfl during the next 2-3 years. The [•any currently operates solely as a one-tier management board and has no supervisory board

Post balance sheet events

ihe post balence sheet events are given in Note 28 of the Notes to the consolidated financial sta Under a loan egreement a US subsidiary paid off it's debt of about \$5.2 million on 27 December 2007 The full details have bean given in Notes 21 and 28.

Chairman & CEO lOoMmfai i MOO

CONSOLIDATED INCOME STATEMENT fOU Uil TCARCNOfO 31 Dfctwew

ENVIPCO

(all amounts in thousands of euros)

	Revenue
	Cost of revenue
	Leasing depreciation
	Groa» profit
	Selling expenses
	General and administrative expenses
	Operating raault
	Other income
	Financial expense
	Financial income
	Excnange gains/(k)sses)
	Reault before taxes
	Income taxes
	Net result from continuing operation»
	Net result from discontinued operations
	Net results after tax
	Minority interest
	Net result

	Attr.butable to
	Ordinary shareholder»
	Earnings/(loss) per ordinary share from
	continuing operations
•	Basic	0 002
•	Fully diluted	0 002
	Earnings/(loss) per ordinary share from total
	operations
P	Basic	0.007
•	Fully diluted	0.007

CONSOLIDATED BALANCE SHEET ASATJIDUIMMR

ENVIPCO

(in thousands of euros)
	Note	2006	2005

Non-current assets
Intangible assets	(12)	307	150
Property, plant and equipment	(13)	13	14,178
Other non-current assets	(14)		866
Deferred tax assets	(15)	280	269

Total non-current assets				15.463
Current assets
Cash and cash equivalents	(16)	575	897
Trade and other receivables	(17)	8278	8,264
Inventory	(18)	8316	5,192
			14,353
Assets of discontinued operations held for sale	(27)	12213	14.242

Total current assets		29.381		28,595


Total assets		44,323		44,058

CONSOLIDATED BALANCE SHEET ASATSIDCCCMBER

ENVIPCO

	Note	2006		2005
Equity	(19)
Share capital		936		244
Share premium		753		25.145
Translation reserve				515
Retained eamings				(30,233)

Total equity
			11,066		(4.329)
Minority interest	(20)		104		-



Liabilities
Non-current liabilities	(21)
Borrowings		4,742		26,557
Other liabilities		791		771
Provisions				782

Total non-current liabilities			5.533		28,110
Current liabilities
Borrowings	(21)	5.790		2,163
Trade creditors		11,446		9,655
Accrued expenses		2.727		1.881
Other current liabilities	(22)	2,380		1,532

		'^43		15.231
Liabilities directly associated with
Discontinued operations held for sale	(27)	i87		5,046
Total current liabilities			26,730		20.277

Total liabilities			32.263		48,387
		-		-
Total equity and liabilities			44,323		44,058

CONSOLIDATED CASH FLOW STATEMENT

KM THC VCAN INI* O 31 DcaiMOl

Qki iwand i of aaws)
	Note	2006		2005
Cash flow (used in) / provided by operating
ActivKies
Operating result				1.468
Interest income		59		328
Finance costs				(1,050)
Income taxes				(765)
Depreciation of properly, plant & equipment				3,627
Other income				640
			4,354		4,248
Decrease/(increase) m trade and other receivables				(4.404)
Decrease/(increase) in other current assets				(1,463)
lncrease/(decrease) m provisions	(21)	(782)		401
increase/(decrease) m trade and other creditors				5,168
lncrease/(decrease) in other current liabilities
Cash flow (used in)/			• •		(296)
provided by operating activities			8,917		3,950
Cash flow (used in)/provided by investing
Activities
Acquisition of consolidated subsidiary				1.872
Capital expenditures on property, plant and equipment		—^1 -		(7.168)
Cash flow (used inV
provided by investing activities			(3,218)		(5.296)
Cash flow (used in)/provided by financing
Activities
Proceeds from the issue of new shares		17300
Change in minority interest		104		(258)
Change in equity		(648)		969
Proceeds from/(repayments of) borrowings and capital lease
obligations		(21,795)		1.373
Cash flow (used in)/
provided by financing activities			(5,,037J		2,084
Net cash flow for the period			662		738
Exchange rate differences		(55)		(442)
Cash flow from not consolidated subsidiaries		,029]		456
			(664)		14
Changes in cash and cash equivalents, net of bank
overdrafts for the period	(16)				752
Opening balance cash and cash equivalents					145
Closing balance cash and cash equivalents					897

ENVIPCO

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ENVIPCO

(m thousands of euros)

	Share capital	Share premium	Retained eamings	Other reserves	Translation Reserve	Equity
Balance at 1 January 2005	244	25.145	(30,634)	-	(53)	(5,298)
Net result	•	-	626	-	-	626
Currency translation adjustment Other movements	•	-	(226)	- -	568	568 (225)
Balance at 31 December 2005	244	25,145	(30,233)		515	(4.329)
Net result Currency translation adjustment Increase in capital Other movements	• - 692	16.608	(368) • (278)	- -	- (300) -	,368; (360) 17.300 278)
Total recognized income for the year ended 31 December 2006	692	MJOI	gMQ			16 285
Balance at 31 December 2006	936	41.753	(30,879)		146	11.956

NOTES TO THE CONSOLIDATED FINANOAL STATEMENTS ENVIPCO FOR THE YtAB CNOCO 3 1 Of UMS U

(1) General information

Envipco Holding N.V. is a public limited liability company incorporated in accordance with the laws of The Netherlands, with Its registered address at Leliegracht 10. 1015 DE Amsterdam. The Netherlands. Envipco Holding N V. and Subsidiaries ("the Company" or "Envipco") are engaged principally in two sectors: Recycling and Helicopter Engine Maintenance.

Recycling remains the core business of the Company in which It

develops, manufactures, assembles, leases, sells, markets and services a line of "reverse vending
machines" (RVMs) In the USA, Europe. Australia, South America and the Far East: and • collects or acquires, cleans, processes and resells recycled plastic and derivative products

The Company acquired Posada Holding B.V. in August 1999. which operates through its subsidiaries in approved helicopter maintenance centers in the USA, Malta and the UK for Agusta. Bell, HR Textron. Honeywell/Allied Signal. Parker Stratoflex. Robinson and Rolls-Royce Allison.

These Financial Statements have been authorised for issue by the Board of Management on 8 December 2008 and are subject to approval by the shareholders at the Annual General Meeting of Shareholders. All amounts are stated in thousands of euros unless stated otherwise.

Deposit redemption programmes

Under deposit redemption programs, the Company is responsible for the operation of systems to redeem, collect, account for and dispose of used beverage containers. In connection with these programs, participating retailers lease or purchase RVMs from the Company. The Company then acts in a clearinghouse capacity to collect deposits and handling fees on redeemed containers from participating beverage distributors and to distribute deposit refunds and handling fees to participating retailers. Accordingly, deposits and handling fees are not included as revenue and expense in the consolidated financial statements. The Company earns its revenues through leasing and selling machines to retailers and other participants, and through various services provided to distributors and retailers, including container collection, disposition, and accounting services.

Plastics processing programme

The Company operates a plastic processing facility In France, which produces plastic "flake" a product derived from post-consumer plastic beverage containers. The plastic product is sold to various customers for packaging and fiber applications.

(2) Summary of significant accounting policies

Basis of preparation

The consolidated financial statements of Envipco have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. As previous years consolidated financial statements were prepared in accordance with IFRS, there is no impact to the Group's accounting policies.

Valuation of assets and liabilities and determination of the result takes place under the historical cost convention. Unless presented otherwise at the relevant principle for the specific balance sheet item, assets and liabilities are presented at face value. Income and expenses are accounted for on accrual basis. Profit is only included when realized on the balance sheet date. Losses originating before the end of the financial year are taken into account if they have become known before preparation of the financial statements. Revenues from goods are recognised upon delivery. The cost price of these goods is allocated to the same period. Revenues from services are recognised In proportion to the services rendered. The cost price of these services is allocated to the same period.

Adoption of new Standards

(a) New standards, amendments to published standards and interpretations to existing standards effective in the financial year 2006 adopted by the group

IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006). This amendment introduces the option of an alternative recognrtion approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi-employer plans, adoption of this amendment will only impact the format and extent of disclosures presented in the accounts.

(b) Standards, Interpretations and amendments to published standards effective in 2007 but which are not relevant to the group

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2006 but are currently not relevant to the group's operations:

IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intra-group Transactions (effective from 1 January 2006). The amendment allows the foreign currency risk of a highly probable forecast intra-group transaction to qualify as a hedged Item in the consolidated financial statements, provided that: (a) the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction; and (b) the foreign currency risk will affect consolidated profit or loss. This amendment is not relevant to the Groups operations, as the Group does not have any intra-group transactions that would qualify as a hedged Item in the consolidated financial statements as of 31 December 2006 and 2005.

