Q Vara OÜ's financial results of the first quarter 2007


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

Attachments

q vara iq 2007 eng.pdf