According to the article 67 of The Law of market of valuable papers and other financial instruments (Official messenger 47/06) ‘TAKOVO INSURANCE COMPANY’ for the stock insurance company Kragujevac declares

ANNUAL REPORT ON THE BUSINESS OF STOCK INSURANCECOMPANY

I General data

1)business name, seat and address, main number and tax number of stock company / Opened Stock insurance for ‘Takovo’ insurance company Kragujevac, Dr Zorana Djindjica 15 a, 06084184, 101457935
2) web site and e-mail address /
3) number and date of registration in the book of tradesmen / BD. 10691/2005 since May 6, 2005
4) activity (code and description) / 66030
5) number of employees / 343
6) number of stock holders / 66
7) major ten stock holders (first and last name, business name of legal entity with number of stocks and participation in basic capital) / Jovovic Dragan , Rudnicka 13/8,
Kragujevac / 1115 / 18.44%
‘Auto Takovo’, Kragujevackog okt. 98, Kragujevac / 1062
790 / 17.56%
13.06%
Jovovic Milan, Donji Branetici, Donji Branetici
Jovovic Snezana, Rudnicka 13/8, Kragujevac / 664 / 10.65%
‘Probanka’ dd Ljubljana / 340 / 5.62%
‘Euro Balkan Corporation’ doo, Bul. Mihaila Pupina 10d/I, Novi BG / 301 / 4.97%
Snezana Zivkovic, Brace Petkovic 9/ 26, Kragujevac / 275 / 4.55%
‘A Banka Vipa’dd, Slovenska cesta 58, Ljubljana / 260 / 4.27%
‘Dzosua’ doo, Spanskih boraca 24/v, BG / 189 / 3.12%
‘Factor banka’ dd Ljubljana / 185 / 3.06%
8) value of basic capital / 302.400
9) number of issued stocks (regular and main, with ISIN and CFI code) / Regular stocks: 6048, CFI code-ESVUFR ISIN number RSTAKOE 19555
10) data on dependant companies ( up to 5 most significant subjects of consolidation ) –business name, seat and business address / 1. ‘Sumadija broker’ stock company Kragujevac, Dr Zorana Djindjica 15a
2. ‘TV K-9’ doo Kragujevac, Miloja Pavlovica 8
11) business name, seat and business address of the auditor that has audited the last financial report / Company for the audition of accounting reports ‘Vincic’doo, Novi BG, Narodnih heroja 23/I
12) business name of the organized market involving stocks / BG berza stock company, Novi BG, Omladinskih brigada number 1

II Data on management

1) Members of Managing Board on December 31, 2006 in 000

First and last name and residence / Education, current employment, membership in Managing Board and Supervisory Board / Paid net amount of compensation / No. and % of stocks owned by Stock company
1. Snezana Zivkovic, Kragujevac, president / High- lawyer; executive manager of the company; president of Managing Board of ‘Takovo ‘ Kragujevac / 275 stocks
4.55 %
2. Jovanka Macuzic, Kragujevac, member / High-graduate economist, executive manager of ‘Credy banka’ member of Managing board / 240 / /
3. Gojko Adzic, Kragujevac / High-graduate economist, retired, member of Managing board / 220 / /
4. Zivorad Nesic, Kragujevac / High- graduate economist, manager of ‘Zitoprodukt’, member of MB / 240 / /
5. Dragan Vasiljevic, Uzice / High-engineer, member of MB of ‘Takovo’ / / / /

2) Members of Supervisory Board on December 31, 2006

First and last name and residence / Education, current employment, membership in MB and SB of other
companies / Paid net amount of compensation / No. and % of stocks owned by Stock company
1. Radmilo Jankovic, Kragujevac president / High-graduate economist, retired person, president of Supervisory Board / 250 / /
2. Milena Simovic, Kragujevac / High-graduate economist, ‘Credy banka’, member of SB / 240 / /
3. Natasa Petrovic, Kragujevac / High-lawyer, ‘Sumadia broker’, member of SB / 240 / /

3) Issued and regulated code of behavior and web site with its presentation: NONE

III Data on business of the company

1) Report of the management on realization of adopted business politics, with the cases and reasons for exception and other important issues relating business

The Company is doing business in accordance with adopted business politics

2) Analysis of achieved incomes, outcomes and results of business, income according to the activity , description of basic products and services with special attention to profitability, liquidity, economics, and the market value of the company, along with the effects of change in its position

Income on total capital / 15.61%
Net income on its own capital / 27.25%
Business net income / December 31,2005=loss 142.393
December 31, 2006=profit 82.413
Level of debt / 15.20%
I and II level of liquidity / I level=1.39%
II level=18.12%
Net working capital / 1.264.291
Price of stocks- the highest and lowest in the reported period, if traded (especially for regular and main) / Lowest price in 2006=73.000 highest price in 2006 240.000 for a nominal stock value which amounts 50.000
Market capitalization / From total stock number of 6.048 in process of trading was involved in 2006 4.463 stocks whose market capitalization amounts 1.071.120
Profit according to a stock / 13.062
Paid dividend according to regular and main stock for last 3 years, on annual level / Dividend was not paid off

3) Information on implementation of the company in segments (formed on production and geographic base), in accordance with demands of MRS 14:

Income from selling to external buyers / Segment AO=1.287.699
Other insurances=60.036
Income from selling to other segments in the domain of the same company / There was no selling in the domain of the company
Results of every segment / Segment AO=profit 66.417
Segment other insurances=profit 23.063
Property and responsibility of segments / There is no evidence of property in segments; it is considered as total property of the company
Main buyers and suppliers (buyers with more than 10% in the income of the company, and suppliers with more than 10% in total responsibility of the company towards the suppliers) / /
Way of forming transferable prices

4) State and explain every change bigger than 10% considering the last year:

Property and responsibility (stated according to responsibilities in financial reports) / There has been significant increase of reserves for risk settlement because of growth of insurance portfolio
Net profit, loss of the company / In the year of 2006 the company has achieved significant growth of the insurance portfolio and other significant business activities, which has affected the implementation of the company which amounts 82.413

5) State cases with the incertitude in income payment or possible future expenses that can significantly affect the financial position of the company:

/

6) Information on position (number and %), gaining, sellingand annulment of its own stocks:

/

7) Investment in research and development of basic activity, informational technology and human resource:

During 2006 the company has invested in equipment, informational system and human resource

8) State the amount, way of formation in the use of reserves in the last two years:

In balance sheets there are two kinds of reserves:
Revalorizing reserves formed based on evaluation of property and stocks for selling (MRS 16, MRS 39) and its value are changing according to change of market value of property.
Reserves based on positive emission premium formed in process of recapitalization in 2006.

9) State all important business events that took place since the day of balance sheet up to day of filing the report:

On April 20, 2007, Committee for Valuable papers hasreached the Decisionnumber 4/0-29-1978/4-07 about giving confirmation for issuing Valuable papers without public offer by the means of which the replacement of existing stocks took place due to change of their nominal value.
On June 28, 2007, Committee for valuable papers has reached the Decision number 4/0-24-2696/7-07 about giving confirmation for issuing Valuable papers without public offer by the means of which the transformation of reserves into basic capital amounting 88.112.000,00 took place, which ensured the increase of capital so that after increase it amounts 390.512.000,00 dinars.

10) Explain other important changes of data contained in prospectus, that were not previously stated

IV Other

The company is responsible for the punctuality and reliability of data stated in Report and in the same way for the punctuality and reliability of data stated in Prospectus.

September 25, 2007 President of the firm

Dragan Jovovic, graduate engineer