IAS 39 (Amendment) The Fair Value Option (effective from 1 January 2006). This amendment changes the identification of financial instruments classified at fair value through profit and loss account and restricts the ability to designate financial instruments as part of this category. The Group believes that this amendment should not have a significant impact on the classification of the financial instruments, as the Group should be able to comply with the amended criteria for the designation of financial instruments at fair value through profit and loss.

IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (effective from 1 January 2006). This amendment requires issued financial guarantees, other than those previously asserted by the entity to be Insurance contracts, to be initially recognised at their fair value and subsequently measured at the higher of: (a) the unamortised balance of the related fees received and deferred, and (b) the expenditure required to settle the commitment at the balance sheet date. Management considered this amendment to IAS 39 and concluded that it is not relevant to the Group.

IFRS 1 (Amendment), first-time Adoption of International financial Reporting Standards and IFRS 6 (Amendment), Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006). These amendments are not relevant to the Groups operations as the Group is not a first-time adopter of IFRS and does not carry out exploration for and evaluation of mineral resources.

IFRS 6, Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006). IFRS 6 is not relevant to the Group's operations.

IFRIC 4. Determining whether an Arrangement contains a Lease (effective from 1 January 2006). IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. IFRIC 4 is not relevant to the Group's operations.

IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (effective from 1 January 2006). IFRIC 5 is not relevant to the Group's operations.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting periods beginning on or after 1 January 2007 or later periods and which the group has decided not to adopt early. These are:

IFRS 7, Financial Instruments: disclosures and a complementary amendment to IAS 1. Presentation of Financial Statements - capital disclosures (effective for accounting periods beginning on or after 1 January 2007). IFRS 7 introduces new requirements aimed at improving the disclosure of information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk. Where those risks are deemed to be material to the group it requires disclosures based on the infomiation used by key management. It replaces the disclosure requirements in IAS 32 'Financial Instruments: disclosure and presentation'. It is applicable to all entities that report under IFRS.

The amendment to IAS 1 introduces disclosures about the level and management of an entity's capital. The Group has applied IFRS 7 and the amendment to IAS 1 to the accounts for the period beginning on 1 January 2007.

IFRS 8, Operating Segments (effective for accounting periods beginning on or after 1 January 2009). This standard sets out requirements for the disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in which it operates, and its major customers. It replaces IAS 14, Segmental Reporting. The group expects to apply this standard in the accounting period beginning on 1 January 2009. As this is a disclosure standard it will not have any impact on the results or net assets of the group.

IFRIC 7. Applying the restatement approach under IAS 29, Financial Reporting in Hyperinflationary Economies (effective for accounting periods beginning on or after 1 March 2006). IFRIC 7 provides guidance on the application of IAS 29 requirements in a reporting period in which entity identifies the existence of hyperinflation in the economy of Its functional currency, when the company was not hyperinflationary in the prior period. IFRIC 7 is not relevant to the group as none of the group companies has a currency of a hyperinflationary economy as Its functional currency.

IFRIC 8, Scope of IFRS 2 (effective for accounting periods beginning on or after 1 May 2006). IFRIC 8 requires consideration of transactions involving the issue or grant of equity instruments to establish whether or not they fall within the scope of IFRS 2. It applies to situations where the identifiable consideration received is or appears to be less than the fair value of the equity instruments issued. There was no impact on the group's accounts from its adoption.

IFRIC 9. Reassessment of embedded derivatives (effective for accounting periods beginning on or after 1 June 2006). IFRIC 9 requires an assessment of whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when an entity becomes a party to the contract Subsequent reassessment is prohibited unless there is a change In the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. There was no Impact on the group's accounts from Its adoption.

IFRIC 10, Interim Financial Reporting and Impairment (effective for accounting periods beginning on or after 1 November 2006). IFRIC 10 prohibits Impairment losses recognised In an interim period on goodwill and investments in equity instruments and on financial assets carried at cost to be reversed at a subsequent balance sheet date. There was no impact on the group's accounts from its adoption.

IFRIC 11, IFRS 2 - Group and Treasury Share Transactions (effective for accounting periods beginning on or after 1 March 2007). IFRIC 11 requires share-based payment transactions in which an entity receives services as consideration for its own equity instruments to be accounted for as equity settled. This applies regardless of whether tie entity chooses or is required to buy those equity instruments from another party to satisfy Its obligations to its employees under the share-based payment arrangement. It also applies regardless of whether; (a) the employee's rights to the entity's equity instruments were granted by the entity Itself or by its shareholder(s); or (b) the share-based payment arrangement was settled by the entity itself or by its shareholders). Management is currently assessing the impact of IFRIC 11 on the accounts.

IFRIC 12, Service Concession Arrangements (effective for accounting periods beginning on or after 1 January 2008). IFRIC 12 is still to be endorsed by the EU. IFRIC 12 gives guidance on the accounting by operators for public-to-prlvate service concession arrangements. IFRIC 12 is not relevant to the group's operations due lo absence of such arrangements.

IFRIC 13, Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 July 2008). IFRIC 13 is still to be endorsed by the EU. IFRIC 13 addresses sales transactions in which the entities grant their customers award credits that, subject to meeting any further qualifying conditions, the customers can redeem In future for free or discounted goods or services. Management is currently assessing the impact of IFRIC 13 on the accounts.

IFRIC 14, IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for accounting periods beginning on or after 1 January 2008). IFRIC 14 is still to be endorsed by the EU. IFRIC 14 clarifies when refunds or reductions In future contributions should be regarded as available in accordance with paragraph 58 of IAS 19, how a minimum funding requirement might affect the availability of reductions in future contributions and when a minimum funding requirement might give rise to a liability. Management is currently assessing the impact of IFRIC 14 on the accounts.

IAS 23, Borrowing Costs (revised) (effective for accounting periods beginning on or after 1 January 2009). The revised IAS 23 is still to be endorsed by the EU. The main change from the previous version is the removal of the option of immediately recognising as an expense borrowing costs that relate to qualifying assets, broadly being assets that take a substantial period of time to get ready for use or sale. The Group is currently assessing its impact on the financial statements.

Revised IFRS 3, Business Combinations and complementary Amendments to IAS 27, 'Consolidated and separate financial statements (both effective for accounting periods beginning on or after 1 July 2009). This revised standard and amendments to is still to be endorsed by the EU. The revised IFRS 3 and amendments to IAS 27 arise from a joint project with the Financial Accounting Standards Board (FASB), the US standards setter, and result in IFRS being largely converged with the related, recently issued, US requirements. There are certain very significant changes to the requirements of IFRS, and options available, if accounting for business combinations. Management is currently assessing the impact of revised IFRS 3 and amendments to IAS 27 on the accounts.

Amendment to IFRS 2, Share-based payments: vesting conditions and cancellations (effective for accounting periods beginning on or after 1 January 2009). This amendment Is still to be endorsed by the EU The Amendment to IFRS 2 Is of particular relevance to companies that operate employee shares saving schemes. This Is because it results in an immediate acceleration of the IFRS 2 expense that would otherwise have been recognised In future periods should an employee decide to stop contributing to the savings plan, as well as a potential revision to the fair value of the awards granted to factor in the probability of employees withdrawing from such a plan. Management Is currently assessing the impact of the Amendment on the accounts.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Groups accounting policies. The areas involving a higher degree of judgment or complexity are disclosed in Note 3.

CofMflMdaÉad ..iv ^ow stater¹ "-''t

The Groups consolidated statement of cash flows is presented using the indirect method.

The funds in the cash flow statement consist of cash and cash equivalents. Cash equivalents can be considered as highly liquid Investments Cash flows in foreign currencies are translated at an estimated average rate. Exchange rate differences concerning finances are shown separately in the cash flow statement.

Consolidation

Subsidiaries

Subsidiaries are all entities (including special purpose entitles) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. 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 on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The consolidated financial statements comprise the financial data of Envipco Holding N.V. and the following wholly-owned subsidiaries:

Tek-O-Matic Enterprises Inc - Quebec. Canada - 74%

Recypac Inc - Quebec. Canada - 100% Envipco Finance Company Limited - London. United Kingdom - 100% Sorepla Industrie S.A. - Paris, France - 97.5% Sorepla Technologie S.A. - Rebevrille, France - 100% Envipco Automaten GmbH, Germany - 100% Envipco Japan Limited, Japan - 100% Envipco Pickup & Processing Services Inc., Delaware. U.S.A. - 99.85% Environmental Products Corporation. Delaware, U.S.A. - 99.85% Envipco Sweden AB. Sweden - 99.85% Community Redemption Center LLC. Delaware. U.S.A. - 100% Environmental Products Recycling Inc.. Delaware. U.SA - 100% Posada Holding B.V. - Amsterdam. The Netherlands - 100%

Wholly owned subsidiaries of Posada Holding B.V. consisted of:

Aeromaritime Mediterranean Limited, Hal-Far, Malta - 100% Aeromaritime U.K. Limited. London, United Kingdom - 100% Component Process & Repair Limited - London, United Kingdom - 100% Aeromaritime Mediterranean Corporation. Delaware. U.S.A. - 100% Aeromaritime America Inc.. Delaware, U.S.A. - 100%

The purchase method of accounting Is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed In a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition ove' the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Inter-company transactions and balances between Group companies are eliminated.

