Final Results

Metro Baltic Horizons plc (MET.L)

Annual Report and Accounts 31 December 2010

Overview

·; Some market stabilisation has now emerged, allowing full disposal of the Metro Plaza property in Talinn and a stabilised valuation for the St Petersburg property. Any market recovery will not be in sufficient time to allow any material recovery of value in respect of the Pirita Tee or Krasta properties.

·; The Board now currently consists of Ronan Reid, Brendan Murphy and Tim Crowley with Robin James having resigned and Kristel Meos having been removed from the Board.

·; A preliminary internal investigation by the Board into the current assets and historic affairs of the Group has taken considerable time and is ongoing. Matters have arisen in regard of previous announcements and related party transactions and could result in possible litigation in respect of losses incurred by the Group.

·; One such transaction pertains to a loan agreement which is the subject of dispute. The amount claimed under same is approximately €1.9m (as at 20 April 2011) from a subsidiary of MBH plc and proceedings in Russia have commenced seeking an order for the sale of the St Petersburg property. These have been adjourned until year end and will allow lodgement of relevant defence documents in Estonia and other possible litigation.

·; Shares having been suspended on 11th November 2010 will relist as of 3rd August 2011.

·; Net asset value per share (NAV) after deferred tax liabilities declined by 5% to €0.37 (31 December 2009:€0.39). The NAV is derived from the Group's cash holdings and the Russian property.

·; Loss after tax of €582k (2009: loss of €8.6 million).

·; Total gross property portfolio (including minority interests) valued at €18.1 million (31 December 2009: €35.8 million).

·; At year end, the Group had a total of €6.75 million of asset-level bank debt, of which approximately €2.97 million related to the Krasta property and €3.78 million related to the Pirita Tee property.

·; Working capital pressures remain but the Group having disposed of Metro Plaza have significantly more liquidity available at Company level than in previous years and this will allow consideration of development of Pirita Tee and St Petersburg sites with development partners to allow the possibility of delivering future value.

For further information, please contact:

Metro Baltic Horizons plc

Ronan Reid (Chairman)

Tel: +353 1 633 3843

Fairfax I.S. PLC (Nominated Adviser and Broker)

James King/ Gillian McCarthy/ Andrew Cox

Tel: +44 (0) 20 7598 5368

Notes to Editors

Metro Baltic Horizons (ticker code: MET.L) is a property investment company targeting development opportunities in the cities of St Petersburg, Russia and Riga and Tallinn, the capitals of Latvia and Estonia respectively.

Chairman's Statement

Dear Shareholders

Having been appointed to the Board of the Company (the "Board") on 29 October 2010, I was appointed Chairman on 2 December 2010.

The reason for both my own and fellow directors' (Brendan Murphy and Tim Crowley) appointment was to address investor concerns at developments in the Company and not solely limited to the poor share price performance. We raised issues consistently with the investment manager and the Chairman on several occasions and in writing prior to our appointment.

One such catalyst was the proposal on the part of the existing directors to issue shares to the Investment Manager, Metro Frontier Ltd ("Metro Frontier"), in lieu of management fees due. This would have resulted in the issue to Metro Frontier and the Investment Adviser, Metro Capital Management AS ("MCM") of a significant shareholding in the Company. The management fees due in respect of 2009 were charged based upon the Net Asset Value ("NAV") of the Company (and subject to a discount) whereas the shares in lieu were sought to be issued at the prevailing share price, which was a fraction of NAV. While the Board was authorised to issue shares below NAV, I believed that, as a consequence of the large number of shares to be issued and the fact that the shares were being issued to a related party, this matter should be put to shareholders. Subsequently, and as a result of our intercession, this share issue was cancelled.

Since our appointment, Robin James resigned as Chairman on 2 December 2010 and as a director on 10 May 2011. Kristel Meos was dismissed as a director on 11 May 2011. James Kenny resigned from the board of Metro Frontier and the Supervisory Board of MCM in November 2010. It is our intention to further widen the Board in the coming months.

As is outlined below, on joining the Board we were faced with a liquidity crisis as well as significant issues relating to prior transactions and the outlook for some of the Company's investments. This unfortunately necessitated the suspension of trading in the Company's the shares on 11 November 2010. Following the completion of a forensic review undertaken by the Board, application has been made by the Company to recommence trading in the shares on 3 August 2011.

The reconstituted Board has worked tirelessly to ensure sufficient liquidity in the Company to discharge its ongoing expenses. All third party debt provided to the Group is ring-fenced within subsidiary companies without recourse to the Company. The sale of the remaining interest in the Metro Plaza property ensured the success of this strategy ensuring cash on hand currently at the Company of approximately €3 million versus €5,000 at 31/12/2009 and €47,000 as of 31/12/2010.

The Board has also sought to provide clarity as to the valuation of assets and has recently completed valuation of the predominant asset of the Group, the St Petersburg property, which at €11.1m underpins the asset value of the Group. Lastly the Board has sought to review and understand both the original structure of and conflicts arising in the investment transactions previously undertaken by the Company, including the outstanding loan notes secured over the St Petersburg property. This may result in the Company undertaking necessary and appropriate litigation against certain parties. Such litigation can be costly and there is no guarantee of success but, having regard to the issues described below and pursuant to legal advice, the Board believes that such litigation should be pursued.

