ARCO VARA AS - NASDAQ OMX Baltic

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Non-current assets acquired in 2005 by type of assets Estonia Latvia Lithuania Ukraine Total Investment property 54 838 9 570 0 0 64 408 Property, plant and equipment 173 745 374 268 272 174 659 Intangible assets 7 631 81 0 0 7 712 Total acquired non-current assets 236 214 10 025 268 272 246 779 7 Changes in the Arco Vara Group structure 7.1 Scope of consolidation Estonia Latvia Lithuania Ukraine Bulgaria Romania Total Parent and subsidiaries As of 01.01.2006 21 7 1 2 - - 31 Additions 1 1 1 - 1 - 4 Disposals -2 -1 - - - - -3 As of 31.12.2006 Joint ventures 20 7 2 2 1 - 32 As of 01.01.2006 10 1 - - - - 11 Additions 14 1 - - - 1 16 Disposals -2 - - - - - -2 As of 31.12.2006 22 2 - - - 1 25 Associated companies (not consolidated) As of 01.01.2006 - - - - - - - Additions 1 - - - - - 1 As of 31.12.2006 1 - - - - - 1 As of 31.12.2006, 42 Estonian, 9 Latvian, 2 Lithuanian, 2 Ukrainian, 1 Bulgarian and 1 Romanian company had been consolidated under the Arco Vara Group. In 2006, the Group acquired 4 subsidiaries, consolidation of three companies was stopped. 16 proportionally consolidated joint ventures were added to the Group. The effect of joint ventures on the consolidated balance sheet and income statement (in thousands of kroons): 2006 2005 Operating income 279 718 93 336 Operating expenses -52 390 -19 551 Financial income and expenses -1 425 -10 377 Current assets 98 992 28 806 Non-current assets 599 910 296 653 Current liabilities 85 780 22 485 Non-current liabilities 172 217 61 475 The most significant joint ventures from the Group’s perspective are Tallinna Olümpiapurjespordikeskus AS (owns the Regati pst 1 property) and Floriston Grupp OÜ (owns several development properties in Tallinn). F-40
Companies belonging to the Arco Vara consolidation group: Service segment companies Group's subsidiaries in the service segment The Group's share as of 31.12.06 The Group's share as of 31.12.05 Home country Arco Neruhomist TOV1 75% 75% Ukraine Arco Real Estate EOOD 100% 0% Bulgaria Arco Real Estate SIA 80% 80% Latvia F-41 The Group's joint ventures in the service segment The Group's share as of 31.12.06 The Group's share as of 31.12.05 Home country Arco Varavalitsemise AS 50% 50% Estonia Arco Rumeenia Valdused OÜ 50% 0% Estonia Arco Real Estate Consulting SRL1 50% 0% Romania Arco Real Estate UAB 80% 80% Lithuania Lehe Elamud OÜ sold 50% Estonia Arco Ukraina Valdused OÜ 75% 75% Estonia Home Service SIA1,3 40% 40% Latvia Arco Vara Halduse OÜ merged 100% Estonia Arco Vara Kinnisvarabüroo AS 100% 100% Estonia Development segment companies The Group's subsidiaries in the development segment The Group's share as of 31.12.06 The Group's share as of 31.12.05 Home country Arco Capital TOV 1 75% 75% Ukraine The Group's joint ventures in the development segment The Group's share as of 31.12.06 The Group's share as of 31.12.05 Home country Arco & Koger Investeeringute AS 1 50% 0% Estonia Arco Development SIA 80% 80% Latvia Arco Vara Arenduse OÜ 50% 50% Estonia Arco HCE OÜ 100% 100% Estonia Arco Vara Saare Kinnistud OÜ 50% 50% Estonia Arco Invest UAB 1 80% 0% Lithuania Arco Ärikeskuse OÜ 2 50% 50% Estonia Arco Investeeringute AS 100% 84% Estonia Barrow Investments OÜ 1 50% 0% Estonia Arco Maadehaldus OÜ 100% 100% Estonia Castleberry OÜ 1 50% 0% Estonia Arco Management SIA 1 liquidated 100% Latvia Chalwell OÜ 1 50% 50% Estonia Arco Vara Kinnistute AS 100% 100% Estonia Cromer Trade OÜ 1 50% 0% Estonia Arco Vara Puukool OÜ 75% 75% Estonia Dreilini-Ulbroka-1 SIA 1,3 40% 0% Latvia Arco Vara Riia Valdused OÜ 75% 75% Estonia Floriston Grupp OÜ 50% 50% Estonia Arcofond OÜ 100% 84% Estonia Hopson Capital OÜ 1 50% 0% Estonia Bisumuiza Nami SIA 1 80% 0% Latvia Kastner Grupp OÜ 1 50% 0% Estonia Kerberon OÜ 83,4% 67% Estonia Koduküla OÜ 1 50% 0% Estonia Kolde AS 89,3% 73% Estonia Kramer Kinnisvara OÜ 50% 0% Estonia Metro Kinnisvara OÜ 100% 100% Estonia Noland Grupp OÜ 1 50% 0% Estonia Pärnu Turg OÜ 100% 84% Estonia Pärnu Elumaja OÜ 1,3 50% 42% Estonia Rasmussen Invest SIA 1 60% 60% Latvia Pärnu Ärihoone OÜ 1,3 merged 42% Estonia Sportings Riga SIA 80% 80% 1 Latvia Redman Invest OÜ 1 50% 0% Estonia
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OFFERING CIRCULAR Offering of 34,45
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The Combined Offering will be gover
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neither subject to Section 13 or 15
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TABLE OF CONTENTS SUMMARY .........