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group.

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost The Group's investments in associates Includes goodwill (net of any accumulated impairment loss) Identified on acquisition.

The Group's share of its associates' post-acquisition profits or losses is recognised in the Income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses In an associate equals or exceeds its interest in the associate, Including any of their unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and Its associates are eliminated to the extent of the Groups interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary lo ensure consistency with the policies adopted by the Group.

Joint ventures

The Group's Interests in jointly controlled entities are generally equity accounted for In Its financial statements. Where there is an increase of ownership to more than 50%, then up lo the date of the acquisition the results are equity accounted for and after the date of the increased ownership the results are consolidated.

Discontinued operations

A discontinued operation is a component of the Group that either has been disposed of, or that Is classified as held for sale, and

Represents a separate major geographical area of operations;
Is part of a single coordinated plan to dispose of a separate major geographical area of operations; or
Is a subsidiary acquired exclusively with a view to resale.

The assets and associated liabilities of discontinued operations are classified as held for sale and stated at the carrying amount. The assets and liabilities are expected to be recovered through a sale rather than through continued use. Non-current assets are not depreciated as from the moment they are held for sale.

Segment reporting

A geographical segment is engaged in providing services and products within a particular economic environment, that are subject to risks and retums, that are different from those of segments operating in other economic environments. This coincides with the Group's internal organisational and management structure and Its internal financial management reporting system. A business segment is a group of operations engaged in providing services or products that are subject to risks and returns that are different from those of other business segments.

Foreign currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency) The consolidated financial statements are presented in Euros, which Is the Company's functional and presentation currency. Transactions and cash flows in foreign currencies are translated into the functional currency at the rale prevailing when the transaction took place. Related exchange rale differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rales are recognised in the income statement.

Balance sheets of entitles that have a functional currency other than the Euro are translated using the closing rates at each reporting dale The income statements of such entities are translated al the average rates during the period. The resulting exchange difference is recognised in currency translation adjustment in equity. When a foreign entity is sold, such cumulative exchange difference is recognised in the income statement as part of the gain or loss on sale. Translation gains and losses on inter-company balances which are in substance a part of the investment in such Group company are also credited or charged to equity Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Revenue recognition

GenefÉ

Group revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Groups activities. Revenue is shown net of value-added tax. retums,

rebates and discounts, allowances for credit notes likely lo be sent out. other revenue reducing factors, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, collectabillty is reasonably assured and when specific criteria have been met for each of the Group's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies related to the sale have been resolved. When revenue recognition involves the use of estimates, the Group bases Its estimates on historical results taking into consideration the type of client, the type of transaction and the specifics of each arrangement.

Services

The Groups primary service offerings include repairs and maintenance, and pickup and processing. These services are provided on a time and material basis or as a fixed-price contract with contract terms generally ranging from less than one year to three years.

Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are incurred. Revenue from fixed-price contracts involving managed services is generally recognised in the period the services are provided using a straight-line basis over the term of the contract. If circumstances arise that may change the original estimates of revenues, costs, or extent of progress toward completion, then revisions to the estimates are made These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in income in the period in which management becomes aware of the circumstances that give rise to the revision.

Product

Revenue from product sales is generally recognised when the product is delivered to the client and when there are no unfulfilled obligations that affect the clients final acceptance of the arrangement. Delivery does not occur until products have been shipped, risk of loss has transferred to the client and client acceptance has been obtained, client acceptance provisions have lapsed, or the Group has objective evidence that the criteria specified in the client acceptance provisions are either perfunctory or have been satisfied.

Cost of revenue

Cost of revenue Includes all direct material and labour costs and those Indirect costs related to contract performance, such as indirect labour, supplies, housing and depreciation costs. The Group performs ongoing profitability analyses of Its service contracts in order to determine whether the latest estimates - revenues, costs and profits - require updating. If. at any time, these estimates indicate that a contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded Immediately and presented as losses on contracts under provisions.

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classiflec as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the Income statement on a straight-line basis over the period of the lease.

Leases where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leases inception at the lower of the fair value of the leased asset or the present value of the minimum lease payment The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost Is charged to the income statement over the lease period using the effective interest method. Assets acquired under finance leases are depreciated over the shorter of their useful life or the lease term.

Income tax

Deferred mcome tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred Income tax asset is realised or the deferred income tax liability is settled.

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

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and It is probable that the temporary difference will not reverse in the foreseeable future.

Intangible assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the Groups share of the net identifiable assets of the acquired company at the date of acquisition and is carried at cost less accumulated impairment losses Goodwill is tested annually for impairment. An impairment loss is recognised for the amount by which the goodwill of a cash generating unit exceeds the recoverable amount of that segment. The recoverable amount is the higher of the cash generating unit's fair value less costs to sell and value in use. The Group Identified Its cash generating units as countries as they are the lowest level at which goodwill is monitored. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.

Trade names and customer relationships are acquired intangible assets and are measured initially at their fair values at the acquisition date. They are amortised using the straight-line method based on the estimated useful lives of such assets. Computer software represents purchased software licenses valued at historical cost less accumulated amortisation and direct costs to develop software internally. These costs are amortised over the estimated useful life of the software. Costs associated with maintaining computer software programs are recognised as an expense as incurred.

Intangible assets other than goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An Impairment loss Is recognised for the amount by which the asset's carrying amount exceeds Its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value In use.

Property, plant and equipment

Property, plant and equipment are valued at historical cost less accumulated depreciation and impairment losses Historical cost includes expenditures that are directly attributable to the acquisition of the asset. In addition, the cost of leasehold improvements includes the estimated future costs of returning leased facilities to their original condition, if required. Subsequent expenditures that extend the asset's useful life are capitalised Expenditures for repairs and maintenance are expensed when incurred.

Land is not depreciated Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values, based on the estimated useful lives of such assets.

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

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.

Assets under construction will be depreciated once the assets are complete and available for use.

Depreciation is based on the estimated useful lives of assets as follows:

Buildings	25-40 years
Plant and machinery	3-10 years
Vehicles and equipment	3-8 years

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, and other highly liquid investments with original maturities of three months or less.

Trade receivables

Trade receivables are recognised initially at fair value, which is generally face value, less an impairment allowance for credit losses when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Inventory

Product inventory is valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Spare parts Inventory Is valued at the lower of historical cost, or net realisable value. Appropriate consideration is given to excessive inventory levels, product deterioration and other factors when establishing the net realisable value.

Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The Company records purchases of its own ordinary shares (treasury shares) under the cost method whereby the entire cost of the acquired shares is deducted from equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds, net of transaction costs, and the redemption value Is recognised in the income statement over the period of the borrowings using the effective interest method.

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

Borrowing costs are recognised as interest expenses.

Employee benefit plans

The Group subsidiaries sponsor employee benefit plans which cover substantially all of their employees. Such plan is referred to as defined contribution. A defined contribution plan Is a plan under which the Group companies pay fixed contributions into a separate entity Under defined contribution plans, the Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee sen/Ice in the current and prior periods.

For defined contribution plans, Envipco pays contributions to publically or privately administered funds or insurance companies. Contributions are generally based on fixed amounts of eligible compensation and the cost for such plans is recognised based on employee service.

Government grants

Government grants received on capital expenditure are generally deducted in arriving at the carrying amount of the asset purchased. Grants for revenue expenditure are netted against the cost incurred by the group. Where retention of a grant is dependent on the group satisfying certain criteria, it is Initially recognised as deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to the consolidated income statement or netted against the asset purchased.

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required, and a reliable estimate of the amount can be made. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation

Deferred income

In some of the Group's services contracts, the Group bills the client prior to performing the services resulting In the recognition of deferred income on the consolidated balance sheet.

(3) Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors. Including estimates and assumptions concerning the future that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period In which the estimates are revised and in any future periods affected The main areas for which the use of different estimates and assumptions could cause material adjustment to the carrying amounts of assets and liabilities are discussed below

Deferred tax v

The Group recognises deferred tax assets for loss carry-forwards and deductible temporary differences, estimating the amount of future taxable profit that will be probable, against which the loss carry-forwards and deductible tempora^ difference can be utilised (note 15).

The Group tests annually whether goodwill has suffered any Impairment, in accordance with the accounting policy on intangible assets stated In Note 2. Goodwill is tested for impairment based on value-in-use calculations. These calculations require estimates (Note12).

ontinued operettons valuation

Assets and associated liabilities of discontinued operations are valued at the book value.

