Orco Property Group

ORCO PROPERTY GROUP (incorporated as a société anonyme (Joint Stock Company) under the laws of the Grand Duchy of Luxembourg; registered with the Luxembourg Registre de Commerce et des Sociétés under number B44.996) Offering of 1,304,348 new Shares at an Offer Price of €115.00 Per Share (subject to an over-allotment option to increase such amount by up to 195,652 new Shares) Admission to listing and trading of the Shares on the main market of the Warsaw Stock Exchange and the Budapest Stock Exchange and admission to trading of the new Shares on Eurolist by Euronext Paris and on the main market of the Prague Stock Exchange

1,304,348 newly issued ordinary bearer shares without nominal value of Orco Property Group (the “Company”), a Luxembourg joint stock company, are being offered by the Company (subject to an over-allotment option to increase such amount by up to 195,652 new shares) (the “Offer Shares”) in an offering to institutional investors in Poland and a private placement to institutional investors outside of the United States in compliance with Regulation S promulgated under the U.S. Securities Act of 1933, as amended (the “Securities Act”), pursuant to this Prospectus (the “Offering”). The ordinary bearer shares of the Company (the “Shares”) are currently listed on Eurolist by Euronext Paris S.A. (“Eurolist by Euronext Paris”) and the main market of Burza cenných papíru˚ Praha, a.s. (the “Prague Stock Exchange”). The Company intends to apply for the Offer Shares to be admitted to trading on Eurolist by Euronext Paris and has applied for its entire authorised share capital to be admitted to trading on the main market of the Prague Stock Exchange, each of which is expected to take place on or about 21 June 2007. The Company intends to apply for the Shares representing its entire current authorised capital (including the Offer Shares) to be admitted to listing and trading on the main market of Giełda Papierów Wartos´ciowych w Warszawie Spółka Akcyjna (the “Warsaw Stock Exchange”) and the regulated market of the Budapesti Értéktõzsde (the “Budapest Stock Exchange”). The Company expects trading of the Shares (including the Offer Shares) on the Warsaw Stock Exchange and the Budapest Stock Exchange on or about 21 June 2007 and 21 June 2007, respectively. This Prospectus has been prepared for the admission to listing and trading of the Shares on the main market of the Warsaw Stock Exchange and the regulated market of the Budapest Stock Exchange and admission to trading of the Offer Shares on Eurolist by Euronext Paris, which are regulated markets for the purpose of the Market and Financial Instruments Directive (Directive 2004/39/EC). This Prospectus has also been prepared for the admission to trading of the Company’s entire authorised share capital on the main market of the Prague Stock Exchange, a regulated market for purposes of the Investment Services Directive (1993/22/EEC). This Prospectus constitutes a prospectus for the purposes of Directive 2003/71/EC (the “Prospectus Directive”) and has been approved by the Commission de Surveillance du Secteur Financier in Luxembourg (“CSSF”), which is the competent authority in Luxembourg for the purpose of the Prospectus Directive for the purposes of the admission to trading of the Shares and Offer Shares on the respective stock exchanges referred to above. This Prospectus has been prepared in accordance with Commission Regulation (EC) No 809/2004 of 29 April 2004, as amended. In accordance with the European passport mechanism set out in the Prospectus Directive, a notice of approval of this Prospectus will be provided by the CSSF to: the Polish Financial Supervision Commission, in connection with the application for admission to listing and trading of the Shares on the main market of the Warsaw Stock Exchange; the Hungarian Financial Supervisory Authority, in connection with the application for listing and trading of the Shares on the Budapest Stock Exchange; the Autorité des marchés financiers (“AMF”), in connection with the application for trading of the Offer Shares on Eurolist by Euronext Paris; and the Czech National Bank, in connection with the application for trading of the entire authorised share capital on the main market of the Prague Stock Exchange. Institutional investors (including in Poland) who wish to purchase Offer Shares in the Offering must be qualified investors pursuant to Article 2 of the Prospectus Directive as implemented in the relevant member state where the Offering is made. For a discussion of certain considerations which should be taken into account in deciding whether to purchase the Offer Shares, see “Risk Factors”. The Offer Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and subject to certain exceptions, may not be offered or sold within the United States but solely outside the United States in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation S”). This Prospectus will be published on the website of the Company (www.orcogroup.com) and on the website of the Luxembourg Stock Exchange (www.bourse.lu). In the Czech Republic, the Prospectus will also be published on the website of Wood & Co. at www.wood.cz. In connection with the Offering, the Company has granted to the Lead Manager an option, exercisable within 30 days from the date of this Prospectus, to subscribe for up to 195,652 Shares at the Offer Price to cover over-allotments, if any (the “Over-allotment Option”). The Shares have been, or are expected to be, accepted for settlement through Clearstream Banking S.A., Luxembourg (“Clearstream”), Euroclear France, UNIVYC, a.s. (“UNIVYC”), Krajowy Depozyt Papierów Wartos´ciowych S.A. (“KDPW”) and KELER Ltd. (“KELER”). Delivery of the Offer Shares is to be made through the facilities of these clearing systems, and is expected to occur on or about 21 June 2007 (the “Settlement Date”). This Prospectus does not constitute an offer to sell, or the solicitation of any offer to buy, Offer Shares in any jurisdiction where such offer or solicitation is unlawful. For a description of certain restrictions on transfer, see “Selling Restrictions”.

Sole Coordinator, Bookrunner and Lead Manager Citi Co-Lead Manager Wood & Co. Prospectus dated 14 June 2007 IMPORTANT INFORMATION ABOUT THE OFFERING

This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the Offer Shares offered hereby and does not constitute an offer to sell or a solicitation of an offer to buy any Offer Shares to any person in any jurisdiction in which it is unlawful to make any such offer or solicitation to such person. Neither the delivery of this Prospectus nor any sale made hereby shall under any circumstances imply that there has been no change in the affairs of the Company or any of its subsidiaries or the Company and its subsidiaries taken as a whole (the “Group”) or that the information contained herein is correct as of any date subsequent to the earlier of the date hereof or any date specified with respect to such information.

This Prospectus has been prepared by the Company in connection with the Offering solely for the purpose of enabling a prospective investor to consider an investment in the Offer Shares. Reproduction and distribution of this Prospectus or revelation or use of the information contained herein for any purpose other than (i) considering an investment in the Offer Shares or (ii) for purposes of complying with publication requirements under the Prospectus Directive, is prohibited. The information contained in this Prospectus has been provided by the Company and other sources identified herein. No representation or warranty, express or implied, is made by the Managers (as defined in “Plan of Distribution”) as to the accuracy or completeness of the information set forth herein and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation, whether as to the past or the future. No person has been authorised to give any information or to make any representation not contained in this Prospectus in connection with the Offering and, if given or made, any such information or representation should not be relied upon as having been authorised by the Company or the Managers.

Except as set out hereafter, the Company assumes responsibility for the contents of this Prospectus and declares that the information contained in this Prospectus is, to its knowledge, in accordance with the facts and contains no omission likely to affect its import, and that it has taken all reasonable care to ensure that the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import.

In making an investment decision, investors must rely on their own examination of the Company and the Group and the terms of the Offering, including the merits and risks involved. Any decision to purchase the Offer Shares should be based solely on the information contained in this Prospectus. Information on the Company’s website, any website mentioned in this Prospectus or any website directly or indirectly linked to the Company’s website is not, unless explicitly stated herein, incorporated by reference into this Prospectus, and any decision to purchase the Offer Shares should not be made in reliance on such information.

Prior to publication of this Prospectus, there may have been press and media coverage regarding the Company and the Offering which may have included certain financial information, operational information, financial projections and other information that does not appear in this Prospectus. The Company has not authorised the disclosure of any such information in the press or the media and does not accept any responsibility for any such press or media coverage or the accuracy or completeness or reliability of any such information or publication. Accordingly, prospective investors should not rely on any such information. In making a decision as to whether to purchase the Offer Shares, investors should rely only on the financial, operational and other information included in this Prospectus.

None of the Company or the Managers or any of their respective representatives makes any representation to any offeree or purchaser of the Offer Shares offered hereby regarding the legality of an investment by such offeree or purchaser under appropriate legal investment or similar laws. Each investor should consult with his own advisers as to the legal, tax, business, financial and related aspects of the subscription for the Offer Shares. The distribution of this Prospectus and the offer and sale of the Offer Shares may, in certain circumstances, be restricted by law. Persons who come into possession of this Prospectus are required by the Company and the Managers to comply with any such restrictions. For a further description of certain restrictions on the offer and sale of the Offer Shares, see “Selling Restrictions”.

During a period of 30 days following the date of adequate public disclosure of the Offer Price, the Lead Manager (as defined in “Plan of Distribution”) or its affiliate, on behalf of the Managers (as defined in “Plan of Distribution”), may (but is not obliged to) purchase and sell Shares in the open market in compliance with applicable law (in particular the provision of European Commission Regulation No 2273-03 of 22 December 2003 regarding implementation of Directive 2003/06/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation, with a view to stabilising or maintaining the price of the Shares on the Eurolist by Euronext Paris, the main market of the Prague Stock Exchange, the main market

i of the Warsaw Stock Exchange and the Budapest Stock Exchange (“Stabilisation Transactions”). Stabilisation Transactions may affect the market price of the Shares and may result in a price for Shares that is higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the Lead Manager or its affiliate at any time. The Lead Manager, on behalf of the Managers, may over-allot up to the number of Shares covered by the Over-allotment Option. This Prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchase or barter in Luxembourg, other than in compliance with the law of 10 July 2005 on Prospectuses for Securities. This Prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchased or bartered in Poland, other than in compliance with the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading and Public Companies (the “Public Offering Act”). This Prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchase or barter in Hungary, other than in compliance with the Act CXX of 2001 on the Capital Markets, as amended. This Prospectus has been prepared on the basis (except for Poland) that all offers of Offer Shares (i) will not be made as offers to the public in any member state of the European Economic Area or (ii) will be made pursuant to an exemption under the Prospectus Directive, as implemented in member states of the European Economic Area, from the requirement to produce a prospectus for offers of shares. Accordingly, any person making or intending to make any offer within the European Economic Area of Offer Shares which are the subject of the Offering contemplated in this Prospectus should only do so in circumstances in which (i) such offer does not constitute an offer to the public or (ii) no obligation arises for the Company or any of the Managers to produce a prospectus for such offer. None of the Company or the Managers has authorised or does authorise the making of any offer of Offer Shares through any financial intermediary, other than offers made by the Managers which constitute the final placement of the Offer Shares contemplated in this Prospectus. THE OFFER SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY OTHER STATE OR JURISDICTION. SUBJECT TO CERTAIN EXCEPTIONS, THE OFFER SHARES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES. FOR A DESCRIPTION OF THESE AND CERTAIN FURTHER RESTRICTIONS ON OFFERS, SALES AND TRANSFERS OF THE OFFER SHARES AND THE DISTRIBUTION OF THIS PROSPECTUS, SEE “SELLING RESTRICTIONS”. This Prospectus is only being distributed in the United Kingdom to, and is only directed at (i) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and (ii) persons to whom it would otherwise be lawful to distribute it (all such persons together being referred to as “relevant persons”). This Prospectus is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Prospectus relates is available only to relevant persons and will be engaged in only with relevant persons. This Prospectus has been prepared for the listing of the Offer Shares on Eurolist by Euronext Paris. This Prospectus has not been prepared in the context of a public offering of securities in France within the meaning of article L.411-1 of the French Code monétaire et financier and, accordingly, may not be (i) released, issued, distributed or caused to be released, issued or distributed to the public in France or (ii) used in connection with any offer for subscription or sale of the Offer Shares to the public in France. This Prospectus may only be distributed in France to, and is only directed at, qualified investors (investisseurs qualifiés) within the meaning of article L.411-2 of the French Code monétaire et financier. The Articles of Association (statuts) of the Company have been filed with the Greffe du Tribunal de Commerce de Paris. This Prospectus may only be distributed in the Czech Republic to qualified investors as defined in Section 34(2)(d) of the Act of the Czech Republic No. 256/2004 Coll., on Conducting Business in the Capital Market, as amended (the “Czech Capital Market Act”), exclusively for their own use and the Offer Shares may not be publicly offered for sale, purchase or barter in the Czech Republic, other than in compliance with the Czech Capital Market Act. The recipients of this Prospectus may not reproduce or distribute it or pass it on to other persons. For a more detailed description of selling restrictions that are applicable in respect of investors in the United States, the United Kingdom, the European Economic Area, Luxembourg, France, the Czech Republic, Poland and Hungary, see “Selling Restrictions”.

ii TABLE OF CONTENTS

PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... iv DOCUMENTS INCORPORATED BY REFERENCE ...... v FORWARD-LOOKING STATEMENTS ...... vi SUMMARY ...... 1 RISK FACTORS ...... 10 USE OF PROCEEDS ...... 25 DIVIDENDS AND DIVIDEND POLICY ...... 26 EXCHANGE RATES ...... 27 INDUSTRY OVERVIEW ...... 29 CAPITALISATION AND INDEBTEDNESS ...... 32 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION ...... 33 SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA ...... 36 OPERATING AND FINANCIAL REVIEW ...... 40 BUSINESS ...... 61 MANAGEMENT AND BOARD OF DIRECTORS ...... 78 GENERAL INFORMATION ABOUT THE COMPANY ...... 83 PRINCIPAL SHAREHOLDERS ...... 97 RELATED PARTY TRANSACTIONS ...... 98 TRANSFER RESTRICTIONS ...... 99 INFORMATION ON THE SHARES ...... 100 TERMS AND CONDITIONS OF THE OFFERING ...... 105 TAXATION ...... 107 SECURITIES MARKETS ...... 114 PLAN OF DISTRIBUTION ...... 130 SELLING RESTRICTIONS ...... 131 FINANCIAL STATEMENTS ...... F-1 SCHEDULE A: DTZ VALUATION REPORT AS AT 31 DECEMBER 2006 AND ANNEX A THEREOF ...... A-1 SCHEDULE B: DTZ VALUATION REPORT AS AT 30 JUNE 2006 AND ANNEX A THEREOF ...... B-1

iii PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Presentation of financial information This Prospectus contains audited consolidated financial statements of the Company and its subsidiaries taken as a whole (the “Group”) as of and for the years ended 31 December 2006 and 31 December 2005, prepared in accordance with International Financial Reporting Standards (“IFRS”), and incorporates by reference the audited consolidated financial statements of the Group as of and for the year ended 31 December 2004, prepared in accordance with Luxembourg legal and regulatory requirements (“Luxembourg GAAP”) (the “Consolidated Financial Statements”) (see “Financial Statements”). Copies of documents incorporated by reference may be obtained, free of charge, on the Company’s website (www.orcogroup.com).

The selected financial information provided below as of 31 March 2007 and for the three months ended 31 March 2007 and 2006 is unaudited and has not been reviewed by the Company’s independent auditors. Operating results for the three months ended 31 March 2007 are not necessarily indicative of the results that may be expected for the entire year ending 31 December 2007.

The comparative figures as of and for the year ended 31 December 2005, included in the audited consolidated financial statements as of and for the year ended 31 December 2006, have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets by €2.8 million and a decrease of other reserves in shareholders’ equity by €2.8 million. The audited consolidated financial statements as of and for the year ended 31 December 2005 (which include the comparative figures as of and for the year ended 31 December 2004), included in this Prospectus, have not been restated but all references in this Prospectus to the Group consolidated balance sheet as of 31 December 2005 and 31 December 2004 have been restated to reflect the derecognition of this deferred tax asset.

In 2005, the Company adopted IFRS and produced audited consolidated financial statements as of and for the year ended 31 December 2005 in accordance with IFRS. The Company did not prepare IFRS consolidated financial statements as of and for the year ended 31 December 2004. However, it prepared audited consolidated financial statements as of and for the year ended 31 December 2004 according to Luxembourg GAAP. The comparative figures in respect of 2004 in the IFRS audited consolidated financial statements as of and for the year ended 31 December 2005 were restated to reflect the adjustments to IFRS and have been audited. All references in this Prospectus to the Company’s financial information as of and for the year ended 31 December 2004 are to the IFRS restated comparative figures included in the Company’s IFRS audited consolidated financial statements as of and for the year ended 31 December 2005.

As required by Luxembourg law, the Company prepares unconsolidated financial statements under Luxembourg GAAP, which are not included in this Prospectus.

This Prospectus also contains the Company’s unaudited pro forma consolidated income statement for the year ended 31 December 2006, presented to give effect to the Company’s acquisition of Viterra Development Polska Sp.z.o.o., and the acquisition by Orco Germany S.A. (“Orco Germany”), a subsidiary of the Company, of Viterra Development GmbH and Viterra Baupartner GmbH (Viterra Development Polska Sp. z.o.o., Viterra Development GmbH and Viterra Baupartner GmbH, and their respective subsidiaries, are referred to hereinafter as the “Viterra Development Group”), as if the acquisition had occurred on 1 January 2006. The Viterra Development Group was fully consolidated as of 1 July 2006. The unaudited pro forma consolidated financial information is prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and therefore does not represent the actual results of operations of the Company. The unaudited pro forma consolidated financial information is based on assumptions of the Company and has been prepared using historical financial information derived from the Company’s and the Viterra Development Group’s financial statements. If the acquisition of the Viterra Development Group had occurred on 1 January 2006, the actual operating results might have been different from those presented in this Prospectus. The unaudited pro forma consolidated information should not be relied on as an indication of the operating results that would have been achieved if the acquisition had occurred on 1 January 2006, nor should it be used as an indication of the operating results that the Company will achieve following the acquisition of Viterra Development Group.

The Company presents its financial statements in euro, unless otherwise specified or the context otherwise requires. References to “euro” or “€” are to the currency of the member states of the European Union participating in the third stage of European Economic and Monetary Union.

iv For the convenience of the reader, financial amounts have been rounded, and as a result of such rounding adjustments, figures shown as totals and period changes presented in percentages in the discussion and analysis may not be exact arithmetic aggregations of the figures shown in tables.

Valuation of properties DTZ Debenham Tie Leung (“DTZ”) has prepared valuation reports (including the annexes thereto) dated 29 March 2007 and 24 August 2006 (the “DTZ Reports”) on the Company’s property portfolio as of 31 December 2006 and 30 June 2006, respectively. The main reports and Annexes A of the DTZ Reports have been set out in Schedule A and Schedule B, respectively, of this Prospectus.

Only the properties classified as “investment properties” are carried at fair value in the Company’s consolidated financial statements. Accordingly, the aggregate value of the Group’s properties in the DTZ Reports is not equal to the aggregate book value of the properties in the Company’s consolidated financial statements. See “Operating and Financial Review — Material factors affecting the Company’s business — Changes in appraised value of investment properties and land banks”.

Industry and market data Information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to the Company’s business contained in this Prospectus consists of estimates based on data reports compiled by professional organisations and analysts, data from other external sources and the Company’s knowledge of sales and markets. In certain cases, there is no readily available external information (whether from trade associations, government bodies or other organisations) to validate market-related analyses and estimates, requiring the Company to rely on internally developed estimates.

While the Company has compiled, extracted and reproduced market or other industry data from external sources, including third parties or industry or general publications, none of the Company or the Managers has independently verified that data. Information in this Prospectus which is based on third-party sources has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. Subject to the foregoing, none of the Company or the Managers can assure investors of the accuracy or completeness of, or takes any responsibility for, such data. The source of such third-party information is cited whenever such information is used in this Prospectus.

While the Company believes its internal estimates to be reasonable, such estimates have not been verified by any independent sources and none of the Company or the Managers can assure potential investors as to their accuracy or that a third party using different methods to assemble, analyse or compute market data would obtain the same result. The Company does not intend to, and does not, assume any obligations to update industry or market data set forth in this Prospectus. Finally, behaviour, preferences and trends in the marketplace tend to change. As a result, investors should be aware that data in this Prospectus and estimates based on that data may not be reliable indicators of future results.

DOCUMENTS INCORPORATED BY REFERENCE This Prospectus should be read and construed in conjunction with the audited consolidated financial statements (consisting of balance sheet, income statement and statement of changes in equity) of the Company as of and for the year ended 31 December 2004 prepared in accordance with Luxembourg GAAP. These financial statements are incorporated by reference in, and form part of, this Prospectus, and copies of these financial statements may be obtained, free of charge, on the Company’s website at www.orcogroup.com and on the website of the Luxembourg Stock Exchange at www.bourse.lu.

For ease of reference, the table below sets out the relevant page references for the financial statements, the notes to the financial statements and the auditors’ report for the year ended and as of 31 December 2004. Any information not listed in the cross-reference table but included in the documents incorporated by reference is given for information purposes only.

Financial Statements 31 December 2004 Income statement ...... Page 9 Balance sheet ...... Page 8 Statement of changes in equity ...... Page 19 Notes to financial statements ...... Pages 10 - 27 Auditors’ report ...... Page 6 - 7

v FORWARD-LOOKING STATEMENTS

This Prospectus contains statements under the captions “Summary”, “Risk Factors”, “Operating and Financial Review” and elsewhere that are, or may be deemed to be, “forward-looking statements”. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes”, “estimates”, “anticipates”, “expects”, “intends”, “targets”, “may”, “will”, “plans”, “continue” or “should” or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, goals, future events or intentions. The forward-looking statements contained in this Prospectus include certain “targets”. These targets reflect goals that the Company is aiming to achieve and do not constitute forecasts.

The forward-looking statements contained in this Prospectus include all matters that are not historical facts and include statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy and the industry and markets in which the Company operates. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events, and depend on circumstances, that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Prospective investors should not place undue reliance on these forward-looking statements.

Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Some of these factors are discussed in more detail under “Risk Factors” and “Operating and Financial Review” below. In addition, factors that could affect the future results, performance or achievements of the Company include: • the Company’s ability to obtain suitable sites for development; • the Company’s ability to successfully, within acceptable financial parameters, complete and sell its development projects; • the Company’s ability to successfully acquire new property for its investment portfolio; • the Company’s ability to rent out the properties in its investment portfolio; • macroeconomic factors, in particular rising interest rates, disposable income, availability of credit and economic growth in the countries in which the Company operates; • governmental factors, including the costs of compliance with regulations and the impact of regulatory changes; and • other risks, uncertainties and factors inherent in the Company’s business, such as construction risk, rent cycles, vacancy risks and maintenance risks.

Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Prospectus as anticipated, believed, estimated or expected.

vi SUMMARY The following summary should be read as an introduction to this Prospectus, and any decision to invest in the Offer Shares should be based on consideration of this Prospectus as a whole, including the documents incorporated by reference and the risks related to the Offering and the Offer Shares as set out in “Risk Factors”. This summary is only intended to provide an overview and does not purport to contain all the information that investors should consider in connection with any decision relating to the Offer Shares. Investors are therefore advised to carefully read this Prospectus in its entirety.

Where a claim relating to the information contained in this Prospectus is brought before a court in a state of the European Economic Area, the plaintiff may, under the national legislation of the state where the claim is brought, be required to bear the costs of translating this Prospectus before the legal proceedings are initiated, and may be reimbursed for such costs, or parts thereof, by the other party or parties to the proceedings only if the plaintiff investor is successful in such proceedings.

The Company takes responsibility for and accepts liability in respect of this Summary, including the Summary Description of the Company, the Summary of the Offering, the Summary of Risk Factors and the Summary Financial Information included herein, but only accepts liability if it is misleading, inaccurate or inconsistent when read together with other parts of this Prospectus.

Summary Description of the Company

The Company and its subsidiaries (the “Group”) are engaged in real estate development, investment and asset management in Central and Eastern Europe. In addition, the Company owned, managed and operated a portfolio of small hotels and extended stay residences across Central and Eastern Europe under the MaMaison Hotels and Apartments brand. In April 2007, the Group agreed to sell all of its hotels and extended stay residences (other than the Pachtuv Palace Hotel in Prague and its interest in Suncani Hvar d.d. (“Suncani Hvar”) in Croatia) (the “Hospitality Business”) to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total value of the Hospitality Business (as determined by DTZ Debenham Tie Leung (“DTZ”)) is €174.3 million. The Company’s activities are focused on the markets in the Czech Republic, Germany, Hungary, Poland, Croatia, Slovakia and Russia, which accounted for 41 per cent., 21 per cent., 12 per cent., 11 per cent., 8 per cent., 4 per cent. and 3 per cent., respectively, of the appraised value of the assets of the Company as of 31 December 2006. The Company is one of the major real estate developers and investors in the Czech Republic and Germany, and it is a leader in the development of residential real estate in Prague under its IPB Real brand.

The Company’s development portfolio consists of residential projects focusing on the middle and upper middle segment of the residential housing market. The Company also develops luxury apartments in landmark buildings. As of 31 December 2006, the Company’s development portfolio (excluding land banks) consisted of 39 properties under construction. In addition, the Company had invested in a number of land banks in various countries, valued by DTZ at €154.3 million as of 31 December 2006.

The Company’s investment portfolio is based on the acquisition or development of prime properties in major Central and Eastern European capitals, focusing on commercial and residential buildings and in more recently, on retail premises. As of 31 December 2006, the Company’s investment portfolio was valued by DTZ at €469.7 million, and consisted of 51 properties.

The Company sponsors and manages The Endurance Real Estate Fund for Central Europe (the “Endurance Fund”), a Luxembourg mutual investment umbrella fund (fonds commun de placement — fonds d’investissement spécialisé), which has four sub-funds as of the date of this Prospectus. The Endurance Fund invests in prime real estate in Central and Eastern Europe. As of 31 December 2006, the Endurance Fund owned and managed €180 million (appraised value) of real estate assets in the residential, office, retail and hospitality segments.

The Group was created in 1991 by Jean-François Ott, who, as of the date of this Prospectus, retains a 12.16 per cent. shareholding in the Company through Orco Holding S.A. Since its foundation, the Group has grown both organically and through acquisitions of other real estate companies (such as IPB Real based in the Czech Republic in 2003 and Viterra Development Group based in Germany in 2006).

The Company is currently listed on Eurolist by Euronext Paris and the main market of the Prague Stock Exchange.

1 Summary of the Offering

The Company ...... Orco Property Group, a société anonyme incorporated under the laws of the Grand Duchy of Luxembourg with registration number B44.996. The Offering ...... The Company is issuing and offering for subscription 1,304,348 new Shares (plus up to an additional 195,652 new Shares, in the event of the exercise by the Lead Manager of the Over-allotment Option) (the “Offer Shares”). The Offering represents up to 14.7 per cent. of the increased share capital of the Company (assuming the exercise in full of the Over- allotment Option). The Offering consists of an offering to institutional investors in Poland and a private placement to selected institutional investors outside the United States in compliance with Regulation S under the Securities Act pursuant to this Prospectus (the “Offering”). Over-allotment Option ...... TheLead Manager (on behalf of the Managers) has been granted by the Company the Over-allotment Option, exercisable as of the date of announcement of the Offer Price and until 30 days thereafter corresponding to a maximum of 195,652 Offer Shares, for the purpose of allowing the Lead Manager to cover over-allotments, if any. Shares covered by the Over-allotment Option will be new Shares issued by the Company. Offer Price ...... TheOffer Price is €115.00. Lock-up of Shares ...... TheCompany has agreed with the Managers not to issue or sell Shares or effect transactions that have a similar effect on the market for the Shares for three months after the Settlement Date subject to certain exceptions. Listing and Admission to trading . . The Shares are currently listed on Eurolist by Euronext Paris and the main market of the Prague Stock Exchange. The Company will apply for the Offer Shares to be admitted to trading on Eurolist by Euronext Paris (Compartment B) and has applied for its entire authorised share capital to be admitted to trading on the Prague Stock Exchange, each of which is expected to take place on or about 21 June 2007. In addition, the Company intends to apply for admission to listing and trading of its entire current authorised share capital (including the Offer Shares) on the main market of the Warsaw Stock Exchange and on the Budapest Stock Exchange, each of which is expected to take place on or about 21 June 2007. Use of Proceeds ...... TheCompanywillreceive approximately €164.3 million in net proceeds from the Offering (assuming that the Over-allotment Option is fully exercised) (less commissions, fees and expenses incurred in connection with the Offering). The Company intends to use the net proceeds from the Offering to (i) fund its development projects, (ii) invest in the expansion of its portfolio and (iii) for general corporate purposes. Dividends ...... TheCompanyhaspaiddividendssince2004 (for the fiscal year 2003). In 2007, the Company paid gross dividends of €1.00 per Share, with a total payment of €8,646,673, for the fiscal year 2006. Such dividend was paid on 1 June 2007, at the choice of the Shareholder either in cash or in new Shares with an issue price fixed at €111.91. The Offer Shares will not be entitled to the dividends for the fiscal year 2006. At and after the Settlement Date, the Offer Shares will be entirely fungible with the existing Shares and each of the Shares will be entitled to any dividends declared after 27 April 2007.

2 Voting Rights ...... EachShareisentitled to one vote. Withholding Tax ...... A 15percent.withholding tax (as of 1 January 2007) will be levied on dividends distributed by the Company, except if this rate is reduced by a tax treaty or if the Luxembourg participation exemption is applicable. Settlement Date and Payment for Offer Shares ...... DeliveryoftheOfferShares(otherthanthosetobeissuedupon exercise of the Over-allotment Option) is expected to take place on or about 21 June 2007. It is anticipated that the Offer Shares will be ready for delivery in book-entry form through the facilities of Clearstream, Euroclear, Euroclear France, KDPW, KELER and UNIVYC on or about 21 June 2007. Subscribers of the Offer Shares will not be entitled to receive individual share certificates. Subscription orders from Polish institutional investors for the Offer Shares must be submitted through Dom Maklerski Banku Handlowego S.A. (“DMBH”). All settlements will be payable in euro. Publishing this Prospectus ...... AftertheapprovalbytheCSSF, this Prospectus, and its French, Polish, Czech and Hungarian language summaries will be published on the Company’s website (www.orcogroup.com). The Prospectus (but not the French, Polish, Czech and Hungarian language summaries) will also be published on the website of the Luxembourg Stock Exchange (www.bourse.lu). In France, the certificate of approval the Prospectus and the French language summary of the Prospectus will be additionally available on the website of the Autorité des marchés financiers (www.amf- france.org). In Poland, the Prospectus and its Polish language summary will be additionally available on the website of the Warsaw Stock Exchange (www.gpw.pl). In the Czech Republic, the Prospectus and its Czech language summary will be additionally available on the website of Wood & Co. (www.wood.cz). In Hungary, the Prospectus and its Hungarian language summary will be additionally available on the website of Wood & Co. and on the website of the Budapest Stock Exchange at (www.bet.hu). Securities Identification Number .... ISIN LU0122624777 Common Code 012262477

3 Summary of Risk Factors Risks related to the Group’s business — General • The Group faces a number of general risks related to the real estate industry. • The Group will continue to depend on its ability to identify profitable development and investment projects. • The Group’s properties may be subject to increases in operating and other expenses. • The Group is exposed to the risk of increases in construction costs. • The Group may be unable to effectively manage its expansion and the consequences of its rapid growth. • Internal controls may prove difficult to implement, which may adversely impact the Group’s ability to prepare accurate financial information. • Competition in the markets in which the Group operates is high and may intensify in the future. • The Group may be exposed to oversupply in its key markets. • The Group is exposed to location risks. • The Group is exposed to the risk of illiquidity of real estate investments. • The Group may be exposed to losses and liabilities (including tax liabilities) in respect of its properties as a result of the acts or omissions of vendors or previous owners or occupiers or relating to a prior period of ownership. • The Group is party to co-investment agreements which may impose obligations and certain restrictions on the Group. • Insurance may not cover all losses relating to the Group’s properties and the Group may suffer material losses in excess of insurance proceeds. • The Group may not be able to attract and retain sufficiently qualified employees in the countries in which the Group operates. • The Group may not have title to property or shares in relation to its investments in the Czech Republic, Croatia and Russia. • The Group’s activities are subject to many regulations, some of which are highly restrictive. In addition, current regulations may become more onerous in the future. • The Group’s property valuations may not reflect the real value of its portfolio, and the valuation of its assets may fluctuate from one period to the next. • The Group’s properties are exposed to the risk of destruction and deterioration. • The Group is exposed to risks of environmental claims. • The Group is exposed to counterparty credit risk. • The Group is exposed to financing risk. • The Group’s financing arrangements could give rise to additional risk. • A change of control of the Company could result in a substantial payment obligation for the Company. • The Endurance Fund may choose to acquire desirable investment properties thus restricting the Group’s attractive investment opportunities. • The Group is exposed to liquidity risk resulting from negative cash flow. • The Group is exposed to interest rate risks. • The Group is exposed to currency risks. • The Company, as a Luxembourg tax resident company, benefits from a tax regime under which dividends and capital gains are exempt provided certain conditions are met. Should its tax residence be challenged or the tax regime applicable to it change, this could result in a significant increase in its annual tax liabilities and could impact its profitability. • The Group is exposed to tax risks. • The Group may be exposed to changes in VAT law.

4 Risks related to the Group’s real estate development business • Unexpected problems and unrecognised risks could arise in the Group’s existing and future development projects. • The Group may face problems in obtaining vacant possession of its development projects. • The Group is exposed to risks associated with its investments in development projects. • The Group may not obtain at all or in a timely manner all required permits and consents for the completion of its property development projects. • Changing residential trends may adversely affect sales of developments.

Risks related to the Group’s investment business • The Group is subject to increasing pressure on rental yields. • The Group is exposed to leasing risks. • The Group is exposed to maintenance risks. • The Group is subject to risks relating to its office and retail rental business. • The Group is exposed to indexation risks.

Risks related to the Group’s asset management business • The future success of investments by the Fund Manager is uncertain. • The Endurance Fund is reliant on key members of its management. • Some of the investments of the Endurance Fund may be illiquid.

Risks related to the geographic markets in which the Group operates • Economic or political developments in the Czech Republic, Germany, Hungary, Poland, Russia, Croatia and Slovakia could have a material adverse effect. • The legal systems and procedural safeguards in Central and Eastern Europe are not fully developed. • The Group holds assets or receives payments in Croatia and Russia in currencies which may not be readily convertible into foreign currencies.

Risks related to the Offering and the Offer Shares • The market price of the Shares could prove to be volatile. • The holders of the Shares face potential dilutions of their shareholdings in the future. • Future sales of Shares may affect their market price.

Risks related to Polish investors • The Polish Financial Supervision Commission may undertake actions that may lead to the withholding of the Offering or the listing and trading of the Shares and the Offer Shares on the Warsaw Stock Exchange. • The scope of ongoing information disclosed by the Company to Polish investors may differ from the scope of such information disclosed by Polish public companies. • The Company is a Luxembourg corporation and certain Polish corporate regulations relating to Polish public companies may not apply to it. • Risks associated with enforceability of court judgments against the Company or its subsidiaries with their registered offices and assets outside Poland. • The risk of limited trading in the Shares and the Offer Shares on the Warsaw Stock Exchange.

Risks related to Hungarian investors • The HFSA may undertake actions which may affect the success or the timing of the Offering or the listing of the Shares and the Offer Shares on the BSE. • The Company is a Luxembourg corporation and certain Hungarian corporate regulations relating to Hungarian public companies may not apply to it.

5 Summary financial information The summary financial information provided below as of and for the years ended 31 December 2006, 31 December 2005 and 31 December 2004, respectively, has been derived from the Group’s audited consolidated financial statements as of and for the years ended 31 December 2006 (which include the comparative audited restated figures as of and for the year ended 31 December 2005) and 31 December 2005 (which include the comparative audited restated figures as of and for the year ended 31 December 2004), respectively, prepared in accordance with IFRS, and included in the F- Pages of this Prospectus.

The comparative figures as of and for the year ended 31 December 2005, included in the audited consolidated financial statements as of and for the year ended 31 December 2006, have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets by €2.8 million and a decrease of other reserves in the shareholders’ equity by €2.8 million. The audited consolidated financial statements as of and for the year ended 31 December 2005 (which include the comparative figures as of and for the year ended 31 December 2004), included in this Prospectus, have not been restated but all references in this Prospectus to the Group consolidated balance sheet as of 31 December 2005 and 31 December 2004 have been restated to reflect the derecognition of this deferred tax asset.

The following data should be read in conjunction with “Operating and Financial Review” beginning on page 40 and the Group’s consolidated financial statements and notes thereto included in this Prospectus beginning on page F-2.

Year ended 31 December 2006 2005 2004 (€ thousands except for share data) Income statement Revenues ...... 172,908 50,348 70,670 Net gain from fair value adjustment on investment property ...... 145,901 78,975 25,408 Operating result ...... 134,248 76,888 30,829 Net interest expenses ...... (15,740) (6,962) (5,515) Net profit attributable to the Group ...... 96,699 54,523 18,700 Basic earnings in € per share(1) ...... 12.58 9.25 4.46 Diluted earnings in € per share(2) ...... 10.11 7.83 3.22

Notes: (1) Basic earnings per share is calculated by dividing the profit attributable to the Group by the weighted average number of ordinary shares in issue during the period (4,197,074 Shares, 5,893,582 Shares and 7,685,668 Shares, respectively, in 2004, 2005 and 2006), excluding ordinary shares purchased by the Group and held as treasury shares. (2) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares (for a total of 6,210,825, 7,193,204 and 9,632,168 diluted Shares, respectively, in 2004, 2005 and 2006).

6 As of 31 December 2005(1) 2004(2) 2006 (restated) (restated) (€ thousands) Balance sheet Investment property ...... 749,438 361,193 134,503 Other non-current assets ...... 243,167 175,603 71,349 Total current assets ...... 485,468 153,779 80,176 Cash and cash equivalents ...... 98,339 49,089 15,742 Held for sale activities ...... 2,281 — 20,054 Total assets ...... 1,480,354 690,575 306,082 Total equity ...... 518,425 290,923 105,979 Total non-current liabilities ...... 673,075 312,943 101,612 Bonds ...... 240,854 84,364 30,829 Financial debts ...... 331,651 183,060 56,655 Provisions ...... 11,822 1,001 762 Deferred tax liabilities ...... 88,748 44,518 13,366 Total current liabilities ...... 287,381 86,709 88,204 Bonds and financial debts ...... 95,370 35,700 29,340 Trade payables ...... 55,526 20,787 18,116 Advance payments ...... 63,377 19,210 26,939 Other current liabilities ...... 73,108 11,012 13,809 Held for sale activities ...... 1,473 — 10,287 Total equity and liabilities ...... 1,480,354 690,575 306,082

Notes: (1) The figures as of 31 December 2005 have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets by €2.8 million. (2) The figures as of 31 December 2004 have been restated to reflect the derecognition of a deferred tax asset.

Year ended 31 December Development Renting Hotels and Residences(1) Management services(2) 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 2005 2004 (€ thousands) Results by segment Revenues ...... 124,298 21,925 60,554 19,856 7,584 6,558 30,753 21,534 10,605 8,690 3,087 — Net gain from fair value adjustment on investment property ...... 57,394 36,436 17,044 79,942 20,178 5,320 8,565 22,361 3,044 — — — Other operating result ...... (137,436) (23,268) (54,321) (17,008) (8,761) (6,514) (36,572) (25,493) (11,460) (799) 1,681 — Operating result ..... 44,256 35,093 23,277 82,790 19,001 5,364 2,746 18,402 2,189 7,891 4,768 —

Notes: (1) In April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total appraised value of the Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. The Company currently owns 100 per cent. of the shares of the Endurance Hospitality Sub-Fund, and intends to reduce its interest to less than 20 per cent. (2) Management services consist of property management, management services to Group companies and asset management services to the Endurance Fund.

7 Year ended 31 December 2006 2005 2004 (€ thousands) Cash flow statement Net cash from (used in) operating activities ...... 12,633 (50,242) (7,210) Net cash used in investing activities ...... (433,943) (169,225) (26,038) Net cash from financing activities ...... 469,206 251,852 31,481 Net increase in cash ...... 47,896 32,385 (1,767) Cash and cash equivalents(1) at the beginning of the period ...... 49,089 15,742 16,232 Cash and cash equivalents(1) at the end of the period ...... 98,344 49,089 15,742

Note: (1) Cash and cash equivalents include cash in hand, deposits held on call with banks, and other short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts.

Year ended 31 December 2006 2005 (€ thousands except for loan to value and average cost of debt data) Other Financial Data Adjusted EBITA(1) ...... 5,562(2) 1,399 Of which: Development ...... (3,911) (2,303) Hotels and residences ...... (272) 179 Renting ...... 4,890 (956) Management services ...... 8,289 4,852 Intersegment activities ...... (3,434) (373) Net Debt(3) ...... 543,035 241,439 Loan to value ratio(4) ...... 40.3% 42.34% Average cost of debt(5) ...... 4.34% 5.4%

Notes: (1) Adjusted EBITA is calculated as operating result for the period after deduction of net gain from fair value adjustment on investment property and after adding back costs relating to (i) amortisation, impairments and provisions, (ii) stock-based compensation and (iii) cost of goods sold corrections linked to the revaluation of properties. Adjusted EBITA is not a measure of financial performance under IFRS. Prospective investors should not consider it an alternative to operating result or net profit attributable to the Group as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Adjusted EBITA does not necessarily indicate whether cash flow will be sufficient or available for cash requirements. The Group believes that adjusted EBITA provides useful information to investors because it eliminates variances caused by non-cash items (particularly the net gains from fair value adjustments on investment property) and helps investors evaluate the performance of the Group’s underlying business. Adjusted EBITA may not be indicative of the Group’s historical operating results nor is it indicative of potential future results. Other companies may not calculate adjusted EBITA the way the Group does, and accordingly the presentation of adjusted EBITA in this Prospectus may not be comparable to a similarly titled measure of other companies. (2) In 2006, for the first time, adjusted EBITA excludes the impact of transferring properties to inventory at fair value. The impact on 2006 adjusted EBITA was €5,567 thousand. (3) Net debt is calculated as non-current bonds and financial debts and current bonds and financial debts less cash and cash equivalents and current financial assets (which consist primarily of the Company’s portfolio of trading securities which are short term unrestricted securities). (4) Loan to value ratio is calculated as net debt divided by the appraised value of the Group’s property portfolio. (5) Average cost of debt is calculated as the average of the cash cost of the debt during the year.

8 Reconciliation of adjusted EBITA to operating result is as follows for the periods indicated:

Year ended 31 December 2006 2005 (€ thousands) Operating result ...... 134,248 76,888 Net gain from fair value adjustment on investment properties ...... (145,901) (78,975) Amortisation, impairments and provisions ...... 4,076 2,093 Stock-based compensation ...... 7,572 1,393 Cost of goods sold corrections(1) ...... 5,567 — Adjusted EBITA ...... 5,562 1,399

Reconciliation of net debt to total (current and non-current) bonds and financial debts is as follows for the period indicated:

As of 31 December 2006 2005 (unaudited) (unaudited) (€ thousands) Total (current and non-current) bonds and financial debts ...... 667,875 303,124 Net derivative instruments ...... (6,050) 255 Current financial assets ...... (20,451) (12,851) Cash and cash equivalents ...... (98,339) (49,089) Net debt ...... 543,035 241,439

9 RISK FACTORS

Prospective investors should carefully review and consider the following risk factors and the other information contained in this Prospectus prior to making any investment decision with respect to the Offer Shares. The occurrence of one or more of these risks alone or in combination with other circumstances may have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

The risks set out below are not complete or exhaustive and therefore may not be the only risks the Group is exposed to. The order in which the risks are presented below does not reflect the likelihood of their occurrence or the magnitude or significance of the individual risks. Additional risks and uncertainties of which the Group is not currently aware or which it does not consider significant at present could likewise have a material adverse effect on the Group’s business, financial condition, results of operations or prospects. The market price of the Shares could fall if any of these risks were to materialise, in which case investors could lose all or part of their investment.

Investors should only purchase Offer Shares for inclusion in a broadly diversified portfolio. Those investors who have any reservations regarding the content of this Prospectus should contact their stockbroker, bank, lawyer, tax adviser or financial adviser. The information in this Prospectus is not equivalent to the professional advice from the persons mentioned above.

Risks related to the Group’s business — General The Group faces a number of general risks related to the real estate industry. The Group is exposed to all of the risks inherent in the business of acquiring, developing, owning, managing and using real estate. These risks include, in particular, the following: • cyclical fluctuations in the property market generally and in the national and local markets where properties are located; • sales risks; • property abuse risks (including terrorism); • construction delays and construction budget overruns; • opposition from civic and environmental groups; and • natural disasters.

The Group takes precautionary measures to protect its business activities from the negative impact of the above risks and other risks related to the real estate industry in general, especially those to which the Group’s developments are more susceptible, through contractual provisions and, as far as possible, through insurance coverage. However, it is not possible to completely overcome all of these risks. If, despite all of the precautions taken, any of these risks materialise, the result could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.

The Group will continue to depend on its ability to identify profitable development and investment projects. The Group’s business model depends on its continuing ability to develop and/or acquire commercial and residential properties across Central and Eastern European countries with the potential for capital growth and/or investment returns. Competition for such properties is intense at present, and the Group expects competition to further intensify in the markets in which it operates. As a result, the Group may not be able to find suitable properties, which could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

Even if the Group is able to develop projects and acquire property portfolios compatible with its strategy, such developments and acquisitions could prove unsuccessful. The assumptions the Group makes when developing and acquiring its property portfolio may prove partly or entirely inaccurate. Inaccurate assumptions could adversely affect the Group’s business, financial condition, results of operations or prospects.

The Group’s properties may be subject to increases in operating and other expenses. The Group’s business, results of operations, financial condition and prospects could be materially adversely affected if operating and other expenses increase without a corresponding increase in revenues.

10 Factors which could increase operating and other costs include, among others: • changes in statutory laws, regulations or government policies (including increases in property taxes and other statutory charges), which increase the cost of compliance with such laws, regulations or policies; • increases in insurance premiums; and • defects affecting the properties which need to be rectified, leading to unforeseen capital expenditure.

The Group is exposed to the risk of increases in construction costs. The Group relies on subcontractors for the construction of its buildings. The Group recognises that, for several years, there has been a trend of increasing construction costs, particularly in Poland. This trend could be heightened by stricter regulation relating to environmental protection. The Group is subject to the risk of being unable to pass along the increase in construction costs in the form of higher sale prices.

The Group may be unable to effectively manage its expansion and the consequences of its rapid growth. The Group has experienced rapid growth in its headcount and operations, which has placed significant demands on its management and operational and financial infrastructure. As the Group continues to increase its headcount and operations, it will need to ensure that its planning and management processes in conducting its business are effective. The Group will also need to continue to improve its financial and managerial controls and reporting systems and controls. In addition, the Group will need to expand, train and manage its work force, in particular its financial personnel with experience in the application and interpretation of IFRS. There can be no assurance that the Group’s internal systems, due diligence procedures and monitoring measures will be adequate to support the rapid expansion of its business. Any inability of the Group to manage effectively its rapid growth, or to obtain the necessary resources required to administer and support such growth, could have a material adverse effect on its business, financial condition, results of operations or prospects.

Internal controls may prove difficult to implement, which may adversely impact the Group’s ability to prepare accurate financial information. The Group operates on a decentralised basis with a large number of legal entities operating independently of one another. As a result, the implementation of reliable, standardised procedures throughout the Group’s operations may take longer than in other companies or in other sectors. If the Group is unable to implement reliable, standardised internal control procedures in a timely manner, the Group may not be able to prevent or detect a material misstatement of its annual or interim IFRS financial statements, and the process of preparing its annual or interim IFRS financial statements may be subject to delays.

Competition in the markets in which the Group operates is high and may intensify in the future. The real estate market in Central and Eastern Europe is highly competitive and fragmented. The Group faces competition from both international and local real estate investors including developers, investment funds, various types of financial institutions and wealthy individuals. As property markets in Central and Eastern Europe mature, the Group expects competition to intensify. In particular, the Group has experienced, as a result of the accession of the Czech Republic, Hungary, Poland and Slovakia to the European Union, increased competitive pressures from international property developers and other investors. Some competitors and potential competitors may have significant advantages over the Group, including greater name recognition, longer operating histories, pre-existing relationships with current or potential purchasers or tenants, significantly greater financial, marketing and other resources and more ready access to capital which would allow them to respond more quickly to new investment opportunities.

No assurance can be given that the Group will be able to compete successfully in the future. If the Group fails to compete effectively or, if increased competition leads to lower revenues and lower profit margins for the Group, the Group’s business, financial condition, results of operations or prospects may be adversely affected.

The Group may be exposed to oversupply in its key markets. The real estate markets across Central and Eastern Europe have experienced significant growth in recent years. Although the Company believes that its focus on prime sites and developments means that there is and will continue to be demand for its developments, no assurance can be given that the supply of new office and residential projects will not exceed demand in the relevant jurisdiction. Any such excess may have an effect on the value of the Company’s portfolio and its ability to sell or lease its completed projects at forecasted levels or at all and, therefore, may adversely affect the Company’s business, financial condition, results of operations or prospects.

11 The Group is exposed to location risks. The value of a property depends to a large extent on its location and the purpose for which it is intended. If the Group misjudges the desirability of a property’s location or its intended use, it may be difficult to sell the property at the budgeted price or to rent fully or at all at the budgeted rental levels. If the Group is required to reduce the sale price to attract purchasers or the rental level of a property to attract tenants, or if the property is empty for a long period of time, the market value of the property may be significantly reduced and the Group’s revenues adversely affected. If budgeted sale or rental revenue should fail to materialise as planned, this may have long-term effects on the performance of the property concerned. Any such misjudgement or miscalculation may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group is exposed to the risk of illiquidity of real estate investments. Investments in real estate are relatively illiquid and are generally more difficult to realise than other investments. Proceeds from current or future asset sales may not meet the Group’s expectations, or the Group may not be able to sell assets on the expected terms. Disposals of assets could take longer than may be commercially desirable which may have an effect on the timing of a disposal or on the funds received for a disposed property. Any delay in the disposal of a property or reduction in the sale price thereof could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may be exposed to losses and liabilities (including tax liabilities) in respect of its properties as a result of the acts or omissions of vendors or previous owners or occupiers or relating to a prior period of ownership. The Group may be exposed to losses and liabilities, including, for example, tax, regulatory, environmental and compliance liabilities, in respect of properties it acquires. The acts and omissions of the vendors or previous owners or occupiers of the properties in question, changes in regulation and a variety of other factors could result in the Group being exposed to such losses and liabilities.

The Group has acquired pre-owned buildings and may acquire other pre-owned buildings in the future. Hence there is a risk that some properties may contain hidden defects which if revealed would be the responsibility of the Group and adequate insurance to cover such risk may be unavailable (see “—Insurance may not cover all losses relating to the Group’s properties and the Group may suffer material losses in excess of insurance proceeds”). Moreover, in some cases, the Group carried out a limited due diligence exercise prior to purchasing a property and therefore did not verify fully that the owners of the properties obtained (or the properties comply with) all planning permissions and conditions, building permits, licences, fire and health and safety rules and related regulations. Also, in some cases, the Group did not undertake (and did not obtain results for) all searches, inspections and surveys (including technical surveys) that it might have otherwise carried out in relation to an acquisition. The Group does not usually undertake any environmental searches or asbestos investigations prior to purchasing land or properties. The agreements that the Group enters into to acquire properties may contain only limited representations and warranties from the relevant vendors in favour of the Group and may contain limited or no other contractual protection. Moreover, there can be no assurance as to the ability of the relevant vendor to satisfy any claims which may be made by the Group.

The Group is party to co-investment agreements which may impose obligations and certain restrictions on the Group. Where the Group does not own all of a property, it may be a party to a co-investment agreement with its co-investors. Such co-investment agreements may impose restrictions on the Group, including, inter alia,in relation to the disposal of its interest, changing the managers of (or where relevant, the general partner or the investment structure for) the property, its income and capital distribution entitlements and its voting rights, and/ or the co-investment agreement may entitle its co-investors (or some of them or the relevant manager) to preferential income or capital returns on, or other rights in relation to, the investment in certain circumstances and/or pre-emption rights on the sale of the Group’s interest. Any such co-investment agreement may also impose obligations on the Group. Any of these matters may affect the value of the Group’s investment in such properties. In addition, the Group may be jointly and severally liable for costs, taxes or liabilities with its co-investors and, in the event of their default, the Group may be exposed to more than its proportionate share of the cost, tax or liability in question.

12 Insurance may not cover all losses relating to the Group’s properties and the Group may suffer material losses in excess of insurance proceeds. Properties may suffer physical damage by fire or other causes, or the Group may suffer public liability claims, resulting in losses (including loss of rent) which may not be fully compensated by insurance proceeds. In addition, certain types of risk (such as war risk, acts of terrorism and losses caused by the outbreak of contagious diseases, contamination or other environmental breaches) may be uninsurable or the cost of insurance may be prohibitive when compared to the related risk. Should an uninsured loss or a loss in excess of insured limits occur, the Group could be required to pay compensation and/or lose capital invested in the affected property. The Group would also remain liable for any debt or other financial obligation related to that property. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future. Any such uninsured loss or a loss in excess of insured limits, may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may not be able to attract and retain sufficiently qualified employees in the countries in which the Group operates. Increasing competition for employees across Central and Eastern European countries from other local or international real estate companies may make it more difficult for the Group or its subsidiaries to attract and retain qualified employees and may lead to rising employee costs in the future. If the Group is unable to attract and retain employees with the required training, experience and motivation in key strategic markets or if competition for qualified employees increases its employee costs, it may materially adversely affect the Group’s business, financial condition, results of operations or prospects.

The Group may not have title to property or shares in relation to its investments in the Czech Republic, Croatia and Russia. As a result of various issues related to, among other things, the process of registration of title at the real estate and corporate registries, the purchase of property from public authorities, the purchase of matrimonial property, restitution laws and untested law-enforcement procedures, the Company’s subsidiaries may not in all cases have title to properties and/or land on which properties are located or title to the shares of companies which own the land and properties of the Group in the Czech Republic, Croatia and Russia. The Group believes that only a small proportion of its properties and/or land is subject to such uncertainty. While the Group has not to date experienced the situation where any such title to the properties themselves or to the shares in companies which own the relevant land and/or building in the Czech Republic, Croatia or Russia has been the subject of legal proceedings leading to such loss of title, the Company is subject to the risk that the Group may not acquire or be granted title to such land or shares, and/or that the relevant company within the Group could be determined to be in violation of applicable law. Any such outcome could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

The Group’s activities are subject to many regulations, some of which are highly restrictive. In addition, current regulations may become more onerous in the future. The Group is required to comply with numerous regulations governing matters such as the construction, refurbishment and maintenance of buildings, safety and leases. The Group, along with its suppliers and subcontractors, must comply with numerous regulations concerning urban planning, construction and development and building safety, which can result in significant expenses and investments for the Group. Changes to these regulations or to their interpretation or application could force changes in the way the Group manages its assets. Regulations may require the Group to conduct major renovations of its buildings and limit its ability to sell assets, implement its investment or renovation programs. Such changes could increase operating, maintenance and refurbishment costs of the Group’s properties, or limit the amount of rent that the Group may collect from its tenants, and could therefore have a significant negative impact on the Group’s business, financial condition, results or outlook. In addition, in Germany, legislation governing residential leases is very restrictive for the landlord. Contractual terms concerning the length of the lease, termination, renewal, rent increases and eviction are restricted by law and limit property owners’ ability to increase and optimize rents and to freely manage their properties. Given the complexity of some regulations applicable to the Group, particularly rules that determine when building permits must be obtained for renovations, it is possible that the Group’s interpretation of these regulations could be challenged by tenants or result in injunctions or compliance orders from the relevant authorities.

13 The Group’s property valuations may not reflect the real value of its portfolio, and the valuation of its assets may fluctuate from one period to the next. The Group’s investment property portfolio is usually valued once a year by the independent appraiser, DTZ. However, in 2006, the Group’s portfolio was valued both in June and December. The Group’s property assets were most recently valued as of 31 December 2006.

The change in the appraised value of investment properties, in each period, determined on the basis of expert valuations and adjusted to account for any acquisitions and sales of buildings and capital expenditures, is recorded in the Group’s income statements. Changes in the fair value of the buildings could also affect gains from sales recorded on the income statement (which are determined by reference to the value of the buildings at the beginning of the accounting period during which the sale is realised) and the rental yield from the buildings (which is equal to the ratio of rental revenues to the fair value of the buildings). Furthermore, changes in the fair value of the buildings could affect the Group’s cost of debt financing, its compliance with financial covenants and its borrowing capacity.

The values determined by independent appraisers are based on numerous assumptions that may not prove correct, and also depend on trends in the relevant property markets. As a result, the valuation of the Group’s property assets may not reflect potential selling prices. In addition, the figures may vary substantially between valuations. A decline in valuation may have a significant adverse impact on the Group’s financial condition and results, particularly because changes in property values to a certain extent are reflected in the Group’s consolidated net profit.

The Group’s properties are exposed to the risk of destruction and deterioration. The Group’s buildings may be exposed to risks such as flooding, fire and gas explosions which could lead to the destruction or deterioration of its buildings. These risks may not be adequately covered by the Group’s insurance policies, and the Group may not be fully indemnified for losses related to these risks, in particular for losses suffered from total destruction of property or from operating losses due to such destruction. If full indemnity is not possible, the total or partial destruction of the Group’s properties could lead to major renovation costs and significant financial losses.

Some of the Group’s properties may not be readily convertible to an alternative use if such properties were to become unprofitable due to competition, age, decreased demand, regulatory changes or other factors. The conversion of commercial properties to alternate uses or of non-commercial properties to commercial use generally requires substantial capital expenditure. Thus, if the current use of any property becomes unprofitable the market value of that property may decline.

The conversion of a commercial property to an alternate use or the conversion of a non-commercial property to commercial use may also be subject to planning control and zoning restrictions. Current and future applications for the proposed use or change of use and redevelopment of a property may be refused or delayed by the relevant authorities or by objections and appeals to the courts by third parties, thereby restricting the Group’s ability to develop or re-let, as the case may be, the property for the new use within its proposed timescale.

The Group is exposed to risks of environmental claims. The Group’s activities are subject to laws and regulations relating to the environment and public health. These laws and regulations require a property owner to ensure that its premises are free from risks that may threaten the physical safety or health of its occupants. They cover the presence of toxic products in buildings (e.g., asbestos and lead), the installation of approved environmental protection measures, and efforts to combat risks such as those caused by electromagnetic waves, floods, fires and gas explosions. Failure to comply with these laws and regulations could lead to major costs or penalties for the Group.

The Group generally does not undertake any environmental searches or investigations prior to purchasing any land or properties, and therefore the Group may own land which contains environmental pollutants (e.g. waste, oil or toxic chemicals) or buildings whose structures incorporate hazardous materials (e.g. asbestos and formaldehyde) which are harmful to the environment or to the health of workmen on development sites or residents and occupants of residential or office sites. Environmental laws often impose liability regardless of whether the owner or operator of the property knew of, or was responsible for, the presence or release of the hazardous substances. The removal and disposal of such hazardous substances, along with the associated maintenance and repair work, could entail significant costs. Furthermore, it may be impossible for the Group to obtain recourse against the party responsible for the pollution or against prior owners.

14 These environmental risks are particularly acute with respect to properties located in countries where reliable documentation for past contamination does not exist or where the laws governing environmental matters are in development or unclear, as is more often the case in the countries of Central and Eastern Europe than in Western Europe. These risks associated with environmental claims are not always predictable or under the Group’s control.

The incurrence of environmental claims or unforeseen costs to remove or dispose of these substances and hazardous materials or to repair resultant damage caused by them could adversely affect the Group’s business, financial condition, results of operations and prospects.

If laws and regulations relating to the environment and public health were to impose increased obligations or to be extended to apply to all Group assets regardless of age, or if new laws regulating risks not currently identified were to come into force, the Group could be required to significantly increase its expenses or capital expenditures to comply with them.

The Group is exposed to counterparty credit risk. The Group is exposed to the credit risk of its counterparties (including local sub-contractors who assist in the development of projects) and their ability to satisfy the terms of contracts the Company has with them. The Company could experience delays in recovering any sums owed to it by such counterparties and suffer significant losses, including declines in the value of its investment during the period in which it seeks to enforce its rights, or an inability to realise any gains on its investment during such period and may incur fees and expenses in enforcing its rights.

The Group is exposed to financing risk. The Group finances the majority of its development through borrowings. The Company enjoys good relationships with several banks and has not experienced difficulties with obtaining debt funding. However, the real estate development market has experienced significant growth in the recent past in Central and Eastern Europe and no assurance can be given that banks that have lent to the Group or their regulators will not introduce policies to limit exposure to the real estate sector such as quotas, increased provisioning or higher interest rates. Any such measures may result in the Group having to obtain funding at increased rates or being unable to obtain funding, which may adversely affect the Group’s business, financial condition, results of operations and prospects.

The Group’s financing arrangements could give rise to additional risk. Where the Group acquires a property using external finance, this is achieved in some cases through a mortgage over the property acquired and a pledge over the shares of the specific subsidiary that owns the relevant property. There can be no assurance that the registration of mortgages and pledges has been concluded in accordance with applicable local law, and a successful challenge against such mortgages or pledges may entitle the lender to demand early repayment of its loan to the Group.

The Group’s financing agreements contain financial covenants that could, among other things, require the Group to maintain certain financial ratios. In addition, some of the financing agreements require the prior written consent of the lender to any merger, consolidation or corporate changes of the borrower and the other obligors. Should the Group breach any representations, warranties or covenants contained in any such loan or other financing agreement, or otherwise be unable to service interest payments or principal repayments, the Group may be required immediately to repay such borrowings in whole or in part, together with any related costs. If the Group does not have sufficient cash resources or other credit facilities available to make such repayments, it may be forced to sell some or all of the properties comprising the Group’s investment portfolio, or refinance those borrowings with the risk that borrowings may not be able to be refinanced or that the terms of such refinancing may be less favourable than the existing terms of borrowing.

A change of control of the Company could result in a substantial payment obligation for the Company. On 3 March 2006, the Board of Directors of the Company granted to the members of the Executive Committee a termination indemnity payment for a total amount of €34 million. This indemnity would become payable by the Company to the relevant member of the Executive Committee only in case of a change in control of the Company and where the relationship between the Company and the member is terminated by either party within a period of six months after the change of control.

15 The Endurance Fund may choose to acquire desirable investment properties thus restricting the Group’s attractive investment opportunities. If a project that the Group is considering for investment meets the Endurance Fund’s investment strategy policy, then the Group must offer that project first to the Endurance Fund and may only invest in the project if the Endurance Fund rejects it. The Endurance Fund’s investment strategy is to invest in superior quality real estate having a stabilised cash flow with the potential to add value through active asset management. If the Endurance Fund invests in the desirable investment properties that the Group would otherwise seek to acquire, that may have a material adverse effect on the Group’s revenues from its investment portfolio and on its business, financial condition, results of operations and prospects.

The Group is exposed to liquidity risk resulting from negative cash flow. The Group had negative cash flow from operating activities for the years ended 31 December 2005 and 2004, respectively, which exposed the Group to liquidity risk. The negative cash flow from operating activities has been primarily due to the expenses relating to the new acquisitions. As the Group continues to invest in new acquisitions to increase its net asset value, there can be no assurance that the Group will not experience negative cash flow from its operating activities in the future. If it records negative cash flow from its operating activities in future, it may need funding sources to finance its activities, which might not be available on reasonable terms or at all. In addition, the Group may need to sell or refinance assets in order to make debt service payments, potentially on less advantageous terms than those the Group could have realised in the absence of financing constraints.

The Group is exposed to interest rate risks. The Group utilises variable and fixed rate debt financing to finance the purchase, development, construction and maintenance of its properties. When variable rate financing is used, the Group’s costs increase if prevailing interest rate levels rise. While the Group generally seeks to control its exposure to interest rate risks by entering into interest rate swaps, not all financing arrangements are covered by such swaps and a significant increase in interest expense would have an unfavourable effect on the Group’s financial results and may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. Rising interest rates could also affect the Group’s ability to make new investments and could reduce the value of the properties.

The Group is exposed to currency risks. Currency risk is applicable generally to those business activities and development projects where different currencies are utilised for repayment of liabilities under the relevant financing to that of the revenues generated by the relevant property or project. Currency risk is managed where possible by utilising the same currency for financing as that in which revenue will be generated. In the event different currencies are utilised, the Group companies limit the risk, where appropriate, by utilisation of hedging instruments. Any loss accruing to the Group due to currency fluctuations may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Company, as a Luxembourg tax resident company, benefits from a tax regime under which dividends and capital gains are exempt provided certain conditions are met. Should its tax residence be challenged or the tax regime applicable to it change, this could result in a significant increase in its annual tax liabilities and could impact its profitability. As a Luxembourg tax resident company, the Company currently pays corporation tax on its profits at the rate of 29.63%. In addition, the Group holds investment properties through Luxembourg special purpose entities. If the Group were to sell such Luxembourg special purpose entities, and if certain conditions are met, the Group believes that, as a Luxembourg tax resident company, no capital gains tax would be due upon the sale. If the Company were deemed to have a taxable presence in a country other than Luxembourg due to a challenge of its tax residence, it may be subject to an increased tax rate or capital gains taxes upon the sale of investment property. Any challenge of the Luxembourg tax residence could arise from tax authorities of other countries regarding the effective place of management or changes of the location of its overall management and control, its board and senior management composition and governance and other corporate matters.

The Group is exposed to tax risks. The Company and its subsidiaries carrying out the property development and investment are exposed to risks associated with possible changes in tax laws, or the interpretation of tax laws, in the various countries in which they operate.

16 Germany In March 2007, a draft bill, “German business tax reform 2008” was published in Germany, which inter alia provides for a limitation of the deductibility of interest expenses for corporate income tax and trade tax purposes. As a result of the proposed tax reform, the overall tax burden on German companies could be increased substantially, thus affecting the Group’s German subsidiaries. If and when the legislation comes into force, this may adversely affect the after-tax profit, cash flow and financial condition of the German companies in the Group.

The Group may be exposed to changes in VAT law. Czech Republic In the Czech Republic, value added tax on sales of properties is generally charged at 19 per cent. but a preferential rate of 5 per cent. applies to residential dwellings. A change in tax law is due to come into effect on 1 January 2008 which will remove the preferential rate of 5 per cent. and, accordingly, the residential apartments of the Group will be subject to value added tax of 19 per cent. unless the property being sold falls into the category of “social residential dwelling”, such term not being precisely defined under Czech law and is pending parliamentary approval. A legislative proposal approved by the Czech government but subject to approval by the Czech Parliament indicates that it may be similar to the definition used in Poland (see “— Poland” below). The levying of such value added tax on residential dwellings may have an adverse effect on the Group’s ability to sell its residential apartments and/or the sale price which can be achieved for such properties and, therefore, have an adverse effect on its business, financial condition, results of operations and prospects.

Poland In Poland, value added tax is generally charged at 22 per cent. but a preferential rate of 7 per cent. applies to the sale, by developers, of residential apartments. A change in tax law is due to come into force on 1 January 2008 which will remove the preferential rate of 7 per cent. and, accordingly, the sale of residential apartments by the Group will be subject to value added tax at 22 per cent. unless the property being sold falls into the category of “social development”. The category of “social development” is not defined with certainty under Polish law. On 3 April 2007, the Polish government approved the proposal of such definition to be included in the Polish VAT regulations. The definition in its version approved by the government, relates to, among others, residential apartments with an area not exceeding 120 square metres. However, the definition may be subject to change as it must be introduced to the Polish VAT regulations through the act adopted by the Polish Parliament and may be amended during the parliamentary proceedings. As of the date of this Prospectus, the Polish government has not filed the relevant bill with the Polish Parliament. The levying of value added tax on residential apartments may have an adverse effect on the Group’s ability to sell its residential apartments and/or the sale price which can be achieved for such properties and, therefore, have an adverse effect on its business, financial condition, results of operations and prospects.

Risks related to the Group’s real estate development business Unexpected problems and unrecognised risks could arise in the Group’s existing and future development projects. Unexpected problems or unrecognised risks could arise in connection with the Group’s existing and future development projects. The residential and commercial real estate development businesses are subject to certain risks arising from the complexity of the projects, the application of regulations, the multiplicity of participants and the need to obtain permits. These risks include the possible abandonment of projects on which the Group has incurred significant feasibility study costs and to which it has devoted management attention. Moreover, the agreements that the Company enters into when developing or acquiring property portfolios may not adequately address such problems or risks. While the Group takes great care in selecting project participants and in conducting detailed technical, market and cost studies prior to launching projects, it is subject to risks such as underestimating costs in the budgeting process, incurring additional costs due to delivery delays or experiencing sales rates or prices that are lower than expected, all of which could affect its profitability. In some cases, the Group could be exposed to legal action concerning structural defects or problems affecting buildings it develops. Finally, although the Group’s policies require its subcontractors to comply with all relevant labour laws and regulations, including those relating to undeclared labour, the Group could be subject to legal action if one or more of its subcontractors were to fail to comply with these policies. Unrecognised risks and the occurrence of unexpected problems, which may occur without warning, could adversely affect the Group’s results of operations, lead to a decline in the value of development projects or acquired assets, and materially adversely affect the Group’s business, financial condition, results of operations or prospects.

17 The Group may face problems in obtaining vacant possession of its development projects. Some of the Group’s properties at the time of purchase are subject to existing tenancies, and vacant possession of these properties is necessary for the Group to commence its construction plans. The terms for vacating the tenants will depend on inter alia, the terms of the lease agreement, some of which may provide that the lease may only be terminated on the occurrence of specific events, or with the mutual agreement of the parties. Any delay and/or additional costs incurred by the Group in reaching an agreement with such tenants may delay the commencement and therefore completion, of the development project, which may have a material adverse effect on the Group’s business and financial condition.

The Group is exposed to risks associated with its investments in development projects. During the initial phases of development projects, the Group normally carries the costs of the project, both through injection of equity and by incurring debt, and begins to receive revenues only at a later point in time. Development projects sometimes face cost overruns and delays in completion, many of which are caused by factors that are not directly within the control of the developer. These types of risks, especially in relation to the quality and timeliness of performance by contractors, are inherent in property development. If any of these risks occur, the economic success of a project could be significantly impaired and the Group’s business, results of operations, financial condition and prospects could be materially adversely affected.

The Group may not obtain at all or in a timely manner all required permits and consents for the completion of its property development projects. As a result of bureaucratic difficulties, environmental and heritage protection laws, and time constraints with the administrative authorities in the relevant jurisdictions, the Group may encounter difficulties in obtaining relevant permits for the development of its projects or, more likely, may acquire those permits later than expected. Any such inability to obtain, or delay in obtaining, permits or consents could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

Changing residential trends may adversely affect sales of developments. The Group is involved in residential, office and retail development projects. Changing residential trends are likely to emerge within the markets in Central and Eastern Europe as they mature and, in some regions, relaxed planning policies may give rise to over-development, thereby affecting the sales potential of the Group’s residential developments. These factors will be considered within the investment strategy implemented by the Group but may not always be able to be anticipated and may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Risks related to the Group’s investment business The Group is subject to increasing pressure on rental yields. Additional new retail space is being developed in a number of jurisdictions in which the Group is active. Following the continued development of that additional retail space there may be pressure on rent levels, which may also have an adverse impact on the Group’s rental returns, as well as the value of its properties, and as a consequence on the Group’s business, financial condition, results of operations or prospects. Future development projects and acquisitions of property portfolios by the Group could prove unsuccessful.

A fall in market rent levels would adversely affect rents on new leases and on renewed leases. It would also make negotiations with existing tenants on increasing rent more difficult, particularly if this increase results in rent amounts under existing leases being higher than rent amounts under comparable new leases. A fall in market rent levels could therefore have a significant adverse impact on the Group’s business, financial condition and results.

The Group is exposed to leasing risks. The value of a rental property depends to a large extent on the remaining term of the related rental agreements as well as the creditworthiness of the tenants. If the Group is unable to renew expiring leases on favourable terms and find and retain suitably creditworthy tenants willing to enter into long-term rental agreements, the market value of the relevant property will be adversely affected. The creditworthiness of a tenant can decline over the short or medium term, leading to a risk that the tenant will become insolvent or be otherwise

18 unable to meet its obligations under the lease. If the Group’s judgment about a significant tenant or about the location, use or desirability of a property proves to be incorrect, its income from the property may be significantly below its estimates while its operating costs remain largely fixed. Local law or regulations may restrict the levels at which rental may increase, or index such rental increases to price indices. All of these factors could have a material adverse effect on the Group’s business, assets, financial condition, results of operations or prospects.

The occupancy rate of the Group’s rental investment properties could fall if the Group were to become less effective in marketing vacant properties. Property vacancies adversely affect the Group’s results both because vacant properties earn no revenue, and because the Group’s costs increase when units are vacant. Vacant units increase costs because they require renovation work before they are put on the market, and because the Group cannot pass on building costs relating to those units in the form of higher rents.

The Group cannot guarantee that it will be able to relet properties quickly and at satisfactory rent levels when tenants leave. Additionally, market conditions could be adverse or new regulations could further restrict rent increases when existing leases come up for renewal.

The Group is exposed to maintenance risks. The desirability of a rental property depends not only on its location but also on its condition. To remain desirable and to generate a revenue stream over the long term, a property’s condition must be maintained or, in some cases, improved to meet the changing needs of the market. Most of the Group’s properties have been recently redeveloped, and are expected to require only standard maintenance in the near term. As these properties age, or as market requirements change, maintaining or upgrading these properties in accordance with market standards may entail significant costs, which are typically borne primarily by the property owner, not the tenants. If the actual costs of maintaining or upgrading a property exceed the Group’s estimates, or if hidden defects are discovered during maintenance or upgrading, which are not covered by insurance or contractual warranties, or if the Group is not permitted to raise its rents due to legal constraints under applicable local landlord-tenant laws, the Group will have to bear the additional costs. Furthermore, any failure by the Group to undertake relevant repair work in response to the factors described above could adversely affect the sales and rental income earned from affected properties. All of these factors could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group is subject to risks relating to its office and retail rental business. The Group faces risks specific to office and retail rental business, which may have a negative impact on the value of its assets, its results, business and financial condition. These risks result from the following factors: • The office and retail rental portfolio is more sensitive than residential property to the economic environment in the relevant markets. • Renovation work required on vacant units before they are relet is often more extensive in the office and retail segment than in the residential segment. • The risk of tenants becoming insolvent and the resulting impact on Group results is greater in the office and retail segment because of the greater relative importance of each tenant.

The Group is exposed to indexation risks. Some of the Group’s leases include a clause that provides for partial or full indexation of the rent, in most cases in line with consumer price indices or other similar indices, and the rent payable is pegged to the euro. The Group may not be able to fully index its leases to appropriate consumer price indices due to increasing competition in the real estate markets, which would materially adversely affect the value of the relevant properties.

If a lease is not fully indexed and, as a result, the rent remains constant for a lengthy period, while the Group’s costs of maintaining, operating and administering the property increase due to inflation, this would adversely affect the Group’s operating results. If such leases are terminated after a long period, then the index- link may subsequently cause a significant deviation in the rent achievable on reletting if market rates have not kept up with the rate of inflation or deviate from the development of the euro. This may result in a material adverse effect on the Group’s business, assets, financial condition and results of operations.

19 Risks related to the Group’s asset management business The Company acts in its capacities as fund manager (the “Fund Manager”) and property manager (the “Property Manager”) to the Endurance Fund and its sub-funds and earns management fees as described in “— Asset Management — Fees of the Fund Manager and the Property Manager”. As a result, the Group is subject to risks relating to the performance of the Endurance Fund, as described below in this section.

The future success of investments by the Fund Manager is uncertain. The success of the Endurance Fund will rely on the Fund Manager’s ability to identify and acquire suitable investments (if any). Such investments may be made over a substantial period of time and the Endurance Fund may face the risk of interest rate fluctuations and adverse changes in the real estate markets. The inability to or any delay in identifying suitable investments by the Fund Manager could have a material adverse effect on the management fees that the Group receives from the Endurance Fund.

The Endurance Fund is reliant on key members of its management. Management of the activities of the Endurance Fund has been delegated to the Fund Manager and the Property Manager. The Fund Manager and the Property Manager will be relying on the experience, relationships and expertise of the members of their team. Past performance of similar investments made by individuals of the executive team of the Fund Manager and the Property Manager is not necessarily a guide to the future performance of the Endurance Fund’s investments. The success of the Endurance Fund depends on the ability of the Fund Manager and the property managers to identify, select, effect and realise appropriate investments, and there is no guarantee that suitable investments will be or can be acquired or that investments will be successful. Further, it may not be possible to retain certain key persons, particularly the members of the Fund Manager’s and the Property Manager’s teams, should one or more of them cease to be involved with the Endurance Fund for any reason. If the Group is not able to retain or attract employees with sufficient expertise and experience to select, manage and supervise the Endurance Fund’s investments, this could have a material adverse effect on the management fees that the Group receives from the Endurance Fund.

Some of the investments of the Endurance Fund may be illiquid. The investments to be made by the Endurance Fund or any of its sub-funds, may be illiquid and it is unlikely that there will be a public market for many of the investments held by the Endurance Fund. The eventual liquidity of all investments of the Endurance Fund will be dependent upon the success of the realisation strategy proposed for each investment, which could be adversely affected by a variety of risk factors. Realisation of the Endurance Fund or any of the sub-funds’ assets as the case may be, on termination or otherwise could be a process of uncertain duration and no assurances can be given that all the Endurance Fund’s or any of the sub-funds’ investments will be able to be liquidated prior to the scheduled expiration of the term of the Endurance Fund or the relevant sub-fund. Furthermore, investments held in a joint venture may prove more difficult to realise. The realisation price for such a joint venture stake may also differ from the open market value of the investment. Any delay or inability of the Endurance Fund to liquidate or realise its investments may have a material adverse effect on the management fees that the Group receives from the Endurance Fund.

Risks related to the geographic markets in which the Group operates Economic or political developments in the Czech Republic, Germany, Hungary, Poland, Russia, Croatia and Slovakia could have a material adverse effect. The Group’s operations in the Czech Republic, Germany, Hungary, Poland, Russia, Croatia and Slovakia are exposed to risks common to all regions that have recently undergone, or are undergoing, political, economic and social change, including currency fluctuations, exchange control restrictions, an evolving regulatory environment, inflation, economic recession, local market disruption, labour unrest, changes in disposable income or gross national product, variations in interest rates and taxation policies, levels of economic growth, expected declines in the birth rate and other similar factors. Political or economic instability resulting from the occurrence of any of these risks may adversely affect the real property market in the affected country or countries. The level of risk that the Group faces differs significantly between the different countries where the Group operates. It is generally believed that the risk in Central and Eastern European countries, which are members of the European Union, is lower compared to countries, such as Russia and Croatia, which are not members of the European Union. However, the Group is affected by these issues in each of the markets in which it operates. Many of these factors are entirely beyond the Group’s control. Adverse economic or political developments in the markets where the Group operates may have a material adverse effect on the Group’s business, results of operations, financial condition or prospects.

20 The legal systems and procedural safeguards in Central and Eastern Europe are not fully developed. Many of the agreements concluded with local partners and service providers in Central and Eastern Europe for the ownership, development, construction and management of the land and/or properties in which the Group has invested are subject to the laws of the jurisdiction where the property is located. The legal systems of most of these countries have undergone dramatic changes in recent years. In many cases, the interpretation and procedural safeguards of the new legal and regulatory systems are still being developed, which may result in inconsistent application of existing laws and regulations and uncertainty as to the application and effect of new laws and regulations.

Additionally, in some circumstances, it may not be possible to obtain the legal remedies provided for under relevant laws and regulations in a reasonably timely manner or at all. Although institutions and legal and regulatory systems characteristic of parliamentary democracies have been developed in Central and Eastern European countries, some of them lack an institutional history, and there may be no generally observed procedural guidelines. As a result, shifts in government policies and regulations tend to be more frequent and less predictable than in the countries of Western Europe. Moreover, a lack of legal certainty or the inability to obtain effective legal remedies in a reasonably timely manner may have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

Government authorities have a high degree of discretion in Central and Eastern European countries and at times may exercise their discretion arbitrarily, without hearing or prior notice, and sometimes in a manner that is contrary to law. Moreover, governments may have the power in certain circumstances, by regulation or a government act, to interfere with the performance of, nullify or terminate contracts. Unlawful or arbitrary governmental actions may include the withdrawal of licences, sudden and unexpected tax audits, criminal prosecutions and civil actions.

