(C) Earnings expectations 08Q1

Bearing in mind the US stagflation, the rising inflation in the Euro zone and Bulgaria, we should expect more of contrasting monetary policies on the both sides of the Atlantic – restrictive in Europe and Bulgaria, and liberal in the USA.

With this macro piece of expectations in mind, we need to further differentiate the companies on the basis of several important financial factors and be more precise in our industry and company-specific expectations: the degree of leverage of the public companies and their financial stability, represented by the external financing risk premiums; the companies ability to transfer inflation to its clients in order to generate higher real returns for its shareholders; the skill to generate and retain earnings in order to fund internally its development; last but not least diligently analyze the dependence on energy and mineral resources, as well as any FX influence on the revenues and expenses.

If we ignore the seasonality in some of the reports and take into account the time lag of the above mentioned macro factors influence, my personal expectations are for better cash flows from operations, my personal hopes are for higher real free cash flows YoY.