The Board continues to work to maximise the liquidity and value of the Company and will continue to update shareholders on a regular basis. The Board is hopeful that it can achieve value for shareholders in excess of the share price of £0.13 as of the date of suspension, however no certainty can be given on this eventuality.

Background

On 11 November 2010, the Board requested that trading in the Company's shares be suspended. The Company's shares remained suspended pending substantial completion of an investigation into certain matters and publication of the Company's results for the year ended 31 December 2010.

The matters that were brought to the Board's attention related to the general financial position of the Company, including certain asset values and the liquidity position of the Company. They also related to the circumstances behind certain of the Group's transactions and related party issues in relation to the acquisitions made by the Group since Admission, and a series of transactions pursuant to which the Group raised finance (including via granting of security over the Group's primary asset in St. Petersburg), and apparent deficiencies in disclosures regarding the same.

As a result of these matters, the Board believes that certain disclosures previously made by the Company were inaccurate. References to inaccurate disclosures below are not intended to be complete. The Board will update the market in the future in the event that further inaccuracies are identified as being material.

Following Admission, the Company acquired four properties. The current status of each one of these properties, as understood by the Board, is set out below:

1. Bolshaya Pushkarskay 10, St Petersburg ("St Petersburg")

This property was acquired in April 2007 by one of the Company's subsidiaries Gruppa KUB for a total consideration of €12.5 million and subsequently sold to another subsidiary Goldbrick Investments Limited ("Goldbrick"). The property remains wholly owned by Goldbrick and, at the request of the Board, was valued by Jones Long Lasalle at €11.1 million as at 31st December 2010.

The valuation report provided the Board with a detailed note regarding development options for this asset, which the Directors are exploring further.

In order to obtain finance for certain of the Group's projects, in or about April 2009, Goldbrick and another Group company, Pedragon Investments Limited ("Pedragon"), entered into a series of transactions with OÜ BAP Holding ("BAP"), a special purpose vehicle incorporated in Estonia by MCM to raise finance for the Group through the issue of secured, high yield bonds (the "Loan Notes"). The transactions included a loan agreement dated 4 April 2009, secured by a mortgage over the St Petersburg property. The Board is currently investigating a number of aspects of these transactions including (a) the validity of the loan agreement and the mortgage, (b) the fact that a very substantial proportion of the Loan Notes were issued to parties related to MCM, and (c) a series of purported assignments of the loan agreement and the mortgage to third parties. The ultimate purported assignee of the loan agreement is claiming approximately €1.9 million (as at 20 April 2011) from Pedragon, including interest and penalties at a rate of 40%, and has commenced proceedings in Russia seeking an order for the sale of the St Petersburg property.

The Board has sought legal advice in both Russia and Estonia and believes the Company has grounds upon which to contest the validity and/or enforceability of both the loan agreement and the security granted over the St Petersburg property and, as such, the Company aims to prevent any sale of the property by the purported assignee pending determination of the disputed status of the loan agreement. The Company has commenced declaratory proceedings in Estonia contesting the validity of the loan agreement and is defending the proceedings instituted in Russia. As a result of the Board's intervention at a hearing before the Russian court on 26 July 2011, the mortgage foreclosure hearing has been adjourned until 6 December 2011.

2. Krasta 99A, Riga ("Krasta")

In June 2007, the Group acquired an 80% holding in SIA D Tilts Holding ("Tilts Holding"), a Latvian incorporated special purpose holding vehicle for the Krasta site, for €10.8 million and subsequently invested a further €0.9 million bringing the total investment to €11.7 million. The Company's announcement on 18 June 2007 noted that the Krasta project was being managed by MCM on behalf of third party investors. We now understand that in fact 100% of the issued share capital of Tilts Holding was owned by MCM albeit that some of the beneficial interest in Tilts Holding appears to have been held by clients of MCM. In addition, following the acquisition, MCM retained a 20% minority shareholding. This matter is still subject to ongoing review by the Board. The property continues to remain under formal legal protection thereby protecting the Company's interest in the site from foreclosure or otherwise being disposed of without the consent of the Company. This arrangement remains in place until September 2011. All debt in relation to this subsidiary is non-recourse and is ''ring fenced'' within the subsidiary. Given the current state of the property market in Riga, the Board anticipates that insolvency filing is the most likely outcome and accordingly does not envisage any returns to shareholders following disposal of this asset, representing a loss of approximately €11.7 million.

3. Metro Plaza, Viru Square, Tallinn ( "Metro Plaza")

In February 2011, the Group disposed of its remaining interest in Metro Plaza for €3 million. Pursuant to that and earlier sales of the Group's interests, the Group realised a total of approximately €5.1 million from this asset, representing a loss of approximately €5.6 million.

Previous announcements made in respect of this investment require clarification/correction including, without limitation, the following:

·; The Company's announcement on 18 June 2007 noted that the Metro Plaza project was being managed by MCM on behalf of third party investors. In fact, 100% of the share capital of the SPV holding Metro Plaza ("OU Focus") was owned by MCM, either beneficially for itself or for parties related to MCM. In addition, upon acquisition of the share capital in OU Focus for circa €5 million, MBH through its subsidiary also assumed the debts of the company being circa €5 million of which €2.5 million was a performance fee payable to MCM.

