According to Q Vara OÜ's bond issue terms' sub clause 13.3.2, Q Vara hereby presents the consolidated unaudited financial results for the first quarter 2007. 1. Introduction The real estate market in the Baltic countries is in an interesting phase. The hyper growth in prices has stopped and the fierce demand for any kind of real estate together with that. Customers have taken a step back and carefully analyse the product before making the purchase decision. But it does not mean that the demand has vanished - the demand for good quality products with correct price is still very strong. At the same time the developments on the financing side have shifted also towards conservatism. The macroeconomic signs of over heating (high inflation, exploding borrowing against real estate, large trade deficit, booming internal consumption etc.) have made banks cautious about financing real estate. For example the debt financing share of construction has decreased from around 80% to 60-70%. At the same time financing new land plot purchases has decreased even more (especially land plots without detail plan). The financiers are now looking more carefully on developers' previous experience; own financing capacity and project assumptions. Also the financing structures include more pre-sales requirements and breaking the projects into smaller stages. The lastly mentioned assumption has been a key measurement also for Q Vara to make the projects bankable. Several important decisions were made in the first quarter of 2007 about Q Vara's projects that should reduce risks and align with the new market situation. The brief insight of such changes is described in the “Projects' overview” section. 2. Cash flows matter Considering the fact that in 2007 four Q Vara Group's projects are in the sales phase (Kirsiaed row houses, Kirsiaed residential plots, Pinki residential project, Terminal 11 industrial properties) the 2007 is expected to bring the highest sales revenues for Q Vara Group. The management expects the consolidated revenue to reach 350 000 thousand EEK by the end of 2007. Together with strong sales revenues the cash flow from the sale of real estate should also be significant (total cash flows from operations is lower by the own financing investments into the construction of new projects). As historically also the first quarter in 2007 showed modest sales results and cash flows from sales and the management of Q Vara expects significant improvement to that in the second quarter. This expectation is supported also by the strong client interest towards Q Vara Group's projects that are in the sales phase (see also „Projects' overview”) Q Vara Group's accounting system is based on international financial accounting standards (IFRS) and therefore the property investments are stated in their fair value. Fair value method generates profit when the value of real estate increases (fair value increases as a result of rising market prices or as a result of property development). So as a result of price stabilization profit decreases considerably (in Q Vara this means that revaluation profit will be derived just from the value increase from development and only from projects in early development phase like Trophy, Jonathan and Sofia). This is exactly the case of the first quarter results in 2007 and that will probably affect the annual results of 2007. The profits remain also unaffected by the revenue increase because as the profit is included in the properties' fair values it has been stated in the profit & loss statements of the previous periods (hence the current sales price equals the more-less the calculated cost of sales). This profit accounting specialty does not affect cash flows because cash flows are still equal to revenues minus land acquisition price and construction cost. So cash flows is the most important indicator in analyzing Q Vara Group's financial performance. The management of Q Vara Group expects record cash flows from the sale of real estate in 2007. The final Group's cash flows are lower by the own financing investments into the new projects' construction. 