Allowance for inventory obsolescence

All RVM parts Inventory is valued at the lower of cost and net realisable value with the exception of repair parts for which 50% obsolescence allowance is provided.

Property, plant an

The Group estimates useful lives of its assets as follows:

Buildings	25-40 years
Plant and machinery	3-10 years
Vehicles and equipment	3-8 years

(4) Financial Risk Management

Market r

Market risk arises from the fact that the value of financial instruments may be positively or negatively affected by fluctuating prices on the financial markets. Market risk includes currency risk, fair value interest rate risk, and price risk.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to exchange rate fluctuations. Exposure to currency risks arises primarily when receivables and payables are denominated in a currency other than the operating company's local currency. In addition, the Group operates internationally and Is exposed tc foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, the UK pound, the Japanese yen and the Maltese pound.

The Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Company does not hedge translation risk.

Credit risk

Credit risk arises from the possibility of asset Impairment occurring because counterparties are not able to meet their obligations in transactions involving financial instruments. While the Groups trade receivables are mostly exposed to credit risk, the exposure to concentrations of credit risk Is limited due to the diverse geographic areas and industries covered by its operations. In the normal course of business, the Group provides credit to clients, provides credit evaluations of these clients, and maintains an Impairment provision for credit losses. Credit losses, when realised, have been within the range of management's impairment provision for credit losses. Cash and cash equivalents are held with reliable counterparties.

Liquidity risk arises from the possibility that the Group may encounter difficulty in raising funds to meet commitments associated with financial Instruments. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions Due to the dynamic nature of the underlying businesses, the Group alms to maintain flexibility in funding by keeping committed credit lines available.

The group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. During 2006. the group's borrowings at variable rate were denominated in euros and the US dollar.

(5) Transition to IFRS

General

The Groups consolidated financial statements for the year ended 31 December 2005 were the first annual financial statements that comply with IFRS. The Group's transition date was 1 January 2004. The Group prepared its opening IFRS balance sheet at that date. The Group's IFRS adoption date was 1 January 2005

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The policies adopted have been consistently applied to all the years.

(6) Segment Information

Envipco considers geography and products as Its main segments. Management measures geographical segment performance based on the segments operating result. Similarly the respective assets and liabilities are allocated to the geographical segments. Segment information is presented for continuing operations. Revenues and gross assets of the main business segments are detailed below:

				2006				2005
	Europe	i	Rest of the Vv'	1 /.!.	Europe	North America	Rest of the Worid	Total
Revenues
Sale of goods		2 830	666	16360	12,389	2,708	132	15.229
Service revenue	7.528	r'>47	-	19 075	6,673	8,012	-	14.685
Leasing revenue	-	3,617	-	7	*	3.142	*	3,142
Total	20.513	18.003	565	39,081	19,062	13,862	132	33,056
Discontinued operations
Engine overhaul	7 025	6 856	-	13881	4,094	4,405	514	9.013
Sale of parts	2 221		•	3.812	4.796	5,161	602	10,559
Total	9,246	8.447		17,693	8,890	9.566	1,116	19,572
				2006				2005
	Europe	North America	Rest of the World	Total	Europe	North America	Rest of the World	Total
Gross assets
.ing operations	18,220	13,502	388	32,110	14,705	14,276	835	29,816
	6,258	5 955	-	12,213	7,287	6,955	-	14,242
Total	24,478	19,457	388	44,323	21.992	21,231	835	44,058

(7) Expenses

Selling expenses

Selling expenses consist of costs associated with market development, marketing and promotions and trade shows.

General and administrative expenses

General and administrative expenses include depreciation expenses for an amount of €2,204 (2005: €2,050), research and development costs of €450 (2005: €319) and other costs of €161 (2005: €130). Also included therein is the reversal of excess provisions amounting to €1,257. The fee paid to the auditors for the following services is Included in general expenses as well and can be specified as follow:

	2006	2005
Audit fee Tax services	384 37	318 21
Other services
	422	339

(8) Other income

Other income relates to government grant received by the group companies of €401 (2005: €640 includes €169 of governments grants received and €471 of sundry income).

(9) Employee benefit expense	2006	2005
Salaries	6302	6.255
Social security expenses	2 034	1.872
Pension expenses	*	163
	8.358	8,290
	20 06	2005
Continuing operations
North America	111	110
Europe	-.	88
	/ M.	198
Discontinued operations
North America	23	23
Europe	n	90
	112	113
Total	312	311

(10) Income taxes 2006 2005 Tax expense Deferred •.axes Current taxes Income tax benefit/(loss) from continued operations (20) Ll£9i (159) (6061 (169; (765)

Effective tax rate

Envipco operates in several jurisdictions with local statutory income tax rates varying from 10% to 35%. This causes a difference between the average statutory income tax rate and The Netherlands tax rate of 29.6% The following table reconciles income taxes based on the Group's weighted average statutory income tax rate and the Group's income tax benefit from continuing operations:

Reconciliation between the company's effective tax rate and the statutory income tax rate in The Netheriands. which currently is 29.6%. can be specified as follows:

Profitless) before tax		1.276		2005 1.349
Taxation at statutory rate Lower statutory tax rates on foreign subsidlanes	1 § M	378J	31 5%	(425) 720
Losses under participation exemption				(1,060)
Effective income tax	16 W	(169)	56.7%	(765)

The effective tax is 13.2% (2005: 56.7%). The nominal tax rate is 29.6% (2005: 31.5%). The taxable loss for which no deferred tax asset was recorded is € 24.348 (2005: €28.759).

(11) Net result per ordinary share

The numerator for both basic and fully diluted net resuit per ordinary share (eamings per share or EPS) Is net result attributable to holders of ordinary shares from continuing operations. The denominator for basic EPS is the number of ordinary shares outstanding during the year, excluding ordinary shares held as treasury shares. The fully diluted EPS is same as the basic EPS as there were no outstanding employee stock options.

The net result per ordinary share has been calculated according to the following schedule:

	2006	2005
Basic
Net result attributable to holders of ordinary shares from continuing operations	t -	128
Net result attributable lo holders of ordinary shares from discontinued operations	'«)	456
Minonty		42
Net result attributable to holders of ordinary shares	(368)	626
Net result per ordinary share - basic
from continuing operations	0006	0.002
Net result per ordinary share - - basic from discontinued operations	(0 010)	0.005
Net result per ordinary share -basic	(0004)	0.007
Fully Diluted
Net result per ordinary share - - fully diluted from continuing operations	0006	0002
Net result per ordinary share - fully diluted from discontinued operations	.J10)	0.005
Net result per ordinary share - fully diluted	(0.004)	0.007

Basic and Fully diluted Earnings/(loss) per share for all periods have been calculated using the weighted-average number of current ordinary shares of 93,607,811.

		Concessions, licences & intellectual
(12) Intangible assets	Goodwil	property	Total
At 1 January 2005
Cost	915	075	1,890
Accumulated amortisation	(791)	(9731	(1.764)

Net carrying amount	124		126

Changes to net carrying amount in 2005
Additions/^edassification	•	565	565
Disposals/Reclassification	(610)	(565)	(1.175)
Amortisation	11	(2)	9
Currency translation differences	625		625
Total changes in 2005	26	(2)	24
At 31 December 2005
Cost	930	975	1.905
Accumulated amortisation and impairment	(780)	(975)	(1.755)
Net carrying amount	150		150
Changes to net carrying amount In 2006
Additions/Reclassification		174	174
Disposals/Reclassification
Amortisation		(2)	(2)
Currency translation differences			(15)
Total changes in 2006	LIJ)	172	157
At 31 December 2006
Cost	915	1,149	2,064
Accumulated amortisation and impairment		i977 l	11,757)
Net carrying amount	135	172	307

Goodwill

In September 2006. the Group's management Board approved the sale of its helicopter engine maintenance operations. In light of the proposed sale, the Group assessed the recoverable value of its operations being the carrying value of the assets and liabilities of this operation As a result of classifying this ooeration as discontinued, no goodwill impairment charges were recognised

No impairment charges were recognised on any other goodwill during the period.

Included in concessions licences and intellectual property are €170 of in use and registered patents and trade marks acquired during the year.