·; The former Chairman, Mr Robin James, noted in his Chairman's statement dated 7 May 2008 in the Company's Annual Report for the year ended December 2007 that the Company had secured a banking facility tofund 100% of the turnkey construction contract cost for Metro Plaza. The Board has since seen correspondence that indicates that this facility only lasted until August 2008 and the subsequent funding gap created the need for the Loan Notes described above. 

·; On 15 October 2010, the Company announced the sale of a 30.7% interest in OU Focus. That announcement also stated that the acquirer had also acquired the 19.7% (in fact, 19.3%) minority shareholding in OU Focus, describing that minority shareholding as being held by "an unrelated party". In fact, when that transaction took place, the minority shareholding was held by MCM.

4. Pirita Tee, Pirita Road, Tallin ("Pirita")

In late 2007, the Company acquired an 80% holding in Pirita Tee, Tallin, Estonia ("Pirita Tee") an Estonian special purpose holding vehicle for the Pirita Tee site, for approximately €3.1 million. The Company's announcement on 27 September 2007 did not note that the 80% shareholding was purchased from MCM nor that MCM retained the minority shareholding (whether beneficially or on behalf of other clients) The Company has not re-financed the facility used to acquire Pirita Tee and is in continued discussions with the lending bank. The Board has negotiated a further two month rolling extension of the finance facility and has appointed a local representative to both continue the discussions with the bank and provide a strategic review of the asset. There is no certainty that the facility will be financed. All debt in relation to this subsidiary is non-recourse and is ''ring fenced'' within the subsidiary. The Board expects to achieve some value in due course from this site dependent upon the development of the project in association with a partner firm. If no additional funding can be found from a joint venture party, or if no financing is found to be available, the directors anticipate that the bank will take over the property. At this juncture the Board would ascribe a negligible value to the Company's investment in this project.

Advisers to the Company

The Company is reviewing its relationship with Metro Frontier and, as a consequence, its relationship with MCM. James Kenny resigned from the board of Metro Frontier and the supervisory board of MCM in November 2010. Mr Paul McGuinness had been providing the services of Financial Controller to the Company through his corporate vehicle, Mc Guinness Investments OU which terminated its contract with the Company in February 2011.

Given the reduced number of properties requiring active management the Board is considering an investment management strategy of local advisers in Talinn and St Petersburg reporting directly to the Board.

Preliminary investigation and relationship with Management Team

As referred to above, with assistance from external counsel, the Board has conducted a preliminary internal investigation into the affairs of the Group including the circumstances relating to the acquisitions made since Admission, the counter-parties to such acquisitions and the related financing secured or roles performed by the Group and/or its advisers in completing such acquisitions.

As a result of those preliminary investigations the Board does not believe that the former directors and/or the investment management team managed the Company in its best interests and/or with due care and skill.

The Board continues to review the strategic options available to the Company and is considering legal actions against various parties (including the former directors, professional advisers and management team) in relation to a material proportion of the losses suffered by the Group. The Board believes that legal proceedings may be in the best interests of the Company although the Board notes that such proceedings are costly and there is no guarantee of success and/or material recoveries.

I believe that the steps taken by your Board are in the best interests of the Company and your Board is resolved to maximise the remaining value in the Company and to seek restitution for losses wherever possible and from those responsible.

Ronan Reid

Chairman

2 August 2011

Directors' Report

The Directors present their report and audited financial statements for the year ended 31 December 2010.

Principal activities

The principal activity of the Group is investing in and developing land and buildings in the Baltic States and in the St. Petersburg area of Russia.

Business Review

A review of the business during the year is contained in the Chairman's Statement.

Results for the period

The loss attributable to the shareholders in the parent for the year ended 31 December 2010 was €562k (Loss for the period ended 31 December 2009 €7.9m). The results for the year are set out in the Consolidated Statement of Comprehensive Income on page 16. The loss for the year of €562k (2009: €7,912k) has been transferred to reserves.

Basis of Preparation

The board have considered and reviewed the current financial status and the cash-flow projections of the Group. Having completed this review and given consideration to the other factors detailed in Note 2.2 to the financial statements, the directors are of the opinion that there are adequate financial resources available to enable the company and group to continue in operational existence as a going concern for a period of at least 12 months from the date of approval of these financial statements.

Dividend

The Directors have not declared any dividends in the year ended 31 December 2010 (2009: Nil).

Directors

The Directors who served during the year were Robin James, Kristel Meos, Ronan Reid and Brendan Murphy. Ronan Reid and Brendan Murphy were appointed to the Board on 29th October 2010 and on 2nd December 2010, Mr Reid replaced Mr James as Chairman. Subsequent to the year end, Tim Crowley was appointed a Director on 15th April 2011, Robin James resigned from the Board on 10th May 2011 and Kristel Meos was removed as a Director on 11th May 2011.

The beneficial interests of the directors and secretary in the shares of the Group and Company are as noted below. All interest are in the ordinary share capital of the parent company, Metro Baltic Horizons PLC;

Directors Remuneration

Remuneration to directors during each of the financial years ending 31 December 2009 and 31 December 2010 consisted entirely of Directors fees and can be analysed as follows;

No remuneration was payable to Ronan Reid, Tim Crowley or Brendan Murphy from the date of their appointment to 31 December 2010.

The secretary who served during the year was Philip Scales.