3. Structure In the first quarter 2007 the group restructuring transactions were officially finished. Firstly OÜ Multi Metall Kinnisvara and Merona Group transactions were recorded in Estonian Commercial Registry which means that the merger between Q Vara and these two companies is completed. Another change in the group that was started in 2006 but finalized in 2007 was shifting the real estate maintenance service to Q Vara's 100% subsidiary OÜ Q Haldus. By the end of the first quarter Q Haldus has already taken over from Q Vara and the client contracts were being changed. A new company in Q Vara Group is AS Maakri City. The company was established by Q Vara OÜ's jointly controlled company Stansfield OÜ together with Mark Invest OÜ (subsidiary of SRV) and Maakri KVF OÜ established. AS Maakri City was established for developing jointly the land plots between Maakri, Kuke and Lennuki streets in Tallinn. The share capital amount of the new company is EEK 420 000 and the shares are equally divided between the three shareholders. Each shareholder owns 14 000 shares with a nominal value of EEK 10. Tõnis Vare (Q Vara OÜ's management board member), Margus Mändmets (SRV's management board member) and Urmas Kivisalu (Maakri KVF's management board member) were elected as the management board members of AS Maakri City. On March 6, 2007 the shareholders of Q Vara OÜ decided to reorganize Q Vara from private limited company (osaühing) into public limited company (aktsiaselts). The decision does not bring any changes in the current shareholders' share proportions. The change also does not affect employees, management board members nor supervisory board members. The shareholders' meeting also decided to approve the 25% minority shareholder buyout by Q Vara OÜ's subsidiary SIA Q Estate in SIA Quality Nami. The minority shareholding is owned by Viktorija Zagrebilnaja. SIA Quality Nami is developing an apartment building with 403 apartments in Riga on Maskavas street. Currently SIA Q Estate owns 75% of SIA Quality Nami. The third decision by the same shareholders' meeting was to approve the establishment of OÜ Q Ehitus' subsidiary in Lithuania. The new company will start to offer construction main contracting services in Lithuania. The company will be named Q Statyba and Q Ehitus will own 100% of its shares. 4. Management and personnel The first quarter saw also several changes in Q Vara Group's team. Altogether 34 new employees joined the Group of whom most (20) were employed by the Group's Latvian construction company SIA Q Būve. The total number of employees who left the group to find their next challenge was four. As the team has grown considerably during the last 12 months the constant training on teamwork and work efficiency continues. Also the alignment of our activities and team members' individuality bring slight changes within the group. According to the decision Q Vara OÜ's Supervisory Board that was made on April 24, 2007 Tõnis Vare was withdrawn from Q Vara OÜ's management board. No new management board member was elected and Q Vara OÜ's management board continues with two members: Meelis Šokman and Andre Poopuu. The Supervisory Board's decision is related to the deeper integration of Q Vara OÜ's and Q Ehitus OÜ's activities as a result of which several development activities are shifted from Q Vara OÜ over to Q Ehitus OÜ. In the contest of “Best Personnel Project 2006” Q Vara Group's “Management training through organizing Paide Triathlon” was selected as the winner among small companies. The project combined organizing Estonia's leading triathlon competition with Q Varas trainings of teamwork and management skills. All the assignments starting from setting up the track to cleaning up after the race, were carried out by Q Vara's employees and volunteers. According to Q Vara's employees this has been the best management training but most of all irreplaceable event for strengthening the team spirit and mutual trust. Q Vara Group has already started to prepare also the 2007 event. 5. Risk management Because of the changing economic environment Q Vara's management looked through the previous forecasts and realigned the plans. The actions were targeted at two main problems: market risk and financing risk. Market risk is a risk that there is no demand for the developed project that can arise from oversupply, clients' financing difficulties or product specification problems. Financing risk on the other hand is a risk that the company is not able to raise financing for project development. This risk can arise from the banks' credit policy changes towards reducing overall credit amount, drop in developers' credit rating or lack of funds for own financing. To hedge these risks Q Vara's management decided to reduce the development volume by slicing projects into stages and connecting the development pace to sales pace. Developing projects in smaller stages also improves cash flow because less own financing is needed for investments at once and also the cash locked into inventories decreases. Considering slower sales pace than before the cash flow argument is a strong incentive to divide the projects into stages. It also increases financiers' willingness to finance development projects because their risks at any point of time is lower than in case the whole project is in development and their outstanding risk amount (loan amount) is connected to sales volume. Because the own financing share in development projects has increased Q Vara's management has looked through also the own financing sources. To increase available own financing the decision was made to sell the Pärtlepõllu property in Viimsi parish (Q Vara signed a contract to purchase the property in 2006) and to realize some of the industrial properties in Terminal 11 project as land plots. Such sales transactions enable the Group to secure needed own financing in development projects and also to cover the overhead costs. The more specific details about measures in each project are described in the Projects' Overview section. 