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SUMMARY This summary should be read
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GROUP STRUCTURE Arco Vara AS, a com
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to increase the number of new Offer
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SUMMARY OF THE CONSOLIDATED FINANCI
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RISK FACTORS An investment in the O
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In addition, the government and mun
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find changes in customer preference
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from interest rate fluctuations. Se
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Contractual risks A dispute may ari
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staff will increase. Future success
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existing competitive advantages, no
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subject to the discretion of the Co
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their transition process is far fro
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Group fails to achieve new competit
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CANCELLATION OF COMBINED OFFERING T
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By submitting a Purchase Order an i
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Any remaining Offer Shares that can
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Priit Hainoja 15,500 Total 1,550,00
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INSTRUCTIONS TO INVESTORS IN ESTONI
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SUBMISSION OF PURCHASE ORDERS INSTR
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BACKGROUND TO THE COMBINED OFFERING
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USE OF PROCEEDS The aggregate net p
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CAPITALIZATION AND INDEBTEDNESS The
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The International Monetary Fund (IM
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• Class D: Lowest quality office
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The table below compares prime offi
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on apartments. Developers increasin
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The table below summarises the rece
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prestigious districts, such as the
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The following table summarises the
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570,000 m 2 between 2003 and 2006,
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Office property market King Sturge
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The following table outlines genera
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Project Consolidated project book v
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originate from the new target marke
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HISTORY The Group was founded in 19
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EEK million 2004 audited % EEK mill
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Country 2004 2005 2006 31 March 200
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Any small scale development project
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Name of the company 2004 (EEK m) 20
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tends to be smoother in Latvia than
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In addition to 21 projects specifie
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project is also expected in 2007. T
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RESIDENTIAL DEVELOPMENT PROJECTS Ti
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Laeva office building project in Ta
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The property in TOP Pirita includes
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Enerpoint office property in Kuress
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The construction division has a sup
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prescribed by IFRS, such investment
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Human resource management principle
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Name / Location Description Intende
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the Group nor does it consider it l
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ENVIRONMENTAL ISSUES As a result of
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The shareholders’ meeting can pas
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If a party breaches its obligations
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Shareholders’ agreement in relati
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transactions of the Group, see Note
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expiring on 31 December 2007. Inter
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• Loan agreement between Arco Inv
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SELECTED FINANCIAL DATA The followi
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Year ended 31 December Three months
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ownership structures and disposals
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a company owned by City of Riga. A
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The Group’s future development de
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Year ended 31 December Three months
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evenue of the division for the firs
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Total revenue from rental and prope
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The Group recognised an EEK 7.5 mil
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Operating expenses Marketing expens
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were an increase in operating profi
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As at 31 December 2006, Arco Vara A
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Revenue from sales of other goods R
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MANAGEMENT Pursuant to the provisio
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more than two members, the Supervis
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Kaido Kangur 1968 Head of Services
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CORPORATE GOVERNANCE The Estonian F
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165 Privador AS, Supervisory Counci
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Each member of the Management Board