The governments of some countries in which the Group operates may expropriate (either permanently or temporarily) part or all of a property at less than its full market value. Expropriation or nationalisation of the companies in which the Group invests, their assets or portions thereof, potentially with little or no compensation, could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

The Group holds assets or receives payments in Croatia and Russia in currencies which may not be readily convertible into foreign currencies. The Group’s assets in Croatia and Russia may be invested in assets denominated in currencies other than euro which are not externally convertible into other currencies. The value of the Group’s assets, as measured in euro, may be affected, both positively and negatively, by fluctuations in currency rates and exchange control regulations.

Risks related to the Offering and the Offer Shares The market price of the Shares could prove to be volatile. The market price of the Shares depends to a large extent on the value of the Group’s real estate portfolio. After the Offering, the price of the Shares may be subject to volatility due in particular to variations in the Group’s actual or forecasted operating results, changes in profit forecasts or a failure to meet the profit expectations of securities analysts, a decrease in the market value of the Group’s portfolio, general economic conditions and other factors. The general volatility of share prices, in particular within the real estate sector, may also lead to price pressure on the Shares without there necessarily being a reason for this in the business or the earnings outlook of the Group.

Other than Germany, the Group invests in properties in markets that are generally considered to be less mature than Western European property markets and the price of the Shares may be more volatile than the price of shares of other publicly traded real estate companies that concentrate their investments in Western European markets. Significant decreases in the price of the Shares could result from political or economic developments in the region where the Group invests, rather than any change in the Group’s property or business per se.

The holders of the Shares face potential dilution of their shareholdings in the future. The Company has the following convertible bonds and bonds with warrants outstanding: • 1,086,956 convertible bonds due 31 May 2013, with each bond converting into one Share of the Company;

21 • 73,273 bonds due 18 November 2010 with 1,099,095 warrants, with each warrant entitling its holder to one Share of the Company; and • 119,544 bonds with 1,793,160 redeemable warrants due 28 March 2014, with each warrant entitling its holder to one Share of the Company.

The conversion of the bonds and the exercise of the warrants is subject to certain conditions, however, they will dilute the holding of the shareholder if converted and/or exercised. For more information on the outstanding convertible bonds and bonds with warrants of the Company, see the “General Information About the Company — Share capital — Other securities” section below.

In addition, the Company arranged on 12 April 2006 a step-up equity subscription programme (Programme d’Augmentation de Capital par Exercise d’Options (PACEO)) with Société Générale Corporate & Investment Banking (“SG”) (the “PACEO Programme”) that allows the Company to issue a maximum of 1 million new Shares subscribed by SG on demand by the Company. As at the date of this Prospectus, the Company had exercised 450,000 options under the PACEO Programme and had the right to issue a further 550,000 new Shares to be subscribed on demand by SG. If the Company issues further new Shares under the PACEO Programme, the shareholders will be subject to further dilution of their holdings.

Future sales of Shares may affect their market price. Sales, or the possibility of sales, of substantial numbers of Shares in the public markets, including sales by the Company’s principal shareholders, following the Offering could have a material adverse effect on the market price of the Shares or could affect the Company’s ability to obtain further capital through an offering of equity securities. Subsequent equity offerings may reduce the percentage ownership of the Company’s existing shareholders.

Risks related to Polish investors The Polish Financial Supervision Commission may undertake actions that may lead to the withholding of the Offering or the listing and trading of the Shares and the Offer Shares on the Warsaw Stock Exchange. If the issuer or any entity participating in a public offering on behalf of, or on instruction from, the issuer violates the law in connection with the public offering in Poland, or there is a reasonable suspicion that such violation has occurred or may occur, the Polish Financial Supervision Commission may (i) order that the commencement of such public offering be withheld or that such public offering already underway be discontinued, in each case for not more than 10 business days, or (ii) proscribe the commencement or continuation of the public offering, or (iii) publish, at the expense of the issuer, information concerning the illegal activities with respect to the public offering.

Similarly, if the issuer or any entity acting on behalf of, or on instruction from the issuer violates the law in connection with applying for the admission of securities to listing and trading on a regulated market operated by the Warsaw Stock Exchange, or there is a reasonable suspicion that such violation has occurred or may occur, the Polish Financial Supervision Commission may (i) order that the admission of the securities to trading on a regulated market operated by the Warsaw Stock Exchange be withheld for not more than 10 business days, or (ii) proscribe admission of the securities to listing and trading on a regulated market operated by the Warsaw Stock Exchange, or (iii) publish at the expense of the issuer information concerning the illegal activities with respect to applying for admission of securities to listing and trading on a regulated market operated by the Warsaw Stock Exchange.

The Polish Financial Supervision Commission may apply the measures described in the first or second paragraph above if the contents of this Prospectus filed with the Polish Financial Supervision Commission or made available indicate that (i) the offer or the admission of securities to listing and trading on a regulated market operated by the Warsaw Stock Exchange would materially compromise investors’ interests, (ii) establishment or incorporation of the issuer was effected in gross violation of applicable laws and the consequences of such violation subsist, (iii) activities of the issuer were, or are, conducted in gross violation of applicable laws and the legal consequences of such violation subsist, or (iv) the legal status of the securities does not comply with applicable laws.

If the issuer to whom the Republic of Poland is a host state violates or is reasonably suspected to have violated the law, the Polish Financial Supervision Commission shall notify the competent authority in such

22 issuer’s home state. If, despite the notification mentioned in the preceding sentence, the competent authority of the issuer’s home state does not undertake measures to prevent further violation of the statutory provisions or if such measures prove ineffective, the Polish Financial Supervision Commission may, with a view to protecting the interests of investors and having first notified such authority, apply with respect to the issuer the measures provided in the first or second paragraph above.

If justified by the security of listing and trading on a regulated market operated by the Warsaw Stock Exchange or a threat to investors’ interests, at the demand of the Polish Financial Supervision Commission, the Management Board of the Warsaw Stock Exchange shall withhold the admission to trading on the regulated market or the listing of the securities indicated by the Polish Financial Supervision Commission for up to 10 days.

There can be no assurance that the situations described above will not occur in relation to the Company, the Shares and/or the Offer Shares, the Offering and the applying for the admission of the Shares and the Offer Shares to listing and trading on a regulated market operated by the Warsaw Stock Exchange.

The scope of ongoing information disclosed by the Company to Polish investors may differ from the scope of such information disclosed by Polish public companies. As of the date of this Prospectus relevant Polish regulations require foreign companies having their securities listed on one or more regulated markets in EU member states and on the Warsaw Stock Exchange to disclose to Polish investors solely, current and periodic reports published by that company on such regulated markets. Due to the fact that the Company’s shares are listed on Eurolist by Euronext Paris and the Prague Stock Exchange, the Company will not be subject to the information obligations specified by relevant Polish regulations and will be obliged to provide Polish investors solely with current and periodic reports published in accordance with French and Czech regulations.

It cannot be excluded that the scope of ongoing information disclosed by the issuers of the securities listed on Eurolist by Euronext Paris or the Prague Stock Exchange differs and/or will differ materially from the scope of such information disclosed by Polish public companies listed on the Warsaw Stock Exchange. As a result, Polish investors may not be provided with ongoing information that they could reasonably expect from an issuer of securities listed on the Warsaw Stock Exchange.

For further details regarding the ongoing information to be disclosed by the Company in connection with the listing of Shares and the Offer Shares on the Warsaw Stock Exchange, see “Polish and Hungarian Securities Markets — Poland — Polish Securities Market — Rules for publication of information for investors in Poland”.

The Company is a Luxembourg corporation and certain Polish corporate regulations relating to Polish public companies may not apply to it. The Company was incorporated under the laws of the Grand Duchy of Luxembourg. The Polish Act of 12 November 1965 on International Private Law stipulates that the capacity of a legal person shall be governed by the laws of the state of its registered office. Therefore, issues connected with the structure of the Company, the powers vested to its corporate authorities and the rights and obligations attributable to the holders of the Company’s shares shall be governed by Luxembourg law. Polish investors should be aware that certain regulations included in Polish acts governing capital markets may not apply to the Company due to the fact that they relate solely to the corporate nature of the issuer. Such situation may relate, in particular, to the special auditor (rewident do spraw szczególnych) that may be appointed by the general meeting of shareholders of a public company incorporated under Polish law. Certain legal controversies may arise in connection with the applicability to the Company of EU corporate regulations incorporated by Polish law in situations where such regulations were not incorporated by the relevant Luxemburg laws.

Before taking any action with respect to the Company, the Shares or the Offer Shares, investors should seek the advice of a professional legal attorney in order to determine whether such action is or is not permitted.

Risks associated with enforceability of court judgments against the Company or its subsidiaries with their registered offices and assets outside Poland. The Company is a company incorporated under the laws of the Grand Duchy of Luxembourg and has its registered office in Luxembourg. The majority of the Company’s assets (including its subsidiaries) are located outside Poland, in particular, in the Czech Republic, Germany, Slovakia and Croatia. The majority of the

23 Company’s management is resident outside Poland. For this reason, Polish investors may encounter difficulties in serving summons and other documents relating to court proceedings to the Company or any of its subsidiaries with its registered office outside Poland, including on their management. For the same reason it may be harder for Polish investors to enforce a Polish court’s judgement issued against the Company or any of its subsidiaries with its registered office outside Poland, including on their management, than if those entities and their management were located in Poland.

The risk of limited trading in the Shares and the Offer Shares on the Warsaw Stock Exchange. Except for the Warsaw Stock Exchange, the Shares and the Offer Shares, are and will be listed on three other European stock exchanges (Euronext Paris, the Prague Stock Exchange and the Budapest Stock Exchange). It is not possible to predict the volume of transactions in the Shares and/or the Offer Shares on the Warsaw Stock Exchange. Therefore, it cannot be excluded that the number of transactions in the Shares or the Offer Shares will be materially lower in comparison to the other stock exchanges. That situation may have a negative impact on the liquidity of the Shares on the Warsaw Stock Exchange and their quotation, which may differ materially from the liquidity and the quotation on the stock exchanges on which transaction volumes are higher and the securities are more liquid.

Risks related to Hungarian investors

The HFSA may undertake actions which may affect the success or the timing of the Offering or the listing of the Shares and the Offer Shares on the BSE. The HFSA may suspend the offering of securities and the trading of investment instruments in the case the offering of securities is in breach of any of the provisions of Hungarian law.

The HFSA is entitled to impose a fine on issuers or any other persons between HUF 50,000 and HUF 5,000,000 (or €200 and €19,980 respectively, based on the HUF Reference Rate on 31 May 2007) for any breach of law, negligence or late compliance with the obligations, as set out in the applicable laws.

If the issuer to whom the Republic of Hungary is a host state breaches or is reasonably suspected to have breached Hungarian law, the HFSA must notify the competent authority of the issuer in such issuer’s home state. If the competent authority of the issuer’s home state does not undertake the measures to prevent further violation of the statutory provisions or if such measures prove ineffective following the receipt of such notification referred to above, the HFSA may, with a view to protecting the interests of investors and having first notified such home authority, apply sanctions in respect of the issuer. The HFSA must simultaneously notify the European Commission of the measures applied by it.

There can be no assurance that the non-compliances and events described above will not occur in relation to the Company, the Shares and/or the Offer Shares, the Offering and the applying for the admission of the Shares and the Offer Shares to listing on a regulated market operated by the BSE.

The Company is a Luxembourg corporation and certain Hungarian corporate regulations relating to Hungarian public companies may not apply to it. The Company was incorporated under the laws of the Grand Duchy of Luxembourg. The Hungarian Law Decree No. 13 of 1979 on International Private Law stipulates that the capacity of a legal person shall be governed by the laws of the state of its registered office. Therefore, issues connected with the structure of the Company, the powers vested to its corporate authorities and the rights and obligations attributable to the holders of the Company’s shares shall be governed by Luxembourg law. Hungarian investors should be aware that certain regulations included in Hungarian acts governing capital markets may not apply to the Company due to the fact that they relate solely to the corporate nature of the issuer. Certain legal controversies may arise in connection with the applicability to the Company of EU corporate regulations incorporated by Hungarian law in situations where such regulations were not incorporated by the relevant Luxemburg laws.

Before taking any action with respect to the Company, the Shares and the Offer Shares, investors should seek the advice of a professional legal attorney in order to determine whether such action is or is not permitted.

24 USE OF PROCEEDS

The Company will receive (assuming the full exercise of the Over-allotment Option) approximately €164.3 million in net proceeds from the Offering (less commissions, fees and expenses incurred in connection with the Offering), which the Company intends to use to, (i) fund its development projects, (ii) invest in the expansion of its portfolio and (iii) for general corporate purposes.

25 DIVIDENDS AND DIVIDEND POLICY

Holders of the Shares are entitled to the annual dividend proposed by the Board of Directors of the Company (the “Board of Directors”) in respect of the Company’s fiscal year. The declaration, payment and amount of dividends on the Shares are subject to the approval of the shareholders at the annual shareholders’ meeting. See “General Information about the Company — Summary of the Articles of Association of the Company — Payment of dividends”.

The Company has paid dividends since 2004 (for the fiscal year 2003). On 26 April 2007, the shareholders at a general meeting approved the proposal by the Board of Directors to pay gross dividends of €1.00 per Share, with a total payment of €8,646,673 for the fiscal year 2006. Such dividend was paid on 1 June 2007 at the choice of the Shareholder, and in conformity with Luxembourg company law, either in cash or in new Shares with an issue price fixed at €111.91. Shareholders holding 3,967,695 number of Shares had elected to receive dividends in cash, and Shareholders holding 4,669,978 number of Shares had elected to receive dividends in new Shares, leading to an issue of 36,834 new Shares. The Offer Shares will not be entitled to the dividends for the fiscal year 2006. The Company is targeting to pay annual dividends in the future, so long as its financial condition permits such distributions and as approved by Shareholders at a general meeting. The Company expects these dividends to be funded by cash generated from its operations. The timing and amount of such dividends, if any, will depend upon the Company’s future earnings and prospects, capital requirements and financial condition and such other factors as the Board of Directors consider relevant, as well as the approval of shareholders. There can be no assurance that any dividends will be paid or that, if paid, they will correspond to the policy described above. These dividend targets should also not be regarded as a profit or earnings forecast. The Company may revise its dividend policy from time to time.

The table below sets out the historical annual dividends paid by the Company:

Historical annual dividends As at 31 December 2006 2005 2004 (€ thousands, except dividends paid per share in €) Total dividends paid ...... 6,000 3,500 1,800 Dividend paid per Share ...... 0.80 0.58 0.39

Dividends paid by the Company may be subject to deduction of Luxembourg withholding tax, as described in “Taxation — Luxembourg — Withholding tax”. Please also see “Taxation — Poland” and “Taxation — Hungary” for the tax implications on dividends paid by the Company in these jurisdictions.

Shareholders’ participation in profits is determined based on their respective interests in the share capital.

26 EXCHANGE RATES

The following table sets forth, for the periods indicated, certain information regarding the exchange rates for the Czech koruna and €, as reported by the website of the European Central Bank (the “CZK Reference Rate”) expressed as Czech koruna per €1.00. This rate may differ from the actual rates used in the preparation of the financial statements and other financial information appearing in this Prospectus. The Company makes no representation that the Czech koruna or € amounts referred to in this Prospectus have been, could have been or could, in the future be converted into € or Czech koruna, as the case may be, at any particular rate, if at all. On 11 June 2007, the CZK Reference Rate between the Czech koruna and the € was CZK 28.44 = €1.00.

CZK per €1.00 Year High Low Average(1) Period End 2002 ...... 32.37 28.97 30.7529 31.60 2003 ...... 32.88 31.17 31.89 32.40 2004 ...... 33.33 30.40 31.89 30.46 2005 ...... 30.55 28.86 29.79 29.00 2006 ...... 29.04 27.42 28.27 27.49

Month in 2006/07 December ...... 28.01 27.42 27.78 27.49 January ...... 28.30 27.46 27.84 28.16 February ...... 28.46 28.09 28.23 28.30 March ...... 28.22 27.78 28.06 28.00 April ...... 28.17 27.93 28.01 28.12 May ...... 28.34 28.11 28.23 28.32 June through 11 June 2007 ...... 28.44 28.29 28.40 28.44

Note: (1) The average of the CZK Reference Rates on the last business day of each month during the relevant one-year period and, with respect to monthly information, the average of the CZK Reference Rates on each business day for the relevant period.

The following table sets forth, for the periods indicated, certain information regarding the reference exchange rates for the Polish zloty and €, as reported by the website of the European Central Bank (the “PLN Reference Rate”) expressed as Polish zloty per €1.00. This rate may differ from the actual rates used in the preparation of the financial statements and other financial information appearing in this Prospectus. The Company makes no representation that the Polish zloty or € amounts referred to in this Prospectus have been, could have been or could, in the future be converted into € or Polish zloty, as the case may be, at any particular rate, if at all. On 11 June 2007, the PLN Reference Rate between the Polish zloty and the € was PLN 3.83 = €1.00.

PLN per €1.00 Year High Low Average(1) Period End 2002 ...... 4.21 3.50 3.87 4.02 2003 ...... 4.72 3.98 4.45 4.72 2004 ...... 4.91 4.05 4.51 4.08 2005 ...... 4.28 3.82 4.02 3.86 2006 ...... 4.11 3.75 3.90 3.83

Month in 2006/07 December ...... 3.84 3.79 3.81 3.83 January ...... 3.94 3.83 3.88 3.93 February ...... 3.92 3.86 3.90 3.92 March ...... 3.92 3.87 3.89 3.87 April ...... 3.85 3.77 3.81 3.78 May ...... 3.83 3.74 3.78 3.82 June through 11 June 2007 ...... 3.85 3.80 3.82 3.83

Note: (1) The average of the PLN Reference Rates on the last business day of each month during the relevant one-year period and, with respect to monthly information, the average of the PLN Reference Rates on each business day for the relevant period.

27 The following table sets forth, for the periods indicated, certain information regarding the reference exchange rates for the Hungarian forint and €, as reported by the website of the European Central Bank (the “HUF Reference Rate”) expressed as Hungarian forint per €1.00. This rate may differ from the actual rates used in the preparation of the financial statements and other financial information appearing in this Prospectus. The Company makes no representation that the Hungarian forint or € amounts referred to in this Prospectus have been, could have been or could, in the future be converted into € or Hungarian forint, as the case may be, at any particular rate, if at all. On 11 June 2007, the HUF Reference Rate between the Hungarian forint and the € was HUF 253.88 = €1.00.

HUF per €1.00 Year High Low Average(1) Period End 2002 ...... 252.38 235.17 242.73 235.90 2003 ...... 272.03 234.69 254.85 262.23 2004 ...... 270.00 243.42 250.96 245.93 2005 ...... 255.93 241.42 248.71 252.73 2006 ...... 282.69 249.55 264.11 252.30

Month in 2006/07 December ...... 256.90 252.30 254.08 252.30 January ...... 258.46 251.15 253.83 258.04 February ...... 255.70 251.65 253.40 254.79 March ...... 256.05 245.67 249.81 247.83 April ...... 247.18 245.13 246.00 247.18 May ...... 251.03 245.85 248.42 250.25 June through 11 June 2007 ...... 254.72 249.80 252.23 253.88

Note: (1) The average of the HUF Reference Rates on the last business day of each month during the relevant one-year period and, with respect to monthly information, the average of the HUF Reference Rates on each business day for the relevant period.

28 INDUSTRY OVERVIEW

The following section provides selected information on the real estate markets in Central and Eastern Europe, focusing on selected countries where the Company is active and where it expects to invest in the near future. The summary is provided for information purposes only and neither purports to cover all relevant issues nor to be a comprehensive description of all the topics discussed below. The Company has taken certain information in this summary from publicly available information and identifies the sources of such information below. The Company has not independently verified any such independent information and, accordingly, only takes responsibility for its accurate reproduction.

The information derived from Jones Lang LaSalle is subject to copyright of Jones Lang LaSalle IP, Inc. 2007 and is reproduced with permission. Jones Lang LaSalle accepts no responsibility for any damage or loss suffered by reason of the inaccuracy or incorrectness of this information.

Macroeconomic drivers of the real property markets in Central and Eastern Europe The major macroeconomic factors that influence real property markets are: GDP growth, inflation, production growth, consumer behaviour, demographic developments, interest rates, disposable income of purchasers and the availability of credit. Interest rates are of particular importance because they drive a real property company’s refinancing costs. Key drivers for market segments such as office, logistics or residential differ substantially. The real property market for office properties is much more dependent on economic trends than the market for residential real property. The factors driving the attractiveness of a property generally are legal requirements, tenant diversity, the condition of the property and, in particular, the property’s location.

The return on real property investment — the yield — has three major components: the risk-free rate, a risk premium and an individual property-related premium. With the first component driven primarily by macroeconomic conditions, the risk premium substantially depends on real property market fundamentals in a broader (e.g. national or regional) sense. Real property fundamentals include the market size and tenant diversity, as well as the level of competition among investors and the real property cycle.

The Czech Republic Economic environment in the Czech Republic Year-on-year real GDP growth for the Czech Republic was 5.9 per cent. in 2006 and average consumer prices increased by 2.6 per cent. in 2006. GDP per capita for 2006 was €15,489. (Source: Economic Intelligence Unit.)

Real estate market in the Czech Republic The accession of the Czech Republic to the European Union in 2004 and the associated economic catching-up process have caused real estate price levels, legal certainty and the quality of property facilities to move closer to Western European standards.

The office market in the Czech Republic is primarily concentrated in Prague. Prague is one of the smaller office markets in Europe. Although the Prague market is the most mature in terms of its size and composition, tenants are showing a growing interest in larger regional cities such as Brno, Ostrava and Plzenˇ. Only a limited amount of modern office space currently exists in such cities. As of Q1 2007, prime rents in Prague were approximately €20 per square metre per month, prime yield was approximately 5.50 per cent. and the vacancy rate was approximately 6.1 per cent. (Source: Jones Lang LaSalle.)

Germany Economic environment in Germany During the past few years, the economic situation in Germany was characterised by sluggish growth. However, growth has accelerated since the beginning of 2006. GDP grew by 2.7 per cent. in 2006. For 2007, economic research institutes anticipate further growth as reflected in the upward adjustment from 1.5 per cent in January to 2.1 per cent in April. According to the German Federal Statistical Office, the consumer price index rose 1.7 per cent. on an annual average in 2006 compared to 2005. The seasonally adjusted unemployment rate as of February 2007 was approximately 6.9 per cent. (Sources: Economist Intelligence Unit, Jones Lang LaSalle, German Federal Statistical Office.)

29 Real estate market in Germany In 2006, office space take-up on the Berlin market for office premises amounted to approximately 562,000 square metres (including 172,000 square metres by owner-occupiers). Compared with the average take-up volume for the past ten years, this figure was approximately one-third higher. At the end of 2006, the vacancy volume (including space available for sub-letting) amounted to approximately 1.66 million square metres and was slightly lower than it had been a year earlier. The vacancy rate stood at 10 per cent. in 2006 and for the second year running, the vacancy volume has not risen further. As of Q1 2007, the vacancy rate for the Berlin office sector was approximately 9.8 per cent., prime rent was approximately €20.50 per square metre per month and prime yield was approximately 4.75 per cent. Prime rents have remained stable since the autumn of 2004. (Source: Jones Lang LaSalle.)

Hungary Economic environment in Hungary GDP growth in Hungary for the year reached 3.9 per cent. in 2006, lower than the revised 4.2 per cent. GDP growth in 2005. According to the Economist Intelligence Unit, GDP growth in Hungary is expected to decline to 2.5 per cent. in 2007. Inflation in 2005 averaged 3.6 per cent., and it rose to 4.0 per cent. in 2006. The Economist Intelligence Unit forecasts that average inflation will increase to just over 6 per cent. in 2007. The unemployment rate rose from 7.2 per cent. in 2005 to an estimated 7.5 per cent. in 2006. (Sources: Magyar Nemzeti Bank (Central Bank of Hungary), Economist Intelligence Unit.)

Real property market in Hungary The Budapest office market witnessed very strong development activity in 2006, with completions registering an additional 182,921 square metres of space. Modern office space in Budapest reached 1.73 million square metres at the end of 2006, due to the high volume of completions. Despite gross demand reaching a record level of 248,744 square metres, overall vacancy actually rose to 12.83 per cent at the end of 2006. As of Q1 2007, prime office yield in Budapest was approximately 5.75 per cent., prime rent was approximately €18.50 per square metre per month and the vacancy rate was approximately 9.8 per cent. (Source: Jones Lang LaSalle.)

The retail property segment shows continuous but moderate growth. Development has slowed down in Budapest due to market saturation, but investors have looked elsewhere in the country and are developing new formats (i.e. factory outlets, malls or specialised shopping centres). Investors’ focus on the high-street locations of Budapest continued in the last few months of 2006. Following Louis Vuitton’s opening on Andrássy út, further luxury brands are expected to open in the same area. Rents in high-street locations such as Andrássy út and Váci utca are between €100-140 per square metre per month. As of Q1 2007, retail prime yield in Budapest was approximately 5.75 per cent., and prime rent was approximately €120 per square metre per month. (Source: Jones Lang LaSalle.)

Poland Economic environment in Poland Real GDP growth for 2006 as a whole was 5.8 per cent., the fastest pace since 1997. Growth accelerated to 6.4 per cent. in the fourth quarter and monthly indicators suggest that the pace of growth accelerated further in the first quarter of 2007. Rising real wages and an improving labour market will continue to support rapid growth in private consumption in 2007-08, and high profitability and the inflow of EU funds will help capital investment. The Economist Intelligence Unit forecasts that year-on-year real GDP growth will quicken to 6.1 per cent. in 2007, easing to 5 per cent. in 2008 as rising wage costs lead to slower growth in investment spending. Over 2006 as a whole, consumer price inflation, on the national measure, was just 1 per cent. However, domestic inflationary pressures are gradually rising as falling unemployment, along with migration to the UK and other EU states, leads to a tightening in the labour market. (Source: Economist Intelligence Unit.)

Real property market in Poland Approximately 185,700 square metres of modern office space was delivered to the market in Warsaw in 2006, bringing the office space in January 2007 to around 2.56 million square metres. 2007 should see completions at a similar level to 2006 with a significant increase in the amount of new stock coming to the market forecasted for the subsequent two years, and the office completions both in 2008 and 2009 look set to

30 double the 2006 and 2007 figures in this respect. The demand for office space remains strong, and the office take-up in 2006 reached a high of 410,300 square metres, a 10 per cent. increase compared to 2005. Sound demand for office space, coupled with relatively limited supply in 2005 and 2006, caused the vacancy rate to drop to an all-time low of 5.4 per cent. As of the end of Q1 2007, the vacancy rate in Warsaw had further dropped to 3.9 per cent. The limited availability of office space for lease has put upward pressure on headline and average effective rates in the central as well as non-central areas. As of March 2007, the prime headline rents in the best, centrally located buildings, were at the level of €23 to €25 per square metre per month and, in respect of a few top quality and prestigious buildings, exceeded €25. (Source: Jones Lang LaSalle.)

As of March 2007, there was over 1 million square metres of modern retail space located in 30 shopping centres. Almost all types of retail developments are already represented in Warsaw, from hypermarkets with adjacent service lines, to giant shopping centres, factory outlets and retail parks. Strong retail demand has led to a decrease in vacancy rate in most of the shopping centres with some exceptions of shopping centres located in the areas with high demand or areas undergoing rapid tenant turnover. Rents in shopping centres for notional units of 100 square metres range between €55 and €85 per square metre per month. Rents have remained stable for the last two years, however an upward pressure on rents remains, most notably in the best performing shopping centres in Warsaw. (Source: Jones Lang LaSalle.)

In the residential sector, Warsaw has seen the demand rising, fuelled by the people born in the second baby boom entering the work force, falling unemployment rate and scale of migration by young people to Warsaw. Over 2006, the most dynamic increase in demand has been reported among buyers who either purchase units speculatively with the intention of reselling them before completion of construction, or buying them for investment purposes with the intention of renting them. The total market value of new units offered for sale in 2006-2007 in the entire Warsaw metropolitan area is estimated at 14.0 billion PLN (approximately €3.7 billion based on the PLN Reference Rate on 31 May 2007). Thanks to rapid price increases and limited supply, the profitability of development activity has remained at roughly the same high level over the past twelve months and may have even increased despite the sharp rise in land prices and the increase in construction costs above the rate of inflation. As a substantial increase in supply is expected together with higher land prices and construction costs, profitability is likely to decrease over the next year or so, but nonetheless should remain fairly attractive. (Source: REAS, Jones Lang LaSalle.)

31 CAPITALISATION AND INDEBTEDNESS

The following table shows the capitalisation and indebtedness of the Group as of 31 December 2006, on an actual basis and as adjusted to reflect the issuance of 1,500,000 new shares (assuming the exercise in full of the Over-allotment Option) in connection with the Offering, at the Offer Price of €115.00, and after the deduction of commissions and expenses payable by the Company relating to the Offering.

The table below should be read in conjunction with “Operating and Financial Review” and the Group’s consolidated financial statements included elsewhere in this Prospectus. There have been no material changes to the information set out below since 31 December 2006, except as reflected in the column “As adjusted” and the footnotes to the table.

As of 31 December 2006 As adjusted Actual (unaudited) (€ thousands) Total current debt ...... 95,370 95,370 Guaranteed ...... — — Secured(1) ...... 89,692 89,692 Unguaranteed/Unsecured(2) ...... 5,678 5,678 Total non-current debt ...... 555,960 555,960 Guaranteed ...... — — Secured(1) ...... 311,212 311,212 Unguaranteed/Unsecured(2) ...... 244,748 244,748 Shareholders’ Equity(3) ...... 454,232 618,532 Share capital ...... 34,398 40,548 Share premium ...... 197,552 355,702 Other reserves ...... 222,282 222,282 Minority interests(4) ...... 64,193 64,193 Total ...... 1,169,755 1,334,055

Notes: (1) Secured debt consists of bank loans, which are entered into by subsidiaries of the Company and are secured by mortgages on properties or pledges on shares of the relevant subsidiaries. As of 31 March 2007, the total secured debt amounted to €376 million. (2) Unguaranteed/unsecured debt consists of bonds issued by the Company. As of 31 March 2007, the total unguaranteed/unsecured debt amounted to €367 million. (3) As of 31 March 2007, total shareholders’ equity amounted to €476 million. (4) As of 31 March 2007, minority interests amounted to €68 million.

Net indebtedness The following table shows the net indebtedness of the Group as of 31 December 2006.

As of 31 December 2006 Actual (€ thousands) Cash ...... 96,449 Cash equivalents ...... 1,890 Current financial assets ...... 20,451 Net derivative instruments ...... 6,050 Total liquidity ...... 124,840 Current bank debt ...... 89,692 Current portion of non-current debt ...... 4,210 Other current financial debt ...... 1,468 Current financial debt ...... 95,370 Net current financial indebtedness ...... (39,965) Non-current bank debt ...... 311,212 Bonds issued ...... 240,885 Other non-current financial debt ...... 3,893 Non-current financial indebtedness ...... 555,960 Net financial indebtedness ...... 515,995

32 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma consolidated financial information set forth below represents the Company’s unaudited pro forma income statement for the year ended 31 December 2006 and is presented to give effect to the Group’s acquisition of the Viterra Development Group as if the acquisition had occurred on 1 January 2006. The unaudited pro forma consolidated financial information is prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and therefore does not represent the actual results of operations that the Company would have realised if the acquisition had taken place on 1 January 2006. Viterra Development Group was fully consolidated as of 1 July 2006. The audited consolidated balance sheet as of 31 December 2006, included elsewhere in this Prospectus, therefore includes the Viterra Development Group.

The unaudited pro forma consolidated financial information is based on assumptions of the Company and has been prepared using historical financial information derived from the Company’s and the Viterra Development Group’s financial statements (which were prepared in accordance with German generally accepted accounting principles (“German GAAP”) and converted to the Group’s accounting policies). If the acquisition of the Viterra Development Group had occurred on 1 January 2006, the actual operating results might have been different from those presented in the following table. The unaudited pro forma consolidated information should not be relied on as an indication of the operating results that would have been achieved if the acquisition had occurred on 1 January 2006, nor should it be used as an indication of the operating results that the Company will achieve following the acquisition of Viterra Development Group.

Unaudited Pro Forma Consolidated Income Statement for the year ended 31 December 2006

Year ended December Viterra Carved out Financing Pro Forma 2006(1) operations(2) properties(3) Cost(4) Total Revenues ...... 172,908 43,528 (3,978) — 212,458 Net gain from fair value adjustment on investment property ...... 145,901 — — — 145,901 Other operating income ...... 2,786 31 — — 2,817 Cost of sales ...... (119,224) (35,041) 5,024 — (149,241) Employee benefit ...... (30,141) (3,501) — — (33,642) Amortization, impairments and provisions ...... (4,076) (9,470) (851) — (14,397) Other operating expenses ...... (33,906) 2 — — (33,904) Operating result ...... 134,248 (4,450) 195 — 129,993 Net interest expenses ...... (15,740) (671) — (1,992) (18,403) Other financial results ...... 4,416 29 — — 4,445 Financial result ...... (11,324) (642) — (1,992) (13,958) Profit before income taxes ...... 122,924 (5,092) 195 (1,992) 116,035 Income taxes ...... (25,069) 22 — 578 (24,470) Net profit ...... 97,855 (5,071) 195 (1,414) 91,565 Attributable to minority interests ...... 1,156 (1,262) 45 (330) (390) Attributable to the Group ...... 96,699 (3,808) 150 (1,085) 91,956

Notes: (1) Extracted, without material adjustment, from the audited consolidated financial statements of the Group for the year ended 31 December 2006. (2) The elements shown under the “Viterra operations” adjustment column reflect the results of the acquired group from 1 January 2006 to 30 June 2006. It corresponds to the consolidated income statement of the Viterra Development Group for the six months ended 30 June 2006. (3) The consolidated income statement of the Viterra Development Group in note 2 includes the results of some assets in the Viterra Development Group which were not acquired by the Group. The “Carved out properties” adjustment column corresponds to the impact on Viterra income statement of those assets. (4) The elements under “Financing costs” reflect the additional financing costs that the Group would have borne during the first half-year of 2006. This amount is calculated by applying the effective cost of the bonds issued to finance the Viterra acquisition (4.03%) to the acquisition price for the Viterra Development Group of €98.8 million.

PricewaterhouseCoopers Société à responsabilité limitée Réviseur d’entreprises To the attention of the Board of Directors of 400, route d’Esch B.P. 1443 Orco Property Group S.A. L-1014 Luxembourg 48, Boulevard Grande Duchesse Charlotte Telephone +352 494848-1 L-1330 Luxembourg Facsimile +352 494848-2900 www.pwc.com/lu [email protected]

Report on Pro forma financial information In compliance with Commission Regulation (EC) No 809/2004, as independent auditor, we report on the Pro forma financial information (the “Pro forma financial information”) set out on page 33 of the prospectus dated on or around June 14, 2007 of Orco Property Group S.A.

This Pro forma financial information has been prepared on the basis described in notes 1 to 4, for illustrative purposes only, to provide information about how the acquisition of the Viterra Development Group might have affected the financial information presented on the basis of the accounting policies adopted by Orco Property Group S.A. in preparing the audited consolidated income statement for the year ended December 31, 2006. By nature, the Pro forma financial information describes a hypothetical situation and may not necessarily provide an accurate or complete picture of the financial position or the performance of Orco Property Group S.A. had the transaction taken place on January 1, 2006.

It is the responsibility of the Board of Directors of Orco Property Group S.A. to prepare the Pro forma financial information in accordance with the applicable requirements of Commission Regulation (EC) No 809/2004 relating to pro forma information.

It is our responsibility to form an opinion, as required by Item 7 of Annex II of Commission Regulation (EC) No 809/2004, as to the proper compilation of the Pro forma financial information and to report that opinion to you.

In providing this report, we are not required to, and do not, provide any opinion on any of the underlying information and assumptions, neither are we updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro forma financial information. We do not accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us, at the dates of their issue, and for the purposes defined therein.

We conducted our work in accordance with the Luxembourg applicable professional standards. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the underlying source documents, considering the evidence supporting the adjustments and discussing the Pro forma financial information with the Board of Directors of Orco Property Group S.A.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro forma financial information has been properly compiled on the basis stated.

In our opinion: (a) the Pro forma financial information has been properly compiled on the basis stated; and (b) such basis is consistent with the accounting policies of Orco Property Group S.A. as described in note 2 of its consolidated financial statements for year ended December 31, 2006.

This report is issued exclusively in the context of the prospectus to be issued by the Board of Directors relating to the offering of Orco Property Group S. A. new shares and admission to trading on the main market of the Warsaw Stock Exchange and the Budapest Stock Exchange, and admission to trading of the new shares on Eurolist by Euronext Paris and on the main market of the Prague Stock Exchange, and may not be used for any other purposes by any party.

Declaration We declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the prospectus in compliance with item 1.2 of Annex I of Commission Regulation (EC) N0 809/2004.

PricewaterhouseCoopers S.à r.l. Luxembourg, June 13, 2007 Réviseur d’enterprises Represented by

Anne-Sophie Preud homme

35 SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA

The selected financial information provided below as of and for the years ended 31 December 2006, 31 December 2005 and 31 December 2004, respectively, has been derived from the Group’s audited consolidated financial statements as of and for the years ended 31 December 2006 (which include the comparative audited restated figures as of and for the year ended 31 December 2005) and 31 December 2005 (which include the comparative audited restated figures as of and for the year ended 31 December 2004) respectively, prepared in accordance with IFRS, and included in the F- Pages of this Prospectus. The selected financial information provided below as of 31 March 2007 and for the three months ended 31 March 2007 and 2006 is unaudited and has not been reviewed by the Company’s independent auditors. Operating results for the three months ended 31 March 2007 are not necessarily indicative of the results that may be expected for the entire year ending 31 December 2007.

The comparative figures as of and for the year ended 31 December 2005, included in the audited consolidated financial statements as of and for the year ended 31 December 2006, have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets by €2.8 million and a decrease of other reserves in the shareholders’ equity by €2.8 million. The audited consolidated financial statements as of and for the year ended 31 December 2005 (which include the comparative figures as of and for the year ended 31 December 2004), included in this Prospectus, have not been restated but all references in this Prospectus to the Group consolidated balance sheet as of 31 December 2005 and 31 December 2004 have been restated to reflect the derecognition of this deferred tax asset.

As of 31 December 2005(1) 2004(2) 2006 (restated) (restated) (€ thousands) Balance Sheet Investment property ...... 749,438 361,193 134,503 Other non-current assets ...... 243,167 175,603 71,349 Total current assets ...... 485,468 153,779 80,176 Cash and cash equivalents ...... 98,339 49,089 15,742 Held for sale activities ...... 2,281 — 20,054 Total assets ...... 1,480,354 690,575 306,082 Total equity ...... 518,425 290,923 105,979 Total non-current liabilities ...... 673,075 312,943 101,612 Bonds ...... 240,854 84,364 30,829 Financial debts ...... 331,651 183,060 56,655 Provisions ...... 11,822 1,001 762 Deferred tax liabilities ...... 88,748 44,518 13,366 Total current liabilities ...... 287,381 86,709 88,204 Bonds and financial debts ...... 95,370 35,700 29,340 Trade payables ...... 55,526 20,787 18,116 Advance payments ...... 63,377 19,210 26,939 Other current liabilities ...... 73,108 11,012 13,809 Held for sale activities ...... 1,473 — 10,287 Total equity and liabilities ...... 1,480,354 690,575 306,082

Notes: (1) The figures as of 31 December 2005 have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets and shareholders’ equity by €2.8 million. (2) The figures as of 31 December 2004 have been restated to reflect the derecognition of a deferred tax asset.

36 Year ended 31 December 2006 2005 2004 (€ thousands except for share data) Income statement Revenues ...... 172,908 50,348 70,670 Net gain from fair value adjustment on investment property ...... 145,901 78,975 25,408 Operating result ...... 134,248 76,888 30,829 Net interest expenses ...... (15,740) (6,962) (5,515) Net profit attributable to the Group ...... 96,699 54,523 18,700 Basic earnings in € per share(1) ...... 12.58 9.25 4.46 Diluted earnings in € per share(2) ...... 10.11 7.83 3.22

Notes: (1) In April 2007, the Group agreed to sell the all of its hotels and extended stay residences (other than the Pachtuv Palace Hotel in Prague and its interest in Suncani Hvar in Croatia) (the “Hospitality Business”) to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total appraised value of the Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. See “Operating and Financial Review — Recent Developments”. The Company currently owns 100 per cent. of the shares of the Endurance Hospitality Sub-Fund, and intends to reduce its interest to less than 20 per cent. (2) Management services consist of property management, management services to Group companies and asset management services to the Endurance Fund.

Year ended 31 December 2006 2005 2004 (€ thousands) Cash flow statement Net cash from (used in) operating activities ...... 12,633 (50,242) (7,210) Net cash used in investing activities ...... (433,943) (169,225) (26,038) Net cash from financing activities ...... 469,206 251,852 31,481 Net increase in cash ...... 47,896 32,385 (1,767) Cash and cash equivalents(1) at the beginning of the period ...... 49,089 15,742 16,232 Cash and cash equivalents(1) at the end of the period ...... 98,344 49,089 15,742

37 Year ended 31 December 2006 2005 (€ thousands except for loan to value and average cost of debt data) Other Financial Data Adjusted EBITA(1) ...... 5,562(2) 1,399 Of which: Development ...... (3,911) (2,303) Hotels and residences ...... (272) 179 Renting ...... 4,890 (956) Management services ...... 8,289 4,852 Intersegment activities ...... (3,434) (373) Net Debt(3) ...... 543,035 241,439 Loan to value ratio(4) ...... 40.3% 42.34% Average cost of debt(5) ...... 4.34% 5.4%

Notes: (1) Adjusted EBITA is calculated as operating result for the period after deduction of net gain from fair value adjustment on investment property and after adding back costs relating to (i) amortisation, impairments and provisions, (ii) stock-based compensation and (iii) cost of goods sold corrections linked to the revaluation of properties. Adjusted EBITA is not a measure of financial performance under IFRS. Prospective investors should not consider it an alternative to operating result or net profit attributable to the Group as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Adjusted EBITA does not necessarily indicate whether cash flow will be sufficient or available for cash requirements. The Group believes that adjusted EBITA provides useful information to investors because it eliminates variances caused by non-cash items (particularly the net gains from fair value adjustments on investment property) and helps investors evaluate the performance of the Group’s underlying business. Adjusted EBITA may not be indicative of the Group’s historical operating results nor is it indicative of potential future results. Other companies may not calculate adjusted EBITA the way the Group does, and accordingly the presentation of adjusted EBITA in this Prospectus may not be comparable to a similarly titled measure of other companies. (2) In 2006, for the first time, adjusted EBITA excludes the impact of transferring properties to inventory at fair value. The impact on 2006 adjusted EBITA was €5,567 thousand. (3) Net debt is calculated as non-current bonds and financial debts and current bonds and financial debts less cash and cash equivalents and current financial assets (which consists primarily of the Company’s portfolio of trading securities which are short term unrestricted securities). (4) Loan to value ratio is calculated as net debt divided by the appraised value of the Group’s property portfolio. (5) Average cost of debt is calculated as the average of the cash cost of the debt during the year.

Reconciliation of adjusted EBITA to operating result is as follows for the periods indicated:

Reconciliation of net debt to total (current and non-current) bonds and financial debts is as follows for the period indicated:

Year ended 31 December 2006 2005 (unaudited) (unaudited) (€ thousands) Total (current and non-current) bonds and financial debts ...... 667,875 303,124 Net derivative instruments ...... (6,050) 255 Current financial assets ...... (20,451) (12,851) Cash and cash equivalents ...... (98,339) (49,089) Net debt ...... 543,035 241,439

38 As of 31 March 2007 31 December 2006 (unaudited) € Balance Sheet ( thousands) Investment property ...... 727,901 749,438 Other non-current assets ...... 319,831 243,167 Total current assets ...... 670,609 485,468 Cash and cash equivalents ...... 236,107 98,339 Held for sale activities ...... 2,538 2,281 Total assets ...... 1,720,879 1,480,354 Total equity ...... 544,153 518,425 Total non-current liabilities ...... 886,416 673,075 Bonds ...... 366,840 240,854 Financial debts ...... 403,074 331,651 Provisions ...... 11,629 11,822 Deferred tax liabilities ...... 104,873 88,748 Total current liabilities ...... 287,772 287,381 Bonds and financial debts ...... 102,019 95,370 Trade payables ...... 55,691 55,526 Advance payments ...... 69,445 63,377 Other current liabilities ...... 60,617 73,108 Held for sale activities ...... 2,538 1,473 Total equity and liabilities ...... 1,720,879 1,480,354

Three months ended 31 March 2007 2006 (unaudited) (unaudited) (€ thousands) Income statement Revenues ...... 58,599 16,148 Net gain from fair value adjustment on investment property ...... — 6,498 Operating result ...... 1,282 6,491 Net interest expenses ...... (3,160) (4,665) Net profit attributable to the Group ...... 439 7,337

39 OPERATING AND FINANCIAL REVIEW

The following review of the Group’s operating and financial performance should be read in conjunction with the Group’s audited consolidated financial statements as of and for the years ended 31 December 2006 (which include the comparative audited restated figures as of and for the year ended 31 December 2005) and 31 December 2005 (which include the corresponding audited restated figures as of and for the year ended 31 December 2004) respectively, prepared in accordance with IFRS, and included in the F-Pages of this Prospectus. The financial information provided below for the three months ended 31 March 2007 and 2006 and as of 31 March 2007 is unaudited and has not been reviewed by the Company’s independent auditors. Operating results for the three months ended 31 March 2007 are not necessarily indicative of the results that may be expected for the entire year ending 31 December 2007.

The review includes forward-looking statements that are based on assumptions about the Company’s future business performance and therefore involve risks and uncertainties. Investors should review “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein.

The comparative figures as of and for the year ended 31 December 2005, included in the audited consolidated financial statements as of and for the year ended 31 December 2006, have been restated to reflect the derecognition of a deferred tax asset, which resulted in a decrease of deferred tax assets by €2.8 million and a decrease of other reserves in the shareholders’ equity by €2.8 million. The audited consolidated financial statements as of and for the year ended 31 December 2005 (which include the comparative figures as of and for the year ended 31 December 2004), included in this Prospectus, have not been restated but all references in this Prospectus to the Group consolidated balance sheet as of 31 December 2005 and 31 December 2004 have been restated to reflect the derecognition of this deferred tax asset.

In 2005, the Company adopted IFRS and produced audited consolidated financial statements as of and for the year ended 31 December 2005 in accordance with IFRS. The Company did not prepare IFRS audited consolidated financial statements as of and for the year ended 31 December 2004. However, it prepared audited consolidated financial statements as of and for the year ended 31 December 2004 according to Luxembourg GAAP. The comparative figures in respect of 2004 in the IFRS audited consolidated financial statements as of and for the year ended 31 December 2005 were restated to reflect the adjustments to IFRS and have been audited. All references in this Prospectus to the Company’s financial information as of and for the year ended 31 December 2004 are to the IFRS restated comparative figures included in the Company’s IFRS audited consolidated financial statements as of and for the year ended 31 December 2005.

Overview The Group is engaged in real estate development, real estate investment and real estate asset management in Central and Eastern Europe. The Group’s activities are focused on the markets in the Czech Republic, Germany, Hungary, Poland, Croatia, Slovakia and Russia. As of 31 December 2006, the real estate portfolio had an appraised value (as determined by DTZ) of €1.3 billion, an appraised value attributable to the Group (excluding minority interests) of €1.1 billion and a book value (without deducting minority interests) of €1.2 billion (the difference between appraised value and book value relates to the treatment of development properties and hotels, as described below). Since the end of 2006, the Group has acquired additional properties for an aggregate acquisition price of €63 million, and has signed agreements to acquire properties with an aggregate acquisition price of €200 million. See “— Recent Developments”.

The Group’s development portfolio consists of residential projects focusing on the middle and upper middle segment of the residential housing market. The Group also develops luxury apartments in landmark buildings. As at 31 December 2006, the Group’s development portfolio (excluding land banks) was valued by DTZ at €335.7 million, and consisted of 39 properties. In addition, the Group had invested in land banks with an appraised value (as determined by DTZ) of €154.3 million as of 31 December 2006. The Group’s properties that are under current development are classified as inventory, carried in the balance sheet at the lower of cost or net realisable value. Property held for future development is carried in the balance sheet on the basis of fair value.

The Group’s investment portfolio is based on the acquisition or development of prime properties in major Central and Eastern European cities, focusing on commercial and residential buildings and more recently on retail premises. As at 31 December 2006, the Group’s investment portfolio had an appraised value (as determined by DTZ) of €469.7 million, and consisted of 51 properties.

40 The Group also sponsors and manages the Endurance Fund, which has four sub-funds and invests in prime real estate in Central and Eastern Europe. As at 31 December 2006, the Endurance Fund owned and managed €180 million of real estate assets.

In addition, the Group has owned, managed and operated a portfolio of small hotels and extended stay residences across Central and Eastern Europe under the MaMaison Hotels and Apartments brand. In April 2007, the Group agreed to sell all of its hotels and extended stay residences (other than the Pachtuv Palace Hotel in Prague and its interest in Suncani Hvar d.d. (“Suncani Hvar”) in Croatia) (the “Hospitality Business”) to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total appraised value of the Hospitality Business (as determined by DTZ) is €174.3 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. See “— Recent Developments”. The Company currently owns 100 per cent. of the shares of the Endurance Hospitality Sub-Fund, and intends to reduce its interest to less than 20 per cent.

For the year ended 31 December 2006, the Group’s consolidated revenue and net profit was €172.9 million and €97.9 million, respectively. The net profit figure reflects, among other things, gain from fair value adjustments in respect of investment properties of €145.9 million (or €120 million net of related deferred tax charges).

Material factors affecting the Company’s results of operations General economic conditions in the real estate markets in which the Group operates influence the Group’s business. See “Industry overview” and “Risk Factors — Risks related to the geographic markets in which the Group operates.” Political and regulatory decisions and developments also affect supply and demand in the real property markets. In addition, the following factors have affected and are expected to continue to affect the results of the Group’s operations:

Ability to acquire land and/or buildings for development at reasonable prices The most significant component of the Group’s revenue is income from the sale of development property, which was approximately 72 per cent., 44 per cent. and 86 per cent. of total revenues for 2006, 2005 and 2004, respectively. The Group’s results depend significantly on its ability to continually acquire land and/or buildings in desirable locations for development at reasonable prices. The price paid to acquire land for development or a development property depends largely on its condition and location and on the real estate market conditions in the relevant country. The Group’s ability to secure land or properties for development at reasonable prices depends on its ability to identify land or properties that qualify for value enhancing measures and on its ability to quickly negotiate acquisitions with the sellers.

Ability to develop properties for sale and investment at reasonable costs The Group’s results also depend on its ability to develop properties both for sale and for investment at reasonable costs. Development costs influence the Group’s revenues from both the properties developed for long- term investment and properties for sale.

As a general trend in the real estate industry where the Group operates and during the periods under review, the Group has experienced annual increases in development costs, in particular construction costs and labour costs. The Group seeks to pass on the increase in development costs in the form of higher sale prices. To date, sale prices have increased in line with the increase in development costs. The Group anticipates that developments costs will continue to increase significantly. The Group’s ability to achieve the targeted profit from the sale of development property will therefore continue to depend on its ability to pass on any increases in development costs in the form of higher sale prices.

Rental income Approximately 11 per cent. of the Group’s revenues in 2006 (approximately 15 per cent. in 2005 and 9 per cent. in 2004) is rental income. The rental income that the Group derives from a property depends on the rent per square metre and the occupancy rate. As with real property sales prices, the level of rent depends largely on the property’s location and condition and on the real estate market conditions in the relevant country. Rental income is strongly affected by local market trends. The Group’s rental income stream is affected in particular by the number of properties in the rental portfolio, vacancy levels and the Group’s ability to effect rent increases.

41 Most of the Group’s leases include a clause that provides for full indexation of the rent, linked to the consumer price index of the relevant country where the lease is concluded in local currency and linked to the EICP (European Index of Consumer Prices) where the lease is concluded in euro.

Changes in appraised value of investment properties and land banks The Group’s investment properties (which exclude properties that are being developed for non-investment purposes, hotels and owner-occupied properties, but which include extended stay residences) and land banks are valued for accounting purposes at fair value, which is based on the appraised valuations made by DTZ, a RICS chartered surveyor, in accordance with the RICS Appraisal and Valuation Standards (the so-called Red Book standards). DTZ assesses the market value and market rents of the properties in accordance with practice statements 3.2 and 3.4 of the Red Book. The valuations by DTZ are used to determine the carrying value in the Group’s financial statements. Changes in the appraised value of these properties and land banks will affect their fair value for accounting purposes, and the Group recognises changes in the fair value as revaluation income or loss. For further details regarding the revaluation of investment properties and land banks, see Note 2.6 to the Consolidated Financial Statements.

When the Group acquires real estate companies, the properties are initially valued based on the fair value determined by an independent valuation report, and the difference between this valuation and the acquisition price is treated as negative goodwill that is included in the income statement as a revaluation gain. As a result, a significant amount of revaluation profit is typically recorded shortly following an acquisition of real estate companies (including acquisitions that involve properties that are held in inventory for development properties, and not classified as investment property). When the Group acquires individual real estate assets, these properties are initially valued at acquisition cost as of the date of acquisition and are revalued at the next balance sheet date. Subsequently, if the relevant properties are classified as investment property or land banks, revaluation profit and loss is based mainly on real estate market movements.

Interest rates In general, demand for real estate tends to increase when interest rates are low, which can lead to higher valuations of the Company’s existing portfolio and higher prices charged by the Group. Conversely, increasing interest rates generally affect the valuation of the Company’s properties adversely, which can result in the Group being required to recognise a valuation adjustment that negatively affects its income. Increases in interest rates also increase the Company’s refinancing costs.

Exchange rate fluctuations Although the Company’s reporting currency is the euro, it receives a significant portion of its revenues and incurs most of its costs in currencies other than the euro, including the Czech koruna, the Hungarian forint and the Polish zloty. The Company’s income statement and cash flow items are translated into euro using average exchange rates during the relevant period and balance sheet items are translated from their source currency into euro using exchange rates prevailing on the date of the balance sheet. Accordingly, increases and decreases in the value of the euro versus the Czech koruna, the Hungarian forint and the Polish zloty, to the extent not reflected in the prices for development of properties in local currency terms, will affect the Company’s reported results of operations and also will affect the value of its assets and liabilities on the consolidated balance sheet, even if its results of operations or the value of those assets and liabilities has not changed in their original currency. The Company’s reported results are therefore affected by movements in exchange rates, particularly in the euro/ Czech koruna exchange rate.

In addition, a substantial proportion of the Company’s borrowings is denominated in euro. As the Company receives revenues in a number of different currencies, it may not always be possible for it to match its revenues to its debt service obligations. The Company does not systematically hedge its foreign exchange risks to mitigate its potential exposure to currency fluctuations.

Effect of acquisitions and divestitures on the Group’s results of operations The Group has actively pursued the expansion of its property portfolio through acquisitions. Acquisitions result in an increase in revenues, operating and administrative expenses, debt and financing costs. Portfolio growth may also result in an increase in revaluation gains or losses.

During 2005, the Group acquired a 47.7 per cent. interest in Suncani Hvar, which owns hotels on the Hvar island in Croatia. This acquisition, which is fully consolidated in the Group on 1 July 2005, contributed €6.8 million in revenues in the second half of 2005 (which includes the high tourism season) and €9.7 million in

42 revenues in 2006. In addition, the acquisition price was lower than the fair value of net equity acquired and the Group accordingly recognised €13.3 million of negative goodwill in 2005, which appears in net gain from fair value adjustment on investment property. See “Unaudited Pro Forma Consolidated Financial Information” for further information regarding the acquisition of the Viterra Development Group.

In June 2006, the Group acquired the Viterra Development Group from the Deutsche Annington Immobilien Group for a total purchase price of approximately €98.8 million (€69.9 million, net of cash acquired). As part of the acquisition of the Viterra Development Group, the Group also acquired two buildings for a total cash consideration of €14 million. The Viterra Development Group was a leading commercial and residential property developer with a number of commercial and residential developments across Germany, the Czech Republic and Poland. The acquisition of the Viterra Development Group was fully consolidated as of 1 July 2006. In the second half of 2006, the activities of the Viterra Development Group contributed €83.2 million to the Group’s revenue. Including this contribution, the Group recorded consolidated revenues of €139.2 million in the second half of 2006. The Group’s consolidated revenue for all of 2006 was €172.9 million. In the first half of 2006, prior to the acquisition by the Group, the Viterra Development Group recorded €43.5 million of revenue (under German GAAP, which is not materially different from IFRS with respect to revenue recognition). The Group anticipates that the revenues from the projects of the Viterra Development Group in 2007 will be substantially less than the revenue recorded by the Viterra Development Group in all of 2006. In addition, the acquisition price was lower than the fair value of the net equity acquired and the Group accordingly recognised €23.3 million of negative goodwill in 2006, which appears in net gain from fair value adjustment on investment property.

The Group also acquires individual real estate assets, which can have a material effect on its results of operations. In 2004, 2005 and 2006, the Group acquired individual real estate assets for an aggregate consideration of €28 million, €151 million and €315 million, respectively. The Group plans to continue to acquire attractive real estate assets in the markets in which it operates and it therefore expects that acquisitions will influence its results of operations in future periods.

See “— Recent Developments” for further information regarding acquisitions and divestitures since 1 January 2007.

Changes in taxation rates The Group’s results are influenced by changes in, and interpretation of, taxation laws in the countries in which it operates. The statutory tax rate in the Czech Republic, where the Group derives a significant proportion of its revenues, was reduced to 24 per cent. for the year ended 31 December 2006, from 26 per cent. for the years ended 31 December 2004 and 2005. This resulted in a lower effective tax rate of 20.4 per cent. in 2006, compared to 22.2 per cent. in 2005.

Changes in the value added tax law are also due to come into effect on 1 January 2008 in the Czech Republic and Poland. In the Czech Republic, value added tax on new developments is expected to rise from 5 per cent. to 19 per cent. unless the property being sold falls within the category of “social residential dwelling”, such term not yet being precisely defined due to pending parliamentary approval of the legislation. In Poland, value added tax on sale of residential apartments is expected to be 22 per cent. (with the removal of the preferential rate of 7 per cent.) unless the property being sold falls into the category of “social development”. Such category is not defined with certainty under Polish law. On 3 April 2007, the Polish government proposed a definition to be included in the Polish VAT regulations. The definition in its version approved by the government, relates to, among others, residential apartments with an area not exceeding 120 square metres. The large majority of the Group’s apartments in Poland are 120 square meters or less, excluding the Zlota 44 luxury project. However, the definition may be subject to change as it must be introduced to the Polish VAT regulations through the act adopted by the Polish Parliament and may be amended during the parliamentary proceedings. As of the date of this Prospectus, the Polish government has not filed the relevant bill with the Polish Parliament. See “Risk Factors — The Group may be exposed to changes in VAT law”. This change will affect any uncompleted projects in the Group’s portfolio on 1 January 2008. The Group will seek to pass on most or all of the value added tax increase in the form of higher prices. The Group believes that higher prices as a consequence of this change in legislation could have a negative impact on sales in the middle and upper middle segment of the residential housing market. However, the Group hopes that this negative impact would only be short-term and would, at least in part, be offset by increased demand for properties prior to the date when this legislation would take effect. The Group hopes that this change in legislation will not have a negative impact on sales of luxury apartments. While no definition of “social residential dwelling” is yet available in the Czech Republic a legislative proposal, approved by the Czech government but subject to approval by the Czech Parliament,

43 indicates that it may be similar to the definition used in Poland. If so adopted, the Group believes that most of its development portfolio will come within the purview of the “social residential dwelling” exemption. However, any similar changes in tax laws in any of the countries in which the Group operates could cause its costs to increase or demand to decrease as a result of the costs being passed on to customers.

Significant accounting policies The principal accounting policies applied in the preparation of the Consolidated Financial Statements are set out in the Notes to the relevant Consolidated Financial Statements. Some of the Group’s accounting policies require the application by the management of the Group of subjective, complex and challenging judgements, often taking into account estimates about the effect of matters that are inherently uncertain. Those critical accounting policies involve judgements and uncertainties that are sufficiently sensitive to lead to materially different results under different assumptions and conditions. The Group’s critical and other accounting policies that have a significant effect on its results are described below.

Revenue recognition The Group recognises revenues from sales of properties (buildings and units including development properties) when a sale is completed and ownership of the property, including the usual risks and rewards of ownership, is transferred to the buyer.

Revenue from the rental portfolio is the rental income from operating leases which is recognised on a straight-line basis over the term of the lease. If the Group provides incentives to its customers, the cost of incentives is also recognised over the term of the lease on a straight-line basis as a reduction of the rental income.

Revenue from property service charges and fund management fees is recognised in the accounting period in which services are rendered. Fund performance based fees are recognised when the relevant performance targets are realised or triggered.

Fair value of investment properties and land banks The Group’s investment properties (which exclude properties that are being developed for non-investment purposes, hotels and owner-occupied properties, but which include extended stay residences) and land banks not being used for development of properties for sale are valued for accounting purposes at fair value based on DTZ valuation. The best evidence of fair value is the current prices in an active market for similar properties and/or land. In the absence of such information, fair value is determined on the basis of reasonable estimates made by the Company, which reflects the location, state of repair and condition of the property as well as its rental income from current leases and, taking into account the current market condition, the assumed rental income from future leases, and for land banks reflects the location, condition and potential use of the land bank. The reasonable estimates used by the Group are derived from a variety of sources, including (i) current prices in an active market for properties of different nature, condition or location adjusted to reflect those differences, (ii) recent prices of similar properties in less active markets with adjustments to reflect any changes in economic conditions since the date of the transaction that occurred at those prices and (ii) discounted cash flow projections. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.

Taxation The income tax expense reported for the business year contains the income tax of the individual companies calculated from their taxable income and the tax rate applicable in the relevant country (“current tax”) and the change in deferred taxes recognized in the income statement (“deferred tax”). Consistent with IAS 12, all temporary differences between tax values and book values of assets and liabilities were included in the calculation of deferred taxes. Deferred taxes on tax losses carried forward are capitalized to the extent that such losses are likely to be netted against future tax profits within the next five to seven years. The comparative figures as of and for the year ended 31 December 2005, included in the audited consolidated financial statements as of and for the year ended 31 December 2006, have been restated to reflect the derecognition of a deferred tax asset recorded in the audited consolidated balance sheet as of 31 December 2005 (and in the 2004 comparatives), which resulted in a decrease of deferred tax assets by €2.8 million and a decrease of other reserves in the shareholders’ equity by €2.8 million.

Deferred income tax is provided on all temporary differences arising on the fair value of investment properties held by the Group. In many cases, the Group holds such investment properties through special purpose

44 entities. If the Group were to sell such Luxembourg special purpose entities, and if certain conditions are met (see Note 2.17 to the Consolidated Financial Statements), the Group believes that, under tax laws and treaties currently in effect, no capital gains tax would be due upon the sale, except in respect of properties in Germany under particular circumstances. If the Group were to sell such an investment property under conditions where no capital gains tax would be due, except in respect of properties in Germany under particular circumstances, the related deferred tax liability would be reversed at the time of sale, and the reversal would be recorded as a reduction in income tax expense for the relevant year.

Description of selected income statement line items Revenues The Company’s principal sources of revenue are revenue from property sales (development revenue), revenue from renting of properties in its investment portfolio (renting revenue), revenues from hotels and extended stay residences, asset management fees in connection with the management of the Endurance Fund and service charges in connection with property management.

Net gain from fair value adjustment on investment property Net gain from fair value adjustment on investment property consists of adjustments to the fair value of investment properties and land banks not used or intended to be used for development of properties for sale made by the Group to reflect adjusted valuations conducted annually by DTZ. Capital expenditures are deducted from the total change in valuation to determine the fair value adjustment in the income statement. If the Group has incurred capital expenditure in relation to an investment property in the relevant accounting period that is more than the increase in the market value of that property during that period then the Group will record a fair value adjustment in the income statement for such amount.

Other operating income Other operating income consists primarily of cost reimbursement received from tenants in jurisdictions where utilities (in particular electricity and heating) are charged to the owner and then billed to the tenants.

Cost of sales Cost of sales consists primarily of development costs, which are initially capitalised and charged as expenses only on a pro rata basis for unit by unit sales, based on units delivered, as well as costs in respect of the Company’s investment portfolio and hotel portfolio, which are expensed immediately. Cost of sales includes the cost of inventory, including land banks, which are transferred to inventory at fair value (rather than historical cost) when development starts.

Employee benefit Employee benefit costs consist of salaries, social security expenses and other employee-related expenses for employees not assigned to specific projects and estimated costs of issuing options to employees, as required under IFRS 2. Fair value of options granted to employees is determined using the Black-Scholes valuation model.

Other operating expenses Other operating expenses consist primarily of costs passed on to tenants (in particular costs of utilities, such as electricity and heating in jurisdictions where utilities are charged to the owner and then billed to the tenants), advisory, and sales and marketing expenses, maintenance and service costs, professional fees and travel expenses as well as general overheads.

45 Results of Operations For the years ended 31 December 2006, 2005 and 2004 The following table sets out the Company’s historical operating results in absolute amounts and as a percentage of total revenue for the periods indicated:

Year ended 31 December 2006 2005 2004 (€ thousands) Revenues ...... 172,908 50,348 70,670 Net gain from fair value adjustment on investment property ...... 145,901 78,975 25,408 Other operating income ...... 2,786 2,219 3,050 Gain on sale of activities held for sale ...... — 2,365 — Cost of sales ...... (119,224) (17,795) (43,819) Employee benefit ...... (30,141) (13,259) (7,464) Amortisation, impairments and provisions ...... (4,076) (2,093) (6,220) Other operating expenses ...... (33,906) (23,872) (10,796) Operating result ...... 134,248 76,888 30,829 Net interest expenses ...... (15,740) (6,962) (5,515) Other financial results ...... 4,416 2,411 1,686 Financial result ...... (11,324) (4,551) (3,829) Profit before income taxes ...... 122,924 72,337 27,000 Income taxes ...... (25,069) (16,065) (8,211) Net profit ...... 97,855 56,272 18,789 Attributable to minority interests ...... 1,156 1,749 89 Attributable to the Group ...... 96,699 54,523 18,700

Revenues The Group’s revenues increased substantially in 2006, to €172.9 million, or 243 per cent. from 2005 revenues of €50.3 million. The acquisition of Viterra Development, consolidated as of 1 July 2006, accounted for approximately €83.2 million of this increase, realised primarily in the development segment in Germany, the Czech Republic and Poland. Excluding the impact of the Viterra acquisition, revenues increased by 76 per cent. in 2006 compared to 2005.

The 2005 revenue figure represented a decline compared to €70.7 million of revenues recorded in 2004, with the decline recorded mainly in the development segment in the Czech Republic, resulting from the delivery in 2004 of units under development at the time of the acquisition of the developer IPB Real in 2003, which slowed new development projects in anticipation of the acquisition. Revenues increased in the Group’s other segments, particularly the hotels and residences segment, which benefited from the initial consolidation of Suncani Hvar.

The following table presents the Group’s revenues by business segments, for the periods presented:

Year ended 31 December 2006 2005 2004 (€ thousands) Development ...... 124,298 21,925 60,554 Renting ...... 19,856 7,584 6,558 Hotels and residences ...... 30,753 21,534 10,605 Management services ...... 8,690 3,087 — Intersegment activities(1) ...... (10,689) (3,782) (7,047) Total ...... 172,908 50,348 70,670

Note: (1) Intersegment activities consist primarily of project management fees and property management fees charged by companies in the development segment to companies in other segments.

46 The following table presents the Group’s revenues, by geography, for the periods presented:

Year ended 31 December 2006 2005 2004 (€ thousands) Czech Republic ...... 66,363 34,149 66,608 Germany ...... 62,796 291 — Poland ...... 22,216 4,298 863 Croatia ...... 9,676 6,797 — Hungary ...... 8,593 3,020 3,539 Other Central European countries ...... 9,628 3,762 77 Intersegment activities(1) ...... (6,364) (1,969) (417) Total Revenue ...... 172,908 50,348 70,670

Note: (1) Intersegment activities (see note 1 to the preceding table) are provided primarily by companies in the Czech Republic to other Group companies, some of which are located in other countries.

Development The Group’s property development revenues decreased by 63.8 per cent. from €60.6 million for the year ended 31 December 2004 to €21.9 million for the year ended 31 December 2005, but increased by 467.6 per cent. to €124.3 million for the year ended 31 December 2006.

The decrease from 2004 to 2005 was due to the completion of fewer projects in the Czech Republic, primarily a result of the fact that all units under construction by the Czech residential developer IPB Real when it was acquired by the Company in 2003 were sold and delivered in 2004. IPB Real slowed development projects in anticipation of the sale to the Group, which resulted in a gap in its development pipeline. During 2005, the Company recognised development revenue from the sale of 191 units in the Czech Republic, compared to 617 units during 2004.

The significant increase from 2005 to 2006 is principally attributable to the acquisition of the Viterra Development Group, which was consolidated as of 1 July 2006. The Viterra Development Group contributed development revenue of €83.2 million in the six months ended 31 December 2006. If the contributions by the Viterra Development Group were excluded, development revenues increased by 87 per cent. Prior to the acquisition of Viterra Development Group, the Czech Republic was the only country in which the Company received revenues from its development activities. Following the acquisition, the Company received development revenues from Germany and Poland as well as the Czech Republic. In addition, the expansion into Germany through the acquisition of Viterra Development Group resulted in a higher average price received by the Company for its developed properties, due to higher pricing for real estate in Germany, compared to the other countries in which the Group is active. The significant increase from 2005 to 2006 is also attributable to the completion of development projects, which resulted in the sale and delivery of more units in 2006, and an increase in average prices received by the Company for its developed properties. In 2006, 530 units were sold and delivered, of which 311, 146 and 73 units were in the Czech Republic, Poland and Germany, respectively.

As at 31 December 2006, the Group had 1,244 units subject to future purchase contracts.

Renting The Group’s revenues from renting of properties in its investment portfolio increased by 15.6 per cent. from €6.6 million for the year ended 31 December 2004 to €7.6 million for the year ended 31 December 2005 and by 161.8 per cent. to €19.9 million for the year ended 31 December 2006.

The increase from 2004 to 2005 was attributable to improving market conditions, which led to higher occupancy rates and higher rent. In addition, the Group acquired 65,956 square metres of office space during 2005.

The significant increase in revenues from renting during 2006 was largely due to the finalisation of several important acquisitions of office space, including the purchase at the end of 2005 of the Budapest office portfolio in Hungary, the finalisation of the Luxembourg Plaza acquisition in Prague and the acquisition of the Bubenska office building in Prague. The Group began recognising rental revenues from these properties during 2006. As a result of these acquisitions, the Group’s renting revenue profile also changed significantly, with offices and retail accounting for 70 per cent. and 13 per cent., respectively, of total rental revenue during 2006, compared to 60 per

47 cent. and zero per cent., respectively, during 2005. The proportion of residential rental revenues fell to 17 per cent. in 2006, compared to 40 per cent. during 2005. In addition, the increase during 2006 was also attributable to improving market conditions, which lead to higher rent. In 2006, the average occupancy rates (based on square meters) for the office, residential and retail portfolios were 80.6 per cent., 88.9 per cent. and 90.6 per cent., respectively, compared to 91 per cent. and 85.3 per cent. for the office portfolio and residential portfolio, respectively. The decline in the average occupancy rate for office properties in 2006 was due to lower occupancy rate in acquired properties in Germany and the Czech Republic.

Hotels and residences Revenues from hotels and extended stay residences increased by 103.1 per cent. from €10.6 million for the year ended 31 December 2004 to €21.5 million for the year ended 2005 and by 42.8 per cent. to €30.8 million for the year ended 31 December 2006. The increase from 2004 to 2005 was primarily due to the acquisition of Suncani Hvar, the Croatian hotel operator. Suncani Hvar, which was consolidated as of 1 July 2005, contributed revenues of €6.8 million in the six months ending 31 December 2005, which correspond to the high season of the hotel business, and €9.7 million in 2006. If revenues from Suncani Hvar are excluded, the increase during 2005 was approximately 38.9 per cent., attributable to an increase in the number of hotels and extended stay residences as well as an increase in the occupancy rates and average daily room rate. The increase from 2005 to 2006 was primarily attributable to an increase in the occupancy rate to 60 per cent. in 2006 (compared to 55 per cent. in 2005) and an increase in the average daily room rate from €91 to €96 for the MaMaison hotels and apartments portfolio, resulting in an increase of revenues from the MaMaison hotels and apartments to €21.1 million, compared to €14.7 million in 2005. Occupancy rates at Suncani Hvar remained stable at 32.5 per cent. in 2006 while the average daily room rate increased from €30 in 2005 to €51 in 2006.

Management services The Group’s results of operations included revenues from management fees for the first time in 2005. These revenues are derived from the Company’s fund management services carried out on the Endurance Fund’s behalf. Management fees were €3.1 million for the year ended 31 December 2005 and increased by 181.2 per cent. to €8.7 million for the year ended 31 December 2006. Management fees for 2006 included €4.5 million of fund management fees (mostly from subscriptions and new acquisitions by the Endurance Fund) for managing the Endurance Fund’s sub-funds and €4.2 million of property and project management fees for services provided to other business lines and third parties.

Net gain from fair value adjustment on investment property The following table presents the Group’s net gain from fair value adjustment on investment property, by business segments, for the periods presented:

Year ended 31 December 2006 2005 2004 (€ thousands) Development ...... 57,394 36,436 17,044 Hotels and residences ...... 8,565 22,361 3,044 Renting ...... 79,942 20,178 5,320 Total ...... 145,901 78,975 25,408

Net gain from fair value adjustment on investment property increased by 210.8 per cent. from €25.4 million for the year ended 31 December 2004 to €79.0 million for the year ended 31 December 2005 and by 84.7 per cent. to €145.9 million for the year ended 31 December 2006. The increases during these periods were attributable to fair value adjustments on recently acquired properties and land banks and, to a lesser extent, to favourable developments in the real estate markets in which the Company operates.

In 2006, the main contributors to the significant increase were revaluations of the Bubny land bank in Prague’s city centre (€34.5 million), the Berlin buildings portfolio (€9.4 million), the Bubenska building in the Czech Republic (€9.5 million), the Na Porici building in Prague (€8.4 million), the Pokrovka land bank in Russia (€8.3 million), the Luxembourg Plaza office complex in Prague (€7.9 million), and the Budapest Stock Exchange building (€7.8 million), as well as the gain from revaluations of properties and land banks acquired in connection with the acquisition of the Viterra Development Group (€23.3 million).

In 2005, the main contributors to the significant increase were the revaluations of the Hagibor land bank in Prague (€9.2 million), Na Porici building in Prague (€7.2 million), the Luxembourg Plaza land portion in Prague

48 (€6.9 million), the Zlota City Center building in Warsaw (€6.6 million), five residential buildings in Berlin (€5.8 million), and the Diana extended stay residence in Warsaw (€5.2 million), as well as the gain from revaluations of properties acquired in connection with the acquisition of Suncani Hvar (€13.3 million).

Other operating income Other operating income remained relatively stable during the periods under review, decreasing from €3.1 million for the year ended 31 December 2004 to €2.2 million for the year ended 31 December 2005 and increasing slightly to €2.8 million for the year ended 31 December 2006. This increase is due to the growth in the number of rental properties and, as a consequence, additional cost reimbursement.

Gain on sale of activities held for sale For the year ended 31 December 2005, the Company recognised €2.4 million of gain on sale of activities held for sale, which was attributable to the sale of the Orco Business Park building in Budapest to the Endurance Fund. At the time of the sale, the Group held a 13 per cent. ownership interest in the relevant sub-fund of the Endurance Fund.

Cost of sales Cost of sales decreased by 59.4 per cent. from €43.8 million for the year ended 31 December 2004 to €17.8 million for the year ended 31 December 2005 and increased by 570.0 per cent. to €119.2 million for the year ended 31 December 2006. The decrease during 2005 was the result of fewer projects completed during 2005, offset by higher costs relating to its hotel portfolio during 2005. Since development costs are generally not expensed until the units are delivered, in periods of low project completion, cost of sales decreases.

Cost of sales increased during 2006 as a result of higher levels of project completion. In particular, the acquisition of Viterra Development Group acquisition led to higher development costs. Hotel costs also continued to rise during 2006.

As a general trend the group has experienced annual increases in per unit development costs, in particular construction costs and labour costs. The group anticipants that development costs will continue to increase significantly. The group’s ability to achieve the targeted profit from the sale of developement property will therefore depend on its ability to pass on any increases in development costs in the form of higher prices.

Employee benefit Employee benefit costs increased by 77.6 per cent. from €7.5 million for the year ended 31 December 2004 to €13.3 million for the year ended 31 December 2005 and by 127.3 per cent. to €30.1 million for the year ended 31 December 2006.

The €16.9 million increase in employee benefit costs from 2005 to 2006 was principally attributable to the recognition under IFRS of €7.6 million of non-cash expenses in 2006 in connection with the Group’s stock option plans, compared to €1.4 million in 2005. The increase also reflected the consolidation of Suncani Hvar for the whole year 2006 instead of six months only, resulting in €6.7 million of employee benefit costs in 2006, compared to €3 million in 2005. The acquisition of Viterra Development Group resulted in €2.8 million of additional employee benefit costs in 2006.

The €5.8 million increase in employee benefit costs from 2004 to 2005 was primarily attributable to the acquisition of Suncani Hvar, which resulted in €3 million of additional employee benefit costs in 2005, an increase in the number of employees, the recognition under IFRS of €1.4 million of non-cash expenses in 2005 (2004: nil) in connection with the Group’s stock option plans.

Amortisation, impairments and provisions Amortisation, impairments and provisions decreased from €6.2 million for the year ended 31 December 2004 to €2.1 million for the year ended 31 December 2005 and increased slightly to €4.1 million for the year ended 31 December 2006.

In 2005 and 2006, this line item included primarily amortisation relating to fixtures and fittings in the Company’s hotel portfolio. In 2004, this line item included primarily provisions for guarantees given by the Group in connection with the development of apartments following the acquisition of IPB Real to adjust provisions in relation to IPB Real projects to group policy.

49 Other operating expenses Other operating expenses increased by 121.2 per cent. from €10.8 million for the year ended 31 December 2004 to €23.9 million for the year ended 31 December 2005 and by 42.0 per cent. to €33.9 million for the year ended 31 December 2006. The increases during these periods were primarily attributable to the expansion of the Company’s business, in particular through acquisitions, which led to an increase in sales and marketing expenses and general overheads as well as an increase in costs passed on to tenants.

Operating result As a result of the factors discussed above, the Company’s operating result increased by 149.7 per cent. from €30.8 million for the year ended 31 December 2004 to €76.9 million for the year ended 31 December 2005 and by 74.6 per cent. to €134.2 million in 2006. The following table presents the Group’s operating results, by business segments, for the periods presented: Year ended 31 December 2006 2005 2004 (€ thousands) Development ...... 44,256 35,093 23,277 Hotels and residences ...... 2,746 18,402 2,189 Renting ...... 82,790 19,001 5,364 Management services ...... 7,891 4,768 — Intersegment activities ...... (3,435) (376) (1) Total ...... 134,248 76,888 30,829

Adjusted EBITA Adjusted EBITA is calculated as operating result for the period after deduction of net gain from fair value adjustment on investment property and after adding back costs relating to (i) amortisation, impairments and provisions, (ii) stock-based compensation and (iii) the impact on operating results of the fact that land is transferred from investment property to inventory when development projects start at fair value, not historical cost (cost of goods sold corrections). Adjusted EBITA is not a measure of financial performance under IFRS. Prospective investors should not consider it an alternative to operating result or net profit attributable to the Group as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Adjusted EBITA does not necessarily indicate whether cash flow will be sufficient or available for cash requirements. The Group believes that adjusted EBITA provides useful information to investors because it eliminates variances caused by non-cash items (particularly the net gains from fair value adjustments on investment property) and helps investors evaluate the performance of the Group’s underlying business. Adjusted EBITA may not be indicative of the Group’s historical operating results nor is it indicative of potential future results. Other companies may not calculate adjusted EBITA the way the Group does, and accordingly the presentation of adjusted EBITA in this Prospectus may not be comparable to a similarly titled measure of other companies. Adjusted EBITA amounted to €5.6 million in 2006, compared to €1.4 million in 2005. The following table provides a reconciliation of the Group’s adjusted EBITA to operating result, and the Group’s adjusted EBITA, by business segments, for the periods presented: Year ended 31 December 2006 2005 (€ thousands) Operating result ...... 134,248 76,888 Net gain from fair value adjustment on investment properties ...... (145,901) (78,975) Amortisation, impairments and provisions ...... 4,076 2,093 Stock-based compensation ...... 7,572 1,393 Cost of goods sold corrections ...... 5,567 — Adjusted EBITA ...... 5,562 1,399 Of which: Development ...... (3,911) (2,303) Hotels and residences ...... (272) 179 Renting ...... 4,890 (956) Management services ...... 8,289 4,852 Intersegment activities ...... (3,434) (373)

50 The increase in adjusted EBITA from 2005 to 2006 was primarily attributable to an increase in non-cash costs in 2006. In particular, in 2006, the Group recorded for the first time cost of goods sold corrections, as well as higher costs relating to stock-based compensation and amortisation, impairments and provisions. The negative adjusted EBITA in the development segment reflects the high amount of non-capitalised costs (such as sales and marketing) in the development segment. In addition, other operating expenses are allocated to the various business segments based on contribution to revenues. As the development segment accounts for the majority of the revenues, a majority of the other operating expenses are allocated to the development segment. As a result, during periods of significant growth, adjusted EBITA is systematically lower than the overall per-project margins realised in the development segment.