6. Bonds In January 2007 Q Vara paid annual interests on the bonds issued in the beginning of 2007. The interest payment amounted 8 606 thousand EEK (550 thousand EUR). Q Vara issued bonds in January 2006 with total face value of 72 233 thousand EEK (5 000 thousand Euro) and annual yield of 11%. The bonds mature on January 10, 2009. 7. Financial results Q Vara's consolidated operating income in the first quarter of 2007 was 16 081 Th EEK; 1 028 thousand EUR (2006 I quarter: 27 969 thousand EEK; 1 788 thousand EUR). Sales revenue from real estate for the same period was 14 507 thousand EEK; 927 thousand EUR (2006 I quarter: 27 516 thousand EEK; 1 759 thousand EUR). The consolidated net loss for the ended three months was 18 229 thousand EEK; 1 165 thousand EUR (2006 I quarter loss: 8 736 thousand EEK; 558 thousand EUR). At the end of the first quarter 2007 Q Vara Group is still strongly capitalized: equity forms 35,4% of total assets. In the end of the quarter the total asset amount was 797 335 thousand EEK; 50 959 thousand EUR and total equity amount was 281 897 thousand EEK; 18 015 thousand EUR. At the end of the first quarter 2006 the total asset amount was 486 019 thousand EEK; 31 062 thousand EUR. 8. Overview of the projects 8.1. Kirsiaed triple houses - Location: Viimsi parish, Estonia - Segment: Residential, high - Development: Row houses - Period: 2006-2007 - Sellable space: 3 305 m2 Introduction: Kirsiaed (“Cherry tree”) is a residential development project, in which a family friendly and enjoyable living environment is created through combination of architecture, landscape and greenery. Position towards the sun and privacy of the residents were considered as the main starting points inform the very beginning. The main features of the units are brightness, practical and considered interior planning and a magnificent view on the silhouette of Tallinn. One may choose a unit with high quality finishing's in place or a unit where one can make the designs by oneself. By the end of February 2007 15 boxes with final inner decoration are finished, the rest 15 are still being inner decorated. In springtime the greenery concept is started to be put into practice. By the end of February 2007 15 units with final interior decoration were finished and the other 15 units remain with “grey” finishing and wait for the client's choice. In spring the greenery concept is realized to finish the project. Development: By the end of February 2007 15 units with final interior decoration were finished and the other 15 units remain with “grey” finishing and wait for the client's choice. In April also the greening works were started. Sales: By the end of the first quarter of 2007 already six units were sold. At the end of the quarter the clients started to show even more interest in the project and by the third week of April already eight new bookings have been made. Q Vara's sales team continues preparing these deals and hopes to sign notarial sales agreements during the next couple of weeks. The increased interest among clients can be explained by finished buildings and full environment concept. Also the contacts from the previous client events are starting to bare fruit as a result of active sales. The total positive cash flow from the sale of Kirsiaed during the next months (including the interior work expenses that must be done to complete all the units and the construction loan repayment) is about EEK 20.7 million (EUR 1.3 million); 8.2. Kirsiaed plots - Location: Viimsi parish, Estonia - Segment: Residential, high - Development: Residential land plots - Period: 2006-2007 - Sellable space: 23 219 m2 Introduction: Kirsiaia residential land plot project is one of the few plot developments in Viimsi that has all utility, connections, asphalt road and street-lighting. Partial greenery has been planted to the plots already today - fir-trees, thorn bush hedges, rowan trees and low cherry trees. The plots are situated on a hilly terrain, from with a nice view on the Tallinn-panorama. Sales: By the end of the first quarter 2007 the number of completed sales transactions was two and a couple of interested clients were standing by. But in the second half of March the demand increased considerably and by the third week of april all 16 properties were booked. Q Vara's sales department expects to complete the sales transactions by the end of May 2007. 