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currently under compulsory liquidat
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DEVELOPMENT Name % Registered offic
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CHANGES IN THE SHARE CAPITAL Since
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For the description of transactions
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The rights attaching to any class o
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obligation to make the mandatory ta
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The supervisory council engages in
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The public has access to certain in
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established by law (such permission
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TAXATION The following summary is b
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In addition, as the current income
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FEDERAL TAX CONSIDERATIONS IN UNITE
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Page 195 and 196: GENERAL UNDERWRITING The Company an
Page 197 and 198: ely upon the truth and accuracy of
Page 199 and 200: document in respect of the Offer, u
Page 201 and 202: non-U.S. plan, and such acquisition
Page 203 and 204: DEFINITIONS AND GLOSSARY “CAB”
Page 205 and 206: INDEX TO FINANCIAL STATEMENTS F-1 P
Page 207 and 208: CONSOLIDATED INCOME STATEMENT in th
Page 209 and 210: CONSOLIDATED CASH FLOW STATEMENT in
Page 211 and 212: NOTES TO THE CONSOLIDATED INTERIM C
Page 213 and 214: Property, plant and equipment (note
Page 215 and 216: The decrease in the volume of the a
Page 217 and 218: Disposals related to sale of subsid
Page 219 and 220: 13 Events after the balance sheet d
Page 221 and 222: CONSOLIDATED INCOME STATEMENT in th
Page 223 and 224: CONSOLIDATED CASH FLOW STATEMENT in
Page 225 and 226: NOTES TO THE CONSOLIDATED FINANCIAL
Page 227 and 228: 3 Changes in the presentation and a
Page 229 and 230: Estimation uncertainty The estimate
Page 231 and 232: warranty provisions and other produ
Page 233 and 234: Financial Reporting Standards may n
Page 235 and 236: Investment property Investment prop
Page 237 and 238: Expenses incurred on PPE after thei
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Page 241 and 242: Accounting for investments in subsi
Page 243: Segment investments into non-curren
Page 247 and 248: 7.2 Changes in the Group's ownershi
Page 249 and 250: F-45 1.01.2005 Cash and cash equiva
Page 251 and 252: In the autumn of 2006, Pennington K
Page 253 and 254: 1 Depreciation, amoritzation and im
Page 255 and 256: Operating lease: Group as the lesse
Page 257 and 258: The net realizable value of invento
Page 259 and 260: 1 Investments measured at fair valu
Page 261 and 262: properties into investment property
Page 263 and 264: o Forecasted aggressive growth in r
Page 265 and 266: 2 Other short-term and long-term lo
Page 267 and 268: Total adjustment of revenue 3 903 -
Page 269 and 270: 32 Contingent liabilities in thousa
Page 271 and 272: Risk management in Arco Vara Group
Page 273 and 274: Interest-bearing receivables and li
Page 275 and 276: 35 Cash flows from operating activi
Page 277 and 278: 2006 2005 Sales revenue 249 1 829 P
Page 279 and 280: As a part of the restructuring, the
Page 281 and 282: 41 Main statements of the Parent as
Page 283 and 284: Cash Flow Statement 2006 2005 Cash
Page 285 and 286: CONSOLIDATED AUDITED FINANCIAL STAT
Page 287 and 288: CONSOLIDATED BALANCE SHEET for the
Page 289 and 290: 1 In 2005, purchase of investment p
Page 291 and 292: 2005 2004 Total dividends announced
Page 293 and 294: More detailed information of subsid
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these new / revised standards and i
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Receivable from local municipalitie
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agreed, is concluded. Payments rece
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Interest income from receivables an
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characteristic (age, sort and level
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eviewed for impairment when events
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tax. A Group’s potential tax liab
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As of 31.12.2004 or for the year 20
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8 Cost of sales in thousands of kro
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Weighted average number of ordinary
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Arco Maadehalduse OÜ Arco Manageme
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4 In 2005, the Group purchased 20%
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Cash and cash equivalents -253 Othe
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19 Long-term receivables in thousan
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Reclassifications from and to prope
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Amortisation charge 0 0 -263 -263 I
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Additional information on borrowing
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29 Other long-term payables in thou
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counterparty to be able to use the
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The amount of cash and cash equival
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many real estate transactions are f
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The acquisition of ownership in the
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38 Main statements of the Parent as
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Repayments of borrowings -142 693 -
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Opinion In our opinion, the consoli
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ANNEX A: COLLIERS INTERNATIONAL APP
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TABLE OF CONTENTS Instructions Page
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COMPLIANCE WITH STANDARDS AND STATU
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VALUATION METHODOLOGIES Discounted
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SUMMARY All information gathered ha
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Project Address Cadastral Gross Inc
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six-storey high 100% office buildin
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Project Address Cadastral Size, Net
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[THIS PAGE HAS INTENTIONALLY BEEN L
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[THIS PAGE HAS INTENTIONALLY BEEN L
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ARCO VARA AS - NASDAQ OMX Baltic

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