ANNUAL REPORT 06 - Bosnalijek dd

Bosnalijek d.d.Notes to financial statements for the year ended 31 December 2006(All amounts are expressed in thousands of KM)1. GENERAL2. CORRECTION OF AN ERRORBosnalijek d.d. (the "Company") is a joint-stock company incorporated inthe Federation of Bosnia and Herzegovina with the registered addressJukićeva 53, 71 000 Sarajevo. The Company is primarily engaged in theproduction and wholesale trade of pharmaceuticals, veterinary medicineproducts, disinfectants and similar products.As of 31 December 2006, the Company employed 581 employees (2005,536 employees).The Company has restated the financial statements for the years ended 31December 2005 and 2004 in order to correct an error related to therecognition of the provisions for the long- and short-term employeebenefits as required by International Accounting Standard 19 – Employeebenefits and recognition of the accruals for employee bonuses as requiredby the Framework for the Preparation and Presentation of FinancialStatements, Underlying assumptions - Accrual basis. Previously, theManagementSupervisory BoardHasan Muratović Ph DLjunora MavrićAbdul-Umid ŠalakaMidhad VehabovićRifat KlopićManagementEdin ArslanagićAkif MujezinLjiljana KamberovićŠefik HandžićAudit CommitteeSead SarvanIbrahim ImamovićRabija AvduliChairmanMemberMemberMemberMemberDirectorExecutive director for production managementExecutive director for operations developmentExecutive director for finance and economyChairmanMemberMemberCompany recorded the costs of retirement severance payments andemployee bonuses when they became due and were paid to the employees.As a result of the above, as at 31 December 2005 and 2004, retainedearnings have decreased by KM 1,295 thousand and KM 1,243 thousandrespectively. In addition, as at 31 December 2005 and 2004, provisions forretirement benefits have increased by KM 510 thousand and KM 519thousand, and accruals for employee bonuses have decreased by KM 39thousand and increased by KM 724 thousand, respectively, whereas netresult for the year ended 31 December 2005 has increased by KM 48thousand.serving Your health INDEPENDENT AUDITOR’S REPORT ANNUAL REPORT 06 57