8.3. Taevasmaa - Location: Harku parish, Estonia - Segment: Residential, medium - Development: Gallery- and row houses - Period: 2007-2009 - Sellable space: 32 137 m2 Introduction: The name Taevasmaa (Skyland) name comes from two architecturally very different parts of the project (row houses - sky (Taevas in Estonian) and gallery houses - land (maa in Estonian), which as joined together compile an interesting and aesthetically pleasing living environment. The residential area is situated nearby Tabasalu and has already today the value in the surrounding nature and privacy. Q Vara is developing there apartment houses and row houses with low acquisition costs and low monthly expenses. In creating the living areas, the attention is paid on HEALTH and on INTEGRATION, which means houses with few apartments, surrounding sporting facilities, playgrounds, greeneries', play parks and kindergarten. Ergonomics and practicality are considered also as very important details throughout the development (entrance-room closets, kitchen furniture etc). Development: The construction and sale of Taevasmaa project will be split into stages and the stages into smaller sets. The timeline of different stages and sets is determined by the sales pace. The first stage of Taevasmaa consists of 10 apartment houses, each with 10 apartments (altogether 100 apartments). The first stage total volume is 8 157 sqm (including basements and saunas) and the preliminary construction price is 16 520 EEK (1 056 EUR; excluding land price and utility line costs). The construction of the first stage is divided into smaller sets that include 3-4 houses (see the picture). This allows to test the market for demand and also make the project bankable in the current market situation (banks' risks are smaller at any point of time). The launch of the first set is yet undetermined and it depends on the issuance of construction permit and the final financing decision. The construction of the second set of houses is launched only after at least 50% of the first set are pre-sold (notarial agreements signed and 15% of the final price paid in). Similarly the third set construction is launched after 50% of the second set plus 100 % of the first set are pre sold. As of the utilities, the lines that connect to the public utility network are constructed considering all project stages (Eestkünka I and Eestkünka III properties on full scale) but the lines on the project land are fully built only on the plots of the first stage. The first works were started in the beginning of April 2007 when the earth works were launched. Earlier months were used for various preparation activities (designing, preparing technical plans, communicating with local government booking resources etc.). The general construction works follow after construction permit is issued and the financing agreement has been signed on full scale. Taevasmaa projects' first stage is financed by bank loan (70% of the cost) and own financing (30% of the cost). The financier is most probably DnB Nord Pank that makes its final decision in May. In the first quarter 2007 DnB Nord Pank has already opened a loan limit of EEK 12.0 million (EUR 0.8 million) to finance the launch of the construction of the utility networks. The main part of the first set's own financing comes from other Q Vara's projects. Still some positive cash flows is expected to be received from pre sales but this occurs in the later stages of the first set. Sales: The pre-sales is launched after the general construction of the houses begins. The preparations (marketing materials, project website etc) for sales launch are underway. 8.4. Terminal 11 - Location: Rae parish, Estonia - Segment: Commercial, medium - Development: Warehouses - Period: 2007-2009 - Sellable space: 42 000 m2 Introduction: Project's name - Terminal 11 - comes from its positioning beside the Tallinn traffic circle (11th highway). The warehouses are aimed for small and medium-sized companies, to whom the optimal storage size, common location of storage and office space, very comfortable working conditions to the employees and efficient storage managing are crucial. The project's focus is also on minimizing clients' monthly loan repayments and administration costs. Development: The construction of Terminal 11, the industrial park near Tallinn, was launched in March 2007 with earth works. On 8 land plots out of 22 Q Vara develops