Net interest expenses The Company’s net interest expense increased by 26.2 per cent. from €5.5 million for the year ended 31 December 2004 to €7.0 million for the year ended 31 December 2005 and by 126.1 per cent. to €15.7 million for the year ended 31 December 2006.

The €1.5 million increase in net interest expense from 2004 to 2005 was attributable to a significant increase in total borrowings (consisting of bonds and financial debts) from €116.8 million as of 31 December 2004 to €296.0 million as of 31 December 2005. The amount of bank loans increased from €69.1 million as of 31 December 2004 to €185.0 million as of 31 December 2005. The amount of issued bonds increased from €44.6 million as of 31 December 2004 to €101.1 million as of 31 December 2005. The €8.8 million increase in net interest expense from 2005 to 2006 was due to a significant increase in total borrowings from €296.0 million as of 31 December 2005 to €651.3 million as of 31 December 2006. The amount of bank loans increased from €184.9 million as of 31 December 2005 to €400.9 million as of 31 December 2006. The amount of issued bonds increased from €101.1 million as of 31 December 2005 to €245.1 million as of 31 December 2006. The average cost of borrowing in 2006 was 4.34 per cent., compared to 5.2 per cent. in 2005 and 5.68 per cent. in 2004. The decrease in average cost of borrowing is due to the greater use of low coupon bonds.

Other financial results Other financial results, which consists primarily of gains or losses on foreign exchange, increased from €1.7 million for the year ended 31 December 2004 to €2.4 million for the year ended 31 December 2005 and to €4.4 million for the year ended 31 December 2006. The increases in 2005 and 2006 were due primarily to foreign exchange gains resulting from fluctuations in the Czech koruna/euro exchange rate during the relevant years.

Income taxes The Company’s income tax expense increased from €8.2 million for the year ended 31 December 2004 to €16.1 million for the year ended 31 December 2005 and to €25.1 million for the year ended 31 December 2006.

In 2005, the Company’s tax expense was composed of €1.1 million of current income taxes and €15 million of deferred income taxes. In 2006, current income taxes and deferred income taxes amounted to €2.9 million and €22.2 million, respectively. The deferred income taxes are primarily related to the tax on the Group’s revaluation of its investment property portfolio in accordance with IAS 12.

The Company’s effective tax rate was 30.4 per cent., 22.2 per cent. and 20.4 per cent. for the years ended 31 December 2004, 2005 and 2006, respectively. The decrease in its effective tax rate from 2005 to 2006 resulted primarily from the reduction in the Czech statutory tax rate from 26 per cent. to 24 per cent.

51 For the three months ended 31 March 2007 and 2006 The following table sets out the Company’s historical operating results for the periods indicated: Three months ended 31 March 2007 2006 (unaudited) (unaudited) (€ thousands) Revenues ...... 58,599 16,148 Net gain from fair value adjustment on investment property ...... — 6,498 Other operating income ...... 449 (425) Loss on sale of activities held for sale ...... (20) — Cost of sales ...... (39,241) (7,496) Employee benefit ...... (8,715) (4,096) Amortisation, impairments and provisions ...... (1,800) 657 Other operating expenses ...... (7,990) (4,795) Operating result ...... 1,282 6,491 Net interest expenses ...... (3,160) (4,665) Other financial results ...... 1,991 7,008 Financial result ...... (1,169) 2,343 Profit before income taxes ...... 113 8,834 Income taxes ...... (1,406) (2,228) Net profit ...... (1,293) 6,606 Attributable to minority interests ...... (1,732) (731) Attributable to the Group ...... 439 7,337

The following table presents the Group’s revenues by business segments, for the periods presented: Three months ended 31 March 2007 2006 (unaudited) (unaudited) (€ thousands) Development ...... 45,598 7,077 Renting ...... 6,625 3,868 Hotels and residences ...... 6,188 4,211 Management services ...... 1,715 2,575 Intersegment activities ...... (1,527) (1,583) Total ...... 58,599 16,148

The substantial increase in revenues was primarily due to a substantial increase in the Group’s property development revenues. This increase was primarily due to the acquisition of the Viterra Development Group (which contributed approximately €15.6 million of revenues in the three months ended 31 March 2007), an increase in units delivered in the first quarter of 2007 (particularly in the Czech Republic), and the recognition of revenues from the Group’s development activities in Germany and Poland in the first quarter of 2007 instead of the fourth quarter of 2006. The increase in revenues from renting was primarily attributable to contributions of the Bubenska office building in Prague and the Viterra Development Group. In the first quarter of 2007, the average occupancy rates for the office, residential and retail portfolios were 83 per cent., 88 per cent., and 91 per cent. The decrease in the Group’s revenues from management services was primarily attributable to fewer new subscriptions or acquisitions. The Group did not record any net gain from value adjustment on investment property in the three months ended 31 March 2007, due to the Group’s policy to only request external appraisal for assets undergoing significant changes or for newly acquired properties. The significant acquisitions for which the Group has signed agreements since the end of 2006 have all closed or are expected to close in the second quarter of 2007, and will therefore be valued by DTZ in connection with the financial information as of and for the six months ended 30 June 2007. See “— Recent Developments” for further information regarding the significant acquisitions since the end of 2006. The significant increase in cost of sales reflects the higher levels of units delivered in the first quarter of 2007, compared to the first quarter of 2006. The significant decrease in other financial results was primarily due

52 to lower foreign exchange pairs in the first quarter of 2007, compared to the first quarter of 2006. The increase in net profit attributable to minority interests reflects Suncani Hvar.

Adjusted EBITA for the three months ended 31 March 2007 amounted to €7.4 million, compared to €0.7 million for the three months ended 31 March 2006. The following table provides a reconciliation of the Group’s adjusted EBITA to operating result, for the periods presented:

Three months ended 31 March 2007 2006 (unaudited) (unaudited) (€ thousands) Operating Result ...... 1,282 6,491 Net gain from fair value adjustment on investment properties ...... — (6,498) Amortisation, impairments and provisions ...... 1,800 657 Stock-based compensation ...... 1,500 0 Cost of goods sold corrections(1) ...... 2,800 0 Adjusted EBITA(2) ...... 7,382 650

Note: (1) This represents the impact on operating results of the fact that land is transferred from investment property to inventory when development projects start at fair value, not historical cost. It is calculated upon sale of investment property as the difference between the historical cost of the investment property and the adjusted fair value of such property, as recorded in inventory determined on a corporate basis for each unit sold. (2) Adjusted EBITA is calculated as operating result for the period after deduction of net gain from fair value adjustment on investment property and after adding back costs relating to (i) amortisation, impairments and provisions, (ii) stock-based compensation and (iii) cost of goods sold corrections linked to the revaluation of properties. Adjusted EBITA is not a measure of financial performance under IFRS. Prospective investors should not consider it an alternative to operating result or net profit attributable to the Group as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Adjusted EBITA does not necessarily indicate whether cash flow will be sufficient or available for cash requirements. The Group believes that adjusted EBITA provides useful information to investors because it eliminates variances caused by non-cash items (particularly the net gains from fair value adjustments on investment property) and helps investors evaluate the performance of the Group’s underlying business. Adjusted EBITA may not be indicative of the Group’s historical operating results nor is it indicative of potential future results. Other companies may not calculate adjusted EBITA the way the Group does, and accordingly the presentation of adjusted EBITA in this Prospectus may not be comparable to a similarly titled measure of other companies.

The increase in adjusted EBITA from the first quarter of 2006 to the first quarter of 2007 was primarily attributable to an increase in operating results (after deduction of net gain from fair value adjustment on investment properties) and higher levels of non-cash costs in the first quarter of 2007, compared to the first quarter of 2006. In particular, the Group recorded cost of goods sold corrections of €2.8 million (of which €1.6 million was attributable to the fair value adjustments following acquisition of the Viterra Development Group) in the first quarter of 2007.

53 The table below sets out the Company’s consolidated balance sheets as of 31 March 2007 and 31 December 2006. As of 31 March 2007 31 December 2006 (unaudited) € Balance Sheet ( thousands) Assets NON-CURRENT ASSETS ...... 1,047,732 992,605 Intangible assets ...... 3,142 1,545 Investment property ...... 727,901 749,438 Property, plant and equipment ...... 267,020 213,860 Hotels and own-occupied buildings ...... 164,266 165,502 Fixtures and fittings ...... 14,280 15,036 Properties under development ...... 88,474 33,322 Financial assets ...... 36,476 21,196 Deferred tax assets ...... 13,193 6,566 CURRENT ASSETS ...... 670,609 485,468 Inventories ...... 254,739 248,884 Trade receivables ...... 50,788 52,602 Other current assets ...... 128,975 85,643 Cash and cash equivalents ...... 236,107 98,339 Held for sale activities ...... 2,538 2,281 TOTAL ...... 1,720,879 1,480,354

Equity and liabilities EQUITY ...... 544,153 518,425 Shareholders’ equity ...... 475,750 454,232 Minority interests ...... 68,403 64,193

LIABILITIES ...... 1,176,726 961,929 Non-current liabilities ...... 886,416 673,075 Bonds ...... 366,840 240,854 Financial debts ...... 403,074 331,651 Provisions ...... 11,629 11,822 Deferred tax liabilities ...... 104,873 88,748

Current liabilities ...... 287,772 287,381 Bonds and financial debts ...... 102,019 95,370 Trade payables ...... 55,691 55,526 Advance payments ...... 69,445 63,377 Other current liabilities ...... 60,617 73,108 Held for sale activities ...... 2,538 1,473 TOTAL ...... 1,720,879 1,480,354

Liquidity and Capital Resources The Company has historically generated negative operating cash flows and has therefore relied primarily on external sources of financing, consisting primarily of euro and Czech koruna denominated bank loans and issuances of convertible and exchangeable bonds, as well as issuances of new shares in the Company. As of 31 December 2006, the Group had €400.9 million in outstanding bank loans, compared to €184.9 million as of 31 December 2005. Bank loans are entered into by subsidiaries of the Company and are secured by mortgages on individual real estate assets and/or a pledge on the shares of the relevant subsidiaries. In addition, these bank loans are generally guaranteed by the Company. In September 2004, the Company issued €32 million in convertible bonds, which it subsequently called in the first quarter of 2007. In June 2005, it issued €24 million in bonds exchangeable into shares of Suncani Hvar, the Croatian hotel operator in which the Company acquired a stake. It also issued €50 million of bonds with repayable subscription warrants during 2005. The Company issued an additional €150 million in convertible bonds in May 2006. As of 31 December 2006, the Group had €245.1 million in outstanding bonds, compared to

54 €101.1 million as of 31 December 2005. See Note 17 to the consolidated financial statements as of and for the year ended 31 December 2006 for further information regarding the bonds outstanding as of 31 December 2006. In March 2007, the Company completed its largest ever financing, a €175 million issuance of bonds with warrants with a maturity of seven years. See “Recent Developments” for further details regarding the Company’s €175 million bonds with warrants issue in March 2007 and the €100.1 million bonds with warrants issue in May 2007 by Orco Germany in May 2007.

In March 2005, the Company also arranged its first Step-up Equity Subscription Programme (“PACEO”), which allowed it to issue a maximum of 1 million new shares to Société Générale, at the Company’s option. All subscriptions were at an issue price of 95 per cent. of the share price at the time of subscription. The first PACEO was fully used and closed in early 2006. A second PACEO was arranged in April 2006 with Société Générale allowing the issue of one million new Shares at an issue price of 96 per cent. of the Share price at the time of the subscription. As at 31 December 2006, the Company had issued 450,000 shares under the equity line for the second PACEO for total proceeds of €44 million. No new shares have been issued under the second PACEO since 31 December 2006.

Cash flows The table below sets out the Company’s consolidated cash flows for the years ended 31 December 2006, 2005 and 2004:

Year ended 31 December 2006 2005 2004 (€ thousands) Operating result ...... 134,248 76,888 30,829 Net gain from fair value adjustments ...... (145,901) (78,975) (25,408) Amortization, impairments & provisions ...... 4,076 2,093 6,220 Gain and losses on disposal of investments ...... (93) (2,777) (1,637) Stock options plans ...... 7,571 1,393 0 Adjusted operating profit ...... (99) (1,378) 10,004 Financial result ...... 5,240 2,821 — Income tax paid ...... (1,204) (4,331) — Financial result and income taxes paid ...... 4,036 (1,510) (3,560) Changes in operating assets and liabilities ...... 8,696 (47,354) (13,654) Net cash from operating activities ...... 12,633 (50,242) (7,210) Acquisition of subsidiaries, net of cash acquired ...... (69,887) 3,759 — Capital expenditures ...... (342,427) (171,526) (29,398) Proceeds from sales of non current tangible assets ...... 3,831 3,085 8,017 Purchase of intangible assets ...... (1,199) (157) (159) Purchase of financial assets ...... (5,820) (10,680) — Proceeds from sale of held for sale activities ...... — 12,430 — Net interest paid ...... (18,441) (6,136) (4,498) Net cash used in investing activities ...... (433,943) (169,225) (26,038) Issue of equity instruments from shareholders ...... 84,495 81,398 7,267 Issue if equity instruments from minority ...... 31,814 4,360 — Proceeds from borrowings ...... 434,644 195,152 39,360 Repayments of borrowings ...... (75,754) (25,560) (13,320) Dividend paid to company’s shareholders ...... (5,993) (3,498) (1,826) Net cash from financing activities ...... 469,206 251,852 31,481 Net increase in cash ...... 47,896 32,385 (1,767) Cash and cash equivalents(1) at the beginning of the period ...... 49,089 15,742 16,232 Exchange difference on cash ...... 1,359 962 1,277 Cash and cash equivalents(1) at the end of the period ...... 98,344 49,089 15,742

55 Net cash from (used in) operating activities Net cash used in operating activities amounted to €7.2 million for the year ended 31 December 2004, compared to net cash used in operating activities of €50.2 million for the year ended 31 December 2005. The significant increase in cash used in operating activities was primarily caused by a cash outflow of €47.4 million due to changes in operating assets and liabilities, which was primarily due to a significant increase in inventory of €25.0 million and in other current assets (which consists primarily of deposits paid to contractors) of €33.0 million, offset by a decrease in trade receivables of €16.6 million, a decrease in advance payments received from customers of €7.7 million, a decrease in other current liabilities of €2.8 million, and an increase in trade payables of €2.7 million. The significant increase in inventory and other current assets was the result of increased development activities but fewer completed projects. As a general matter, the Group’s working capital requirements increase during periods of increased development activities and completion of fewer projects and decrease when it records a substantial number of deliveries of units. This is because the Group pays expenses over the life of a project, while it receives payments for units only upon delivery.

In the year ended 31 December 2006, the Group recorded net cash from operating activities of €12.6 million, compared to net cash used in operating activities of €50.2 million in the year ended 31 December 2005. This improvement in net cash from operating activities was primarily due to the fact that the acquisition of the Viterra Development Group was recorded in net cash used in investing activities while the proceeds from the sale of units was recorded in net cash from operating activities, resulting in a cash inflow of €8.7 million from changes in operating assets and liabilities in 2006, compared to a cash outflow of €47.4 million in 2005. The cash inflow from changes in operating assets and liabilities was primarily the result of increases in inventory, trade receivables and other current assets of €36.7 million (calculated as changes in inventory net of the acquisition price for the Viterra Development Group (€98.1 million), changes in transfer of investment property to inventory (€55.8 million), and changes in net impairments (€2.6 million)), €47.0 million and €42.1 million, respectively, and significant increases in trade payables, advance payments and other current liabilities of €34.7 million, €44.2 million and €62.1 million, respectively. The significant increases in operating liabilities were primarily due to the acquisition of the Viterra Development Group, as the Group recorded operating liabilities in respect of costs relating to units delivered by the Viterra Development Group prior to the acquisition. Other current liabilities also increased as a result of the Group’s purchase of the interest of the European Bank for Recreation and Development in the MaMaison Hotels and Residences portfolio and an increase in prepayments from customers. Excluding the impact of the acquisition of the Viterra Development Group, changes in operating assets and liabilities resulted in a net cash outflow. The number of development projects underway has significantly increased since 31 December 2006 and the Group therefore expects a significant increase in its working capital requirements for the current year. Accordingly, for the current year the Group expects a significant cash outflow in connection with changes in operating assets and liabilities.

Net cash used in investing activities Net cash used in investing activities increased from €26.0 million for the year ended 31 December 2004 to €169.2 million for the year ended 31 December 2005 and to €433.9 million for the year ended 31 December 2006. The increase from 2004 to 2005 was primarily due to higher capital expenditures (€171.5 million in 2005, compared to €29.4 million in 2004). The increase from 2005 to 2006 was primarily due to higher capital expenditures (€342.4 million in 2006, compared to €171.5 million in 2005) as well as the acquisition of the Viterra Development Group. See “— Capital Requirements” below.

Net cash from financing activities Net cash from financing activities increased from €31.5 million for the year ended 31 December 2004 to €251.9 million for the year ended 31 December 2005 and to €469.2 million for the year ended 31 December 2006. The increase from 2004 to 2005 was primarily due to increased proceeds from borrowings (€195.2 million in 2005, compared to €39.4 million in 2004), and increased proceeds from the issuance of equity securities (€85.8 million in 2005, compared to €7.3 million in 2004). The increase in proceeds from the issuance of equity securities was primarily attributable to the first PACEO programme set up in March 2005, which allowed the Company to issue one million new shares. The increase from 2005 to 2006 was also primarily due to increased proceeds from borrowings (€434.6 million in 2006, compared to €195.2 million in 2005), increased proceeds from the issuance of equity instruments to minority (€31.8 million in 2006, compared to €4.4 million in 2005), offset by increased repayments of borrowings (€75.8 million in 2006, compared to €25.6 million in 2005).

56 Capital Requirements The Group requires capital to finance the following: • Capital expenditures, consisting of cash outlays for the acquisition of individual real estate assets, the development of real estate properties, investments in income-producing properties, and investments in the hotels and residences segment; • Acquisitions of companies; • Repayment of debt; • Changes in working capital; and • General corporate activities, including dividends.

Real estate investment and development is a capital-intensive business, and the Group expects to have significant ongoing liquidity and capital requirements in order to finance its growth strategy, including investing in new properties and development projects.

The Group’s cash outlays for capital expenditures (excluding cash outlays for the acquisition of companies) for the years ended 31 December 2004, 2005 and 2006 were €29.4 million, €171.5 million and €342.4 million, respectively. The increases reflect significant increases in acquisitions of individual real estate assets. In 2006, the Group acquired land banks and land for a total consideration of €103.4 million (compared to €27 million in 2005) and freehold buildings for a total consideration of €166.6 million (compared to €127.3 million in 2005). In addition, the capital expenditure for investments in the Group’s hotels and residences segment increased from €17.9 million in 2005 to €64.3 million in 2006, due to refurbishments of hotels in Russia and Croatia.

The Group’s cash outlays for the acquisition of companies (net of cash acquired) also increased significantly and amounted to €70.1 million for the year ended 31 December 2006 (reflecting primarily the acquisition of the Viterra Development Group), compared to €3.8 million in the year ended 31 December 2005. In 2004, the Group did not acquire any companies.

As of 31 December 2006, the Group’s capital expenditure commitments regarding development projects (which were already underway as of 31 December 2006) amounted to €499.4 million (compared to €75.7 million as of 31 December 2005). In 2007, the Group’s capital requirements in connection with its development activities will therefore be substantially higher than in 2006, which reflects an increase in development activities in 2007. The Group expects to finance the large majority of these development costs through project-specific bank loans and advance payments by customers. The Group is also currently considering the acquisition of individual real estate assets and companies, which, if fully realised, would result in capital requirements of over €1 billion, more than double the amount spent in 2006. The Group expects to finance these capital requirements through the proceeds from this Offering, proceeds from the issuance of the €100.1 million bond with warrants issued by Orco Germany and the issuance of equity securities under the second PACEO. Since the end of 2006, the Group has acquired additional properties for an aggregate acquisition price of €63 million, and has signed binding agreements to acquire properties with an aggregate acquisition price of €200 million. Depending on its success in signing new acquisitions, the Group may need to seek additional financing in the second half of 2007.

The Group is also subject to capital requirements as sponsor of the Endurance Fund. As of the date of this Prospectus, the Group’s total outstanding capital commitments to the Endurance Fund were €25.4 million.

For the foreseeable future, the Group expects that it will continue to rely primarily on its financing activities to support its operating and investing activities. The Group expects that its capital expenditures in connection with the development of real estate properties, investments in income-producing properties, the acquisition of real estate properties and land banks will be the majority of its cash outflows for the foreseeable future.

57 Commitments and Contingencies The Group has various contractual obligations to make future payments, including bonds, bank loans, lease obligations and certain other borrowings. The following table summarises the Group’s future obligations under these contracts due by periods:

As at 31 December 2006 Less than Between one More than Total one year and five years five years Total current and non-current bonds(1) ...... 245,065 4,210 56,176 184,679 Current bonds ...... 4,210 4,210 — — Non-current Convertible bonds ...... 125,976 — 5,768 120,208 Non-current Exchangeable bonds ...... 23,172 — — 23,172 Non-current Bonds ...... 91,707 — 50,408 41,299 Financial debts(2) ...... 406,265 91,160 204,419 110,686 Bank loans ...... 400,904 89,692 203,644 107,568 Fixed rate ...... 87,375 23,615 39,143 24,617 Variable rate ...... 313,529 66,077 164,501 82,951 Other borrowings ...... 4,120 1,384 775 1,961 Finance lease obligations ...... 1,241 84 — 1,157 Total ...... 651,330 95,370 260,595 295,365

Notes: (1) As of 31 March 2007, total current and non-current bonds amounted to €370 million. (2) As of 31 March 2007, total financial debts amounted to €489 million.

The Group’s total borrowings amounted to €651.3 million as of 31 December 2006, compared with €296.0 million as of 31 December 2005. The Group’s total net debt (calculated as non-current bonds and financial debts and current bonds and financial debts less cash and cash equivalents and current financial assets) amounted to €532.5 million as of 31 December 2006, compared to €234.1 million as of 31 December 2005. The Group’s loan to value ratio (calculated as net debt divided by the appraised value of the Group’s property portfolio) was 40.3 per cent. as of 31 December 2006.

Off balance sheet transactions On 3 March 2006, the Board of Directors of the Company granted to some management personnel in the Group a termination indemnity payment for a total amount of €34 million. This indemnity would become payable by the Company to the relevant management member only in case of a change in control of the Company and where the relationship between the Company and the member is terminated by either party within a period of six months after the change of control.

As of the date of this Prospectus, the Group’s total outstanding capital commitments to the Endurance Fund were €25.4 million.

The Company generally provides a guarantee for the bank loans, which are typically entered into by its subsidiaries.

Market risk The Company’s financial risk management focuses on four major types of risks: foreign exchange risk, price risk, credit risk, liquidity risk and interest rate risk.

Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Czech Koruna (CZK), the Polish Zloty (PLN), the Hungarian Forint (HUF), the Slovak Koruna (SKK) and the Croatian Kuna (HRK). Foreign exchange risk arises from recognised monetary assets and liabilities and net investments in foreign operations. The Group does not hedge its foreign exchange risks. Salaries, overhead expenses, future purchase contracts in the development sector, building refurbishment and construction costs are denominated in local currencies. Loans, rental income and sales of building are denominated in the local currency but linked to euros (€).

58 Price risk The Group is exposed to property price and property rentals risk. Even though the Group’s activities are focused on one geographical area — Central and Eastern Europe — such activities are spread over several business lines (residences, offices, hotels) and different countries that each undergo specific business cycles.

Credit risk The Group has no significant concentrations of credit risk. Rental contracts are made with customers with an appropriate credit history. Cash transactions are limited to high-credit-quality financial institutions. The Group has policies that limit the amount of credit exposure to any financial institution.

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the inherent nature of its assets the Group is subject to a liquidity risk.

Interest rate risk As the Group has no significant interest-bearing assets, the Group’s income is substantially independent of changes in market interest rates. An increase of 1 per cent. in the rate of interest would decrease the Group’s net income by €2.6 million as of 31 December 2006. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group has now started to hedge some of its variable interest rates by entering into swap transactions. The total amount of the Group’s swap transactions is not material. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows.

Recent developments Since 31 December 2006, the Company has entered into certain material transactions which are described below.

Acquisition of GSG On 12 June 2007, ORCO Capitol S.A., a 100 per cent. owned subsidiary of Orco Germany together with Morgan Stanley Real Estate Fund V (“MSREF V”), a real estate fund sponsored by Morgan Stanley Real Estate, finalised the acquisition of Gewerbesiedlungs-Gesellschaft mbH (“GSG”), the largest provider of commercial property in Berlin, for approximately €400 million.

The original option agreement for the sale and purchase was entered into on 23 May 2006, and, subsequent to the approval of the Berlin Senate on 20 March 2007, the parties entered into an amended agreement, the terms of which substantially reflect the terms of the original option agreement. The property portfolio owned by GSG is located in Berlin and is approximately 800,000 square metres (commercial and light industrial space) with approximately 1,200 tenants and produces investment income, which was approximately €25 million in 2006. The Company believes that the redevelopment potential of the acquired portfolio will help achieve its objective of value creation.

Under the terms of the joint venture agreement, MSREF V will receive 14.1 million new shares in Orco Germany, which represents approximately 29 per cent. of Orco Germany’s share capital. The completion of the GSG acquisition will reduce the Group’s ownership interest in Orco Germany to 57 per cent.

Redemption of €32 million convertible bond due 15 December 2011 In March 2007, the Company exercised its call option and redeemed its €32 million convertible bonds due 15 December 2011 with a nominal interest rate of 5.5 per cent. per annum. The bondholders were given the option to convert their bonds at the conversion ratio of 1 bond for 1 Share in the Company up to 19 March 2007. On 20 March 2007, the bondholders who did not convert their bonds received a supplementary interest for the total length of their investment amounting to a gross redemption return of 8 per cent. The total amount of the reimbursement amounted to €34.46 per bond. On 26 March 2007, the Company reimbursed in cash the holders of 1,987 bonds which were not converted.

59 €175 million bond with warrants issue In March 2007, the Company issued €175 million of bonds with warrants, which were placed privately with institutional investors. The bonds have a maturity of seven years, a coupon of 2.5 per cent. and will be redeemed at 117.5 per cent. of the principal amount. The warrants permit the issuance of 1,793,160 new shares before the maturity date. They can be called at the option of the Company at €0.01 per warrant after five years if the parity value exceeds €190.31 (130 per cent. of the initial exercise price of €146.39). The bonds and warrants were listed on Euronext Paris in April 2007.

Acquisition of Molcom In April 2007, the Company acquired 80 per cent. of Molcom, a logistic centre located approximately 15 kilometres from Moscow, for a total consideration of US$85 million. The current management will retain the remaining 20 per cent. interest. The total project area amounts to 104,000 square metres, and the project also includes a four hectare land bank reserve which the Company may redevelop in the future.

Sale of Hospitality Business In April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total appraised value of Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet completed and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into an agreement with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. As the Company will initially hold all of the shares of the Endurance Hospitality Sub-Fund, until outside investors subscribe for shares in the Endurance Hospitality Sub-Fund, the results of the hotels and extended stay residences will continue to be fully consolidated. As a result, these activities are not considered to be “held for sale” and their results are fully reflected in the consolidated financial statements. The Company intends to decrease its interest in the Endurance Hospitality Sub-Fund to below 20 per cent.

Acquisition of properties Since the end of 2006, the Group has acquired additional properties for an aggregate acquisition price of €63 million, and has signed binding agreements to acquire properties with an aggregate acquisition price of €200 million, excluding the acquisitions of GSG and Molcom.

€100.1 million bond with warrants issued by Orco Germany In May 2007, Orco Germany issued €100.1 million of bonds with warrants, which were placed privately with institutional investors. The bonds have a maturity of five years and a coupon of 4.00 per cent. The maximum redemption price of the bond will be 125 per cent. of the principal amount. The warrants permit the issuance of 9,328,851 new shares of Orco Germany before the maturity date. As of the date of this Prospectus, the Company holds 72 per cent. of Orco Germany. Assuming the completion of the GSG acquisition, which will reduce the Group’s ownership interest in Orco Germany to 57 per cent., the issuance of 9,328,851 new shares upon the exercise of all warrants would result in a dilution of the Group’s ownership interest in Orco Germany to 49 per cent.

60 BUSINESS Overview The Company is a real estate company active across Central and Eastern Europe in the following three segments of business: • Real Estate Development: development of properties intended to be sold and investment in land banks to be used for future developments; • Real Estate Investment: investment in rental properties either through acquisition or development; and • Asset Management: sponsorship and management of the Endurance Fund, a Luxembourg mutual investment umbrella fund (fonds commun de placement — fonds d’investissement spécialisé).

The Company’s activities are focused on the markets in the Czech Republic, Germany, Hungary, Poland, Croatia, Slovakia and Russia, which accounted for 41 per cent., 21 per cent., 12 per cent., 11 per cent., 8 per cent., 4 per cent. and 3 per cent., respectively, of the appraised value of the total assets of the Company as of 31 December 2006. The Company is one of the major real estate developers and investors in the Czech Republic and Germany and a leader in the development of residential real estate in Prague under its IPB Real brand.

The Company’s development portfolio consists of residential projects focusing on the middle and upper middle segment of the residential housing market. The Company also develops luxury apartments in landmark buildings. As at 31 December 2006, the Company’s development portfolio (excluding land banks) consisted of 39 properties under construction. In addition, the Company had invested in a number of land banks in various countries, and valued by DTZ at €154.3 million as of 31 December 2006.

The Company’s investment portfolio is based on the acquisition or development of prime properties in major Central and Eastern European cities, focusing on commercial and residential buildings and more recently on retail premises. As at 31 December 2006, the Company’s investment portfolio had an appraised value (as determined by DTZ) of €469.7 million, and consisted of 51 properties.

The Company also sponsors and manages The Endurance Real Estate Fund for Central Europe, a Luxembourg mutual investment umbrella fund (fonds commun de placement — fonds d’investissement spécialisé), which has four sub-funds as of the date of this Prospectus. The Endurance Fund invests in prime real estate in Central and Eastern Europe. As at 31 December 2006, the Endurance Fund owned and managed €180 million appraised value of real estate assets in the residential, office, retail and hospitality segments. The Company received €4.5 million revenues (mostly from subscriptions and new acquisitions by the Endurance Fund) for the management of the Endurance Fund’s sub-funds for the year ended 31 December 2006.

The Group has owned, managed and operated a portfolio of small hotels and extended stay residences across Central and Eastern Europe under the MaMaison Hotels and Apartments brand. In April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total value of the Hospitality Business (as determined by DTZ) is €174.3 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business See “Operating and Financial Review — Recent Developments”.

The Company’s principal sources of revenue are income from property sales, rental income, service charges and asset management fees. For the year ended 31 December 2006, the Company’s consolidated revenue and net profit was €172.91 million and €96.7 million, respectively. The net profit figure reflects, among other things, the gain from gross fair value adjustments in respect of investment properties of €145.9 million. As at 31 December 2006, the Company had 1,304 employees (including 529 employees working in Croatia), although approximately 300 employees will be transferred along with the hospitality properties in 2007.

History

The Group was created in 1991 by Jean-François Ott, who retains, as of the date of this Prospectus, a 12.16 per cent. shareholding in the Company through Orco Holding S.A. The Company was founded in 1993 to take control of the Group’s business.

61 Since its foundation, the Group has grown both organically and through acquisitions of other real estate companies. The Company purchased the Czech residential developer IPB Real in 2003, which significantly strengthened the Company’s position in the Czech Republic by increasing its customer base and expanding its activities from Prague to other Czech cities. In 2005, the Company acquired a 47.7 per cent. interest in Suncani Hvar, a company listed on the Zagreb stock exchange, which was fully consolidated into the Group on 1 July 2005. Suncani Hvar owns approximately 90 per cent. of the total hotel capacity on the Hvar island off the coast of Croatia, near Split. In 2006, the Company decided to enter the German market to take advantage of the growing property prices and it purchased Viterra Development Group, which is a leading commercial and residential property development and investment group based in Essen, Germany, focusing on the property markets in Germany, the Czech Republic and Poland. The acquisition of Viterra Development Group has strengthened the Company’s position in Germany, and has enabled the Company to become one of the major residential developers in the Czech Republic and a key residential developer in Poland. Viterra Development Group was fully consolidated into the Group on 1 July 2006.

The Company expanded its investment in the hotel segment in 2002 by opening the first MaMaison Residences in Prague and investing in other hotels.

The Company invested in a number of small hotels and extended stay residences until 2006, and in April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. See “Operating and Financial Review — Recent Developments”.

In 2004, the Company established The Endurance Real Estate Fund for Central Europe, a Luxembourg mutual investment umbrella fund (fonds commun de placement — fonds d’investissement spécialisé), that invests in real estate in Central and Eastern Europe. In 2005, the Endurance Office Sub-Fund under the Endurance Fund was launched and subscriptions were closed in April 2006. In 2006, the Endurance Residential Sub-Fund was launched and in 2007, the Endurance Hospitality Sub-Fund and the Endurance Office Class A Sub-Fund were launched. The Endurance Fund is managed by a wholly-owned subsidiary of the Company.

The Company was listed on Eurolist by Euronext Paris in 2000 and on the Prague Stock Exchange in 2005.

Competitive strengths The management of the Company believes that the Company has a number of key competitive strengths that help to differentiate it from its competitors. These strengths include:

In-depth local market knowledge, strong name recognition and a well-established reputation through long term track record in Central and Eastern Europe The Group has been operating in Central and Eastern Europe since 1991. The Group has accumulated significant in-depth local market knowledge in the Central and Eastern Europe real estate market and invests considerable resources into collecting local knowledge relating to the business environment, real estate market, financing, taxation, legislation, political environment and any other matters specific to the relevant market in all the core markets where it operates. The Company believes it has strong name recognition in the Central and Eastern European real estate market, particularly through IPB Real in the Czech Republic. The Company believes that it has a well-established reputation, based largely on its successful completion of more than 150 projects in Central and Eastern Europe.

Track record of entering new markets and segments The Company has a track record of continuing growth in the Czech Republic and expanding into other markets in Central and Eastern Europe, building portfolios and operations in each of those markets. The Company believes that it has the credibility and market standing necessary to expand its portfolio into new geographic markets and new segments in the real estate market.

Expertise in real estate development project management The Company possesses extensive expertise in identifying attractive development projects, and managing and controlling the development process, which the Company believes enables it to increase returns and control development risks. The Company carefully selects its projects, the location of such projects and the subcontractors with whom it wishes to work, as well as overseeing the entire development process from the pre-project design phase to completion.

62 Experienced and proven management team The Company benefits from the extensive regional and industry experience of its management team. Jean- François Ott, the founder and Chief Executive Officer of the Company, has over 16 years of experience in the real estate development and business in Central and Eastern Europe. Other key executive officers have worked at various companies that have engaged in the development and construction of real estate projects, as well as property management. The Company believes that its management team is experienced in adapting internationally recognised real estate concepts and practices to local conditions in Central and Eastern Europe.

Taking advantage of the Company’s financial relationships The Company’s track record of successful real estate development in Central and Eastern Europe means it has a strong relationship with several European and international banks that ensure sufficient and competitively priced debt funding.

The Company’s strong capital base and access to finance provides it with a competitive advantage in securing, in a timely manner, the best available investment properties and development projects in Central and Eastern Europe.

Balanced segmental and geographic portfolio The Company’s geographical and segmental focus has allowed it to develop a diversified property portfolio, helping to reduce the risks associated with investing only in a single geographic market or segment of the real estate sector. The Company believes that this broad diversification compared to its competitors, together with the quality of its properties’ locations and tenants, provides it with a balanced portfolio and stable earnings by mitigating the impact of a potential economic downturn in one segment of the country or real estate sector.

Investment in landmark real estate and ability to secure prime locations Although the Company considers all real estate developments or acquisitions which it believes will provide a high rate of return, it predominantly invests in premium real estate developments or acquires land in sought after locations in major cities on which the Company considers it will be able to build landmark buildings. For example, the Company is currently developing one of the highest apartment towers in Poland, which is located in Warsaw, with unparalleled views across the city, and redeveloping the old Budapest Stock Exchange building. Such real estate investments have significant marketing potential, liquidity and intangible value, which is reflected in the price that tenants and purchasers are prepared to pay to lease or acquire such properties.

Negotiating and executing acquisitions quickly The Company has demonstrated its ability to execute acquisitions as quickly as possible after a property and/or land has been identified as suitable for development or investment to prevent its competitors from starting negotiations with the vendor and driving up the price. The Company does not generally carry out time consuming environmental searches prior to executing acquisitions, but relies on its knowledge of the market and the location of the property and/or land to factor into the purchase price any costs associated with possible future environmental claims. After such acquisition, appropriate environmental studies are carried out by the Company before development or investment takes place.

Strategy The Company’s objective is to take advantage of its market position in its key markets in order to expand its operations in the region. To achieve this goal, the Company has implemented the following strategies:

Expanding its regional presence to further diversify its portfolio The Company plans to leverage its strong position and network throughout its core market, which comprises the Czech Republic, Germany, Hungary, Poland, Croatia, Slovakia and Russia, to further build up its portfolio in its core market and the new markets which it may enter. Despite the entry into the German property market, the Company’s geographical focus will remain on fast-growing Central and Eastern European economies where both residential and commercial property markets demonstrate greater potential for value creation than mature Western European markets. The Company believes that wider geographic diversification will add greater stability to earnings by mitigating the impact of a potential economic downturn in one country.

63 Expanding its core businesses of development, investment and real estate fund management The Company is focused on the expansion of its three core businesses of development (mostly residential), investment and real estate fund management, through both organic growth and an aggressive acquisition policy.

In residential development, the Company seeks to capitalise on the fast-growing demand for both luxury and good-quality residential housing in Central and Eastern Europe. The Company also sees some potential for commercial property projects (both offices and retail) and plans to assess those on an opportunistic basis.

In its investment property activities, the Company aims to create value by (i) continuing to grow its portfolio of office and retail properties through acquisitions of prime assets that it generally redevelops to enhance their value and (ii) mechanically benefiting from the alignment of the investment yields in Central and Eastern Europe towards those experienced in Western Europe.

The management of the Endurance Fund allows the Company to build on its expertise and knowledge of the Central and Eastern European property markets. The Endurance Fund invests in completed properties valued between €10 million to €50 million in office, retail, residential and hospitality segments. In addition to managing the Endurance Fund, the Company has invested in each sub-fund and its revenues from the Endurance Fund consist of management fees and investor income from the Endurance Fund’s portfolio which are recorded in the consolidated income statement of the Group.

Corporate organisation and structure The Company is the parent company of the Group. The main function of the Company is the determination of the objectives and strategies of the Group, central co-ordination of the activities of the Group, central allocation of resources and monitoring the Group’s activities. The Company’s subsidiaries comprise real estate holding and management companies in relation to its projects in Central and Eastern Europe (see “— Description of the Company’s business”). The Company itself does not directly hold properties.

Each development or investment building that the Company envisages that it will sell in future through a share deal is owned by a specific special purpose vehicle (“SPV”) incorporated under the relevant local laws. In addition, the Company will usually have another specific SPV set up to provide management services for each such building. This is done in order to ring-fence the building from the rest of the portfolio and asset management operations of the Company which is usually requested by the lenders that have financed the relevant development or acquisition and taken security over the property.

Development or investment projects that the Company intends to sell in future in part or in units are owned by a number of SPVs. Each such SPV holds different projects at different stages of development. In future, the Company intends to streamline its corporate structure to have a single SPV in each jurisdiction that owns all land and/or buildings being developed in that jurisdiction to be sold in part or in units.

In addition to SPVs that manage specific buildings, the Company has general management companies. The purpose of the management companies is to provide personnel to the Company and certain facilities for the property management activities of the Company. Such management activities include the operation and management of hotels and extended stay residences, letting, administration, sale and purchase of properties.

As at the date of this Prospectus, the Group comprised 158 companies, of which 12 are incorporated in Luxembourg, 62 incorporated in Czech Republic, 29 incorporated in Germany, 19 incorporated in Poland, 19 incorporated in Hungary, 3 incorporated in Croatia, 12 incorporated in Slovakia and 3 incorporated in Russia.

Investment and development process The Group’s development is focused on value creation and the growth of net asset value. As such, opportunistic acquisitions by the Group of suitable properties are the main contributor to this development. The Group has not defined a target of investments either per country or per activity but its strategy is to retain the flexibility to invest in such countries that it deems suitable and in assets that will contribute to value creation.

The investment process is driven by an investment committee made up of Jean-François Ott (Chief Executive Officer), Alès Vobruba (Senior Vice President) and Nicolas Tommasini (Vice President). With the help of local teams in each country, investment opportunities are identified and presented to the investment committee for their consideration. Potential investments are studied with regard to current and future returns and yields, and

64 developments are studied with regard to potential margins on sales. In relation to high end projects, target margins are approximately 30 to 35 per cent. In relation to mid range projects, target margins are approximately 15 per cent. for Germany, Czech Republic and Poland. The Group’s financial and sales departments prepare financing and sales forecasts, and the project management department prepares the construction costs assumptions. If all assumptions and criteria are satisfactory in the investment committee’s view, the acquisition is approved.

Portfolio overview The following table provides an overview of the Company’s real estate portfolio by country (excluding the Hospitality Business) as of 31 December 2006:

Net lettable area Number of Number of (excluding Number of Appraised Segment/Country properties units parking) rooms/apartments value(1) (2) (m2)(€ thousands) Development properties Development properties for sale Czech Republic ...... 19 2,248 — — 112,731 Germany ...... 11 498 — — 102,885 Hungary ...... 1 77 — — 15,000 Poland ...... 7 1,412 — — 95,139 Slovakia ...... 1 77 — — 8,125 Development properties for investment Czech Republic ...... 1 — 14,616 — 22,700 Hungary ...... 2 — — — 50,300 Germany ...... 1 — — — 44,400 Poland ...... 1 — — — 2,850 Land banks Czech Republic ...... 11 — — — 129,549 Germany ...... 3 — — — 23,437 Investment properties Czech Republic ...... 21 — 99,444 — 186,851 Germany ...... 20 — 53,975 — 90,608 Hungary ...... 5 — 20,464 — 59,730 Poland ...... 1 — 1,400 — 5,600 Luxembourg ...... 1 — 300 — 1,800 Hotels Czech Republic (Pachtuv Palace hotel) ...... 1 — — 50 30,000 Croatia ...... 9 — — 1,014(5) 102,808 Hotels in the process of being sold(6) ...... 174,300 Total (for 100% ownership) ...... 116 4,312 190,199 1,064 1,258,813

Notes: (1) The appraised value of the properties set out in the DTZ Report dated 24 August 2006 is as of 30 June 2006: €147,520,000. These relate to properties valued as part of the acquisition of the Viterra Development Group, and which were not subsequently revalued in December 2006. (2) The table includes only 50 per cent. of the value of the properties in the Kosic joint venture project in the Czech Republic, and 48 per cent. of the value of the properties in Croatia. (3) This property is an old hotel currently used as staff accommodation. (4) These include a retail complex, a restaurant, a large campsite (covering an area of 116,000m2), an administration block and staff premises occupied by Suncani Hvar. (5) The number of rooms at Hotel Dalmacija have not been included. Hotel Dalmacija is intended to be redeveloped into a hotel with 20 rooms. (6) In April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total value of the Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet completed and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. See “Operating and Financial Review — Recent Developments”.

Development portfolio The Company’s development portfolio consists of properties that the Company has developed or is developing for sale and land banks that the Company has invested in to be used for development of properties for either sale or investment, or to be re-sold as land.

65 Development projects for sale The Company is a major developer of residential projects in Central and Eastern Europe. The Company’s projects are developed under the IPB Real brand in the Czech Republic and the Orco brand in other Central European countries.

The acquisition of IPB Real in 2003 for approximately €17 million made development of residential projects in the Czech Republic the Company’s most important activity in terms of revenue. IPB Real develops high quality apartments and houses in attractive locations in Prague, Brno, Ostrava and Hradec Králové, with plans to expand in other cities throughout the Czech Republic.

In June 2006, the Group acquired the Viterra Development Group. Viterra Development Group is one of the few leading commercial and residential property developers and investors operating across both Germany and Central Europe. Its portfolio consists of a number of commercial and residential developments across Germany (Berlin, Cologne, Düsseldorf, Munich, Hamburg, Frankfurt and Essen), the Czech Republic and Poland. The acquisition cost of the Viterra Development Group was €98.8 million (€69.9 million, net of cash acquired). As part of the acquisition of the Viterra Development Group, the Group also acquired two buildings for a total cash consideration of €14 million.

In December 2006, the Company acquired the Stein group of companies in Slovakia for €21.6 million, which consisted of a parent company that owns an industrial building complex used as a beer brewery and two subsidiaries that run the brewery business and related distribution activities. The Company plans to relocate and sell the brewery and the distribution activities in 2007, and use the site of the old brewery to construct a multi- functional complex (see “— Land banks”).

The Company’s residential developments, consisting of apartments and houses, are aimed at the middle and upper middle segment of the residential housing market in Central and Eastern Europe. The Company also develops luxury apartments in landmark buildings. Such diversified base of customers reduces the Company’s reliance upon a single category of buyers who generally tend to be sensitive to changes in the economic environment. In addition, the Company benefits from the current imbalance between a strong demand and a low supply of good quality residential housing units in Central and Eastern Europe.

The Company divides all its large residential development projects into development phases, and the Company attempts to pre-sell as many units in each development phase as possible before commencing construction works for the relevant phase. The Company usually starts construction when an average of 30 per cent. pre-sale has been achieved.

The following table provides an overview of the Group’s residential development projects by country delivered and pre-sold, during the financial year ended 31 December 2006:

Number of Number of Country Number of projects units delivered units pre-sold(1) Czech Republic ...... 19 311 762 Germany ...... 11 73 88 Poland ...... 7 146 381 Hungary ...... 1 0 13 Slovakia ...... 1 0 0 Total ...... 39 530 1,244

Note: (1) Units pre-sold only include future purchase contracts (which are binding upon customers), and not reservation contracts (which are non-binding).

In addition, as of 31 December 2006, the Company had 1,100 units in its residential development projects available for sale, which were not subject to customer reservations or future purchase contracts.

66 Czech Republic The Company had 19 residential development projects in the Czech Republic as of 31 December 2006, which accounted for 34 per cent. of the Company’s residential development portfolio (by appraised value).

The Company’s two most important residential development projects in the Czech Republic are the Kosˇík project and the Benice project.

The Kosˇík project is a joint venture between the Company and GE Capital Golub, each with 50 per cent. interest, to construct apartments and retail units in Kosˇík, which is approximately 7.5km south east of the Prague’s city centre near the Hostivarˇ district of Prague 10. A subsidiary of the Company owns a single plot of land in Kosˇík that has a total area of 85,733 square metres, and the Group plans to build through three phases a total of approximately 1,134 apartments with relatively high density. The phase I of the construction has commenced and completion is scheduled for the first half of 2007. This phase comprised of 571 apartments, out of which 196 units have been sold, 341 units were subject to future purchase contracts and 3 units were subject to reservation contracts, as of 31 March 2007. Phases II and III, consisting of 116 and 447 apartments, respectively, are planned to be realised by the end of 2008 and in the third quarter of 2009, respectively. Construction is expected to start on phase II in the second quarter of 2007 and on phase III in the third quarter of 2007. The land for phase III of the Kosˇík project is currently classified as a land bank.

The Benice project is a large project near the villages of Benice, Cˇ estlice and Pitkovice in the south east of Prague, approximately 13km from the city centre. A subsidiary of the Company owns three separate plots of land that together extend to 561,379 square metres. The land is relatively flat and was used for agricultural purposes. The Benice project consists of five phases. Phase I extends to 49,636 square metres of land and phases II to V extend to a combined area of 511,743 square metres. Construction of phase I, consisting of 71 units, started in the first half of 2007 and completion is scheduled for the second quarter of 2008. The land for phases II to V are currently classified as land banks by the Company as construction is expected to start in the first quarter of 2008 with completion of the final phase scheduled for the second quarter of 2012. The total number of units in phases II to V of this project is not yet available, but it is expected to be a lower density than the Kosˇík project.

The Company’s other major residential development projects in the Czech Republic are the Rˇ epy project and the Nové Medlánky project.

The Rˇ epy project is situated in Prague 6 in the Rˇ epy district which is currently one of the most popular residential locations in Prague. This project covers a site of 8,013 square metres and consists of one building with 236 flats with a secluded landscaped park for the tenants. The Rˇ epy project was completed in the first quarter of 2007. As at 31 March 2007, 63 flats had been sold, 65 units were subject to future purchase contracts and 1 unit was subject to a reservation contract.

The Nové Medlánky project consists of three phases and it is located in a quiet residential district approximately 4.5km to the northwest of Brno. Phase I is expected to be completed in the second quarter of 2007 and consists of one building with 186 flats with a total surface area of 14,005 square metres. As at 31 March 2007, 39 flats had been sold, 134 units were subject to future purchase contracts and 7 units were subject to future reservation contracts. Phase II is expected to be completed in September 2007, and it consists of six buildings with 176 flats with a total surface area of 13,729 square metres. As at 31 March 2007, 122 units were subject to future purchase contracts. The land for phase III is currently classified as a land bank, but development is expected to commence in the second quarter of 2007 and completion is scheduled for the third quarter of 2008. It is planned that 4 buildings with 124 flats with a total surface area of 9,333 square metres will be constructed in phase III.

Germany As of 31 December 2006, the Company had 11 residential development projects in Germany. The largest project is located in Fehrbelliner Höfe in the Prenzlauer Berg district of Berlin, approximately 5km north east of the city centre. This project comprises a large multi-block residential building, which is planned to be redeveloped from the second quarter of 2007 to provide luxury residential accommodation, with a combination of apartments, penthouses and town houses covering 16,100 square metres in aggregate, as well a hotel covering 1,700 square metres and office premises over 2,000 square metres. Completion of this project is scheduled for the second quarter of 2009. The Group is also developing a residential building in Hamburg expected to provide 56 units. In addition, the Group has three other residential development projects in Hamburg.

67 Poland The Company had seven residential development projects in Poland, as of 31 December 2006, with over 1,412 apartments in aggregate. The Company’s most prestigious residential development project in Poland is the redevelopment of the Zlota 44 building in the centre of Warsaw into a high rise residential tower with 251 luxury apartments over 54 floors, with retail space on the ground floor. The Zlota 44 tower is expected to be a landmark building in Warsaw and one of the tallest residential buildings in Poland. In November 2006, the Company obtained planning permission for the project and redevelopment is expected to start in the third quarter of 2007. A demolition permit was issued on 19 July 2006 and the Company has commenced the demolition of the shopping centre formerly located on the site. Completion is expected in 2010. As of April 2007, approximately 50 per cent. of the 251 apartments were sold in Phase I, and approximately 40 per cent. of the remaining 125 apartments were sold in Phase II. The other projects in Poland target the middle and upper middle segment of the Polish residential housing market.

Hungary The Company is developing one residential project in Avenue Gardens, Budapest, consisting of 77 luxury apartments with 117 parking spaces, 411 square metres of retail space (aggregate site area: 2,623 square metres) to be completed at the end of 2007.

Croatia The Group is planning to redevelop one of the hotels on the Hvar island, which is currently used as staff accommodation, into a residential block with 60 luxury apartments with 4,200 square metres of surface area in aggregate. Construction is planned to commence at the end of 2007 and completion is expected to be in the third quarter of 2008.

Slovakia In Slovakia, the Company is developing a residential project in the Vinohrady district of Bratislava, consisting of 77 units to be completed in the second quarter of 2008.

The following table provides an overview of the Company’s residential development projects which are undergoing development. The information provided is based on current development plans and estimated timelines. The current development plans and estimated timelines, however, are subject to change or may not proceed at all.

Construction Estimated Total Country No. of units Start delivery Czech Republic Hradec Kralove Plachta ...... 509flats In progress Q1 2009 Nove Medlanky Brno ...... 486flats In progress Q4 2008 Michle ...... 49flats Q2 2007 Q4 2008 Sterboholy, Prague 10 ...... 111flats In progress Q4 2007 Kosik Phase 2 and 3 ...... 563flats Q2 2007 Q4 2009 Spindleruv Mlyn, Bedrichov ...... 70flats Q2 2007 Q3 2008 Prague 6 Cukrovarnicka ...... 12flats In progress Q4 2007 Kolin ...... 93flats Q2 2007 Q4 2008 Praga ...... 900flats Q2 2008 Q4 2011 Benice, (phase 1) ...... 68houses+3 flats In progress Q3 2008 Benice, (phase 2 to 4) ...... 640houses Q3 2008 Q4 2012 Radotin, Prague ...... 4flats+ lots In progress Q1 2008 Nové Dvory, Prague ...... 114 Q22007 Q4 2008 Vrchlabí ...... 163flats Q3 2007 Q4 2009 Bellevue, Sp. Mlyn ...... 27flats In progress Q3 2007 Bubny, Prague ...... 2,200flats Q1 2010 Q4 2018 Palmovka, Prague ...... 90flats Q1 2008 Q2 2009 Doupovská, Prague ...... 800flats Q3 2009 Q4 2012 Plachta Jih (Hr. K) ...... 36flats+54 lots Q2 2009 Q3 2010 Brˇevnov, Prague ...... 61flats Q1 2010 Q4 2010 Vavrˇenova ...... 103flats Q2 2008 Q2 2009 U Hranic ...... 160flats Q1 2008 Q4 2009 Slezska Ostrava ...... 67flats Q2 2007 Q4 2008

68 Construction Estimated Total Country No. of units Start delivery Germany Frankfurt, taunSide ...... 117flats In progress Q4 2007 Frankfurt Qwaterwest ...... 93 Inprogress Q3 2007 Hamburg Mützendorpsteed ...... 18 Inprogress Q3 2007 Hamburg Volksdorf, Foßredder ...... 12 Inprogress Q3 2007 Hamburg Wedel, 5th phase ...... 17 Inprogress Hamburg Wedel, 9th phase ...... 10 Inprogress Q4 2007 Hamburg HafenCity, Dalmannkai ...... 24 Inprogress Q1 2007 Hamburg Ottensen ...... 56 Inprogress Q4 2007 Hamburg Lämmersieth ...... 50 Q32007 Q4 2008 Fehrbelliner Höfe Berlin ...... 160flats Q2 2007 2008

Poland Mokotowska 59 ...... 14flats In progress Q4 2007 Casa Verde ...... 102flats In progress Q3 2008 Targowek/Malborska ...... 283flats Q3 2007 Q3 2008 Drawska ...... 49flats Q4 2007 Q4 2008 Sapphire Avenue Warsaw ...... 324flats In progress Q1 2008 Jozefoslaw Warsaw (2 phases) ...... 394flats Q3 2007 Q4 2009 Zlota Warsaw ...... 251flats In progress Q1 2011 Szczecin ...... 770flats Q2 2008

Hungary Avenue Gardens ...... 77flats In progress Q3 2007

Slovakia Bratislava Koliba ...... 92flats In progress Q3 2008

Development portfolio for investment

The following table provides an overview of the Company’s development portfolio for investment as of 31 December 2006:

Estimated Number of Net lettable Net lettable completion Country projects office space retail space schedule (m2)(m2) Czech Republic ...... 1 14,616 — 2008-2009 Germany ...... 1 — — 2007-2009 Poland ...... 1 — 3,980 2008 Hungary ...... 2 — — 2007-2010 Total ...... 5 14,616 3,980 —

Czech Republic

The Company is developing the prestigious new broadcasting centre of Radio Free Europe in Prague. Radio Free Europe (also known as Radio Liberty) is a private international communications provider, funded by the U.S. Congress, broadcasting in over 25 languages to countries in Eastern and Southeastern Europe, the Caucasus, Central Asia, the Middle East and Southwestern Asia. In July 2005, the Company signed a “build-to-lease” contract with Radio Free Europe for a 15-year lease of a building with particular emphasis on security in the Hagibor district of Prague 10, which is approximately three km to the east of the city centre. The Hagibor site owned by the Group consists of two plots of land that together extend to 26,229 square metres. The whole site is intended to be used for the Radio Free Europe building, which will have a net area of 14,616 square metres, a substantial boundary and perimeter fencing with security gates. Radio Free Europe has two options to extend the lease by a further 10 years in each case. Construction of this project commenced in December 2006 and completion is scheduled for the second quarter of 2008. The agreed gross annual rent for the completed property is US$5.4 million.

69 Germany As of 31 December 2006, the Group had one development project for investment in Germany, which was the redevelopment of an old hotel building known as Cumberland House on Kurfürstendamm in the Charlottenberg district of Berlin. The Group intends to redevelop Cumberland House into a contemporary multi-functional building providing 13,000 square metres of residential accommodation, 5,800 square metres of retail space and 1,900 square metres of lettable office area, as well as a hotel covering 4,300 square metres. The redevelopment is intended to start at the end of 2007 and completion is expected at the end of 2009.

Hungary The Group had two development projects for investment in Hungary, and the largest of these projects is the redevelopment of the old Budapest Stock Exchange building, located in the centre of Budapest, into a flagship shopping centre providing 18,640 square metres of retail and commercial space. The other development project in Hungary is the development of Budapest’s oldest department store, knows as the Paris Department Store, on the prestigious Andrássy avenue. The redevelopment works is expected to start in the second quarter of 2007 and completion is expected in the first quarter of 2009. The redeveloped property is expected to provide 2,951 square metres of office space, 1,390 square metres of retail space, as well as a restaurant, an event hall and some storage space.

Poland The Group’s only commercial development project in Poland is the development of a 3,980 square metres car show room, together with a workshop and parking facilities, in the Targówek district in Warsaw for Peugeot. The Group has signed a conditional lease agreement with Peugeot under which the building will be leased on a 10-year basis with an option to extend for another 10 years. Construction is due commence in June 2007 and completion is expected in January 2008.

Land banks The Company has invested in a number of land banks in various countries, which the Company intends to use in the future for residential and commercial developments, both for sale and investment. The Company purchases land banks in areas in or around major cities that it considers will become sought-after locations in near future. The land banks are usually purchased without any zoning permits at competitive prices. Certain properties on the land banks have existing buildings which the Company may demolish, redevelop or convert in the future.

The following table provides an overview of the Company’s land banks, by country, as of 31 December 2006:

Number of Appraised Country land banks value (€ thousands) Czech Republic ...... 11 129,549 Germany ...... 3 23,437 Total ...... 14 152,986

Czech Republic The Company has 11 land banks in the Czech Republic, and the largest of these is the Bubny land bank in the Bubny district in Prague, which the Group acquired from the Railway Administration of the Czech Republic in 2006 for €43 million. The Bubny plot is the largest undeveloped site in the Prague city centre extending over 250,000 square metres. The ownership right of the Group was registered in the Czech Real Estate Register with effect from 13 September 2006. Within 10 to 15 years, the Group intends to develop in Bubny a multifunctional area with residential apartments, space for leisure activities, playgrounds, a shopping centre and good quality office spaces. The Group is liaising and working with the Prague 7 municipality and Prague Town Hall on the preparation of this project, so that the final plans are in line with their requirements for the optimal use of the area. For information regarding environmental contamination on the Bubny land bank, see “Business — Environmental Matters”.

70 The Group also owns a 90,212 square metres plot of land located in Radolin suburb of Prague, approximately 12km south west of the city centre. The Group plans to construct a multi-functional building on this site, providing a show-room, retail space and some residential accommodations, and the rest of the site is intended to be sold.

Germany As of 31 December 2006, the Group owned three land banks in Germany, and the largest of these is the Helberger building in Frankfurt, located in the city centre. The Helberger provides 9,551 square metres of lettable office area over eight floors and is currently 43 per cent. leased. The property is classified as a land bank as the Company does not view the current rental value as material to the Group’s operating result. The Group intends to refurbish this building to achieve a significant increase in the rent. The Group also owns land banks in Essen and Duisburg .

Portfolio of investment properties The Company’s investment portfolio consist of rental properties, which are completed properties that are being, or are to be, leased, and development properties that the Company intends to keep after completion for investment. The Company invests in properties in good locations in major cities in Central and Eastern Europe that the Company considers will attract long-term stable tenants and grow in value.

Rental portfolio The Company’s rental portfolio consists of prime properties in major Central and Eastern European cities, focusing on commercial and residential buildings, that the Company has either acquired or developed, and recently on retail premises as well. The largest part of the Company’s rental portfolio by value are offices located in the Czech Republic, Germany and Hungary.

Investment in retail properties is a new activity which the Company started in 2005, when it acquired a 4,900 square metres shopping centre in Brno in the Czech Republic. Currently a number of properties in the Company’s portfolio include some retail space. The Company is also redeveloping the old Budapest Stock Exchange building in Hungary into a flagship shopping centre providing 13,678 square metres of retail space (see “— Development portfolio for investment”).

In terms of revenue contribution, the rental income from offices, residential and retail was 70 per cent, 17 per cent. and 13 per cent., respectively, of the Group’s total rental income during 2006. Although the Group’s rental income has been relatively low in the past, being approximately 12 per cent. and 15 per cent. of its total revenues for the years ended 31 December 2006 and 2005, respectively, the Group views the predictability and stability of the rental income generated by these assets as favourable to its long-term business strategy.

Czech Republic The following table sets forth the Company’s rental portfolio in the Czech Republic as of 31 December 2006:

Rental income received for Average Number of Net lettable area year ended 31 occupancy Appraised Type of investment(1) properties (excluding parking) December 2006 rate value (m2)(€ thousands) (%) (€ thousands) Residential ...... 10 9,540 4,339 82.93 36,409 Office ...... 10 74,972 6,346 91.53 144,842 Retail ...... 1 4,903 1,552 79.87 5,600 Total ...... 21 89,415 12,237 — 186,851

Note: (1) The Group includes only its proportion of co-owned properties as of 31 December 2006.

71 The Bubenska building in Prague, which the Group acquired in 2006, is one of the largest office buildings in the Company’s portfolio. This property consists of a 26,500 square metres office space situated over eight floors and a 3,000 square metres cultural centre on the ground floor. There are also a number of retail units located along the front of the building. The Bubenska building is currently 95 per cent. let to 12 tenants, including Ceska Sporitela which is the main tenant occupying 81 per cent. of the office space. The Company intends to redevelop this building into modern office and retail space, and the DTZ valuation is based on its redevelopment potential.

The Group also owns the Na Porici block of buildings, approximately 1km from the historical city centre benefiting from excellent transport links with trams and metro stops in close proximity, which consists of four separate sections constructed between 1921 and 1997, and it is currently used as a bank, a restaurant and a theatre. The property is expected to become vacant in June 2007, when it will be refurbished to provide 22,500 square metres of high quality office area, 2,000 square metres of retail units, 1,000 square metres of storage space and 125 parking spaces.

In 2006, the Group completed the development of the Luxembourg Plaza in Prague, which consists of 20,489 square metres office space and a hotel with 161 rooms managed by Marriott. The Company occupies 4,445 square metres of the office space and the rest of the office space is let to international companies, including ExonMobil, GTS Novera and Burda Praha. The lease agreements with these tenants were concluded for periods between five to nine years. The office part of the Luxembourg Plaza was held by a joint venture vehicle with the Group owning 50 per cent. of the vehicle. In the beginning of 2006, the Group acquired the remaining 50 per cent. interest in the vehicle, and subsequently sold it to the Endurance Office Sub-Fund. In April 2007, the Marriott-managed hotel in the Luxembourg Plaza was sold to the Endurance Hospitality Sub-Fund for €13.5 million (see “— Asset management”). The Group currently owns 50 per cent. of the office space of the Luxembourg Plaza.

The Company’s residential rental portfolio in the Czech Republic consists of ten buildings with 101 apartments located in Prague.

Germany The following table sets forth the Company’s rental portfolio in Germany as of 31 December 2006:

Rental income received for year ended Number of Net lettable area 31 December Average Appraised Type of investment properties (excluding parking) 2006 occupancy rate value (m2)(€ thousands) (%) (€ thousands) Residential ...... 15 28,504 619 90.92 52,841 Office ...... 3 29,710 640 59.44 27,627(1) Retail ...... 2 6,045 252 100 14,125 Total ...... 20 64,259 1,511 — 90,608

Note: (1) Includes the value of two offices that were valued as part of the acquisition of the Viterra Development Group as of 30 June 2006 (together at €27 million).

The majority of properties in the Company’s rental portfolio in Germany are multi-functional buildings that have apartments and offices, and a few retail units. An example of a multi-functional building owned by the Group is the Immanuelkirchstrasse building located in the popular Prezlauer Berg district in Berlin. With 24 apartments to the front of the building, which provide 2,317 square metres in total of lettable residential space, and 5,269 square metres of lettable office space to the rear of the building, it is classified as an office building. The largest rental building in the Group’s portfolio in Germany is the Pier Eins building in Duisburg that provides 7,524 square metres lettable office area and 1,489 square metres retail space. The Group owns four other office buildings, two of which are located on the same street in Berlin’s famous Charlottenberg district. One of these buildings provides 3,390 square metres of lettable office space over seven floors, which is 63 per cent. leased, and the other provides 3,075 square metres of lettable office space and 12 apartments over five floors, which is 45 per cent. leased.

The Group’s only major retail investment in Germany is a newly built single-storey retail warehouse in Cologne that provides 8,732 square metres of warehouse units.

72 Hungary The following table sets forth the Company’s rental portfolio in Hungary as of 31 December 2006:

The Company owns five office buildings in Budapest, and the largest of these buildings is currently rented to the Budapest Bank’s headquarters located in the thirteenth district of Budapest, approximately 7km north of the city centre. This building provides 13,218 square metres of office space which is fully leased to the Budapest Bank.

Poland The Company owns one rental property in Poland, which is the Diana Passage Building in the centre of Warsaw. Part of this building was a hotel owned by the Group, which is part of the Hospitality Business being sold to the Endurance Hospitality Sub-Fund. The office part, providing 1,400 square metres of lettable space, is leased to two tenants, including the Goethe Institute which has a 10-year lease. The Company received €355,000 rental income from the fully-leased office part of this building for the year ended 31 December 2006.

Leases and Rents The Group typically enters into lease agreements with the tenants occupying its properties. Most of the Group’s leases include a clause that provides for full indexation of the rent, linked to the consumer price index of the relevant country where the lease is concluded in local currency and linked to the EICP (European Index of Consumer Prices) where the lease is concluded in euro. Currently, retail rents are not indexed to the turnover of tenants but this may be contemplated in future projects. The rental level trends for each of the cities in which the Group operates vary depending on inter alia, supply and demand, the maturity of such market and its position on the rental cycle. For a general overview of rental trends in the cities in which the Group operates, see “Industry”.

Certain category of building expenses are passed through to tenants as additional rent. The leases for the Bubenska building and the Na Porici buildings will expire soon (representing aggregate rental revenues of approximately €3.8 million in 2006), as the Company intends to redevelop these properties, as described in “— Czech Republic” above.

Asset management In 2004, the Company established The Endurance Real Estate Fund for Central Europe, a property investment umbrella fund exclusively restricted to institutional investors. The Fund is organised under the laws of the Grand Duchy of Luxembourg as a mutual investment umbrella fund (fonds commun de placement — fonds d’investissement spécialisé) and may have one or more sub-funds, and it focuses on the acquisition, development, management and disposal of commercial, residential and hotel real estate in Central and Eastern Europe. Each sub-fund under the Fund is set up for a limited period from the initial closing date, subject to a possible extension period. The Company acts as sponsor and manager of the Endurance Fund.

The Endurance Fund is currently divided into four sub-funds: • The Endurance Office Sub-Fund, which was launched in September 2005 with subscriptions closed in April 2006 and has a total subscription capital of approximately €150 million from 16 investors, including the Company which holds a 8.77 per cent. interest in this sub-fund. The Endurance Office Sub-Fund invests in office as well as some retail premises in the Czech Republic, Hungary and Poland. • The Endurance Residential Sub-Fund, which was launched in December 2006 and aims to have an equity of €150 million. As of the date of this Prospectus, it had equity investment of €56.80 million from 5 investors, including the Company which held a 15.92 per cent. interest in this sub-fund. Since its launch, it has acquired one residential property in Germany and two in the Czech Republic. The Group’s outstanding capital commitments regarding the Endurance Residential Sub-Fund amount to €10.4 million.

73 • The Endurance Hospitality Sub-Fund, which was launched in May 2007, aims to have an equity of €250 million. As of the date of this Prospectus, no equity was raised and the Company will be the first investor in the sub-fund through the sale of the Hospitality Business. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. The Company intends to decrease its interest in the Endurance Hospitality Sub-Fund to below 20 per cent. The Endurance Hospitality Sub-Fund intends to invest in business and luxury hotels, leisure resorts and extended stay residents. • The Endurance Class A Office Sub-Fund, which was launched in May 2007 and aims to have an equity of €150 million. As of the date of this Prospectus, no equity was raised. The Endurance Class A Office Sub-Fund intends to invest in prime offices in the target cities located in Central Europe. The Group’s outstanding capital commitments regarding the Endurance Class A Office sub-fund amount to €15 million.

Administration and management of the Endurance Fund The Endurance Fund is administered and managed under Luxembourg law and pursuant to the management regulations of the Endurance Fund, by Endurance Real Estate Management Company S.A. (the “Management Company”), a wholly-owned subsidiary of the Company, incorporated as a société anonyme under the laws of the Grand Duchy of Luxembourg. Under the Endurance Fund’s management regulations, the Management Company has the general right to delegate any management or administration functions in respect of the Endurance Fund and each sub-fund under the Endurance Fund. Each sub-fund also has an advisory board comprised of representatives of certain investors which must approve any major issues concerning the relevant sub-fund, including acquisitions of land, building, shares in real estate companies and long-term property-related interests in the name of the Endurance Fund. The Company (the “Fund Manager”, in its capacity as fund manager of the Endurance Fund) has entered into a fund management agreement with the Management Company to provide fund management services to all the sub-funds in the Endurance Fund under the overall supervision and liability of the Management Company.

The Endurance Fund’s management regulations set out in detail the investment objectives of each sub-fund and the investment guidelines. Broadly, the Endurance Fund, and each of its sub-funds, focus on a “core plus” strategy of acquisition, development, refurbishment and realisation of office, retail properties, distribution centres and/or portfolios situated in advantageous locations in Central and Eastern Europe. A “core plus” strategy refers to investment in superior quality real estate having a stabilised cash flow, but with potential to add value through active asset management, which may involve some re-tenanting, expansion and reorganisation of the building layout, renovation of the building fabric and structure, and other forms of income/capital enhancement. Conflict of interests between the Endurance Fund and the Group rarely arise as the Endurance Fund does not invest in development properties, which is the primary focus of the Group. However, if the Group intends to invest in a project which complies with the Endurance Fund’s investment policy then the Group must offer that project first to the Endurance Fund and may only invest if the Endurance Fund has rejected the relevant project.

The maximum leverage of the Endurance Fund is 70 per cent. in terms of total indebtedness of the Endurance Fund (determined on a consolidated basis) to gross asset value throughout the life of the Endurance Fund. With respect to each sub-fund, the leverage in respect of individual assets may not exceed 80 per cent. of the value of the individual asset. The Endurance Fund is also prohibited by its management regulations from investing in companies that do not meet environmental guidelines customary for investment funds in Western Europe.

The Endurance Fund invests in assets that are individually valued between €10 million and €50 million. The Management Company may delegate, upon the recommendation of the Fund Manager and subject to the approval of the Fund Manager, the property management functions in respect of each individual property to a property manager depending on the size, nature and location of the relevant property (the “Property Manager”), which may or may not be the Company.

Fees of the Fund Manager and the Property Managers The Fund Manager receives a number of different fees from the Endurance Fund. It receives a placement fee when investors subscribe capital into any of the sub-funds, which consists of an amount up to 2.5 per cent. of the

74 committed funds of the investors. In addition, the Fund Manager receives an annual management fee, which consists of an amount equal to maximum two per cent. of the total equity placed in the relevant sub-fund by the various investors (including the Group itself) as well as an amount equal to one per cent. of the transactional value paid or received by each sub-fund in respect of each real estate assets acquired or disposed by the relevant sub-fund except as otherwise provided by the regulations of the relevant sub-fund.

The Fund Manager received €4.5 million revenues from the management of the Endurance Fund’s sub-funds for the year ended 31 December 2006. The Endurance Fund is also required to reimburse the Management Company and the Fund Manager out of the assets of the relevant sub-fund, all operation and administration expenses incurred by them in relation to each sub-fund, subject to a maximum of 0.4 per cent. per annum of the Endurance Fund’s commitments.

Each Property Manager also receives a property management fee based on market rates depending on the location, size and complexity of each property. In cases where the Property Manager has arranged for the renewal of existing tenancies or for the re-leasing of premises that have come vacant, the Property Manager is entitled to an additional fee equal to 7.5 per cent. of gross rental income anticipated for the first year of the new lease shall be payable. In those cases where the work for renewal and re-leasing is not handled in-house by the Property manager but by a third party, then the Endurance Fund will reimburse market level fees and marketing charges at cost.

Hospitality business The Company owns, manages and operates a portfolio of small hotels and extended stay residences across Central and Eastern Europe under the MaMaison Hotels & Apartments brand. The Company’s hospitality business consists of two segments: the MaMaison Residences segment, which operates extended stay residences; and the Orco Hotel Collection, which operates small hotels. In the last quarter of 2006, the MaMaison Residences and the Orco Hotel Collection merged to form the MaMaison Hotels & Apartments brand. As at 31 December 2006, the Group owned 13 hotels and extended stay residences (excluding the hotels owned in Croatia), together valued by DTZ at €204.20 million.

The Company’s performance from its hospitality business has been improving through the years with an increase in both occupancy rates and average daily rates (ADR) (from €30 in 2005 to €51 in 2006 in the case of Suncani Hvar hotels, and from €91 in 2005 to €96 in 2006 in the case of MaMaison hotels). In April 2007, the Group agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total value of the Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. See “Operating and Financial Review— Recent Developments”.

Pachtuv Palace hotel has 50 apartments, each with its own layout and décor, and was valued by DTZ at €30 million as of 31 December 2006. The size of the apartments ranges from between 35 square metres to 137 square metres, with an average size of 67 square metres. The Group decided not to sell Pachtuv Palace hotel with the rest of its hospitality portfolio, because the Group considers that this building is a historical landmark in Prague and has the potential for future capital appreciation.

In 2005, the Group acquired a 47.7 per cent. interest in Suncani Hvar, a company listed on the Zagreb stock exchange, which is fully consolidated into the Company. Suncani Hvar owns 9 hotels on the Hvar island off the coast of Dubrovnik, Croatia, that together have over 1,000 rooms which is approximately 90 per cent. of the total hotel capacity on the Hvar island. These hotels are also managed and operated by the Group. The Company is prohibited under the terms of the shareholders’ agreement with the Croatian Privatisation Fund from disposing of its interest in Suncani Hvar until 31 December 2007, except that it may transfer up to 10 per cent. of its present shareholding in Suncani Hvar on the Zagreb stock exchange, and it may transfer up to 10 per cent. of Suncani Hvar’s issued share capital to third parties. During the period after 31 December 2007 and before 18 June 2010 (being five years after the date of the Shareholders’ Agreement), the Company has pre-emption rights over the shares owned by the Croatian Privatisation Fund, should it decide to sell its interest in Suncani Hvar.

75 Environmental matters The Company does not generally carry out time consuming environmental searches prior to acquiring any properties and/or land. The Company relies on its knowledge of the market and the location of the property and/ or land to factor into the purchase price any costs associated with possible future environmental claims. The Company owns two sites in the Czech Republic that are contaminated. These are the Bubny land bank, which is a brownfield site, and the Praga Hostivarˇ site in Prague 10.

Site investigations were carried out by EnviCon G s.r.o. on the Bubny site on 17 May 2006 and on the Praga Hostivarˇ site between 2 November 2005 and 17 November 2005. The investigation on the Bubny site revealed contaminants, including heavy metals, non-polar extractable substances, crude-oil based and polychloride biphenyls, each caused by previous use of the site. The de-contamination costs for the Bubny site are estimated to be approximately CZK 60 million (or €2.1 million, based on the CZK Reference Rate on 31 May 2007). The investigation did not exclude the risk of presence of materials containing fibre focus of asbestos on that site. The investigations on the Praga Hostivarˇ site revealed contaminants including non-polar extractable substances in the land, oil hydrocarbons in the buildings, aggressive chemical environment in the underground water due to content of sulphates, and that the surface of the cooling tower on that site is made of materials containing asbestos. The Praga Hostivarˇ site was used as a production site since 1965, including production of components for aircrafts and trucks since 1998.

Apart from Bubny land bank and the Praga Hostivarˇ site, the Company is not aware of any property and/or land that it owns which may be contaminated to lead to any environmental claims.

Regulatory matters The Company and its property portfolio are subject to the laws and regulations of the Central and Eastern European countries where they operate, as well as the laws and regulations of the European Union. In particular, the Company’s financial operations and structure are regulated by the Luxembourg laws on “Soparfi” companies (société de participations financières) (see “General Information about the Company — The Company”).

In addition, among other laws and regulations, the Company’s properties or activities are subject to: • regulation of intra-Company distributions or other payments that may restrict upstream cash flows or loans; • regulation of lease contracts and tenant protection provisions; • regulation of sales of properties and property holding companies; • anti-money laundering regulations; • building codes, including regulations of common areas, fire, safety and other requirements; and • municipal planning and development restrictions, including zoning regulations.

Insurance The Group maintains insurance policies and considers the policy specifications and insured limits of those policies to be of the types and amounts customary for real property assets and in accordance with industry practice and sufficient to protect it against potential damage and liabilities incurred in the ordinary course of business. The Group carries comprehensive liability, fire, extended coverage, business interruption and rental loss insurance covering the properties owned by the Group. However, the Group’s standard insurance coverage excludes coverage for certain events, including damages caused by acts of war, riots, force majeure and civil liability for environmental damages, radioactive contamination and sonic booms. The Group’s insurance policies therefore may not be sufficient to fully cover any losses. See “Risk Factors — Risks relating to the Company’s business — Insurance may not cover all losses relating to the Group’s properties and the Group may suffer material losses in excess of insurance proceeds”.

The Group exercises its discretion in calculating amounts, insured limits and deductibility provisions of its insurance policies, with a view to maintenance of appropriate insurance on its investments at a reasonable cost relative to the risk of loss and on suitable terms. Although the Group periodically reviews that its insurance coverage is sufficient to pay the full current replacement cost of its lost investment, inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to fully replace or restore a property after it has been damaged or destroyed.

76 Competition The real estate market in Central and Eastern Europe is highly competitive and fragmented. The Group believes that there is no single entity that competes with the Group in all jurisdictions while the Group is active and in all the segments in which the Group operates. The Group has different competitors in different countries and segments, with competition in the development segment being higher than in the other segments. For example, the Group considers Central Group and FINEP & Partners a.s. as it main competitors in the residential development market in the Czech Republic. However, the Company does not believe that any single competitor or group of competitors in any of the markets where the Group is active is dominant in that market. The Group faces competition from both international and local real estate investors including developers, investment funds, various types of financial institutions and wealthy individuals.