The following entities had substantial holdings in the share capital of the group at 31 December 2010;

Shares held Perc. of total

The board and subcommittees

The board considers all directors, including the chairman, to be independent. All the Directors are non-executive. The Group and Company has an audit committee consisting of all the board members. The audit committee is responsible for overseeing all financial transactions and activities of the Company.

The Directors are responsible for preparing this report and the financial statements in accordance International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The Directors are required to prepare financial statements for each financial period which present fairly the financial position of the Group and Company and the financial performance and cash flows of the Group for that period. In preparing those financial statements the directors are required to:

·; Select suitable accounting policies and then apply them consistently;

·; Make judgements and estimates that are reasonable and prudent;

·; State whether all applicable accounting standards have been followed; and

·; Prepare the financial statements on the going concern basis unless it is inappropriate to assume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

By Order of the Board

P Scales

Secretary

02 August 2011

Independent Auditors' Report

To the members of Metro Baltic Horizons plc

We have audited the financial statements of Metro Baltic Horizons plc for the year ended 31 December 2010 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the company statement of financial position, the consolidated statement of changes in equity, the company statement of changes in equity, the consolidated statement of cash flows, the company statement of cash flows and the related notes 1 to 25. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards.

This report is made solely to the company's members, as a body, pursuant to Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body for our audit work, for this report or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities set out on page 13, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

Ø give a true and fair view of the state of the group's and company's affairs as at 31 December 2010 and of the group's loss for the year then ended;

Ø have been properly prepared in accordance with International Financial Reporting Standards; and

Ø have been prepared in accordance with the requirements of the Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 requires us to report to you if, in our opinion:

Ø adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

Ø the financial statements are not in agreement with the accounting records and returns; or

Ø certain disclosures of directors' remuneration specified by law are not made; or

Ø we have not received all the information and explanations we require for our audit.

Ernst & Young LLC

Chartered Accountants

Isle of Man

Date: 2 August 2011

Consolidated Statement of Total Comprehensive Income

For the year ended 31 December 2010

The directors have chosen not to include the Company Statement of Total Comprehensive Income as permitted by the Isle of Man Companies Acts.

Consolidated Statement of Financial Position

As at 31 December 2010

Consolidated Statement of Financial Position

As at 31 December 2010

The financial statements were approved by the Board and authorised for issue on 02 August 2011

R Reid B Murphy

Director Director

Company Statement of Financial Position

As at 31 December 2010

The financial statements were approved by the Board and authorised for issue on 02 August 2011

R Reid B Murphy

Director Director

Consolidated Statement of Changes in Equity

For the year ended 31 December 2010

Company Statement of Changes in Equity

For the year ended 31 December 2010

Issued Distributable Retained

Capital Reserves Earnings Total

€'000 €'000 €'000 €'000

At 1 January 2009 262 36,186 1,942 38,390

Total comprehensive

income - - (25,462) (25,462)

_______ ______ _______ _______

At 31 December 2009 262 36,186 (23,520) 12,928

====== ===== ====== ======

Issued Distributable Retained

Capital Reserves Earnings Total

€'000 €'000 €'000 €'000

At 1 January 2010 262 36,186 (23,520) 12,928

Total comprehensive

income - - (5,465) (5,465)

_______ ______ _______ _______

At 31 December 2010 262 36,186 (28,985) 7,463

====== ===== ====== ======

Consolidated Statement of Cash Flows

For the year ended 31 December 2010

Company Statement of cash flows

For the year ended 31 December 2010

1. General Information

The Company was incorporated in the Isle of Man on 18 September 2006 as Metro Baltic Hermitage plc. On 13 November 2006 the Company passed a special resolution to change its name to Metro Baltic Horizons plc. The Company invests in and develops property in the Baltic States and in the St. Petersburg area of Russia.

This report of the Company for the year ended 31 December 2010 comprises the Company and its subsidiaries (together referred to as the "Group").

The Company's registered address is IOMA House, Hope Street, Douglas, Isle of Man.

The Company was admitted to the AIM of the London Stock Exchange and commenced operations on 11 December 2006. The shares were suspended on 11 November 2010 and will relist on 3 August 2011.

2. Principal Accounting Policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below:

2.1 Statement of Compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The IFRS applied are those effective for accounting periods beginning on or after 1 January 2010.

2.2 Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, which have been measured at fair value. These financial statements have been prepared on a going concern basis as it is the view of the directors that this is the most appropriate basis of preparation to adopt having considered the issues identified below.

·; The group has sought and received legal protection in respect of its Latvian subsidiary, D Tilts Holding SIA, which provides legal protection from its creditors until 2 October 2011. This subsidiary owns the Krasta 99 property, valued at €3,081,000, and is funded by bank loans of €2,969,000 and loans from non-controlling interest of €1,358,000 and has net liabilities of €6,532,000 as at 31 December 2010. All debt in relation to this subsidiary is non-recourse and is "ring-fenced" within the subsidiary. The directors anticipate that on expiry of the legal protection, the company will file for insolvency.

·; The group's Estonian subsidiary, Pirita Tee, owns the property know as the Pirita site, which is valued at €3,860,000, and is funded by bank loans of €3,780,000 and loans from non-controlling interest of €961,000. All debt in relation to this subsidiary is non-recourse and is "ring-fenced" within the subsidiary. The bank loan fell due for repayment in May 2010 and was extended to November 2010. Currently the loan is being rolled over on a monthly basis and interest is being paid in advance. The board has appointed a local representative to continue negotiations with the bank and to assist in identifying a joint venture party. The loan continues to be rolled over and if no additional funding can be found from a joint venture party, or if no financing is found to be available, the directors anticipate that the bank will take over the property.