warehouses that are divided into 5-6 sections and are sold to small and medium sized enterprises. Similarly to Taevasmaa project also Terminal 11 is divided into smaller stages. The first stage includes the construction of utility lines on the whole project property and the construction of two warehouses. One of the buildings lies on one land plot and features 6 sections and another lies over 2 land plots and features 12 sections. The construction of the two buildings is started at different time. Firstly, together with the construction of the utility lines starts the construction of the smaller building. At the same time the pre-sales begins. After at least 50% of the smaller building is pre-sold (transaction is deemed completed after notarial pre-sales contract is signed and 10-15% of the final price is paid) the construction of the second building is launched. The construction of one building takes about 6 months which means that the first building should be finished by the end of 2007. Still the final sales revenues are forecasted to be paid by the customers in 2008. The construction of utilities and buildings will be financed with bank loan (70% of the project's cost) and own financing (30% of the project's cost). SEB Eesti Ühispank has already made a binding offer to finance the project and Sampo Pank will give the offer in May. Currently Sampo Pank, who financed also the purchase of the land plot, has opened a loan limit of EEK 12.0 million (EUR 0.8) to finance the launch of the construction of utilities. Sales: In order to support the own financing part of the warehouses (besides the pre-sales) part of the project's property is sold as land plots with utility connections. The estimated sales price per land plot sqm is EEK 800.0 (EUR 51.1; not including the VAT). Because the actual cash flows from the sale of land plots and the pre sales contracts becomes available in a few months the first months' own financing is obtained from other Q Vara's projects. As of the beginning of April 2007 the projects' website has been set up (www.terminal11.ee). Also the print material has been prepared that in all allows launching the sales campaign of the project in the second half of April. Firstly the main attention is focused on the sale of properties to which the warehouses add up starting from May 2007. Q Vara has also negotiated direct sales support from the corporate banking departments of the largest banks in Estonia. The first interested potential clients have already registered themselves on a waiting list that shows strong demand for commercial spaces targeted at SME's. 8.5. Pärnu mnt 113 / Rapla 1 - Location: Tallinn, Estonia - Segment: Residential/commercial - Development: - - Period: - - Capacity: - Introduction: The project includes a property at Pärnu mnt, near downtown of Tallinn. According to Tallinn City's general plan an apartment-house / office building may developed on the property. In third quarter of 2006 Q Vara's Board decided to sell the 650 m2 property, because the realization enables to earn profit more than 400%. Also one of the reasons for the sale is that instead of splitting the resources between many small projects they can be drawn together into larger projects (Taevasmaa and Terminal 11). In January 2007 the sales-purchase contract was signed and the transaction was made. The propery's sales price was EEK 22 000 thousand (EUR 1 406 thousand). 8.6. Maakri - Location: Tallinn, Estonia - Segment: Residential / commercial, high - Development: high-rise buildings - Period: - - Capacity: - Introduction: Through an associate (Stansfield OÜ) Q Vara has two properties in the centre of Tallinn. According to Tallinn City's general plans the area is going to be a district with high-rise buildings that accommodate residential as well as commercial space. Development: The negotiations between Stansfield, Mark Invest and Maakri KVF over joint development of the area continued. In the first quarter a joint company - AS Maakri City - was established where all three parties own equal share. The shareholders agreement continues. Also the negotiations with other property owners to join joint development or to sell their properties go forward. 