Today, on February 22, 2007, AS Eesti Ehitus sent to OÜ Grove Invest the declaration of cancellation of the construction contract due to the breach of contractual obligations by OÜ Grove Invest. On September 20, 2005, AS Eesti Ehitus and OÜ Grove Invest concluded the construction contract for the renovation of the so-called Luther residential block to apartment buildings and parking house at Vana-Lõuna 39 and Vana-Lõuna 39a in Tallinn, which total price, including the amendments to the contract concluded on February 2, 2006, is EEK 213 million (EUR 13.6 million) excluding VAT. Until today OÜ Grove Invest has failed to deliver to AS Eesti Ehitus a sufficiently detailed construction project required for the performance of the works. The client has also failed, in violation of the construction contract, to perform its obligations in obtaining the permits and approvals specified in the contract. The continuous breach of obligations by the client has from the very beginning hindered the due performance of obligations by AS Eesti Ehitus, whose role in the project is limited solely to performing the construction works, and by now such breach has rendered impossible the completion of the works specified in the contract by the time specified in the contract. As at January 31, 2007, the percentage of completion of the works in question was 34.4% and the gross profit margin of the project was lower than the average of the group in the recent years. In connection with the cancellation of the contract, an in-depth inventory of the works performed and of all costs involved will be performed at the construction site. On the basis of the amounts paid by OÜ Grove Invest until now and the results of the inventory AS Eesti Ehitus will refund the client any overpaid amounts. Jaano Vink AS Eesti Ehitus Tel: (+372) 6400 450 E-mail: eestiehitus@eestiehitus.ee