Intellectual Property The following trademarks are protected by the Group in the relevant countries where the Group is active: “ORCO”, “ORCO PROPERTY GROUP”, “OPG”, “ANDRASSY”, “MAMAISON RESIDENCE”, “HVAR”, “SUNCANI HVAR and “T-O GREEN EUROPE”.

Legal and arbitration proceedings The Group is not, nor has it been, involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Bank is aware) during the 12 months before the date of this Prospectus which may have, or have had in the recent past, significant effects on the financial position or profitability of the Group.

77 MANAGEMENT AND BOARD OF DIRECTORS

Board of Directors Directors meet as often as deemed necessary or appropriate at the request of the Chairman. All directors, and in particular the non-executive directors, are guided by the interests of the Company and its business, such interests including but not limited to the interests of the Company’s shareholders and employees.

The members of the Board of Directors are elected by the general meeting of shareholders for a period not exceeding six years. They are eligible for re-election and they may be removed at any time, with or without cause, by a resolution adopted by the simple majority of the general meeting of shareholders. The current mandate for the directors expires on April 2008.

The business address of all the members of the Board of Directors is 48 Bd Grande-Duchesse Charlotte, L-1330 Luxembourg.

At present, the Board of Directors is formed by Jean-François Ott, Luc Leroi, Arnaud Bricout, Nicolas Tommasini, Rémy Allemane, Pierre Cornet, Patrick Ganansia, Bernard Gauthier, Silvano Pedretti and Guy Wallier. The Company also has two corporate directors: Orco Holding S.A., represented by Jean-François Ott and Luc Leroi; and CEREM S.A., a subsidiary of the Company, represented by Luc Leroi. Jean-François Ott is the Chief Executive Officer of the Company and the Chairman of the Board of Directors. Mr. Ott and Mr. Leroi, as managing directors, may each individually enter into any transaction on behalf of the Company, within the limits of the daily management.

The Board of Directors comprises:

Name Age Position Jean-François Ott ...... 42 Chairman, Chief Executive Officer and member of Board of Directors Luc Leroi ...... 41 Vice President, Global Chief Financial Officer, Secretary and member of Board of Directors Arnaud Bricout ...... 43 Vice President and member of Board of Directors Nicolas Tommasini ...... 35 Vice President and member of Board of Directors Rémy Allemane ...... 47 Member of Board of Directors Patrick Ganansia ...... 39 Member of Board of Directors Silvano Pedretti ...... 43 Member of Board of Directors Pierre Cornet ...... 70 Member of Board of Directors Bernard Gauthier ...... 63 Member of Board of Directors Guy Wallier ...... 71 Member of Board of Directors Orco Holding S.A...... — Member of Board of Directors CEREM S.A...... — Member of Board of Directors

Jean-François Ott founded the business of the Company in 1991. He is the Chairman of the Board of Directors and the Chief Executive Officer. Outside of the Group, he also serves as a Director of Mala Strana (formerly Orco Paris S.A.), Manager of Vinohrady (formerly Orco Paris S.à r.l.), a Manager of Sci La Praguoise, a Manager of Sci Ottan and a Director of Manhattan S.A. He was formerly President of MaMaison Hotel & Apartments. Based in Paris, Mr. Ott manages the Group’s strategy, including new business development issues, and the Group’s finances, banking and investor relations. Mr. Ott has 16 years of experience in real estate development in Central and Eastern Europe. He graduated in Finance and Economics from the Institut d’Études Politiques (Political Sciences Institute) and the Owners Directors Program of INSEAD. Mr. Ott is 42 years old and speaks fluent French, English and German.

Luc Leroi joined the Company in January 2002 and has been the Company’s Global Chief Financial Officer since 2005. He was nominated a Vice President of the Company in January 2007. Mr. Leroi heads the accounting, consolidation, budgeting and forecasting, treasury and cash flow management of the Group with the help of several teams spread throughout the countries where the Group operates. In addition, he is the General Secretary of the Company. Prior to joining the Company, Mr. Leroi worked as an auditor with Deloitte & Touche, as well as Banque UCL (Fortis Bank Luxembourg) and was the head of the Financial Engineering department in Credit Lyonnais Luxembourg. Mr. Leroi graduated from HEC Belgium with a degree in financial sciences.

78 Arnaud Bricout is one of the five Vice Presidents of the Company. He joined the Company in 2003 to manage its corporate finance department. Prior to that he worked for 18 years on stock exchange markets both as a trader and as a managing director. Since joining the Company, Mr. Bricout has overseen all of the Company’s corporate finance transactions, including the listing of the Company’s shares on the Prague Stock Exchange in 2005. Mr. Bricout has a degree in Financial Management from Université Paris Dauphine. He is 43 years old and speaks fluent French and English. Nicolas Tommasini joined the Company in 1997. He is one of five Vice Presidents of the Company. He also used to be the Chief Executive Officer of MaMaison Hotel & Apartments. Mr. Tommasini’s main responsibilities include the development of hospitality related products throughout Central and Eastern Europe and, particularly, acquisitions and asset management for the Endurance Fund managed by the Group. Prior to joining the Company, he was involved in business development in Central and Eastern Europe. Mr. Tommasini holds a degree in Political Science from Institut d’Études Politiques in Paris and an MSc in International Finance from Lancaster University. Mr. Tommasini is 36 years old and lives in Prague. Rémy Allemane is a member of the Board of Directors. He previously worked at AMM Finance S.A. in Geneva, where he held the title of President. He is currently Director of AAM Finance and a member of the supervisory board of PGO Automobiles. Mr. Allemane graduated from Ecole Supérieure des Travaux Publics and speaks French and English. He is 47 years old. Patrick Ganansia is a member of the Board of Directors. Mr. Ganansia currently serves as President of Sofii S.A., Director of Mala Strana (formerly Orco Paris S.A.), and as Manager for S.à r.l. Initiatives Financieres, S.à r.l. Initiatives Patrimoniales, S.à r.l. Nanelle Creations and Sci Ginvest. He previously worked as an asset manager and graduated from the ISG International School of Business. Mr. Ganansia is 39 years old and speaks French and English. His primary residence is in Paris. Silvano Pedretti joined the Company in 1993 as a Vice President and stepped down from that position in 2003. Since 2003, he has served as the foreign advisor for France in the Czech Republic for the sphere of social and economic investment. Other current positions include: President of EC S.A., Director of Euro-cafés, Director of Euro-franchise, Manager of Euro-cafés cz, Manager of DB2004 cz, President of EC2009, President of Union des Français de l’Etranger and Director of AS 2000. Prior to joining the Company, Mr. Pedretti was a Director at Bouygues Immobilier et Eiffage, Paris. He holds a degree in political sciences from the Grenoble Institute of Political Studies, a degree in construction sciences from ICH Arts et Métiers and a doctorate in real sciences from Sorbonne. Mr. Pedretti is 43 years old and speaks French, Italian, English and Czech. Pierre Cornet is a member of the Board of Directors. Prior to joining the Company, he worked in the real estate and finance sector. He currently serves as President of Cher Initiative and Director of Centre Capital Développement. Mr. Cornet graduated from the University of Hamburg in Germany. He is 70 years old and speaks French. Bernard Gauthier is a member of the Board of Directors. He was a director for several years in real estate companies. He is 63 years old and he lives in Hong Kong. Mr. Gauthier speaks English and French. Guy Wallier is a member of the Board of Directors. He is also President of Compagnie Française de Participation Mobilière et Immobilière (CFPMI) and President of L’action Sociale Immobilière (ASI). Mr. Wallier is 71 years old and lives in Paris. Orco Holding S.A. is a société anonyme incorporated on 22 February 1994 and is governed by the laws of Luxembourg. Its registered office is located at 48 Boulevard Grande-Duchesse Charlotte, L-1330 Luxembourg, and is registered with the Luxembourg Register of Commerce and Companies of Luxembourg under B-46.918. Orco Holding S.A. is managed by a board of directors composed of five members (Bears & Sons S.A., Mr. Oliver Lansac, Mr. Jean-François Ott, Mrs. Corinne Ott and Mr. Luc Leroi), with Mr. Jean-François Ott serving as managing director. CEREM S.A. (Central European Real Estate Management S.A.), a subsidiary of the Company, is a société anonyme incorporated on 6 July 2004 and governed by the laws of Luxembourg. Its registered office is located at 48 Boulevard Grande-Duchesse Charlotte, L-1330 Luxembourg, and is registered with the Luxembourg Register of Commerce and Companies of Luxembourg under B-101.753. CEREM S.A. is managed by a board of directors composed of four members (Mr. Jean-François Ott, Mr. Arnaud Bricout, Mr. Yves Désiront and Mr. Luc Leroi), with Jean-François Ott serving as managing director. Conduct Within the five years prior to the date of this Prospectus, no member of the Board of Directors or the Executive Committee: • was convicted of any fraudulent offences; • was associated with any bankruptcies, receiverships or liquidations of companies or partnerships of which he acted as a director or senior manager;

79 • was officially and publicly incriminated and/or sanctioned by statutory or regulatory authorities (including designated professional bodies); or • has been disqualified by a court from acting as a member of the administrative, executive or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer. Conflicts of interest No member of the Board of Directors or the Executive Committee holds a position in another company or institution that constitutes a conflict of interest with their position in the Company, nor have they any interest, conflicting or otherwise, that is material to the Offering. Third-party influence on the election of the members of the Board of Directors No third party has any influence over the election of the members of the Board of Directors. Audit committee Members of the audit committee are Patrick Ganansia, Rémy Allemane, Luc Leroi and Jean-François Ott. The audit committee reviews the Company’s accounting policies and communication of financial information. There has been one meeting since 1 January 2006, primarily to discuss changes in accounting policies. Remuneration committee Members of the remuneration committee are Rémy Allemane, Patrick Ganansia, Jean-François Ott, Luc Leroi and Guy Wallier. The remuneration committee presents proposals to the Board of Directors about remuneration and incentive programmes to be offered to the management and the Directors of the Company. The members of the Executive Committee do not vote on matters relating to their own remuneration. There has been one meeting since 1 January 2006. The Management Executive Committee The Management of the Company is also known as the Executive Committee. The Executive Committee has monthly meetings to implement strategies for the Group’s development. The members of the Executive Committee are: Name Age Position Jean-François Ott ...... 42 Chief Executive Officer Steven Davis ...... 47 Senior Vice President Alesˇ Vobruba ...... 47 Senior Vice President Arnaud Bricout ...... 43 Vice President Luc Leroi ...... 41 Vice President and Chief Financial Officer Nicolas Tommasini ...... 36 Vice President Dragan Lazukicˇ ...... 42 Regional Director for Croatia and SE Europe Karen Hartley ...... 40 European Sales and Marketing Director Martin Gebauer ...... 44 Financial Director for Czech Republic and Slovakia and Finance Director of Central and Eastern Europe Hospitality Pavel Klimesˇ ...... 42 Development Director Rainer Bormann ...... 35 Chief Executive Officer of Orco Germany S.A. Douglas Noble ...... 30 Director for Orco Warsaw Jean-François Ott, Chief Executive Officer. See above. Steven Davis is a Senior Vice President of ORCO Property Group and Managing Director and Chief Operating Officer for all its real estate companies in the Czech Republic, Hungary, Poland and Slovakia. Prior to joining the Company, he worked as Executive Director for a British real estate and development company and, more recently, as a partner with the real estate and development company FlowEast, where he worked from 1991-2003. A resident of Prague since 1991, Mr. Davis has more than 15 years of business experience in central and eastern Europe and extensive knowledge of the real estate market in the region. Alesˇ Vobruba is a Senior Vice President of the Company, whose main responsibilities include new acquisitions, asset management, office and residential and hotel projects in central Europe. Before starting at the Company in 1995, Alesˇ worked for PZO Artia, Transport-Construction Company Olomouc and TAP/ARC (construction and advertising). He studied foreign trade at VSE in Prague. Arnaud Bricout is a Vice President of the Company. See above.

80 Luc Leroi is a Vice President and the Chief Financial Officer of the Company. See above.

Nicolas Tommasini is a Vice President of the Company. See above.

Dragan Lazukicˇ is the Regional Director for Croatia and SE Europe. After more than 12 years in the Prague office, and subsequent to last year’s joint venture with the Croatian Privatization Fund in Suncˇari Hvar d.d., he has relocated to Croatia where he has assumed the roles of CEO in Suncˇari Hvar and Regional Director for Croatia and SE Europe. Mr. Lazukic, 41, holds a Master’s Degree from the Faculty of Economics at Sarajevo University, Bosnia and Herzegovina.

Karen Hartley is Director of European Sales and Marketing. She is responsible for all residential sales throughout the Group and for the global coordination of the Group’s corporate marketing, branding, and demand creation activities in central Europe. She has over 15 years’ experience in the Czech market and speaks fluent Czech.

Martin Gebauer is Financial Director for the Czech Republic and Slovakia and Finance Director of Central and Eastern Europe Hospitality. Before joining the Group in 2003, Mr. Gebauer was a financial director of a British hospitality group in Spain. Prior to that he spent five years with Ernst & Young assurance services in the Czech Republic and United States. He is a member of the Association of Certified Accountants in Great Britain and holds an MSc in Economics and Management of Civil Engineering from the Czech Technical University, with graduation from the City University of London.

Pavel Klimesˇ joined the Group in 2000 and is currently the Development Director. Previous positions include country manager for the Czech Republic and Director of Operations. Before joining the Group, Mr. Klimesˇ served as general manager of HEBEL, an industrial construction company, and worked as a consultant for A.T. Kearney. He holds an MSc in Civil Engineering from the Czech Technical University and an MBA from the Katz School of Business, University of Pittsburgh.

Rainer Bormann is the CEO of Orco Germany S.A. After starting his career as a sales representative with Barings investment bank in Paris and London and prior to founding Orco Germany S.A., a subsidiary of the Company, in 2004, Mr. Bormann headed the Asian Equity division at Lehman Brothers in Europe. He studied economics and finance at the Institut d’Études Politiques in Paris.

Douglas Noble is the Company’s Director for Orco Warsaw. He has more than ten years of experience in the real estate market, with a background in Project Management and Quantity Surveying. Prior to joining the Orco Property Group team, Mr. Noble held the position of Senior Associate Partner with the global construction consultancy, Gardiner & Theobald LLP, active in the Czech Republic and Romania. Prior to that, he practised as a Charted Surveyor in London with AYH plc. Mr. Noble is a Member of the Royal Institution of Chartered Surveyors and holds a Bachelor of Science degree from the Robert Gordon University in Aberdeen.

Remuneration and Benefits The following table sets out the aggregate remuneration and benefits (including stock options) received by the Board of Directors and the Management for the years ended 31 December 2006, 2005 and 2004.

Board of Directors and Executive Committee

Year ended 31 December 2006 2005 2004 (€ thousands) Directors ...... 890 841 486 Executive Committee members (other than Directors) ...... 1,700 859 814

The amounts paid to the Directors above include a fee of €1,000 (€500 in 2005) which is paid to each director when he participates in a meeting of the Board.

Certain of the Company’s Directors and members of the Executive Committee, are also directors and/or officers of the Endurance Fund, but they do not receive any additional remuneration or benefits for such services to the Endurance Fund.

Employees Remuneration is provided at market standard rate. The Company has also granted stock option plans to its employees. (See “— Employee stock options” below).

81 Pension, retirement or similar benefits In the Group, only Viterra Development GmbH and Viterra Baupartner GmbH have defined benefit plans. These plans are so-called book reserve plans, where there is no separate vehicle to accumulate assets to provide for the payment of benefits. Instead the employer sets up a book reserve (provision) in its balance sheet.

The amount of pension benefit that an employee will receive on retirement usually depends on one or more factors, such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of good investment grade corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

In March 2006, the Board of Directors of the Company granted to some management personnel in the Group a termination indemnity payment for a combined total of €34 million. This indemnity would become payable by the Company to the relevant management member only in case of a change in control of the Company and where the relationship between the Company and the member is terminated by either party within a period of six months after the change of control. See “General Information About the Company — Material contracts”.

Employee stock options On 3 March 2006, a stock option plan was granted to employees at a total number of 350,000 options exercisable at €75.6 per share for the period between 3 March 2007 to 3 March 2012.

On 2 May 2005, a stock option was granted to employees at a total number of 150,000 options exercisable at €35.0 per share for the period between 2 May 2006 to 30 April 2010.

As of 31 December 2006, 99,500 options have been exercised and 367,500 options remain outstanding. The table below describes the movement in the stock options during 2005 and 2006.

2006 2005 Average Average exercise price Number of exercise Number of in € options price in € options Outstanding at the beginning of the year ...... 35.00 117,000 25.69 18,000 Granted ...... 75.60 350,000 35.00 150,000 Exercised ...... 35.00 (99,500) 31.72 (51,000) Outstanding at the end of the year ...... 73.67 367,500 35.00 117,000

In March 2006, the Board of Directors decided to set up a stock option plan for a maximum of 350,000 Suncani Hvar shares (representing approximately 0.06 per cent. of the total share capital of Suncani Hvar’s share capital). This plan has not been created yet and, as such, is not recorded in the audited consolidated financial statements of the Company as of and for the year ended 31 December 2006. The Company is currently considering to adopt a new stock option plan for members of the Executive Committee. The total number of shares underlying the stock options authorised in the plan will not exceed five per cent. of the sum of the number of Shares outstanding as of the date thereof, plus the number of Shares issued in this Offering.

Corporate governance Good corporate governance improves transparency and the quality of reporting, enables effective management control, safeguards shareholder interests and serves as an important tool to build corporate culture. Although there are no mandatory rules on corporate governance applicable to companies incorporated in Luxembourg, the Company has decided to implement corporate governance rules inspired by the recommendations applicable in Luxembourg, France and Czech Republic, insofar as they apply to the Company.

According to Article 17 of the Law of 9 May 2006 on Market Abuse, persons discharging managerial responsibilities within an issuer having its registered office in Luxembourg or by persons closely associated with them, have to notify to the CSSF and to the issuer all transactions related to shares admitted to trading on a regulated market, or to derivatives or other financial instruments linked to them, conducted on their own account. The disclosure is to be made to the CSSF within five business days following the conclusion of each individual operation. The information must be accessible to the public.

82 GENERAL INFORMATION ABOUT THE COMPANY

The Company The Company is a joint stock company which was incorporated on 9 September 1993 under the Luxembourg Law of 10 August 1915 on commercial companies, as amended (the “Luxembourg Law of 10 August 1915”). The Company is a so-called “Soparfi” — Société de Participations Financières. A Soparfi is subject to full taxation and may take advantage of Luxembourg’s double tax treaties. If a Soparfi has a shareholding of at least 10 per cent. in a company (or, if less, if the acquisition cost was at least €1.2 million) and its holding period of the shareholding is at least 12 months, dividends from the company received by the Soparfi are excluded from the Soparfi’s taxable profit. If a Soparfi has a shareholding of at least 10 per cent. in a company (or, if less, if the acquisition cost was at least €6 million) and its holding period of the shareholding is at least 12 months, capital gains are excluded from the Soparfi’s taxable profit. Other income reduced by financing and other costs would be generally subject to taxation at the rate of 29.63 per cent. (in the City of Luxembourg). There is also wealth tax (minimum 0.5 per cent.) charged on the net asset value of a company as of 1 January of each year. The Company’s place of incorporation and registered office are in Luxembourg.

The registered address of the Company is at 48 Bd Grande-Duchesse Charlotte, L-1330 Luxembourg, Grand Duchy of Luxembourg. The telephone number of the Company is +352 2647 671 and the fax number is +352 2647 6767. The legal name of the Company is “Orco Property Group”. The commercial name frequently used by the Company is Orco. The Company is registered in the Luxembourg Register of Commerce and Companies under number B 44996. The duration of the Company is indefinite.

Summary of the Articles of Association of the Company Object of business The Company’s corporate purposes, as stated in Article 4 of the Company’s Articles of Association include, inter alia, all direct real estate acquisitions, real estate investments such as the purchase, sale, building, development, management, leasing and promotion of real estate. The Company’s purposes also include acting as a holding company.

Board of Directors The Company is managed by a Board of Directors composed of not less than three members, each of whom is required to hold at least one share of the Company. A director can be a natural person or a legal entity.

The Board of Directors represents the Company vis-à-vis third parties and in legal proceedings, either as plaintiff or as defendant. Writs served on behalf of or upon the Company shall be validly served in the sole name of the Company.

The members of the Board of Directors are appointed at a general meeting of shareholders for a period not exceeding six years. They are eligible for re-election and they may be removed at any time, with or without cause, by a resolution adopted by a simple majority at a general meeting of shareholders.

In the event of a vacancy in the Board of Directors, the remaining directors may elect a director to fill such vacancy until the next general meeting of shareholders, which shall ratify such election, or elect a new member of the Board of Directors instead.

However, if there are more than five vacancies, the Chief Executive Officer, or the oldest director, shall convene an extraordinary general meeting of shareholders with respect to the renewal of the Board of Directors.

The Board of Directors is vested with the broadest powers to perform any action necessary or useful for accomplishing the Company’s purposes. All powers not expressly reserved by the Articles of Association or by the laws to the general meeting of shareholders or the statutory auditor(s) are within the competence of the Board of Directors.

With respect to third parties, the Company is liable for the actions of the Board of Directors which exceed the corporate purposes, except where the Company proves that the third party knew that such action or actions exceeded the corporate purpose or that such third party could not ignore such fact due to the circumstances.

83 The directors shall not contract any personal obligation by reason of the commitments of the Company.

The directors shall be liable to the Company, in accordance with general law, for the execution of the mandate given to them and for any misconduct in the management of the Company’s affairs. They shall be jointly and severally liable towards both the Company and any third parties for damages resulting from the violation of the Luxembourg Law of 10 August 1915, or the Articles of the Company. They shall be discharged from such liability in the case of a violation where they were not a party, provided no misconduct is attributable to them and they have reported such violation at the first general meeting after they had acquired knowledge thereof.

The Board of Directors shall not validly deliberate unless the majority of its members is present or represented. The proxy between directors, which can be given in written form, by telegram or by fax, is allowed. In case of urgency, the directors can send their votes in written form, by telegram or by fax.

The decisions of the Board of Directors are adopted by the majority of votes; in the event of a tie, the vote of the chairman of the meeting is the deciding vote.

Resolutions signed by all members of the Board of Directors carry the same force and validity as decisions adopted during a meeting regularly convened and held.

The Board of Directors may delegate the daily management of the Company and the representation of the Company within such daily management to one or more members of the Board of Directors. Included in the daily management are all operations with respect to the corporate purposes, such as real estate acquisitions, the acquisition of holdings and the disposal of loans in the companies which are members of the Group, all bank financing without any limitation on amount and any kind of investment. This list is not exhaustive.

The delegation in favour of a member of the Board of Directors is subject to the prior authorisation at the general meeting of shareholders and shall require registration at the Register of Commerce and Companies in accordance with the provisions of Article 9 of the Luxembourg Law of 10 August 1915. Daily management has been delegated to Mr. Jean-François Ott and Mr. Luc Leroi.

The Company shall be bound either by the signatures of at least two directors, or by the individual signature of a managing director.

Statutory/Independent Auditor(s) The annual financial statements of the Company shall be audited by one or more statutory and/or independent auditor(s) (“réviseurs d’entreprises”), who will be members of the Luxembourg Institut des Réviseurs d’Entreprises.

The statutory and/or independent auditor(s) shall be elected by a simple majority of the shareholders for a period not exceeding six years and are eligible for re-election. PricewaterhouseCoopers S.à r.l and HRT Révision S.à r.l. have been appointed as the independent auditors of the Company for the years ended 2006, 2005 and 2004. PricewaterhouseCoopers S.à r.l and HRT Révision S.à r.l. are members of the Institut des Réviseurs d’Entreprises.

Form of shares All the shares of the Company have the same value. The shares will be either in the form of registered shares or in the form of bearer shares, as decided by the shareholder, except to the extent otherwise provided by law.

The shareholder can freely sell or transfer the shares.

The shares are indivisible and the Company only recognises one holder per share. If there are several owners per share, the Company shall be entitled to suspend the exercise of all rights attached to such shares until the appointment of a single person as owner of the shares towards the Company. The same shall apply in the case of usufruct and bare ownership or security granted on the shares.

The joint owners of shares shall be represented within the Company by one of them, considered as sole owner or by a proxy, who in case of conflict may be legally designated by a court at the request of one of the owners.

84 Rights and obligations attached to the shares Each share entitles a shareholder to the benefits and the corporate assets of the Company equal to a proportionate amount of the share capital that such share represents. Each share also confers the right to vote at a general meeting of shareholders in conformity with legal and statutory conditions.

The Company is a limited liability corporation and shareholders may be held liable only up to the amount that they hold in the share capital, whether the shares are in registered form or in bearer form.

The rights attached to the shares follow the holder of the shares.

The ownership, in any form whatsoever, of a share implies that the shareholder consents to and is bound by the Articles of Association of the Company and decisions properly adopted at the general meeting of shareholders.

Information to the shareholder Fifteen days before the annual general meeting of shareholders, shareholders have access at the registered office of the Company to: • the annual accounts; • the list of public funds (governmental securities), shares, bonds and other titles or securities held by the Company; • the list of shareholders who have not fully paid their shares, including the number of shares and their addresses; and • the report of the statutory and independent auditor(s).

The annual accounts and the report of the statutory and independent auditor(s) are delivered to the registered shareholders, at the same time as the convening notice.

Under general Luxembourg law, the Company must also make available to the shareholders at its registered office fifteen days before the general meeting the management report on the annual results and a list of its directors. There may be further requirements in the future pursuant to the implementation of the European Parliament and Council Directive on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market or through a comparable mechanism for the disclosure of information under national requirements of a Member State concerning the dissemination of information (No. 2004/109/EC) (the “Transparency Directive”).

Every shareholder is entitled to obtain, free of charge, by duly evidencing his shareholding, fifteen days before the meeting, a copy of the documents listed above.

Payment of dividends The Board of Directors is entitled to pay advances on dividends when the legal conditions listed below are fulfilled: • an accounting statement must be established which indicates that the available funds for the distribution are sufficient; • the amount to be distributed may not exceed the amount of results realised since the end of the last accounting year for which the accounts have been approved, increased by the reported profits and by the deduction made on the available reserves for this purpose and decreased by the reported losses and by the sums to allocate in reserves in accordance with a legal and statutory provision; • the Board of Directors’ decision to distribute interim dividends can only be taken within two months after the date of the accounting statement described above; • the distribution may not be decided less than six months after the closing date of the previous accounting year and before the approval of the annual accounts related to this accounting year;

85 • when a first interim dividend has been distributed, the decision to distribute a second one may only be taken at least three months after the decision to distribute the first one; and • the statutory and independent auditor(s) in its(their) report to the Board of Directors confirm(s) the conditions listed above are fulfilled.

Under general Luxembourg law, the conditions for making advances on dividends are less stringent than the conditions listed above, however, the more restrictive provisions of the Articles of Association will prevail as the recent changes under Luxembourg law have not yet been reflected in the Articles of Association of the Company.

When an advance distribution exceeds the amount of dividend subsequently approved by the general meeting of shareholders, such advance payment is considered as an advance on future dividends.

Financial year The Company’s financial year begins on the first day of January and ends on the thirty-first day of December.

General meetings of shareholders Shareholders at the general meeting of shareholders shall have the broadest powers to adopt or ratify any action relating to the Company.

Directors’ appointments shall be made in accordance with the ordinary rules of deliberating assemblies. Every shareholder shall be entitled to vote personally or by proxy in conformity with the provisions of the Articles of Association.

Every shareholder may take part in the deliberations, with a number of votes equal to the number of shares held by him, without limitation.

The Board of Directors is entitled to adjourn a meeting, while in session, to four weeks later upon request of a shareholder or shareholders. It must do so at the request of shareholders representing at least one-fifth of the share capital of the Company. Any such adjournment, which shall also apply to general meetings called for the purpose of amending the Articles of Association, shall cancel any resolution passed until it is again taken up at the second general meeting. The second meeting shall be entitled to pass final resolutions provided that, in cases of amendment of the Articles of Association, the conditions as to quorum laid down by Article 22 of the Articles of Association are fulfilled.

The annual general meeting of shareholders will be held on the last Thursday of April at 2 p.m. CET time in Luxembourg at the registered office or at such other place as may be specified in the notice convening the meeting. If such day is a public holiday, the meeting will be held on the following business day.

The Board of Directors and the auditors are entitled to convene the general meeting of shareholders. They must convene such meeting if shareholders which represent one-tenth (notwithstanding the Articles of Association which refer to an older law of two-tenths) of the share capital require it by a written request, indicating the agenda proposed for such meeting. Such meeting will be held within one month of the written request.

The notices for each general meeting of shareholders shall contain the agenda and shall be published two times, each at an interval of eight days, with the second notice being published at least eight days prior to the meeting, in the Mémorial and in a Luxembourg newspaper.

If all shares are in registered form, the notices can only be sent by registered mail.

At the annual general meeting, shareholders shall also receive the directors’ and statutory and/or independent auditors’ reports as well as the annual accounts.

The annual accounts are to be filed by the directors of the Company at the Register of Commerce and Companies within the month of their approval.

The first names, last names, occupation, and the professional or private addresses of directors and of statutory and/or independent auditor(s) must also be published on the Mémorial.

86 Extraordinary general meetings of shareholders/bondholders A resolution adopted at an extraordinary general meeting of shareholders may amend any provision of the Articles of Association. However, the nationality of the Company may be changed and the commitments of its shareholders may be increased only with the unanimous consent of all shareholders and bondholders of the Company.

The extraordinary general meeting of shareholders shall not validly deliberate unless at least one half of the capital is represented and the agenda indicates the proposed amendments to the Articles, and where applicable, the text of those which concern the purposes or the form of the Company. If the first of these conditions is not satisfied, a second meeting may be convened, in the manner prescribed in the Articles of Association, by publishing twice, each at an interval of fifteen days, with the second notice being published at least fifteen days before the meeting, notices of such meeting in the Mémorial and in two Luxembourg newspapers. Such convening notice shall reproduce the agenda and indicate the date and the results of the previous meeting. The second meeting shall validly deliberate, regardless of the proportion of the capital that is represented. At both meetings, resolutions must be approved by at least two-thirds of the votes of the shareholders present or represented in order to be adopted.

The Board of Directors may decide that in order to attend the extraordinary general meeting of shareholders, the owner of shares shall block their shares five business days before the date of the meeting; every shareholder shall be entitled to vote personally or by a proxy.

Each share entitles its holder to one vote.

Any amendments concerning the purposes or the form of the Company must be approved by the general meeting of all bondholders of the Company. Such meeting shall not validly deliberate unless at least one half of the bonds outstanding are represented and the agenda indicates the proposed amendments. If the first of these conditions is not fulfilled, a second meeting may be convened in accordance with the conditions noted above.

At the second meeting, bondholders who are not present or represented shall be regarded as being present and as voting for the proposals of the Board of Directors.

The following requirements must be met subject to voidance of any resolutions adopted in breach thereof: • the notice of the second meeting must contain the agenda of the first meeting and indicate the date and the minutes of that meeting; • the notice must specify the proposals of the Board of Directors on each of the items of such agenda, indicating the amendments proposed; and • the notice must contain a notice to bondholders that failure to attend the meeting shall be deemed to indicate support for the proposals of the Board of Directors.

At both meetings, resolutions shall be validly adopted if they receive the approval of two-thirds of the votes.

Inventories and balance sheet Each year, management must prepare an inventory indicating the value of all the Company’s assets and all the debts owed to and by it, with an annex summarising all of its commitments and the debts of the directors and statutory auditors of the Company.

Management prepares the balance sheet and the profit and loss account in which the necessary depreciation charges must be made.

Dissolution of the Company The dissolution of the Company is approved by a decision taken in an extraordinary general meeting of shareholders on the conditions described above for amendments to the Articles of Association.

In the event of a loss of half or more of the corporate capital, the directors shall convene an extraordinary general meeting of shareholders within a period not exceeding two months from the time when the loss took place or should have been ascertained by the directors.

The same rules shall be observed where the loss equals at least three-quarters of the corporate capital, and in such case the dissolution shall be properly authorized if approved by one-fourth of the votes cast at the meeting.

87 Liquidation of the Company The liquidators may bring and defend any action on behalf of the Company, receive any payments, grant releases with or without receipt, dispose of all movable property of the Company, endorse any negotiable instrument and engage in and settle any disputes on behalf of the Company. They may dispose of immovable property of the Company through a public auction if they consider the sale thereof necessary to pay the debts of the Company or if requested by seven or more shareholders of the Company.

They may, but only with the authorisation of the shareholders given in an extraordinary general meeting of shareholders and until the disposal of the Company’s business, continue with the industrial and commercial activity of the Company, borrow to pay the debts of the Company, issue negotiable instruments, mortgage and pledge the assets of the Company, dispose of the real property even by private contract, and contribute the assets of the Company to other companies.

The liquidators may require shareholders to pay up amounts which they have undertaken to pay to the Company and which the liquidators consider necessary for the completion of the liquidation. Shareholders may be held liable only up to the amount that they hold in the share capital.

Without prejudice to the rights of creditors benefiting from liens or mortgages, the liquidators shall pay all the debts of the Company, proportionally and without distinction between debts which have matured and those that have not matured, subject to a discount in the case of the latter.

The liquidators may pay any due debts provided that the Company’s assets exceed its liabilities or provided that payment of debts, which are not yet due, is sufficiently guaranteed, all without prejudice to the right of creditors to seek appropriate remedies in court and without prejudice to the liquidator’s responsibility as to his actions in this respect.

After the payment, or the deposit in escrow, of the sums necessary for payment of debts, the liquidators shall distribute to the shareholders those amounts or assets capable of forming equal shares and they shall deliver to shareholders any property which may have been retained for the purpose of apportionment.

They may, subject to the authorisation referred to above, repurchase the shares or the corporate units of the Company either on the stock exchange on which the shares of the Company are listed or by subscription or tender, in which all the shareholders shall be entitled to participate.

The liquidators shall be liable, both to third parties and to the Company, for the execution of the mandate given to them and for any misconduct in the management of the liquidation.

Each year, the results of the liquidation shall be submitted to the general meeting of the shareholders of the Company, together with a statement as to the reasons which have prevented completion of the liquidation. The balance sheet shall be filed with the Register of Commerce and Companies and may be published in the Mémorial.

When the liquidation is completed, the liquidators shall present a report to the general meeting regarding the use of the corporate assets, including supporting accounts and documents. The meeting shall appoint auditors to examine such documents and shall determine a further meeting which, after the auditors have issued their report, shall deliberate on the management of the liquidators.

Notice of completion of the liquidation shall be published in the Mémorial.

Such publication must also include: • an indication of the place designated by the general meeting where the corporate books and documents are to be kept for at least five years; and • an indication of the measures taken for the deposit in escrow of the sums and assets due to creditors or shareholders which it has not been possible to deliver to them.

Applicable law All matters not governed by the Articles of Association shall be determined in accordance with the relevant laws, in particular with the Luxembourg Law of 10 August 1915.

88 Disclosure obligations The law of 4 December 1992 (as amended), relating to the information to be published when a major holding in a listed company is acquired or disposed of, implements EC Directive 88/627 (OJ 1988 L 348/62). It provides that if a natural person or legal entity acquires or disposes of a holding in a listed company and if, as a consequence of this acquisition or disposal, the percentage of the voting rights held by that person reaches or exceeds 10 per cent., 20 per cent., 33.33 per cent., 50 per cent. or 66.66 per cent. of the total voting rights existing at the time the situation giving rise to the declaration occurs, or falls below said thresholds, such person must notify the Commission de Surveillance du Secteur Financier (“CSSF”) and the company whose shares or securities representing such shares are listed on stock exchanges situated or operating within one or more EU member states, of the proportion of such person’s or legal entity’s voting rights following that acquisition or disposal.

In Luxembourg, this declaration has to be notified in the French, German or English language to such listed company and to the CSSF within seven calendar days from the date the natural person or legal entity learned or, in view of the circumstances, should have learned of its acquisition or disposal of such a major holding.

The listed company which has received the above declaration must in turn disclose it to the public in each of the member states in which its shares are officially listed on a stock exchange no later than nine calendar days after the receipt of such declaration.

For the purposes of determining whether a natural person or legal entity shall be regarded as holding a certain percentage of voting rights, the voting rights held by third parties which are controlled by that person or entity, or for which that person or entity has entered into a written agreement which obliges them to adopt by concerted exercise of the voting rights they hold a lasting common policy towards the management of the listed company, are also taken into consideration. In case of a group of undertakings, the required disclosure may under certain circumstances be made by the parent undertaking on behalf of the group member actually acquiring or disposing of the shares.

The disclosure requirements do not apply to the acquisition or disposal of a major holding by a professional dealer in securities insofar as the acquisition or disposal is effected in his capacity as a professional dealer in securities and insofar as the acquisition is not used by the dealer to intervene in the management of the company concerned.

According to Article 26 of the Articles of Association of the Company, any shareholder exceeding, either up or down, the thresholds of 2.5 per cent., 5 per cent., 10 per cent., 15 per cent., 20 per cent., 33 per cent., 50 per cent. and 66 per cent. of total voting rights shall be bound to inform the Company regarding that fact, and the Company shall in turn be bound to inform its supervisory authorities within eight days of the event. No sanction is provided by the Articles of Association for failure of the shareholder to do so, although there may be other sanctions and penalties imposed by law, including fines and/or the suspension of voting rights.

Statutory auditors The Company’s annual consolidated financial statements as of and for the years ended 31 December 2006 and 31 December 2005 prepared in accordance with IFRS, were audited by PricewaterhouseCoopers S.à r.l., with its registered office at 400 route d’Esch, L-1471 Luxembourg, and HRT Révision S.a r.l., with its registered office at 23 Val Fleuri, L-1526 Luxembourg, each of whom has issued an unqualified audit opinion. The Company’s annual consolidated financial statements as of 31 December 2004, prepared in accordance with Luxembourg GAAP, were audited by PricewaterhouseCoopers S.à r.l. and HRT Révision S.à r.l. PricewaterhouseCoopers S.à r.l. has issued a qualified audit opinion. HRT Revision S.à r.l. has issued an unqualified opinion.

The comparative figures in respect of the financial year ended 31 December 2004 in the audited consolidated financial statements as of and for the year ended 31 December 2005 were restated to IFRS. The comparative figures in the balance sheet as of 31 December 2005, as contained in the audited consolidated financial statements as of and for the year ended 31 December 2006, were restated to reflect the derecognition of a deferred tax asset.

Employees The Group had 1,304, 982 and 422 employees and managers on the basis of contracts of employment as of 31 December 2006, 2005 and 2004, respectively. The increase in the number of employees in 2006 was a result of the acquisition of the Viterra Development Group and the expansion of its business. At the end of 2006, the

89 number of employees in the non-hospitality sector was 463 in 2006 (246 in 2005) and 841 in the hospitality sector (736 in 2005). Of the 841 employees in the hospitality sector, 529 were employed by Suncani Hvar. All of the Group’s employees are engaged in real estate trading, leasing, asset management and administration, book- keeping, selling, supporting activities and services.

Significant change in the Group’s financial or trading position Except as described in “Operating and Financial Review — Recent Developments”, there has been no significant change in the Group’s financial or trading position since 31 March 2007 or any material adverse change in its prospects since 31 December 2006.

Consent PricewaterhouseCoopers S.à r.l. has given and has not withdrawn its written consent to the inclusion in this Prospectus of its report set out in the section “UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION” of this Prospectus on the Group’s unaudited pro forma consolidated income statement in the form and context in which it is included for the purposes of item 23.1 of Annex I and item 10.3 of Annex III of the Commission Regulation (EC) 809/2004.

Share capital General The Company has an authorised capital of €100 million without nominal value per share. As of 1 June 2007, the Company had an issued share capital of €35,684,378.70 divided into 8,703,507 shares. All shares have been paid in full. The Company has not issued shares which do not represent capital. The Company does not hold shares in itself. No subsidiary of the Company holds shares in the Company except CEREM S.A., which holds at least one share of the Company since its appointment as a member of the Board of Directors on 26 April 2007.

Other securities On 22 September 2004, the Company issued 1,001,563 convertible bonds due 15 December 2011 with a nominal value of €32.40 per bond and a nominal interest rate of 5.5 per cent. per annum (the “2011 Convertible Bonds”). The 2011 Convertible Bonds were redeemed by the Company pursuant to a call option on 26 March 2007. See “Operating and Financial Review — Recent Developments”. On 1 June 2006, the Company issued 1,086,956 convertible bonds due 31 May 2013 with a nominal value of €138.00 per bond and a nominal interest rate of 1 per cent. per annum (the “2013 Convertible Bonds”). Each 2013 Convertible Bond converts into one new share of the Company, subject to satisfaction of certain conditions and anti-dilutive adjustments. As of 31 December 2006, none of the 2013 Convertible Bonds had been converted.

The Company has also issued 73,273 bonds, with 15 repayable subscription warrants per bond, due 18 November 2010 with a nominal value of €686.10 per bond and a nominal interest rate of 4.5 per cent. per annum. Each warrant gives its holder the right to one Share, subject to satisfaction of certain conditions and anti- dilutive adjustments. The Company has the right to repay the warrants from 19 November 2007 at €.01 if the average price over the last 10 days preceding 19 November 2007 is higher than €96.05.

On 28 March 2007, the Company also issued 119,544 bonds, with 1,793,160 redeemable warrants, due 28 March 2014 with a nominal value of €1,720.08 per bond and a nominal interest rate of 2.5 per cent. per annum which were placed privately with institutional investors. Each warrant gives its holder the right to one Share, subject to satisfaction of certain conditions and anti-dilutive adjustments. The Company has the right to repay the warrants from 28 March 2012 at €0.01 if the multiple of the exercise ratio of the warrants and the closing price of the Shares for at least 20 dealing days during the period of 30 consecutive dealing days, ending not earlier than 14 dealings days prior to the date when the Company has given a notice to repay the warrants, is higher than €190.31.

90 History of the Company’s share capital The Company was founded on 9 September 1993 and registered in the Register of Trade and Companies of Luxembourg, the Grand Duchy of Luxembourg under Ref No. B44.996 on 24 September 1993. The following table sets out a summary of changes made to the share capital of the Company as well as in the number of shares into which it is divided between January 2005 and April 2007: Number of shares composing the Change in capital after numbers Share Amount of Date Type of transaction increase of shares premium capital (€ thousands) (€ thousands) Balance as of 31/12/2004 ...... 4,622,824 — 46,089 18,954 Board of Directors of 26/01/2005 ...... 119,169 stocks warrants 4,662,547 39,723 +751 19,116 46,840 Board of Directors of 03/02/2005 ...... 200stocks options 4,664,547 2,000 +42 19,125 46,882 Board of Directors of 14/02/2005 ...... 91,950 stocks warrants and 5,015 4,700,212 35,665 +721 19,271 convertible bonds 47,603 Board of Directors of 18/02/2005 ...... 24,579 stocks warrants and 18,800 4,727,205 26,993 +687 19,382 convertible bonds 48,290 Board of Directors of 02/03/2005 ...... 1,238,925 stocks warrants and 5,179,775 452,570 +8,926 21,237 39,595 convertible bonds 57,215 Board of Directors of 18/03/2005 ...... 161,889 stocks warrants, 95,472 5,335,210 155,435 +3,847 21,874 convertible bonds, 6,000 stocks 61,063 options Board of Directors of 18/03/2005 ...... 20,000 convertible bonds 5,355,210 20,000 +566 21,956 61,629 Board of Directors of 21/03/2005 ...... Private placement of 300,000 5,655,210 300,000 +11,970 23,186 shares 73,599 Board of Directors of 30/03/2005 ...... 148,320 stocks warrants and 5,727,417 72,207 +1,579 23,482 22,767 convertible bonds 75,177 Board of Directors of 18/04/2005 ...... 48,657 stocks warrants and 28,506 5,772,142 44,725 +183 23,666 convertible bonds 75,984 Board of Directors of 22/04/2005 ...... 5,379 stocks warrants and 55,504 5,829,439 57,297 +1,605 23,901 convertible bonds 77,589 Board of Directors of 13/05/2005 ...... 100,000 convertible warrants (bon 5,929,439 100,000 +3,515 24,311 d’emission d’actions) 81,104 Board of Directors of 27/05/2005 ...... Dividend 2004 (contribution in 6,003,400 73,961 +2,677 24,614 kind) 41,654 shares, capital 83,781 contribution OHG 32,307 shares Board of Directors of 13/06/2005 ...... 2,835 stocks warrants and 4,840 6,009,185 5,785 +155 24,638 convertible bonds 83,936 Board of Directors of 14/07/2005 ...... 120,000 convertible warrants (bon 6,129,185 120,000 +4,904 25,130 d’emission d’actions) 88,840

91 Number of shares composing the Change in capital after numbers of Share Amount of Date Type of transaction increase shares premium capital (€ thousands) (€ thousands) Board of Directors of 20/07/2005 ...... 5,000 stock options and 6,154,185 102,500 +773 25,232 20,000 stock options 88,943 Board of Directors of 06/09/2005 ...... 167,960 convertible warrants 6,322,145 688,636 +7,311 25,921 (bon d’emission d’actions) 96,254 Board of Directors of 19/09/2005 ...... 15,231 stocks warrants and of 6,330,222 33,115,3 +166 25,954 3,000 S/O Board of Directors of 26/10/2005 ...... 1,000 + 1,000 stock options, 6,334,319 16,797,70 +121 25,971 2,000 stock options and 97 96,375 convertible bonds Board of Directors of 03/11/2005 ...... 290,000 convertible warrants 6,624,319 1,189,000 +13,462 27,160 (bon d’emission d’actions) 109,923 Board of Directors of 07/11/2005 ...... 156,100 convertible warrants 6,780,419 640,010 +7,693 27,800 (bon d’emission d’actions) Board of Directors of 08/11/2005 ...... 3,426 stocks warrants and 17 6,781,578 4,751,90 +22 27,804 convertible bonds Board of Directors of 12/12/2005 ...... 6,000 stock options 2,000 6,792,578 45,100 325 27,850 stock options 5,000 stock options Balance as of 01/01/2006 ...... 6,792,578 — 119 27,850 Board of Directors of 03/01/2006 ...... 5,000 stock options 6,797,578 20,500 155 27,870 Board of Directors of 09/01/2006 ...... 165,940 convertible warrants 6,963,518 680,354 10,199 28,550 (bon d’emission d’actions) Board of Directors of 11/01/2006 ...... 36,402 stocks warrants and 7,149,284 761,640,600 5,143 29,312 173,632 convertible bonds Board of Directors of 30/01/2006 ...... 4,000 stock options, 7,500 7,160,784 47,150 355 29,359 stock options Board of Directors of 01/02/2006 ...... 5,000 stock options 7,165,784 20,500 155 29,380 Board of Directors of 08/02/2006 ...... 4,674 stocks warrants and 7,212,455 191,351,10 1,306 29,571 45,113 convertible bonds Board of Directors of 09/02/2006 ...... 30,000 convertible bonds 7,242,455 123,000 849 29,694

92 Number of shares composing the Change in capital after numbers Share Amount of Date Type of transaction increase of shares premium capital (€ thousands) (€ thousands) Board of Directors of 17/02/2006 ...... 10,000 convertible bonds 7,252,455 41,000 283 29,735 Board of Directors of 08/03/2006 ...... 9,516 stocks warrants and 14,000 7,269,627 70,405,2 456 29,805 convertible bonds Board of Directors of 21/03/2006 ...... 2,490 stocks warrants and 1,000 7,271,457 7,503 44 29,813 convertible bonds Board of Directors of 23/03/2006 ...... 249stocks warrants and 5,000 7,276,540 5,083 143 29,834 convertible bonds Board of Directors of 10/04/2006 ...... 449,256 stocks warrants and 7,463,163 186,623 3,874 30,599 36,871 convertible bonds Board of Directors of 20/04/2006 ...... 16,998 stocks warrants and 44,402 7,513,231 50,068 1,364 30,804 convertible bonds Board of Directors of 04/05/2006 ...... 45,000 stock options (Orco 7,568,231 55,000 1,700 31,030 Holding S.A.) and 10,000 stock options Board of Directors of 09/05/2006 ...... 145,000 convertible warrants 7,713,231 145,000 13,640 31,624 (bon d’emission d’actions) (PACEO 2) Board of Directors of 18/05/2006 ...... 16,194 stocks warrants and 82,525 7,801,154 87,923 2,437 31,985 convertible bonds Board of Directors of 29/05/2006 ...... Dividend 41,411 shares 7,842,565 41,411 3,229 32,155 distribution in kind Board of Directors of 26/06/2006 ...... 18,906 stocks warrants 7,848,917 6,352 121 32,181 Board of Directors of 21/07/2006 ...... 37,494 stocks warrants 7,861,415 12,498 236 32,232 Board of Directors of 27/09/2006 ...... 23,000 stock options 7,884,415 23,000 711 32,326 Board of Directors of 02/10/2006 ...... 13,749 stocks warrants and 6,476 7,895,474 11,059 270 32,371 convertible bonds Board of Directors of 19/10/2006 ...... 105,000 convertible warrants 8,000,474 105,000 +9,823 32,802 (bon d’emission d’actions) Board of Directors of 20/10/2006 ...... 124,914 stocks warrants 8,042,112 41,638 787 32,973 Board of Directors of 10/11/2006 ...... 100,000 convertible warrants 8,142,112 100,000 9,131 33,383 (bon d’emission d’actions) Board of Directors of 23/11/2006 ...... 433,293 stock warrants and 300 8,286,843 144,731 2,738 33,976 convertible bonds

93 Number of shares composing the Change in capital after numbers Share Amount of Date Type of transaction increase of shares premium capital (€ thousands) (€ thousands) Board of Directors of 18/12/2006 ...... 708stock warrants and 2,567 8,289,646 2,803 77 33,988 convertible bonds Board of Directors of 19/12/2006 ...... 100,000 convertible warrants 8,389,646 100,000 9,363 34,398 (bon d’emission d’actions) Balance as of 31/12/2006 ...... 8,389,646 — 198 34,398 Board of Directors of 04/01/2007 ...... 10,000 stock options and 35,097 8,434,743 45,097 1,302 34,582 convertible bonds Board of Directors of 08/02/2007 ...... 26,559 convertible bonds 8,461,302 26,559 752 34,691 Board of Directors of 23/02/2007 ...... 41,651 convertible bonds 8,502,953 41,651 1,179 34,862 Board of Directors of 12/03/2007 ...... 1,000 stock options 8,503,953 1,000 71 34,866 Board of Directors of 20/03/2007 ...... 153,720 convertible bonds 8,657,673 153,720 4,350 35,496 Board of Directors of 18/04/2007 ...... 3,000 stock options 8,660,673 3,000 215 35,509 Board of Directors of 27/04/2007 ...... 6,000 stock options 8,666,673 6,000 429 35,533 Board of Directors of 25/05/2007 ...... Dividend 2006: 36,834 shares 8,703,507 36,834 3,971 35,684

Material contracts On 3 March 2006, the Board of Directors of the Company approved termination indemnity payments totalling €34 million to Orco Holding S.A. and some management personnel in the Group. Such indemnity payments would become payable by the Company only in the case of a change in control of the Company and where the relationship between the Company and the management member or Orco Holding S.A. (as the case may be) is terminated, by either party within a period of six months after completion of a change in control. A change in control includes any acquisition, merger, capital increase or any other kind of transaction whatsoever resulting in a third party taking over control of the Company, “control” defined as the holding of more than a third (1/3) of the voting rights of the Company.

Documents on display Copies of the following documents may be inspected at the registered office of the Company, at 48 Bd Grand-Duchesse Charlotte, L-1330 Luxembourg, on any weekday (excluding public holidays) during normal business hours: 1. Articles of Association of the Company; 2. Audited consolidated financial statements of the Company as of and for the years ended 31 December 2006 and 2005, prepared in accordance with IFRS; and 3. Audited consolidated financial statements of the Company as of and for the year ended 31 December 2004, prepared in accordance with Luxembourg GAAP.

Working capital statement Taking into account the proceeds of the Offering, the Company is of the opinion that the working capital available for the Company is sufficient for its present requirements, for at least a period of 12 months from the date of the publication of this Prospectus.

94 Information on subsidiaries The table below sets out the shareholding structure of the Group and indicates the country of incorporation of each entity:

Orco Group Organisation Chart

100% ORCO PROPERTY GROUP

0001 c Americka- Orco,a.s CZ 50% 0002 c Machova-Orco,a.s. CZ 100% 0003 c Orco Project Management s.r.o. CZ 0004 c Zahrebska 35 s.r.o. CZ 0012 c ORCO Property,a.s. CZ 0023 c Orco Hotel Group S.A. LU 0005 c Belgicka-Na Kozacce,s.r.o. CZ 0006 c Londynska 41,s.r.o. CZ 50% 100% 0007 c Nad Petruskou,s.r.o. CZ 0030 c Kosic s.a.r.l. LU 0008 c Londynska 39 s.r.o. CZ 100% 0027 c Orco Hotel Collection S.A. LU 0009 c Anglicka 26,s.r.o. CZ 0088 c Kosic Development,s.r.o. CZ 100% 0010 c Americka 1,a.s. CZ 0136 c SV FÁZE II, s.r.o. CZ 0013 c Londynska 26,a.s. CZ 0137 c SLUNEČNÝ VRŠEK III, s.r.o. CZ

0014 c Residence Masaryk, a.s. CZ 0015 c Orco Property Start,a.s. CZ 0016 c Orco Property Management,a.s. CZ 100% 0060 Dienzenhoferovy sady 5, s.r.o. CZ 0017 c Orco Prague,a.s. CZ 0116 c BP Servis,s.r.o. CZ 0061 c Tyršova 6, a.s. CZ 0018 c Orco Vinohrady,a.s. CZ 99.92% 0062 c Orco Hotel Ostrava, a.s. CZ 0020 nc Central European Real Estate Management S.A. LU L05 Endurance Real Estate Management Comp. LU 0064 c Orco Hotel Riverside, s.r.o. CZ 0025 c VINOHRADY FR 0065 c Janackovo nabrezí 15, s.r.o. CZ 0031 c ORCO Budapest Rt. HU 100% 0032 c Orco Hotel Rt HU 0033 c ORCO Vagyonkezelo Kft HU 0011 c Americka 33,a.s. CZ 0037 c Orco Hotel Management Kft HU 0036 c Révay 10 Kft HU 100% 0041 c Orco Hospitality Services Sp. Z o.o. PL 0038 c Izabella 62-64 Kft HU 0045 c Orco Warsaw Sp. z o.o. PL 0040 c ORCO INVESTMENT,a.s. CZ 0072 c IPB Real,a.s. CZ 0047 c Orco Hotel Project Sp. z o.o. PL 0042 c Orco Development Sp. z o.o. PL 100% 0112 c Orco Investment Sp. z o.o. PL 7.22% 0043 c Orco Strategy Sp. z o.o. PL 0048 c Orco Poland Sp. z o.o. PL 0073 c IPB Real,s.r.o. CZ 100% 0049 c Orco Property Sp. z o.o. PL 0076 c Nove Medlanky a.s. CZ 0021 c Mamaison Residences S.A. LU 100% CZ 0107 c ORCO Croatia s.a. LU 0056 c Hagibor Office Building, a.s. 0077 c 1.Sportovni,a.s. CZ 100% 0057 c Na Poříčí, a.s. CZ 0078 c IPB Real Reality,a.s. CZ 40.49% 0059 c ORCO Development Kft. HU 0079 c JIHOVYCHODNI MESTO,a.s. CZ 0019 c Residence Belgicka, s.r.o. CZ 0120 c 0066 c Americka Park, a.s. CZ 0063 c Pachtuv Palac s.r.o. CZ Suncani Hvar CR 0069 c ORCO Investment Kft. HU 0067 MMR Management, s.r.o. CZ 0071 c Manesova 28, a.s. CZ 0035 c Residence Izabella Rt. HU 0080 c Oak Mill a.s. CZ 0117 c Byty Podkova, a.s. CZ 0115 MMR Russia S.A. LU 75% 0083 nc MAMAISON YU d.o.o. YU 0046 c Orco Hotel Development Sp. z o.o. PL 0084 c TQE Asset, a.s. CZ 0058 Diana Development Sp. z o.o. PL 0086 c ORCO ESTATE,s.r.o. CZ 0068 nc Orco Pokrovka Management o.o.o. RU 0087 c Development Doupovska, s.r.o. CZ 99.99% 0090 MMR Building o.o.o. RU 0089 c ORCO Hungary Kft. HU 0158 c And 70 Kft HU 0075 c MaMaison Bratislava, s.r.o. SK 0091 c Orco Slovakia s.r.o. SK 0124 c MaMaison Slovakia, s.r.o. SK 0092 c Orco Estates s.r.o. SK 0093 c Orco Development s.r.o. SK 0094 ORCO YU d.o.o. YU 0095 ORCO Property d.o.o. CR 0096 Orco Bucharest RU 0100 c Brno Centrum s.r.o. CZ Isalotta 1. GmbH DE 0105 c Orco Capitol S.A. LU 50% 50% 0109 c Orco Commercial Sp. z o.o. PL Isalotta 2. GmbH DE Isalotta 3. GmbH DE 0110 c Orco Residential Sp. z o.o. PL 0111 c Orco Construction Sp. z o.o. PL 0113 c Seattle,s.r.o. CZ 100% 0118 Orco Sigma, a.s. CZ 100% 0125 c Orco Project, s.r.o. SK 0180 c Pivovar Stein, a.s. SK 0181 c Stein, s.r.o. SK 0126 c Orco House, s.r.o. SK 100% 0127 c ORCO Praga,a.s. CZ 0182 c Stein beverages, a.s. SK 0128 c Zeta Property a.s. CZ 0129 Orco Omega, a.s. CZ 100% 0130 c Ariah Kft HU 0132 c Meder 36 Kft HU 0131 c Medec 36 Kft HU 0133 c Yuli Kft HU 100% 0134 c Medec 35 Kft HU 0138 c Orco Residence, s.r.o. SK 0135 c CWM 35 Kft HU 0139 c Orco Alfa, a.s. SK 0140 nc Orco Beta a.s. CZ 0142 c Etoile d'or s.a. LU 0143 c Orco Adriatic d.o.o. CR 0144 c Ozrics Kft HU 0149 c Orco Enterprise Sp. z.o.o. PL 0151 c Orco Development LTD Kiev UKR 0152 nc Orco Kappa, s.r.o. CZ 0154 c Bubny Development s.r.o. CZ 0155 Orco Theta s.r.o. CZ 0156 c Certuv ostrov a.s. CZ 0157 c OPG Russia S.à r.l. LU 0159 c Onset a.s. CZ 0160 c TO Green Europe a.s. CZ 0161 c Orco Financial Services s.r.o. CZ 0172 nc Orco Estate Sp.z.o.o. PL 100% 0225 c Viterra Development Polska Sp.z.o.o. PL 0226 Raab Karcher Security International Sp.z.o.o. PL 0228 Viterra Development Ceska s.r.o. CZ 100% 0300 c Salinoko Ltd. CY 0147 Re Investment Trust, a.s. CZ City Gate s.r.o. SK 0044 Orco Project Sp.z.o.o. PL U Hradeb a.s. CZ 0103 Bears Prague s.r.o. CZ Ballena a.s. CZ Easydentic Central Europe a.s. CZ Galen s.r.o. CZ 0085 OC Spektrum s.r.o. CZ Orco Delta s.r.o. CZ Spolecenstvi domu c.p. 489 CZ Viva Varo s.r.o. CZ

CR = Croatia PL = Poland CZ = Czech Republic RU = Romania DE = Germany SK = Slovakia FR = France UKR = Ukraine HU = Hungary YU = Serbia LU = Luxembourg

95 as of the date of this Prospectus

72.66%

100% 100% 0029 c Orco Germany s.a. LU 0205 Orco Grundstücks- u. Bet.ges.mbH DE 0223 Viterra Baupartner GmbH DE

100%

0206 Viterra (Viterra Development GmbH) DE

100% 0201 c Orco Immobilien Gmbh DE 100% 100% 100% 0207 Stauffenbergstrasse Zwei GmbH DE 0217 Viterra Grundstücke Verw. GmbH DE 0202 c Lora Grundbesitz GmbH DE 100% 100% 0208 0218 100% Stauffenbergstrasse Drei GmbH DE An den Gärten GmbH DE 0203 c Orco Berlin Invest GmbH DE 100% 100% 0209 0219 75% Viterra erste PEG mbH DE VIMG Viag Immobil. Man. GmbH DE 0204 c Orco Projekt 103 GmbH DE 100% 100% 100% 0230 c Orco Leipziger Platz GmbH DE 0210 Viterra zweite PEG mbH DE 0220 Zeppelinstrasse PEG mbH DE 100% 100% 25% 0231 c Orco LP 12 GmbH DE 0211 Viterra dritte PEG mbH DE 0221 BHG Tiefgarage Baufeld 4 GbR, HH DE 100% 5.1% 100% Tucholskystr. 39/41 GmbH 0212 Viterra vierte PEG mbH DE 0224 Eins Stauffenbergstrasse mbH & Co. Shell-Haus KG DE 0232nc & Co. Grundbesitz KG DE 100% 50% 0213 Viterra fünfte PEG mbH DE Knorrstrasse 119 Verwaltungs GmbH DE

99.8% 0214 PEG Knorrstrasse mbH & Co. KG DE 0229 Knorrstrasse 119 GmbH & Co. KG DE 59% (dét. légale: 58,82%; dét. économ.: 50%) 94% 0215 Westendstrasse 28 Ffm GmbH DE 90% 0216 Lennestrasse A 3 GmbH DE 100% 0227 Cybernetyki Business Parl Sp.z.o.o. PL

96 PRINCIPAL SHAREHOLDERS

The following table sets out information regarding the ownership of the Company’s shares as of the date of this Prospectus and as adjusted to reflect the Offering and the exercise of the Over-allotment Option in full:

Shares Owned After the Offering Assuming Shares Owned Before Shares Owned After the Exercise of Over- Shareholder the Offering Offering allotment Option in Full Number Per cent. Number Per cent. Number Per cent. Orco Holding S.A(1) ...... 1,058,234 12.16 1,058,234 10.57 1,058,234 10.37 Bernard Gauthier ...... 469,230 5.39 469,230 4.69 469,230 4.60 Jardenne Corporation S.à r.l ...... 351,064 4.03 351,064 3.51 351,064 3.44 Members of Board of Directors and Executive Committee as a group(2) ...... 35,631 0.41 35,631 0.36 35,631 0.35 Public ...... 6,789,348 78.01 8,093,696 80.87 8,289,348 81.24 Total ...... 8,703,507 100.00 10,007,855 100.00 10,203,507 100.00

Notes: (1) As at the date of this Prospectus, Mr. Jean-François Ott holds 12.16 per cent. shareholding in the Company through Orco Holding S.A. (2) Excluding Orco Holding S.A. and Bernard Gauthier as separately disclosed above.

None of the Company’s principal shareholders has voting rights different from any other holders of the Company’s Shares.

To the Company’s knowledge, the Company is not aware of any person who owns, directly or indirectly, or exercises control of the Company.

Other than as disclosed in this Prospectus, to the Company’s knowledge, there are no arrangements in place, the operation of which may at a subsequent date result in a change in control of the Company.

97 RELATED PARTY TRANSACTIONS

There are certain related party transactions between member companies of the Group. The effects of these related party transactions are taken into account in the consolidated financial statements of the Group and consequently are not set out in the Prospectus.

In addition to related party transactions within the consolidated group, the following transactions with the Endurance Fund and the members of the Executive Committee and the Board of Directors are related party transactions: (1) The Company is the sponsor and the fund manager of the Fund. In addition, the Company is the shareholder of the management company of the Endurance Fund and the Group has also invested directly in the Fund (see “Business — Asset Management”). As at the year ended 31 December 2006, the portion invested by the Group in the Endurance Fund amounted to €14.2 million. For the Company’s remuneration and fee structure from the Endurance Fund, see “Business — Asset management”. For the year ended 31 December 2006, the Company received €4.5 million fees for the management of the Endurance Fund’s sub-funds. The Group has also invested in the Endurance Office Sub-Fund and the Endurance Residential Sub-Fund as of December 2006 directly. As at 31 December 2006, the Group’s subscription to the Endurance Office Sub-Fund represented 9 per cent. of the total subscription. The subscription period for the Endurance Residential Sub-Fund is not closed; after this period the Group’s share in this compartment should be lower than 15 per cent. (2) In January 2006, the Company sold 50 per cent. of the office part of the Luxembourg Plaza to the Endurance Fund for €13.5 million. In addition, in April 2007, the Company has agreed to sell the Hospitality Business to a company, which is currently 100 per cent. owned by the Endurance Hospitality Sub-Fund. The total value of the Hospitality Business (as determined by DTZ) is €174.30 million. The sale of the Hospitality Business is not yet complete and the Group is currently negotiating with the banks providing loans to the Hospitality Business regarding the transfer of these loans to the company acquiring the Hospitality Business. The Endurance Hospitality Sub-Fund and the company that has agreed to acquire the Hospitality Business have entered into a non-binding term sheet with an institutional investor for the sale of a 50 per cent. interest in the company that has agreed to acquire the Hospitality Business. See “— Recent Developments”). (3) The aggregate consideration given as short term employee benefit to the members of the Executive Committee amounted to €2.6 million as of December 2006 (€1.7 million as of 31 December 2005). The stock options granted to members of the Executive Committee are detailed in note 22.5 of the audited consolidated financial statements of the Company as of and for the year ended 31 December 2006. Among the 350,000 new stock options that were granted by the Company, 339,000 were granted to members of the Executive Committee. In addition the Group sold, in the first quarter of 2006, 980,000 shares (after adjustment for share split by eight) of Orco Germany S.A., a subsidiary of the Company, to members of the Executive Committee for an aggregate consideration of €1.2 million. In addition, each Director of the Company receives a fee of €1,000 (€500 in 2005) for each board meeting that they attend. The total amount of attendance fees for the year ended 31 December 2006 amounted to €27,000 (€14,000 in 2005). (4) A loan amounting to €3.1 million bearing an interest of 10 per cent. with a renewable term of one year was granted to a member of the Executive Committee. At the date of publication of the audited consolidated financial statements of the Company as of and for the year ended 31 December 2006, this loan and accrued interests have been fully reimbursed. As at 31 December 2006, the Group had receivables from Orco Holding S.A. amounting to €0.3 million. (5) During the first six months of 2006, three houses built by the Group in the Czech Republic were sold to key management personnel for an aggregate amount of €2.4 million, which were carried out on arm’s length terms. (6) In March 2006, the board of directors of the Company granted to some management personnel in the Group a termination indemnity payment for a total amount of €34 million. This indemnity would become payable by the Company to the relevant management member only in case of a change in control of the Company and where the relationship between the Company and the member is terminated by either party within a period of six months after the change of control.

98 TRANSFER RESTRICTIONS

As a result of the following restrictions, we advise you to contact legal counsel prior to making any resale, pledge or transfer of the Offer Shares.

Each purchaser of the Offer Shares outside the United States pursuant to Regulation S, by accepting delivery of this Prospectus, and the Offer Shares, will be deemed to have represented, agreed and acknowledged as follows: 1. It (a) is aware that the sale of the Offer Shares to it is being made pursuant to and in accordance with Rule 903 or 904 of Regulation S, (b) is, or at the time such Offer Shares are purchased will be, the beneficial owner of those Offer Shares and (c) is purchasing such Offer Shares in an “offshore transaction” meeting the requirements of Regulation S. 2. It understands that the Offer Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States. 3. It acknowledges that the Company, the Managers and their respective affiliates will rely upon the truth and accuracy of the acknowledgements, representations and agreements in the foregoing paragraphs.

99 INFORMATION ON THE SHARES

Information on the Shares to be offered and admitted to trading Type, category and ranking date of the Shares The Shares (including the Offer Shares) are subject to the provisions of the Articles of Association of the Company.

The Shares have the same accounting par value and are of the same category. The Shares will be either in the form of registered shares or in the form of bearer shares, at the option of the shareholder, except to the extent otherwise provided by law.

The shareholder can sell or transfer the shares subject to the relevant statutory limitations.

The Shares are indivisible and the Company only recognises one holder per Share. If there are several owners per Share, the Company will be entitled to suspend the exercise of all rights attached until the appointment of a unique person as owner of the Shares. It will be the same in the case of conflict between the usufructuary and the bare owner or between a debtor and the creditor.

Jurisdiction and applicable law Applicable law The Shares are issued under Luxembourg law.

Competent courts The competent courts in the event of disputes shall be those under whose jurisdiction the registered office of the Company falls, without prejudice to the latter’s right to take action before any other competent court under Luxembourg law.

Currency of the Shares The Shares may only be issued in €. The Shares are without nominal value. Shares are to be purchased by the institutional investors in € or another currency based on the agreement between such institutional investor and the Managers.

Resolution and decision by virtue of which the Shares are offered The issue of the Offer Shares was authorised by circular resolution of the Board of Directors of the Company on or around 13 June 2007.

Settlement and Delivery of the Shares and Corporate Actions Settlement of trades in Shares listed on Euronext Paris, Prague Stock Exchange, Warsaw Stock Exchange and Budapest Stock Exchange The Offer Shares will initially be issued in bearer form and will be initially represented by interests in a global certificate (the “Global Certificate”) which will be deposited with Euroclear France, the French central depositary system through which all securities listed and traded on Euronext Paris S.A. (“Euronext Paris”) are held.

Euroclear France will hold the Shares on behalf of persons holding securities accounts with the financial intermediaries (intermédiaire financier habilité) and authorised to maintain accounts therein. Shares will be held and transferred through book-entry in accounts opened with one or more financial intermediaries with Euroclear France.

The persons shown in securities accounts of a financial intermediary authorised to maintain accounts with Euroclear France as the holders of the Shares will not be entitled to receive physical delivery of definitive certificates evidencing interests in the Shares, will not be considered owners or holders thereof and will only be able to transfer their interests in accordance with the rules and procedures of Euroclear France and other relevant additional clearing systems.

100 Shareholders may also hold Shares by being directly recorded in the shareholders register kept in Luxembourg by or on behalf of the Company or by directly holding a bearer share, thus taking their shares out of the Euroclear France clearing system. Transfer of Shares and settlement (delivery and payment) of transactions on the Prague Stock Exchange, on Euronext Paris, on the Warsaw Stock Exchange and on the Budapest Stock Exchange will, however, only be effected through a settlement system recognised by the Prague Stock Exchange, Euronext Paris, the Warsaw Stock Exchange and the Budapest Stock Exchange, as the case may be. Only Shares in bearer form held directly or indirectly through Euroclear France can be traded on Euronext Paris. Shareholders directly recorded in the Company’s shareholder register or holding definitive bearer shares must therefore, in order to be able to trade their Shares on Euroclear France, deposit them first with Euroclear France. Settlement of the transactions executed on Euronext Paris will be cleared through Clearnet S.A. and will be recorded in book-entry form on securities accounts of a financial intermediary authorised to maintain accounts with Euroclear France. UNIVYC, a wholly owned subsidiary of the Prague Stock Exchange, is licensed by the Czech National Bank primarily to settle trades on the Prague Stock Exchange. The settlement of the transactions concluded on the Warsaw Stock Exchange takes place outside the Warsaw Stock Exchange through the KDPW. KELER, the Hungarian Central Depositary and Settlement House, performs the divergent tasks of the central background institution of the Hungarian capital market with an unchanging ownership structure, as a private joint-stock company. UNIVYC, KDPW and KELER (the “Clearing Houses”) are accountholders with Clearstream Banking, société anonyme (“Clearstream”) which in turn holds an account with Euroclear France. The Clearing Houses will record interests of clients of the Clearing Houses’ accountholders in the Shares in book-entry form in accordance with the relevant local regulations of book-entry securities. Transfers of the interests in the Shares between the Clearing Houses’ accountholders will be effected in accordance with the rules and operating procedures of the Clearing Houses, Clearstream and Euroclear France. Trading in the Shares on the Prague Stock Exchange, on the Warsaw Stock Exchange and on the Budapest Stock Exchange will be settled only through the relevant clearing systems and will be recorded in book-entry form. Investors should take note that trades involving the transfer of Shares between different exchanges may result in delays, which may be more significant than trades executed on the same exchange. Investors should obtain information from the relevant exchanges and the relevant Clearing Houses about the exact procedures and delays associated with such cross-exchange trades. Trades in the Shares concluded on the Prague Stock Exchange, on Euronext Paris, on the Warsaw Stock Exchange and on the Budapest Stock Exchange will not result in any change in the holder of the Global Certificate.

Exercise of Shareholder Rights The Clearing Houses’ accountholders or any persons holding their shares through a securities settlement system must rely on the rules and procedures of Euroclear France, Clearstream and the respective Clearing House to exercise any rights and obligations of a holder of Shares. The Clearing Houses’ accountholders or any persons holding their shares through a securities settlement system may attend and vote at a general meeting of shareholders by presenting at the place indicated by the Board of Directors at least five days prior to the date set for the meeting a certificate indicating, inter alia, the number of Shares held and delivered by the broker, bank, custodian, dealer or other qualified intermediary with which the Shares are held. The Shares which are the object of such a certificate must be blocked until after the holding of the general meeting of shareholders and may be transferred only after the holding of such meeting; such blocking will result from the certificate. The Clearing Houses’ accountholders may vote by ballot paper (formulaire), subject to the internal rules of the relevant securities settlement system, by giving relevant instructions as to how to exercise their vote to the broker, bank, custodian, dealer or other qualified intermediary with which their shares are held.

101 Payments on the Shares through the clearing system The Clearing Houses’ accountholders or any persons holding their shares through a securities settlement system must look solely to Euroclear France, Clearstream and the respective Clearing House for its share of each payment made by the Company in relation to all the rights arising under the Global Certificate, subject to and in accordance with the rules and procedures of Euroclear France, Clearstream and the respective Clearing House.

Such accountholders shall have no claim directly against the Company in respect of payments due on the Shares for so long as the Shares are represented by the Global Certificate and such obligations of the Company will be discharged by payment to Natixis, which is in charge of the securities (service des titres) and financial services (service financier) in respect of shares held through Euroclear France.

Those who hold interests in the Global Certificate through Euroclear France, Clearstream and the Clearing Houses will receive payments subject to and in accordance with the rules and procedures of the relevant clearing system.

Distribution of dividends and other payments with respect to the book-entry interests in the Shares held through Euroclear France will be credited, to the extent received by Natixis, to the cash accounts of Euroclear France accountholders in accordance with the Euroclear France system rules and procedures.

Distribution of dividends and other payments with respect to the book-entry interests in the Shares held through the Clearing Houses will be credited, to the extent received by the Clearing Houses, to the cash accounts of the Clearing Houses’ members in accordance with the Clearing Houses’ system rules and procedures for further distribution to the Clearing Houses’ accountholders.

Settlement and delivery of the Offer Shares The Offer Shares issued will be deposited with Euroclear France.

Euroclear France will credit the account of Clearstream and the account of the Clearing Houses on or about the Settlement Date.

Investors will be allocated the Offer Shares through the Clearing Houses’ book-entry system and the relevant accounts with the Clearing Houses will be credited with interests in the Shares on or as promptly as possible following the Settlement Date.

Each investor must designate, in a manner and time as instructed by the Managers, its local custodian who must be a member of one of the Clearing Houses, and the investor must instruct such local custodian to perform all steps necessary for settlement of the Shares. In particular, the local custodian must be instructed to enter an instruction into the relevant Clearing House to receive from the respective Manager’s agent the allocated Shares in accordance with the rules and operating procedures of the relevant Clearing House.

The manner in which the investor intends to hold the allocated Shares, and the manner of funding of the purchase of the allocated Shares, shall be agreed between the investor and its local custodian. No assurance can be given that the Shares will be properly delivered unless the investor and its local custodian comply with all above procedures and all relevant instructions of the Managers or their agents.

Legislation on public offerings Pursuant to article 4(2)(b) of the Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids (the “Takeover Directive”) providing for the rules applicable to takeover bids on companies which securities are not admitted to trading on a regulated market in the Member State of the European Union in which they have their registered office and since the securities of the Company were first admitted to trading in France: (i) matters relating to the consideration offered in the context of a takeover bid, in particular the price, and matters relating to the takeover bid procedure, in particular the information on the offeror’s decision to make a bid, the contents of the offer document and the disclosure of the bid, shall be dealt with in accordance with French rules, in particular with the general regulation of the French financial markets authority (the Autorité des marchés financiers, the “AMF”), and supervised by the AMF; and

102 (ii) matters relating to the information to be provided to the employees of the Company and to company law (in particular relating to the percentage of voting rights which confers control over the Company, any derogation from the obligation to launch an offer or the conditions under which the board of the Company may undertake any action which might result in the frustration of the bid) shall be dealt with in accordance with Luxembourg rules, in particular with the Loi du 19 mai 2006 portant transposition de la directive 2004/25/EC du Parlement européen et du Conseil du 21 avril 2004 concernant les offres publiques d’acquisition (the “Luxembourg Takeover Law”) and supervised by the Luxembourg regulator, the CSSF.

Mandatory bids Obligation to file a takeover bid Pursuant to Luxembourg law, should a person hold securities of the Company which, added to any existing holdings of those securities of his/her and the holdings of those securities of persons acting in concert with him/ her, directly or indirectly give him/her control of the Company, such a person will be required to make, as soon as possible and at an equitable price, a bid to all the other holders of those securities for their entire holdings of such securities. Under Luxembourg law, a controlling stake is deemed to be acquired, if a voting power of 33 1⁄3 per cent. is reached (non voting shares not being considered to this effect).

A mandatory bid would not have to be launched under Luxembourg law, should the acquisition of the control over the Company be the result of a voluntary takeover bid on all the shares of the Company.

Principles applicable to the price with respect to a mandatory takeover bid Pursuant to French rules, except in specific cases, the minimum price shall be at least equivalent to the highest price paid by the offeror, acting alone or in concert, over the last 12 months prior to the filing of the offer.

In addition, a cash alternative would be required should the offeror, or any persons acting in concert with him, have previously purchased, for cash, securities representing more than 5 per cent. of the share capital or voting rights in the Company, over the last 12 months prior to the filing of the offer.

Furthermore, in the event of a full cash offer and under certain circumstances, should the offeror purchase, between the date of the filing of the offer and five trading days before the closing of the offer any shares on the market at a price which is above the offer price, the offer price shall be automatically increased to the higher of such price and 102 per cent. of the original offer price.

Squeeze-out Pursuant to Luxembourg law, should any offeror hold the Company’s securities representing not less than 95 per cent. of the capital carrying voting rights and 95 per cent. of the voting rights of the Company as a result of a takeover bid, such offeror would be entitled to squeeze-out minority shareholders.

In accordance with French rules, such offeror may exercise such right of squeeze-out within three months following the end of the initial takeover bid.

Except in specific cases, the AMF will review the consideration offered in the context of such squeeze-out. In this respect, the offeror shall provide the AMF with a valuation of the shares, appropriately taking into account the valuation derived from the value of the assets, the profits, the stock market value, the existence of subsidiaries and the future prospects of the Company.

Sell-out Pursuant to Luxembourg law, should a bidder hold securities representing more than 90 per cent. of the Company’s capital carrying voting rights following a bid made to all the holders of the Company’s securities for all of their securities, a minority shareholder would be entitled to require the offeror to buy his/her securities from him/her at a fair price.

The AMF will review the consideration offered in the context of such sell-out. In this respect, the offeror shall provide the AMF with a valuation of the shares, appropriately taking into account the valuation derived from the value of the assets, the profits, the stock market value, the existence of subsidiaries and the future prospects of the Company.

103 Board opinion The Board of Directors of the Company shall publish a document setting out its opinion on the takeover bid and the reasons on which it is based, including the bid’s impact on the Company’s interests, and analysing, in particular, the bid’s impact on employment and the bidder’s proposed strategy for the Company.

Employees’ information The Luxembourg Takeover Law involves employees’ representatives in the takeover process by providing for the duty of the Company’s board to inform the employees of the Company about the takeover bid.

Breakthrough rules The Shareholders may elect, by special shareholders’ vote to be notified to the CSSF and to the supervisory authorities of Member States in which the shares are admitted to trading on regulated markets or where such admission has been requested, to apply the breakthrough rules. If such breakthrough rules apply, (i) any share transfer restrictions contained in certain shareholders’ agreements shall not be binding on the offeror and (ii) at the general meeting of the shareholders which decides on any defensive measures any restrictions on voting rights provided for in the articles of association of the target company or in certain shareholders’ agreements shall not have effect.