8.7. Pärtlepõllu - Location: Viimsi parish, Estonia - Segment: Residential, medium - Development: - - Period: - - Capacity: - Introduction: Q Vara signed a contract in 2006 to purchase the Pärtlepõllu land plot in Viimsi parish. Part of the property will be developed into residential land and part of it remains as a green area. As Q Vara has not finalized the property's purchase transaction the land is not on Q Vara's balance sheet. Development: In the first quarter the detail planning documents were filed and the local government started to work on them. The detail plan is expected to be approved during 2007. Sales: In the end of the first quarter Q Vara's management decided to start looking for potential buyers for the property. The reason for selling the land is that the funds received from the sale can be used in other projects as own financing. Also the development of another small project disperses the resources across various projects that on one hand can result in lack of focus and on the other hand increased overheads. Also selling the project releases additional risk limit in banks that allows to successfully financing other projects. By April 2007 several interested buyers approached Q Vara and started negotiations to purchase the property. 8.8. Silukalni - Location: Pinki village, Latvia - Segment: Residential, medium - Development: Double and row houses - Period: 2005-2007 - Sellable space: 8 525 m2 Introduction: Silukalni residential area is located next to a pine forest which together with its suburban location makes a perfect home for a family. Double- and row houses includes 72 units. Development: In the first quarter of 2007 the main contractor agreement was terminated with SIA Pinki and Q Būve became the new main contractor. The problem with SIA Pinki was the inability to meet the agree deadlines and finishing the first stage was again postponed. Most important is that the new constructor has been able to stabilize the project and is working on the realistic project timetable and budget. In construction activities the main focus is on the first stage houses that are already pre-sold and almost ready (approximately 80% of the first houses is finished). An important achievement was also agreeing with DnB Nord Banka to increase the project's bank loan limit because compared to the preliminary budget the construction has become more expensive. Releasing the additional loan limit is strictly tied to handing over the first stage apartments and every apartment that is handed over releases additional share of new loan. The first three houses (six units) are handed over in May/June. Sales: The sale of the second and third stage started in December 2006 and has proved successful. By April 2006 six contracts has been signed and five are expected to be signed in a few weeks. 8.9. 365 - Location: Jurmala, Latvia - Segment: Residential, high - Development: Apartment building - Period: 2006-2008 - Sellable space: 2 730 m2 Introduction: “365” apartment building is situated in a prestigious Jurmala beach town. It is a stylish apartment building designed by Latvian top architectural company SIA Sīlis, Zābers & Klava. The building includes thirty exclusive apartments, which net space ranges from 60 to160 m2. Development: By March 2007 the earth and pile works were finished and BMGS handed the construction site over to the general construction main contractor SIA Ars Domina. The project is in on schedule and the already done construction works' quality is very good. The project's budget is 100% covered with bank financing and the bank releases the limit according to the pre sales of the apartments. Sales: The pre-sales started in November and since then five apartments with the highest price have been booked. The active marketing campaign of the projects was launched in March. It includes direct marketing to private banking clients in larger banks and PR articles and large advertisements in the largest real estate magazines. Also a special sales office is prepared for the project in Old Riga, at Torna Street 4. The sales office features a scale model of the project and other informative materials - booklets, plans etc. Also a short film is prepared to introduce the project which will be presented to sales office visitors. 8.10. Jonathan - Location: Riga, Latvia - Segment: Residential, medium - Development: Apartment building - Period: 2007-2010 - Sellable space: 30 575 m2 Introduction: Jonathan is an apartment building that is situated in Riga, ashore of Daugava River, 15 minutes drive from Riga city centre. The project's main attraction is a pond in the courtyard which means that the building is partly in the water and the pond has a direct connecting canal with the river. Nothing is impossible... Development: In January 2007 the project's detail plan was approved by Riga City. After that the approval process of the project's sketch drawings continued. In April also the sketch drawings were approved and preparation of technical plans continues. The technical project is carried out in two stages of which the zero cycle plans should be ready by the end of 2007. After that the construction of the foundation works can be launched and the preparation of the whole buildings' technical plans can be carried out at