·; In the financial year ended 31 December 2008, the group arranged a loan from BAP Holding OU, a special purpose vehicle established and part funded by the Investment Advisor to raise funds for the group. This facility matured on 15 October 2010. The balance outstanding at 31 December 2010 was €1,652,000 and is collateralised by a mortgage over Bolshaya Pushkarskaya, St Petersburg, which is valued at €11,133,000. The company is subject to legal action in respect of this overdue loan and legal proceedings have commenced in Russia seeking an order for the sale of the St Petersburg property. The directors have sought legal advice and believes the group has grounds upon which to contest the validity of both the loan agreement and the security granted over the St Petersburg property. In the event of the group being unsuccessful in its challenges to the loan agreement and security granted there are sufficient funds available to discharge the liability. Recent judgements in Estonia and Russia provide the directors with a degree of confidence that this will not occur.

·; In view of the potential litigation against the group's professional advisers, no payment will be made in respect of management fees due of €474,000.

In concluding that it is appropriate to adopt the going concern basis in preparation of the financial statements, the directors have prepared cash flow projections to August 2012. The projections include the assumptions that D Tilts Holdings Ltd will file for insolvency, that alternative financing will be arranged for Pirita Tee otherwise the bank will be allowed to take over the property and that the amount claimed under the BAP Holding loan is paid in full.

Whilst recognising the inherent uncertainty of potential litigation, the directors believe that the outcome of such potential litigation will be successful. The directors believe that adequate funding will be available to enable the group to continue operating and meet its liabilities as they fall due and that it is therefore appropriate to prepare the financial statements on a going concern basis. The financial statements do not reflect any adjustments which would have to be made should sufficient funding not be available.

2.3 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the subsidiaries controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Losses are attributed to the non-controlling interest even if that results in a deficit balance.

If the Group loses control over a subsidiary, it:

·; Derecognises the assets (including goodwill) and liabilities of the subsidiary at the carrying amounts at the date when control is lost;

·; Derecognises the carrying amount of any non -controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them);

·; Derecognises the cumulative translation differences, recorded in equity

·; Recognises the fair value of the consideration received, if any, from the transaction, event or circumstances that resulted in the loss of control;

·; Recognises any investment retained in the former subsidiary at its fair value at the date that control is lost; and

·; Recognises any resulting difference as a gain or loss in profit or loss attributable to parent.

Entities whose economic activities are controlled jointly by the Group and other venturers independent of the Group (joint ventures) are accounted for using the proportionate consolidation method, whereby the Group's share of the assets, liabilities, income and expenses is included line by line in the consolidated financial statements.

Associates are those entities over which the Group is able to exert significant influence but which are neither subsidiaries nor joint ventures. Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustments attributable to the Group's share of associate are not recognised separately and is included in the amount recognised as investment in associates.

The carrying amount of investments in associates is increased or decreased to recognise the Group's share of profit or loss and other comprehensive income of the associate. These changes include subsequent depreciation, amortisation or impairment of the fair value adjustments of assets and liabilities.

Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

2.4 Changes in accounting policy and disclosures

The Group has adopted the following new and amended IFRS as of 31 December 2010:

·; IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended): applicable for annual periods commencing 1 July 2009 including consequential amendments to IFRS 7 and IAS 21.

·; IFRS 5 Non-Current Assets held for Sale and Discontinued Operations- effective date 1 January 2010

·; IFRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions effective 1 January 2010.

Improvements to IFRS

·; Amendment to IAS 1 Presentation of Financial Statements is applicable for annual periods beginning on or after 1 January 2010.

·; Amendment to IAS 7 Statement of Cash Flows is applicable for annual periods beginning on or after 1 January 2010.

·; Amendment to IAS 17 Leases is applicable for annual periods beginning on or after 1 January 2010.

When the adoption of the standard or interpretation is deemed to have an impact on the financial statements or performance of the Group its impact is described below:

IAS 27 Consolidated and Separate Financial Statements

The standard specifies;

a) The circumstances in which an entity must consolidate the financial statements of another entity (being a subsidiary);

b) The accounting for changes in the level of ownership interest in a subsidiary;

c) The accounting for the loss of control of a subsidiary; and

d) The information that an entity must disclose to enable users of the financial statements to evaluate the nature of the relationship between the entity and its subsidiaries.

IFRS 5 Non-Current Assets Held for sale and Discontinued operations

The standard requires;

a) assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and where applicable, depreciation of such assets to cease; and

b) assets that meet the criteria to be classified as held for sale to be presented separately in the statement of financial position and the results of discontinued operations to be presented separately in the Consolidated Statement of Comprehensive Income.

The adoption of these standards and interpretations did not have a material effect on the financial statements on initial adoption other than as follows;

·; increased disclosures with respect to Non-current assets held for sale and discontinued operations

·; method of calculation of profit or loss on loss of control of a subsidiary entity

The IASB and IFRIC have issued additional standards and interpretations which are effective for periods starting after January 1, 2010. The following standards and interpretations have yet to be adopted by the Group:

The Group does not anticipate that the adoption of these standards and interpretations will have a material effect on its financial statements on initial adoption.

Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.

Annual Improvements 2010 (effective from 1 July 2010 and later)

The IASB has issued Improvements to IFRS 2010 (2010 Improvements). Most of these amendments become effective in annual periods beginning on or after 1 July 2010 or 1 January 2011. The 2010 Improvements amend certain provisions of IFRS 3R, clarify presentation of the reconciliation of each of the components of other comprehensive income and clarify certain disclosure requirements for financial instruments. The Group's preliminary assessments indicate that the 2010 Improvements will not have a material impact on the Group's financial statements.

IFRS 9 Financial Instruments (effective from 1 January 2013)

The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (IFRS 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed.

Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of IFRS 9 have been published and they can comprehensively assess the impact of all changes.

2.5 Summary of significant accounting policies

a) Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be measured reliably.

Rental income

Rental revenues are accounted for on an accruals basis.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Interest income is included in finance income in the Consolidated Statement of Comprehensive Income.

b) Investment property

Property held to earn rentals and/or for capital appreciation and that is not occupied by the companies in the Group, is classified as investment property. Investment property is initially measured at cost including transaction costs. Subsequent to initial recognition investment property is carried at fair value and adjustments to fair value are reflected in the Consolidated Statement of Comprehensive Income.

Properties held by the Group are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. Any gains or losses on the retirement or disposal of a property are recognised in the Consolidated Statement of Comprehensive Income in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

All directly attributable transaction costs associated with the purchase of the investment properties are included within the cost of the property. Development costs and borrowing costs are also capitalised where appropriate.

c). Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

d). Expenses

Expenses are accounted for on an accruals basis. Fees payable to the Property Adviser are calculated with reference to the cost or valuation of the underlying properties held by the Group.

All administration expenses are charged through the Consolidated Statement of Comprehensive Income.

e). Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and short-term deposits which are short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

f). Income tax and deferred tax

Income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income.

Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except:

- Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

- Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

g). Business combinations

Business combinations from 1 January 2009

There were no business combinations during the year ended 31 December 2010 or in the prior year.

Business combinations prior to 31 December 2008

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and any equity instruments issued by the Group in exchange of control of the acquiree, plus any contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date.

The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree's identifiable net assets.

Goodwill is initially measured at cost being the excess of the consideration transferred over the Group's net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

h). Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group entities are measured in the currency of the primary economic environment in which the entity operates (the "functional currency"). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group has elected to recycle the gain or loss that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation.

The consolidated financial statements are presented in Euro which is the Company's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income.

Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value is determined.

Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing rate at the date of the statement of financial position;

(ii) income and expenses are translated at the average exchange rate prevailing in the period and gains or losses are dealt with in the Consolidated Statement of Comprehensive Income.

The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign entity, the component of other comprehensive income relating to that particular foreign operation is recognised in the Consolidated Statement of Comprehensive Income.

i). Operating segments

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed regularly by the chief operating decision maker in order to allocate resources and to assess their performance. The group disposed of Focus Kinnisvara OU ("Focus") during September 2010. Focus Kinnisvara owned the Metro Plaza property. Up until the disposal of Focus, the group has four operating segments relating to its four projects. Following the disposal of Focus, the group now has 3 operating segments.

j) Financial assets

All financial assets are recognised initially at fair value. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the group commits to purchase or sell the asset.

k) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as accounts payable, accruals and other liabilities, loans or borrowings and recorded at amortised cost. The Group determines the classification of its financial liabilities at initial recognition.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the income statement.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

l) Profit or loss from discontinued operations

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the consolidated statement of comprehensive income of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income.

m) Judgements

In the preparation of the Group's consolidated financial statements, management is required to make certain judgements and estimates that affect the reported amounts of its assets and liabilities, revenues and expenses at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities. Significant areas requiring management's judgement include assessment of the fair value of investment properties and properties under construction and also the determination of deferred tax.

Deferred tax assets / liabilities

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits. Further details are contained in Note 5.

The basis for determination of deferred tax assets/ liabilities is outlined in Note 5 of these financial statements.

Revaluation of investment properties

The Group carries its investment properties at fair value, with changes in fair value being recognised in the Consolidated Statement of Comprehensive Income. The Group engaged independent valuation specialists with relevant experience in the location and category of investment property being valued to determine fair value as at 31 December 2010. The significant assumptions applied in determining the valuation are detailed in Note 7 to the financial statements.

Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of the asset's fair value less the cost of selling the asset and its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the Company relies on independent valuers.

n) Investments in subsidiaries and associate undertakings

All investments in subsidiary companies and associate undertakings are recorded at cost less provision for any permanent diminution in value.

3. Administrative Expenses

Administrative expenses include the following; 31 December 31 December

2010 2009

Group Group

€'000 €'000

Investment management fees 404 495

Interest on management fees 70 -

Legal and other professional fees 134 20

Administrators fees 72 74

Directors' remuneration 31 34

Auditors' remuneration - audit services 40 45

Impairment of VAT receivable balance 188 -

Other administrative expenses 221 216

_______ _______

1,160 884

====== ======

Management fees are 1.5% per annum of gross assets under management in Russia and 1% per annum of all other gross assets. The management fees are calculated and charged quarterly based on the gross assets of the Group at the end of the quarter.