Defensive measures The Shareholders of the Company may elect, by special shareholders’ vote to be notified to the CSSF and to the supervisory authorities of Member States in which the shares are admitted to trading on regulated markets or where such admission has been requested, to prohibit its management from taking defensive measures, other than seeking a competing bid, during a takeover bid, without being authorised to do so by a separate resolution passed at a shareholders’ meeting.

Recent takeover bids No takeover bid was launched with respect to the capital of the Company during the last financial year or the current financial year.

104 TERMS AND CONDITIONS OF THE OFFERING

The Offering

The Company is issuing and offering for subscription 1,304,348 new Shares (subject to an over-allotment option to increase such amount by up to 195,652 new Shares).

The Offer Shares are being offered in the context of an offering to institutional investors in Poland and a private placement of the Offer Shares to selected institutional investors outside the United States in reliance on Regulation S of the Securities Act of 1933 pursuant to this Prospectus.

Offer Price

The Offer Price is €115.00.

Final Number of the Offer Shares offered in the Offering

The Offering comprises 1,304,348 new Shares (subject to an over-allotment option to increase such amount by up to 195,652 new Shares). Before the acceptance of orders from investors commences, the Company may decide to reduce the amount to be raised and/or the number of the Offer Shares based on the following: (i) the volume and quality of the demand for the Offer Shares from investors during the bookbuilding process; (ii) the anticipated demand from various groups of investors during the period of the first 30 days from the date of listing of the Shares on the Warsaw Stock Exchange and the Budapest Stock Exchange; and (iii) the current and anticipated situation on the international capital markets. The decisions on the final number of Offer Shares will be included in the Final Prospectus published on the website of the Company (www.orcogroup.com) and on the website of the Luxembourg Stock Exchange (www.bourse.lu). In the Czech Republic, the final number of Offer Shares will also be published on the website of Wood & Co. (www.wood.cz) and notified to the Czech National Bank and the Prague Stock Exchange. In France, the final number of Offer Shares will be notified to Euronext.

Allotment of Shares

The allotment of Offer Shares between the investors will be determined by the Lead Manager at its discretion, subject to consent of the Company.

The Offer Shares are expected to be allotted to institutional investors, subject to full payment for the Offer Shares they subscribed for in accordance with the provisions set forth in this Prospectus.

Subscription orders from the Polish institutional investors for the Offer Shares must be submitted through Dom Maklerski Banku Handlowego S.A. (“DMBH”). There is no minimum or maximum number of the Offer Shares that can be subscribed by the Polish institutional investors. The Polish institutional investors must express the price for the Offer Shares in their subscription orders in € only. For further information on the settlement of the Shares in relation to Polish institutional investors, please see “Terms and Conditions of the Offering — Additional information relating to the public offering to institutional investors in Poland”.

All settlements will be payable in euro in the form and manner set out in “Information on the Shares”.

Admission to listing and trading of the Shares

The Shares are currently listed on Eurolist by Euronext Paris and the main market of the Prague Stock Exchange. The Company will apply for the Offer Shares to be admitted to trading on Eurolist by Euronext Paris (Compartment B) and for its entire authorised share capital to be admitted to trading on the main market of the Prague Stock Exchange, each of which is expected to take place on or about 21 June 2007. In addition, the Company intends to apply for admission to listing and trading of its entire current authorised capital (including the Offer Shares) on the main market of the Warsaw Stock Exchange and the Budapest Stock Exchange. The Company expects listing of the Shares (including the Offer Shares) on the Warsaw Stock Exchange and on the Budapest Stock Exchange on or about 21 June 2007 and 21 June 2007, respectively.

105 Expenses of the Offering The total estimated expenses to be incurred by the Company in connection with the Offering (including the fees and commissions of the Managers and the Company’s other advisers and the fees related to the listing of the Shares on the Warsaw Stock Exchange and the Budapest Stock Exchange) are approximately €8.2 million.

Other Relationships The Managers and their respective affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with the Company and any of its affiliates. The Managers and their respective affiliates have received and may receive in the future customary fees and commissions for these transactions and services.

Additional information relating to the public offering to institutional investors in Poland The Offering is addressed to, among others, institutional investors in Poland (the “Polish Offering”). However, no separate tranche of the Offer Shares has been reserved for the subscriptions by institutional investors in the Polish Offering. It should be considered that there is no guarantee that the Lead Manager allocates any Offer Shares under the Polish Offering.

Subscription process DMBH with its registered office at 8 Chałubin´skiego Street, 00-613 Warsaw, is acting as an offering agent for the Polish Offering.

Only qualified investors, as specified in Art. 8 of the Public Offering Act, are authorized to participate in the Polish Offering (the “Polish Institutional Investors”).

Prospective Polish Institutional Investors seeking to take part in the bookbuilding process and to subscribe for the Offer Shares in the Polish Offering are advised to contact DMBH for further details regarding the participation in bookbuilding and subscription processes.

There will be no maximum or minimum number of the Offer Shares which may be subscribed for by the prospective Polish Institutional Investors.

During the bookbuilding process, Polish Institutional Investors will be invited to submit the declarations containing, inter alia, the number of Offer Shares that the Polish Institutional Investor intends to subscribe for and the proposed price for one Offer Share, expressed in €, at which the Polish Institutional Investor is ready to acquire the Offer Shares. The allocation of Offer Shares to Polish Institutional Investors will be made by the Lead Manager in cooperation with DMBH. DMBH will send a trade confirmation only to the chosen Polish Institutional Investors to whom the Offer Shares have been allocated and will invite them to submit the subscription orders and to pay for the Offer Shares.

The Polish Institutional Investors will be required to pay the amounts due in €, constituting the product of the number of the Offer Shares that were allocated to such Polish Institutional Investors and the Offer Price, in a manner agreed with DMBH. The subscription order must include the full information regarding the securities account held by the Polish Institutional Investor where the allocated Offer Shares should be delivered. DMBH shall not be liable for any delays in the delivery of the Offer Shares resulting from the incorrect information regarding such Polish Institutional Investor’s securities account or circumstances beyond DMBH’s control.

The Company may change the dates and time of subscription at its discretion. Such changes will be announced by way of a press release.

106 TAXATION

A summary of Polish, Hungarian and Luxembourgian tax consequences of an investment in the Offer Shares is set forth below. The summary is for general information only and does not purport to be a comprehensive description of all the tax considerations which may be relevant to a decision to invest in or hold Shares. Prospective investors should consult their own tax advisers as to the particular tax consequences of their purchasing, owning and disposing of the Shares, including the applicability and effect of state, local, foreign and other tax laws and possible changes in tax law.

Poland Rules for the Taxation of Trading in and Income Derived from Securities in Poland The information below is of a general nature only and takes into account the tax provisions binding at the date of this Prospectus and should therefore not be relied upon in isolation when assessing the tax consequences of any investment decision. It is recommended that before making any investment decision, a prospective investor should consult a tax adviser or legal counsel on any potential tax consequences.

The information contained in this section relating to taxation in Luxembourg is based only on the provisions of the agreement between the Republic of Poland and the Grand Duchy Luxembourg on the avoidance of double taxation in respect of income and property taxes dated 14 June 1995 (the “Polish-Luxembourgian Double Tax Treaty”); it is not based on the provisions of Luxembourg tax law. Consequently, in respect of taxation in Luxembourg, the advice of a Luxembourgian tax adviser or counsel should be obtained.

Individuals who have their place of residence in Poland are subject to Polish Personal Income Tax (“PIT”) on their worldwide profits, irrespective of the location of the source of income. Individuals who do not have a place of residence in Poland are subject to PIT only as regards the profits that they derive from Polish sources.

Legal entities, companies in organisations and other entities with no legal personality (with the exception of certain types of partnerships) that have their registered seats or their management in Poland, are subject to Polish Corporate Income Tax (“CIT”) on their worldwide profits irrespective of the country from which they were derived. The aforementioned entities (including foreign partnerships that have no legal personality, if treated as a legal entity under the tax law of a given country and if they are subject to taxation in that country on their worldwide income) that do not have their registered seat or their management in Poland, are subject to CIT only as regards profits that they derive in Poland.

Taxation of Profits from the Disposal of Shares Taxation of Profits Derived by Polish Individuals from the Transfer of Shares Under the relevant provisions of the Polish-Luxembourgian Double Tax Treaty, the profits derived by individuals, who are Polish tax residents, from the transfer of a Luxembourgian company’s shares for consideration, are exempt from taxation in Luxembourg and are taxed only in Poland, unless the assets of the Luxembourgian company whose shares are transferred comprise mainly (directly or indirectly) real property located in Luxembourg (or the rights attached to that real property), or the transferred shares are attributable to the Luxembourgian permanent establishment of the relevant Polish individual. In these cases, the profits derived from the transfer of shares for consideration may be taxed in Luxembourg and would be exempt in Poland.

Under the PIT provisions, the profits derived by individuals, as Polish tax residents, from the transfer of shares for consideration, are subject to PIT at a flat rate of 19 per cent. on the amount of profit. The profits from the transfer of shares for consideration derived by individuals is not aggregated with their income from other sources.

Profits are calculated as the difference between the income derived from the transfer of shares for consideration and the tax deductible cost. The income constitutes the value of the shares as represented by the price specified in the relevant agreement, reduced by the cost of transfer for consideration as defined by the Polish Personal Income Tax Act of 1991, (the “PIT Act”). If the price differs significantly from the market value of shares, for reasons that cannot be justified, it may be open to questioning by the tax authority. The PIT Act specifies what costs can be treated as tax deductible.

Individuals are obliged to declare the profits received from the transfer of shares for consideration, and pay the due tax by 30 April of the year following the year in which the profits were received.

107 The above rules do not apply when the shares are sold by Polish individuals within the scope of their business activity. In such circumstances, the profits received from the transfer of shares for consideration is either subject to PIT at the flat rate of 19 per cent., or according to a progressive scale, which in 2007 varies between 19 and 40 per cent. (depending on the form of taxation chosen by the individual).

Taxation of Profits Derived by Polish Entities from the Transfer of Shares Under the relevant provisions of the Polish-Luxembourgian Double Tax Treaty, the profits derived by an entity which is a Polish tax resident, from the transfer of a Luxembourgian company’s shares for consideration, is exempt from taxation in Luxembourg, and taxed only in Poland unless the assets of the Luxembourgian company whose shares are transferred comprise mainly (directly or indirectly) real property located in Luxembourg (or the rights attached to that real property), or the transferred shares are attributable to the Luxembourgian permanent establishment of the Polish entity. In these cases, the profits derived from the transfer of the shares for consideration may be taxed in Luxembourg and would be exempt in Poland.

Under the Polish Corporate Income Tax Act of 1992 (the “CIT Act”), the profits derived by entities that are Polish tax residents from the transfer of shares for consideration are subject to CIT at the standard rate of 19 per cent. The profits received from the transfer of shares for consideration derived by entities is aggregated with their other profits.

Profits are calculated as the difference between the income derived from the transfer of shares for consideration and the tax deductible cost, as defined by the CIT Act.

The entities that transfer shares for consideration are obliged to declare income (or loss) derived from such sources in their monthly tax returns and pay the amount of tax due.

Taxation of Profit Derived by Non-Polish Residents from the Transfer of Shares According to prevailing Polish tax practice, the profits derived by non-Polish residents from the transfer of shares listed for consideration on the Warsaw Stock Exchange are treated as profits from a Polish source. Such profits are taxed in Poland according to the general rules stipulated by Polish tax law, unless the relevant tax treaty on the avoidance of double taxation between Poland and the country of residence of the non-Polish investor states otherwise.

Taxation of Income from Dividends Taxation of Dividends Paid to Polish Individuals The income received from dividends paid out to individuals that are Polish tax residents is generally subject to PIT at the flat rate of 19 per cent. This income is not aggregated with the individual’s income from other sources. However, under the provisions of the Polish-Luxembourgian Double Tax Treaty, the income received from dividends (if any) paid out by a Luxembourgian company to Polish individuals is exempt from PIT in Poland.

Under the relevant provisions of the Polish-Luxembourgian Double Tax Treaty, the dividends paid out by a Luxembourgian company to Polish individuals may be taxed in Luxembourg in accordance with Luxembourgian law. However, the amount of Luxembourgian withholding tax cannot exceed 15 per cent.

The above rule does not apply if the recipient of dividends with its seat in Poland has a permanent establishment in Luxembourg and the activity of the business is performed in Luxembourg, provided that the shares which are the source of the dividends are attributable to this permanent establishment. In this case, the dividends may be treated as income of a Luxembourgian permanent establishment and taxed respectively in Luxembourg. This income would be exempt from PIT in Poland.

Prospective investors should consult a Luxembourgian tax adviser on the application of the reduced tax rate as outlined in the Polish-Luxembourgian Double Tax Treaty by the appropriate Luxembourgian entities; the rules relating to collection and any method of documenting the collection of such tax; and any other consequences that may arise under Luxembourgian law.

108 Taxation of Dividends Paid to Polish Entities The income received from dividends paid out to entities which have their registered seat or their management in Poland, is generally subject to CIT. This income is aggregated with the other income of the relevant entities in the given tax year, and is subject to CIT at the standard rate of 19 per cent. However, under the provisions of the Polish-Luxembourgian Double Tax Treaty, the income received from dividends (if any) paid out by a Luxembourgian company to Polish entities is exempt from CIT in Poland.

Under the relevant provisions of the Polish-Luxembourgian Double Tax Treaty, the dividend paid out by a Luxembourgian company to a Polish entity may be taxed in Luxembourg in accordance with Luxembourgian law. However, where the Polish company, which is the recipient of the dividends, directly holds at least 25 per cent. of shares in the capital of the Luxembourgian company which has paid out the dividends, the amount of Luxembourgian withholding tax cannot exceed 5 per cent. of the gross amount of dividends. Where the Polish company which is the recipient of the dividends holds less than 25 per cent. of shares in the capital of the Luxembourgian company, which paid out the dividends, the amount of withholding tax cannot exceed 15 per cent. of the gross amount of the dividend.

The above rules do not apply if the recipient of dividends, with its seat in Poland, has a permanent establishment in Luxembourg, where the activity of the enterprise is performed, and if the shares which are the source of the dividend are attributable to this permanent establishment. In this case, the dividend may be treated as the income of a Luxembourgian permanent establishment and taxed respectively in Luxembourg. This income would be exempt from tax in Poland.

The dividends paid out by a Luxembourgian company to a Polish entity may be exempt from Luxembourgian withholding tax under the European Parent Subsidiary Directive if the conditions specified by the Luxembourgian tax laws are satisfied.

Prospective investors should consult a Luxembourgian tax adviser on the application of the reduced tax rate set out in the Polish-Luxembourgian Double Tax Treaty by the appropriate Luxembourgian entities, the collection rules and the manner of documenting the collection of such tax and any other consequences arising under Luxembourgian law.

Civil Law Transactions Tax Generally, the sale of shares in non-Polish companies is subject to 1 per cent. civil law transaction tax on their market value, but only if the buyer is a Polish company, or a Polish individual, and the transaction is performed in Poland. However, the sale of brokerage financial instruments (including securities) to investments firms or through their intermediation or sale of the brokerage financial instruments on the regulated market or on the alternative market in Poland, is exempt from civil law transaction tax.

Acts in civil law (including the sale of rights) are not subject to civil law transactions tax, if at least one party, when performing such an act, is subject to VAT or is VAT exempt (subject to certain exceptions).

Hungary The following is a summary of certain Hungarian tax considerations that may be relevant to the acquisition, ownership and disposition of the Offer Shares. The summary relates to Hungarian tax law and regulations in force on the date of this Prospectus and is subject to any changes in Hungarian law, including any double taxation treaty entered into by Hungary, which may take effect after the date of this Prospectus. The summary is for general information purposes only and does not address all possible tax consequences relating to an investment in the Offer Shares. Prospective purchasers are advised to consult their own tax advisers concerning tax consequences in their particular circumstances.

Hungarian tax residency Hungarian tax residents (other than individuals) are corporate and non-corporate organisations incorporated (established) under Hungarian laws or those having their place of management in Hungary.

Individuals who are citizens of Hungary, or whose sole permanent residence is in Hungary, or whose centre of vital interests is in Hungary, or who maintain their habitual abode in Hungary, are considered Hungarian tax residents.

109 Taxation of foreign resident shareholders other than individuals Foreign resident shareholders other than individuals are not subject to Hungarian income tax on dividends paid on the Offer Shares provided the shareholding is not attributable to a Hungarian permanent establishment of the shareholder.

Foreign resident shareholders other than individuals are not subject to Hungarian income tax on capital gains realised on the disposition of any Offer Shares provided that the shareholding is not attributable to a Hungarian permanent establishment of the shareholder.

Foreign resident shareholders other than individuals with a permanent establishment may, subject to the terms of a relevant double taxation treaty, be liable for tax on income attributable to their Hungarian permanent establishment, including capital gains from the sale of the Offer Shares. Such shareholders are subject to tax at the 16 per cent. corporate income tax rate and the 4 per cent. “solidarity” tax rate.

Taxation of individual foreign resident shareholders Dividends paid on the Offer Shares to individual foreign resident shareholders are subject to 10 per cent. withholding tax, as long as the Offer Shares are listed on the Budapest Stock Exchange or any other acknowledged (regulated) exchange of the European Union. If a double taxation treaty entered into between Hungary and the country of residence of the shareholder prescribes a lower tax rate on dividends, then the provisions of that treaty shall apply.

Capital gains realised by an individual foreign resident shareholder on the disposition of any Offer Shares are not subject to tax in Hungary.

Taxation of Hungarian resident shareholders other than individuals Hungarian resident shareholders other than individuals are exempt from Hungarian corporate income tax and “solidarity” surtax on dividends received in respect of the Offer Shares.

Capital gains realised by Hungarian resident shareholders other than individuals on the disposition of any Offer Shares are subject to tax in Hungary as part of the shareholders’ corporate income tax base and “solidarity” surtax base. The applicable tax rates of the corporate income tax and the “solidarity” surtax are 16 per cent. and 4 per cent., respectively. Subject to certain conditions, 50 per cent. of the capital gains realised at a regulated stock exchange, as defined in Act CXX of 2001 on Capital Markets is exempt from corporate income tax.

Taxation of individual Hungarian resident shareholders Dividends paid on the Offer Shares to individual Hungarian resident shareholders are subject to 10 per cent. withholding tax, as long as the Offer Shares are listed on the Budapest Stock Exchange or any other acknowledged (regulated) exchange of the European Union.

Capital gains realised on the disposition of the Offer Shares by individual Hungarian resident shareholders at any regulated market within the European Union or within a member of the Organisation for Economic Co-operation and Development (OECD) are subject to 20 per cent. tax in Hungary.

Other tax considerations The sale and other disposition of the Offer Shares as well as the purchase or receipt of the Offer Shares are not subject to transfer taxes or stamp duties in Hungary.

The receipt of the Offer Shares may only subject the recipient to Hungarian transfer tax (gift tax) if the Offer Shares are transferred gratuitously (by way of gift or otherwise for no consideration) and are physically handed over in Hungary.

Heirs of the Offer Shares are subject to Hungarian inheritance tax when the Offer Shares are deposited and held within Hungary. In the event that the Offer Shares are deposited and held outside Hungary by an heir who is not a Hungarian citizen, who does not hold a Hungarian residence or immigration permit and whose place of incorporation is outside Hungary, the inheritance will not trigger Hungarian inheritance tax.

As long as the Offer Shares are deposited and held outside Hungary by an heir who is a Hungarian citizen, an individual permanently residing in Hungary or a non-individual whose place of incorporation is in Hungary, the inheritance will only be subject to Hungarian inheritance taxes if no inheritance tax or equivalent charge is levied by the jurisdiction where the Offer Shares are deposited and held.

110 Luxembourg The following is a summary discussion of certain material Luxembourg tax consequences with respect to the Company and its Shares. This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular Shareholder, and does not purport to include tax considerations that arise from rules of general application or that are generally assumed to be known to Shareholders. It is not intended to be, nor should it be construed to be, legal or tax advice. This discussion is based on Luxembourg laws and regulations as they stand on the date of this prospectus and is subject to any change in law or regulations or changes in interpretation or application thereof that may take effect after such date. Prospective investors in the Shares should therefore consult their own professional advisers as to the effects of state, local or foreign laws and regulations, including Luxembourg tax law and regulations, to which they may be subject.

Please be aware that the residence concept used under the respective headings below applies for Luxembourg income tax assessment purposes only. Any reference in the present section to a tax, duty, levy impost or other charge or withholding of a similar nature refers to Luxembourg tax law and/or concepts only. Also, please note that a reference to Luxembourg income tax encompasses corporate income tax (impôt sur le revenu des collectivités), municipal business tax (impôt commercial communal), a contribution to the employment fund (contribution au fonds pour l’emploi), as well as individual income tax (impôt sur le revenu) generally. Investors may further be subject to net wealth tax (impôt sur la fortune) as well as other duties, levies or taxes. Corporate income tax, municipal business tax as well as the solidarity surcharge (which are collectively referred to as Luxembourg corporation taxes) invariably apply to most corporate taxpayers resident of Luxembourg for tax purposes. Individual taxpayers are generally subject to personal income tax and the solidarity surcharge. Under certain circumstances, where an individual taxpayer acts in the course of the management of a professional or business undertaking, municipal business tax may apply as well.

Since the change of its tax status, the Company is fully subject to Luxembourg income taxes. The Company is considered to be a Luxembourg resident company for tax purposes and, as such, benefits from double taxation treaties concluded by Luxembourg.

Withholding tax Under current Luxembourg tax law, dividends distributed by the Company to its shareholders are subject to a 15 per cent. withholding tax (as of 1 January 2007), computed on the gross amount of the dividend distributed.

This rate could be reduced pursuant to double taxation treaties concluded between Luxembourg and the country of residence of the shareholders. Under most of the double taxation treaties concluded by Luxembourg, dividend withholding tax is reduced on dividends distributed to shareholders who are resident in the country with which Luxembourg has entered into the double taxation treaty. Withholding tax is usually reduced by refunding to the shareholder the excess of the total amount withheld over the withholding tax actually owed under the pertinent double taxation treaty upon the shareholder’s application for a refund to the Luxembourg tax authorities (Administration des Contributions Directes, Division 5 — Relations Internationales, 18 rue du Fort Wedell, L-2982 Luxembourg). Forms for the refund request can be obtained from the Luxembourg tax authorities.

No withholding tax is levied if the dividends are paid to a limited liability company which is a fully taxable Luxembourg resident company, or to a company resident in a Member State of the European Union as defined in Article 2 of EU Directive 90/435/EEC of 23 July 1990 as amended or to its permanent establishment located in Luxembourg, or to the Luxembourg permanent establishment of a company resident in a country which has concluded a double taxation treaty with Luxembourg, provided that at the date of the payment, the shareholder holds or commits itself to hold, directly or through a tax transparent vehicle, during an uninterrupted period of at least 12 months, a participation of at least 10 per cent. in the capital of the Company or a participation with an acquisition price of at least €1.2 million.

Income tax and corporate income tax Taxation of dividends Dividends received from the Company by Luxembourg resident individuals are subject to Luxembourg individual income tax at progressive rates. Luxembourg resident individuals receiving dividends will be exempt from tax on 50 per cent. of these dividends.

Dividends distributed by the Company to a Luxembourg resident company, or to a permanent establishment located in Luxembourg, which do not fall within the scope of the Luxembourg participation exemption regime

111 are subject to Luxembourg corporate income tax (including the contribution to the employment fund and the municipal business tax). Half of the dividends received from the Company are however excluded from the taxable basis of the shareholder.

According to the Luxembourg participation exemption regime, dividends distributed by the Company to a Luxembourg limited liability company or to a permanent establishment located in Luxembourg of a company resident in a Member State of the European Union as defined in Article 2 of the EU Directive 90/435/EEC of 23 July 1990 as amended, or to a permanent establishment located in Luxembourg of a company resident in a country which has concluded a double taxation treaty with Luxembourg, are exempt from income tax in Luxembourg provided that, at the date of the distribution, the shareholder holds or commits itself to hold, directly or through a tax transparent vehicle, during an uninterrupted period of at least 12 months, a participation of at least 10 per cent. in the capital of the Company or a participation with an acquisition price of at least €1.2 million.

Dividends distributed to holding companies subject to the amended Law of 31 July 1929 and to undertakings for collective investments subject to the Law of 30 March 1988 or the Law of 20 December 2002 or the Law of 13 February 2007 are not subject to any Luxembourg income tax.

For a shareholder resident in Luxembourg and for a non-resident shareholder that holds the Shares as part of the assets of a permanent establishment (including a permanent representative) or fixed base in Luxembourg, dividend withholding tax will be credited against the income or corporate tax liability upon the shareholder’s income tax assessment.

Dividends distributed to non-resident individuals or non-resident companies which do not have a permanent establishment or fixed base in Luxembourg are not taxable in Luxembourg, apart from the dividend withholding tax, if applicable.

Taxation of capital gains Capital gains realised upon the disposal of the Shares by a Luxembourg resident individual shareholder are not subject to taxation in Luxembourg, unless the disposal occurs less than six months after the acquisition of the Shares or precedes the acquisition, or the disposal occurs more than six months after the acquisition of the Shares and the shareholder, together with family members, has held more than 10 per cent. of the share capital of the Company at any time during the five preceding years.

Capital gains realised upon the disposal of the Shares by a Luxembourg resident company, or by a permanent establishment located in Luxembourg, are fully subject to corporate income tax in Luxembourg, except if the Luxembourg participation regime is applicable.

According to the Luxembourg participation exemption regime, capital gains realised upon the disposal of the Shares by a Luxembourg limited liability company or by a permanent establishment located in Luxembourg of a company resident in a Member State of the European Union as defined in Article 2 of the EU Directive 90/435/EEC of 23 July 1990 as amended, or by a permanent establishment located in Luxembourg of a company resident in a country which has concluded a double taxation treaty with Luxembourg, are exempt from corporate income tax in Luxembourg provided that, at the date of the disposal, the shareholder holds or commits itself to hold, directly or through a tax transparent vehicle, during an uninterrupted period of at least 12 months, a participation of at least 10 per cent. in the capital of the Company or a participation with an acquisition price of at least €6 million.

Capital gains realised upon the disposal of the Shares by holding companies subject to the amended Law of 31 July 1929 and by undertakings for collective investments subject to the Law of 30 March 1988 or the Law of 20 December 2002 or the Law of 13 February 2007 are not subject to any Luxembourg income tax.

No Luxembourg income tax will be payable, as a result of a disposal of the Shares by an individual or corporate shareholder that is a non-resident of Luxembourg, unless the participation held by the shareholder represents more than 10 per cent. of the share capital of the Company, and the relevant shareholder was a Luxembourg resident taxpayer during more than 15 years and has become a non-resident taxpayer less than five years before the sale of the Shares, or the participation held by the shareholder represents more than 10 per cent. of the share capital of the Company and the Shares have been held less than six months at the time of the sale. These conditions could be relaxed by double taxation treaties concluded between Luxembourg and the country of residence of the shareholder.

112 Inheritance and gift tax No inheritance tax is levied on the transfer of Shares upon the death of a shareholder in cases where the deceased was not a resident of Luxembourg for inheritance tax purposes. No gift tax is levied in Luxembourg upon a gift of the Shares if the deed is not executed before a Luxembourg notary public or recorded on a deed registered in Luxembourg.

Net wealth tax Luxembourg resident companies, other than a holding company subject to the amended Law of 31 July 1929, or an undertaking for collective investment subject to the Law of 30 March 1988 or the law of 20 December 2002 or the Law of 13 February 2007, are subject to net wealth tax on their net assets. For fully taxable Luxembourg resident corporate entities, Shares whose dividends qualify for the participation exemption regime are excluded from the taxable basis for net wealth tax purposes. Non-resident companies are subject to net wealth tax on their assets which are attributable to an enterprise or part thereof which is carried on in Luxembourg through a permanent establishment, except otherwise provided for by a tax treaty concluded by Luxembourg and the country of residence of the non-resident company. The mere holding of the Shares in Luxembourg custody accounts does not create a permanent establishment or a fixed base in Luxembourg.

Other Luxembourg taxes There is no Luxembourg registration tax, stamp duty or any other similar tax or duty payable in Luxembourg by the shareholders of the Company as a consequence of the purchase, holding or disposal of the Shares. There is no Luxembourg value added tax payable in respect of payments in consideration for the issuance or disposal of the Shares or in respect of payment of dividends.

113 SECURITIES MARKETS

France Eurolist by Euronext Paris General As from 21 February 2005 all securities approved for admission to trading by Euronext Paris are traded on the Eurolist by Euronext Paris. The Eurolist by Euronext Paris is a regulated market operated and managed by Euronext Paris, a market operator (entreprise de marché) responsible for the admission of securities and the supervision of trading in listed securities. Euronext Paris publishes a daily official price list which includes price information on listed securities. Securities listed on Eurolist by Euronext Paris are classified in alphabetical order. In addition, Euronext Paris created the following compartments for classification purposes: “Compartment A” for issuers with a market capitalisation over €1 billion, “Compartment B” for issuers with a market capitalisation between €150 million and €1 billion and “Compartment C” for issuers with a market capitalisation under €150 million. The Company’s Shares are classified under Compartment B.

Trading on the Eurolist by Euronext Paris Securities admitted to trading on Eurolist by Euronext Paris are officially traded through authorised financial institutions that are members of Euronext Paris. Euronext Paris places securities admitted to trading on Eurolist by Euronext Paris in one of two categories (continuous -“continu”, or fixed), depending on their belonging to certain indices or segments and/or on their trading volume. The Shares are traded in the continu category. Shares pertaining to the continu category are traded on each trading day from 9:00 a.m. to 5:25 p.m. (Paris time), with a pre-opening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:25 p.m. to 5:30 p.m. (during which pre-opening and post-closing sessions trades are recorded but not executed until the opening auction at 9:00 a.m. and the closing auction at 5:30 p.m., respectively). In addition, from 5:30 p.m. to 5:40 p.m., trading can take place at the closing auction price. Trading in a share pertaining to the continu category after 5:40 p.m. until the beginning of the pre-opening session of the following trading day may take place at a price which must be within the closing auction price plus or minus 1 per cent.

Euronext Paris may restrict trading in a security admitted to trading on Eurolist by Euronext Paris if the quoted price of the security increases or decreases beyond the specific price limits defined by its regulations (réservation à la hausse ou à la baisse). In particular, trading is automatically restricted in shares whose quoted price varies by more than 10 per cent. from the last price determined in an auction or by more than a certain percentage from the last traded price (such percentage depends on the category of listed security). Trading of these shares resumes after a call phase of a few minutes (such time period depends on the category of listed security), during which orders are entered in the central order book but not executed, and which ends by an auction. Euronext Paris may also suspend trading of a security admitted to trading on Eurolist by Euronext Paris in other limited circumstances (suspension de la cotation), in particular to prevent or stop disorderly market conditions. In addition, in exceptional cases, including, for example, in the context of a takeover bid, Euronext Paris may also suspend trading of the security concerned, upon request of the AMF.

Trades of securities listed on Eurolist by Euronext Paris are settled on a cash basis on the third day following the trade. For certain securities, market intermediaries are also permitted to offer investors the possibility of placing orders through a deferred settlement service (Service de Règlement Différé) for a fee. The deferred settlement service is only available for trades in securities that have both a total market capitalisation of at least €1 billion and a daily average volume of trades of at least €1 million. Investors can elect on the determination date (jour de liquidation), which is the fifth trading day before the end of the month, either to settle by the last trading day of the month or to pay an additional fee and postpone the settlement decision to the determination date of the following month. At the date of the Prospectus, the Shares are currently eligible for the deferred settlement service.

Equity securities traded on a deferred settlement basis are considered to have been transferred only after they have been registered in the purchaser’s account. Under French securities regulations, any sale of a security traded on a deferred settlement basis during the month of a dividend payment is deemed to occur after the dividend has been paid. If the sale takes place before, but during the month of, a dividend payment date, the purchaser’s account will be credited with an amount equal to the dividend paid and the seller’s account will be debited by the same amount.

Prior to any transfer of securities held in registered form on the Eurolist by Euronext Paris, the securities must be converted into bearer form and accordingly inscribed in an account maintained by an accredited intermediary with Euroclear France, a registered central security depository. Transactions in securities are

114 initiated by the owner giving instruction (through an agent, if appropriate) to the relevant accredited intermediary. Trades of securities listed on Eurolist by Euronext Paris are cleared through LCH Clearnet and settled through Euroclear France using a continuous net settlement system. A fee or commission is payable to the accredited intermediary or other agent involved in the transaction.

French securities law

Since the Company’s shares are admitted to trading on Eurolist by Euronext Paris, certain provisions of French securities laws and regulations are applicable to the Company.

The Company is subject to provisions of (i) articles 223-1 to 223-10-1 of the General Regulations of the AMF relating to ongoing disclosure obligation, (ii) articles 631-1 to 632-1 of the General Regulations of the AMF relating to market manipulation and dissemination of false information, (iii) articles 223-24, 223-27 to 223- 31 and 621-1 to 622-2 of the General Regulations of the AMF relating to insider trading, (iv) articles 241-1 to 241-6 of the General Regulations of the AMF relating to programmes to repurchase shares admitted to trading on a regulated market and the declaration of share repurchase and (v) articles 212-1 to 212-35 and 212-39 to 212-42 of the General Regulations of the AMF relating to information to be provided prior to a public offering in France. The organisational and operational principles of Euronext Paris are also applicable to the Company.

In addition, since the Company’s shares are admitted to trading on Eurolist by Euronext Paris, in accordance with provisions of the General Regulations of the AMF and the aforementioned organisational and operational principles of Euronext Paris:

• the Company is required: (i) upon request of the AMF, to inform the public and the AMF of any changes in its total number of voting rights and shares compared with previously published data, (ii) to translate into French or in a language that is customary in the sphere of finance the regulated information (within the meaning of the General Regulations of the AMF) published in France, (iii) to publish, as soon as possible, any information concerning new developments that may have a significant impact on the share price, (iv) upon request of the AMF, to inform the AMF of any declaration of threshold crossing received, (v) to provide the name and contact details of the person responsible for the Company’s information in France, (vi) to disclose the fees paid to each of its statutory auditors, (vi) to publish a report relating to the condition of preparation and organisation of the Company’s Board of Directors and related internal control procedures, (vii) to disclose any modification of its articles of association in order to apply or cease applying the provisions of such articles stating certain restrictions relating inter alia to voting rights and transfer of shares in the context of a takeover, (viii) to provide the AMF with any additional information requested by the AMF pursuant to the General Regulations and applicable to the Company;

• the Company is required to inform as soon as possible and at least at the convening date of the general meeting Euronext Paris of any proposed changes to its articles of association;

• the Company is required to inform the AMF and the public of (i) any resolutions approved by the general meeting of shareholders authorising a share repurchase programme and (ii) the implementation of any share repurchase programme and to publish periodic statements of purchases or sales of shares carried out by the Company pursuant to this programme; and

• the Company must ensure that identical information is provided in France, at the same time, to that provided in other countries, particularly in Luxembourg, Czech Republic, Poland and Hungary.

Specific procedures applicable to shareholders holding Company’s shares through Euroclear France

Shareholders’ meetings

Eight calendar days before each general meeting, letters are sent to the holders of nominative shares convening them to such meeting. As regards shareholders holding their shares through Euroclear France, information on the holding of a general meeting will be directly provided by the Company to Natixis, which is in charge of the securities and financial services (service des titres and service financier) of the Company in France. Upon receipt, Natixis shall communicate this information to the authorised financial intermediaries affiliated to Euroclear France.

115 Each shareholder has the right to vote personally or by appointing a personal representative, and to participate in person in the general meeting. In particular: • Shareholders holding their shares through Euroclear France and wishing to vote by proxy shall provide Natixis with their voting instructions and a blocking certificate (certificat de blocage) obtained from their financial intermediary accountholder. Such voting instructions and certificate shall be provided to Natixis by the shareholder’s financial intermediary. Shareholders may appoint Natixis as proxy at a shareholders’ meeting. • Shareholders holding their shares through Euroclear France and wishing to attend a general meeting in person shall notify their intent to the board of directors at least five clear days before such meeting in order to be registered on the attendance list. In order to attend in person and exercise their voting rights at the general meeting, shareholders shall also deliver a blocking certificate (certificat de blocage).

Payment of dividends The payment of dividends attached to the Company’s ordinary shares to shareholders holding their shares through Euroclear France will be centralised by Natixis and paid to the shareholders through their authorised financial intermediary.

Czech Republic Czech Securities Markets Introduction In the Czech Republic, there are two regulated markets for trading shares: the Prague Stock Exchange (the “Prague Stock Exchange” or “PSE”) and the RM System. In addition to the regulated markets, trading of book- entry securities is also conducted over the counter (the “OTC market”). The PSE has also established a non-regulated market.

The operations of the Prague Stock Exchange, the RM System, securities dealers, settlement systems and other capital market professionals in the Czech Republic are primarily regulated by the Czech Act on Conducting Business in the Capital Market (No. 256/2004 Coll., as amended) (the “Czech Capital Market Act”) and by the Czech National Bank, which is the regulator of capital markets in the Czech Republic (in this role, it replaced the Czech Securities Commission on 1 April 2006). The majority of the regulatory standards of capital markets in the Czech Republic comply with applicable directives and regulations of the European Union.

Prague Stock Exchange The PSE is the principal market in the Czech Republic in which shares, bonds, investment certificates, single stock futures, PX index futures, mortgage bonds and warrants are traded. The PSE organises both the regulated, official securities market (which is divided into three segments, main market, secondary market and official free market), and an unregulated free market. Mortgage bonds are traded on the official free market.

As at 12 February 2007, shares representing 32 companies were registered for trading on the PSE, and of these, shares representing 10 companies were registered for trading on the main market, 11 on the secondary market, and 11 on the official free market. No securities were registered for trading on the unregulated free market. The total market capitalisation for shares at said date with respect to companies registered for trading on the main market and all companies registered for trading on the PSE was approximately CZK 1,566,923.3 million (i.e. €55,368 million) and CZK 1,639,099.6 million (i.e. €57,918 million) respectively.

The PSE is a private organisation, comprising 22 members as of 26 September 2006. Only corporate entities holding a securities dealer’s licence issued by the Czech National Bank (or its predecessor, the Czech Securities Commission) and foreign entities that are licensed to provide investment services are eligible for membership in the PSE, which is regulated by the Czech Capital Market Act and its internal rules. Except for the Czech National Bank, the Czech Consolidation Agency and the Czech Republic, which acts through the Ministry of Finance and certain other entities under specific conditions, only members of the PSE are allowed to trade directly on the PSE under Czech law, either on their own behalf or on behalf of their clients. Non-members can only trade indirectly through a PSE member.

The listing of securities on the PSE is extensively regulated by the applicable EC secondary legislation and the Czech Capital Market Act, which set out minimum listing requirements and specify certain reporting obligations. In addition, the PSE has specific listing and reporting rules for each of its markets (the “Listing Rules”).

116 Under the Czech Capital Market Act and the PSE listing rules, a foreign issuer that has its registered office in another EU member state or whose prospectus was approved by the supervisory authority of another EU member state does not have to apply for the approval of such prospectus in the Czech Republic. It will fully comply with the respective rules if it provides to the domestic supervisory authority a prospectus that was already approved by the supervisory authority of the respective EU member state, together with the certification of its having been prepared in compliance with the laws of the European Community.

Main market and secondary market In order for a company to have its equity securities admitted to the main market or the secondary market of the PSE, the following principal criteria must ordinarily be met: (i) the minimum issue value earmarked for the public offer must be CZK 200 million or CZK 100 million, respectively; (ii) the securities to be admitted must be fully paid up and must be tradable without any restrictions; (iii) the minimum free float in the member states of the European Union must be at least 25 per cent. of the issue; (iv) the issuer must have been conducting its business activities for at least three years; and (v) a prospectus must be published subsequent to its approval by the Czech National Bank. In addition, any issue admitted to the main market must be sufficiently liquid; liquidity criteria for the relevant securities are set by the PSE Committee on Listing (the “PSE Listing Committee”).

The PSE Listing Committee decides whether or not to admit a security to the main market or the secondary market. The PSE Listing Committee has discretion to deviate from the admission requirements described above.

A company whose security is admitted to the main market or the secondary market is regulated by the Capital Market Act and the Listing Rules applicable on the issuer of securities traded on the main and secondary market. For details please see below.

Trading The PSE is an electronic exchange and trades are effected through its automated trading system. The exchange trading and information system is based on the automated processing of buy and sell orders entered into the system by member firms.

Securities traded on the PSE are divided into six trading groups. The first trading group comprises shares and bonds except for shares traded in SPAD. The second trading group includes certificated shares and bonds. The third group comprises selected shares included in SPAD trading. The fourth group includes investment certificates. The fifth trading group comprises futures, and the sixth trading group includes warrants.

Both equity and debt securities can be traded on the PSE. Trading currently can be undertaken in the following ways: (i) trades with the participation of market makers within the SPAD system; (ii) automatic trades; or (iii) block trades.

SPAD is based on the participation of market makers. A market maker is a PSE member who has entered into an official contract with the PSE to act as a market maker for selected issues. Trading is divided into either an open or closed phase. During the open phase, market makers are obliged to make their quotations and the price is set according to the best quotation. During the closed phase, market makers are not obliged to make quotations and trading can be made within the allowed spread defined by the best quotation in the open phase.

Automatic trading is effected in two forms: (i) auction trading, which is based on the accumulation of buy and sell orders through the automated trading system at a particular time, at which a single price for the security is fixed — the price fixed on a given day can differ from the closing price from the previous day by a maximum of 5 per cent.; and (ii) continuous trading, which enables conclusion of transactions based on continually filed buy and sell orders for investment instruments. Price and time priority apply to accepted orders. Transactions may only be concluded within the framework of the allowable spread.

Block trades are effected in two forms: (i) block trades between PSE members; and (ii) block trades between a PSE member and a non-member. For these trades, both the price and number of securities are determined by an agreement between the buyer and seller, but the trade is registered and settled in the automatic trading system of the PSE.

117 Settlement Univyc, a wholly-owned subsidiary of the PSE, is licensed by the Czech National Bank primarily to settle trades on the PSE.

The manner in which trades are settled depends on whether the securities are in certificated or book-entry form. The majority of securities traded on the PSE is in book-entry form and are registered at the Securities Centre, a computerised register of all Czech book-entry form securities. The settlement of trades on the PSE is generally effected on the third business day following the trading day. Univyc maintains the accounts of members of the PSE and a number of accounts of non-members of the PSE and records the securities traded. Univyc ensures cash settlement through the Clearing Centre of the Czech National Bank and the delivery of the securities in book-entry form to the purchaser to its account at the Securities Centre, or to its account with Univyc, where applicable.

The members of the PSE have created the Guarantee Fund of the PSE, administered by Univyc to guarantee the fulfillment of the obligations of members of the PSE arising from automatic trades and trades within the SPAD system.

Indices There are two general indices calculated by the PSE which track daily prices on the PSE. In addition, there are a number of other indices calculated by other participants in the capital markets. The PSE uses the PX, which on 20 March 2006 replaced the PSE indices PX 50, PX-D, and PX-GLOB.

The PX index is an official index of the PSE. It has been calculated since April 1994 because it took over the history of the PX 50 index. The PX index comprises so-called “blue chip” issues only. Its base is adjusted quarterly using several criteria, in particular market capitalisation. The PX base comprises nine stocks. The PX-GLOB, which is a broad-based price index, is also an official index of the PSE. It currently comprises 29 stocks.

The RM System The RM System is a privately owned entity in which securities trading takes place through a computerised bid and offer matching system that operates every business day. Trades through the RM System may be placed either by a securities dealer or directly by an investor. Trading on the RM System is conducted through a network of 57 designated locations. The auction price varies during the course of the day according to the actual bids and offers. Settlement takes place on the same trading day. Book-entry securities traded on the RM System are settled through the Securities Centre.

The OTC Market In addition to the regulated securities markets, a portion of securities trading is conducted on the OTC market.

OTC market trades concerning shares in book-entry form are settled in the Securities Centre. The Securities Centre publishes the volumes and prices of securities traded on the OTC market on a daily basis.

Czech National Bank The main regulator of the securities market in the Czech Republic is the Czech National Bank, which on 1 April 2006 took over the role of the Czech Securities Commission, including all its duties. Therefore, since 1 April 2006 the mission of the Czech National Bank has been, among other things, to foster investor confidence in the securities market through the protection of investors, the development of the Czech capital market and the promotion of public knowledge in this area. The Czech National Bank is authorised to supervise compliance on the part of securities market professionals with applicable laws and regulations. The Czech National Bank issues licences to professionals operating on the Czech securities market. For instance, a licence from the Czech National Bank is required for the operation of a stock exchange, for the operation of a settlement system or in order to provide services as a securities dealer.

Any public offer of securities in the Czech Republic and any public trading of securities on the PSE must be preceded by the publication of a prospectus describing the offered or listed securities and their issuer. Prior to its publication, the Czech National Bank must approve the prospectus, unless the prospectus has already been

118 approved by another competent EU authority and passported in the Czech Republic. Only after the prospectus has been so approved or passported and published can the PSE admit the securities for trading. Issuers are liable for any incorrect or misleading statements or omissions of fact contained in the prospectus and may be held liable for damages arising therefrom.

Foreign currency regulations in the Czech Republic The Shares are deemed to be foreign securities within the meaning of Czech Act No. 219/1995, the Act on Foreign Exchange, as amended (the “Foreign Exchange Act”). Pursuant to the Foreign Exchange Act, it is not necessary to obtain a foreign exchange licence or foreign exchange permit for individual purchases or sales of foreign securities to foreigners or residents, or for transactions with foreign securities conducted as a business activity, except as specified below. However, transactions with foreign securities may be subject to a reporting obligation.

In the event of an emergency situation in the area of foreign exchange management, if the Czech Republic’s ability to make foreign payments is directly and seriously endangered, it is prohibited, without a special permit of the Czech National Bank, among other things, to (i) acquire foreign-currency values (including the shares) for Czech currency, or (ii) make any payments abroad from the Czech Republic (including transfers of funds between banks and their branches). In the event of such an emergency situation, if the internal monetary balance of the Czech Republic is directly and seriously endangered, it is prohibited, among other things, to transfer funds from abroad into the Czech Republic between banks and their branches without a special permit of the Czech National Bank. An emergency situation in the area of foreign exchange management may be declared by the Czech government in the event of an unfavourable development of the balance of payments which directly and seriously endangers the ability to make payments abroad or the internal monetary balance of the Czech Republic. An emergency situation in the area of foreign currency management ends no later than three months after the date on which it was announced in the mass media.

Czech Stock Market Law Czech law Upon the admission of the Company’s shares for trading on the main market of the PSE, the Company will need to comply with certain provisions of Czech law regulating capital markets and with the Listing Rules.

The Company will in particular be subject to the following provisions of the Czech Capital Market Act: (i) Sections 118 to 123 of the Czech Capital Market Act regulating the provision of information to the public; and (ii) Sections 124 to 127 of the Czech Capital Market Act concerning the rules applicable to market manipulation and insider dealing (including “safe harbours” for carrying out share buy-back programs).

Czech Capital Market Act Under the Czech Capital Market Act the following will be applicable to the Company.

(a) Ad Hoc publicity Under the Czech Capital Market Act, the Company will be required to publish without delay any insider information (as defined below) which concerns the Company directly or indirectly. Such information must be clear and not misleading. The Company will be required to post such information on the company website and disclose it either (i) through a generally and regularly visited financial server disseminating information related to the capital market or (ii) at least in one nationwide daily newspaper or (iii) as a report of an agency that engages in the dissemination of information related to the capital market, and notify the Czech National Bank. The Company may delay the publication of relevant information for serious reasons, but only if investors would not be misled as a result of the non-disclosure of such information and the Company is able to ensure the confidentiality of such information. If the Company decides to delay the publication of insider information, it must inform the Czech National Bank, stating the reasons for delay and content of the insider information. The Company also must publish on the Internet and send to the Czech National Bank (electronically) all information about the convening of the general meeting of the company, payments of dividends, any decision to issue new shares and any decision to exercise a subscription right.

119 Without any undue delay after the publication of its annual financial statement, the Company must also at least annually provide the Czech National Bank with a document that contains or refers to all information that it has published during the preceding 12 months in the Czech Republic and under the securities and certain other laws of the Czech Republic and in other countries under EC or domestic capital markets law of said other countries.

(b) Publication of annual report, consolidated annual reports and semi-annual report The Company must publish on the Internet and send to the Czech National Bank its annual reports, consolidated annual reports and semi-annual reports containing certain information about the Company’s business and financial conditions.

(c) Changes in major shareholdings Czech law imposes notification requirements in respect of certain shareholdings in companies which are listed on the Prague Stock Exchange which have their registered office in the Czech Republic. Thus, these requirements do not apply to the Company or any holders of its shares.

(d) Management trading in shares Management and members of the supervisory body of the Company and persons related to those persons (this category is broadly defined) must notify the Czech National Bank of the existence of any transactions conducted on their own account relating to the Company’s shares or derivatives linked to such shares. This obligation is applicable only if the aggregate value of such transactions (i.e. including those conducted on the account of related persons) of such transactions exceeds €5,000 per calendar year. The Czech National Bank will publish such information without delay on its website.

(e) Insider trading Insider information is defined as accurate information not known to the public which concerns directly or indirectly an investment instrument or other instrument which has been admitted (or relevant application has been filed) for trading on the regulated market of a member state of the European Union (the “financial instrument”) or other instrument which has not been admitted on such market, the value of which is derived from the financial instrument, from the issuer of such financial instrument or from other facts that are important for the development of the quoted price or other price or yield of such financial instrument, and which would, if it were publicly known, substantially influence the quoted price or yield of such financial instrument or other instrument, the value of which is derived from such financial instrument. A reasonable investor would likely use such information as the basis for an investment decision. An insider is any person who obtains insider information either due to his profession or employment, position or shareholding (or voting rights) in the issuer or in relation to the fulfilment of his obligations. Any person who gains access to insider information by way of a criminal offence is also deemed to be an insider. A person who obtains insider information in another manner and is or should be aware that such information constitutes insider information is also deemed to be an insider. In general, Czech criminal law prohibits the abuse of insider information on Czech territory or by Czech citizens abroad. Any insider who uses insider information that is not yet public with the intention of gaining advantage for himself or a third party is liable to a penalty of up to three years’ imprisonment. If the financial advantage achieved exceeds CZK 500,000, then the penalty is two to eight years’ imprisonment. If the financial advantage achieved amounts to more than CZK 5 million, the penalty is five to twelve years’ imprisonment.

(f) Market manipulation Under the Czech Capital Market Act, market manipulation means an act that may distort the view of participants in the capital market with respect to the value of, supply of or demand for a financial instrument. Market manipulation also means any other act that may distort the quoted price of a financial instrument. Such act is not regarded as market manipulation if the person who entered into the transaction or issued the trade order has a legitimate reason for doing such act and the transaction or trade order conforms to accepted market practices on the regulated market concerned. There are also other exceptions which are

120 modelled on the basis of the relevant EC market abuse legislation. Market manipulation is prohibited and is subject to an administrative fine of up CZK 20 million. The fine may be imposed by the Czech National Bank.

(g) Takeovers under the Czech Commercial Code The provisions of the Czech Commercial Act on takeovers apply only to companies formed under Czech law, and consequently do not apply to the Company.

Prague Stock Exchange Listing Rules Further, the Company will be subject to the Listing Rules issued by the PSE applicable on the issuer of securities traded on the main market or on the secondary market.

Under these Listing Rules, the Company will be required to make certain financial information publicly available. In particular, the Company will have to file with the PSE preliminary financial results if it compiles them and quarterly financial results, unaudited semi-annual and annual reports and audited annual financial statements. The Company will also have to provide the PSE with minutes from every ordinary, extraordinary and alternative general meeting of the Company including annexes.

Furthermore, the Company must notify the PSE of certain information, in particular changes in its financial condition, including: (i) extensive information regarding the security in question, the payout of dividends and all changes to rights relating to the listing of securities; (ii) information about the convening of a general meeting and its decisions on all matters; (iii) proposals for changes to the founding document; (iv) any changes to the entry in the Commercial Register involving the Company; (v) changes in the shareholder structure; (vi) any changes in the members of the Board of Directors or supervisory board of the Company and in the management thereof; (vii) any changes in the Company’s ownership interests; (viii) any legal or commercial dispute involving 5 per cent. or more of the Company’s assets; (ix) new patents and licences; (x) new important contracts; (xi) a change of auditors; (xii) the filing of a petition for a declaration of bankruptcy against the Company or an imminent threat of such a filing; and (xiii) other changes in the Company’s financial situation, such as changes in the data in the prospectus and other facts that could influence the price of shares or could worsen the Company’s ability to meet its obligations arising from the issues of securities, in particular the fact that the Company is in default with any of its due monetary obligations to a bank or other financial institution or that it is in default with any monetary obligation that exceeds 5 per cent. of the Company’s equity capital.

The Company must ensure that identical information is provided in the Czech Republic, at the same time, to that provided in other countries, particularly in Luxembourg, France, Poland and Hungary.

Poland Warsaw Stock Exchange General information The stock exchange in Poland is operated by the company Giełda Papierów Wartos´ciowych w Warszawie Spółka Akcyjna (the “Warsaw Stock Exchange”). The Warsaw Stock Exchange conducts its activity and operates pursuant to statutory regulations including, among others, the Act of 29 July 2005 on Trading in Financial Instruments (Ustawa o obrocie instrumentami finansowymi) (the “Trading Act”), as well as its internal rules regulating issues connected with stock exchange markets operated by it.

As of 31 May 2007, there were 296 companies listed on the Warsaw Stock Exchange, of which 13 were foreign issuers. As of the same day, the total capitalisation of the companies listed on the Warsaw Stock Exchange was PLN 839 billion. In 2006, 38 new companies (including six foreign issuers) debuted on the Warsaw Stock Exchange. This made the Warsaw Stock Exchange the fifth largest European stock exchange market and the largest CEE market in terms of new issuers admitted to listing. The Management Board of the Warsaw Stock Exchange expects that in 2007, approximately 60 new companies will be listed on the Warsaw Stock Exchange.

121 Trading and settlement The securities, in order to be traded on the Warsaw Stock Exchange, must be: (a) admitted to listing on the Warsaw Stock Exchange (such admission may cover the securities that do not exist as of the date of admission) and (b) admitted to trading on the Warsaw Stock Exchange (such admission must cover the existing securities that were allocated to the subscribers). The decision on both admissions is issued by the Management Board of the Warsaw Stock Exchange at the request of the issuer. If, within the six months following the admission of shares to listing on the Warsaw Stock Exchange, the issuer will not apply for admission of the shares to trading on the Warsaw Stock Exchange, the Management Board of the Warsaw Stock Exchange may revoke its decision on the admission to listing. The securities listed on the Warsaw Stock Exchange are quoted in Polish zloty.

The electronic trading system used by the Warsaw Stock Exchange is WARSET, a trading system similar to the system used on Euronext. The settlement of the transactions concluded on the Warsaw Stock Exchange takes place outside the Warsaw Stock Exchange through the KDPW (for further information see “Securities Markets — Poland — Polish Securities Market — Regulation of the Polish securities market — Reduction of publicly traded securities to book-entry form”).

Regulation of the Polish securities market General information The information below outlines selected Polish law regulations which are applicable to trading of securities and to publicly-listed companies as of the date of the Prospectus.

Orco Property Group has its registered office in Luxembourg, and is therefore a foreign entity governed by Luxembourg law. Therefore, certain Polish legal considerations may not apply or may be irrelevant. Before taking any action specified below, the prospective investor should seek the advice of a professional attorney in order to determine whether such action is or is not permitted.

Reduction of publicly traded securities to book-entry form (dematerialisation) Under Polish law, the securities which are offered in a public offering or admitted to trading on a regulated market shall have no documentary form and shall be registered in the depository-settlement system operated by the KDPW. Before the commencement of a public offering or before applying for the securities to be admitted to trading on a regulated market the issuer shall conclude the agreement with the KDPW for the registration of securities in the depository-settlement system operated by the KDPW.

The rights attached to the dematerialised securities are established upon their registration in their respective securities accounts. The transfer of such securities becomes effective once the appropriate record has been made in the relevant securities account.

At the request of the holder of a securities account, the entity keeping the account shall issue a written deposit certificate in the name of the holder (the “deposit certificate”). The deposit certificate confirms the holder’s entitlement to exercise such rights attached to the securities specified in such certificate that are not or cannot be exercised solely on the basis of the registration in the securities account. As of the date the deposit certificate is issued, the number of securities specified in such certificate will not be traded until the lapse of the certificate’s validity period, or its earlier return to the certificate issuer. The certificate issuer will block the relevant number of securities in the account for the duration of the deposit certificate validity period.

Notification duties related to the purchase and sale of substantial blocks of shares The Public Offering Act stipulates that the shareholder who: • has achieved or exceeded 5 per cent., 10 per cent., 20 per cent., 25 per cent., 33 per cent., 50 per cent. or 75 per cent. of the total number of votes in a public company; or • held at least 5 per cent., 10 per cent., 20 per cent., 25 per cent., 33 per cent., 50 per cent. or 75 per cent. of the total number of votes in a public company, and as a result of the reduction of its equity interest, now holds 5 per cent., 10 per cent., 20 per cent., 25 per cent., 33 per cent., 50 per cent. or 75 per cent. or less of the total number of votes in a public company; shall notify the Polish Financial Supervision Commission and this public company of such change in the number of votes represented by the shares held by such shareholder. The notification shall be filed within four days from

122 the date of a change in such shareholder’s share in the total number of votes, or from the date on which the shareholder becomes, or by exercising due care could have become, aware of such change.

The notification requirements specified by the Public Offering Act also apply to a shareholder who: • held over 10 per cent. of the total number of votes in a public company and his/her share has changed by at least: (a) two per cent. of the total number of votes — in the case of a public company whose shares have been admitted to the trading on the official listing market or (b) five per cent. of the total number of votes — in the case of a public company whose shares have been admitted to the trading on a regulated market other than the official listing market; or • held over 33 per cent. of the total number of votes and this share has changed by at least one per cent. of the total number of votes.

The public company notified by the shareholder about the facts specified above will publish, within 24 hours from obtaining such notification, a relevant current report including the information provided by the shareholder.

Mandatory public tender offers Pursuant to the Public Offering Act, in certain situations the entity acquiring the shares in a public company is obliged to acquire such shares by way of a public tender offer to subscribe for the sale or exchange of shares (the “public tender offer”) announced by the acquirer.

The first type of mandatory public tender offer refers to the acquisition of shares in a public company in a number that increases a shareholder’s share in the total number of votes by more than: • 10 per cent. within less than 60 days — in the case of a shareholder holding the shares representing less than 33 per cent. of the total number of votes at the general meeting of shareholders in a public company; or • 5 per cent. within less than 12 months — in the case of a shareholder holding the shares representing at least 33 per cent. of the total number of votes at the general meeting of shareholders in a public company.

The second type of mandatory public tender offer refers to the acquisition of shares in a public company that will result in the acquirer exceeding 33 per cent. of the total number of votes at the general meeting of shareholders in such public company. Such acquisition may only be executed by way of the public tender offer concerning a number of shares which confers the right to 66 per cent. of the total number of votes at the general meeting of shareholders in such public company, unless the 33 per cent. threshold is to be exceeded as a result of the public tender offer concerning all the remaining shares in a public company (as described below).

The third type of mandatory public tender offer refers to the acquisition of shares in a public company that will result in the acquirer exceeding 66 per cent. of the total number of votes at the general meeting of shareholders in such public company. Such acquisition may be executed only by way of the public tender offer concerning all the remaining shares in this company.

The Public Offering Act also includes regulations regarding the minimum price for the tendered shares.

For the purposes of the obligations referring to substantial blocks of shares, the shareholdings of affiliates, parties acting in concert and certain other entities associated with the shareholders shall be aggregated.

Insider dealing “Insider information” is defined in Polish law as specific information relating to, directly or indirectly, the issuer, financial instruments (including securities) or acquisition or disposal of such financial instruments, if such information has not been disclosed to the public and, if so disclosed, it could materially influence the price of such financial instruments (or the price of derivative rights arising from such financial instruments).

Subject to certain exceptions, the issuer is obliged to disclose the insider information promptly upon the occurrence of events or circumstances which require the disclosure, or upon becoming aware of such events or circumstances, but not later than within 24 hours. The issuer is also obliged to disclose such information on its

123 website, except for personal data of any persons to whom such information refers. Subject to certain exceptions, any individual who acquires insider information as a result of his position in a company’s governing bodies or as the owner of a company’s shares, or as a result of his employment in such company, or any other similar legal relationship, is prohibited by law from using or disclosing such information to third parties. The above also applies to individuals who illegally obtain insider information or obtain such information in another manner, but should have known that such information was insider information.

Market manipulation Share price manipulation is defined by reference to a number of activities, including, without limitation, taking actions whose effect could be misleading as to the actual demand, supply or price of the shares in question or actions involving placing orders or executing transactions that cause an artificial fixing of the share price, unless the grounds on which such actions were effected are legitimate and such actions have not infringed the established market trading rules. Manipulation may also include disseminating false or inaccurate information that may mislead investors, as well as placing orders or executing transactions in order to profit from investors having been misled as to the price or value of the shares in question. Manipulation is prohibited under Polish law.

Taking into account that the provisions regarding public companies refer to the corporate nature of such entities, it is not clear whether such provisions will apply to the Company solely on the basis of the fact that they have been implemented by Polish law. For further discussion in that respect, see “Risk Factors — The Company is a Luxembourg corporation and certain Polish corporate regulations relating to Polish public companies may not apply to it”.

Rules for publication of information for investors in Poland Each company whose shares are listed on the Warsaw Stock Exchange is obliged to provide investors with current and periodic information regarding this company and its activity. The issuer with its registered office outside the territory of the Republic of Poland, whose securities of the same type as those admitted to trading on the Warsaw Stock Exchange are also admitted to trading on the regulated market in at least one EU member state, is obliged to provide Polish investors with the current and periodic reports published by such issuer on the market where such issuer’s securities are traded.

The current and periodic reports shall be published in Poland at the same time as they are published on the foreign regulated market on which the issuer’s securities are traded.

Foreign issuers may publish current and periodic reports in English. However, each current report shall be supplemented by a short summary in Polish. The periodic report shall be published together with a translation of selected items of financial statements presenting basic information on the issuer’s financial standing. The full content of the current or periodic report translated into Polish shall be published by the issuer as soon as is practically possible, but in any case no later than within five days (with respect to the current report) or three weeks (with respect to the periodic report).

Current and periodic reports are disseminated through the Electronic System for Provision of Information (Elektroniczny System Przekazywania Informacji) (the “ESPI System”), which is a dedicated system used by the issuers of securities. Current or periodic reports sent by the issuer via the ESPI System are delivered at the same time to the Polish Financial Supervision Commission and the Warsaw Stock Exchange and, after 20 minutes, to the Polish Press Agency. The Polish Press Agency publishes current and periodic reports on its website.

Execution of Corporate Rights by Polish Investors in respect of the Shares Dividend Payments (if any) to Polish Investors Detailed information about the rules for dividend payments is included in the section, “General Information About the Company — Summary of the Articles of Association of the Company — Payment of dividends”, of this Prospectus.

See also the section “Information on the Shares and Settlement and delivery of the Shares — Settlement and Delivery of the Shares — Payments on the shares through the clearing system”, of this Prospectus.

124 Participation in Shareholders’ Meetings Detailed information about the rules for convening and participating in the Company’s General Meeting is included in the sections, “General Information About the Company — Summary of the Articles of Association of the Company — General meetings of shareholders” and “General Information About the Company — Summary of the Articles of Association of the Company — Information to the shareholder”, of this Prospectus.

See also the section “Information on the Shares and Settlement and delivery of the Shares — Settlement and Delivery of the Shares — Exercise of Shareholder Rights”, of this Prospectus.

Challenging Resolutions of Shareholders’ Meetings Resolutions of the Company’s General Meeting may be challenged before the Luxembourg courts. The rules for determining whether the court has the competence to resolve the investor’s claim, the conditions for the filing of such claim and the rules for the court’s decisions are subject to Luxembourg law.

See also the section “Information on the Shares and Settlement and delivery of the Shares — Information on the Shares to be offered and admitted to trading — Jurisdiction and applicable law — Competent courts”, of this Prospectus.

Corporate Governance Code of the Warsaw Stock Exchange In connection with the proposed listing of the Shares on the Warsaw Stock Exchange, the Company is required to make a statement of compliance or non-compliance with the Corporate Governance Rules of the Warsaw Stock Exchange. The Company is required to declare which of the principles of the Code it intends to comply with, as well as to enumerate the principles which it does not intend to comply with, and to state the reasons for non-compliance.

Detailed information regarding compliance or non-compliance, as well as required explanations, will be included in the full text of the Company’s statement regarding the Corporate Governance Rules of the Warsaw Stock Exchange, which will be filed with the Warsaw Stock Exchange at the time of the Company’s application for listing and will be available on the website of the Company.

Hungary Budapest Stock Exchange General Information The Budapest Stock Exchange (“BSE”) was established in 1990 with 42 banks and brokerage firms. The BSE is a self-governing and self-regulating organisation, which elects its own bodies and officials, adopts its own regulations, defines its operating rules and fixes the fees charged for its services.

The BSE is the key actor on the Hungarian securities market, being the official trading platform for publicly traded securities.

The new remote trading system of BSE was set up in November 1998 on the cash market (MMTS I.) and in October 2000 in the derivatives market (MMTS II.), both as further described in “— Trading and settlement” below.

Short description of history In June 1999 the Federation of European Stock Exchanges (“FESE”) accepted the BSE as its first associate member.

In July 2001 the BSE created the debt securities section, including all securities representing borrowing relationships. Corporate bonds, previously traded in the equities section, were re-classified and listed in the former government securities section.

In August 2003, within the framework of a contract between the BSE and Deutsche Börse AG, the BSE undertook to provide direct technical access to the Xetra trading system as a so-called multi-member service provider.

125 In September 2005 the BSE announced the integration of the Budapest Commodity Exchange and the BSE. The first trading day of the commodity section of the BSE was 2 November 2005.

Number of companies listed on the BSE As at 20 April 2007, 41 companies’ shares are listed on the BSE, including large corporates, credit institutions and energy companies. Furthermore, there are various types of securities issued by different investment funds, including bonds, notes, derivatives, various types of corporate bonds issued mainly by credit institutions and mortgage bonds mainly issued by FHB Mortgage Bank Co. Plc, OTP Mortgage Bank Ltd. and UniCredit Bank Hungary Zrt.

Markets of the BSE The BSE operates in the following market sections for trading: commodity trading, equity and debt securities trading and derivatives trading. The equities section has been operating since the very beginning of the BSE. Aside from equities, this section also includes the trading of investment fund units and compensation notes (in Hungarian: kárpòtlàsi jegy, being transferable securities in bearer form which represent a claim towards the Hungarian state in the denomination of the compensation note and were issued by the Hungarian state on 10 August 1991 pursuant to Act XXV of 1991, and which bore interest until 31 December 1994). The debt securities section is dominated by government bonds, although mortgage bonds and corporate bonds also enjoy increasing popularity. The derivatives section is the youngest and most dynamically developing section of the BSE. It includes the BUX index and equity futures and options, as well as currency and interest rate futures.

In the equities section, securities representing ownership relations (shares, investment notes) as well as compensation notes are traded.

The debt securities section includes securities representing borrowing relations, such as discount treasury bills, government bonds, corporate bonds, bonds issued by international institutions and mortgage bonds.

The derivative products on the BSE are the futures and option contracts. The derivative products listed on the BSE are standardised, i.e. characteristics of the traded contracts are determined by the BSE in a standardised way (e.g. maturity, contract size etc.).

Trading and settlement Following the transfer of the operations of the Budapest Commodity Exchange from 2 November 2005, products transferred in the framework of the integrated operation have been traded on the floor of the BSE.

Since March 2001, the BSE has been offering a new service for investors which consist of the BSE, making use of the opportunities provided by the MMTS trading system (the “MMTS System”), ensuring a place for the organised trading of shares not officially listed on the BSE but already listed on a recognised market.

In February 2000, after a long preparatory period and in response to increased market demands, the remote trading in options was launched on the BSE and was also incorporated into the MMTS System.

Subsequently, on 25 October 2000, the BSE launched its new trading system developed specifically to serve the derivatives market, called Multi Market Trading System II (“System II”). With the introduction of this System II, the BSE has been able to provide, from the point of view of trading techniques, all of the services provided by the leading stock markets of the world.

Currency Since mid-June 2001, in accordance with the continuous liberalisation of restrictions on capital movements, the Hungarian forint (HUF) is fully convertible, not only in terms of current account transactions but in terms of capital transactions as well. The remaining restrictions relating to foreign investment have been removed: non-residents have unrestricted access to Hungarian securities, HUF-denominated accounts and the onshore derivates market, and residents have unrestricted access to off-shore financial services and foreign securities. Minor restrictions remain which have the objective of preventing money laundering.

126 Trading and settlement in KELER Since the establishment of the Hungarian Central Depositary and Settlement House (“KELER”) in 1993, KELER has performed the divergent tasks of the central background institution of the Hungarian capital market with an unchanging ownership structure, as a private joint-stock company. According to the recent product and IT developments, KELER has become the sole institution in the region that can offer all required depository, settlement and clearing related functions concurrently.

The guarantee system of KELER, which was previously used only on derivatives markets, has been extended to the settlement of all BSE spot securities transactions since May 2002, by providing risk management and collateral requirements to such transactions.

The service activities of KELER fundamentally belong to three different categories: • KELER acts as the central depository of the BSE. In addition to the securities account-keeping functions offered to financial intermediaries active in the capital market, this also includes the release and recording of dematerialised securities, as well as the ISIN code; • settlement of the trades made in the markets of the BSE, ensuring full administration of spot and derivative transactions, in accordance with international recommendations. In the over-the-counter (OTC) securities market, due to its special role in the real-time giro system (“VIBER”) of the National Bank of Hungary, it provides a real time delivery vs. payment settlement facility; and • in addition to share registrar and other supplementary services (e.g. dividend payment, transformation of shares into dematerialised securities) rendered to issuers, it offers its products in a competitive situation as well as a market intermediary and custodian in the field of cross-border securities settlement.

Trading in securities is regulated in the Capital Markets Act (as defined below). In the framework of its central depositary activity, KELER maintains a central securities account in breakdown of own and customer’s securities. KELER operates a separate account for each securities intermediary and maintains a central securities account in the name of the issuer as part of the creation process of dematerialised securities.

When a securities intermediary makes a transfer of securities from a securities account to the credit of a securities account maintained by another securities intermediary, the transaction must contain an indication of the central securities account number to which the relevant securities are attributed.

The securities intermediaries are considered as clients of KELER. Each securities intermediary has a securities primary account at KELER. Debiting and crediting of the securities on the securities primary account will be performed on the sub-accounts to be opened under the securities primary account. On the request of a securities intermediary which is a client of KELER, KELER may open any number of sub-accounts under the primary securities account. On the request of a securities intermediary which is a client of KELER, KELER will register the dematerialised securities in the ownership of the clients of the securities intermediary on a separate sub-account.

Regulation of the Hungarian securities market In the course of the transition to a market economy, Hungary attached great importance to the development of a sound capital market in order to promote economic development and to finance Hungarian enterprises. With effect from 1 January 1999, banks with proper authorisation may carry on investment and financial service activities within the same organisational framework, thereby offering universal banking services. Regulation of the capital markets in Hungary is substantially compliant with EU regulations and guidelines.

The information below outlines selected provisions of Hungarian law which are applicable to the public trading of securities and to publicly listed companies.

Description of the Capital Markets Act Act CXX of 2001 on the capital markets (the “Capital Markets Act”) regulates all aspects of the capital markets in Hungary including, inter alia, the private and public offering and trade of securities (including government securities), the institutional framework of the Hungarian capital market (such as stock exchanges, investment funds and clearing houses) and the takeover offers in Hungarian public limited companies.

127 The Capital Markets Act is harmonised on a high level with, and closely follows, certain important EU capital markets directives, including the Prospectus Directive and the Takeover Directive.

State control State control and supervision of the Hungarian capital markets was delegated to the Hungarian Financial Supervisory Authority (the “HFSA”). The HFSA is a single regulator supervising the operation and the institutions of the Hungarian capital markets.

Insider dealing In 2005 and 2006, amendments were made to the Capital Markets Act to implement the EU Market Abuse Directive containing provisions on insider dealing and market manipulation. The main amendments providing for insider dealing became effective as of 1 July 2005 and further minor amendments were introduced as of 1 November 2005 and 1 January 2006.

The Capital Markets Act provides for an obligation on issuers of securities (and other persons acting on their behalf) to draw up insider lists. Insider lists must include all persons who work for the issuers either on an employment or agency basis and have access to inside information related, directly or indirectly, to the issuer. It should be noted that the issuers of securities can appoint other persons to be responsible for keeping and updating their insider lists.

Market manipulation Under the Capital Markets Act, market manipulation means (i) the conclusion of a transaction or an order to conclude a transaction which gives, or is likely to give, false or misleading indication on the demand or supply or market price of the relevant financial instrument; (ii) the conclusion of a transaction or an order to conclude a transaction which results in setting the market price of a financial instrument on an artificial level; (iii) the conclusion of a transaction or an order to conclude a transaction which is a bogus transaction or is misleading or manipulative in any means; (iv) the dissemination or making available to the public of any unfounded, misleading or false information provided that the person disseminating the information knows, or with reasonable due diligence, should have been aware of the false or misleading nature of the information.

Book-entry form of shares and share certificates Title to dematerialised securities is transferred only by the simultaneous debiting and crediting of securities accounts. Thereby, unless evidenced to the contrary, the holder of the securities in question is the person on whose account it is credited.

Rules on publication of information for investors in Hungary Rules on publication under the Capital Markets Act Under the Capital Markets Act, the issuer of publicly traded securities is obliged to inform the public and the HFSA periodically both in the form of ordinary and extraordinary notifications.

In respect of ordinary reporting requirements, the issuer is obliged to inform the public of its financial condition and operation on an annual and semi-annual basis (referred to as “fast reports”) and also, together with an auditor’s report, on an annual basis. The fast reports must be prepared within 45 days of the end of the financial year or the half-year and the annual audited report must be prepared within 120 days of the end of the relevant financial year. These reports must also be published and sent to the HFSA within the above-mentioned timeframe.

Both the fast reports and the annual audited report must include the interim and annual reports of the issuer together with an analysis thereof.

In respect of extraordinary reporting requirements, the issuer must send to the HFSA and publish all information immediately, but not later than one day after the occurrence of the underlying event, which either directly or indirectly affects the value or the yield of its securities.

128 Rules on publication under the BSE rules The BSE rules require issuers to provide quarterly reports (referred to as “flash reports” and in Hungarian: to˝zsdei gyorsjelentés) and annual reports for the BSE (in Hungarian: éves jelentés), and to publish these reports on the website of BSE pursuant to the rules of the publication by-laws of the BSE. The flash report’s purpose is to provide significant information on the issuer to the investors in order to enable them to make investment decisions and to provide information on the financial position and performance of the issuer. The issuer must draw up a flash report in each quarter year within 45 days of the last day of the quarter. The annual reports must be drawn up within 120 days following the end of each financial year.

Corporate Governance Under Hungarian law and the rules of procedure of the BSE, there is a possibility, although it is not a mandatory requirement, for issuers to declare which corporate governance structure they follow within their corporate structure.

129 PLAN OF DISTRIBUTION General The Company has entered into an underwriting agreement (the “Underwriting Agreement”) in respect of the Offering with Citigroup Global Markets Limited (the “Lead Manager”) on 14 June 2007. Below follows a summary of the principal terms and conditions of the Underwriting Agreement.

Underwriting The Lead Manager and Wood & Co. (together with the Lead Manager, the “Managers”) have committed, severally and not jointly, to procure subscribers or purchasers for the Offer Shares and, in the event the Over- allotment Option is exercised for the Offer Shares, the Over-allotment Shares (as defined below), at the Offer Price. Failing the procurement of such purchasers or payment of the Offer Price by such purchasers, the Managers shall purchase and pay themselves for the Offer Shares and, in the event the Over-allotment Option is exercised, for the Over-allotment Shares, pro rata to their commitments to be set out in the Underwriting Agreement. The Underwriting Agreement provides that the obligations of the Managers are subject to customary conditions precedent, representations, warranties and indemnities. The Underwriting Agreement also provides that the Lead Manager may terminate the Underwriting Agreement upon the occurrence of certain customary circumstances. The Offering cannot be revoked or suspended after trading of the Offer Shares has begun. If any or all of the conditions precedent contained in the Underwriting Agreement referred to above are not met or waived, or if any of the circumstances referred to above occur prior to payment for and delivery of the Offer Shares, the same obligation of the Managers to subscribe for any Offer Shares will lapse. In such event, the Offering will be withdrawn. Furthermore, subscriptions for, and allotments of, Offer Shares that have been made will be disregarded, and any subscription payments made will be returned without interest or any other compensation. All dealings in the Offer Shares prior to settlement and delivery are the sole risk of the investor concerned. During a period of 30 days following the adequate public disclosure of the Offer Price, the Lead Manager or its affiliate, on behalf of the Managers may (but is not obliged to) to the extent permitted by applicable law, effect transactions in the Shares on Eurolist by Euronext Paris, the main market of the Prague Stock Exchange, the main market of the Warsaw Stock Exchange and the Budapest Stock Exchange with a view to supporting the market price of the Shares at a level which may not otherwise prevail in the open market but in doing so shall act (on behalf of the Lead Manager, or its affiliate as the case may be) as principal and not as agent of the Company and any loss resulting or profit arising therefrom shall be retained for the account of the Lead Manager, or its affiliate as the case may be. There is no assurance that stabilisation transaction will be undertaken. Such stabilisation, if commenced, may be discontinued at any time.

Costs Any delivery expense must be borne by investors who should request information about such expenses.

Lock-up agreement The Company has agreed that, for three months after the Settlement Date, it will not issue, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, any Shares (or any securities convertible into or exchangeable for Shares or which carry rights to subscribe or purchase Shares) or enter into a transaction relating to the Shares (including a derivative transaction) having a direct effect on the market in the Shares similar to that of a sale or publicly announce any intention to do any such things or deposit any Shares (or any securities convertible into or exchangeable for Shares or which carry rights to subscribe or purchase Shares) in any depositary receipt facility, in each case without the prior written consent of the Lead Manager (which is not to be unreasonably withheld or delayed), other than (i) the grant of stock options under a new stock option plan that may be adopted after the date hereof, provided that (A) such stock options do not vest prior to three months after the date hereof, and (B) the total number of shares underlying the stock options authorised in the plan does not exceed 5 per cent. of the sum of the number of Shares outstanding as of the date hereof, plus the number of Shares issued in this Offering, (ii) Shares (or any securities convertible into or exchangeable for or which carry rights to subscribe or purchase Shares) issued, offered, allotted, appropriated, modified or granted to employees (including directors) or former employees of the Company, its subsidiaries and/or associated companies or persons related to such employees (including senior directors) or former employees, directly or indirectly, pursuant to any employee or executive share scheme or arrangement for any one of more employees or directors generally, or (iii) as required by law.

130 SELLING RESTRICTIONS

General No action has been taken by the Company or the Managers that would permit an offer of Offer Shares or possession or distribution of this Prospectus or any other offering material in any jurisdiction where action for that purpose is required. The distribution of this Prospectus and the offer of Offer Shares in certain jurisdictions may be restricted by law, and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions, including those in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.

Notice to investors in the United States The Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered or sold within the United States except in certain transactions exempt from the registration requirements of the Securities Act.

The Offer Shares are being offered and sold outside the United States in reliance on Regulation S.

Notice to investors in the European Economic Area In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer to the public of any Offer Shares which are the subject of the Offering contemplated by this Prospectus may not be made to the public in that Relevant Member State, except that an offer of Offer Shares may be made to the public in that Relevant Member State at any time under the following exemptions under the Prospectus Directive, if they are implemented and in accordance with the implementing legislation in that Relevant Member State: • to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; • to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; • to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Managers for any such offer; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Offer Shares shall result in a requirement for the publication by the Company or any Manager of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression “offer of any Offer Shares to the public” in relation to any Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Offer Shares to be offered so as to enable an investor to decide to purchase any Offer Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Notice to investors in Poland This Prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchase or barter in Poland, other than in compliance with the Public Offering Act.