the same time and will be finished expectedly in April 2008. In the end of the first quarter the project's team started also to analyze weather it is possible to divide the project's construction into stages. According to the preliminary estimations the zero cycle works can be splitted into two stages and the rest of the construction into three stages. The preliminary project's timetable foresees that the construction of the project will be launched in the first half of 2008. Sales: The presales of the project begin in the end of 2007. In order to achieve maximal possible sales volume with existing areas, special attention is to be paid to marketing activities and informative materials. A sale of apartments is planned to start with wide advertising campaign in mass media in the second half of 2007. Advertisements will be placed in the largest thematic real estate magazines and other issues. Along with advertising in mass media, home page in the form of flash presentation will be developed, too. Similarly to 365 also a sales office in Old Riga, at Torna Street 4 will be opened. Also here the sales office features a scale model of the project, various informative materials and a film about the project's story. The short film contains dynamic three-dimensional description of the development. A short version of the film will be also be shown in Cinema Forums in the block of advertisements before the show. 8.11. Trophy - Location: Vilnius, Lithuania - Segment: Residential, high - Development: Apartment building - Period: 2007-2008 - Sellable space: 2 340 m2 Introduction: The project is developed on UAB Q Vara's property that was acquired in the end of 2006 - 1 800 m2 property, addressed in Vilnius, Elniu 20. The price of the property was 3,64 million LVL and 75% was financed by bank loan. The financer was AB SEB Vilniaus Banka. The plan is to develop a 2-3 floor apartment building, with total volume of 2 300 m2. The property is located in a prestigious green area in Vilnius called Zverynas, right next to the downtown of Vilnius. The apartments with high quality finishing targeted at upper-middle-class customers are priced from 2 300 to 2 900 euros per square meter and the size of the apartments ranges from 55 to 120 m2. Development: In the first quarter of 2007 UAB Q Vara continued the detail planning process and passed a couple of important procedures like local community's public discussion and the construction commission. The detail plan will expectedly be finished by the end of the second quarter of 2007. At the same time the designing of the apartment house resumed and by the beginning of April the first sketch drawings were already completed (see the illustration below). Sales: The sales and active marketing activities of the project are scheduled to start in October 2007. 8.12. Sofia - Location: Sofia, Bulgaria - Segment: Residential / Business, medium / high - Development: - - Period: - - Sellable space - Introduction: In 2006 Q Vara entered Bulgarian real estate market and acquired 60% of a company named OOD Delta Retail. The minority shareholder of the company is a local real estate company OOD Delta Imoti Capital. The acquired company owns an 11 000 m2 property in the centre of Sofia. Since the acquisition was not formally documented by the end of 2006, with the negotiations over the shareholders agreement still pending, the investment was recorded as a loan granted in the end of 2006. The purpose of the property allows to develop there high rise buildings with apartments and office spaces in it. In total Q Vara invested 2,98 million euros into the project acquisition. Development: In the first quarter a contest for the best sketch design of the project was launched. The concept materials were distributed to four architects. The first work was presented in the beginning of April. As the first project team members were also hired the project coordination is from now on sharply focused and the development has started to pick up speed. 9. Q Vara's consolidated profit and loss statement 2006 ------------------------------------------------------------- 01.01.2007- 01.01.2006- 31.03.2007 31.12.2006 Unaudited Audited thousand EEK thousand EEK ------------------------------------------------------------- Operating revenues Sales revenues 14 507 63 231 Change in RE investments' value 161 545 Other operating revenues 1 574 2 867 Total operating revenues 16 081 227 643 Operating expenses Cost of construction -8 494 -63 789 Direct development costs -4 087 -8 950 Development overhead costs -8 102 -23 326 Marketing costs -1 897 -9 459 Maintenance expenses -1 894 -1 940 Other operating expenses -3 288 -6 929 Total operating expenses -27 762 114 393 Operating profit -11 681 113 250 