(13) Property, plant and equipment	Reverse vending machine»	Land 4. buildings	Plant & machinery	Vehicles & equipment	Total
At 1 January 2005
Cost	40,907	6.791	11,659	1.981	61.338
Accumulated depreciation	(36,421)	(1.853)	(8.541)	(1-572)	(48,387)
Net carrying amount	4,486	4.938	3.118	409	12,951
Changes to net carrying amount in 2005
Additions	3,031	115	1.211	91	4.448
Disposals	(297)	(508)	(857)	(215)	(1.877)
Depreciaticn	(1.587)	(436)	(1,463)	(150)	3.636)
Currency translation differences	733	(26)	(302)	(22)	363
IFRS adjustments and rodassificalions	•	702	982	225	1,909
Total changes in 2005	1.880	(153)	(429)	(71)	1,227
At 31 December 2005
Cost	44,374	7.074	12.693	2.060	66,201
Accumulated depreciation	(38.008)	(2,289)	(10.004)	(1.722)	(52,023)
Net carrying amount	6.356	4.785	2.689	338	14.178
Change» to net carrying amount in 2006
Additions	1.985	3.329	2.660	811	8,786
Disposals	(072J	KB)	(601)	(127)	(4 033)
Depreciation	(1.595)	(302)	(1001)	(749)	(3737)
Currency translation differences	(678)	(164)	(9)		(868)
IFRS adjustments and reclassifications	13	(808)	(813)	616	(702)
Adjustments and reclassifications - cost	(6.745)	508		1	(6.236)
Adjustments and reclassifications - depreciation	6745	(M6	•		8236
Total changes in 2006	(1.247)	(368)	436	534	issn
Al 31 December 2006
Cost	977	7.606	14,130	3,344
Accumulated depreciation	132.858,	(3.189,		2 «721	(49,524)
Net carrying amount	5.119	4.417	3,125	872	13,533

Plant and machinery Includes €576 for an asset which is under construction.

(14) Other non-current assets
	2006	2005
Schedule of movement
At beginning of year	566
Addition/redassification	18	m
Withdrawal/release		,346)
At end of year	813
Other non-current assets

Deposits	749	764
Debt issuing costs		102
	813	866

(15) Deferred tax assets	2ÜÜ6	2005
At beginning of year	s	222
Addilion/reclassiflcation		150
Withdrawal/release	(17)	(103)
At end of year	289	269

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax relates to the same fiscal authority.

(16) Cash and cash equivalents	2006	2005
Cash at bank and in hand Bank overdrafts	578 _13I	905 _18I
Cash and cash equivalents - net	575	897

The cash balances are at free disposal of the Company.

[17) Trade receivables	2006	2005
Trade receivables	6.064	fi QfiO
Other receivables	104	975
Prepaid expenses	90	329
Trade receivables - net	8.278	8,264

Estimates of the recoverabillty of trade receivables are based on the most reliable evidence available at the time the estimates are made. As these estimates are continuously evaluated, it is common that in the normal course of business, circumstances that previously caused trade receivables to be impaired no longer exist resulting in reversals of impairment charges. Impairment charges and reversals of impairment charges are generally not material.

(18) Inv,	2006	2 0 9 J L
Finished goods	/b57	1,428
Raw material and parts	5,710	4,028
Work in progress	241	104
Provision for obsolescence		(368)
Inventory	8,315	5.192

Estimates of net realisable value of inventory are based on the most reliable evidence available at the time the estimates are made. These estimates take Into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. As such estimates are continuously evaluated, It is common that in the normal course of business, circumstances that previously caused inventories to be written down below cost no longer exist resulting in reversals of write-downs. Write-downs and reversals of write-downs are generally not material.

Schedule of movement of provision for obsolescence	2006	2005
At beginning of period Additions	ib8	240 128
Withdrawals/Releases	ITSJ,
At end of period	293	368

The increase/(decrease) in provisions relating to raw materials is effected through cost of revenue.

(19) Shareholders' equity

Share Capital

	Ordinary shares
	Nominal value A Shares	Nominal value B Shares	Total
At 1 January 2005	•
At 31 December 2005
At 1 January 2006 Issue of shares	6
At 31 December 2006	••:-.	/	•
Number of ordinary shares Oj^'ind^i		2006	2005
At 1 January Issued At 31 December		24,407 69.200 93.607	24,407 24,407
Authorised share capital amounts in thousands) Ordinary Shares		20Ü6	2005
200,000.000 Class A shares of €0 01 each
200,000.000 Class B shares of €0.01 each		2.000
		4.000	500

On 26th of June 1998 Stichting Administratiekantoor Envipco Holding N.V., ("the Trust Office"), with its registered address at Leliegracht 10, 1015 DE, Amsterdam, issued bearer Depository Receipts in exchange for Class A shares In Envipco Holding N.V.

5,000.000 Depository Receipts in representation of an equal number of Class B Shares were issued at NLG 10 (BEF 185) each under an Initial Public Offering on 29th of June 1998. In July 1998 the capital was increased by issue of another 319.189 Class B Shares at NLG 10 (BEF 185) each.

The Trust Office manages and administers the shares received in exchange for Depository Receipts, exercises the voting rights and all the rights attached to the shares and does everything in connection therewith, with due observance of the applicable administration conditions. Upon transfer of their shares to the Trust Office in exchange for Depository Receipts, the holders of shares in Envipco Holding N.V. accept the conditions of the Trust Office. Such Trust conditions are therefore regarded as an agreement between the holders of the Depository Receipts and the Trust Office. One of the conditions stipulates that holders of Depository Receipts do not have any voting rights.

On 10 March 2006 the shareholders approved a resolution to amend the Articles of Association of the Company to increase the authorised share capital from €500 to €4,000. It was further resolved to Issue 69,200.000 Class A shares, each of nominal value of €0.01 to Mr. A. Bouri at a price of €0.25 each. The total payment on the said share issue was €17,300. The total payment of the A Shares was by settlement of the claim which Mr. A. Bouri has on the company for an equal amount.

After this new issue of shares the total number of issued and outstanding shares is as follows:

Class A ordinary shares	69,800,000
Class B Shares	23,807.811

Share premium reserve

For full detailed movements in share premium reserve please refer to the consolidated statement of changes In equity. Other reserves are not distributable.

Retained eamings

At the Company's Annual General Shareholders' Meeting it will be proposed to add the 2006 net result to retained earnings.

(20) Minority interest

Changes in minority interest during the year ended 31 of December 2006 were as follows:

	200e	2005
At beginning of period Result for the period Translation reserve Transfer to reserves	(8)	(42) (241) 25
At end of period
(21) Non-current liabilities	2006	2005
Borrowings	4,742	26.557
Other liabilities	2006	2005
Deferred taxation Other non-current liabilities Deferred income	437 60 294	- 112 659 771
Provisions	2006	2005
Provision against investments		782
		782
Schedule of movement of provision against investments	2006	2005
At beginning of period Additions Other liabilities Withdrawals/Releases	782 (782)	700 429 (200) (156)
At end of period		782

When investments in subsidiaries are written down to negative values, these provisions are created in the absence of any current receivables from those subsidiaries The provision Is esteemed to be long term (2-5 years). These provisions were written back during the year as management believed that these were no longer required.

(21) Non-current liabilities (continued)

Borrowings
		2006	2005
	Environmental Products Corporation, USA entered into a revolving line of credit of up to US\$ 12.500 on 18 of May 2001. bearing interest at a certain margin over prevailing prime rate of interest announced by the US Federal Reserve This facility is secured by a fixed and floating charge over the assets of Environmental Products Corporation,
	USA This facility is also secured by a first mortgage on the real estate owned by the
Company The balance is net of the debt issuance costs.			7,406
Sorepla Industrie S A entered into various secured and unsecured bonowing	agreements with various parties totaling €3,728 (2005 - €3.954) with interest ranging
from 0% to 4.25% and maturity dates ranging from 2005 to 2012			3,954
Envipco Holding N.V entered into a secured loan agreement of US\$18,482 with its main shareholder with interest of 1% over the 12 month Eunbor, repayable at the demand of the Lender after 31 December 2006. This loan is secured by the pledge of shares of Posada Holding B V , Sorepla Technologie S.A and Sorepla Industrie S A. The denominated currency of the loan
fixed as €13,549 without changing any other terms and conditions	was changed from US Dollars to Euros at 1 January 2005 and the amount of loan was	785	15,180
Other loans		1 358	2.180
		10,532	28,720
Future payments under long term borrowings		2006	2005
Current		5,790	2.163
Due between 2 to 5 years		3384	25.916
> 5 years		1,358	641
Total borrowings			28.720

Schedule of movement		2006	2005
At beginning of period		28,720	26.990
I ncrease/(decrease)		(17,658)	687
Debt issuance costs Translation effect		- (530)	34 1,009
At end of period		10 532	28,720

(21) Non-current liabilities (continued)

Effective 18 May 2001 a USA subsidiary entered into a financing agreement (the Agreement) to refinance its outstanding revolving line of credit and term loan. The new revolving line of credit has a maximum limit of \$12,500 subject to availability under the "borrowing base' as defined within the agreement, and matures in May 2004. Borrowings under the Agreement bear interest at the prime rate plus a certain margin. The US subsidiary and Its holding company are each required to meet certain covenants under the Agreement. Subsequently the US subsidiary has restructured Its financing agreement and obtained waivers for the breach of certain financial covenants, on 30 June 2004 and again on 9 March 2006.