This Prospectus may not be distributed to the public prior to the completion of the following actions: • the Polish Financial Supervision Commission is provided by the CSSF with a notification document confirming the approval of this Prospectus and a copy of the approved Prospectus along with a Polish translation of the Prospectus summary, • the Polish Financial Supervision Commission notifies the Company on obtaining the documents specified above, and

131 • upon the abovementioned notification of the Polish Financial Supervision Commission the Company publishes this Prospectus in Poland.

The Offer shares may not be publicly offered for sale, purchased or bartered in Poland before the completion of the actions specified above.

The Offer Shares may be subject to a promotional campaign, provided that all promotional materials unequivocally state: • that they are exclusively of an advertising or promotional nature, • that this Prospectus has been or will be published, • the location where this Prospectus is or will be available.

Notice to investors in Hungary This prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchase or barter in Hungary, other than in compliance with the Act CXX of 2001 on the Capital Markets, as amended.

Notice to investors in Luxembourg This Prospectus may not be distributed to the public and the Offer Shares may not be publicly offered for sale, purchase or barter in Luxembourg, other than in compliance with the Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières.

Notice to investors in France This Prospectus has been prepared for the listing of the Offer Shares on Eurolist by Euronext Paris.

This Prospectus has not been prepared in the context of a public offering of securities in France with the meaning of article L.411-1 of the French Code monétaire et financier and, accordingly, may not be (i) released, issued, distributed or caused to be released, issued or distributed to the public in France or (ii) used in connection with any offer for subscription or sale of the Offer Shares to the public in France.

The Offer Shares have not been offered, sold or otherwise transferred and will not be offered, sold or otherwise transferred, directly or indirectly, to the public in France. Any offers, sales or other transfers of the Offer Shares in France will be made in accordance with Article L.411-2 of the French Code monétaire et financier only (i) to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case, and except as otherwise stated under French laws and regulations, investing for their own account, all as defined in and in accordance with Articles L.411-2, D.411-1 to D.411-4, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier and/or (ii) to investment services providers authorized to engage in portfolio management on a discretionary basis on behalf of third parties, in each case in compliance with Articles L.341-1 to L.341-17 of the French Code monétaire et financier.

The direct or indirect distribution to the public in France or any Shares so acquired may be made only as provided by Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8.3 of the French Code monétaire et financier and applicable regulations thereunder.

For the needs of the listing of the Offer Shares in France, the CSSF is expected to notify prior to such listing the Autorité des marchés financiers of its approvals on the Prospectus pursuant to the Prospectus Directive. This Prospectus and its French language summary are available on the Autorité des marchés financiers’ website at www.amf-france.org, and on the company’s website (www.orcogroup.com).

A legal notice related to the listing of the Offer Shares will be published in the Bulletin des Annonces légales obligatoires in France. A notice announcing the listing of the Offer Shares will be published by Euronext Paris.

Notice to investors in the Czech Republic No approval of a prospectus has been sought or obtained from the Czech National Bank under the Czech Capital Market Act with respect to the Shares. No action has been taken to passport a prospectus (other than this

132 Prospectus) approved by the competent authority of the home member state of the issuer into the Czech Republic by delivery of a certificate of such competent authority to the Czech National Bank attesting that a prospectus approved by the home member state authority has been drawn up in accordance with the law of the European Community.

Save as contemplated in the Prospectus no application has been filed nor has any permission been obtained for listing nor has any other arrangement for trading the Shares on any regulated market in the Czech Republic (as defined by the Czech Capital Market Act) been made. Accordingly, each of the Managers represents, warrants and agrees that it has not and will not offer, sell or otherwise introduce the Shares for trading in the Czech Republic in a manner that would require (i) the approval of a prospectus by the Czech National Bank or (ii) passporting of a prospectus (other than this Prospectus) approved by the competent authority of the home member state of the issuer into the Czech Republic by delivery of a certificate of such competent authority to the Czech National Bank attesting that a prospectus approved by the home member state authority has been drawn up in accordance with the law of the European Community.

Accordingly, any person making or intending to make any offer within the Czech Republic of Shares which are the subject of the placement contemplated in the Prospectus should only do so in circumstances in which no obligation arises for the Issuer or any of the Managers to produce a prospectus for such offer (other than this Prospectus). Neither the Issuer nor the Managers have authorised, nor do they authorise, the making of any offer of Shares through any financial intermediary, other than offers contemplated in this Prospectus.

Each Manager has represented and agreed with the Issuer and each other Manager that it has complied with and will comply with all the requirements of the Czech Capital Market Act and has not taken, and will not take, any action which would result in the Shares being deemed to have been issued in the Czech Republic or requiring a permit, registration, filing or notification to the Czech National Bank or other authorities in the Czech Republic in respect of the Shares in accordance with the Czech Capital Market Act or the practice of the Czech National Bank (other than this Prospectus).

Each Manager has represented and agreed with the Issuer and each other Manager that it has complied with and will comply with all the laws of the Czech Republic applicable to the conduct of business in the Czech Republic (including the laws applicable to the provision of investment services (within the meaning of the Czech Capital Market Act) in the Czech Republic) in respect of the Shares.

Notice to investors in the United Kingdom Each Manager will represent, warrant and agree that (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Offer Shares in circumstances in which section 21(1) of the FSMA does not apply to the Company and (ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Offer Shares in, from or otherwise involving the United Kingdom.

133 FINANCIAL STATEMENTS

Consolidated Financial Statements in accordance with IFRS as of and for the year ended 31 December 2006 and Independent Auditors’ Report ...... F-2 Consolidated Financial Statements in accordance with IFRS as of and for the year ended 31 December 2005 and Independent Auditors’ Report ...... F-51

F-1 400, route d’Esch 23, Val Fleuri L-1471 Luxembourg L-I526 Luxembourg

Report of the independent auditors To the Shareholders of Orco Property Group S.A.

Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Orco Property Group S.A. and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at December 31, 2006, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Board of Directors’ responsibility for the consolidated financial statements The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the “Institut des Réviseurs d’Entreprises”. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the Group, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, these consolidated financial statements give a true and fair view of the consolidated financial position of Orco Property Group S.A. as of December 31, 2006, and of its financial performance and changes cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Report on other legal and regulatory requirements The management report, which is the responsibility of the Board of Directors, is in accordance with the consolidated financial statements.

F-2 Emphasis of matter Without qualifying our report, we draw attention to Note 2.1, which describes the restatements made to the comparative figures for the year ended 31 December 2005. This note also mentions the missing disclosures and comparative information, which are required under IFRS.

Luxembourg, 17 April 2007

PricewaterhouseCoopers S.à. r.l. HRT Révision S.à r.l. Réviseur d’entreprises Réviseur d’entreprises Represented by Represented by

Anne-Sophie Preud’homme Dominique Ransquin

F-3 ORCO PROPERTY GROUP Consolidated financial statements

Orco Property Group’s Board of Directors has approved on 28 March 2007 the consolidated financial statements for 2006. All the figures in this report are presented in thousands of Euros, except if explicitly stated.

I. Consolidated income statement The accompanying notes form an integral part of these consolidated financial statements.

December December Note 2006 2005 Revenues ...... 5 172,908 50,348 Net gain from fair value adjustment on investment property ...... 5, 7 145,901 78,975 Other operating income ...... 2,786 2,219 Gain on sale of activities held for sale ...... 15 — 2,365 Cost of sales ...... (119,224) (17,795) Employee benefit ...... 22.5 (30,141) (13,259) Amortization, impairments and provisions ...... (4,076) (2,093) Other operating expenses ...... (33,906) (23,872) Operating result ...... 134,248 76,888 Net interest expenses ...... 17 (15,740) (6,962) Other financial results ...... 19 4,416 2,411 Financial result ...... (11,324) (4,551) Profit before income taxes ...... 122,924 72,337 Income taxes ...... 20 (25,069) (16,065) Net profit ...... 97,855 56,272 Attributable to minority interests ...... 1,156 1,749 Attributable to the Group ...... 96,699 54,523 Basic earnings in EUR per share ...... 21 12.58 9.25 Diluted earnings in EUR per share ...... 21 10.11 7.83

F-4 II. Consolidated balance sheet The accompanying notes form an integral part of these consolidated financial statements. December December Note 2006 2005* Assets NON-CURRENT ASSETS ...... 992,605 536,796 Intangible assets ...... 1,545 718 Investment property ...... 7 749,438 361,193 Property, plant and equipment ...... 213,860 158,295 Hotels and own-occupied buildings ...... 8 165,502 126,034 Fixtures and fittings ...... 9 15,036 7,397 Properties under development ...... 10 33,322 24,864

Financial assets ...... 11 21,196 13,121 Deferred tax assets ...... 20 6,566 3,469 CURRENT ASSETS ...... 485,468 153,779 Inventories ...... 12 248,884 55,637 Trade receivables ...... 13 52,602 5,553 Other current assets ...... 85,643 43,500 Cash and cash equivalents ...... 14 98,339 49,089 Held for sale activities ...... 15 2,281 0 TOTAL ...... 1,480,354 690,575

Equity and liabilities EQUITY ...... 518,425 290,923 Shareholders’ equity ...... 454,232 243,197 Minority interests ...... 16 64,193 47,726

LIABILITIES ...... 960,456 399,652 Non-current liabilities ...... 673,075 312,943 Bonds ...... 17 240,854 84,364 Financial debts ...... 17 331,651 183,060 Provisions ...... 18 11,822 1,001 Deferred tax liabilities ...... 20 88,748 44,518

Current liabilities ...... 287,381 86,709 Bonds and financial debts ...... 17 95,370 35,700 Trade payables ...... 55,526 20,787 Advance payments ...... 63,377 19,210 Other current liabilities ...... 73,108 11,012 Held for sale activities ...... 15 1,473 0 TOTAL ...... 1,480,354 690,575

* Restated (see note 2.1)

F-5 II. Consolidated statement of changes in equity The accompanying notes form an Integral part of these consolidated financial statements.

Share Share Translation Treasury Other * Shareholders Minority capital premium reserve * shares reserves equity* interests Equity*

Balance at 1 January 2005 ...... 18,954 46,089 3,991 (72) 34,913 103,875 2,104 105,979 Gains or losses for the period : Translation differences ..... 5,362 5,362 582 5,944 Profit of the period ...... 54,523 54,523 1,749 56,272 Dividends relating to 2004 . . . (3,498) (3,498) (3,498) Capital increase ...... 8,896 72,875 (2,786) 78,985 78,985 Convertible loan ...... (404) (404) (404) OBSAR ...... 17.4 2,577 2,577 2,577 Treasury shares ...... 72 35 107 107 Stock option plan ...... 22.5 1,393 1,393 1,393 Acquisition of Suncani Hvar ...... 6 — 40,625 40,625 Minority interests’ transactions ...... 16 277 277 2,666 2,943 Balance at 31 December 2005 ...... 27,850 118,964 9,353 0 87,030 243,197 47,726 290,923 Gains or losses for the period : Translation differences ..... 10,260 10,260 416 10,676 Profit of the period ...... 96,699 96,699 1,156 97,855 Dividends relating to 2005 . . . (5,993) (5,993) (5,993) Capital increase ...... 6,548 78,588 (2,409) 82,727 82,727 Convertible loan ...... 17.5 18,826 18,826 18,826 Treasury shares ...... 1,768 1,768 1,768 Stock option plan ...... 22.5 7,572 7,572 7,572 Anglicka 26 revaluation ..... 7 801 801 801 MMR transactions ...... 16 (5,617) (5,617) (5,834) (11,451) Orco Germany transactions ...... 16 5,098 5,098 22,948 28,046 Other minority interests’ transactions ...... (1,106) (1,106) (2,219) (3,325) Balance at 31 December 2006 ...... 34,398 197,552 19,613 0 202,669 454,232 64,193 518,425

* Restated (see note 2.1)

F-6 IV. Consolidated cash flow statement The accompanying notes form an integral part of these consolidated financial statements.

December December 2006 2005 Operating result ...... 134,248 76,888 Net gain from fair value adjustments ...... (145,901) (78,975) Amortization, impairments & provisions ...... 4,076 2,093 Gain and losses on disposal of investments ...... (93) (2,777) Stock options plans ...... 7,571 1,393 Adjusted operating profit ...... (99) (1,378) Financial result ...... 5,240 2,821 Income tax paid ...... (1,204) (4,331) Financial result and income taxes paid ...... 4,036 (1,510) Changes in operating assets and liabilities ...... 8,696 (47,354) NET CASH FROM OPERATING ACTIVITIES ...... 12,633 (50,242) Acquisition of subsidiaries, net of cash acquired ...... 6 (69,887) 3,759 Capital expenditures ...... 5.1 (342,427) (171,526) Proceeds from sales of non current tangible assets ...... 3,831 3,085 Purchase of intangible assets ...... (1,199) (157) Purchase of financial assets ...... (5,820) (10,680) Proceeds from sale of held for sale activities ...... 0 12,430 Net interest paid ...... (18,441) (6,136) NET CASH USED IN INVESTING ACTIVITIES ...... (433,943) (169,225) Issue of equity instruments from shareholders ...... 22 84,495 81,398 Issue of equity instruments from minority ...... 16 31,814 4,360 Proceeds from borrowings ...... 17 434,644 195,152 Repayments of borrowings ...... 17 (75,754) (25,560) Dividend paid to company’s shareholders ...... 22.6 (5,993) (3,498) NET CASH FROM FINANCING ACTIVITIES ...... 469,206 251,852 NET INCREASE IN CASH ...... 47,896 32,385 Cash and cash equivalents at the beginning of the period ...... 49,089 15,742 Exchange difference on cash ...... 1,359 962 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD ...... 98,344 49,089

F-7 Orco Property Group IFRS consolidated financial statements at 31 December 2006 Notes to the consolidated financial statements

1. GENERAL INFORMATION Orco Property Group, société anonyme (the Company) and its subsidiaries (together the Group) is a real estate group with a major portfolio in Central and Eastern Europe. It is principally involved in leasing out investment property under operating leases as well as in asset management, in operating hotels and extended stay hotels and is also very active in the development of properties for its own portfolio or intended to be sold in the ordinary course of business. During the year, the Group has substantially focused on growing its property portfolio with acquisitions of land banks in Czech Republic and Germany, and developments in the Cezch Republic, Croatia, Hungary, Germany, Poland and Russia.

The Company is a limited liability company incorporated for an unlimited term and registered in Luxembourg. The address of its registered office is 48 bvd Grande-Duchesse Charlotte, L-1330 Luxembourg.

The Company has a dual listing on the EuroNext Paris stock exchange and on the Prague stock exchange. In the course of the first half of 2007, the Company should also be listed on the Warsaw stock exchange and the Budapest stock exchange.

These consolidated financial statements have been approved for issue by the Board of Directors on 28 March 2007.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation The consolidated financial statements have been prepared in accordance with international financial reporting standards (IFRS) as adopted by the European Union. However the Group has not disclosed the reconciliation between tax expense and accounting profit as required by IAS 12 — Income Taxes for the year ended 2006 together the related comparative information for 2005.

The consolidated financial statements are presented in thousands of euros, which is the Company’s functional and Group’s presentation currency, and have been prepared under the historical cost convention except that investment property is carried at fair value as well as available-for-sale financial assets, and financial assets or financial liabilities (including derivative instruments) at fair value through income statement.

The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.

The accounting policies have been consistently applied by Group’s entities and are consistent with those used in the previous year except for the application of the revised and new standards and interpretations effective as from 1 January 2006 described below. The application of those amendments and interpretations did not result in substantial changes to the Group’s accounting policies: • IAS 19 Amendment — Actuarial Gains and Losses, Group Plans and Disclosures; • IAS 21 Amendment — Net Investment in a Foreign Operation; • IAS 39 Amendment — Cash Flow Hedge Accounting of Forecast Intragroup Transactions; • IAS 39 Amendment — The Fair Value Option; • IAS 39 and IFRS 4 Amendment — Financial Guarantee Contracts;

F-8 • IFRS 1 Amendment — First-time Adoption of International Financial Reporting Standards, and IFRS 6 Amendment — Exploration for and Evaluation of Mineral Resources; • IFRS 6, Exploration for and Evaluation of Mineral Resources; • IFRIC 4, Determining whether an Arrangement contains a Lease; • IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds; and • IFRIC 6, Liabilities arising from Participating in a Specific Market — Waste Electrical and Electronic Equipment. • IAS 19 Amendment introduces the option of an alternative recognition approach for actuarial gains and losses. It also adds new disclosure requirements. As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi- employer plans, adoption of this amendment only impacts the format and extent of disclosures presented in the accounts. • IAS 21 Amendment, IAS 39 Amendment — Cash flow hedge accounting of forecasted intragroup transactions, IFRS 1, IFRS 6, IFRIC 4 and IFRIC 5 are not relevant to the Group’s operating activities and therefore have no material effect on the Group’s policies. • IAS 39 Amendment — The Fair Value Option. Prior to the amendment, the Group applied the unrestricted version of the fair value option in IAS 39. The Group meets the new criteria in the amendment and therefore continues to designate certain financial assets and financial liabilities at fair value through profit and loss. • IAS 39 and IFRS 4 Amendment — Financial Guarantee Contracts. These types of contract are now accounted for under IAS 39 and no longer accounted for under IFRS 4, as previously required under IFRS. The measurement and disclosure requirements under IAS 39 have not resulted in a material change to the Group’s policies.

The Group has chosen not to early adopt the following standard and interpretations that were issued but not yet effective for accounting periods beginning on 1 January 2006: • IFRS 7, Financial Instruments: Disclosures and the Amendment to IAS 1, Presentation of Financial Statements: Capital Disclosures (effective 1 January 2007) require extensive disclosures about the significance of financial instruments for an entity’s financial position and performance, and qualitative and quantitative disclosures on the nature and extent of risks. • IFRS 8, Operating Segments (effective 1 January 2009); • IFRIC 7, Applying the Restatement Approach under IAS 29 (effective 1 March 2006); • IFRIC 8, Scope of IFRS 2 (effective 1 May 2006); • IFRIC 9, Reassessment of embedded derivative (effective 1 June 2006); • IFRIC 10, Interim Financial Reporting and Impairment (effective 1 November 2006); • IFRIC 11, IFRS 2 — Group Treasury Share Transactions (effective 1 March 2007); and • IFRIC 12, Service Concession Arrangements (effective 1 January 2008).

Except for the application of IFRS 7 and amendments to IAS 1, which will require additional disclosures with respect to Group’s risk management and share capital in 2007 financial statements, the application of these new interpretations will not have a material impact on the Group’s financial statements in the period of initial application.

The comparatives figures in respect of the opening balance sheet, as at 31 December 2005, have been restated to reflect the derecognition of a deferred tax asset included in the IFRS transition. This restatement has the following impact on the 2005 comparative figures : • decrease of the deferred tax assets by EUR 2.8 million; and • decrease of the other reserves in shareholders’ equity by the same amount.

F-9 2.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interests. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Joint-ventures The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation.

The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial statements.

The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it resells the assets to an independent party. A loss on the transaction is recognized immediately if it provides evidence of a reduction in the net realisable value of current assets, or an impairment loss. Joint ventures’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3 Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

2.4 Foreign currency translation The exchange rates against euros (EUR) used to establish these consolidated financial statements are as follows:

Currency 31 December 2006 31 December 2005 Code Currency Average Closing Average Closing CZK Czech Koruna 0.03535 0.03637 0.03355 0.03448 HRK Croatian Kuna 0.13659 0.13615 0.13570 0.13558 HUF Hungarian Forint 0.00380 0.00396 0.00402 0.00396 PLN Polish Zloty 0.25705 0.26101 0.24862 0.25908 SKK Slovak Koruna 0.02691 0.02892 0.02591 0.02642 USD US Dollars 0.77224 0.75740 N.A. N.A.

F-10 (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in euros (EUR), which is the Company’s functional and Group’s presentation currency.

(b) 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 year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

Translation differences on non-monetary financial assets and liabilities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss.

(c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and (iii) all resulting exchange differences are recognized as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, exchange differences arising from the translation of the net investment in foreign entities are recognized in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.5 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/joint-venture at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint-ventures is included in ‘intangible assets’. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the acquisition from which the goodwill arose.

Negative goodwill arising on an acquisition is recognized in the income statement, in net gain from fair value adjustment on investment property.

(b) Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised using the straight-line method over their estimated useful lives (three to five years).

F-11 Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include the costs of software development employees and an appropriate portion of relevant overheads.

Computer software development costs recognized as assets are amortised using the straight-line method over their estimated useful lives (not exceeding three years).

2.6 Investment property Property that is held for long-term rental yields or for capital appreciation or both (including the land bank), and that is not occupied by the Group, is classified as investment property.

Investment property comprises freehold land, freehold buildings, extended stay residences, land held under operating lease and buildings held under finance lease.

Land held under operating lease is classified and accounted for as investment property when the rest of the definition of investment property is met. The operating lease is accounted for as if it was a finance lease.

Investment property is measured initially at its cost, including related transaction costs.

After initial recognition, investment property is carried out at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. These valuations are performed annually by an independent expert, DTZ Debenham Tie Leung. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. Some of those outflows are recognized as a liability, including finance lease liabilities in respect of land classified as investment property; others, including contingent rent payments, are not recognized in the financial statements.

Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.

Changes in fair values are recorded in the income statement.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment property is classified as property, plant and equipment and stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property.

If an item of property, plant and equipment becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognized in equity as a revaluation of property, plant and equipment under IAS 16. However, if a fair value gain reverses a previous impairment loss, the gain is recognized in the income statement.

The pieces of land on which are located buildings under construction that will qualify as investment property at completion of the construction are from the beginning classified as investment property and hence recorded at fair value. This includes all plots of land held by the Group on which no construction or development has started at the balance sheet date.

F-12 Freehold lands, for which the destination is not determined at year end, are classified under the land bank category. The destination of freehold lands remains uncertain until a project design is definitive and the building permit granted. Therefore, the transfer of the land to property, plants and equipment or Inventories is recorded only when the building permit is granted.

Hotel buildings held by the Group are not classified as investment property but rather as property, plants and equipment.

2.7 Property, plant and equipment Hotels and own-occupied buildings, fixtures and fittings, properties under development are classified as property, plant and equipment.

All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation, based on a component approach, starts off when construction or development is completed. Depreciation is calculated using the straight-line method to allocate the cost over the asset’s estimated useful lives, as follows:

• Land ...... Nil • Buildings ...... 50-80years • Fixtures and fittings ...... 3to20years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial year-end.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (note 2.9).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

All borrowing costs are expensed except for the borrowing costs that are capitalized as part of the cost of that asset when they are directly attributable to the acquisition, construction or production of a qualifying asset.

2.8 Leases (a) A group company is the lessee i) Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

ii) Finance lease Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The investment properties acquired under finance leases are carried at their fair value.

F-13 (b) A group company is the lessor i) Operating lease Properties leased out under operating leases are included in investment property in the balance sheet.

ii) Finance lease When assets are leased out under a finance lease, the present value of the lease payments is recognized as a receivable. The difference between the gross receivable and the present value of the receivable is recognized as unearned finance income.

Lease income is recognized over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.

2.9 Impairment of non-financial assets Intangible assets including goodwill that have an indefinite useful life are not subject to systematic amortisation and are tested for impairment annually or whenever there is an indication that the intangible asset may be impaired. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

2.10 Financial assets The Group classifies its financial assets other than derivatives in the following categories: loans and receivables and financial assets at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as trade receivables (note 2.12) and other current assets in the balance sheet. Loans and receivables are carried at amortised cost using the effective interest method.

Management assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets classified as loans and receivables is impaired. Impairment testing of trade receivables is described in note 2.12.

Financial assets at fair value through profit or loss include financial assets held for trading which are acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. The Group subscriptions in investment property closed end fund managed by the Group are categorised as financial assets designated at fair value at inception as they are managed and evaluated on a fair value basis in accordance with a documented risk management or investment strategy and reported to key management personnel on that basis. They are initially recognized at fair value, and transaction costs are expensed in the income statement, and subsequently carried at fair value. This classification is specifically adopted as a reflection of the accounting treatment of the investment properties’ portfolio.

Regular purchases and sales of financial assets are recognized on the trade-date on which the Group commits to purchase or sale these assets.

2.11 Inventories Properties that are being developed for future sale are classified as inventories at their cost or deemed cost, which is the carrying amounts at the date of reclassification from investment property. They are subsequently carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less cost to complete redevelopment and selling expenses.

F-14 2.12 Trade receivables Trade receivables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognized in the income statement.

2.13 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

2.14 Share capital Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds in other reserves.

The shares of the Company (Orco Property Group, société anonyme) held by the Group — Treasury shares — are measured at their acquisition cost and recognized as a deduction from equity. Gains and losses on disposal are taken directly to equity.

2.15 Borrowings The term Borrowings covers the elements recorded under the captions Bonds and Financial debts within the non-current liabilities and the caption Bonds and financial debts within current liabilities.

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion a maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognized and included in shareholders’ equities, net of income tax effect.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.16 Trade payables Trade payables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.17 Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

F-15 Investment property Deferred income tax is provided on all temporary differences arising on fair value of buildings and lands held by the Group as investment properties even when they are located in special purpose entities, which are themselves held by a company based in Luxembourg. Each special purpose entity is meant to hold one specific project. Possibly, should a special purpose entity be disposed of, the gains generated from the disposal will be exempted from any tax (in accordance with the Grand-ducal regulation of 21 December 2001), if the Luxembourg-based company holds or commits itself to hold this stake for a minimum of a continuous 12-month period and, if, during this same period, the stake amounts to at least 10% of the affiliate’s capital or the acquisition price amounts to at least EUR 6 million. The Group is confident that all special purpose entities will comply with these conditions.

2.18 Provisions Provisions for legal claims are recognized when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where the Group, as lessee, is contractually required to restore a leased-in property to an agreed condition, prior to release by a lessor, provision is made for such costs as they are identified.

In the Group, only the newly acquired Viterra Development GmbH and Viterra Baupartner GmbH have defined benefit plans. The Viterra plan is a so-called book reserve plan. The important attribute of this kind of plan is that there is no separate vehicle to accumulate assets to provide for the payment of benefits. Rather, the employer sets up a book reserve (accruals) in its balance sheet.

Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high- quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to income over the employees’ expected average remaining working lives. Past-service costs are recognized immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due.

2.19 Derivative financial instruments and hedging activities Derivatives are initially recognized in the balance sheet at their fair value on a date a derivative contract is entered into and are subsequently remeasured at their fair value which is generally the market value. Derivatives are presented, at the balance sheet date, within other current assets when fair value is positive or other current liabilities when fair value is negative. Changes in the fair value are recognized immediately in the income statement under other financial results.

Embedded derivatives that are not equity instruments — such as issued call options embedded in exchangeable bond — are recognized separately and changes in fair value are accounted for through the income statement.

2.20 Revenue recognition Revenue includes rental income, service charges and management charges from properties, and income from property trading.

F-16 Rental income from operating leases is recognized in income on a straight-line basis over the lease term. When the Group provides incentives to its customers, the cost of incentives are recognized over the lease term, on a straight-line basis, as a reduction of rental income.

Service and management charges are recognized in the accounting period in which the services are rendered. When the Group is acting as an agent, the commission rather than gross income is recorded as revenue.

The amount of inventories recognized as an expense during the period, referred to as cost of sales, consists of those costs previously included in the measurement of inventory that has been sold during the year and unallocated production overheads.

The other operating expenses include repair and maintenance costs of buildings and properties, utilities costs, marketing and representation costs, travel and mobility expenses, operating taxes and other general overhead expenses.

2.21 Dividend distribution Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

2.22 Share option plans Share options are granted to certain directors and senior employees. The options are granted at the market price on the date of the grant and are exercisable at that price.

The fair value of options granted is recognized as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

2.23 Subscription rights and PACEO The Group grants subscription rights to third parties as part of its financing program. Any consideration received is added directly to equity as a capital increase recorded in share capital and share premium. Changes in the fair value of those equity instruments are not recognized in the financial statements.

3 FINANCIAL RISK FACTORS 3.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The group’s overall risk management programme focuses on the unpredictabilitity of financial markets and seeks to minimise potential adverse effects on the group financial performance. The Group uses financial instruments to mitigate certain risk exposures.

Risk management is carried out by the Group’s Chief Financial Officer (CFO) and his team under policies approved by the Board of Directors. The Group’s CFO identifies, evaluates and mitigates financial risks in close co-operation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Czech Koruna (CZK), the Polish Zloty (PLN), the Hungarian Forint (HUF), the Slovak Koruna (SKK) and the Croatian Kuna (HRK). Foreign exchange risk arises from recognized monetary assets and liabilities and net investments in foreign operations. The Group does not hedge its foreign

F-17 exchange risks. Salaries, overhead expenses, future purchase contracts in the development sector, building refurbishment and construction costs are denominated in local currencies. Loans, operating income and — except in the development activities — sales of building are denominated in euros (EUR).

(ii) Price risk The Group is exposed to property price and property rentals risk but it does not pursue any speculative policy. Eventhough the Group’s activities are focused on one geographical area — Central and Eastern Europe — such activities are spread over several business lines (residences, offices, hotels) and different countries that each undergo specific business cycles.

(b) Credit risk The Group has no significant concentrations of credit risk. Rental contracts are made with customers with an appropriate credit history. Cash transactions are limited to high-credit-quality financial institutions. The Group has policies that limit the amount of credit exposure to any financial institution.

(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the inherent nature of its assets the Group is subject to a liquidity risk. However, over the medium and long term this risk appears as remote since most loans expire at the earliest in 2010.

(d) Cash flow interest rate risk As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group has now started to mitigate some of its variable interest rates by entering into swap transactions.

The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest costs may increase as a result of such changes. They may reduce or create losses in the event that unexpected movements arise.

3.2 Fair value estimation The fair value of financial instruments traded in active markets (such as publicly traded derivatives, trading securities and financial assets at fair value through income statement) is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows.

The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

F-18 4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

(a) Estimate of fair value of investment properties The best evidence of fair value is current prices in an active market for similar lease and other contracts. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In making its judgement, the Group considers information from a variety of sources including: i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences; ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

If information on current or recent prices of assumptions underlying the discounted cash flow approach investment properties is not available, the fair values of investment properties are determined using discounted cash flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at each balance sheet date.

The principal assumptions underlying management’s estimation of fair value are those related to: the potential use of the asset, the receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements; and appropriate discount rates. The fair value is based on the potential use of the properties as determined by the Group. Fair value is the highest value, determined from market evidence, by considering any other use that is financially feasible, justifiable and reasonably probable. The “highest and best- use” value results in a property’s value being determined on the basis of redevelopment of the site. These valuations are regularly compared to actual market yield data, and actual transactions by the Group and those reported by the market.

The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

(b) Income taxes The Group is subject to income taxes in different jurisdictions. Significant estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

As stated in note 2.16, the calculation of deferred tax on investment properties is not based on the fact that they will be realised through a share deal but through an asset deal. As a result of the Group structure, the potential capital gain may be exempted from any tax in case of share deal if certain conditions are met and hence the accumulated deferred tax liabilities may be recognized as a gain depending on the outcome of negotiations with future buyers.

(c) Determination of remaining construction costs All development projects are subject to individual financial forecasts and balances, prepared by the Group and based on the best estimate of the construction costs to be incurred as part of the projects. The costs incurred are subject to specific controls by the Group and the project balances, showing the costs incurred as well as the remaining construction costs, are updated on a regular basis. This information is used to determine the net realisable value of inventories as well as the fair value less cost to sale for the impairment test of properties under development.

F-19 4.2 Critical judgements in applying the Group’s accounting policies Distinction between investment properties and owner-occupied properties The Management determines whether a property qualifies as investment property. In making its judgement, the Management considers whether the property generates cash flows largely independently of the other assets held by an entity. Owner-occupied properties generate cash flows that are attributable not only to properly but also to other assets used in the production or supply process.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the supply of services or for administrative purposes. If these portions can be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions cannot be sold separately, the property is accounted for as investment property only if an insignificant portion is held for use in the supply of services or for administrative purposes. Judgement is applied in determining whether ancillary services are so significant that a property does not qualify as investment property. The Management considers each property separately in making its judgement.

Where applicable, the land on which new properties are under development is recognized separately as an investment property. In such a case the land is fair valued through the income statement on the basis of a percentage of the value determined by the independent valuation expert for the full property under development (land and construction).

5. SEGMENT REPORTING 5.1 Primary reporting format — business segments The Group is organised on a European basis into four main segments determined in accordance with the type of activity: • Renting: leased out residences, offices or retail buildings, property management and asset management and buildings under construction that are meant to be leased. • Hotels and Residences: includes all the MaMaison Hotels and Appartments activities with extended stay hotels and small luxury hotels. This segment also includes the Suncani Hvar activities i.e. leisure hotels in Croatia. • Development: development of projects meant to be disposed off unit by unit, the land bank and project management. • Management services: includes property management, management services to group companies and asset management for Endurance Fund.

In 2006, the business segments Extended stay hotels and Hotels were brought together into the business segment Hotels and residences to better reflect the strategy and management structure. The 2005 segmental information has been restated accordingly.

F-20 Corporate expenses are allocated on the basis of the revenue realised by each activity. Segment assets consist primarily of tangible assets, inventory and receivables. Unallocated assets comprise deferred tax assets and cash and cash equivalents. Segment liabilities include operating liabilities. Unallocated liabilities are essentially the aggregate of litigation provisions, taxation liabilities and borrowings

Hotels and Management Intersegment As at December 2006 Development Residences Renting services activities TOTAL Revenues ...... 124,298 30,753 19,856 8,690 (10,689) 172,908 Net gain from fair value adjustment on investment property ...... 57,394 8,565 79,942 0 0 145,901 Other operating result ...... (137,436) (36,572) (17,008) (799) 7,254 (184,561) Operating result ...... 44,256 2,746 82,790 7,891 (3,435) 134,248 Financial result ...... (11,324) Profit before income taxes ...... 122,924 Income taxes ...... (25,069) Net Profit ...... 97,855 Attributable to minority interests . . (1,156) Attributable to the group ...... 96,699 Segment assets ...... 624,147 272,184 397,929 0 (10,232) 1,284,028 Unallocated assets ...... 196,326 Total assets ...... 1,480,354 Segment liabilities ...... 144,299 8,990 17,987 (10,971) 160,305 Unallocated liabilities ...... 1,320,049 Total liabilities ...... 1,480,354 Cash flow elements ...... Amortizations, impairments and provisions ...... 1,466 (4,279) (1,223) (39) 0 (4,075) Capital Expenditure ...... 94,925 64,345 183,157 0 342,427

Hotels and Intersegment As at December 2005 Development Residences Renting Other services activities TOTAL NET Revenues ...... 21,925 21,534 7,584 3,087 (3,782) 50 348 Net gain from fair value adjustment on investment property ...... 36,436 22,361 20,178 0 78,975 Other operating results ...... (23,268) (25,493) (8,761) 1,681 3,406 (52,435) Segment result ...... 35,093 18,402 19,001 4,768 (376) 76,888 Financial result ...... (4,551) Profit before income taxes ...... 72,337 Income taxes ...... (16,065) Net Profit ...... 56,272 Attributable to minority interests . . (1,749) Attributable to the group ...... 54,523 Segment assets ...... 184,306 207,339 209,904 0 (11,915) 589,634 Unallocated assets ...... 100,941 Total assets ...... 690,575 Segment liabilities ...... 38,160 8,722 11,965 0 (3,801) 55,046 Unallocated liabilities ...... 635,529 Total liabilities ...... 690,575 Cash flow elements ...... Amortizations, impairments and provisions ...... 1,524 (3,584) (26) (7) 0 (2,093) Capital expenditure ...... 12,655 17,893 137,549 168,097

F-21 The segmental information for the year ended 31 December 2005 has been restated by merging the segments hotels and residences.

5.2 Secondary reporting format — geographical segments The Group’s four business segments operate in Central European countries among which the most activities are presently generated in the Czech Republic, in Germany and in Poland. With exception of these countries, no other individual country contributed more than 10% of consolidated sales or assets. The location of the customers is the same as the location of the assets except for the hospitality activity.

December December 2006 2005 Czech Republic ...... 66,363 34,149 Germany ...... 62,796 291 Poland ...... 22,216 4,298 Croatia ...... 9,676 6,797 Hungary ...... 8,593 3,020 Other Central European countries ...... 9,628 3,762 Intersegment activities ...... (6,364) (1,969) Revenue ...... 172,908 50,348

December December 2006 2005 Czech Republic ...... 563,402 320,013 Germany ...... 289,355 19,775 Croatia ...... 102,463 74,871 Hungary ...... 159,622 111,669 Poland ...... 110,149 64,667 Other Central European countries ...... 80,471 9,561 Intersegment activities ...... (8,921) (13,084) Segment assets ...... 1,296,541 587,472 Non allocated assets ...... 183,815 103,103 Total assets ...... 1,480,356 690,575

6. ACQUISITIONS In 2006, the Group has enterred into two business combinations. • Viterra Development activities in Germany, Poland and the Czech Republic acquired at the end of the first half of the year. • The Stein Brewery in Slovakia at the end of December.

As at 23 June 2006 the Group directly acquired Viterra Development Polska and, through Orco Germany (a 80% fully consolidated subsidiary), Viterra Development GmbH and Viterra Baupartner GmbH. Those companies and their subsidiaries are referred to as Viterra in this report. Viterra is active in Germany, Poland and the Czech Republic. The development and building portfolio has been fair valued on the basis of an independent valuation report (established by DTZ Debenham).

As part of the transaction, the Group also acquired for a total cash consideration of EUR 13 million two buildings whose property has only been transferred in August with some cash flow adjustment mechanisms bringing the final acquisition price to EUR 14 million.

F-22 The following table details the fair value of the assets, liabilities and contingent liabilities acquired and describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired:

Viterra Tangible assets ...... 31,874 Financial assets ...... 1,885 Deferred tax assets ...... 1,290 Inventories ...... 98,709 Trade receivables ...... 35,885 Other current assets ...... 14,631 Cash and cash equivalents ...... 28,961 Provisions ...... (11,875) Deferred tax liabilities ...... (4,665) Payables ...... (34,485) Short term debts and provisions ...... (40,107) Net equity acquired ...... (122,103) Negative goodwill on acquisitions ...... 23,255 Acquisition price ...... (98,848) Less cash acquired ...... 28,961 Cash flow on acquisition net of cash acquired ...... (69,887)

In agregate, the acquired business contributed revenues of EUR 83.2 million and net profit of EUR 0.7 million to the Group for the period from the acquisition date to 31 December 2006. The Group is not able to disclose the information relating to revenue and profit which would have been generated by the Group for the year ended 31 December 2006 if the acquisition had ocurred on 1 January 2006 due to the absence of Viterra Development activities sub-consolidated information prior to the acquisition.

At the end of December 2006, the Group closed a transaction to acquire in Slovakia the Stein companies. These companies comprise one holding company with an industrial building complex which has been recognized at its fair value (and as such disclosed as an acquisition in note 7 Investment property under the caption Freehold buildings for EUR 21.6 million) and two subsidiaries running the brewery and distribution activities that are accounted for as business acquisitions. Since the objective of the group is the conversion of the old industrial building complex, the brewery and distribution activities are meant to be sold in 2007. A procedure of due diligence with potential buyers should be finalized in the first half of 2007.

As at December 2006, these acquisitions only contribute to the balance sheet and the specific lines of held for sale activities for the brewery and beer distribution activities.

The following table details the fair value of the assets, liabilities and contingent liabilities acquired and describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired:

Stein acquisition

Brewery & Investment Acquired activities distribution property Total Tangible assets ...... 169 21,902 22,071 Inventories ...... 476 — 476 Trade receivables ...... 1,060 86 1,146 Other current assets ...... 12 10 22 Cash and cash equivalents ...... 564 11 575 Long term debts ...... (2,751) (514) (3,265) Deferred tax liabilities ...... — (2,230) (2,230) Payables ...... (602) (273) (875) Short term debts and provisions ...... (595) — (595) Net equity acquired ...... 1,667 (18,992) (17,325) Goodwill on acquisitions ...... 0 Acquisition price ...... (17,325) Less cash acquired ...... 575 Cash flow on acquisition net of cash acquired ...... (16,750)

F-23 In 2005 the Group has enterred into two business combinations. • The acquisition in June 2005 of 100% of the capital of BP Servis, a property management company. The company is fully consolidated since the date of acquisition. The following table describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired:

BP Servis Intangible assets ...... 86 Trade receivables ...... 301 Other current assets ...... 58 Cash and cash equivalents ...... 274 Payables ...... (572) Acquisition price ...... (147) Less cash acquired ...... 274 Cash flow on acquisition net of cash acquired ...... 127

• The acquisition in July 2005 through a capital increase of 47.7% of Suncani Hvar dd, a company carrying 10 hotels on the island of Hvar in Croatia. The company is fully consolidated since the date of acquisition. The hotel portfolio has been fair valued using EBITDA multiples and rates per room multiples based on management assumptions and estimates. The valuation has been made on the basis of the future intended use of the hotels. For hotels which will be demolished, 95% of the fair value has been attributed to the land whereas for hotels to be refurbished, the allocation of value to the land has been based on a ratio of 40% applied to the estimated properties values after refurbisment costs. The remaining fair value has been attributed to the buildings. The contribution of Suncani Hvar dd to the 2005 revenues amounts to EUR 6.8 million and a negative goodwill of EUR 13.3 million has been recognized in the income statement on the same line as the gains and losses from fair value adjustments on investment property. The following table describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired: As part of the transaction, the Group acquired the right to subscribe, as from 1 September 2006, to an increase in share capital of HKR 100 million through the issuance of 1 million shares with a fixed nominal value, excluding all shareholders from their pre-emptive right. This financial instrument has been valued using Black- Scholes valuation model and is recorded in the Group assets, under the caption other current assets. As for any derivative instrument, the movements in fair value after the acquisition is recorded through the income statement. Additionally, under certain conditions related to the financing of the investments, the Group has acquired an additional right to subscribe to a further increase in share capital of HKR 100 million through the issuance of 1 million shares with a fixed nominal value, excluding all shareholders from their pre-emptive right.

Suncani Hvar Tangible assets ...... 72,998 Inventories ...... 102 Trade receivables ...... 536 Other current assets ...... 122 Cash and cash equivalents ...... 27,350 Minority shareholders ...... (40,728) Long term financial debts ...... (8,698) Provisions ...... (293) Deferred tax liabilities ...... (6,475) Short term financial debts ...... (6,102) Payables ...... (1,798) Net equity acqired ...... (37,014) Negative goodwill on acquisitions ...... 13,296 Acquisition price ...... (23,718) Less cash acquired ...... 27,350 Cash flow on acquisition net of cash acquired ...... 3,632

F-24 Suncani Hvar is party to a certain number of claims on the ownership of assets or part of assets. The shareholder agreement in place between the Company and The Privatization Fund secures the Company for compensation in case Suncani Hvar would loose the ownership of the assets.

7. INVESTMENT PROPERTY

Buildings under Freehold Extended stay Investment property finance lease buildings Land hotels Land bank Total Balance at 1 January 2005 ...... 1,510 49,620 5,893 47,199 30,281 134,503 Revaluation ...... (428) 28,826 6,874 9,065 21,341 65,678 Investments / acquisitions ...... 5 127,316 — 10,802 12,655 150,778 Asset sale ...... — (2,312) — — — (2,312) Transfer ...... 404 10,419 (4,234) (416) 859 7,032 Translation differences ...... 19 2,300 67 769 2,359 5,514 Balance at 31 December 2005 ...... 1,510 216,169 8,600 67,419 67,495 361,193 Scope movements ...... — 20,937 — — 10,500 31,437 Investments / acquisitions ...... — 166,615 30,855 — 72,565 270,035 Revaluation through income statement ...... (135) 66,709 8,545 (880) 48,408 122,646 Revaluation through equity ...... — 801 — — — 801 Asset sale ...... — (2,919) — — — (2,919) Transfer ...... — (486) 17,400 (7,837) (49,988) (40,911) Translation differences ...... — 1,839 — 0 5,317 7,156 Balance at 31 December 2006 ...... 1,375 469,666 65,400 58,701 154,296 749,438

Variations in 2006 The scope movements refer to the office building in Viterra’s asset portfolio in Germany recognized at fair value at the date of acquisition and two plots of land Sky Office in Düsseldorf and Gruga Carre in Essen.

During the year, the investments and acquisitions reached EUR 270.0 million in the following projects: • Freehold buildings (EUR 166.6 million in 2006 — EUR 127.3 million in 2005): • Germany: Cumberland Haus EUR 39.5 million and Kufurstendamm EUR 7.0 million, Max Planck Strasse in Köln & Wasser Strasse in Düsseldorf EUR 14.0 million and, various residential and office buildings essentially in Berlin EUR 36.8 million. • Czech Republic: Bubenska EUR 26.6 million and Pivovar Vrchlaby brewery EUR 2.0 million. • Hungary: CIB Bank EUR 6.3 million and Parish Department Store buildings in Budapest EUR 11.8 million. • Slovakia: Pivovar Stein brewery EUR 21.6 million (see note 6). • Land bank and Land (EUR 103.4 million in 2006 — EUR 12.7 million in 2005): • Acquisition of two plots in the Czech Republic (mainly Bubny) EUR 46.6 million and in Warsaw EUR 9.0 million. • Acquisition of land plots for Sky Office project in Düsseldorf for EUR 22.4 million. • Acquisition of land for development of Prokrowka project in Moscow for EUR 8.5 million.

In the freehold building category the transfer reflects the movement of Luxembourg Plaza’s office part transferred from properties under development and the Zlota Tower transferred in inventory. Since Orco’s headquarters moved to Luxembourg Plaza in Autumn, Anglicka 26 has been transferred to investment property under IAS 40. The residences Masaryk and Americka Park have been sold by MaMaison Residence to Orco Property Group and as a result transferred to freehold buildings.

The land caption includes the plots for Radio Free Europe, Sky Office and Prokrowka projects. They were all started this year while the land of the Luxembourg Plaza Office building has been transferred when finalized to the freehold buildings caption.

F-25 Similarly in the land bank category the transfer movement corresponds to the Koliba’s plot for the development of luxury residences in Slovakia, and the second phase of the Slunecny Vrsek and Kouzeine Medianky residential projects in the Czech Republic which were transferred in inventory. Also the plot for Sky Office high tower project in Düsseldorf and the Hagibor’s plot dedicated to the future development of an office property for Radio Free Europe are reclassified and under the land caption.

During the year, the sales of luxury appartments in Prague in the Zahrebska, Masaryk and Rybalkova buildings amount to EUR 2.1 million.

Additional information on the main acquisitions: • Bubny district, plot of 27 hectares in Prague, was acquired for EUR 43.2 million. The plot, which has been vacant and neglected for the last 20 years, is the only area of such a type and size in the Prague City Centre. As such, one of Orco’s main goals is the rejuvenation and revitalisation of the prime Prague 7. Estimated investment into this project stands at EUR 550 million for a potential of 1,000,000 sq m. • Bubenska is engaged in the rental of the real estate portfolio which comprises various plots of land and buildings in the Czech Republic. The acquisition price amounts to EUR 26.6 million. • Cumberland Haus, acquired for EUR 39.5 million, is located in the Charlottenberg district, less than one kilometre west of Berlin’s city centre. The property is a landmark building in a prominent location on Kufürstendamm, Berlin’s most famous and prime commercial and shopping street. The building was originally built at the turn of the century to provide 25,300 sq m of hotel accommodation over ground and four upper floors, around a series of internal courtyards. The intention is to undertake a major refurbishment with additional development and some demolition to provide a prestigious and contemporary mixed-use property. • Pivovar Stein situated in Bratislava is a brewery acquired for EUR 21.6 million. Orco Property Group plans to build a modern multi-purposes complex with residential premises, civil infrastructures and possibly a hotel. The total area of the project amounts to 1.6 hectares, The group intends to sell and relocate beer brewing and distribution activities.

All investment properties are revalued at the end of the year based on a valuation report established by the independent expert Debenham Tie Leung. The total revaluation of investment properties amounts to EUR 122.7 million. This amount does not include the negative goodwill of EUR 23.3 million on the first consolidation of Viterra Developement which is recognized on the same line in the income statement. The main revaluations recorded in 2006 and the related fair value of the properties are presented below:

Freehold Buildings

Fair Value Revaluation 31.12.06 Czech Republic Na Porici ...... 8,433 43,440 Bubenska ...... 9,491 37,212 Luxembourg Plaza ...... 7,920 28,800 Germany Cumberland Haus Berlin ...... 4,875 44,400 Other German freehold buildings ...... 4,502 45,371 Hungary Budapest Stock Exchange ...... 7,800 37,800 Starlight Suite Hotel ...... 5,000 8,600 Headquarters of Budapest Bank ...... 2,520 34,350 Other ...... 16,168 189,693 Total Freehold Buildings : ...... 66,709 469,666

F-26 Land and Land bank

Fair Value Revaluation 31.12.06 Czech Republic Bubny ...... 34,549 80,000 Benice ...... 2,586 24,340 Praga ...... 5,948 9,027 Russia Hotel Pokrowka ...... 8,348 17,040 Poland Jozefoslaw ...... 1,033 10,587 Other ...... 4,489 78,702 Total Land and Land bank: ...... 56,953 219,696

Variations in 2005 Two projects (Kosic project -a joint-venture with a subsidiary of General Electric- and Nove Medlanky) have been divided in three phases. The plots of land relating to the two last phases have therefore been transferred from inventory to investment property until the potential developments start.

During the year, the Group has invested EUR 151 million in the following projects : • Freehold buildings: the Ofer portfolio in Budapest for EUR 74.9 million (revaluation recognized in 2005: EUR 0.9 million), EUR 26.8 million in the Na Porici office building in Prague 1 (revaluation recognized in 2005: EUR 7.2 million), EUR 12.8 million in five appartment buildings in Berlin (revaluation recognized in 2005: EUR 5.8 million), one shopping center in Brno for EUR 4.2 million (revaluation recognized in 2005: EUR 1.1 million) and buildings to be refurbished in Spedleruv mlyn and Prague for EUR 5.8 million. • Extended stay hotels : the new Diana residence in Warsaw represented an investment of EUR 10.7 million (revaluation recognized in 2005: EUR 5.2 million). • Land bank : acquisition of a plot for future development project in Slovakia for EUR 4.4 million and the rest in plots in the Czech Republic.

As its offices and shopping spaces are currently for rent, the Zlota City Center building located in the center of Warsaw is fair valued at EUR 23.0 million after recognition of a gain on revaluation of EUR 6.6 million in 2005 (EUR 4.8 million in 2004) and is classified under the “Freehold buildings”. The fair value is based on the fact that in the near future, the Group is confident in obtaining a building permit to replace the existing building by a prestigious commercial and residential tower of 192 meters. The acquisition cost of this building also includes a prepaid operating lease for the land with an upfront payment in 2004 amounting to PLN 23.8 million. The term of the lease is 99 years starting from 1991.

The plot Hagibor located in Prague 10 in the Czech Republic is dedicated to the future development of an office property for Radio Free Europe with very high specifications. While the plot is still classified as “Landbank”, it has been fair valued at EUR 17.5 million with a gain on revaluation of EUR 9.2 million in 2005 (EUR 0.4 million in 2004) on the assumption that the property will be leased to Radio Free Europe.

The Luxembourg Plaza in Prague is currently under development. However, the land on which the Luxembourg Plaza is located is classified in investment property and revalued at year end. The revaluation recorded on this land in 2005 amounts to EUR 6.9 million.

In 2005, the freehold buildings sale relates to the finalisation of the sale of one apartment to a Board member of the Group. The total transaction amounted to EUR 0.4 million and the Group did not record any material difference compared to the last DTZ valuation. The other sales concern luxury appartments in Prague in the Zharebska, Americka and Rybalkova buildings. The total transactions amounted to EUR 2 million.

The total revaluation of investment properties amounts to EUR 65.7 million. This amount does not include the negative goodwill of EUR 13.3 million on the first consolidation of Suncani Hvar which is recognized on the same line in the income statement.

F-27 8. HOTELS AND OWN-OCCUPIED BUILDINGS

Hotels and own-occupied Own-occupied Prepaid operating buildings buildings leases Hotels TOTAL GROSS AMOUNT Balance at 1 January 2005 ...... 5,158 2,449 41,585 49,192 Scope variation ...... 0 0 73,192 73,192 Investments / acquisitions ...... 2,056 427 381 2,864 Disposal ...... (41) 0 0 (41) Transfer and other movements ...... (118) 621 186 689 Translation differences ...... 265 110 2,099 2,474 Balance at 31 December 2005 ...... 7,320 3,607 117,443 128,370 Scope variation ...... 64 0 0 64 Investments / acquisitions ...... 342 0 15,071 15,413 Transfer and other movements ...... 238 0 23,051 23,289 Translation differences ...... 301 245 2,222 2,769 Balance at 31 December 2006 ...... 8,265 3,852 157,788 169,905 AMORTIZATION Balance at 1 January 2005 ...... 477 25 292 794 Allowance ...... 65 91 1,383 1,539 Disposal ...... (12) 0 0 (12) Transfer and other movements ...... (58) (18) 40 (36) Translation differences ...... 35 1 15 51 Balance at 31 December 2005 ...... 507 99 1,730 2,336 Scope variation ...... 0 0 0 0 Allowance ...... 191 88 2,141 2,421 Reversal of impairment ...... (105) 0 0 (105) Transfer and other movements ...... (150) 0 (192) (342) Translation differences ...... 25 16 52 93 Balance at 31 December 2006 ...... 468 203 3,731 4,402 NET AMOUNT AT 31 December 2006 ...... 7,797 3,648 154,057 165,503 Net amount at 31 December 2005 ...... 6,813 3,508 115,713 126,034

• 2006 The investments relate principaly to the refurbishment of Amfora and Riva Hotels on the Hvar island in Croatia. In the south of Poland, the Group acquired the Park Hotel Vienna built in Bielsko Biala alongside the Beskidy Mountains. The transfer relates to the Marriott Courtyard in Prague that entered into operations in the Luxembourg Plaza. The developped building has been transferred from properties under development.

• 2005 In 2005, the scope variation relates only to the first consolidation of Suncani Hvar. All the assets and liabilities have been valued by Deloitte & Touche Croatia at the time of the acquisition, using the EBITDA and rate per room multiples valuation methods. Please refer to note 6 detailing the business combination accounting on this company. The prepaid operating leases relate to one building serving as an extended stay hotel in Bratislava that was acquired in 2004 (with a remaining term of the lease of 27 years) and to the lands on which the Regina hotel and Diana residence are located (with in both cases a remaining term of the lease of 85 years).

F-28 9. FIXTURES AND FITTINGS

Gross amount Amortization Net amount At 1 January 2005 ...... 8,981 (3,179) 5,802 Increase ...... 3,189 (2,239) 950 Assets sales ...... (269) 176 (93) Transfer ...... 500 500 Translation difference ...... 382 (144) 238 At 31 December 2005 ...... 12,783 (5,386) 7,397 Increase ...... 12,973 (5,153) 7,820 Assets sales ...... (2,053) 1 519 (534) Transfer ...... (636) 643 7 Translation difference ...... 554 (208) 346 At 31 December 2006 ...... 23,621 (8,585) 15,036

The main investments of fixtures and fittings in 2006 were realised on the Hvar island in Croatia principally for the hotels Amfora and Riva (EUR 3.0 million), in Prague for the hotel Lucemburska Marriott {EUR 2.2 million) and in Poland with the acquisition of Park Hotel Vienna (EUR 1.7 million). The same year, most sales of fixtures and fittings were realised by Suncani Hvar hotels (EUR 1.3 million).

In 2005, the Group has mainly invested in the new extended stay hotel Diana Residence in Warsaw (EUR 1.1 million) and in the Ofer buildings portfolio in Budapest for EUR 0.7 million.

10. PROPERTIES UNDER DEVELOPMENT The caption Properties under development also includes advance payments for EUR 5.2 million (EUR 3.3 million in 2005). These advance payments essentially relate to the acquisition of various buildings in Berlin. The rest represents the buildings under construction that have known the following evolution :

December December 2006 2005 Opening Balance ...... 21,601 10,803 New projects and work in progress ...... 44,006 16,516 Finalized projects ...... (39,927) (8,841) Transfer and other movements ...... 1,107 2,285 Translation differences ...... 1,372 838 Total ...... 28,159 21,601

The work in progress represents the investments in the hotels on the Hvar island before the start of the summer season (EUR 13.2 million), the finalization of the Luxembourg Plaza Building (EUR 9.2 million), the construction started in the second half of 2006 of the new Radio Free Europe headquarters in Prague (EUR 2.9 million) and the extension of MaMaison Hotels & appartments’ activities in Russia with the Pokrowka project (EUR 12.2 million).

After its finalization the Luxembourg Plaza building has been transferred in investment properties for the offices for rent part (EUR 11.3 million) and, in Hotels and own occupied buildings for the hotel part (EUR 18.4 million).

In 2005, the group invested EUR 3.0 million in the finalization of a hospital in Londynska that has been transferred to investment properties with a value of EUR 8.8 million. The other investments relate mainly to the Luxembourg plaza building that will be half dedicated to offices and half to hotel premises. The office part is a 50% joint venture with Trigranit. In the beginning of 2006, Trigranit has sold its share in the joint venture to the Group which sold it subsequently to the Endurance Real Estate Fund for Central Europe at the fair value determined by DTZ.

11. FINANCIAL ASSETS This line mainly includes the non eliminated portions of the equity loans granted to joint ventures for EUR 4.4 million (EUR 2.5 million in 2005) and the investment in the Endurance Real Estate Fund for Central Europe

F-29 (the “fund”) amounting to EUR 14.2 million (EUR 10.5 million in 2005). This fund investing in office investment properties has been created in 2005 and is managed by the Group (see note 26). In conformity with IAS 39, this investment is accounted for at its fair value with variations going through the income statement. The unrealised gain recorded for the first time in 2006 amounts EUR 0.7 million.

In December 2006, a new sub-fund compartment specializing in residential properties has been created and Orco has also subscribed to EUR 15.0 million out of which EUR 0.4 million has been called as at 31 December 2006. The fund prepares consolidated financial statements as at 30 September each year and interim consolidated financial statements as at 31 March.

12. INVENTORIES

December December 2006 2005 Opening balance ...... 55,637 31,778 Acquisition of Viterra ...... 98,067 — Transfer with investment property ...... 55,808 3,023 Net impairments ...... 2,563 (1,891) Other variations ...... 36,808 22,727 Total ...... 248,884 55,637

All the transfers relate to plots and buildings transferred from investment properties and particularly for the Zlota Tower in Warsaw (EUR 23.1 million), Fenrbelliner Hofe in Berlin (EUR 6.2 million) and Koliba in Bratislava (EUR 6,1 million).

On the basis of a new DTZ valuation, the impairments recognized in December 2005 on a development in Hungary (EUR 1.7 million) and on a development in the Czech Republic (EUR 0.9 million) have been reversed in 2006.

As part of the inventories, more than 50% is expected to be recovered after more than 12 months.

13. TRADE RECEIVABLES

December December 2006 2005 Trade receivables gross ...... 61,419 11,372 Provision for impairment of receivables ...... (8,817) (5,819) Total ...... 52,602 5,553

The first consolidation of Viterra contributes for EUR 35.9 million to the increase in trade receivables, the rest of the growth is a reflection of the increased sales of the Group.

In 2006, the Group (mainly development activities in the Czech Republic and in Germany) has recorded a reversal of impairments on trade receivables of EUR 2.0 million (2005: EUR 3.1 million).

14. CASH AND CASH EQUIVALENTS As at December 2006, the cash and cash equivalents consist of short term deposits for EUR 1.9 million (EUR 12.8 million in 2005), cash in bank for EUR 96.2 million (EUR 36.1 million in 2005) and cash in hand for EUR 0.2 million (EUR 0.1 million in 2005).

15. HELD FOR SALE ACTIVITIES As at 31 December 2006, held for sale activities consist of the brewing and beer distribution activities of the Stein Brewery acquired by the Group end of December 2006. The Group intends to sell these activities and transform this industrial site into new office, residential and probably hotel buildings.

In December 2005, Atronyx kft holding the Orco Business Park building in Budapest, classified as held for sale in 2004, was sold to the Endurance Fund for a total price of EUR 12.4 million generating a non taxable profit of EUR 2.4 million.

F-30 16. MINORITY INTERESTS’ TRANSACTIONS • 2006

The Group acquired during the first quarter of 2006 the last minority interests present in the capital of Orco Hotel Group increasing its shareholding to 100%. This acquisition has been paid through a cash transaction amounting to EUR 0.3 million.

The capital holding structure of MaMaison Residences has gone through two opposite movements during 2006 : • Two buildings in Prague (Americka Park and Masaryk) have been sold by MaMaison Résidences to Orco Property Group SA through a share deal. The holding of the Group in those buildings has then increased from 71% to 100%. • Capital increases in July and August 2006 for a total number of shares of 8,458 for a total amount of EUR 8.5 million. Since the group only subscribed to 52% of this capital increase, it has been diluted in the capital from 71% to 66%. • Exercise by EBRD of a put option for their share in the capital at mid December 2006 (approximately 34%) at a price of EUR 17.1 million. This amount has been paid in cash in January 2007. As a result of this last transaction no minority interests are shown on the Group consolidated balance sheet as at December 2006 but it has not been taken into account for determining the Group share in MaMaison Résidences 2006 last Quarter net results.

Finally, while holding 100% of the capital of Orco Germany as at December 2005, the Group has been diluted to 80% as at December 2006. This dilution results from the following movements : • In January and March 2006, 35% of Orco Germany has been sold to the Group’s Management. • Capital increases in June, August and November increasing the number of shares from 2.8 million to 34.6 million out of which the Group subscribed 82% for EUR 87.0 million. • The Group sold 0.9 million shares on the Market. • 2005 The Group acquired during the second quarter of 2005, most of the minority interests present in the capital of Orco Hotel Group increasing its shareholding to 99%. This acquisition has been paid through the issue of 32,307 new shares of Orco Property Group S.A. for an amount of EUR 1.4 million.

In the first quarter of 2005, the Group has been diluted in the capital of MaMaison Résidences through a capital increase in cash of EUR 4.4 million of MaMaison Résidences S.A. subscribed by the minority shareholder.

F-31 17. BORROWINGS 17.1 Borrowings maturity The following tables describe the maturity of the Group’s borrowings. For most floating rate borrowings, the Group takes on exposure the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interests costs may increase or decrease as a result of such changes.

In 2006, the non-current bonds and financial debts amount to EUR 572.5 million. The difference between the carrying amount and EUR 556.0 million as mentionned in the following table relates essentially to the call options linked to the convertible bond in Hvar shares described in the note 17.3 whose fair value as at December 2006 amounts to EUR 13.8 million (EUR 0.8 million in 2005) and to right linked to the bond with repayable subscription warrants (OBSAR) described in note 17.4 whose fair value as at December 2006 amounts to EUR 2.5 million (EUR 5.1 million in 2005).

At 31 December 2006 Less than one year 1 to 5 years More than 5 years Total Non-current Bonds ...... — 56,176 184,679 240,855 Convertible bonds ...... — 5,768 120,208 125,976 Exchangeable bonds ...... — — 23,172 23,172 Bonds ...... — 50,408 41,299 91,707 Financial debts ...... — 204,419 110,686 315,105 Bank loans ...... — 203,644 107,568 311212 Fixed rate ...... — 39,143 24,617 63,760 Variable rate ...... — 164,501 82,951 247,452 Other non-current borrowings ...... — 775 1,961 2,736 Finance lease liabilities ...... — — 1,157 1,157 Total ...... — 260,595 295,365 555,960 Current Bonds and financial debts Bonds ...... 4,210 — — 4,210 Bank loan fixed rate ...... 23,615 — — 23,615 Bank loan variable rate ...... 66,077 — — 66,077 Others borrowings ...... 1,384 — — 1,384 Finance lease liabilities ...... 84 — — 84 Total ...... 95,370 — — 95,370

At 31 December 2005 Less than one year 1 to 5 years More than 5 years Total Non-current Bonds ...... — 39,378 44,986 84,364 Convertible bonds ...... — — 21,878 21,878 Exchangeable bonds ...... — — 23,108 23,108 Bonds ...... — 39,378 — 39,378 Financial debts ...... — 83,774 92,157 175,931 Bank loans ...... — 78,236 91,201 169,437 Fixed rate ...... — 14,329 29,534 43,863 Variable rate ...... — 63,907 61,667 125,574 Other non-current borrowings ...... — 5,538 — 5,538 Finance lease liabilities ...... — — 956 956 Total ...... — 123,152 137,143 260,295 Current Bonds and financial debts Bonds ...... 16,700 — — 16,700 Bank loan fixed rate ...... 6,439 — — 6,439 Bank loan variable rate ...... 9,070 — — 9,070 Others borrowings ...... 3,491 — — 3,491 Total ...... 35,700 — — 35,700

Bank loans include amounts secured by a mortgage on properties and/or a pledge on the shares of the companies benefiting from the loan to the value of EUR 400.9 million (EUR 177 million as at 31 December 2005). In general Orco Property Group S.A. has granted its guarantee in favour of the bank for each of the subsidiaries.

F-32 The guarantees granted to financial institutions remain fully valid until complete reimbursement of credits. No partial waiver on pledge or mortgage has been scheduled.

The carrying amount of the Group’s borrowings is denominated in the following currencies:

December December 2006 2005 EUR...... 502,155 253,368 CZK...... 113,113 31,258 PLN...... 7,341 1,083 SKK...... 15,646 2,246 HRK...... 13,075 8,040 Total ...... 651,330 295,995

17.2 Convertible bonds 2004-2011 Within the authorized capital, the Board of Directors decided on September 21, 2004 to issue a convertible bond without preferential subscription rights with the following terms:

Nominal EUR 32,450,641.20 Number of bonds 1,001,563 Issue price at par value, EUR 32.40 Redemption price if not converted 111.76% of par at EUR 36.21, i.e. a gross yield-to- maturity of 6.80% Nominal interest rate 5.5% Conversion price EUR 32.40 Conversion ratio One new share for one bond Issuance date 22 September 2004 Conversion at the discretion of bondholder From the issuance date until 15 December 2011. The final redemption date is on 24 December 2011. The issuer’s call rights As of 1 April 2006, i.e. the first day of the 19th month following the issuance date, should Orco Property Group share be at or above the price of EUR 40.50, bondholders who have not converted after a 30-days call notification period will receive, in addition to redemption of principal and interest accrued, a redemption premium allowing them to achieve a gross yield-to-maturity of 8%.

As at December 2006, 742,549 (290,613 as at December 2005) rights of conversion have been exercised leading to the creation of same amount of new shares.

The funds raised with this convertible bond have been at issuance divided into a long-term debt component and an equity component. Furthermore, the costs linked to the issuance of the bond are deducted from the funds raised. The equity component, classified in other reserves, represents the market value on the date of issue of the call options embedded in the convertible bond. The difference between the debt component and the par value of the bond will be taken in profit and loss accounts using the effective interest method.

Balance at 31 December 2004 ...... 30,579 Interest accumulated in 2005 ...... 280 Conversion rights exercised ...... (8,981) Balance at 31 December 2005 ...... 21,878 Interest accumulated during the period ...... 245 Own bonds ...... (2,253) Conversion rights exercised ...... (14,102) Balance at 31 December 2006 ...... 5,768

F-33 17.3 Exchangeable bonds in Suncani Hvar shares The acquisition of Suncani Hvar dd has been financed by a private placement of an exchangeable bond issued by the Company under the following terms:

Nominal EUR 24,169,193.39 Issue price EUR 26.03 (KN 190) Issue date 30 June 2005 Nominal interest rate 5.5 % Exchange at the discretion of bondholder between 1 July 2010 and 11 June 2012 in Suncani Hvar dd share, one share for one bond. Repayment date the non exchanged bonds will be reimbursed in cash on 30 June 2012 ISIN XS 0223 58 64 20 Listing Luxembourg stock exchange as from November 2005

As at 31 December 2006, no bond had been exchanged.

The funds raised with this exchangeable bond have been at issuance divided into a long-term debt component and a long term derivative component. Furthermore, the costs linked to the issuance of the bond are deducted from the funds raised. The derivative component of EUR 13.6 million (EUR 0.8 million in 2005), classified in other current liabilities, represents the market value of the call options embedded in the bond. This derivative is revalued at its market value at each closing through the income statement. The difference between the debt component and the par value of the bond is taken in profit and loss accounts using the effective interest method.

Debt component on issue ...... 23,048 Interest accumulated in 2005 ...... 60 Balance at 31 December 2005 ...... 23,108 Interest accumulated during the period ...... 144 Own bonds ...... (80) Balance at 31 December 2006 ...... 23,172

As at 29 December 2006, the market price of Hvar dd shares on the Zagreb stock exchange was HRK 201.32.

17.4 Bonds with Repayable Subscription Warrants (“OBSAR”)

Bonds

Nominal EUR 50,272,605.30 Number of bonds 73,273 Nominal value per bond EUR 686,10 Issue price per bond EUR 682.38 Redemption 18 November 2010 Normal Redemption at par, EUR 686,10 per bond, if the average price quoted over the ten stock exchange trading sessions preceding the Redemption Date, of the products of the closing price of the Orco Property Group S.A. share on the Euronext Paris S.A. Eurolist market and of the Exercise Parity applicable during the said stock exchange sessions is equal to or greater than the Exercise Price of the Redeemable Share Subscription Warrants. at 120% of par, that is EUR 823.32 per Bond, if the average price quoted over the ten stock exchange trading sessions preceding the Redemption Date, of the products of the closing price of the Orco Property Group share on the Euronext Paris S.A. Eurolist market and of the Exercise Parity applicable during the said stock exchange sessions is less than the Exercise Price of the Redeemable Share Subscription warrants.

F-34 Early Redemption Option for the Group to redeem all bonds at 120% of the par value on any Interest Payment Date subject to one month’s notice to bearers before the early redemption date. Nominal interest rate 4.5% ISIN FR0010249599 Listing Euronext Warrants Number of warrants 1,099,095 (corresponding to 15 warrants/issued bond) Exercise ratio one warrant gives the right to one share Exercise price EUR 68.61 Exercise period 18 November 2005 until 18 November 2012 Early repayment From 19 November 2007 the issuer may reimburse the warrants at EUR 0.01 if the average share price over the last 10 days preceeding 19 November 2007 is higher than EUR 96.05. ISIN LU0234878881 Listing Euronext The funds raised with this bond have been at issuance divided into a long-term debt component, an equity component and a derivative component. Furthermore, the costs linked to the issuance of the bond are deducted from the funds raised. The equity component (EUR 3.7 million reduced by EUR 1.1 million deferred taxes), classified in other reserves, represents the market value on the date of issue of the subscription warrants embedded in the bond. The derivative component amounting to EUR 2.5 million (EUR 5.3 million in 2005), classified in non-current financial debts, represents the market value of the redemption premium granted to the bondholder if the average market price of Orco shares do not reach a certain level before the repayment date. This derivative is revalued at its market value at each closing through the income statement. The difference between the debt component and the par value of the bond is taken in profit and loss accounts using the effective interest method. Debt component on issue ...... 39,173 Interest accumulated in 2005 ...... 205 Balance at 31 December 2005 ...... 39,378 Interest accumulated during the period ...... 1,921 Balance at 31 December 2006 ...... 41,299

17.5 Convertible bond 2006-2013 Within the authorized capital, the Board of Directors decided on May 15, 2006 to issue a convertible bond without preferential subscription rights with the following terms: Nominal EUR 149,999,928 Number of bonds 1,086,956 Nominal value EUR 138.00 Issue price at par value, EUR 138.00 Redemption price if not converted 138.62% of par at EUR 191.29; i.e. a gross yield-to-maturity of 5.65% Nominal interest rate 1.0% Listing Euronext Paris ISIN FR0010333302 Normal Redemption the non converted bonds will be reimbursed in cash on 31 May 2013. Conversion ratio One new share for one bond Issuance date 1 June 2006 Early Redemption Subject to the one month’s notice to bearers before the early redemption date, the Company may redeem all bonds from 1 July 2008 under the condition that the share price of Orco Property Group exceeds 130% of the issue price during 30 consecutive days after 1 June 2008. The bondholders who did not convert within 30 days will, on top of the par and accrued interest, receive a reimbursement premium giving them a 5.65% IRR

F-35 As at 31 December 2006, no bond had been converted.

Debt component on issue ...... 118,093 Interest accumulated during the period ...... 2,375 Own bonds ...... (260) Balance at 31 December 2006 ...... 120,208

As disclosed above, the terms of the issue include a redemption price to be paid by the Company if the option is not converted. Since Management considers the risk of non conversion as remote as at 31 December 2006, the contingent premium granted to bondholders in that occurence is not accrued.

17.6 CZK 1.4 billion floating rate bond The Board of Directors decided on February 2, 2006 to issue a convertible bond without preferential subscription rights with the following terms :

Nominal CZK 1,400,000,000 Number of bonds 140 Nominal value CZK 10,000,000 Issue price CZK 10,000,000 Nominal interest rate 6M Pribor + 2.20% (4.75%) Listing Prague Stock Exchange ISIN CZ0000000195 Issuance date 03 February 2006 Final redemption date 03 February 2011

Debt component on issue ...... 48,684 Interest accumulated in 2006 ...... 114 Exchange differences ...... 1,610 Balance at 31 December 2006 ...... 50,408

It has to be mentioned that the prospectus in relation to the Czech Bond, which was approved on 26 January 2006 by the Securities Commission of the Czech Republic (the “Czech Bond Prospectus”) there were 2 Czech Rating Agencies (the “CRA”) ratings outstanding at the date of issue of the Czech Bonds, “czP-2” for the long term international CRA rating and “czA-” for the long term local CRA rating. Furthermore the Czech Bond Prospectus states that if CRA withdraws the above-mentioned ratings, the Company shall ask a well-known rating agency in the Czech Republic to issue a rating within 6 months. If CRA or any other rating agency issues a long-term international CRA rating below “investment grade i.e. Baa-” or a long term local CRA rating below “investment grade i.e. czBaa-”, any investor in the Czech Bonds may call for the reimbursement of its bonds. The reimbursement would then be due on the last business day of the month following the month of the reimbursement request. On the Company’s initiative, Moody’s International has issued two ratings: “B2” and “Baa3cz”. Since its complete integration within Moody’s, CRA cannot issue international ratings any more, but merely local ratings. However, the scale established by CRA in the Czech Bond Prospectus, setting the minimum threshold to “investment grade” for international rating does not fit with the Moody’s “investment grade” level. Hence, there is a comparability technical default in relation to the Czech Bonds.

F-36 17.7 Movement of Non-current bonds The derivative instruments are not included in this note (see note 19).

In 2005, the derivative instruments amounts to EUR 7.1 million and in December 2006 to 16.3 million.

December December Non-current Bonds 2006 2005 Opening ...... 84,364 30,829 Issue of new bonds ...... 166,777 62,221 Interest accumulated during the period ...... 4,798 545 Repayments of bonds ...... (14,102) (8,981) Transfer ...... — (250) Translation differences ...... 1,610 — Own bonds ...... (2,593) — Total ...... 240,855 84,364

17.8 Net interest expenses

December December 2006 2005 Interest income ...... 2,393 1,125 Interest expenses ...... (18,133) (8,087) Net interest expenses ...... (15,740) (6,962)

17.9 Average effective interest rates

December 2006 EUR CZK SKK PLN HRK Bonds ...... 5.61% 5.27% — — — Bank borrowings ...... 5.04% 4.45% 5.83% 5.49% 4.75%

December 2005 EUR CZK SKK PLN HRK Bonds ...... 6.33% — — — — Bank borrowings ...... 5.48% 4.68% 4.42% 6.83% 5.40%

17.10 Undrawn credit facilities

December December 2006 2005 Expiring within one year ...... 16,003 1,065 Expiring after one year ...... 59,154 3,835 Total ...... 75,157 4,900

17.11 Minimum lease payments

December December 2006 2005 More than 5 years ...... 4,462 4,032 Future finance charges on finance leases ...... (3,305) (3,076) Present value of finance lease liabilities ...... 1,157 956

18. PROVISIONS In the non-current liabilities, the amount of provisions has increased from EUR 1.0 million as at December 2005 to EUR 11.8 million in 2006. This evolution is mainly a consequence of the first consolidation of Viterra with a contribution amounting to EUR 11.0 million. Out of these provisions, some EUR 10.0 million represent the book reserves for retirement benefit obligations evaluated in respect of the Group accounting principles.

F-37 Retirement benefit obligation:

December 2006 Present value of unfunded obligations ...... 9,237 Unrecognised actuarial gains ...... 723 Liabilities in the balance sheet ...... 9,960

The movement in the defined obligation over the year is as follows:

December 2006 Scope variation ...... 8,782 Current service cost ...... 78 Interest cost ...... 196 Actuarial gains ...... 441 Benefits paid ...... (170) Transfer amounts ...... (90) End of year ...... 9,237

The principal actuarial assumptions used were as follows:

December 2006 Discount rate ...... 4.25% Future salary increases ...... 2.75% Future pension increases ...... 1.75%

19. OTHER FINANCIAL RESULTS

2006 2005 Foreign exchange result ...... (3,624) 1,355 Fair value of derivative instruments ...... 6,650 1,052 Fair value of other financial assets ...... 2,260 — Other ...... (870) 4 Other financial results ...... 4,416 2,411

The fair value of derivative instruments essentially relates to movements in fair value of derivative instruments linked to bonds issued by the Group end of 2005 and in the first half of 2006 (see note 17) and of the subscription rights in Hvar acquired in 2005 as part of the acquisition of Hvar by the Group.

The fair value of other financial assets essentially relates to financial assets at fair value through profit and loss (investment in Endurance Fund compartments) and to short term trading instruments within the treasury management.

F-38 20. INCOME TAXES Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes of one entity relate to the same fiscal authority. All deferred taxes are assumed to be recoverable after more than 12 months.

Change in December SPV Scope income Change in Translation December 2004* acquisition variation statement equity differences* 2005* Intangible assets ...... 5 0 0 0 0 0 5 Tangible assets ...... (13,081) (6,187) (6,175) (15,621) 0 (1,103) (42,467) Financial assets ...... (90) 0 0 0 0 0 (90) Inventories ...... (1,367) (109) 0 723 0 (33) (786) Current assets ...... 1,012 0 0 (1,013) 0 20 19 Provisions ...... 488 0 0 (415) 0 13 86 Long term debts ...... (369) 0 0 (81) (1,104) 1 (1,553) Recognized loss carry forward ...... 1,611 741 0 1,382 0 3 3,737 Total Deferred taxes ...... (11,791) (5,555) (6,475) (15,025) (1,104) (1,099) (41,049) Deferred tax assets ...... 1,575 3,469 Deferred tax liabilities ...... (13,366) (44,518)

In 2005, the Change in equity generated on long term debts comes from the deferred income taxes on the share subscription rights embedded in the OBSAR bonds which have been immediately recognised in equity.

Change in December SPV Scope Income Change in Translation December 2005* acquisition variation statement equity differences 2006 Intangible assets ...... 5 0 0 327 0 (6) 326 Tangible assets ...... (42,467) (5,208) (2,497) (25,908) (192) (2,657) (78,928) Financial assets ...... (90) 0 0 (241) 0 6 (325) Inventories ...... (786) 0 (2,728) (797) 0 (165) (4,476) Current assets ...... 19 0 43 (98) 0 1 (35) Provisions ...... 86 0 44 (39) 0 (2) 89 Long term debts ...... (1,553) 0 0 0 (7,580) 0 (9,133) Recognized loss carry forward ...... 3,737 0 1,763 4,560 0 241 10,301 Total Deferred taxes ...... (41,049) (5,208) (3,375) (22,196) (7,772) (2,582) (82,182) Deferred tax assets ...... 3,469 6,566 Deferred tax liabilities ...... (44,518) (88,748) * Restated (see note 2.1)

The income taxes recognised in the income statement amount to EUR 25.1 million (EUR 16.1 million in 2005) among which EUR 2.9 million (EUR 1.1 million in 2005) of current income taxes and EUR 22.2 million (EUR 15.0 million in 2005) deferred income taxes.

SPV acquisition represent the deferred income taxes recognized on the acquisition of one asset companies. These acquisitions are not considered as business combinations under IFRS. The deferred tax assets and liabilities on scope variation represent the deferred tax assets and liabilities on the acquisition of Viterra Development GmbH (see note 6).