Financial income and expenses -6 548 -3 046 Pre-tax profit -18 229 110 204 Deferred income tax -10 787 Real estate tax -59 Net profit (loss) -18 229 99 358 Mother company's shareholders' share -18 328 79 831 Minority share 99 19 527 ------------------------------------------------------------- ------------------------------------------------------------- 01.01.2007- 01.01.2006- 31.03.2007 31.12.2006 Unaudited Audited thousand EUR thousand EUR ------------------------------------------------------------- Operating revenues Sales revenues 927 4 041 Change in RE investments' value 10 325 Other operating revenues 101 183 Total operating revenues 1 028 14 549 Operating expenses Cost of construction -543 -4 077 Direct development costs -261 -572 Development overhead costs -518 -1 491 Marketing costs -121 -605 Maintenance expenses -121 -124 Other operating expenses -210 -443 Total operating expenses -1 774 -7 311 Operating profit -747 7 238 Financial income and expenses -418 -195 Pre-tax profit -1 165 7 043 Deferred income tax -689 Real estate tax -4 Net profit (loss) -1 165 6 350 Mother company's shareholders' share -1 171 5 102 Minority share 6 1 248 ------------------------------------------------------------- 10. Q Vara's consolidated balance sheet 2006 ------------------------------------------------------------- 31.03.2007 31.12.2006 Unaudited Audited thousand EEK thousand EEK ------------------------------------------------------------- Current assets Cash and cash equivalents 1 626 1 116 Accounts receivable 12 522 4 174 Short-term loans 76 196 74 334 Other short-term receivables 63 430 48 645 Interest receivables 7 226 6 677 Prepayments 33 389 25 908 Real estate for sale 241 753 216 043 Total current assets 436 142 376 897 Non-current assets Long-term loans 6 264 5 760 Associated companies 32 618 32 618 Real estate investments 309 826 338 250 Tangible and intangible assets 12 485 8 826 Goodwill 0 2 886 Total non-current assets 361 193 388 340 Total assets 797 335 765 237 ------------------------------------------------------------- Liabilities and equity Current liabilities Short-term loans 188 900 290 169 Capital lease liabilities 7 488 1 149 Customer prepayments 877 5 577 Accounts payable 30 190 22 163 Personnel related liabilities 2 505 2 650 Interest liabilities 12 414 14 164 Tax liabilities 1 693 0 Total current liabilities 244 067 335 872 Non-current liabilities Long-term loans 163 122 14 936 Other long-term payables 287 90 Issued bonds 76 863 76 863 Capital lease liabilities 4 849 5 468 Deferred income tax 26 268 27 040 Total non-current liabilities 271 389 124 397 Total liabilities 515 456 460 269 Equity Mother company's shareholders' equity Share capital 73 511 73 511 Reserves 7 361 7 361 Unrealized exchange rate differences -1 154 177 Retained earnings 154 017 175 231 Mother company's shareholders' equity 233 735 256 280 Minority share 48 114 48 688 Total equity 281 879 304 968 Total liabilities and equity 797 335 765 237 ------------------------------------------------------------- ------------------------------------------------------------- 31.03.2007 31.12.2006 Unaudited Audited thousand EUR thousand EUR ------------------------------------------------------------- Assets Current assets Cash and cash equivalents 104 71 Accounts receivable 800 267 Short-term loans 4 870 4 751 Other current receivables 4 054 3 109 Interest receivables 462 427 Prepayments 2 134 1 657 Real estate for sale 15 451 13 808 Total current assets 27 875 24 090 Non-current assets Long-term loans 400 368 Associated companies 2 085 2 085 Real estate investments 19 801 21 618 Tangible and intangible assets 798 564 Godwill 0 184 Total non-current assets 23 084 24 819 Total assets 50 959 48 909 Liabilities and equity Current liabilities Short-term loans 12 073 18 545 Capital lease liabilities 479 74 Customer prepayments 56 357 Accounts payable 1 929 1 416 Personnel related liabilities 160 169 Interest liabilities 793 905 Tax liabilities 108 0 Total current liabilities 15 599 21 467 Non-current liabilities Long-term loans 10 425 955 Other long-term liabilities 18 6 Issued bonds 4 912 4 912 Capital lease liabilities 310 349 Deferred income tax liabilities 1 679 1 728 Total non-current liabilities 17 345 7 950 Total liabilities 32 944 29 417 Equity Mother company's shareholders' equity Share capital 4 698 4 698 Reserves 470 470 Unrealized exchage rate differences -74 13 Retained earnings 9 813 11 197 Mother company's shareholders' equity 14 983 16 378 Minority share 3 077 3 114 Total equity 18 015 19 492 Total liabilities and equity 50 959 49 909 ------------------------------------------------------------- Additional information: Meelis Šokman Chairman of the management board Q Vara OÜ Phone: 668 1600