This US subsidiary restructured ils debt with the lender on 30 June 2004 for a period of 4 years. Terms of the bank debt restructuring agreement, requires the US subsidiary (hereinafter the Company) and/or Envipco Holding N.V. to inject capital of US\$2.0m (the "Equity Infusion"), which shall be payable in accordance with the following schedule: (a) US\$1.0m on 30 September 2004, (b) an additional US\$500 on 31 March 2005 and (c) the remaining US\$500 on 31 March 2006. In addition, the Company shall retain a broker to sell the real estate owned by the Company If the real estate is not sold on or prior to 31 December 2004, the lender has the right to sell the property using a broker or agent at a price not less than the amount necessary lo repay the outstanding term loan, the Company will be required to accept such qualified offer; provided thai Envipco Holding N.V. or the group of investors entering Into the subscription agreement shall be granted the first right of refusal to purchase this real estate at such price and on such terms no less favourable to the Company. The real estate was subsequently sold to a Group company at US\$2.5m on 9 March 2006 and the proceeds used to offset this US Subsidiary's loan lo the lender.

The loan contract required the US subsidiary to meet certain financial covenants. Since the US subsidiary company did not meet the covenants, as part of the restructuring agreement signed on 8 March 2006. it obtained a waiver. The loan is secured by pledge of shares of the US subsidiary.

Subsequent to the balance sheet dale this debt was fully paid off on 27 December 2007. Details of the settlement are given in Note 28.

Deferred income

These represent grant assistance received during the years 1999 through 2003 by a consolidated subsidiary for the acquisitions of Plant and Machinery. The grants are amortised over the useful lives of the assets and any unamortised amount is shown as a deferred income liability.

	2006	2005
Un-amortised balance	: --	659
(22) Other current liabilities
	2006	2005
Other liabilities Provisions	1.779	52
Tax and social security contributions	_60L 2,380	1,392 1.532

(23) Employee benefit plans

Group companies provide pension benefits for their employees The way these benefils are provided varies according to the legal, fiscal and economic conditions of each country. Such benefits are provided under defined contribution plans

For the year ended 31 December 2006, expenses related to defined contribution plans amounted to €153 (2005: €163)

(24) Commitments and contingencies

Operating lease commitments-where a Group company is the lessee

The future minimum lease payments under non-cancellable operating leases as of 31 December 2006 and 2005 were as follows:

	2006	2005
Current Between 2 to 5 years	136 282	182 262
	Tie"	444

Rent expenses for the year ended 31 December 2006 were approximately €388 (2005: €204).

Operating lease commltmcnts-where a Group company is the lessor

The future minimum lease payments receivable under non-cancellable operating leases as of 31 December 2006 and 2005 were as follows:

	2006	2005
Current Between 2 to 5 years	1,774 4,703	3.282 6,853
	6,477	10.135

Lease revenues from Reverse Vending Machines for the year ended 31 December 2006 were approximately €3,617 (2005 €3.141).

(24) Commitments and contingencies (continued)

Legal proceedings

Group companies are parties to various legal actions that are incidental to the conduct of business.

In a certain litigation, a plaintiff alleges breach of contract, unjust enrichment, etc against a US subsidiary (the Company) making a claim of about €121. The Company's affiliate has made a counter claim for nearly €223. As of the dale of this report, the outcome of these proceedings is undeterminable. The matter has been settled in 2007 (See Note 28)

In a separate litigation against the Company, a plaintiff alleges breach of contract making a claim of about €288. The Company plans to counterclaim for breach of the same contract and for fraud and negligence that damaged the Company's business and has made a counterclaim for nearly €323. The matter has been settled in 2008 (See Note 28).

In yet another independent litigation, a plaintiff commenced an action seeking unpaid rent alleged to be due and owing for the lease at certain premises of a US subsidiary company (the Subsidiary) making a claim of about €308. The Subsidiary opposed the motion, pursuant to certain agreements executed al the same time and in connection with the lease and has made a counterclaim for nearly €456. This case has been settled during 2006 for a sum of €21.

The Company is nol aware of any legal proceedings including the above that can have a material impact on the accounts.

Others

Aeromaritime (UK) Limited has given a guarantee in favour of HM Customs and Excise as at 31 December 2006 of €89 (2005 was €87 the equivalent of £60).

Posada Group, the helicopter maintenance operation has a liability for the renewal of its Authorised Maintenance Centres (AMC's) of nearly €663, of which €569 remained payable at end of 2006.

Loans

Please refer lo Note 21.

(25) Related party transactions

Affiliates

EM Geralebau Rucknahmesysteme GmbH & Co KG and Envipco GmbH were placed in Administration before 2003. Provision exists for anticipated winding up costs of approximately €135. A final settlement has now been reached at €200. payable In equal installments of €50 in the first year and €37.5 over 4 years that has been fully provided for in the above finandals. The first and second installments were paid during the years 2005 and 2006 respectively. A final payment of €60 has been made in 2008 lo settle this matter.

(26) Acquisitions

In 2005 at the termination of the joint venture with Fuji Electrical Limited (FEL) the company acquired the remaining 50% shares from FEL at no cost. The name of the joint venture company was changed to Envipco Japan Limited with 100% ownership. Under the termination agreement FEL has forgiven about €2,100 of its claim against the joint venture entity.

Assets and liabilities of the joint venture al acquisition were as follows:

Fixed assets		Liabilities and equity
Tangibles assets		Current liabilities
Other non-current assets	68	Trade and other creditors	B68

Current assets		Long term liabilities
Cash and cash equivalents	84	Loans	- 7 54
Receivables	37
Inventory	505	Capital and resen/es
Other current assets	20	Share capital Retained earnings
	Ó4C		- •'.' • ___^_
Total assets	747	Total liabilities and capital	747

On 20 April of 2006 Envipco Holding NV entered into an agreement to acquire certain assets of Multi Reverse Vending GmbH (MRV) from Its Receiver for a consideration of €500. The following assets were acquired on that dale:

Fixed assets
Intangibles assets	170
Other non-current assets	300
Tangibles assets	8
	478
Current assets
Inventory	22
	22
Total assets	500

(27) Discontinued operations

The assets and liabilities related to the Company's helicopter maintenance business have been presented as held for sale following the execution of the sale and purchase agreement on 7 March 2008 with Industrie de Turbinas de Helicopteros S.L.

An analysis of the result of discontinued operations, and the carrying value of the assets and liabilities of the operating company held for sale are as follows:

	2006	2005
Revenue	' '	19.572
Cost of sales	H52)	(15.905)
Gross profit	4,841	3,667
Selling expenses		(258)
General and administrative expenses	-	(3.514)
Operating result	424	(105)
Interest expense	••	(374)
Interest income	-	10
Exchange gain/(loss)	(602)	580
Other income	180	432
Provision for loss on disposal of assets		-
Resutt before taxes	(947)	543
Income taxes	18	(87)
Result after taxes of discontinued operations	(929)	456

Assets of the operating company held for sale consist of the following:

	2006	2005
Intangible assets	M	1.180
Property, plant and equipment	947	1,227
Other non-current assets	60	50
Cash and cash equivalents	1,270	742
Trade receivables	2,338	3,987
Inventory	6.206	6,553
Other current assets	258	503
Assets of discontinued operations held for sale	12.213	14.242

Liabilities directly associated with the operating company held for sale consist of the following:

	2006	2005
Borrowings (current and non-current)	-	194
Trade creditors	2 599	2.598
Accrued expenses	730	2,091
Other current liabilities	109	163
Provision for loss on disposal of assets	949	-
Liabilities directly associated with discontinued operations held for sale	4,387	5.046

(27) Discontinued operations (continued)

The equity of the operating company held for sale al 31 December 2006 amounted lo €898 (2005: - €2,485).

(28) Post balance sheet events

Envipco US borrowings

A US subsidiary has signed a debt restructuring agreement with ils major lender on 30 June 2004 for a period of 4 years. Terms of the bank debt restructuring agreement, requires the US subsidiary (hereinafter the Company) and/or Envipco Holding N.V to inject capital of US\$2.0m (the "Equity Infusion"), which shall be payable in accordance with the following schedule: (a) US\$1.0m on 30 September 2004, (b) an additional US\$500 on 31 March 2005 and (c) the remaining US\$500 on 31 March 2006. In addition, the Company shall retain a broker to sell the real estate owned by the Company. If the real estate is not sold on or prior to 31 December 2004. the lender has the right to sell the property using a broker or agenl al a price not less than the amount necessary to repay the outstanding term loan, the Company will be required to accept such qualified offer; provided that Envipco Holding N.V. or the group of investors entering into the subscription agreement shall be granted the first right of refusal lo purchase this real estate at such price and on such terms no less favourable lo the Company. The real estate was sold lo a Group company at US\$2.5m on 9 March 2006 and the proceeds used to offset the US Subsidiary's loan lo the lender.