Change in Equity mainly represent the deferred income taxes recognized on convertible bonds issued in June 2006 (see note 17.5), slightly offset by the reversal of deferred taxes on the partial conversion of bonds issued in 2004. The remainder on Tangible assets relates to the revaluation of former Orco head offices in Prague, transferred from own occupied to investment property after relocation of headquarters in Luxembourg Plaza.

F-39 21. EARNINGS PER SHARE

December December 2006 2005 At the beginning of the period ...... 6,792,578 4,620,898 Shares issued ...... 6,792,578 4,622,824 Treasury shares ...... — (1,926) Weighted average movements ...... 893,090 1,272,684 Issue of new shares for cash ...... 920,019 1,253,592 Issue of new shares in acquisitions ...... — 19,296 Treasury shares ...... (26,929) (203) Weighted average outstanding shares for the purpose of calculating the basic earnings per share ...... 7,685,668 5,893,582 Dilutive potential ordinary shares ...... 1,946,500 1,299,622 Share subscription rights BSA ...... 168,052 392,068 Share subscription rights BSAR ...... 254,650 — Convertible bond 04-11 ...... 259,014 710,950 Convertible bond 06-13 ...... 634,058 — Employee stock options ...... 80,726 30,664 PACEO ...... 550,000 165,940 Weighted average outstanding shares for the purpose of calculating the diluted earnings per share ...... 9,632,168 7,193,204 Net profit attributable to the Group ...... 96,699 54,523 Effect of assumed conversions / exercises ...... 5,848 1,832 Share subscription rights BSA ...... 177 346 Share subscription rights BSAR ...... 798 — Convertible bond 04-11 ...... 501 1,123 Convertible bond 06-13 ...... 2,308 — PACEO ...... 2,063 364 Effect of assumed conversions of potential ordinary shares in subsidiaries ...... (5,154) 0 Orco Germany Warrants ...... (5,154) — Hvar warrants ...... — — Net profit attributable to the Group after assumed conversions / exercises ...... 97,393 56,355 Basic earnings in EUR par share ...... 12.58 9.25 Diluted earnings in EUR par share ...... 10.11 7.83

Basic earnings per share is calculated by dividing the profit attributable to the Group by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held as treasury shares.

Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

In February 2006 the Board of Directors of Orco Germany decided to allocate one warrant to each 350,000 existing share at that time. Three warrants giving the right to subscribe to one new share at the conditions detailled hereafter. After the Extraordinary General Assembly of Orco Germany’s shareholders voted the division by 8 of the existing shares and the attached warrants. As a result the 2,800,000 warrants have an exercise price of EUR 4,63 a share and can be exercised up to February 2009. 1,820,000 warrants were allocated to the Company. As at December 2006, no warrants nave been exercised.

F-40 22. EQUITY 22.1 Share capital

Number of Share shares Capital premium Balance at 31 December 2004 ...... 4,622,824 18,954 46,089 Exercise of employee stock options ...... 51,000 209 1,408 Exercise of Share subscription rights ...... 620,120 2,542 11,720 Conversion of convertible bonds ...... 290,613 1,192 8,224 Share private placement ...... 300,000 1,230 11,970 Exercise of PACEOs ...... 834,060 3,420 36,885 Acquisition of minority interests ...... 32,307 132 1,243 Dividend paid in shares ...... 41,654 171 1,425 Balance at 31 December 2005 ...... 6,792,578 27,850 118,964 Exercise of employee stock options ...... 99,500 408 3,075 Exercise of Share subscription rights ...... 388,281 1,592 7,339 Conversion of convertible bonds ...... 451,936 1,853 12,790 Exercise of PACEOs 1 ...... 165,940 680 10,199 Exercise of PACEOs 2 ...... 450,000 1,845 41,957 Dividend paid in shares ...... 41,411 170 3,229 Balance at 31 December 2006 ...... 8,389,646 34,398 197,552

The Extraordinary Shareholders’ Meeting of 14 June 2006 renewed the authorization granted by shareholders to the Board of Directors on May 18, 2000, in accordance with article 32-3 (5) of Luxembourg corporate law and in addition enhanced the limit of the authorized capital. The Board of Directors was granted full powers to proceed with the capital increases within the revised authorized capital of EUR 100,000,000, under the terms and conditions it will set, with the option of eliminating or limiting the shareholders’ preferential subscription rights as to the issuance of new shares within the authorized capital.

The Board of Directors has been authorized and empowered to carry out capital increases, in a single operation or in successive tranches, through the issuance of new shares paid up in cash, capital contributions in-kind, transformation of trade receivables, the conversion of convertible bonds into shares or, upon approval of the Annual General Shareholders’ Meeting, through the capitalization of earnings or reserves, as well as to set the time and place for the launching of one or a succession of issues, the issuance price, terms and conditions of subscription and payment of new shares. This authorization is valid for a five-year period ending on 14 June 2011.

A total of EUR 34,397,548.60 has been used to date under this authorization. As such, the Board of Directors still has a potential of EUR 65,602,451.40 at its disposal. Considering that all new shares are issued at the par value price of EUR 4.10, a potential total of 16,000,598 new shares may still be created.

22.2 Share subscription rights The Board of Directors decided, in its meeting on 5 November 2003, to initiate the issue of rights allowing their bearers to subscribe to new shares to be issued by the Company, shareholders having waived their preferential subscription right on the basis of new shares likely to be created following right exercise.

Rights have been granted free of charge to all the shareholders who composed the capital of the Company on the day of issue. One share subscription right has been granted free of charge for one Orco Property Group share held at the end of day 14 November 2003.

Three share subscription rights allow to subscribe to one new share to be issued at the unit price of EUR 23. The exercise period spreads from 17 November 2003 to 16 November 2006 included. At issuance, the number of shares created this way amounts to 1,013,191. A number of 11,361 rights was not used and is definitively lost.

22.3 Convertible bonds See note 17.2

F-41 22.4 Repayable Subscription Warrants See note 17.4

22.5 Employee stock options A new stock option plan was granted to employees on 3 March 2006 under the following conditions:

Exercise price: EUR 75.6 per share Exercise period: from 3 March 2007 until 3 March 2012 Total number of options: 350,000

In accordance with IFRS 2 Share-based payments, the total theoretical and non cash cost of EUR 9.1 million has been estimated and is amortized in the income statement under the Employee benefit caption over the one year vesting period. 2006 amortization amounts to EUR 7.6 million (EUR 1.4 million in 2005). This fair value was determined using the Black-Scholes valuation model. The significant input into the model were share price of EUR 72.15 at grant date, exercise price as stated above, risk-free interest rate EURIBOR.

On 2 May 2005, a stock option plan was granted to employees under the following conditions:

Exercise price EUR 35.0 per share Exercise period from 2 May 2006 until 30 April 2010 Total number of options 150,000

During the year ended 31 December 2006, 99,500 options of the 2005 plan were exercised (2005: 33,000).

As at 31 December 2006, these employee share options have been taken into account in the diluted earnings per share calculation because their exercise price as defined by IAS 33 is lower than the average market price over the period.

Movements in the number of share options:

2006 2005 Average exercice Number of Average exercice Number of price in EUR options price in EUR options Outstanding at the beginning of the year ...... 35.00 117,000 25.69 18,000 Granted ...... 75.60 350,000 35.00 150,000 Exercised ...... 35.00 (99,500) 31.72 (51,000) Outstanding at the end of the year ...... 73.67 367,500 35.00 117,000

In March 2006, the Board of Directors of the company decided to set up a stock option plan on a maximum of 350,000 Suncani Hvar shares. This plan has not been granted yet and as such, is not recorded in the consolidated financial statements.

22.6 Dividends per share The dividends paid in 2006 and 2005 were EUR 6.0 million (EUR 0.80 per share) and EUR 3.5 million (EUR 0.58 per share) respectively.

The Board of Directors has decided to propose at the Annual General Meeting of Orco Property Group S.A. the payment of EUR 1.00 per share in respect of 2006. As an event after the balance sheet date, these financial statements do not reflect this dividend proposal that will be accounted for in 2007 as an appropriation of retained earnings.

23. PACEO On 31 March 2005, Orco Property Group S.A. and Société Générale in Paris (“SG”) have arranged a Step-up Equity Subscription (PACEO: Programme d’Augmentation de Capital par Exercices d’Options). The PACEO has been filed with and approved by the AMF (Autorité des Marches Financiers) with the visa No. 05-201. It allows Orco Property Group S.A. to issue a maximum of 1 million new shares subscribed on the

F-42 demand of Orco Property Group S.A. by SG. All subscriptions will be at an issue price of 95% of the share price at the time of execution. As at 31 December 2006, the Company has issued 1 million new shares for a total amount of EUR 51.2 million.

On 12 April 2006, Orco Property Group S.A. and Société Générale in Paris (“SG”) have arranged a new Step-up Equity Subscription, It allows Orco Property Group S.A. to issue a maximum of 1 million new shares subscribed on the demand of Orco Property Group S.A. by SG. All subscriptions will be at an issue price of 96% of the share price at the time of execution. As at 31 December 2006, the Company has issued 450,000 new shares for a total amount of EUR 43.8 million.

24. CONTINGENCIES The Group has given guarantees in the ordinary course of business (see note 17).

25. CAPITAL AND OTHER COMMITMENTS • Capital commitments • Orco Property Group S.A. entered into a Subscription Agreement with the Endurance Real Estate Fund for Central Europe. The Group subscribed to the two existing sub-funds. As at December 2006, the full amount subscribed to the office sub-fund has been called and on the residential sub-fund the balance still to be called amounts to EUR 14.7 million out of EUR 15 million subscribed. • The Group entered into advanced negociations for the acquisition of different assets in :

• Czech Republic Hotel and residential development plots of land for a total of EUR 28.9 million. • Hungary Office development for EUR 6.8 million. • German Development plot in the Centre of Berlin for EUR 75 million. • Poland Office development plots for EUR 50 million. • Russia Logistic park in operations near Moscow for USD 85 million. • Slovakia Residential and retail developments for EUR 38.4 million.

• As a developer of buildings and residential properties, the Group is committed to finalize the construction of properties in different countries. The commitments for the projects started as at December 2006 amount to EUR 499.4 million (EUR 75.7 million in 2005). This does not take into account the potential investments in future projects on land bank like Bubny in Prague, Wertheim in Berlin or hotels to be refurbished in Hvar.

• Other commitments

In a decision taken on March 3rd, 2006, the board of directors granted to some members of the management of the group a termination indemnity payment for a total amount of EUR 34 million. This indemnity would become payable by the company to the relevant management member only in case of change of control of the company and in case the relationship between the company and the management member is terminated by either party within a period of 6 months after the change of control.

26. RELATED PARTY TRANSACTIONS • Transactions with key management personnel

The global consideration given as short term employee benefit to the members of the Executive Committee amounted to EUR 2.6 million as at December 2006 (EUR 1.7 million as at 31 December 2005).

The stock options granted to members of the Executive Committee are detailed in note 22.5. Among the 350,000 new stock options, 339,000 have been granted to members of the Executive Committee. In addition the Group sold, in the first quarter of 2006, 980,000 shares (after adjustment for share split by 8} of Orco Germany S.A., a subsidiary of the Company, to members of the Executive Committee for a global price of EUR 1.2 million. This transaction resulted in the recognition of a gain amounting to EUR 0.4 million in the Group consolidated accounts.

F-43 A loan amounting to EUR 3.1 million bearing an interest of 10% with a renewable term of one year has been granted in 2006 to a member of the Executive Committee. At the the date of publication of this report this loan and accrued interest have been fully reimbursed. As at the 31 December 2006, the group also has a receivable on Orco Holding amounting to EUR 0.3 million. The Company did not grant any other advance to members of the Executive Committee and does not finance any pension plan in their favour.

During the first six months of 2006, three houses built by the Group in the Czech Republic have been sold to key management personnel for a global amount of Eur 2.4 million. Those transactions were carried out at arms’ length. • Transactions with Directors

Board Members receive a EUR 1000 fee (EUR 500 in 2005) for each board they attend. The total amount of attendence fees allocated amounted to EUR 27 thousand (2005: EUR 14 thousand). The Company did not grant any advance to Board Members and does not finance any pension plan in their favour.

For technical reasons the Group has held for a short period in 2006 a company whose activities have no link to the Group activities. This holding company was subsequently sold to a Board Member at arms’ length. • Transactions with the Endurance Real Estate Fund

Orco is the sponsor and the fund manager of a Luxembourg regulated closed end umbrella investment fund dedicated to qualified investors, the Endurance Real Estate Fund. This fund has opted for the form of a “Fonds Commun de Placement”. The Group is the shareholder of the management company of the Fund and has also invested in the two sub-fund’s existing as at December 2006 (see note 11). As at December 2006, the Group’s subscription to the office sub-fund represents 9% of the total subscription. The subscription period for the residential sub-fund is not closed yet; after this period the Group’s share in this compartment should be lower than 15%.

Orco’s remuneration amounting to EUR 4.5 million in 2006 (2005: EUR 0.4 million) is linked to: • the placement fee of a maximum of 2.5% of the committed funds of the investors • the management fee of 2% per year calculated on the called subscriptions • acquisition fee of 1% calculated on the value of the assets bought or sold by the fund.

The investment process foresees that any investment proposed by the fund manager has first to be approved by the investment committee. This committee is made of a representative of each investor.

27. EVENTS AFTER BALANCE SHEET DATE OBSAR (Bonds with warrants attached issue) Lehman Brothers International (Europe) subscribed to EUR 175 million of Bonds with Warrants that will be issued by ORCO Property Group S.A. Lehman Brothers International (Europe) privately placed some of these securities exclusively with qualified investors (in sense of Directive 2001/34/EC) on 7 March 2007. Lehman Brothers acted as sole book runner on this transaction. In this bond issue, ORCO was also advised by Europe Offering and LBP.

Sale of Hospitality ORCO is selling its hotel portfolio in Central Europe, with the notable exception of the trophy asset Pachtuv Palace and excluding the Suncani Hvar’s stake. ORCO is selling the buildings for EUR 174. million, meaning that this transaction will reduce the size of the portfolio accordingly but also the amount of the debts for around EUR 43 million. This portfolio also corresponds to a total sales contribution in 2006 of EUR 18 million and more than 300 employees.

The buyer is a Joint-Venture set up between an additional sub fund “ENDURANCE HOSPITALITY” that ORCO is managing with a target of EUR 250 million of equity and an institutional investor with whom head of terms has been signed. This new JV with Endurance fund will have the capacity to build a sizable hotel portfolio in Central and Eastern Europe, and will be among the largest investors in the region.

F-44 Moscow: ORCO finalizes its second acquisition in Russia for $85 Million ORCO is purchasing 80% of Molcom, a logistic centre 15 km of Moscow. The current management will keep 20% of the shareholding structure, ensuring the continuity of operating capacities. The project’s total area amounts to 104,000 sqm. This project also includes a 4ha land bank reserve which will ensure a potential future development pipeline in the dynamic logistic and light industrial sector of Russia.

GSG — Berlin On 20 March 2007 the Berlin Senate approved the sale of the Gewerbesiedlungs-Gesellschaft mbH (GSG), Berlin, to a joint-venture between ORCO and a fund managed by Morgan Stanley Real Estate. The sale is still subject to the approval of the Berlin Parliament and the merger control clearance.

Issuer’s call on the 2004 — 2011 : EUR 32 million Convertible Bond During the first quarter, ORCO used its call option on the EUR 32 million convertible bond. Before exercising its issuer call, 999,576 bonds were converted out of 1,001,563 convertible bonds. On 26 March 2007, ORCO reimbursed in cash 1,987 non-converted bonds. The convertible bonds issue 2004-2011 is consequently expired.

The share capital was thus fixed at EUR 35,496,459.30 — representing 8,657,673 shares.

28. LIST OF THE FULLY CONSOLIDATED SUBSIDIARIES

Company Country Currency Activity % shareholding 31.12.2006 31.12.2005 1. Sportovni, a.s...... Czech Republic CZK Development 100% 100% Americká 1, a.s...... Czech Republic CZK Leasing 100% 100% Americká 33, a.s...... Czech Republic CZK Leasing 100% 100% AMERICKÁ — ORCO, a.s...... Czech Republic CZK Leasing 100% 100% Americká Park, a.s...... Czech Republic CZK Extended stay 100% 70.65% And 70 Kft...... Hungary HUF Leasing 100% — Anglická 26, s.r.o...... Czech Republic CZK Leasing 100% 100% Ariah Kft ...... Hungary HUF Leasing 100% 100% Belgická — Na Kozacce, s.r.o...... Czech Republic CZK Leasing 100% 100% B.P. Servis, s.r.o...... Czech Republic CZK Leasing 100% 100% BRNO CENTRUM, s.r.o...... Czech Republic CZK Leasing 100% 100% Bubny, s.r.o. (previously Orco Omikron, s.r.o.) ...... Czech Republic CZK Development 100% — Budapest Real Estate S.a r.l...... Luxembourg EUR Holding — 100% BYTY PODKOVA, a.s...... Czech Republic CZK Development 75% 100% Central European Real Estate Management S.A...... Luxembourg EUR Holding 100% 100% CWM35Kft...... Hungary HUF Leasing 100% 100% Development Doupovska, s.r.o. (previously Orco Alfa s.r.o.) ...... Czech Republic CZK Development 100% 100% Diana Development Sp. z.o.o...... Poland PLN Extended stay 100% 70.65% Diezenhoferovy properties, s.r.o...... Czech Republic CZK Hotel 100% 99.57% Endurance Real Estate Assets Management Company S.A...... Luxembourg EUR Holding 100% 100% Etoile d’or S.A...... Luxembourg EUR Leasing 100% 100% IPB Real development a.s...... Czech Republic CZK Development 100% 100% IPB Real reality, a.s...... Czech Republic CZK Development 100% 100% IPB Real, a.s...... Czech Republic CZK Development 100% 100% IPB Real, s.r.o...... Czech Republic CZK Development 100% 100% Iskolaprojekt 68 Kft ...... Hungary HUF Development 100% 100% Izabella 62-64 Kft ...... Hungary HUF Development 100% 100% Janácˇkovo nábrˇezˇ 15, s.r.o...... Czech Republic CZK Hotel 100% 99.57% JIHOVÝCHODNI MEˇ STO, a.s...... Czech Republic CZK Development 100% 100% Londýnská 26, a.s...... Czech Republic CZK Leasing 100% 100%

F-45 Company Country Currency Activity % shareholding 31.12.2006 31.12.2005 Londýnská 39, s.r.o...... Czech Republic CZK Leasing 100% 100% Londýnská 41, s.r.o...... Czech Republic CZK Leasing 100% 100% MÁCHOVA — ORCO ,a.s...... Czech Republic CZK Leasing 100% 100% MaMaison Bratislava s.r.o...... Slovakia SKK Extended stay 100% 70.65% MaMaison Residences S.A...... Luxembourg EUR Extended stay 100% 70.65% MaMaison Slovakia s.r.o...... Slovakia SKK Extended stay 100% — Mánesova 28, a.s...... Czech Republic CZK Leasing 100% 100% Medec 35 Kft ...... Hungary HUF Leasing 100% 100% Medec 36 Kft ...... Hungary HUF Leasing 100% 100% Meder 36 Kft ...... Hungary HUF Leasing 100% 100% MMR Management, s.r.o...... Czech Republic CZK Extended stay 100% 70.65% MMR Russia S.A...... Luxembourg EUR Extended stay 100% 70.65% Nad Petruskou, s.r.o...... Czech Republic CZK Leasing 100% 100% NOVÉ MEDLÁNKY a.s...... Czech Republic CZK Development 100% 100% Oak Mill, a.s...... Czech Republic CZK Development 100% 50% Onset, a.s...... Czech Republic CZK Development 100% — Orco Adriatic d.o.o...... Croatia HRK Development 100% — Orco Alfa, s.r.o. (Company sold in 2006) . . . Slovakia SKK Development — 100% Orco Aparthotel S.A. (liquidated in 2006) . . Luxembourg EUR Extended stay — 70.65% Orco Budapest Rt...... Hungary HUF Development 100% 100% Orco Capitol S.A. (former Prague Real Estate 2 S.A.) ...... Luxembourg EUR Holding — 100% Orco Commercial Sp. z.o.o...... Poland PLN Development 100% 100% Orco Construction Sp. z.o.o...... Poland PLN Development 100% 100% Orco Croatia S.A...... Luxembourg EUR Hotel 100% 100% Orco Delta a.s...... Czech Republic CZK Development — 100% ORCO Development, s.r.o...... Slovakia SKK Development 100% 100% ORCO DEVELOPMENT, a.s...... Czech Republic CZK Development 100% 100% Orco Development Kft ...... Hungary HUF Development 100% 100% Orco Development Sp. z.o.o...... Poland PLN Development 100% 100% ORCO Enterprise Sp.z.o.o...... Poland PLN Development 100% — ORCO Estates, s.r.o...... Slovakia SKK Development 100% 100% ORCO ESTATE, s.r.o...... Czech Republic CZK Development 100% 100% Orco Financial Services s.r.o...... Czech Republic CZK Fin. Services 100% — Orco Hospitality Services Sp. z.o.o...... Poland PLN Hotel 100% 99.57% Orco Hotel Collection S.A...... Luxembourg EUR Hotel 100% 99.57% ORCO Hotel Development, a.s...... Czech Republic CZK Hotel 100% 99.57% Orco Hotel Development Sp. z o.o...... Poland PLN Hotel 100% 70.65% Orco Hotel Group S.A...... Luxembourg EUR Hotel 100% 99.57% Orco Hotel Management Kft ...... Hungary HUF Hotel 100% 99.57% ORCO HOTEL MANAGEMENT, s.r.o. . . . Czech Republic CZK Hotel 100% 99.57% Orco Hotel Project Sp. z.o.o...... Poland PLN Hotel 100% 99.57% ORCO Hotel Project, a.s...... Czech Republic CZK Hotel 100% 99.57% Orco Hotel Rt ...... Hungary HUF Hotel 100% 99.57% ORCO House, s.r.o...... Slovakia SKK Development 100% 100% Orco Hungary Kft ...... Hungary HUF Development 100% 100% ORCO INVESTMENT, a.s...... Czech Republic CZK Development 100% 100% Orco Investment Kft ...... Hungary HUF Development 100% 100% Orco Investment Sp. z.o.o...... Poland PLN Development 100% 100% Orco Poland Sp. z.o.o...... Poland PLN Development 100% 100% ORCO Praga, a.s...... Czech Republic CZK Development 100% — ORCO Prague, a.s...... Czech Republic CZK Leasing 100% 100% ORCO Project Management, s.r.o...... Czech Republic CZK Development 100% 100% Orco Project Szervezö Rt...... Hungary HUF Development 100% 100% Orco Project Sp. z.o.o...... Poland PLN Development 100% 100% ORCO Project, s.r.o...... Slovakia SKK Development 100% 100% ORCO Properly Management, a.s...... Czech Republic CZK Leasing 100% 100%

F-46 Company Country Currency Activity % shareholding 31.12.2006 31.12.2005 Orco Property Sp. z.o.o...... Poland PLN Development 100% 100% ORCO PROPERTY START, a.s...... Czech Republic CZK Hotel 100% 99.57% ORCO REALITY, a.s...... Czech Republic CZK Development 100% 100% ORCO Residence, s.r.o...... Slovakia SKK Development 100% 100% Orco Residential Sp. z.o.o...... Poland PLN Development 100% 100% ORCO Slovakia, s.r.o...... Slovakia SKK Development 100% 100% ORCO Strategy, a.s...... Czech Republic CZK Development 100% 100% Orco Strategy Sp. z.o.o...... Poland PLN Development 100% 100% Orco Trade s.r.o...... Czech Republic CZK Development — 100% Orco Vagyonkezelö Kft ...... Hungary HUF Leasing 100% 100% ORCO Vinohrady, a.s...... Czech Republic CZK Leasing 100% 100% Orco Warsaw Sp. z.o.o...... Poland PLN Hotel 100% 99.57% Ozrics Kft ...... Hungary HUF Leasing 100% 100% Pachtu˚v palác, s.r.o...... Czech Republic CZK Extended stay 100% 70.65% Pivovar Stein, a.s...... Slovakia SKK Development 100% — Re investment Trust, a.s. (will be renamed Bubenska 1, a.s.) ...... Czech Republic CZK Leasing 100% — Residence Belgická, s.r.o...... Czech Republic CZK Extended stay 100% 70.65% Residence Izabella Rt...... Hungary HUF Extended stay 100% 70.65% RESIDENCE MASARYK, a.s...... Czech Republic CZK Extended stay 100% 70.65% Révay 10 Kft ...... Hungary HUF Leasing 100% 100% Salinoko Ltd...... Cyprus CYP Holding 100% — Seattle, s.r.o...... Czech Republic CZK Development 100% 100% Stein, s.r.o...... Slovakia SKK held for sale 100% — Stein Beverages, a.s...... Slovakia SKK held for sale 100% — SUNCˇ ANI HVAR D.D. HVAR ...... Croatia HRK Hotel 47.74% 47.74% TQE Asset, a.s...... Czech Republic CZK Development 100% 100% Orco Paris S.à r.l...... France EUR Holding 100% 100% Viterra Development Polska Sp.z.o.o...... Poland PLN Development 100% — Yuli Kft ...... Hungary HUF Leasing 100% 100% Záhrˇebská 35, s.r.o...... Czech Republic CZK Leasing 100% 100% Orco Germany S.A...... Luxembourg EUR Leasing 80.37% 100% Hereafter follows the list of Orco Germany S.A. with its direct and indirect subsidiaries, showing the percentage of shareholding

An den Gärten GmbH ...... Germany EUR Development 100% — Cybernetyki Business Parl Sp.z.o.o...... Poland PLN Development 100% — Lora Grundbesitz GmbH ...... Germany EUR Renting 100% — Orco Berlin Invest GmbH ...... Germany EUR Renting 100% — Orco Grundstücks- u. Bet. ges. mbH ...... Germany EUR Development 100% — ORCO Immobilien GmbH ...... Germany EUR Development 100% 100% Orco Leipziger Platz GmbH ...... Germany EUR Development 100% — Orco LP 12 GmbH ...... Germany EUR Development 100% — Orco Projekt 103 GmbH ...... Germany EUR Development 75% — PEG Knorrstr. GmbH & Co. KG ...... Germany EUR Development 100% — Stauffenbergstr. Zwei GmbH ...... Germany EUR Development 100% — Stauffenbergstr. Drei GmbH ...... Germany EUR Development 100% — Viterra Development GmbH ...... Germany EUR Development 100% — Viterra Baupartner GmbH ...... Germany EUR Development 100% — Viterra Development Ceska, s.r.o...... Czech Republic CZK Development 100% — Viterra Erste PEG mbH ...... Germany EUR Development 100% — Viterra Zweite PEG mbH ...... Germany EUR Development 100% — Viterra Vierte PEG mbH ...... Germany EUR Development 100% — Viterra Fünfte PEG mbH ...... Germany EUR Development 100% — Viterra Grundstücke Verw, GmbH ...... Germany EUR Development 100% — Westendstr. 28 Ffm GmbH ...... Germany EUR Development 94% —

F-47 29. LIST OF THE JOINT VENTURES 29.1 Kosic S. à r.l. As at 1 January 2005, Kosic s.r.o. has been split into three entities corresponding to the three phases forecasted of the global Kosic’s development project. Those three new entities are Kosic Development s.r.o. (initial one), Sv Faze s.r.o. and Slunecny Vrsek III, s.r.o. The Group has a 50% interest in Kosic S.à r.l, a Luxembourg based holding company which in turn holds 100% of the 3 operational companies.

The following amounts represent the Group’s 50% share (50% in 2005) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 0 9 Current assets ...... 779 252 Assets ...... 779 261 Non-current liabilities ...... 154 — Current liabilities ...... 66 27 Liabilities ...... 220 27 Income ...... 512 0 Expenses ...... (204) (55) Profit after income tax ...... 308 (55)

29.2 Kosic Development s.r.o. The Group has a 50% interest in a joint venture, Kosic Development s.r.o., which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase I in the Czech Republic. The following amounts represent the Group’s 50% share (50% in 2005) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 358 463 Current assets ...... 20,406 7,475 Assets ...... 20,765 7,937 Non-current liabilities ...... 0 1,741 Current liabilities ...... 18,277 4,231 Liabilities ...... 18,277 5,972 Income ...... 2,642 12 Expenses ...... (2,169) (490) Profit after income tax ...... 473 (478)

F-48 29.3 Kosic SV Faze II s.r.o. The Group has a 50% interest in a joint venture, SV Faze s.r.o., which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase II in the Czech Republic.The following amounts represent the Group’s 50% share of assets and liabilities, and sales and results of the joint venture. They are inducted in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 0 2,950 Current assets ...... 3,183 1 Assets ...... 3,183 2,951 Non-current liabilities ...... 269 1,710 Current liabilities ...... 1 2 Liabilities ...... 270 1,712 Income ...... 0 1,040 Expenses ...... (3) (253) Profit after income tax ...... (3) 787

29.4 Slunecny Vrsek III s.r.o. The Group has a 50% interest in a joint venture, Slunecny Vrsek III s.r.o, which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase III in the Czech Repubiic.The following amounts represent the Group’s 50% share of assets and labilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 402 300 Current assets ...... 891 84 Assets ...... 1,293 384 Non-current liabilities ...... 0 (1) Current liabilities ...... 5 2 Liabilities ...... 51 Income ...... 0 0 Expenses ...... (7) (2) Profit after income tax ...... (7) (2)

29.5 Orco Property a.s. The Group has 50% interest in a joint venture, Orco Property a.s., which is active in the leasing sector and holds the office part of the Luxembourg Plaza project in the Czech Republic. During the year the Group has acquired the Trigranit’s 50% participation which was immediately sold to Endurance Fund. The following amounts represent the Group’s 50% share (50% in 2005) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 34,154 19,553 Current assets ...... 2,083 706 Assets ...... 36,237 20,259 Non-current labilities ...... 5,128 11,121 Current liabilities ...... 15,472 1,224 Liabilities ...... 20,600 12,345 Income ...... 9,338 6,877 Expenses ...... (3,462) (1,496) Profit after income tax ...... 5,876 5,381

F-49 29.6 Oak Mill At the end of December 2006 the Group acquired the remaining 50% of interest in the joint venture, Oak Mill, which is active in the development sector and holds the Dobovy Mlyn project in the Czech Republic. The following amounts represent the Group’s 100% share (50% in 2005) of assets and liabilities, and 50% of the result. They are included in the balance sheet and income statement:

December December 2006 2005 Non-current assets ...... 5 38 Current assets ...... 9,297 4,712 Assets ...... 9,301 4,750 Non-current liabilities ...... 0 407 Current liabilities ...... 7,939 2,357 Liabilities ...... 7,939 2,764 Income ...... 5,672 0 Expenses ...... (5,427) (85) Profit after income tax ...... 245 (85)

29.7 Knorrstrasse 119 GmbH & Co. KG The Group has a 50% interest in a joint venture, Knorrstrasse 119 GmbH & Co. KG, which is the Idea development project for BMW, The following amounts represent the Group’s 50% share of assets and liabilities, and sales and results of the joint ventures. They are included in the balance sheet and in the income statement:

December 2006 Non-current assets ...... — Current assets ...... 3,731 Assets ...... 3,731 Non-current liabilities ...... 0 Current liabilities ...... 3,126 Liabilities ...... 3,126 Income ...... 6,250 Expenses ...... (2,651) Profit after income tax ...... 3,599

29.8 TO Green Europe a.s. The Group has a 50% interest in a joint venture, TO Green Europe a.s. This company has currently no activity and the Group’s 50% share of assets and liabilities, and sales and results of the joint ventures are immaterial. They are included in the balance sheet and in the income statement:

F-50 400, route d’Esch 23, Val Fleuri L-1471 Luxembourg L-1526 Luxembourg

To the shareholders of Oreo Property Group S.A. Report of the independent auditors

We have audited the accompanying consolidated balance sheet of Orco Property Group S.A. and its subsidiaries (the “Group”) as of 31 December 2005 and the related consolidated statements of income, cash flows and changes in shareholders’ equity for the year then ended. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to check the consistency of the consolidated Management report with them.

We conducted our audits in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Board of Directors, as well as evaluating the overall consolidated financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2005, and of the results of its operations and cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union.

The consolidated Management report is in accordance with the consolidated financial statements.

Without qualifying our report, we draw attention to Note 2.1, which describes the restatements made to the comparative figures for the year ended 31 December 2004, published in the Group’s press release dated 15 July 2005 on IFRS conversion, and in the interim consolidated financial statements as of 30 June 2005. This note also mentions the missing disclosures and comparative information, which are required under IFRS.

Luxembourg, 12 April 2006

PricewaterhouseCoopers S.à. r.l HRT Révision S.à. r.l. Réviseur d’entreprises Réviseur d’entreprises Represented by Represented by

Anne-Sophie Preud’homme Dominique Ransquin

F-51 ORCO PROPERTY GROUP Consolidated financial statements

Orco Property Group’s Board of Directors has approved on 27 March 2006 the consolidated financial statements for 2005. All the figures in this report are presented in thousands of Euros, except if explicitly stated.

I. Consolidated income statement The accompanying notes form an integral part of these consolidated financial statements.

December December Note 2005 2004* Revenues ...... 6 50,348 70,670 Net gain from fair value adjustment on investment property ...... 6 78,975 25,408 Other operating income ...... 2,219 3,050 Gain on sale of activities held for sale ...... 16 2,365 0 Cost of sales ...... (17,795) (43,819) Employee benefit ...... 21.5 (13,259) (7,464) Amortization, impairments and provisions ...... (2,093) (6,220) Other operating expenses ...... (23,872) (10,796) Operating result ...... 76,888 30,829 Foreign exchange result ...... 1,355 509 Net interest expenses ...... 18 (6,962) (5,515) Other financial results ...... 1,056 1,177 Financial result ...... (4,551) (3,829) Profit before income taxes ...... 72,337 27,000 Income taxes ...... 19 (16,065) (8,211) Net profit ...... 56,272 18,789 Attributable to minority interests ...... 1,749 89 Attributable to the Group ...... 54,523 18,700 Basic earnings in EUR per share ...... 20 9.25 4.46 Diluted earnings in EUR per share ...... 20 7.83 3.22 * Restated (see note 2.1)

F-52 II. Consolidated balance sheet The accompanying notes form an integral part of these consolidated financial statements.

December December Note 2005 2004* Assets NON-CURRENT ASSETS ...... 539,672 208,728 Intangible assets ...... 718 1,250 Investment property ...... 8 361,193 134,503 Property, plant and equipment ...... 158,295 66,354 Hotels and own-occupied buildings ...... 9 126,034 48,398 Fixtures and fittings ...... 10 7,397 5,802 Properties under development ...... 11 24,864 12,154

Financial assets ...... 12 13,121 2,286 Deferred tax assets ...... 19 6,345 4,335 CURRENT ASSETS ...... 153,779 80,176 Inventories ...... 13 55,637 31,778 Trade receivables ...... 14 5,553 22,145 Other current assets ...... 43,500 10,511 Cash and cash equivalents ...... 15 49,089 15,742 Held for sale activities ...... 16 0 20,054 TOTAL ...... 693,451 308,958

Equity and liabilities EQUITY ...... 293,799 108,855 Shareholders’equity ...... 246,073 106,751 Minority interests ...... 17 47,726 2,104

LIABILITIES ...... 399,652 189,816 Non-current liabilities ...... 312,943 101,612 Bonds ...... 18 84,364 30,829 Financial debts ...... 18 183,060 56,655 Provisions ...... 1,001 762 Deferred tax liabilities ...... 19 44,518 13,366

Current liabilities ...... 86,709 88,204 Bonds and financial debts ...... 18 35,700 29,340 Trade payables ...... 20,787 18,116 Advance payments ...... 19,210 26,939 Other current liabilities ...... 11,012 13,809 Held for sale activities ...... 16 0 10,287 TOTAL ...... 693,451 308,958

* Restated (see note 2.1)

F-53 III. Consolidated statement of changes in equity The accompanying notes form an integral part of these consolidated financial statements.

Share Share Translation Treasury Other* Shareholders Minority Capital premium reserve* shares reserves Equity* Interests* Equity*

Balance at 1 January 2004 ...... 16,470 33,440 0 (319) 22,734 72,325 2,896 75,221 Gains or losses for the period: Translation differences .... 3,991 3,991 1,244 5,235 Profit of the period ...... 18,700 18,700 89 18,789 Dividends relating to 2003 ...... (1,826) (1,826) (1,826) Capital increase ...... 2,484 12,649 (230) 14,903 14,903 Treasury shares ...... 247 151 398 398 Convertible loan ...... 961 961 961 Minority interests’ transactions ...... (2,701) (2,701) (2,125) (4,826) Balance at 31 December 2004 ...... 18,954 46,089 3,991 (72) 37,789 106,751 2,104 108,855 Gains or losses for the period: Translation differences .... 5,362 5,362 582 5,944 Profit of the period ...... 54,523 54,523 1,749 56,272 Dividends relating to 2004 ...... (3,498) (3,498) (3,498) Capital increase ...... 8,896 72,875 (2,786) 78,985 78,985 Convertible loan ...... (404) (404) (404) OBSAR ...... 2,577 2,577 2,577 Treasury shares ...... 72 35 107 107 Stock option plan ...... 1,393 1,393 1,393 Acquisition of Suncani Hvar dd ...... 0 40,625 40,625 Minority interests’ transactions ...... 277 277 2,666 2,943 Balance at 31 December 2005 ...... 27,850 118,964 9,353 0 89,906 246,073 47,726 293,799

* Restated (see note 2.1)

F-54 IV. Consolidated cash flow statement The accompanying notes form an integral part of these consolidated financial statements.

December December 2005 2004 Operating Result ...... 76,888 30,829 Net gain from fair value adjustments ...... (78,975) (25,408) Amortization, impairments & provisions ...... 2,093 6,220 Gain and losses on disposal of investments ...... (2,777) (1,637) Stock options plans ...... 1,393 — Adjusted operating profit ...... (1,378) 10,004 Financial result and income taxes paid ...... (1,510) (3,560) Changes in operating assets and liabilities ...... (47,354) (13,654) NET CASH FROM OPERATING ACTIVITIES ...... (50,242) (7,210) Acquisition of subsidiaries, net of cash acquired ...... 3,759 — Capital expenditures ...... (171,526) (29,398) Proceeds from sales of non current tangible assets ...... 3,085 8,017 Purchase of intangible assets ...... (157) (159) Purchase of financial assets ...... (10,680) — Proceeds from sale of held for sale activities ...... 12,430 0 Net interest paid ...... (6,136) (4,498) NET CASH USED IN INVESTING ACTIVITIES ...... (169,225) (26,038) Issue of equity instruments from shareholders ...... 81,398 7,267 Issue of equity instruments from minority ...... 4,360 — Proceeds from borrowings ...... 195,152 39,360 Repayments of borrowings ...... (25,560) (13,320) Dividend paid to company’s shareholders ...... (3,498) (1,826) NET CASH FROM FINANCING ACTIVITIES ...... 251,852 31,481 NET INCREASE IN CASH ...... 32,385 (1,767) Cash and cash equivalents at the beginning of the period ...... 15,742 16,232 Exchange difference on cash ...... 962 1,277 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD ...... 49,089 15,742

F-55 Orco Property Group IFRS consolidated financial statements at 31 December 2005 Notes to the consolidated financial statements

1. GENERAL INFORMATION Orco Property Group, société anonyme (the Company) and its subsidiaries (together the Group) is a real estate group with a major portfolio in Central and Eastern Europe. It is principally involved in leasing out investment property under operating leases as well as in asset management, in operating hotels and extended stay hotels and is also very active in the development of properties for its own portfolio or intended to be sold in the ordinary course of business. During the year, the Group has substantially focused on growing its property portfolio with acquisitions in Budapest, Hvar, Berlin and Prague and developments in Moscow.

The Company is a limited liability company incorporated for an unlimited term and registered in Luxembourg. The address of its registered office is 8, Boulevard Emmanuel Servais, L-2535 Luxembourg.

The Company has a dual listing on the EuroNext Paris stock exchange and on the Prague stock exchange.

These consolidated financial statements have been approved for issue by the Board of Directors on 27 March 2006.

2.1 Basis of preparation The consolidated financial statements of Orco Property Group have been prepared in accordance with international financial reporting standards (IFRS) as adopted by the European Union, with the exception of the following disclosures for the year ended 2005 together the related comparative information for 2004: • the reconciliation between tax expense and accounting profit as required by IAS 12—Income Taxes, • the amount of capital expenditures disclosed by geographical segments as required by IAS 14— Segment Reporting.

The group did not elect for early adoption of IFRS in 2004. As such, until 31 December 2004, the Group’s consolidated financial statements were prepared in accordance with Luxembourg’s Generally Accepted Accounting Principles (GAAP). Luxembourg GAAP differs in some areas from IFRS. In preparing the Group’s 2005 consolidated financial statements, management has modified certain accounting, valuation and consolidation methods applied in the Luxembourg GAAP financial statements to comply with IFRS. The comparative figures in respect of 2004 were restated to reflect these adjustments, except as described in the accounting policies. Reconciliations and descriptions of the effect of the transition from Luxembourg GAAP to IFRS on the Group’s equity and its net income are presented in note 5.

Additionally, the comparatives figures in respect of 2004 as published as part of both IFRS conversion and interim consolidated financial statements for the half-year ended 30 June 2005 have been restated in order to reflect the recognition of deferred tax liabilities on all revaluations at their fair value of the investment properties. This change has been required by the strict application of IAS 12 that requires, as recommended by the Group auditors, not to take into account the fact that the sale of our properties takes place through a share deal while the group has adopted such a structure in order to not bear any tax on sale of investment properties. This resulted in the following restatements in the 2004 comparative figures: • an additional deferred tax liability amounting to EUR 9.1 million; • a deferred income tax expense amounting to EUR 0.7 million; and • a decrease in equity attributable to Group shareholders amounting to EUR 7.9 million.

Furthermore, the Group elected to reclassify EUR 7.9 million from other operating expenses to cost of sales in the comparative income statement.

F-56 The consolidated financial statements have been prepared under the historical cost convention except that investment property is carried at fair value as well as available-for-sale financial assets, and financial assets or financial liabilities (including derivative instruments) at fair value through income statement.

These consolidated financial statements have been prepared in accordance with IFRS and are covered by IFRS 1, First-time Adoption of IFRS. Latest developments in IFRS and interpretations have also been taken into consideration as noted hereunder:

Interpretations and amendments to published standards effective in 2005 The following amendments and interpretations to standards are mandatory for the Group’s accounting periods beginning on or after 1 September 2004: • IFRIC 2, Members’ Shares in Co-operative Entities and Similar Instruments (effective from 1 January 2005); • SIC 12 (Amendment), Consolidation — Special Purpose Entities (effective from 1 January 2005); and • IAS 39 (Amendment), Transition and Initial Recognition of Financial Assets and Financial Liabilities (effective from 1 January 2005).

Management assessed the relevance of these amendments and interpretations with respect to the Group’s operations and concluded that they are not relevant to the Group.

Early adopted interpretations • IFRIC 4, Determining whether an Arrangement contains a Lease (effective from 1 January 2006). IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. The Group has elected for early adoption of IFRIC 4 which has no impact on the accounting for any of the Group’s current arrangements.

Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accounting periods beginning on or after 1 January 2006 or later periods but which the Group has not early adopted, as follows: • IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006). This amendment introduces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi-employer plans, adoption of this amendment will only impact the format and extent of disclosures presented in the accounts. The Group will apply this amendment from annual periods beginning 1 January 2006. • Amendments to IAS 21, The Effects of Changes in Foreign Exchanges Rates, Net Investments in a Foreign Operation (effective from 1 January 2006). The Group is currently assessing the impact of these amendments and standards and does not expect at this stage that they would significantly impact the Group’s financial position. • IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions (effective from 1 January 2006). The amendment allows the foreign currency risk of a highly probable forecast intragroup transaction to qualify as a hedged item in the consolidated financial statements, provided that: (a) the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction; and (b) the foreign currency risk will affect consolidated profit or

F-57 loss. This amendment is not relevant to the Group’s operations, as the Group does not have any intragroup transactions that would qualify as a hedged item in the consolidated financial statements as of 31 December 2005 and 2004. • IAS 39 (Amendment), The Fair Value Option (effective from 1 January 2006). This amendment changes the definition of financial instruments classified at fair value through profit or loss and restricts the ability to designate financial instruments as part of this category. The Group believes that this amendment should not have a significant impact on the classification of financial instruments, as the Group should be able to comply with the amended criteria for the designation of financial instruments at fair value through profit and loss. The Group will apply this amendment from annual periods beginning 1 January 2006. • IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (effective from 1 January 2006). This amendment requires issued financial guarantees, other than those previously asserted by the entity to be insurance contracts, to be initially recognised at their fair value, and subsequently measured at the higher of (a) the unamortized balance of the related fees received and deferred, and (b) the expenditure required to settle the commitment at the balance sheet date. Management considered this amendment to IAS 39 and concluded that it is not relevant to the Group. • IFRS 6, Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006). IFRS 6 is not relevant to the Group’s operations. • Amendment to IFRS 6, Exploration for and Evaluation of Mineral Resources and consequential amendment, to IFRS 1, First-time Adoption of International Financial Reporting Standards (effective from 1 January 2006) is not relevant to the Group’s operations. • IFRIC 7, Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (effective 1 March 2006) is not applicable to the Group. • IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements — Capital Disclosures (effective from 1 January 2007). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions, and disclosure requirements in IAS 32, Financial Instruments: Disclosure and Presentation. It is applicable to all entities that report under IFRS. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and how it manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of IAS 1. The Group will apply IFRS 7 and the amendment to IAS 1 from annual periods beginning 1 January 2007. • IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (effective from 1 January 2006). IFRIC 5 is not relevant to the Group’s operations. • IFRIC 6, Liabilities arising from Participating in a Specific Market — Waste Electrical and Electronic Equipment (effective from 1 December 2005). IFRIC 6 is not relevant to the Group’s operations.

2.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets

F-58 acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interests. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

(b) Joint-ventures The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation.

The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it resells the assets to an independent party. A loss on the transaction is recognised immediately if it provides evidence of a reduction in the net realisable value of current assets, or an impairment loss. Joint ventures’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.4 Foreign currency translation The exchange rates against euros (EUR) used to establish these consolidated financial statements are as follows:

Currency 31 December 2005 31 December 2004 Code Currency Average Closing Average Closing CZK Czech Koruna 0.03355 0.03448 0.03133 0.03282 HUF Hungarian Forint 0.00402 0.00396 0.00398 0.00407 HRK Croatian Kuna 0.13570 0.13558 N.A. N.A. PLN Polish Zloty 0.24862 0.25908 0.22156 0.24565 SKK Slovak Koruna 0.02591 0.02642 0.02493 0.02578

(a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in euros (EUR), which is the Company’s functional and presentation currency.

F-59 (c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and (iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, exchange differences arising from the translation of the net investment in foreign entities are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.5 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/joint-venture at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint-ventures is included in ‘intangible assets’. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Negative goodwill arising on an acquisition is recognised in the income statement, in net gain from fair value adjustment on investment property.

Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the costs of software development employees and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised using the straight-line method over their estimated useful lives (not exceeding three years).

Investment property comprises freehold land, freehold buildings, land held under operating lease and buildings held under finance lease.

F-60 Land held under operating lease is classified and accounted for as investment property when the rest of the definition of investment property is met. The operating lease is accounted for as if it were a finance lease.

Investment property is measured initially at its cost, including related transaction costs.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

Changes in fair values are recorded in the income statement.

If an item of property, plant and equipment becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognised in equity as a revaluation of property, plant and equipment under IAS 16. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the income statement.

Freehold lands, for which the destination is not determined at year end, are classified under the land bank category.

Hotel buildings held by the Group are not classified as investment property but rather as property, plant and equipment.

2.7 Property, plant and equipment Hotels and own-occupied buildings, fixtures and fittings, properties under development are classified as property, plant and equipment.

All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

F-61 Depreciation, based on a component approach, starts off when construction or development is completed. Depreciation is calculated using the straight-line method to allocate the cost over the asset’s estimated useful lives, as follows:

• Land ...... Nil • Buildings ...... 50–80years • Fixtures and fittings ...... 3to20years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial year-end.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (note 2.9).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

(b) A group company is the lessor i) Operating lease Properties leased out under operating leases are included in investment property in the balance sheet.

ii) Finance lease When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.

Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.

2.9 Impairment of assets Assets including goodwill that have an indefinite useful life are not subject to systematic amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its

F-62 recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

2.10 Financial assets The Group classifies its financial assets in the following categories: loans and receivables and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as trade receivables (note 2.12) and other current assets in the balance sheet.

b) Available for sale financial assets Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Investments are initially recognised at fair value plus transaction costs. Available for sale financial assets are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Changes in the fair value of available for sale financial assets are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in note 2.12.

2.11 Inventories Investment properties that are being developed for future sale are classified as inventories at their cost or deemed cost, which is the carrying amounts at the date of reclassification from investment property. They are subsequently carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less cost to complete redevelopment and selling expenses.

2.12 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

2.14 Share capital Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds in other reserves.

F-63 The shares of the Company (Orco Property Group, société anonyme) held by the Group — Treasury shares — are measured at their acquisition cost and recognized as a deduction from equity. Gains and losses on disposal are taken directly to equity.

2.15 Borrowings The term Borrowings covers the elements recorded under the captions Bonds and Financial debts within the non-current liabilities and the caption Financial debts within current liabilities.

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.16 Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Investment property Deferred income tax is provided on all temporary differences arising on fair value of buildings and lands held by the Group as investment properties even when they are located in special purpose entities, which are themselves held by a company based in Luxembourg. Each special purpose entity is meant to hold one specific project. Possibly, should a special purpose entity be disposed of, the gains generated from the disposal will be exempted from any tax (in accordance with the Grand-ducal regulation of 21 December 2001), if the Luxembourg-based company holds or commits itself to hold this stake for a minimum of a continuous 12-month period and, if, during this same period, the stake amounts to at least 10% of the affiliate’s capital or the acquisition price amounts to at least EUR 6 million. The Group is confident that all special purpose entities will comply with these conditions.

The Group does not believe that for investment properties this recognition reflects the economic reality. Indeed it does not take into account its holding structure which has an influence on the deferred tax calculation as the Group intends to recover its investment by selling its shares in the special purpose entity.

The impact on the Group’s financial statement of these deferred taxes that would only materialise if the existing holding structure would not be in existence or would not be used in the assumption of a sale of all investment properties (asset deal vs. share deal) has been measured and disclosed in note 8.

2.17 Provisions Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where the Group, as lessee, is contractually required to restore a leased-in property to an agreed condition, prior to release by a lessor, provision is made for such costs as they are identified.

F-64 2.18 Derivative financial instruments and hedging activities Derivatives are initially recognized in the balance sheet at their fair value on a date a derivative contract is entered into and are subsequently remeasured at their fair value which is generally the market value. Derivatives are presented, at the balance sheet date, within other current assets or other current liabilities.

2.19 Revenue recognition Revenue includes rental income, service charges and management charges from properties, and income from property trading.

Rental income from operating leases is recognised in income on a straight-line basis over the lease term. When the Group provides incentives to its customers, the cost of incentives are recognised over the lease term, on a straight-line basis, as a reduction of rental income.

Service and management charges are recognised in the accounting period in which the services are rendered. When the Group is acting as an agent, the commission rather than gross income is recorded as revenue.

2.20 Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved.

2.21 Share option plans Share options are granted to certain directors and senior employees. The options are granted at the market price on the date of the grant and are exercisable at that price.

The fair value of options granted is recognized as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

2.22 Subscription rights and PACEO The Group grants share options to third parties as part of its financing program. Any consideration received is added directly to equity. Changes in the fair value of those equity instruments are not recognized in the financial statements.

3 FINANCIAL RISK FACTORS 3.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The group ‘s overall risk management programme focuses on the unpredictabilitity of financial markets and seeks to minimise potential adverse effects on the group financial performance. The Group uses financial instruments to hedge certain risk exposures.

Risk management is carried out by the Group’s Chief Financial Officer (CFO) and his team under policies approved by the Board of Directors. The Group’s CFO identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

F-65 (a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Czech Koruna (CZK), the Polish Zloty (PLN), the Hungarian Forint (HUF), the Slovak Koruna (SKK) and the Croatian Kuna (HRK). Foreign exchange risk arises from recognised monetary assets and liabilities and net investments in foreign operations. The Group does not hedge its foreign exchange risks. Salaries, overhead expenses, future purchase contracts in the development sector, building refurbishment and construction costs are denominated in local currencies. Loans, operating income and — except in the development activities — sales of building are denominated in euros (EUR).

(ii) Price risk The Group is exposed to property price and property rentals risk but it does not pursue any speculative policy. Eventhough the Group’s activities are focused on one geographical area—Central and Eastern Europe — such activities are spread over several business lines (residences, offices, hotels) and different countries that each undergo specific business cycles.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group has now started to hedge some of its variable interest rates by entering into swap transactions.

3.2 Fair value estimation The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows.

F-66 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

If information on current or recent prices of assumptions underlying the discounted cash flow approach investment properties is not available, the fair values of investment properties are determined using discounted flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at each balance sheet date.

The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

F-67 (c) Determination of remaining construction costs All development projects are subject to individual financial forecasts and balances, prepared by the Group and based on the best estimate of the construction costs to be incurred as part of the projects. The costs incurred are subject to specific controls by the Group and the project balances, showing the costs incurred as well as the remaining construction costs, are updated on a regular basis. This information is used to determine the net realisable value of inventories as well as the fair value less cost to sale for the impairment test of properties under development.

4.2 Critical judgements in applying the Group’s accounting policies Distinction between investment properties and owner-occupied properties The Group determines whether a property qualifies as investment property. In making its judgement, the Group considers whether the property generates cash flows largely independently of the other assets held by an entity. Owner-occupied properties generate cash flows that are attributable not only to property but also to other assets used in the production or supply process.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the supply of services or for administrative purposes. If these portions can be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions cannot be sold separately, the property is accounted for as investment property only if an insignificant portion is held for use in the supply of services or for administrative purposes. Judgement is applied in determining whether ancillary services are so significant that a property does not qualify as investment property. The Group considers each property separately in making its judgement.

Where applicable, the land on which new properties are under development is recognised separately as an investment property. In such a case the land is fair valued through the income statement on the basis of a percentage of the value determined by the independent valuation expert for the full property under development (land and construction).

5. IFRS TRANSITION The financial information included in this note relates to the IFRS conversion as presented in the interim consolidated financial statements as at 30 June 2005. Therefore, it does not include the restatements described in note 2.1.

2005 is the first year in which accounts are presented under IFRS. They also include the accounts as at 31 December 2004 restated for IFRS standards. Pursuant to the recommendation of the EFRAG, the present document includes the following information: • Reconciliation between the balance sheet for the financial year ending 31 December 2003, prepared according to Luxembourg accounting standards, and the opening balance sheet at 1 January 2004, prepared according to IFRS. • Reconciliation of the income statement for the year ending December 2004, prepared according to Luxembourg accounting standards and IFRS.

The main standards having a significant impact on the transposition of Orco Property Group accounts into IFRS are indicated as follows:

IFRS 1 First time adoption of IFRS IAS 2 Inventories IAS12 Income taxes IAS 16 Property, plant and equipment IAS 17 Leases IAS 32 and 39 Financial instruments: disclosure and presentation and Financial instruments: recognition and measurement IAS 40 Investment property

F-68 IFRS1 applies to businesses presenting for the first time their financial statements under IFRS. This standard provides for the retroactive application of all the rules and interpretations prevailing during the transition period. The standard provides for exemptions and exceptions in certain cases.

Assets, liabilities and equity, recognized and evaluated according to IFRS, must also be classified according to the same standards.

The Group has opted for the exemptions and exceptions as indicated below: • Fair value is used as the deemed cost for all investment properties, own-occupied buildings, hotels as well as assets to be sold as part of ordinary activities. Hotels under construction as at 1 January 2004 are accounted for at their historic cost as defined by IFRS. • Currency translations on all foreign entities are assumed to be equal to zero. Gains and losses on the subsequent sales of foreign entities will exclude the currency translation differences generated before the transition date to IFRS and will include the subsequent translation changes. • No retroactive application of the standard relating to business combinations. Transactions made before 1 January 2004 are not restated.

Reconciliation between the balance sheet for the financial year ending 31 December 2003, prepared under Luxembourg accounting standards, and the opening balance sheet at 1 January 2004, prepared under IFRS. The opening balances have been restated for deferred taxes on investment properties (see note 2.1). This restatement has not been included in the tables below.

Deemed Assets Published Transfer cost Leasing IAS 32 & 39 Provisions Translation Taxes Others IFRS NON-CURRENT ASSETS ...... 110,416 (1,425) 41,951 804 0 0 0 2,331 4,866 158,943 Intangible assets ...... 1,628 (977) 0 0 0 0 0 0 (282) 369 Tangible assets ...... 108,650 (6,509) 41,951 804 0 0 0 0 5,148 150,044 Investment property ...... 92,857 Hotel and own- occupied buildings ...... 32,764 Fixtures and fittings ...... 3,398 Properties under development ..... 21,025 Financial assets ...... 138 17 0 0 0 0 0 0 0 155 Deferred tax assets ..... 6,044 2,331 8,375 CURRENT ASSETS ... 104,839 1,442 (4,936) 0 (800) (3,779) (242) (170) (8,863) 87,492 Inventories ...... 42,795 5,075 (4,936) 00(3,934) 00039,001 Trade receivables . . . 21,937 892 0 0 0 155 0 0 33 23,017 Deferred tax assets ...... 8,102 (8,102) 0 0 0 0 0 0 0 0 Other current assets ...... 15,454 3,577 0 0 (481) 0 (242) (170) (8,896) 9,242 Cash and cash equivalents ...... 16,551 0 0 0 (319) 0 0 0 0 16,232 TOTAL ...... 215,255 17 37,015 804 (800) (3,779) (242) 2,161 (3,997) 246,435

F-69 Deemed Equity and liabilities Published Transfer cost Leasing IAS32 & 39 Provisions Translation Taxes Others IFRS EQUITY ...... 51,146 17 37,016 0 (319) 1,386 (613) (451) (4,611) 83,571 Shareholders’ equity ..... 52,969 12 30,791 0 (319) 1,392 (569) (2) (4,682) 79,592 Minority interests ...... (1,823) 5 6,225 0 0 (6) (44) (449) 71 3,979 PROVISIONS ...... 7,579 (7,579) 0 0 0 0 0 0 0 0 LIABILITIES ...... 156,530 7,579 0 804 (481) (5,164) 371 2,611 614 162,865 Non-current liabilities ... 80,975 (7,374) 0 804 (481) (5,441) 371 2,611 0 71,465 Bonds ...... 12,735 (2,735) 0 0 (481) 0 0 0 0 9,519 Financial debts ..... 67,018 (10,947) 0 804 0 0 0 0 0 56,875 Other debts ...... 1,222 (1,159) 0 0 0 0 0 (63) 0 0 Provisions ...... 0 6,980 0 0 0 (5,441) 371 0 0 1,910 Deferred tax liabilities ...... 0 487 0 0 0 0 0 2,674 0 3,161 Current liabilities ...... 75,555 14,953 0 0 0 277 0 0 614 91,400 Financial debts ..... 3,615 14,511 0 0 0 0 0 0 0 18,126 Trade payables ..... 10,811 0 0 0 0 0 0 0 0 10,811 Advance payments . . 52,888 330 0 0 0 0 0 0 0 53,218 Debts towards shareholders ..... 3,457 173 0 0 0 0 0 0 0 3,630 Other current liabilities ...... 4,784 (61) 0 0 0 277 0 0 614 5,615 TOTAL ...... 215,255 17 37,016 804 (800) (3,778) (242) 2,160 (3,997) 246,435

Transfer This column mainly consists of the transfer of IPB land sites (EUR 6.5 million) to inventories which will be used for real-estate projects meant for sale as part of the ordinary activities of the business. All development costs are capitalized and booked to the cost of goods sold at the time of the effective transfer of the good. The other reclassifications relate to the breakdown between current and non-current activities as well as the transfer to previously unused captions.

Deemed cost In terms of tangible fixed assets, an exemption to IFRS 1 is applicable. Fair value is used as the deemed cost for all investment buildings, hotels and own-occupied buildings as well as assets to be sold as part of ordinary activities. In terms of inventories, a certain number of costs linked to IPB real-estate projects, which had earlier been capitalized can no longer be so under IAS 2 (EUR 4.9 million before taxes; EUR 3.7 million net of taxes).

Leasing The group holds two buildings via finance leases. As they were not booked previously, these buildings are now booked to assets and to debt in liabilities. The review of operating leases did not lead to a significant change in rental income. Pursuant to the requirements of IAS 17, financial leases are valued at the present value of the minimum payments for the lease (EUR 0.8 million).

IAS 32 & 39 The impact of the standards relating to financial instruments is limited to the reclassification of treasury stock within Equity (EUR 0.3 million) and the premium on bond issues (EUR 0.5 million) now included in the amortized cost of bonds.

Provisions The sum of provisions which are not compliant with IAS 37 is booked to opening equity reserves (EUR 1.4 million). An amount of EUR 4 million has been reclassified from provisions to the appropriate assets/ liabilities items.

Translation Cumulative currency translations before 1 January 2004 are booked to the opening equity reserves account.

F-70 Taxes All adjustments to deferred taxes relate to the assessment of local taxes as well as to IFRS restatements (EUR 0.7 million).

The Group has proceeded to a systematic review of the fiscal situation of each of its subsidiaries in order to book correctly the deferred tax. All adjustments relating to parent-company accounts are booked net of taxes when the standard is applicable.

Tax assets and liabilities were estimated using the tax rate and fiscal base that are consistent with the expected method of recovery or settlement. Therefore, given the structure of the Group’s property-asset base, most of the revaluations did not generate deferred tax.

Others In terms of intangible fixed assets, this mainly entails the cancellation of start-up and research costs, which cannot be capitalized under IFRS (EUR -0.3 million). The correction of other debtors mainly relates to the disposal of 50% of Kosic to General Electric of which the transfer of risks and rewards, according to IFRS, was not complete until 2004 (EUR 3.9 million). The capital gain on this operation is booked in 2004 under IFRS and not in 2003.

Reconciliation of the income statement for the year ending 31 December 2004 under Luxembourg accounting standards and IFRS. The income statement has been restated for deferred taxes on investment properties and for the reclassification from other operating expenses to cost of sale (see note 2.1). Those restatements have not been included in the table below. IAS 2, Published Transfer 16 & 40 Leasing IAS 32 & 39 Translation Taxes Others IFRS Revenue ...... 71,224 0 0 0 0 0 0 (554) 70,670 Net gain from fair value adjustment on investment property ...... 0 0 25,408 0 0 0 0 0 25,408 Fixed production ...... 1,878 (271) 0 0 0 0 0 (1,607) 0 Other operating income ...... 13,084 (834) (10,693) 0 0 0 0 1,493 3,050 Cost of sale ...... (50,631) (583) (1,169) 44 230 0 0 386 (51,723) Employee benefit ...... (7,726) 262 0 0 0 0 0 0 (7,464) Amortization and impairments ..... (7,702) 1,274 (9) 0 0 0 0 217 (6,220) Other operating expenses ...... (2,636) (235) (21) 0 0 0 0 0 (2,892) Operating result ...... 17,491 (387) 13,516 44 230 0 0 (65) 30,829 Foreign exchange result ...... (949) 0 0 0 0 1,458 0 0 509 Net interest charges ...... (5,274) 141 0 (74) (70) 0 0 (238) (5,515) Other financial results ...... 1,505 987 0 0 (151) 0 0 (1,164) 1,177 Financial result ...... (4,718) 1,128 0 (74) (221) 1,458 0 (1,402) (3,829) Exceptional result ...... (403) (741) 1,137 0 0 0 0 7 0 Profit before taxes ...... 12,370 0 14,653 (30) 9 1,458 0 (1,460) 27,000 Income taxes ...... (6,250) 0 0 0 0 0 (1,284) 0 (7,534) Net profit ...... 6,120 0 14,653 (30) 9 1,458 (1,284) (1,460) 19,466 Attributable to minority interests . . . (472) 0 637 0 0 (263) 184 32 117 Attributable to the Group ...... 6,592 0 14,016 (30) 9 1,721 (1,468) (1,492) 19,349

Transfer The transfers mainly relate to the elimination of the notion of exceptional items, but also to the reclassification of items that had previously been incorrectly allocated.

IAS 2, 16, 40 This column (EUR 14.7 million) mainly reflects the revaluation of land sites and buildings at their market value as well as the correction of the inventory value of development projects booked as stock (EUR 1.2 million), the IFRS criteria for capitalization being different from those previously applied. The reversal of the reduction in value of the Benice site, booked to the property asset reserve, is transferred to profit net of revaluation (EUR 10.6 million).

F-71 The correction of exceptional result is attributable to changes in inventory value under IFRS 1 due to the sale of assets during the year ended 31 December 2004.

Leasing The group holds two buildings via finance leases. As they were not booked previously, these buildings are now booked to assets and to debt in liabilities.

The review of operating leases did not lead to a significant change in rental income.

Pursuant to the stipulations of IAS 17, the contractual payments from financial leases are replaced by the depreciation of capitalized buildings and interest charges.

IAS 32 and 39 This column includes the correction under the effective interest rate method for interest on the convertible bond issued in September 2004 (EUR 0.1 million), the cancellation of capital increase costs (EUR 0.2 million) and the cancellation of gains/losses on treasury stock operations (EUR 0.2 million).

Currency translations Under IFRS the Group has adopted as functional currency the local currency of each entity. The euro was previously considered as the functional currency for certain entities.

Taxes All adjustments to deferred taxes relate to the assessment of local taxes as well as to IFRS restatements.

Tax assets and liabilities were valued using the tax rate and fiscal base that are consistent with the expected method of recovery or settlement. Therefore, given the structure of the Group’s property-asset base, most of the revaluations did not generate deferred tax.

Others The other adjustment mainly concern: • The disposal of 50% of Kosik to General Electric of which the transfer of risks and rewards according to IFRS took place in 2004. The capital gain on this operation was booked in 2004. • The restatement of acquisition deals of third-party interests. • The adjustment of inter-company transactions.

6. SEGMENT REPORTING 6.1 Primary reporting format — business segments The Group is organised on a European basis into four main segments determined in accordance with the type of activity : • Renting : leased out residences, offices or retail buildings, property management and asset management and buildings under construction that are meant to be leased. • Extended stay hotels : includes all the MaMaison Residences activities. • Hotels : small luxury hotels. • Development : development of projects meant to be disposed off unit by unit, the land bank and project management.

F-72 Corporate expenses are allocated on the basis of the revenue realised by each activity. Segment assets consist primarily of tangible assets, inventory and receivables. Unallocated assets comprise deferred tax assets and cash and cash equivalents. Segment liabilities include operating liabilities. Unallocated liabilities are essentially the aggregate of litigation provisions, taxation liabilities and borrowings.

Extended stay Other Intersegment As at December 2005 Development Hotels Renting hotels services activities TOTAL NET Revenues ...... 21,925 16,840 7,584 4,694 3,087 (3,782) 50,348 Net result on revaluation ...... 36,436 13,296 20,178 9,065 0 78,975 Other operating results ...... (23,268) (20,005) (8,761) (5,488) 1,681 3,406 (52,435) Segment result ...... 35,093 10,131 19,001 8,271 4,768 (376) 76,888 Financial result ...... (4,551) Profit before income taxes ..... 72,337 Income taxes ...... (16,065) Net Profit ...... 56,272 Attributable to minority interests ...... (1,749) Attibutable to the group ...... 54,523 Segment assets ...... 184,306 132,561 209,904 74,778 0 (11,915) 589,634 Unallocated assets ...... 103,817 Total assets ...... 693,451 Segment liabilities ...... 38,160 5,948 11,965 2,774 0 (3,801) 55,046 Unallocated liabilities ...... 638,405 Total liabilities ...... 693,451 Cash flow elements ...... Amortizations, impairments and provisions ...... 1,524 (2,641) (26) (943) (7) 0 (2,093) Capital expenditure ...... 12,655 6,174 137,549 11,719 168,097

Other operating results include amongst others the operating expenses representing advisory and marketing expenses, maintenance and service costs, professional fees and travel expenses.

Extended stay Other Intersegment As at December 2004 Development Hotels Renting hotels services activities TOTAL NET Revenues ...... 60,554 7,920 6,558 2,685 — (7,047) 70,670 Net result on revaluation ...... 17,044 0 5,320 3,044 — 0 25,408 Other operating results ...... (54,321) (8,758) (6,514) (2,702) — 7,046 (65,249) Segment result ...... 23,277 (838) 5,364 3,027 — (1) 30,829 Financial result ...... (3,829) Profit before income taxes ...... 27,000 Income taxes ...... (8,211) Net Profit ...... 18,789 Attributable to minority interests .... (89) Attibutable to the group ...... 18,700 Segment assets ...... 97,875 50,238 61,964 53,270 — (6,397) 256,950 Unallocated assets ...... 52,008 Total assets ...... 308,958 Segment liabilities ...... 44,793 3,229 6,025 3,123 — (5,895) 51,275 Unallocated liabilities ...... 257,683 Total liabilities ...... 308,958

F-73 6.2 Secondary reporting format — geographical segments The Group’s four business segments operate in Central European countries among which the most activities are presently generated in the Czech Republic, in Croatia, in Hungary and in Poland. With exception of these countries, no other individual country contributed more than 10% of consolidated sales or assets. The location of the customers is the same as the location of the assets.

December December 2005 2004 Czech Republic ...... 34,149 66,608 Croatia ...... 6,797 — Hungary ...... 3,020 3,539 Poland ...... 4,298 863 Other Central European countries ...... 4,053 77 Intersegment activities ...... (1,969) (417) Revenue ...... 50,348 70,670

December December 2005 2004 Czech Republic ...... 320,013 194,698 Croatia ...... 74,871 — Hungary ...... 111,669 33,083 Poland ...... 64,667 30,617 Other Central European countries ...... 29,336 3,137 Intersegment activities ...... (13,086) (4,347) Segment assets ...... 587,470 257,188 Non allocated assets ...... 105,981 51,770 Total assets ...... 693,451 308,958

7. ACQUISITIONS In 2005 the Group has enterred into two business combinations. • The acquisition in June of 100% of the capital of BP Servis, a property management company. The company is fully consolidated since the date of acquisition. The following table describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired:

• The acquisition in July through a capital increase of 47.7% of Suncani Hvar dd, a company carrying 10 hotels on the island of Hvar in Croatia. The company is fully consolidated since the date of acquisition.

The hotel portfolio has been fair valued using EBITDA multiples and rates per room multiples based on management assumptions and estimates. The valuation has been made on the basis of the future intended use of the hotels. For hotels which will be demolished, 95% of the fair value has been attributed to the land whereas for hotels to be refurbished, the allocation of value to the land has been based on a ratio of 40% applied to the estimated properties values after refurbishment costs. The remaining fair value has been attributed to the buildings.

The contribution of Suncani Hvar dd to the 2005 revenues amounts to EUR 6.8 million and a negative goodwill of EUR 13.3 million has been recognized in the income statement on the same line as the gains and losses from fair value adjustments on investment property.

F-74 As part of the transaction, the Group acquired the right to subscribe, as from 1 September 2006, to an increase in share capital of HKR 100 million through the issuance of 1 million shares with a fixed nominal value, excluding all shareholders from their pre-emptive right. This financial instrument has been valued using Black- Scholes valuation model and is recorded in the Group assets, under the caption other current assets. As for any derivative instrument, the movements in fair value after the acquisition are recorded through the income statement. Additionally, under certain conditions related to the financing of the investments, the Group has acquired an additional right to subscribe to a further increase in share capital of HKR 100 million through the issuance of 1 million shares with a fixed nominal value, excluding all shareholders from their pre-emptive right. The following table describes the calculation of the cash flow on acquisition net of the cash and cash equivalents acquired: Suncani Hvar Tangible assets ...... 72,998 Inventories ...... 102 Trade receivables ...... 536 Other current assets ...... 122 Cash and cash equivalents ...... 27,350 Minority shareholders ...... (40,728) Long term financial debts ...... (8,698) Provisions ...... (293) Deferred tax liabilities ...... (6,475) Short term financial debts ...... (6,102) Payables ...... (1,798) Net equity acqired ...... (37,014) Negative goodwill on acquisitions ...... 13,296 Acquisition price ...... (23,718) Less cash acquired ...... 27,350 Cash flow on acquisition net of cash acquired ...... 3,632

Suncani Hvar is party to a certain number of claims on the ownership of assets or part of assets. The shareholder agreement in place between the Company and The Privatization Fund secures the Company for compensation in case Suncani Hvar would loose the ownership of the assets.

8. INVESTMENT PROPERTY Buildings under Freehold Extended stay Investment property finance lease buildings Land hotels Land bank Total Balance at 1 January 2004 ...... 1,511 38,633 3,660 32,583 16,470 92,857 Revaluation ...... (2) 7,745 2,424 3,043 12,198 25,408 Investments / acquisitions ...... 0 9,297 0 5,549 9 14,855 Asset sale ...... 0 (6,361) 0 0 0 (6,361) Transfer ...... 0 0 0 6,688 0 6,688 Translation differences ...... 1 306 (191) (664) 1,604 1,056 Balance at 31 December 2004 ...... 1,510 49,620 5,893 47,199 30,281 134,503 Revaluation ...... (428) 28,826 6,874 9,065 21,341 65,678 Investments / acquisitions ...... 5 127,316 10,802 12,655 150,778 Asset sale ...... (2,312) (2,312) Transfer ...... 404 10,419 (4,234) (416) 859 7,032 Translation differences ...... 19 2,300 67 769 2,359 5,514 Balance at 31 December 2005 ...... 1,510 216,169 8,600 67,419 67,495 361,193

Variations in 2005 Two projects (Kosic project -a joint-venture with a subsidiary of General Electric- and Nove Madlanky) have been divided in three phases. The plots of land relating to the two last phases have therefore been transferred from inventory to investment property until the potential developments start.

F-75 During the year, the Group has invested EUR 151 million in the following projects: • Freehold buildings: the Ofer portfolio in Budapest for EUR 74.9 million (revaluation recognised in 2005: EUR 0.9 million), EUR 26.8 million in the Na Porici office building in Prague 1 (revaluation recognised in 2005: EUR 7.2 million), EUR 12.8 million in five appartment buildings in Berlin (revaluation recognised in 2005: EUR 5.8 million), one shopping center in Brno for EUR 4.2 million (revaluation recognised in 2005: EUR 1.1 million) and buildings to be refurbished in Spedleruv mlyn and Prague for EUR 5.8 million. • Extended stay hotels: the new Diana residence in Warsaw represented an investment of EUR 10.7 million (revaluation recognised in 2005: EUR 5.2 million). • Land bank: acquisition of a plot for future development project in Slovakia for EUR 4.4 million and the rest in plots in the Czech Republic.

Variations in 2004 At 31 December 2003, the Group signed an agreement about the transfer of a 12-apartment building — the building n°2 of the Americka project in Prague- to the company Helmine Entreprises Inc. The transfer of ownership occurred in 2004 and has therefore been accounted for the same year under IFRS. The total transaction proceeds amounted to EUR 5.4 million.

In August 2004, the Group completed the refurbishment of an extended stay hotel — The Pachtuv Palace- located in Prague and transferred this item from properties under development to investment properties; the investments in extended stay hotels also mainly relate to the same building.

Deferred tax liabilities In accordance with IAS 12, the recognition of deferred tax liabililities on the revaluation of investment properties amounts to EUR 20.8 million (EUR 9.1 million in 2004) on the balance sheet as at December 2005 and it reduced the net result attributable to the Group by EUR 5.8 million (EUR 0.7 million in 2004).

F-76 9. HOTELS AND OWN-OCCUPIED BUILDINGS

Prepaid Own-occupied operating Hotels and own-occupied buildings buildings leases Hotels TOTAL GROSS AMOUNT Balance at 1 January 2004 ...... 5,005 837 27,048 32,890 Investments / acquisitions ...... 181 1,366 2,391 3,938 Transfer and other movements ...... (340) 113 10,447 10,220 Translation differences ...... 312 133 1,699 2,144 Balance at 31 December 2004 ...... 5,158 2,449 41,585 49,192 Scope variation ...... 0 0 73,192 73,192 Investments / acquisitions ...... 2,056 427 381 2,864 Disposal ...... (41) 0 0 (41) Transfer and other movements ...... (118) 621 186 689 Translation differences ...... 265 110 2,099 2,474 Balance at 31 December 2005 ...... 7,320 3,607 117,443 128,370 AMORTIZATION Balance at 1 January 2004 ...... 109 17 0 126 Allowance ...... 439 7 294 740 Transfer and other movements ...... (78) 0 0 (78) Translation differences ...... 7 1 (2) 6 Balance at 31 December 2004 ...... 477 25 292 794 Allowance ...... 65 91 1,383 1,539 Disposal ...... (12) 0 0 (12) Transfer and other movements ...... (58) (18) 40 (36) Translation differences ...... 35 1 15 51 Balance at 31 December 2005 ...... 507 99 1,730 2,336 NET AMOUNT AT 31 December 2005 ...... 6,813 3,508 115,713 126,034 Net amount at 31 December 2004 ...... 4,681 2,424 41,293 48,398

In 2005, the scope variation relates only to the first consolidation of Suncany Hvar. All the assets and liabilities have been valued by Deloitte & Touche Croatia at the time of the acquisition, using the EBITDA and rate per room multiples valuation methods. Please refer to note 7 detailing the business combination accounting on this company.

The investment in Own-occupied buildings relates mainly to the new headquarters in Luxembourg that has been acquired at the end of the year.

The prepaid operating leases relate to one building serving as an extended stay hotel in Bratislava that was acquired in 2004 (with a remaining term of the lease of 27 years) and to the lands on which the Regina hotel and Diana residence are located (with in both cases a remaining term of the lease of 85 years).

In 2004, most investments and transfer from properties under development concern the hotel Le Regina located in Warsaw that was opened to the public at the end of that year. The Luxembourg Plaza in Prague is presently under development and hence not classified under this caption yet.

10. FIXTURES AND FITTINGS Gross amount Amortization Net amount At 1 January 2004 ...... 5,814 (2,415) 3,399 Increase ...... 3,670 (1,321) 2,349 Assets sales ...... (815) 703 (112) Translation difference ...... 312 (146) 166 At 31 December 2004 ...... 8,981 (3,179) 5,802 Increase ...... 3,189 (2,239) 950 Assets sales ...... (269) 176 (93) Transfer ...... 500 500 Translation difference ...... 382 (144) 238 At 31December 2005 ...... 12,783 (5,386) 7,397

F-77 In 2005, the Group has mainly invested in the new extended stay hotel Diana Residence in Warsaw (EUR 1.1 million) and in the Ofer buildings portfolio in Budapest for EUR 0.7 million.

The main investments of fixtures and fittings in 2004 were realised in Warsaw for the hotel Regina (EUR 1.7 million), in Prague for the extended stay hotel Pachtuv Palace (EUR 1.1 million) and in Bratislava for the extended stay hotel Sulekova. The same year, most sales of fixtures and fittings were realised by IPB (EUR 0.7 million).

11. PROPERTIES UNDER DEVELOPMENT The caption Properties under development also includes advance payments for EUR 3.3 million (2004 EUR 1.3 million). The rest represents the buildings under construction that have known the following evolution:

December December 2005 2004 Opening Balance ...... 10,803 18,805 New projects and work in progress ...... 16,516 6,935 Finalized projects ...... (8,841) (14,937) transfer and other movements ...... 2,285 — Translation differences ...... 838 — Total ...... 21,601 10,803

In 2005, the group invested EUR 3.0 million in the finalization of a hospital in Londynska that has been transfered to investment properties with a value of EUR 8.8 million. The other investments relate mainly to the Luxembourg plaza building that will be half dedicated to offices and half to hotel premises. The office part is a 50% joint venture with Trigranit. In the beginning of 2006, Trigranit has sold its share in the joint venture to the Group which sold it subsequently to the Endurance Real Estate Fund for Central Europe at the fair value determined by DTZ.

In 2004, the major part of the investments have been dedicated to the Luxembourg Plaza in Prague (EUR 4.2 million). The same year, two projects have been finalized: the hotel Le Regina in Warsaw (EUR 8.7 million) and the Pachtuv Palace in Prague (EUR 5.0 million).