Performance fees are calculated based on the audited net asset value at 31 December each year and are payable annually. The performance fee is calculated as 25% of the increase in the net asset value of the Group in excess of a hurdle rate of 12% over the period. As the net asset value at 31 December 2010 is below the hurdle rate no performance fee is payable in respect of the year. As detailed in Note 2, the Investment Manager is required to use a portion of any performance fee to purchase new shares in the Group if the shares are trading at a level in excess of the net asset value. As the share price was trading below net asset value when the performance fee was paid in respect of 31 December 2007 the manager was required to use that portion of the proceeds to acquire shares in the market. There is no such requirement in relation to the year ended 31 December 2010 and 31 December 2009 as no performance fee arose.

The prior year financial statements noted that the investment manager may receive part of its remuneration by way of a share based payment. Following a change in circumstances, the directors decided that any amounts that may be paid to the investment manager would be discharged without the issue of any shares. Accordingly, the directors formed the view that the references made in the prior year financial statements to share based payments were no longer relevant and accordingly are of the opinion that the prescribed accounting under IFRS 2 - Share based payments is not applicable in either the current or previous financial year.

4. Finance Income and Expense

31 December 31 December

2010 2009

Group Group

€'000 €'000

Interest received on deposits 79 64

______ ______

Finance Income 79 64

===== =====

31 December 31 December

2010 2009

Group Group

€'000 €'000

Interest paid on bank and other loans 1,072 551

______ ______

Finance Expense 1,072 551

===== =====

5. Income Tax

31 December 31 December

2010 2009

Group Group

€'000 €'000

Other tax

Levy on unpaid up share capital and rental income (59) (28)

Deferred tax

Comprehensive income 303 1,546

______ ______

Tax credit for the year 244 1,518

===== =====

Deferred tax principally relates to capital gains tax or equivalent that would be payable on the disposal of investment or other property assets at their current fair market value based on their carrying tax value.

The Company is resident in the Isle of Man. Its activities in the Isle of Man are liable to tax at a 0% tax rate.

Tax payable at 31 December 2010 and 31 December 2009 relates to taxes payable for a Special Defence Contribution levy charged in Cyprus on certain activities.

The Group has income tax losses of €3.4m (2009: €3.4m). The deferred tax asset associated with these losses is €506k (2009: €506k) of which €506k (2009: €422k) has not been recognised in the accounts as there is no expectation that the Group will earn taxable profits sufficient to utilise them.

The deferred tax liability has arisen based on the tax that would be payable by the Group if property assets held by it were sold at the current valuation based on the current tax rates in the appropriate jurisdiction and the current tax carrying value.

6. Earnings Per Share

The calculation of basic earnings per share at 31 December 2010 was based on the loss attributable to shareholders of €562k (2009: €7,912k) split between a loss from continuing operations of €1,280k (2009: loss of €7,740k) and profit from discontinued operations of €718k (2009: loss of €172k). The weighted average number of ordinary shares in issue during the year ended 31 December 2010 of 26,200,270 (2009: 26,200,270).

Diluted earnings per share amounts are calculated by dividing the net profit attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

31 December 31 December

2010 2009

Group Group

€'000 €'000

Basic earnings per share

Loss attributable to

equity holders of the parent - continuing operations (1,280) (7,740)

_______ _______

Profit / (loss) attributable to

equity holders of the parent - discontinued operations 718 (172)

_______ _______

31 December 31 December

2010 2009

Group Group

€'000 €'000

Weighted average number of ordinary shares 26,200,270 26,200,270

in issue during the year

Basic earnings per share (expressed as cents per share)

- Continuing operations (4.89) (29.54)

- Discontinued operations 2.74 (0.66)

7. Investment Property

Investment properties are stated at fair value. The Group has appointed various independent and internationally recognised valuers with significant experience in the region to prepare valuations on a semi-annual basis (as at 30 June and at 31 December). Valuations are undertaken in accordance with International Valuation Standards published by the International Valuations Standards Committee. The fair value adjustment includes foreign exchange differences on conversion of the Russian assets from US dollar to Euro.

The valuation method inter alia considers profit, cost, and market approaches as appropriate. The valuations consider the value of the property based on the expected sale value at completion less any expenditure required to realise this value. The valuations consider the expected rent roll rental yields for similar properties. The valuation method also considers comparative deals, to the extent that any relevant transactions have occurred, in the market at the time of the valuation.

The valuation methods and key assumptions used by project are outlined below.

Krasta 99a

The external valuation estimate was prepared using the Income Approach method. This considered future discounted income, rate used 11.8% commencing with partial rental occupancy and commercial and office sales revenue from the end of 2015 to 2017 and allowing for construction, development costs and operating expenses from 2011.

Pirita tee

The external valuation estimate was prepared using the Sale comparison method. The method of valuation considered recent sales of comparable property going back over six months. Consideration was also given to location, which has been recognised as a location for somewhat luxury apartments in the upper price segment, scale of sea view, the clear development concept and the approved detail planning.

10A Bolshaya Pushkarskaya Street

The external valuation estimate was prepared using the Income Approach method. This considered both existing and future discounted rental income, rate used 12.1%. Development and construction costs have also been considered commencing twelve months from this year end and envisioned to complete in four years.