Divestment program

In September 2006, the Company initialed a divestment program, identifying a limited number of operating companies in continental Europe and USA lo be divested, In line with the strategic decision taken by the Board of Management in 2006. The reason for divesting these business activities is that they no longer fit in the strategic framework of the Company, based on ils core operating activities These non-core operating companies in aggregate, represent approximately €17.7m in revenue and 112 employees. On 7 March 2008 this segment, representing the Helicopter Maintenance business, was sold lo Industrie de Turbinas de Helicopteros S.L. A provision of €949 has been provided during the year for the expected loss on disposal of this segment.

Law suit settlement

On 22 January 2007, a settlement was reached with the former owner of Metropolitan Mining Company Inc. The amount of the settlement was charged against the provision which had already been provided for by the group.

On 12 September 2008, a US subsidiary settled another dispute. This amount had been fully provided by the subsidiary.

(28) Post balance sheet events (continued)

Change in capital structure

Subject to compliance with all statulory laws and adherence to the Company by-laws, articles of association and shareholders resolutions, the controlling shareholders Mr Alexandre Bouri and Megatrade International S.A.. have entered into an agreement with Mr Gregory Garvey whereas. Mr Garvey has purchased 10,056.315 shares in Envipco representing 10.74 % of the total outstanding shares of the Company for a consideration of €2.5m (at €0.2486 per share). Mr Garvey will be granted a further 12.000.000 share option at the strike price of €0.32 per share in the Company as an incentive bonus subject to the key performance target agreed, to be realised on a yearly basis through 31 December 2011. He will be appointed chairman of the management board with full operational responsibility for the reverse vending, related product and services segment of the business.

Mr Alexandre Bouri. the current majority shareholder, has agreed lo subscribe 30,022,525 new shares al €0.2486 each in the Company, representing about €7.5m (\$11.0m) in cash which would be available to the Company to fund its initiatives and business plan This subscription is payable in 3 instalments: €2.0m upon subscription, €2.0m by 15 February 2009, and the balance of €3.5m by 31 December 2009. Such subscription is subject to legal requirements, the rules of the Stock Exchange and the by-laws constitution and articles of association of the Company. Pending legal formalities, Mr Bouri will immediately be granting loans to the company for It to capitalise on immediate business opportunities.

In the new capital structure, once all the share issues are completed and share options to Mr Garvey are granted, the total number of shares shall become 135.630.336 and include 24.407.811 depositary receipts. The total shares and depositary receipts owned by the parties shall be as follows: Mr Alexandre Bouri 79.98%. Mr Gregory Garvey 16.26% and the public 3.76%.

Refinancing of real estate

In May 2007. one of the US subsidiaries refinanced the loan with its parent and entered into a mortgage agreement with a third party lender relating lo its real estate in the amount of US \$1.875m. As a part of the transaction, the parent contributed US \$0.625m to equity of this subsidiary.

SEPARATE COMPANY BALANCE SHEET AS AT 3 1 DECEMBER

ENVIPCO

iROPOSCO APPROPRIATION Of «SUI T

(in thousands of euros)

	Note	2006		2005
Assets
Fixed assets
Intangible assets		170
Tangible assets		300		-
Financial fixed assets	(B)	44		6,324
Loans to group companies	{C) _			8.681
					15,005
Current assets
Receivables
Cash				150
		-			345
Total assets			15,539	-	15,350
Equity and liabilities
Shareholders' equity	(D)
Share capital		9-, e		244
Share premium		41,753		25,145
Translation reserve		146		515
Retained earnings		879)		(30.233)
			11.056 "		(4,329)
Provisions
Provisions for Consolidated Group Companies			826		1.514
Non-current liabilities			1 977		17,123

Current liabilities
Creditors and other liabilities		780		1.042
			780		1.042
Total equity and liabilities			15,539		15,350

SEPARATE COMPANY INCOM E STATEMENT FOR THE YEAR ENDED 3 1 DEaMBER	ENVIPCO
KFORE PROPOSf 0 APWOPRIAIlON Of RCSULT

(in thousands of euros)

	2006	2005
Result from Group companies after income taxes	(1 344)	3.211
Other results after income taxes	976	(2,585)
Net result	i368]_	626

(A) General information

Accounting principles used to prepare separate Company financial statements

The Company financ ial statements have been prepared in accordance with Part 9 of Book 2 of the Netherlands Civil Code. In accordance with Article 2:362 subsection 8 of the civil Code, the Company has elected to apply the accounting policies jsed in the consolidated financial statements to the separate Company financial statements. Furthermore, in accordance with Article 2:402 of the Civil Code, the Company has elected to present an abbreviated income statement. All amounts are stated in thousands of Euros unless stated otherwise.

In addition. Consolidated Group companies are valued based on their net equity, determined using the Group accounting policies In case the net equity of a Group company is negative, the Company records a provision for the negative equity value.

Change In accounting principles

As of 1 January 2005. the Company has prepared its consolidated financial statements in accordance with Intemational Financial Reporting Standards as adopted by the European Union. The initial application of these accounting principle? has resulted In changes to the existing accounting principles used to determine the values of assets, liabilities and profit and loss (IFRS 1 Adjustments). Such IFRS 1 Adjustments are generally applied retroactively in the comparative figures as of 1 January 2004.

The Company has elected to apply the accounting principles used to determine the values of assets, liabilities and profit and loss used n the consolidated financial statements to the separate Company financial statements as of 1 January 2005. The Company has elected this change as rt results in an improved reporting of the separate Company financial statements. As a result, shareholders' equity and net result in the separate Company financial statements are consistent with the amounts presented in the consolidated financial statements.

Composition of shareholders' eq

As of 1 January 2005, the applicable rules for establishing and maintaining legal and revaluation reserves changed. As a result of these legal changes and the aforementioned changes in accounting principles, the classification of shareholders' equity has also changed. Refer to Note D Shareholders' equity of the separate Company financial statements

NOTES TO THE SEPARATE COMPANY FINANCIAL STATEMENTS	ENVIPCO

(B) Financial fixed assets	2006	2005
At beginning of the year	'24	4.096
IFRS adjustment	-	52
Investments	(69)	(1,598)
Treasury shares	(6)	(6)
Results of the group companies for the year	(1344)	3.211
Exchange differences	(435)	569
	1 : "I ,	6,324
(C) Loans to group companies	2006	2005
At beginning of the year	'	7,959
Loans/reclassifications		722
	10.576	8.681

(D) Shareholders' equity

Al the 2007 Annual General Shareholders' Meeting, the Company's shareholders approved that the 2005 net results of the Company be transferred to the retained earnings.

Refer lo Consolidated statement of changes in equity and Note 19 Shareholders' equity of the Company's consolidated financial statements for further information regarding the Company's shareholders' equity.

(E) Subsidiaries and affiliates of Envipco

All Inter-company transaction balances have been eliminated on consolidation. Legal seat of the consolidated subsidiaries is as follows:

Tek-O-Matic Enterprises Inc.- Quebec, Canada

Recypac Inc. - Quebec, Canada Envipco Finance Company Limited - London, United Kingdom Sorepla Industrie S.A. - Paris, France Sorepla Technologie S.A. - Rebevrille, France Posada Holding B.V. - Amsterdam, The Netherlands Aeromaritime Mediterranean Limited. Hal-Far, Malta Aeromaritime U.K. Limited, London, United Kingdom Component Process & Repair Limited - London, United Kingdom Aeromaritime Mediterranean Corporation, Delaware, U.S.A. Aeromaritime America Inc.. Delaware, U.S.A. Envipco Automaten GmbH, Germany Envipco Japan Limited, Japan Envipco Pickup & Processing Services Inc., Delaware, U.S.A. Environmental Products Corporation. Delaware, U.S.A. Envipco Sweden AB, Sweden Community Redempt on Center LLC, Delaware, U.S.A. Environmental Products Recycling Inc., Delaware, U.S.A.

NOTES TO THE SEPARATE COMPANY FINANCIAL STATEMENTS ENVIPCO

on-current liabilities

Refer to Note 21 Bonowings of the Coinpany'a ccmottdata]! financial Mafcamarti lor further informatton regarding the Compatty s borrowings.

(G) R#muner - if Board of Management (in mouaandl of euros)

Remuneration of the Management Board

The remunefatton of the Management Boarcl charged to the result in 2006 was €425 (2005 - €390) and can be specfied as follows

			2005
B. Santchurn			152
N. Turpie
C. Crepet		187	120
H. Letellier		3.8.6	118
G. Lefebvre		36 T
T.Leipold	a s

Total

Mr Christian Crapat

Mr. Bhajun Santchum

Mr Guy Lafabvra

Mr Nell Turpla

Mr. Huguas Lateliier

(H) Events after the balance sheet date

Credit Facility

At 31 December 2004 and 2005, a US subsidiary was in breach of certain financial covenants. On 8 March 2006, the Company obtained an amendment to the credit facility which cured the covenant violations. Under the terms of the amendment agreement, certain financial covenants have been amended through 31 December 2007, providing the Company with additional leeway to meet its financial covenants. The new terms of the loan agreement Includes 8 consecutive quarterly repayment installments of \$250 each beginning 31 March 2006 and a balloon payment by 31 December 2007. This loan is secured by the pledge of the shares of the US subsidiary. As a background, the US subsidiary had signed a debt restructuring agreement with its Senior Lender on 30 June 2004 for a period of 4 years.

This amendment required capital infusions of US \$1 Om on 31 March 2004; US \$500 on 31 March 2005 and US \$500 on 31 March 2006; in addition to the sale of a real estate owned by the subsidiary by 31 December 2004. On 9 March 2006 this real estate was sold to another subsidiary of the Group for US \$2.5m, the proceeds of which went to reduce the amount due to the Senior Lender under the terms of the restructuring.

On 27 December 2007. this subsidiary paid off all its outstanding debt due under this loan agreement

Change In capital structure

Subject to compliance with all statutory laws and adherence to the Company by-laws, articles of association and shareholders resolutions, the controlling shareholders Mr Alexandre Bouri and Megatrade International S.A.. have entered into an agreement with Mr Gregory Garvey whereas, Mr Garvey has purchased 10,056.315 shares in Envipco representing 10.74 % of the total outstanding shares of the Company for a consideration of €2.5m (at €0.2486 per share). Mr Garvey will be granted a further 12,000,000 share option at the strike price of €0.32 per share in the Company as an incentive bonus subject to the key performance target agreed, to be realised on a yearly basis through 31 December 2011. He will be appointed chairman of the management board with full operational responsibility for the reverse vending, related product and services segment of the business.

Mr Alexandre Bouri. the current majority shareholder, has agreed to subscribe 30,022,525 new shares at €0.2486 each in the Company, representing about €7.5m (\$11 Om) in cash which would be available to the Company to fund its initiatives and business plan This subscription is payable in 3 instalments: €2.0m upon subscription, €2.0m by 15 February 2009, and the balance of €3.5m by 31 December 2009. Such subscription is subject to legal requirements, the rules of the Stock Exchange and the by-laws constitution and articles of association of the Company. Pending legal formalities. Mr Bouri will immediately be granting loans to the company for It to capitalise on immediate business opportunities.

In the new capital structure, once all the share Issues are completed and share options to Mr Garvey are granted, the total number of shares shall become 135.630,336 and include 24,407,811 depositary receipts. The total shares and depositary receipts owned by the parties shall be as follows: Mr Alexandre Bouri 79.98%, Mr Gregory Garvey 16.26% and the public 3.76%.

Disinvestment program

In September 2006 the Company decided on a disinvestment program of Its helicopter maintenance business as they do not fit in the strategic framework of the Group. The sale of this segment was completed on 7 March 2008. A provision of €949 has been provided during the year for the expected loss on this disposal. In aggregate this segment represented approximately €17.7m In revenues and 112 employees.

OTHER INFORMATION ENVIPCO

(I) Statutory rules concerning appropriation of results

In Article 19 of the company statutory regulations the following has been presented concerning the appropriation of result:

1. A reserve in favour of the shares of a particular class shall be included in the company s books, and this shall be entitles: dividend reserve shares, followed by the letter corresponding to the class of shares concemed.
1. The company may make distributions to its shareholders and other persons entitled to the distributable profits only to the extent that the company's shareholders' equity exceeds the paid-up and called-up part of the companys capital, plus the reserves which must be maintained under the law.
1. A sum amounting to three per cent of the calculated over the sub of the reserve concerned during the financial year concerned, plus any withdrawals effected in pursuance of the provisions of paragraph 5 below shall in the first place be deducted from the profits referred to In paragraph 2 above and added to each of the dividend reserves.

If the sum computed in this way should be greater than the available profits, the sums to be added shall be decreased proportionately.

The profits which remain after application of the above provisions shall be at the disposal of the general meeting of shareholders.

If the general meeting of shareholders should not resolve to add the profits to the general reserve, the profits shall be booked onto the above-mentioned dividend reserves in proportion to the nominal sum of the shares of the class concemed.

Any withdrawal from the dividend reserve made in pursuance of the previous paragraph must be set-off before any addition can be made to the dividend reserves In pursuance of paragraph 4.
The general meeting of shareholders shall make such a dividend payable on the shares belonging to the dividend reserve to the debit of the dividend reserve, if and to the extent the dividend reserve allows this, as shall be resolved by the meeting o holders of the class of shares concerned. The general meeting of shareholders may only refrain from resolving that dividend shall be made payable if and to the extent it can demonstrate that the company's liquidity position does not allow such a distribution of dividend
1. The general meeting of shareholders may allocate another purpose for the dividend reserves after having obtained the approval of all the meetings of the holders of shares of the respective classes, provided the allocation is debited from the various reserves in proportion to the nominal sums of the shares of the class concemed.
1. The company may make interim additions to the above-mentioned dividend reserves only to the extent that the stipulations set out in paragraph 2 above have been complied with, and provided that It has obtained the prior approval of the general meeting of shareholders.
1. There shall be no distribution in favour of the company on the shares or depositary receipts issued therefore which the company has acquired in its own capital.
1. In computing the distribution of profits, the shares or depositary receipts issued therefore on which no distribution shall be made in favour of the company in pursuance of the provisions of paragraph 10 above, shall be disregarded.
1. Any claim to distribution shall lapse after five years, to be computed from the day on which such distribution became payable.

(J) Appropriation of result for the financial year 2005

The annual report 2005 Is determined In the General Meeting of Shareholders held on 25 May 2007. The General Meeting of Shareholders has determined the appropriation of result in accordance with the proposal being made to that end.

OTHER INFORMATION ENVIPCO

(K) Dividend distributions

Dividend distributions may only be paid out of the profit as shown in the separate Company financial statements adopted by the General Meeting. Dividends may not be paid if the distribution would reduce shareholders' equity below th-2 sum of the paid up and called up part of the issued share capital and any reserves which must be retained according to Dutch law or the Company's Articles of Association.

The Board of Management determines the amount that shall be reserved from the profits as disclosed in the adopted annual accounts.

roposed appropnati m for the financial year 2006

The board of directors proposes that the loss for the financial year 2006 amounting to €368 will be added to the retained sarnings. The financial statements do reflect this proposal.

(M) Special statutory voting rights

Rights are connected to all shares for the binding nomination of directors. at Amsterdam" holds all the shares. The "Stichting Envipco Trust / Foundation

(N) Auditor's report

The auditor's report is set forth on the following page.

AI Terminal

Envipco Holding N.V.

3836_10-k_2009-01-05-000000_20c9bc75-de66-4f62-9eb7-eb87ddfdba1a.pdf

General

Outlook

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

Principal activities

Review of Operations

Reverse vending machines and materials handling

Plastic Recycling

Helicopter maintenance Business

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

Board of Management

Nomination

Appointment/Suspension

Representation

Meeting

Supervisory Board

Stichting Administratiekantoor van aandelen in Envipco Holding N.V. ('the Stichting Envipco Trust/the Foundation')

REPORT OF THE BOARD OF DIRECTORS ENVIPCO

Salaries and remuneration

Research and development

Public accountability

Substantial shareholding

nal Financial Reporting Standard-

Delayed audited results

Post balance sheet events

CONSOLIDATED INCOME STATEMENT fOU Uil TCARCNOfO 31 Dfctwew

CONSOLIDATED BALANCE SHEET ASATJIDUIMMR

CONSOLIDATED BALANCE SHEET ASATSIDCCCMBER

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ENVIPCO

NOTES TO THE CONSOLIDATED FINANOAL STATEMENTS ENVIPCO FOR THE YtAB CNOCO 3 1 Of UMS U

(1) General information

Deposit redemption programmes

Plastics processing programme

(2) Summary of significant accounting policies

Basis of preparation

Adoption of new Standards

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Consolidation

Subsidiaries

Joint ventures

Discontinued operations

Segment reporting

Foreign currencies

Revenue recognition

GenefÉ

Services

Product

Cost of revenue

Leases

Income tax

Intangible assets

Property, plant and equipment

Cash and cash equivalents

Trade receivables

Inventory

Equity

Borrowings

Employee benefit plans

Government grants

Provisions

Deferred income

(3) Critical accounting estimates and judgments

Deferred tax v

ontinued operettons valuation

Allowance for inventory obsolescence

Property, plant an

(4) Financial Risk Management

Market r

Currency risk

Credit risk

(5) Transition to IFRS

General

(6) Segment Information

(7) Expenses

Selling expenses

General and administrative expenses

(8) Other income

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