Given the significance of the value of the property at 10A Bolshaya Pushkarskaya Street in terms of the current year balance sheet and the future plans of the directors, sensitivity analysis was completed on the valuation assuming the following ;

8. Assets classified as held for sale and discontinued operations

In October 2010 the Group sold 30.7% of its 80.7% holding in Focus Kinnisvara OU, the entity that owned the "Metro Plaza" property in Tallin, Estonia, realising a gain on disposal (as calculated in accordance with IAS 27 - Consolidated and Separate Financial Statements) of €255,000. Arising from this, the company ceased to hold a controlling interest in this entity and accordingly ceased to consolidate the results, assets and liabilities of this now former subsidiary from the date of the loss of control. Any amounts previously included in respect of non-controlling interests (€1,218) and the foreign currency translation reserve (€178k) has been eliminated. The gain on disposal has been calculated as follows;

Following the sale of the 30.7% shareholding, the remaining 50% was immediately made available for sale. The sale of the remaining 50% was completed subsequent to the year end. In accordance with IFRS 5 - "Non-current Assets Held for Sale and Discontinued Operations", the associate interest has been reclassified from non-current financial fixed assets to "Assets included in disposal group as held for sale". The investment in the associate undertaking has been measured in accordance with IFRS 5 with the affect that the value of the asset has been adjusted to its net realisable value less costs to sell. The loss arising as a result of this fair value adjustment is disclosed below.

The results of the operations of this operating segment have been included on the statement of total comprehensive income within the single line item "Profit / (loss) for year from discontinued operations". The detailed analysis of the segments results are included below. The comparative financial statement amounts have been adjusted to reflect the fact that the segment is now discontinued.

The results of the operations of this operating segment have been included on the statement of total comprehensive income within the single line item "Profit / (loss) for year from discontinued operations". The detailed analysis of the segments results are included below. The comparative financial statement amounts have been adjusted to reflect the fact that the segment is now discontinued.

The carrying amounts of assets and liabilities held for sale is summarised below as are the details of the amounts previously consolidated.

*The value of the investment property increased by €832,000 in the period between 1 January 2010 and 30 September 2010 resulting in a fair value at the date of loss of control of €18,732,000 (see note 7).

9. Operating Segment Information

For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:

- Metro Plaza, Tallinn, Estonia, (sold post year end).

- Krasta 99, Riga, Latvia

- Pirita Road, Tallinn, Estonia

- Bolshaya Pushkarskaya, St Petersburg, Russia

No operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. As detailed in note 8 above, the company sold its controlling interest in the entity that owned Metro Plaza on 30 September 2010. The company retained a 50% interest at 31 December 2010. An analysis of the results, assets and liabilities of that operating segment is included within note 8 to the financial statements.

The operating segment described as Group in the tables above includes, expenses, assets and liabilities managed centrally and not allocated to individual components. It also includes certain adjustments and eliminations booked on consolidation and not allocated to individual operating segments. The 2009 analysis of assets and liabilities does not agree with the statement of financial position as the assets and liabilities attributed to Metro Plaza have been excluded. An analysis of same is provided in Note 8 to the financial statements.

Geographic information

10. Trade and Other Receivables and Amounts Due from Group Companies

31 December 31 December 31 December 31 December

2010 2010 2009 2009

Group Company Group Company

€'000 €'000 €'000 €'000

Prepayments - 12 -

Trade receivables 99 - - -

VAT receivable 283 - 356 -

Impairment of receivables (39) - - -

Interest due from Group companies - 7,561 - 5,275

Impairment of interest due - (7,561) - (5,275)

_______ _______ _______ ______

Total trade and other receivables 343 - 368 -

Trade receivables - discontinued

operations (note 8) - - 617 -

_______ _______ _______ ______

Trade and other receivables 343 - 985 -

====== ====== ===== =====

As at 31 December, the ageing analysis of trade receivables of the Group is as follows:

11. Cash and Cash Equivalents & Restricted Cash

31 December 31 December 31 December 31 December

2010 2010 2009 2009

Group Company Group Company

€'000 €'000 €'000 €'000

Sterling cash 1 1 3 1

Euro cash 440 46 204 4

Rouble cash 26 - 92 -

Estonian cash 5 - 30 -

Latvian cash 1 - - -

Dollar cash - - 21 -

______ _______ ______ _______

Total cash and

cash equivalents 473 47 350 5

Cash and cash equivalents-

discontinued operations - - 140 -

_______ _______ _______ ______

Cash and cash equivalents 473 47 490 5

====== ====== ===== =====

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following:

31 December 31 December 31 December 31 December

2010 2010 2009 2009

Group Company Group Company

€'000 €'000 €'000 €'000

Cash at banks and on hand 473 47 490 5

=== === === ===

Restricted cash deposit - - 114 -

==== ==== ==== ====

Included within restricted cash is €nil (2009: €114k) deposits which is held by banks against loans they have provided. These amounts cannot be used by the Group until those loans are repaid.

12. Interest Bearing Bank Loans

31 December 31 December

2010 2009

Group Group

€'000 €'000

At beginning of year as originally reported 20,303 17,746

Accrued interest 159 240

New bank loans - 2,317

Repaid during year (186) -

_______ _______

At end of year 20,276 20,303

Reclassified to discontinued operations (note 8) (13,527) (13,713)

_______ _______

6,749 6,590

====== ======

Group interest bearing bank loans at 31 December 2010

Current

Loan Interest Rate Maturity Amount