12. FINANCIAL ASSETS This line mainly includes the investment in the Endurance Real Estate Fund for Central Europe (the “fund”) amounting to EUR 10.5 million. This fund investing in investment properties has been created in 2005 and is managed by the Group (see note 25). The fund prepares consolidated financial statements as at 30 September each year and interim consolidated financial statements as at 31 March. Due to its creation in 2005, the cost of the investment held by the Group in the fund approximates its fair value.

13. INVENTORIES

December December 2005 2004 Opening ...... 31,778 39,000 Transfer with investment property ...... 3,023 — Net impairments ...... (1,891) — Other variations ...... 22,727 (7,222) Total ...... 55,637 31,778

As at December 2005, an impairment of EUR 1.8 million has been recognised on a development in Hungary. This impairment has been calculated by comparing the DTZ value with the net book value of the project. After the closing, the potential selling price of this project has increased that could lead -depending on the new DTZ valuation- in 2006 to a reversal of that impairment.

F-78 14. TRADE RECEIVABLES

December December 2005 2004 Trade receivables gross ...... 11,372 29,918 Provision for impairment of receivables ...... (5,819) (7,773) Total ...... 5,553 22,145

As the Group has a large number of customers, there is no specific concentration of credit risk with respect to trade receivables apart from the fact that most of them are located in the Czech Republic.

In 2005, the Group (mainly IPB) has recognized a net reversal of impairments on trade receivables of EUR 3.1 million.

15. CASH AND CASH EQUIVALENTS As at December 2005, the cash and cash equivalents consist of short term deposits for EUR 12.8 million (essentially held by Suncani Hvar), cash in bank for EUR 36.1 million (non invested part of the OBSAR Bonds issued in November 2005) and cash in hand for EUR 0.1 million.

16. HELD FOR SALE ACTIVITIES Atronyx kft holding the Orco Business Park building in Budapest, classified as held for sale in 2004, was sold to the Endurance Fund in December 2005 for a total price of EUR 12.4 million generating a non taxable profit of EUR 2.4 million.

17. MINORITY INTERESTS’ TRANSACTIONS The Group acquired during the second quarter of 2005, most of the minority interest present in the capital of Orco Hotel Group increasing its shareholding to 99%. This acquisition has been paid through the issue of 32,307 new shares of Orco Property Group S.A. for an amount of EUR 1.4 million.

18. BORROWINGS 18.1 Borrowings maturity The following tables describe the maturity of the Group’s borrowings. For most floating rate borrowings, the Group takes on exposure the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interests costs may increase or decrease as a result of such changes.

In 2005, the non-current financial debts amount to EUR 183.1 million. The difference between the carrying amount and EUR 175.9 million as mentionned in the following table relates to a right linked to the bond with repayable Subscription Warrants (OBSAR) described in the note 18.4 whose fair value as at December 2005 amounts to EUR 7.2 million.

Borrowings At 31 December 2005 Less than one year 1 to 5 years More than 5 years Total Non-current Bonds: ...... — 39,378 44,986 84,364 Convertible bonds ...... — — 21,878 21,878 Exchangeable bonds ...... — — 23,108 23,108 Bonds with repayable subscription warrants .... 39,378 — 39,378 Financial debts ...... 83,774 92,157 175,931 Bank loans : ...... — 78,236 91,200 169,436 Fixed rate ...... — 14,329 29,534 43,863 Variable rate ...... — 63,907 61,667 125,573 Other Non-current borrowings ...... — 5,538 — 5,538 Finance lease liabilities ...... — — 956 956 Total ...... — 123,152 137,143 260,295

F-79 Borrowings At 31 December 2005 Less than one year 1 to 5 years More than 5 years Total Current Bonds and financial debts Bonds ...... 16,700 — — 16,700 Bank loan fixed rate ...... 6,439 — — 6,439 Bank loan variable rate ...... 9,070 9,070 Others borrowings ...... 3,491 — — 3,491 Total ...... 35,700 — — 35,700

At 31 December 2004 Less than one year 1 to 5 years More than 5 years Total Non- current Bonds: ...... — 250 30,579 30,829 Convertible bonds ...... — — 30,579 30,579 Bonds ...... — 250 — 250 Financial debts ...... 13,931 42,724 56,655 Bank loans : ...... — 13,931 41,818 55,749 Fixed rate ...... — 6,124 21,146 27,270 Variable rate ...... — 7,807 20,672 28,479 Finance lease liabilities ...... — — 906 906 Total ...... — 14,181 73,303 87,484 Current Bonds and financial debts Bonds ...... 13,767 — — 13,767 Bank loan fixed rate ...... 12,354 — — 12,354 Bank loan variable rate ...... 1,025 — — 1,025 Others borrowings ...... 2,194 — — 2,194 Total ...... 29,340 — — 29,340

Bank loans include amounts secured by a mortgage on properties and/or a pledge on the shares of the companies benefiting from the loan to the value of EUR 177 million (December 2004 EUR 63.0 million). In general Orco Property Group S.A. has granted its guarantee in favour of the bank for each of the subsidiaries.

The guarantees granted to financial institutions remain fully valid until complete reimbursement of credits. No partial waiver on pledge or mortgage has been scheduled.

The carrying amount of the Group’s borrowings is denominated in the following currencies :

December December 2005 2004 EUR...... 253,368 110,723 CZK...... 31,258 6,101 PLN...... 1,083 0 SKK...... 2,246 0 HKR...... 8,040 0 Total ...... 295,995 116,824

F-80 18.2 Convertible bonds Within the authorized capital, the Board of Directors decided on September 21, 2004 to issue a convertible bond without preferential subscription rights with the following terms :

Nominal EUR 32,450,641.20 Number of bonds 1,001,563 Issue price at par value, EUR 32.40 Redemption price if not converted 111.76% of par at EUR 36.21, i.e. a gross yield-to-maturity of 6.80% Nominal interest rate 5.5% Conversion price EUR 32.40 Conversion ratio One new share for one bond Issuance date 22 September 2004 Conversion at the discretion of From the issuance date until eight days later. The final redemption bondholder date is on 24 December 2011 The issuer’s call rights As of 1 April 2006, i.e. the first day of the 19th month following the issuance date, should Orco Property Group share be at or above the price of EUR 40.50, bondholders who have not converted after a 30-days call notification period will receive, in addition to redemption of principal and interests accrued, a redemption premium allowing them to achieve a gross yield-to-maturity of 8%.

As at 31 December 2004, no bond had been converted. During 2005, 290,613 rights of conversion have been exercised leading to the creation of same amount of new shares.

In the IFRS accounts, the funds raised with this convertible bond have been at issuance divided into a long- term debt component and an equity component. Furthermore, the costs linked to the issuance of the bond are deducted from funds raised. The equity component, classified in other reserves, represents the market value on the date of issue of the call options embedded in the convertible bond. The difference between the debt component and the par value of the bond will be taken in profit and loss accounts using the effective interest method.

Debt component on issue ...... 30,487 Interest accumulated in 2004 ...... 92 Balance at 31 December 2004 ...... 30,579 Interest accumulated during the period ...... 280 Conversion rights exercised ...... (8,981) Balance at 31 December 2005 ...... 21,878

18.3 Exchangeable bonds in Suncani Hvar shares The acquisition of Suncani Hvar dd is financed by a private placement of an exchangeable bond issued by the Company under the following terms:

Nominal EUR 24,169,193.39 Issue price EUR 26.03 (KN 190) Issue date 30 June 2005 Nominal interest rate 5.5% Exchange at the discretion of bondholder between 1 July 2010 and 11 June 2012 in Suncani Hvar dd share, one share for one bond. Repayment date the non exchanged bonds will be reimbursed in cash on 30 June 2012 ISIN XS 0223 58 64 20 Listing Luxembourg stock exchange as from November 2005

F-81 As at 31 December 2005, no bond had been exchanged.

In the IFRS accounts, the funds raised with this exchangeable bond have been at issuance divided into a long-term debt component, an equity component and a long term derivative component. Furthermore, the costs linked to the issuance of the bond are deducted from the funds raised. The derivative component (EUR 0.8 million), classified in other current liabilities, represents the market value on the date of issue of the call options embedded in the bond. This derivative will be revalued at its market value at each closing through the income statement. The difference between the debt component and the par value of the bond will be taken in profit and loss accounts using the effective interest method.

Debt component on issue ...... 23,048 Interest accumulated during the period ...... 60 Balance at 31 December 2005 ...... 23,108

18.4 Bonds with Repayable Subscription Warrants (“OBSAR”)

Bonds Nominal EUR 50,272,605.30 Number of bonds 73,273 Nominal value per bond EUR 686.10 Issue price per bond EUR 682.38 Redemption 18 November 2010 Normal Redemption at par, EUR 686.10 per bond, if the average price quoted over the ten stock exchange trading sessions preceding the Redemption Date, of the products of the closing price of the Orco Property Group S.A. share on the Euronext Paris S.A. Eurolist market and of the Exercise Parity applicable during the said stock exchange sessions is equal to or greater than the Exercise Price of the Redeemable Share Subscription Warrants, at 120% of par, that is EUR 823.32 per Bond, if the average price quoted over the ten stock exchange trading sessions preceding the Redemption Date, of the products of the closing price of the Orco Property Group share on the Euronext Paris S.A. Eurolist market and of the Exercise Parity applicable during the said stock exchange sessions is less than the Exercise Price of the Redeemable Share Subscription warrants. Early Redemption Option for the Group to redeem all bonds at 120% of the par value on any Interest Payment Date subject to one month’s notice to bearers before the early redemption date. Nominal interest rate 4.5% ISIN FR0010249599 Listing Euronext

Warrants Number of warrants 1,099,095 (corresponding to 15 warrants/issued bond) Exercise ratio one warrant gives the right to one share Exercise price EUR 68.61 Exercise period 18 November 2005 until 18 November 2012 Early repayment From 19 November 2007 the issuer may reimburse the warrants at EUR 0.01 if the average share price over the last 10 days preceeding 19 November 2007 is higher than EUR 96.05 ISIN LU0234878881 Listing Euronext

F-82 In the IFRS accounts, the funds raised with this bond have been at issuance divided into a long-term debt component, an equity component and a derivative component. Furthermore, the costs linked to the issuance of the bond are deducted from the funds raised. The equity component (EUR 3.7 million reduced by EUR 1.1 million deferred taxes), classified in other reserves, represents the market value on the date of issue of the subscription warrants embedded in the bond. The derivative component (EUR 5.3 million), classified in non-current financial debts, represents the market value on the date of issue of the bondholder to get redemption premium if the average market price of Orco shares do not reach a certain level before the repayment date. This derivative will be revalued at its market value at each closing through the income statement. The difference between the debt component and the par value of the bond will be taken in profit and loss accounts using the effective interest method.

Debt component on issue ...... 39,173 Interest accumulated during the period ...... 205 Balance at 31 December 2005 ...... 39,378

18.5 Average effective interest rates

December 2005 December 2004 EUR CZK SKK PLN HKR EUR CZK Bonds ...... 6.33% — 6.04% — Bank borrowings ..... 5.48% 4.68% 4.42% 6.83% 5.40% 5.27% 4.88%

18.6 Undrawn credit facilities

December 2005 December 2004 Expiring within one year ...... 1,065 4,727 Expiring after one year ...... 3,835 21,918 Total ...... 4,900 26,645

18.7 Minimum lease payments

2005 December 2004 December More than 5 years ...... 4,032 4,002 Future finance charges on finance leases ...... (3,076) (3,096) Present value of finance lease liabilities ...... 956 906

19. INCOME TAXES Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes of one entity relate to the same fiscal authority. All deferred taxes are assumed to be recoverable after more than 12 months.

Change in December SPV Scope income Other Translation December 2004 acquisition variation statement movements differences 2005 Intangible assets ...... 5 0 0 0 0 0 5 Tangible assets ...... (13,081) (6,187) (6,475) (15,621) 0 (1,103) (42,467) Financial assets ...... (90) 0 0 0 0 0 (90) Inventories ...... 1,393 (109) 0 723 0 83 2,090 Current assets ...... 1,012 0 0 (1,013) 0 20 19 Provisions ...... 488 0 0 (415) 0 13 86 Long term debts ...... (369) 0 0 (81) (1,104) 1 (1,553) Recognized loss carry forward ...... 1,611 741 0 1,382 0 3 3,737 Total Deferred taxes ...... (9,031) (5,555) (6,475) (15,025) (1,104) (983) (38,173) Deferred tax assets ...... 4,335 6,345 Deferred tax liabilities ..... (13,366) (44,518)

F-83 The income taxes recognised in the income statement amount to EUR 16.1 million (2004: EUR 8.2 million) among which EUR 1.1 million of current income taxes and EUR 15.0 million deferred income taxes. The other movements generated on long term debts come from the deferred income taxes on the share subscription rights embedded in the OBSAR bonds which have been immediately recognised in equity.

SPV acquisition represents the deferred income taxes recognized on the temporary differences between the tax base and the acquisition price of the properties in case of acquisition of properties through the acquisition of companies (share deals). Those acquisitions are not considered as business combinations under IFRS. The deferred tax liability on scope variation represent the deferred tax liabilities on the revaluation to the fair market value of the assets and liabilities of Suncani Hvar dd.

In accordance with IAS 12, the recognition of deferred tax liabililities on the revaluation of investment properties amounts to EUR 20.8 million (EUR 9.1 million in 2004) on the balance sheet as at December 2005 and it reduced the net result attributable to the Group by EUR 5.8 million (EUR 0.7 million in 2004).

20. EARNINGS PER SHARE

December December 2005 2004 At the beginning of the period ...... 4,620,898 4,004,157 Shares issued ...... 4,622,824 4,017,073 Treasury shares ...... (1,926) (12,916) Weighted average movements ...... 1,272,684 192,917 Issue of new shares for cash ...... 1,253,592 181,927 Issue of new shares in acquisitions ...... 19,296 — Treasury shares ...... (203) 10,990 Weighted average outstanding shares for the purpose of calculating the basic earnings per share ...... 5,893,582 4,197,074 Dilutive potential ordinary shares ...... 1,299,622 2,013,751 Share subscription rights ...... 392,068 1,012,188 Convertible bond ...... 710,950 1,001,563 Employee stock options ...... 30,664 — PACEO ...... 165,940 — Weighted average outstanding shares for the purpose of calculating the diluted earnings per share ...... 7,193,204 6,210,825 Net profit attributable to the Group ...... 54,523 18,700 Effect of assumed conversions / exercises ...... 1,832 1,272 Share subscription rights ...... 346 883 Convertible bond ...... 1,123 389 PACEO ...... 364 — Net profit attributable to the Group after assumed conversions / exercises ...... 56,355 19,972 Basic earnings in EUR par share ...... 9.25 4.46 Diluted earnings in EUR par share ...... 7.83 3.22

Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. As at 31 December 2005, the Repayable Subscription Warrants (see note 18.4) are not considered as potential dilutive ordinary shares as per the definition of IAS 33.

F-84 21. EQUITY 21.1 Share capital

Number of Share shares Capital premium Balance at 1 January 2004 ...... 4,017,073 16,470 33,440 Exercise of employee stock options ...... 80,000 328 997 Exercise of Share subscription rights ...... 1,003 4 19 Share private placement ...... 150,000 615 2,985 Acquisition of minority interests ...... 319,984 1,312 7,683 Dividend paid in shares ...... 54,764 225 965 Balance at 31 December 2004 ...... 4,622,824 18,954 46,089 Exercise of employee stock options ...... 51,000 209 1,408 Exercise of Share subscription rights ...... 620,120 2,542 11,720 Conversion of convertible bonds ...... 290,613 1,192 8,224 Share private placement ...... 300,000 1,230 11,970 Exercise of PACEOs ...... 834,060 3,420 36,885 Acquisition of minority interests ...... 32,307 132 1,243 Dividend paid in shares ...... 41,654 171 1,425 Balance at 31 December 2005 ...... 6,792,578 27,850 118,964

The Extraordinary Shareholders’ Meeting of 29 April 2004 renewed the authorization granted by shareholders to the Board of Directors on May 18, 2000, in accordance with article 32-3 (5) of Luxembourg corporate law. The Board of Directors was granted full powers to proceed with the capital increases within the authorized capital of EUR 50,000,000, under the terms and conditions it will set, with the option of eliminating or limiting the shareholders’ preferential subscription rights as to the issuance of new shares within the authorized capital.

A total of EUR 27,849,569.80 has been used to date under this authorization. As such, the Board of Directors still has a potential of EUR 22,150,430.20 at its disposal. Considering that all new shares are issued at the par value price of EUR 4.10, a potential total of 5,402,543 new shares may still be created.

21.2 Share subscription rights The Board of Directors decided, in its meeting on 5 November 2003, to initiate the issue of rights allowing their bearers to subscribe to new shares to be issued by the Company, shareholders having waived their preferential subscription right on the basis of new shares likely to be created following right exercise.

Three share subscription rights allow to subscribe to one new share to be issued at the unit price of EUR 23. The exercise period spreads from 17 November 2003 to 16 November 2006 included. At issuance, the maximum number of shares that can be created this way amounts to 1,013,191. The remaining number of rights as at 31 December 2005 amounts to 1,176,204 giving the right to subscribe to 392,068 shares.

21.3 Convertible bonds See note 18.2

F-85 21.4 Repayable Subscription Warrants See note 18.4

21.5 Employee stock options A new stock option plan was granted to employees on 2 May 2005 under the following conditions:

Exercise price: EUR 35 share Exercise period: from 2 May 2005 until 30 April 2010 Beneficiary: Orco Holding ...... 45,000 Arnaud Bricout ...... 20,000 Steven Davis ...... 20,000 Nicolas Tommasini ...... 20,000 Ales Vobruba ...... 20,000 Gilbert Irondelle ...... 5,000 Pavel Klimes ...... 5,000 Dragan Lazukic ...... 5,000 Andy Smith ...... 5,000

In accordance with IFRS 2 Share-based payments, the total theoretical and non cash cost of EUR 1.4 million has been estimated and accounted for 2005 in the income statement under the Employee benefit caption. This fair value was determined using the Black-Scholes valuation model. The significant input into the model were share price of EUR 38.9 at grant date, exercise price as stated above, risk-free interest rate EURIBOR, dividend increase of 7.5% a year, long term standard deviation of expected share price return of 22%.

As at 31 December 2005 , these employee share options have been taken into account in the diluted earnings per share calculation because their exercise price as defined by IAS 33 is lower than the average market price over the period.

In addition to this new plan, 18,000 options granted to employees before 2004 have been exercised in 2005. As at December 2005, there is no remaining options from former plans granted to employees.

Movements in the number of share options :

Average exercise Number of price in EUR options Outstanding at the beginning of the year ...... 25,69 18,000 Granted ...... 35,00 150,000 Exercised ...... 31,72 (51,000) Cancelled ...... 35,00 (5,000) Outstanding at the end of the year ...... 35,00 112,000

The expiry date of the remaining 112,000 options is 30 April 2010.

21.6 PACEO On 31 March 2005, Orco Property Group S.A. and Société Générale in Paris (SG) have arranged a Step-up Equity Subscription (PACEO: Programme d’Augmentation de Capital par Exercices d’Options). The PACEO has been filed with and approved by the AMF (Autorité des Marchés Financiers) with the visa No. 05-201. It allows Orco Property Group S.A. to issue a maximum of 1 million new shares subscribed on the demand of Orco Property Group S.A. by SG. All subscriptions will be at an issue price of 95% of the share price at the time of execution. As at 31 December 2005, the Company has exercised 834,060 options for a total proceeds of EUR 40,304,752.80.

22. DIVIDENDS PER SHARE The dividends paid in 2005 and 2004 were EUR 3.5 million (EUR 0.58 per share) and EUR 1.8 million (EUR 0.39 per share) respectively.

F-86 The Board of Directors has decided to propose at the Annual General Meeting of Orco Property Group S.A. the payment of EUR 0.80 per share in respect of 2005. As an event after the balance sheet date, these financial statements do not reflect this dividend proposal that will be accounted for in 2006 as an appropriation of retained earnings.

23. CONTINGENCIES The Group has given guarantees in the ordinary course of business (see note 18).

24. CAPITAL COMMITMENTS • Orco Property Group S.A. entered into a Subscription Agreement with the Endurance Real Estate Fund for Central Europe. As at December 2005, the balance still to subscribe amounts to EUR 2.7 million. • The Group entered into advanced negociations for the acquisition of different assets in : • Czech Republic Residential plots of land for a total of EUR 7 million. • Hungary Office Building for EUR 18 million. • Orco Property Group S.A. will fund its subsidiary MaMaison Residences in a range of EUR 4.7 million in order to finance the acquisition of an extended stay hotel in Moscow. This payment is foreseen during the second quarter of 2006. • As a developper of buildings and residential properties, the Group is committed to finalize the construction of properties in different countries. The commitments for the projects started as at December 2005 amount to EUR 75.7 million.

25. RELATED PARTY TRANSACTIONS The global consideration given as employee benefit to the members of the Executive Committee amounted to EUR 1.7 million as at December 2005 (EUR 1.3 million as at 31 December 2004). Besides, Board Members receive a EUR 500 fee for each board they attend. The Company did not grant any advance or loan to board members nor to members of the Executive Committee and does not finance any pension plan in their favour. The stock options granted to members of the Executive Committee are detailed in note 21.5.

Orco is the sponsor and the fund manager of a Luxembourg regulated close ended investment fund dedicated to institutional investors, the Endurance Real Estate Fund for Central Europe. This fund has opted for the form of a “Fonds Commun de Placement”. Besides the Group is the shareholder of the management company of the Fund and has also invested in the Fund directly (see note 12). By the end of 2006, the portion invested by the Group in the Fund will represent 9%.

Orco’s remuneration is linked to: • the placement fee of 1% of the committed funds of the investors • the management fee of 2% per year calculated on the called subscriptions • acquisition fee of 1% calculated on the value of the assets bought or sold by the fund.

The investment process foresees that any investment of more than EUR 10 million proposed by the fund manager has first to be approved by the investment committee. This committee is made of a representative of each investor (7 members end of 2005).

26. EVENTS AFTER BALANCE SHEET DATE • Orco Property Group S.A. bought from Trigranit 50% of the shares of Orco Property a.s. and a receivable from Orco Property a.s. for a total price of EUR 15 million. • Orco Property Group S.A. sold to the Endurance fund 50% of the shares of Orco Property a.s. and a receivable from Orco Property a.s. for a total price of EUR 16 million. • Orco Property Group S.A. issued one straight bond of CZK 1,400 million, maturity 2010, interest rate Pribor + 220 bp. This bond issue is listed on the Prague Stock Exchange • The group finalised partly the acquisitions mentionned in note 24.

F-87 27. LIST OF THE FULLY CONSOLIDATED SUBSIDIARIES

% shareholding Company Country Currency Activity 31.12.05 31.12.04 1. Sportovní, a.s...... Czech Republic CZK Development 100.00% 100.00% Americká 1, a.s...... Czech Republic CZK Renting 100.00% 100.00% Americká 33, a.s...... Czech Republic CZK Renting 100.00% 100.00% Americká Park, a.s...... Czech Republic CZK Extended stay 70.65% 81.38% AMERICKÁ—ORCO, a.s...... Czech Republic CZK Renting 100.00% 100.00% Anglická 26, s.r.o...... Czech Republic CZK Renting .100.00% 100.00% Ariah Ingatlanforgalmazó Kft ...... Hungary HUF Renting 100.00% — Belgická—Na Kozacˇce, s.r.o...... Czech Republic CZK Renting 100.00% 100.00% B.P. Servis, s.r.o...... Czech Republic CZK Renting 100.00% — BRNO CENTRUM, s.r.o...... Czech Republic CZK Renting 100.00% — Budapest Real Estate Investors S.à r.l...... Luxembourg EUR Holding 100.00% — BYTY PODKOVA, a.s...... Czech Republic CZK Development 100.00% — CWM35Kft ...... Hungary HUF Renting 100.00% — Diana Development Sp. z.o.o...... Poland PLN Extended stay 70.65% — Diezenhoferovy sady, s.r.o...... Czech Republic CZK Hotel 99.57% — Endurance Real Estate Assets Management Company S.A...... Luxembourg EUR Holding 100.00% — Etoile d’or S.A...... Luxembourg EUR Renting 100.00% — IPB Real development a.s...... Czech Republic CZK Development 100.00% 100.00% IPB Real reality, a.s...... Czech Republic CZK Development 100.00% 100.00% IPB Real, a.s...... Czech Republic CZK Development 100.00% 100.00% IPB Real, s.r.o...... Czech Republic CZK Development 100.00% 100.00% Iskolaprojekt 68 Kft ...... Hungary HUF Development 100.00% 100.00% Izabella 62-64 Kft ...... Hungary HUF Development 100.00% 100.00% Janácˇkovo nábrˇezˇí 15, s.r.o...... Czech Republic CZK Hotel 99.57% 95.00% JIHOVÝCHODNÍ MEˇ STO, a.s...... Czech Republic CZK Development 100.00% 100.00% Londýnská 26, a.s...... Czech Republic CZK Renting 100.00% 100.00% Londýnská 39, s.r.o...... Czech Republic CZK Renting 100.00% 100.00% Londýnská 41, s.r.o...... Czech Republic CZK Renting 100.00% 100.00% MÁCHOVA—ORCO, a.s...... Czech Republic CZK Renting 100.00% 100.00% Mamaison Bratislava ...... Slovakia SKK Extended stay 70.65% 81.38% MaMaison Residences S.A...... Luxembourg EUR Extended stay 70.65% 81.38% Mánesova 28, a.s...... Czech Republic CZK Renting 100.00% 100.00% Medec 35 Ingatlanfejleszto˝Kft...... Hungary HUF Renting 100.00% — Medec 36 Kft ...... Hungary HUF Renting 100.00% — Meder 36 Kft ...... Hungary HUF Renting 100.00% — MMR Management, s.r.o...... Czech Republic CZK Extended stay 70.65% 81.38% MMR Russia S.A...... Luxembourg EUR Extended stay 70.65% — Nad Petruskou, s.r.o...... Czech Republic CZK Renting 100.00% 100.00% NOVÉ MEDLÁNKY a.s...... Czech Republic CZK Development 100.00% 100.00% ORCO ALFA, s.r.o...... Czech Republic CZK Development 100.00% 100.00% ORCO Alfa, s.r.o...... Slovakia SKK Development 100.00% — Orco Aparthotel S.A...... Luxembourg EUR Extended stay 70.65% 81.38% Orco Budapest Kereskedelmi Részénytársaság . . . Hungary HUF Development 100.00% 100.00% Orco Commercial Sp. z.o.o...... Poland PLN Development 100.00% — Orco Construction Sp. z.o.o...... Poland PLN Development 100.00% — Orco Croatia S.A...... Luxembourg EUR Hotel 100.00% — Orco Delta a.s...... Czech Republic CZK Development 100.00% — ORCO Development, s.r.o...... Slovakia SKK Development 100.00% 100.00% ORCO DEVELOPMENT, a.s...... Czech Republic CZK Development 100.00% 100.00% Orco Development Kft ...... Hungary HUF Development 100.00% 100.00% Orco Development Sp. z.o.o...... Poland PLN Development 100.00% 100.00% ORCO Estates, s.r.o...... Slovakia SKK Development 100.00% 100.00% ORCO ESTATE, s.r.o...... Czech Republic CZK Development 100.00% 100.00% Orco Germany S.A...... Luxembourg EUR Renting 100.00% 100.00% Orco Hospitality Services Sp. z.o.o...... Poland PLN Hotel 99.57% 95.00%

F-88 % shareholding Company Country Currency Activity 31.12.05 31.12.04 Orco Hotel Collection S.A...... Luxembourg EUR Hotel 99.57% 95.00% Orco Hotel Development Sp. z.o.o...... Poland PLN Extended stay 70.65% 81.38% ORCO HOTEL DEVELOPMENT, a.s...... Czech Republic CZK Hotel 99.57% 95.00% Orco Hotel Group S.A...... Luxembourg EUR Hotel 99.57% 95.00% Orco Hotel Management Kft ...... Hungary HUF Hotel 99.57% 95.00% ORCO HOTEL MANAGEMENT, s.r.o...... Czech Republic CZK Hotel 99.57% 95.00% Orco Hotel Project Sp. z.o.o...... Poland PLN Hotel 99.57% 95.00% ORCO Hotel Project, a.s...... Czech Republic CZK Hotel 99.57% 95.00% Orco Hotel Rt ...... Hungary HUF Hotel 99.57% 95.00% ORCO House, s.r.o...... Slovakia SKK Development 100.00% — Orco Hungary Kft ...... Hungary HUF Development 100.00% 100.00% ORCO Immobilien GmbH ...... Germany EUR Development 100.00% — ORCO INVESTMENT, a.s...... Czech Republic CZK Development 100.00% 100.00% Orco Investment Kft ...... Hungary HUF Development 100.00% 100.00% Orco Investment Sp. z.o.o...... Poland PLN Development 100.00% — Orco Poland Sp. z.o.o...... Poland PLN Development 100.00% 95.00% ORCO Prague, a.s...... Czech Republic CZK Renting 100.00% 100.00% ORCO Project Management, s.r.o...... Czech Republic CZK Development 100.00% 100.00% Orco ProjectSzervezo˝Rt...... Hungary HUF Development 100.00% 100.00% Orco Project Sp. z.o.o...... Poland PLN Development 100.00% 100.00% ORCO Project, s.r.o...... Slovakia SKK Development 100.00% – ORCO Property Management, a.s...... Czech Republic CZK Renting 100.00% 100.00% Orco Property Sp. z.o.o...... Poland PLN Development 100.00% 100.00% ORCO PROPERTY START, a.s...... Czech Republic CZK Hotel 99.57% 95.00% ORCO REALITY, a.s...... Czech Republic CZK Development 100.00% 100.00% ORCO Residence, s.r.o...... Slovakia SKK Development 100.00% — Orco Residential Sp. z.o.o...... Poland PLN Development 100.00% — ORCO Slovakia, s.r.o...... Slovakia SKK Development 100.00% 100.00% ORCO Strategy, a.s...... Czech Republic CZK Development 100.00% 100.00% Orco Strategy Sp. z.o.o...... Poland PLN Development 100.00% 100.00% Orco Trade s.r.o...... Czech Republic CZK Development 100.00% 100.00% Orco Vagyonkeselo˝Kft ...... Hungary HUF Renting 100.00% 100.00% ORCO Vinohrady, a.s...... Czech Republic CZK Renting 100.00% 100.00% Orco Vinohrady S.à r.l...... France EUR Holding 100.00% 100.00% Orco Warsaw Sp. z.o.o...... Poland PLN Hotel 99.57% 95.00% Ozrics Kft ...... Hungary HUF Renting 100.00% — Pachtu˚v palác, s.r.o...... Czech Republic CZK Extended stay 70.65% 81.38% Central European Real Estate Management S.A. . . . Luxembourg EUR Holding 100.00% — Prague Real Estate 2 SA ...... Luxembourg EUR Holding 100.00% — Residence Belgická, s.r.o...... Czech Republic CZK Extended stay 70.65% 81.38% Residence Izabella Kft ...... Hungary HUF Extended stay 70.65% 81.38% RESIDENCE MASARYK, a.s...... Czech Republic CZK Extended stay 70.65% 81.38% Révay 10 Kft ...... Hungary HUF Renting 100.00% 100.00% Seattle, s.r.o...... Czech Republic CZK Development 100.00% — SUNCˇ ANI HVAR D.D. HVAR ...... Croatia HKR Hotel 47.74% — TQE Asset, a.s...... Czech Republic CZK Renting 100.00% — Yuli Kft ...... Hungary HUF Renting 100.00% — Záhrˇebská 35, s.r.o...... Czech Republic CZK Renting 100.00% 100.00%

F-89 28. LIST OF THE JOINT VENTURES 28.1 Kosic S.à r.l. As at 1 January 2005, Kosic s.r.o. has been split into three entities corresponding to the three phases forecasted of the global Kosic’s development project. Those three new entities are Kosic Development s.r.o. (initial one), Sv Faze s.r.o. and Slunecny Vrsek III, s.r.o. The Group has a 50% interest in Kosic S.à r.l, a Luxembourg based holding company which in turn holds 100% of the 3 operational companies.

The following amounts represent the Group’s 50% share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2005 2004 Non-current assets ...... 9 — Current assets ...... 252 289 Assets ...... 261 289 Non-current liabilities ...... — — Current liabilities ...... 27 (1,993) Liabilities ...... 27 (1,993)

December December 2005 2004 Income ...... 0 3 Expenses ...... (55) (56) Profit after income tax ...... (55) (53)

28.2 Kosic Development s.r.o. The Group has a 50% interest in a joint venture, Kosic Develoment s.r.o., which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase I in the Czech Republic.The following amounts represent the Group’s 50% share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2005 2004 Non-current assets ...... 463 15 Current assets ...... 7,475 3,628 Assets ...... 7,937 3,643 Non-current liabilities ...... 1,741 2 Current liabilities ...... 4,231 166 Liabilities ...... 5,972 168 Income ...... 12 1,871 Expenses ...... (490) (1,656) Profit after income tax ...... (478) 215

F-90 28.3 SV Faze II s.r.o. The Group has a 50% interest in a joint venture, SV Faze s.r.o., which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase II in the Czech Republic. The following amounts represent the Group’s 50% share of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December 2005 Non-current assets ...... 2,950 Current assets ...... 1 Assets ...... 2,951 Non-current liabilities ...... 1,710 Current liabilities ...... 2 Liabilities ...... 1,712

December 2005 Income ...... 1,040 Expenses ...... (253) Profit after income tax ...... 787

28.4 Slunecny Vrsek III s.r.o. The Group has a 50% interest in a joint venture, Slunecny Vrsek III s.r.o, which is one of the three companies active in the development sector resulting from the demerger of Kosic s.r.o. corresponding to the project’s phase III in the Czech Republic. The following amounts represent the Group’s 50% share of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December 2005 Non-current assets ...... 300 Current assets ...... 84 Assets ...... 384 Non-current liabilities ...... (1) Current liabilities ...... 2 Liabilities ...... 1 Income ...... 0 Expenses ...... (2) Profit after income tax ...... (2)

F-91 28.5 Orco Property a.s. The Group has 50% interest in a joint venture, Orco Property a.s., which is active in the leasing sector and holds the office part of the Luxembourg Plaza project in the Czech Republic. The following amounts represent the Group’s 50% share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2005 2004 Non-current assets ...... 19,553 5,768 Current assets ...... 706 256 Assets ...... 20,259 6,024 Non-current liabilities ...... 11,121 2,078 Current liabilities ...... 1,224 1,581 Liabilities ...... 12,346 3,659

December December 2005 2004 Income ...... 6,877 34 Expenses ...... (1,496) (369) Profit after income tax ...... 5,381 (335)

28.6 Oak Mill The Group has 50% interest in a joint venture, Oak Mill, which is active in the development sector and holds the Dobovy Mlyn project in the Czech Republic. The following amounts represent the Group’s 50% share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement:

December December 2005 2004 Non-current assets ...... 38 Current assets ...... 4,712 2,087 Assets ...... 4,750 2,087 Non-current liabilities ...... 407 836 Current liabilities ...... 2,357 271 Liabilities ...... 2,764 1,107

December December 2005 2004 Income ...... 0 15 Expenses ...... (85) (24) Profit after income tax ...... (85) (9)

F-92 SCHEDULE A: DTZ VALUATION REPORT AS AT 31 DECEMBER 2006 AND ANNEX A THEREOF

Report and Valuation for

Orco Property Group S.A. 8, Boulevard Emmanuel Servais L-2535 Luxembourg

29 March 2007 Private and Confidential

DTZ Debenham Tie Leung One Curzon Street LONDON W1A 5PZ

A-1 Contents

Page 1. Terms of instruction, confidentiality and disclosure ...... A-3 1.1 Introduction ...... A-3 1.2 Our appointment ...... A-3 1.3 Schedule of Properties ...... A-6 1.4 Inspections ...... A-6 1.5 Compliance with appraisal and valuation standards ...... A-7 1.6 Status of valuer and conflicts of interest ...... A-7 1.7 Basis of valuation ...... A-7 1.8 Assumptions and sources of information ...... A-7 2. Valuation ...... A-10 3. Confidentiality and disclosure ...... A-11

Appendix

A Summary of Property Values ...... A-12

A-2 Our ref: Pw.cg.0217.0307.rep Direct tel: 020 7643 6300 Direct fax: 020 7643 6345 E-mail: [email protected]

29 March 2007

Orco Property Group S.A. 8, Boulevard Emmanuel Servais L-2535 Luxembourg

For the attention of Mr Jean-Francois Ott, Chairman

Dear Sirs

VALUATION OF CENTRAL EUROPEAN PORTFOLIO 1. Terms of instruction, confidentiality and disclosure 1.1 Introduction We understand from Orco Property Group (the “Company”) that our Report and Valuation (the “Report”) is required for accounts purposes and is intended to be an update to our previous reports and should therefore be read in conjunction with our reports, dated 1 May 2000, 31 March 2001, 21 March 2002, 31 March 2003, 29 March 2004 and 15 February 2005 and 17 January 2006. We also understand that our Report will be used for presentation to the Company’s shareholders, bankers and potential investors, and that the values will be included in the Company’s annual report. The values reported are our opinion of the Market Value of the respective legal interests in the properties.

1.2 Our appointment In accordance with instructions from the Company we have prepared our opinion of Market Value of the following freehold and long leasehold properties in the portfolio mentioned above as at 31 December 2006:

Table 1 — Developments in the Czech Republic

Property City Use Tenure Benice Phase I Prague Land Freehold Benice Phase II-V Prague Land Freehold Bubny, Prague 7 Prague Land Freehold Cukrovarnicka, Prague 6 Prague Land Freehold Dienzenhoferovy sady Prague Hotel Development Freehold Dupovska, Prague 15 Prague Land Freehold Klánovický Les IV Prague Residential Development Freehold Kolin Kolin Land Freehold Kosic — Slunecˇný Vrsˇek phase I Prague Residential Development 50% Freehold Kosic Phase II Prague Land 50% Freehold Kosic Phase III Prague Land 50% Freehold Kouzelne Medlanky Brno Residential Development Freehold

A-3 Orco Property Group Valuation of Central European Properties 29 March 2007

Property City Use Tenure Michle Tyrsˇu˚v Vrch Prague Residential Development Freehold Nove Dvory Prague Residential Development Freehold Nové Medlánky I Brno Residential Development Freehold Nove Medlanky phase 2 Brno Land Freehold Nove Medlanky phase 3 Brno Land Freehold Pivovar Vrchlabi Vrchlabi Residential Development Freehold Plachta Phase II Part A Hradec Kralove Residential Development Freehold Plachta Phase II Part B Hradec Kralove Residential Development Freehold Plachta Phase III Hradec Kralove Residential Development Freehold Podkova Ostrava Ostrava Residential Development Freehold Praga, Prague 10 * Prague Residential Development Freehold Radio Free Europe — Hagibor Prague Office Development Freehold Radotin Prague Land Freehold Repy Nad Beránkem Prague Residential Development Freehold Slezska Na Frantisku Ostrava Residential Development Freehold Spinderluv Mlyn — Bellvue Spindleruv Mlyn Residential Development Freehold Spinderluv Mlyn — Grand Spindleruv Mlyn Residential Development Freehold Sˇpindleru˚v Mlýn — Bedrˇichov Spindleruv Mlyn Residential Development Freehold Sˇteˇrboholy Prague Residential Development Freehold * It should be noted that the Property was not fully acquired by Orco at the valuation date as a forward purchase agreement exists. Following instructions, we have included this Property in the valuation of the Orco portfolio.

Table 2 — Office & Retail investment properties in the Czech Republic

Property City Use Tenure Americka 11, Prague 2 Prague Office Freehold Anglicka 26, Prague 2 Prague Office Freehold Belgicka 40, Prague 2 Prague Office Freehold Londýnská 39 Prague Office Freehold Londynska 41, Prague 2 Prague Office Freehold Luxembourg Plaza Office Prague Office 50% Freehold Machova 18, Prague 2 Prague Office Freehold Manesova 28, Prague 2 Prague Office Freehold Na Porici, Prague 1 Prague Office Freehold OD Centrum (Brno) Brno Retail Freehold Vltavská, Bubenská 1, Prague 7 Prague Office Freehold

Table 3 — Residential investment properties in the Czech Republic

Property City Use Tenure Americka 13, Prague 2 Prague Residential Freehold Americka 33, Prague 2 Prague Residential Leasehold Americka Park (ex hotel), Prague 2 Prague Residential Freehold Americka Park, Prague 2 Prague Residential Freehold Belgicka 36, Prague 2 Prague Residential Freehold Londynska 26, Prague 2 Prague Residential Freehold Masaryka 40, Prague 2 Prague Residential Freehold Na Kozacce 1, Prague 2 Prague Residential Freehold Nad Petruskou 8, Prague 2 Prague Residential Freehold Plachta Phase I Hradec Kralove Residential Freehold Zahrebska 35, Prague 2 Prague Residential Freehold Zelené udoli E1 Prague Residential Freehold

A-4 Orco Property Group Valuation of Central European Properties 29 March 2007

Table 4 — Hotel investment properties in the Czech Republic

Property City Use Tenure Imperial Hotel, Tyrsoa 6, Ostrava 1 Ostrava Hotel Freehold Luxembourg Plaza Hotel Prague Hotel Freehold Pachtuv Palac, Anenske sq. 4 / K.Svetle 34 Prague Extended stay hotel Freehold Residence Belgicka, Belgicka 12, Prague 2 Prague Extended stay hotel Freehold Riverside Hotel, Janockovo Nabrezi Prague Hotel Freehold

Table 5 — Investment and Development Properties in Germany

Property City Use Tenure Benningsenstrasse Berlin Residential Freehold Breitestraße 15 Berlin Residential/Commercial Freehold Brunnenstraße 25 Berlin Residential Freehold Brunnenstraße 27 Berlin Residential/Commercial Freehold Danziger Straße 16 Berlin Residential/Commercial Dev Freehold Danziger Straße 219 Berlin Office Development Freehold Danziger Straße 73 - 77 Berlin Hospital/nursing home Freehold Fehrbelliner Hofe Berlin Residential Development Freehold Helberger Frankfurt Office Freehold Hosemannstrasse 6 Berlin Residential Freehold Immanuelkirchstraße 3-4 Berlin Residential/Commercial Freehold Kollwitzstrasse 71 Berlin Residential Freehold Kurfurstendamm 102 Berlin Office Freehold Kurfürstendamm 103 - 104 Berlin Residential/Commercial Freehold Kurfürstendamm 193 - 194 Berlin Residential/Commercial Dev Freehold Lychener Straße 20 Berlin Residential/Commercial Freehold Max Planck Strasse 24 Koln Retail Freehold Seelower Straße 5 Berlin Residential/Commercial Freehold Singerstraße 109 Berlin Commercial Freehold Sky Office Dusseldorf Development Freehold Wollinerstraße 51 Berlin Residential/Commercial Freehold Zehdenickerstrasse 25 Berlin Residential Freehold Zionskirchstraße 71 Berlin Residential/Commercial Freehold

Table 6 — Investment and Development Properties in Hungary

Property City Use Tenure Andrassy Hotel, Andrassy út 111 Budapest Hotel Freehold Avenue Gardens, Andrássy út 68. Budapest Residential Development Freehold Budapest Bank HQ, Váci út 188. Budapest Office Freehold Budapest Stock Exchange, Deák Ferenc Budapest Office development Freehold utca 5. CIB, Andrássy út 70. Budapest Office Freehold Paris Department Store, Andrássy út 39. Budapest Retail/office development Freehold Residence Izabella Utca 61 Budapest Extended stay hotel Freehold Revay Office, Révay utca 10. Budapest Office Freehold Small Budapest Bank, Váci út 188. Budapest Office development Freehold Starlight Hotel, Mérleg utca 6. Budapest Hotel Freehold Szervita Parking House, Szervita tér 8. Budapest Parking/office development Freehold

A-5 Orco Property Group Valuation of Central European Properties 29 March 2007

Table 7 — Investment and Development Properties in Poland

Property City Use Tenure Diana Residence (hotel Part) Warsaw Extended stay hotel Freehold Diana Residence (office Part) Warsaw Office Freehold Jozefoslaw Warsaw Residential Development Freehold La Regina, Koscielna 12 Warsaw Hotel Freehold Majolikowa / Flamenco Warsaw Residential Development Freehold Malborska / Targowek Warsaw Residential Development Freehold Mokotowska 59 Warsaw Residential Development Leasehold Parkhotel Vienna Bielsko Hotel Freehold Peugeot Site Warsaw Logistics/Retail Development Freehold Skarbka z Gor Warsaw Residential Development Freehold Zlota 44 Warsaw Residential Development Freehold

Table 8 — Investment and Development Properties in Croatia

Property City Use Tenure Administration Block Hvar Office HQ Freehold Cafe Pjaca Hvar Restaurant Freehold Camp Site Vira Hvar Camp site Freehold Dalmacija 2 Hvar Residential Development Freehold FOR Complex Hvar Retail Freehold Hotel Adriana Hvar Hotel Freehold Hotel Amfora Hvar Hotel Freehold Hotel Bodul Hvar Hotel Freehold Hotel Dalmacija Hvar Hotel Freehold Hotel Delfin Hvar Hotel Freehold Hotel Galeb Hvar Hotel Freehold Hotel Palace Hvar Hotel Freehold Hotel Pharos Hvar Hotel Freehold Hotel Riva Hvar Hotel Freehold Hotel Sirena Hvar Hotel Freehold

Table 9 — Investment and Development Properties in Slovakia and Russia

Property City Use Tenure Hotel Pokrovka Moscow Hotel Freehold Koliba Bratislava Land 50% Freehold Residence Sulekova Bratislava Extended stay hotel Leasehold Stein, pivovar, Blumentálska ulica Bratislava Mixed-use Development Freehold

The above are collectively known hereinafter as the “Properties”. We understand that all interests in the Properties are owned by wholly owned subsidiaries of the Orco Property Group.

1.3 Schedule of Properties A schedule of the Market Values for each individual Property is attached as Appendix A. The individual Properties and any specific valuation assumptions have been described in the individual property reports in Appendix B, which forms an integral part hereof.

1.4 Inspections The Properties were inspected part internally and externally by Paul Wolfenden and Chloë Garnett, London, Richard Hogg, Czech Republic, Gyorgy Lindwurm, Hungary, Carey Moore, Poland, between October and

A-6 Orco Property Group Valuation of Central European Properties 29 March 2007

December 2006. This report has been prepared by Paul Wolfenden FRICS, a director of DTZ Debenham Tie Leung. The valuations were carried out in conjunction with DTZ Zadelhoff Tie Leung, Prague, Czech Republic, DTZ Zadelhoff Tie Leung, Budapest, Hungary, DTZ Zadelhoff Tie Leung, Warsaw, Poland and DTZ Zadelhoff Tie Leung, Berlin, Germany.

1.5 Compliance with appraisal and valuation standards We confirm that the valuations have been prepared in accordance with the appropriate sections of the Practice Statements (“PS”) and United Kingdom Practice Statements (“UKPS”) contained within the RICS Appraisal and Valuation Standards, 5th Edition (the “Red Book”). Although this is a UK basis, it is internationally accepted as a basis of arriving at the valuation of real estate assets.

1.6 Status of valuer and conflicts of interest We confirm that we have undertaken the valuations acting as an External Valuer, qualified for the purpose of the valuation.

We have been involved in an agency capacity with Na Porici, Luxembourg Plaza in the Czech Republic, and Utca Révay in Hungary. No conflict of interest arises in this respect.

Aside from this, we confirm that we have had no previous direct or indirect interest, financial or otherwise in the Properties or the Company or their subsidiaries or other affiliates, except in connection with valuations, and we therefore do not consider that any conflict arises in preparing the advice requested.

1.7 Basis of valuation In accordance with your instructions, we have undertaken our valuations on the basis of Market Value.

We have set out the definition of the above basis of valuation in Appendix C.

1.8 Assumptions and sources of information For the purpose of the valuation we have reflected the information provided by the Company and its professional advisers. In the event that any of this information proves to be incorrect then our valuations should be reviewed. We have made certain Assumptions in relation to facts, conditions or situations affecting the subject of, or approach to, our valuations that we have not verified as part of the valuation process. In the event that any of these Assumptions prove to be incorrect then our valuations should be reviewed.

1.8.1 Title We have not had access to the title deed or certificates of Title for the Properties. We have stated in section 1.2 above the tenure of the Properties, and we have made an Assumption that there is good and marketable title and that the Properties are free from rights of way or easements, restrictive covenants, disputes and onerous or unusual outgoings. We have also made an Assumption that the Properties are free from mortgages, charges or other encumbrances. The Property with a Forward Purchase agreement and those subject to Joint Venture agreements have been included within our valuation on the assumption that they are fully owned by the Company, whom should deduct from the value any monies owed in this respect. Where appropriate, this is stated in the property reports in Appendix B.

1.8.2 Condition of structure and services, deleterious materials, plant and machinery and goodwill Due regard has been paid to the apparent state of repair and condition of the Properties, but a condition survey has not been undertaken, nor have woodwork or other parts of the structure which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the Properties are structurally sound or are free from any defects. We have made an Assumption that the Properties are free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects.

A-7 Orco Property Group Valuation of Central European Properties 29 March 2007

In respect of those assets under construction we have assumed that any new building constructed will be constructed in a workman like manner in accordance with good building practice and comprise suitable materials in keeping with similar developments.

We have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious material have been used in the constructions or any alterations, and therefore we cannot confirm that the Properties are free from risk in this regard. For the purposes of this valuation, we have made an Assumption that any such investigation would not reveal the presence of such materials in any adverse condition.

No mining, geological or other investigations have been undertaken to certify that the sites are free from any defect as to foundations. Where relevant, we have made an Assumption that the load bearing qualities of the sites of the Properties are sufficient to support the buildings constructed, or to be constructed thereon. We have also made an Assumption that there are no abnormal ground conditions, nor archaeological remains present, which might adversely affect the present or future occupations, developments or values of the Properties.

No tests have been carried out as to electrical, electronic, heating, plant and machinery equipment or any other services nor have the drains been tested. However, we have made an Assumption that all services are functioning satisfactorily.

No allowance has been made in this valuation for any items of plant or machinery not forming part of the service installations of the building. We have specifically excluded all items of plant, machinery and equipment installed wholly or primarily in connection with any of the occupants’ businesses. We have also excluded furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools. Further, no account has been taken in our valuations of any goodwill that may arise from the present occupations of the Properties.

It is a condition of DTZ Debenham Tie Leung Limited or any related company, or any qualified employee, providing advice and opinions as to value, that the client and/or third parties (whether notified to us or not) accept that the valuation report will in no way relate to, or give warranties as to, the condition of the structure, foundations, soil and services.

1.8.3 Properties in the course of development In undertaking the valuation of the Properties designated for development, where available we have relied upon the total anticipated construction cost estimates provided by the Company as at the valuation date. In some cases this has included all costs including finance costs and contingency, although in other cases we were provided with an explicit breakdown of costs where we have applied a market finance rate and contingency where applicable. Where construction costs or related fees have not been made available we have applied our own estimates based on the proposed development. We have applied an appropriate profit margin based on the profit absorption of the Company and taking into account the stage in development process and remaining risk profile.

In respect of those buildings or parts of those buildings which are not pre-let or where agreements have not been entered into to sell the Property on completion, we have allowed for letting and associated costs, where these have not been included in the development costs provided by the Company.

In undertaking valuations of the Properties in the process of development, the company needs to deduct from the value all reservations and deposits received.

1.8.4 Statutory requirements and planning As instructed, we have not made detailed planning enquiries. We have made an Assumption that the Properties have been constructed in full compliance with valid town planning and building regulations approvals, that where necessary they have the benefit of a current Fire Certificate and that the Properties are not subject to any outstanding statutory notices as to their construction, use or occupation. We have made a further Assumption

A-8 Orco Property Group Valuation of Central European Properties 29 March 2007 that the existing use of the Properties is duly authorised or established and that no adverse planning conditions or restrictions apply. We have assumed that for those Properties in the course of construction, that all planning conditions and permits will be satisfied.

1.8.5 Leasing In accordance with instructions, we have not read the leases or any other associated documents and have therefore relied on the tenancy information provided by the Company, which we have assumed is both complete and accurate. The Company has provided us with tenancy schedules from November 2006, which we understand is the most recent available, and for the purpose of this instruction we have assumed that the schedule is an accurate reflection of the position as at the date of valuation. Should any of the details provided by the Company prove to be incorrect then our valuations should be reviewed accordingly.

We have not undertaken investigations into the financial strength of the tenants. We have made an Assumption that the tenants are financially in a position to meet their obligations. We have also made an Assumption that there are no material arrears of rent or service charges or breaches of covenants, current or anticipated tenant disputes.

However, our valuation reflects the type of tenants actually in occupation or responsible for meeting lease commitments, or likely to be in occupation, and the market’s general perception of their creditworthiness.

1.8.6 Information We have made an Assumption that the information that the Company and its respective professional advisers have supplied to us in respect of the Properties is both full and correct.

It follows that we have made an Assumption that details of all matters likely to affect value within the Company’s and their agent’s collective knowledge have been made available to us and that the information is up to date.

1.8.7 Floor areas We have been provided with floor areas by the Company and we have relied on these areas for the purpose of the valuation. We have made the Assumption that the relevant floor areas supplied to us have been calculated in accordance with market practice. We have therefore assumed that, were a full measurement survey to be carried out on all the accommodation, the results would be consistent with the information provided by the Company.

The Company has provided us with schedules of proposed floor areas in respect of the Properties under construction which we have relied on for the purpose of the valuation.

1.8.8 Legal Issues Legal issues, and in particular the interpretation of matters relating to titles and leases, may have a significant bearing on the value of an interest in property. Where we have expressed an opinion upon legal issues affecting the valuation, then such opinion should be subject to verification by the client with a suitable qualified lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of the legal position of the client or other parties in respect of the valuations of the Properties.

1.8.9 Environmental matters Our inspections have provided no evidence that there is a significant risk of contamination in respect of the Properties. Accordingly, you have instructed us to assume that no contamination or other adverse environmental matters exist in relation to the Properties sufficient to affect value. We have not made any investigations to establish whether there is any contamination or potential for contamination to the Properties, nor have we carried out any investigation into past uses, either of the Properties or any adjacent land to establish whether there is any potential for contamination from such uses or sites and have therefore made an Assumption that none exists. If it is subsequently established that contamination exists at the Properties or on any neighbouring land, or that the premises have been or are being put to any contaminative use then this might reduce the value now reported. We have been instructed to make an Assumption that if investigations were made to an appropriate extent then nothing would be discovered sufficient to affect value.

A-9 Orco Property Group Valuation of Central European Properties 29 March 2007

In practice, purchasers in the property market do not make such an assumption about contamination and a purchaser of the Properties may require appropriate investigations to be made so as to assess any risk before completing a transaction.

We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid then the value would fall by an unspecified amount.

Commensurate with our Assumptions set out above, we have not made any allowance in the valuation for any effect in respect of actual or potential contamination of land or buildings.

2. Valuation Market Value We are of the opinion that the aggregate Market Value of the freehold and long leasehold interests in the Properties as set out in the Section 1.2 above, as at 31 December 2006 subject to the assumptions and comments in this Valuation Report and the Appendices was:- €1,219,869,000 (One Thousand, two Hundred and Nineteen Million, Eight Hundred and Sixty Nine Thousand)

It must be noted that the company should deduct from the values all reservations and deposits received in respect of the developments, and the Praga Property, Czech Republic that was not fully acquired by Orco at the valuation date.

The portfolio value by region and sector:

Market Value in Euros as at 31 December 2006

Valuation Summary — Czech Republic Developments ...... €286,013,000 Offices & Retail ...... €186,425,000 Hotels ...... € 92,300,000 Residential ...... € 38,669,000 Sub total ...... €603,407,000

Valuation Summary — Germany Developments ...... € 71,497,000 Office/Nursing Home/Retail ...... € 46,650,000 Residential/Commercial ...... € 37,201,000 Sub total ...... €155,348,000

Valuation Summary — Hungary Developments ...... € 79,450,000 Offices ...... € 45,580,000 Hotels ...... € 27,600,000 Sub total ...... €152,630,000

Valuation Summary — Poland Developments ...... € 90,016,000 Offices ...... € 5,600,000 Hotels ...... € 33,400,000 Sub total ...... €129,016,000

A-10 Orco Property Group Valuation of Central European Properties 29 March 2007

Market Value in Euros as at 31 December 2006

Valuation Summary — Croatia Hotels ...... € 95,130,000 Other ...... € 6,887,600 Sub total ...... € 102,018,000

Valuation Summary — Slovakia Developments ...... € 29,750,000 Hotel ...... € 5,100,000 Sub total ...... € 34,850,000

Valuation Summary — Russia Hotel ...... € 42,600,000 Sub total ...... € 42,600,000 TOTAL ...... €1,219,869,000

3. Confidentiality and disclosure The contents of this Report and Appendices are confidential to the party to whom they are addressed for the specific purpose to which they refer and are for their use only. Consequently, and in accordance with current practice, no responsibility is accepted to any other party in respect of the whole or any part of their contents. Before this report, or any part thereof, is reproduced or referred to, in any document, circular or statement, and before its contents, or any part thereof, are disclosed orally or otherwise to a third party, the valuer’s written approval as to the form and context of such publication or disclosure must first be obtained. For the avoidance of doubt such approval is required whether or not DTZ Debenham Tie Leung Limited or any related companies are referred to by name and whether or not the contents of our Report are combined with others.

Yours faithfully,

PAUL WOLFENDEN CHARTERED SURVEYOR DIRECTOR FOR AND ON BEHALF OF DTZ DEBENHAM TIE LEUNG LIMITED

A-11 Appendix A Summary of Property Values

A-12 Value as at 31 December No. Property City Use 2006 Czech Republic 1 Benice Phase I ...... Prague Land € 3,320,000 2 Benice Phase II-V ...... Prague Land €24,340,000 3 Bubny, Prague 7 ...... Prague Land €80,000,000 4 Cukrovarnicka, Prague 6 ...... Prague Land € 4,350,000 5 Dupovska, Prague 15 ...... Prague Land € 3,500,000 6 Klánovický Les IV ...... Prague Residential Development € 2,271,000 7 Kolin ...... Kolin Land € 479,000 8 Kosic — Slunecˇný Vrsˇek phase I ...... Prague Residential Development €42,000,000 9 Kosic Phase II ...... Prague Land € 5,892,000 10 Kosic Phase III ...... Prague Land € 1,337,000 11 Kouzelne Medlanky ...... Brno Residential Development € 3,800,000 12 Michle Tyrsˇu˚v Vrch ...... Prague Residential Development € 1,936,000 13 Nove Dvory ...... Prague Residential Development € 2,270,000 14 Nové Medlánky I ...... Brno Residential Development € 9,600,000 15 Nove Medlanky phase 2 ...... Brno Land € 8,500,000 16 Nove Medlanky phase 3 ...... Brno Land € 1,900,000 17 OD Centrum (Brno) ...... Brno Retail € 5,600,000 18 Pivovar Vrchlabi ...... Vrchlabi Residential Development € 2,400,000 19 Plachta Phase I ...... Hradec Kralove Residential € 510,000 20 Plachta Phase II Part A ...... Hradec Kralove Residential Development € 5,525,000 21 Plachta Phase II Part B ...... Hradec Kralove Residential Development € 2,650,000 22 Plachta Phase III ...... Hradec Kralove Residential Development € 575,000 23 Podkova Ostrava ...... Ostrava Residential Development € 5,100,000 24 Praga, Prague 10 ...... Prague Residential Development € 9,027,000 25 Radotin ...... Prague Land € 3,810,000 26 3epy Nad Beránkem ...... Prague Residential Development €20,860,000 27 Slezska Na Frantisku ...... Ostrava Residential Development € 416,000 28 Spinderluv Mlyn — Bellvue ...... Spindleruv Mlyn Residential Development € 3,275,000 29 Spinderluv Mlyn — Grand ...... Spindleruv Mlyn Residential Development € 3,880,000 30 Sˇpindleru˚v Mlýn — Bed3ichov ...... Spindleruv Mlyn Residential Development € 3,000,000 31 Sˇteˇrboholy ...... Prague Residential Development € 4,100,000 32 Zelené udoli E1 ...... Prague Residential € 1,750,000 33 Americka 11, Prague 2 ...... Prague Office € 2,100,000 34 Anglicka 26, Prague 2...... Prague Office € 5,900,000 35 Belgicka 40, Prague 2 ...... Prague Office € 2,900,000 36 Londýnská 39 ...... Prague Office € 7,450,000 37 Londynska 41, Prague 2 ...... Prague Office € 5,490,000 38 Luxembourg Plaza Office — 3rd party leased . . . Prague Office €57,600,000 39 Luxembourg Plaza Office — owner occupied . . . Prague Office €14,360,000 40 Machova 18, Prague 2 ...... Prague Office € 855,000 41 Manesova 28, Prague 2 ...... Prague Office € 5,730,000 42 Na Porici, Prague 1 ...... Prague Office €43,440,000 43 Radio Free Europe — Hagibor ...... Prague Office Development €22,700,000 44 Vltavská, Bubenská 1, Prague 7 ...... Prague Office / Retail €35,000,000 45 Americka Park (ex hotel), Prague 2 ...... Prague Residential € 5,000,000 46 Americka 13, Prague 2 ...... Prague Residential € 2,370,000 47 Americka 33, Prague 2 ...... Prague Residential € 540,000 48 Americka Park Residential, Prague 2 ...... Prague Residential € 8,380,000 49 Belgicka 36, Prague 2 ...... Prague Residential € 4,295,000 50 Londynska 26, Prague 2 ...... Prague Residential € 2,525,000 51 Masaryka 40, Prague 2 ...... Prague Residential € 3,385,000

A-13 Value as at 31 December No. Property City Use 2006 52 Na Kozacce 1, Prague 2 ...... Prague Residential € 4,364,000 53 Nad Petruskou 8, Prague 2 ...... Prague Residential € 3,800,000 54 Zahrebska 35, Prague 2 ...... Prague Residential € 1,750,000 55 Dienzenhoferovy sady (Riverside phase 2) . . . Prague Hotel Development € 3,200,000 56 Imperial Hotel, Tyrsoa 6, Ostrava 1 ...... Ostrava Hotel €15,000,000 57 Luxembourg Plaza Hotel ...... Prague Hotel €28,000,000 58 Pachtuv Palac, Anenske sq. 4 / K.Svetle 34 . . . Prague Extended stay hotel €30,000,000 59 Residence Belgicka, Belgicka 12, Prague 2 . . . Prague Extended stay hotel € 7,100,000 60 Riverside Hotel, Janockovo Nabrezi ...... Prague Hotel €12,200,000 Germany 61 Benningsenstrasse ...... Berlin Residential € 1,852,000 62 Breitestraße 15 ...... Berlin Residential/Commercial € 1,700,000 63 Brunnenstraße 25 ...... Berlin Residential € 2,217,000 64 Brunnenstraße 27 ...... Berlin Residential/Commercial € 1,650,000 65 Danziger Straße 16 ...... Berlin Residential/Commercial € 840,000 Development 66 Danziger Straße 219 ...... Berlin Office Development € 327,000 67 Danziger Straße 73 - 77 ...... Berlin Hospital/nursing home € 6,500,000 68 Fehrbelliner Hofe ...... Berlin Residential Development €25,930,000 69 Helberger ...... Frankfurt Office €17,725,000 70 Hosemannstrasse 6 ...... Berlin Residential € 1,680,000 71 Immanuelkirchstraße 3-4 ...... Berlin Residential/Commercial €11,000,000 72 Kollwitzstrasse 71 ...... Berlin Residential € 2,230,000 73 Kurfurstendamm 102 ...... Berlin Office € 8,300,000 74 Kurfürstendamm 103 - 104 ...... Berlin Residential/Commercial € 7,052,000 75 Kurfürstendamm 193 - 194 (Cumberland House) ...... Berlin Resi/Commercial Development €44,400,000 76 Lychener Straße 20 ...... Berlin Residential/Commercial € 1,650,000 77 Max Planck Strasse 24 ...... Koln Retail €10,140,000 78 Seelower Straße 5 ...... Berlin Residential/Commercial € 1,450,000 79 Singerstraße 109 ...... Berlin Commercial € 3,985,000 80 Wollinerstraße 51 ...... Berlin Residential/Commercial € 1,320,000 81 Zehdenickerstrasse 25 ...... Berlin Residential € 1,600,000 82 Zionskirchstraße 71 ...... Berlin Residential/Commercial € 1,800,000 Hungary 83 Andrassy Hotel, Andrassy út 111 ...... Budapest Hotel €11,100,000 84 Avenue Gardens, Andrássy út 68...... Budapest Residential Development €15,000,000 85 Budapest Bank HQ, Váci út 188...... Budapest Office €34,350,000 86 Budapest Stock Exchange, Deák Ferenc utca 5...... Budapest Office €37,800,000 87 CIB, Andrássy út 70...... Budapest Office € 6,710,000 88 Paris Department Store, Andrássy út 39...... Budapest Retail/office development €12,500,000 89 Residence Izabella Utca 61 ...... Budapest Extended stay hotel € 8,000,000 90 Revay Office, Révay utca 10...... Budapest Office € 4,520,000 91 Small Budapest Bank, Váci út 188...... Budapest Office € 4,950,000 92 Starlight Hotel, Mérleg utca 6...... Budapest Hotel € 8,500,000 93 Szervita Parking House, Szervita tér 8...... Budapest Parking garage € 9,200,000 Poland 94 Diana Residence (hotel Part) ...... Warsaw Extended stay hotel € 8,000,000 95 Diana Residence (office Part) ...... Warsaw Office € 5,600,000 96 Jozefoslaw ...... Warsaw Residential €10,600,000

A-14 Value as at 31 December No. Property City Use 2006 97 La Regina, Koscielna 12 ...... Warsaw Hotel € 17,100,000 98 Majolikowa / Flamenco ...... Warsaw Residential Development € 6,206,000 99 Malborska / Targowek ...... Warsaw Residential Development € 4,260,000 100 Mokotowska 59 ...... Warsaw Residential Development € 3,950,000 101 Parkhotel Vienna ...... Bielsko Hotel € 8,300,000 102 Peugeot ...... Warsaw Logistics / Retail € 2,850,000 103 Skarbka z Gor ...... Warsaw Residential € 8,950,000 104 Zlota 44 ...... Warsaw Residential € 53,200,000 Slovakia 105 Koliba ...... Bratislava Land € 8,130,000 106 Residence Sulekova ...... Bratislava Extended stay hotel € 5,100,000 107 Stein, pivovar, Blumentálska ulica ...... Bratislava Retail, Office, Residential € 21,620,000 Croatia 108 Administration Block ...... Hvar Office HQ € 1,300,000 109 Cafe Pjaca ...... Hvar Restaurant € 800,000 110 Camp Site Vira ...... Hvar Camp site € 2,780,000 111 Dalmacija 2 ...... Hvar Residential Development € 1,408,000 112 FOR Complex ...... Hvar Retail € 600,000 113 Hotel Adriana ...... Hvar Hotel € 8,280,000 114 Hotel Amfora ...... Hvar Hotel € 41,000,000 115 Hotel Bodul ...... Hvar Hotel € 7,000,000 116 Hotel Dalmacija ...... Hvar Hotel € 1,800,000 117 Hotel Delfin ...... Hvar Hotel € 2,500,000 118 Hotel Galeb ...... Hvar Hotel € 1,750,000 119 Hotel Pharos ...... Hvar Hotel € 8,700,000 120 Hotel Riva ...... Hvar Hotel € 11,100,000 121 Hotel Sirena ...... Hvar Hotel € 7,000,000 122 Palace Hotel ...... Hvar Hotel € 6,000,000 Russia 123 Hotel Pokrovka ...... Moscow Hotel € 42,600,000 Total ...... €1,219,869,000

A-15 SCHEDULE B: DTZ VALUATION REPORT AS AT 30 JUNE 2006 AND ANNEX A THEREOF

Report and Valuation for

Orco Property Group S.A. 8, Boulevard Emmanuel Servais L-2535 Luxembourg

24 August 2006 Private and Confidential

DTZ Debenham Tie Leung One Curzon Street LONDON W1A 5PZ

B-1 Contents

Page 1. Terms of instruction, confidentiality and disclosure ...... B-3 1.1 Introduction ...... B-3 1.2 Our appointment ...... B-3 1.3 Schedule of Properties ...... B-4 1.4 Inspections ...... B-4 1.5 Compliance with appraisal and valuation standards ...... B-4 1.6 Status of valuer and conflicts of interest ...... B-4 1.7 Basis of valuation ...... B-5 1.8 Assumptions and sources of information ...... B-5 2. Valuation ...... B-7 3. Confidentiality and disclosure ...... B-7

Appendix

A Summary of Property Values ...... B-8

B-2 Our ref: pw.jd.0283.0806.rep Direct tel: 020 7643 6300 Direct fax: 020 7643 6345 E-mail: [email protected]

24 August 2006

Orco Property Group S.A. 8, Boulevard Emmanuel Servais L-2535 Luxembourg

For the attention of Mr Luc Leroi, Group CFO

Dear Sirs

VALUATION OF VITERRA ASSETS 1. Terms of instruction, confidentiality and disclosure 1.1 Introduction We understand from Orco Property Group (the “Company”) that our Report and Valuation (the “Report”) is required for accounts purposes. The values reported are our opinion of the Market Value of the respective legal interests in the properties.

Table 1 — Commercial Assets

Property Address Tenure Knorrstrasse, Munchen Freehold Voßstrasse, Berlin Freehold H2 Office Duisburg 2 BR Freehold Pier 1 Duisburg Freehold e-point, Horomericka, N2 Prague Freehold Rudna, I&II Prague, Hall 8 and 9, office building HP Freehold Sky Office, Kenndydamm, Dusseldorf Freehold Essen, Gruga-Corree Freehold Koln — Marsdorf, Max Planck-Strasse Freehold Vasen Strasse, Dusseldorf Freehold

B-3 Orco Property Group Valuation of Central European Properties 24 August 2006

Table 2 — Residential Assets

Property Address Tenure Homburger Londstrasse, Frankfurt Freehold Darmstadter, Landstrasse 118, Frankfurt Freehold Westhafen, Baufehd 111, Frankfurt Freehold HH, Mutzendorspteed 46, Hamburg Freehold HH, HH-Volksdorf, Fobredden, Hamburg Freehold HH Eppendorfer Weg 14, Hamburg Freehold HH Wedel Freehold HH Schenkendorfstrasse, Hamburg Freehold HH Hafencity Dalmannkai, Hamburg Freehold HH, HH-Ottensen, Hamburg Freehold HH, Hammersieth, Hamburg Freehold M. Atle, Allee, 4. BA, Munich Freehold M. Neusser Strasse, 4.BA, Munich Freehold M/ Newsser Strasse 5. AB, Munich Freehold Olching, Bauraum 19 in Sapozi, Munich Freehold Oberfoehringer Strasse 188, Munich Freehold Alte Allee 3 BA, Munich Freehold Madalinskiego, Warsaw Freehold Leszczynska Strasse, Warsaw Freehold Rakowiecha Strasse, Warsaw Freehold Drawska Strasse, Warsaw Freehold Madalinskieg Strasse, Warsaw Freehold Leszczynaska Strasse, Warsaw Freehold Qwaterwest Baufeld, Frankfurt Freehold

The above are collectively known hereinafter as the “Properties”.

1.3 Schedule of Properties A schedule of the Market Values for each individual Property is attached as Appendix A.

1.4 Inspections A sample of the Properties were inspected by Paul Wolfenden.

1.6 Status of valuer and conflicts of interest We confirm that we have undertaken the valuations acting as an External Valuer, qualified for the purpose of the valuation.

We confirm that we have had no previous direct or indirect interest, financial or otherwise in the Properties or the Company or their subsidiaries or other affiliates, except in connection with valuations, and we therefore do not consider that any conflict arises in preparing the advice requested.

B-4 Orco Property Group Valuation of Central European Properties 24 August 2006

1.7 Basis of valuation In accordance with your instructions, we have undertaken our valuations on the basis of Market Value.

We have set out the definition of the above basis of valuation in Appendix B.

1.8 Assumptions and sources of information For the purpose of the valuation we have reflected the information provided by the Company and its professional advisers. In the event that any of this information proves to be incorrect then our valuations should be reviewed. We have made certain assumptions in relation to facts, conditions or situations affecting the subject of, or approach to, our valuations that we have not verified as part of the valuation process. In the event that any of these assumptions prove to be incorrect then our valuations should be reviewed.

1.8.1 Title We have made an Assumption that there is good and marketable title and that the Properties are free from rights of way or easements, restrictive covenants, disputes and onerous or unusual outgoings. We have also made an Assumption that the Properties are free from mortgages, charges or other encumbrances.

1.8.2 Condition of structure and services, deleterious materials, plant and machinery and goodwill Due regard has been paid to the apparent state of repair and condition of the Properties, but a condition survey has not been undertaken, nor have woodwork or other parts of the structure which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the Properties are structurally sound or are free from any defects. We have made an assumption that the Properties are free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects.

We have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious material have been used in the constructions or any alterations, and therefore we cannot confirm that the Properties are free from risk in this regard. For the purposes of this valuation, we have made an assumption that any such investigation would not reveal the presence of such materials in any adverse condition.

No mining, geological or other investigations have been undertaken to certify that the sites are free from any defect as to foundations. Where relevant, we have made an Assumption that the load bearing qualities of the sites of the Properties are sufficient to support the buildings constructed, or to be constructed thereon. We have also made an assumption that there are no abnormal ground conditions, nor archaeological remains present, which might adversely affect the present or future occupations, developments or values of the Properties.

No tests have been carried out as to electrical, electronic, heating, plant and machinery equipment or any other services nor have the drains been tested. However, we have made an assumption that all services are functioning satisfactorily.

B-5 Orco Property Group Valuation of Central European Properties 24 August 2006

In respect of those buildings or parts of those buildings which are not pre-let or where agreements have not been entered into to sell the Property on completion, we have also allowed for letting and associated costs.

In undertaking valuations of the Properties in the process of development we have estimated the gross development value (the “GDV”). The Company needs to deduct from the value all costs to complete the developments and also all reservations and deposits received. Property valued on the GDV basis are clearly marked red in Appendix A.

1.8.4 Statutory requirements and planning As instructed, we have not made detailed planning enquiries. We have made an assumption that the Properties have been constructed in full compliance with valid town planning and building regulations approvals, that where necessary they have the benefit of a current Fire Certificate and that the Properties are not subject to any outstanding statutory notices as to their construction, use or occupation. We have made a further assumption that the existing use of the Properties is duly authorised or established and that no adverse planning conditions or restrictions apply. We have assumed that for those Properties in the course of construction, that all planning conditions and permits will be satisfied.

1.8.5 Information We have made an assumption that the information that the Company and its respective professional advisers have supplied to us in respect of the Properties is both full and correct.

It follows that we have made an assumption that details of all matters likely to affect value within your collective knowledge have been made available to us and that the information is up to date.

1.8.6 Floor areas We have been provided with floor areas by the Company and we have relied on these areas for the purpose of the valuation. We have made the assumption that the relevant floor areas supplied to us have been calculated in accordance with market practice. We have therefore assumed that, were a full measurement survey to be carried out on all the accommodation, the results would be consistent with the information provided by the Company.

The Company has provided us with schedules of proposed floor areas in respect of the Properties under construction, which we have relied on for the purpose of the valuation.

1.8.7 Legal Issues Legal issues, and in particular the interpretation of matters relating to titles and leases, may have a significant bearing on the value of an interest in property. Where we have expressed an opinion upon legal issues affecting the valuation, then such opinion should be subject to verification by the client with a suitable qualified lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of the legal position of the client or other parties in respect of the valuations of the Properties.

1.8.8 Environmental matters Our inspections have provided no evidence that there is a significant risk of contamination in respect of the Properties. Accordingly, you have instructed us to assume that no contamination or other adverse environmental matters exist in relation to the Properties sufficient to affect value. We have not made any investigations to establish whether there is any contamination or potential for contamination to the Properties, nor have we carried

B-6 Orco Property Group Valuation of Central European Properties 24 August 2006 out any investigation into past uses, either of the Properties or any adjacent land to establish whether there is any potential for contamination from such uses or sites and have therefore made an Assumption that none exists. If it is subsequently established that contamination exists at the Properties or on any neighbouring land, or that the premises have been or are being put to any contaminative use then this might reduce the value now reported. We have been instructed to make an Assumption that if investigations were made to an appropriate extent then nothing would be discovered sufficient to affect value. In practice, purchasers in the property market do not make such an assumption about contamination and a purchaser of the Properties may require appropriate investigations to be made so as to assess any risk before completing a transaction.

We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid then the value would fall by an unspecified amount.

Commensurate with our assumptions set out above, we have not made any allowance in the valuation for any effect in respect of actual or potential contamination of land or buildings.

2. Valuation Market Value We are of the opinion that the aggregate Market Value of the freehold interests in the Properties as set out in the Section 1.2 above, as at 30 June 2006 subject to the assumptions and comments in this Valuation Report and the Appendices was:- €147,520,000 (One Hundred & Forty-Seven Million, Five Hundred and Twenty Thousand Euros)

It should be noted that the aggregate value includes the GDV values of the developments in progress where the Company needs to deduct from the values all costs to complete the developments and also all reservations and deposits received.

The total value allocated by sector is attached as Appendix A to this report.

The valuation of the development reflects the number of units in the inventory.

Yours faithfully,

PAUL WOLFENDEN CHARTERED SURVEYOR DIRECTOR FOR AND ON BEHALF OF DTZ DEBENHAM TIE LEUNG LIMITED

B-7 Appendix A Summary of Property Values

B-8 Project Viterra 24 August 2006

Commercial Assets

Market Value as at Address 30 June 2006 Notes

Knorrstrasse, Munchen ...... €19.5m Land sold to BMW for €14.45 million, plus a project fee to be paid by BMW to a JV created for the development of at least €12 million, more if the JV is elected for the realisation of the project. Orco has interest in 50% of development fee. Voßstrasse, Berlin ...... €2.78m Site for office and residential development, some 1,854 sqm of lettable space (1,536 sq m of office, 318 sq m of living space). Gross development value of €7 million. Costs incurred assumed to be €2.3 million out of a total cost budget of €6.17 million. H2 Office Duisburg 2 BR ...... €3.25m Development site with permit for 12,500 sq m of lettable space (office) and 241 car spaces. Pier 1 Duisburg ...... €21.0m Office and retail project of 9,745 sq m (office 7,524 sq m and retail restaurant and service facilities 1,489 sq m). e-point, Horomericka, N2 Prague . . . Nil Sold to Austrian Insurance Company. Rudna, II Prague, Hall 8 and 9, office building HP ...... €0.6m Heitman acquired the site. Variable price dependent on permits achieved as tenants are secured, which determines price. Permits due in 3rd Quarter of 2007. No interest in land. Sky Office, Kenndydamm, Dusseldorf ...... €8.5m Office development of 30,000 sq m in course of development. Some 33% pre-let to McKinsay. Costs incurred to date €4.17 million out of a budget of €113 million. Essen, Gruga-Carree ...... €2.0m Large site of which one quarter is owned and an option to acquire the rest before end of 2006. Koln — Marsdorf, Max Planck- Strasse ...... €7.8m Refurbishment. Budget of €5.2 million of which €4.37 million committed. Offer received of €7.8 million. Wasserstrasse, Dusseldorf ...... €6.0m Period office building in prime location. TOTAL COMMERCIAL ...... €71.43m

B-9 Project Viterra 24 August 2006

Residential Assets

Market Value as at Address June 2006 Notes Homburger Londstrasse, Frankfurt ...... €7.0m Development of a total of 9 phases. Phase 7 is about the start with a new general contractor Fa. Jöker. Re-planning of Phase 5 into 8 units of multi storey houses instead of 4 terraced houses. Darmstadter, Landstrasse 118, Frankfurt ...... €1.8m* 37 unit apartments, of which 6 are valued. Assumed building is complete. Quaterwest Westhafen, Baufeld 111, Frankfurt ...... Phase 1: €16.6m* Two phases of development (Phase 1 & Phase 2B). Phase 2B: €9m* Phase 1 is of 54 units with 5,556 sq m of living space of which 45 are sold. Phase 2B is of 39 units with 3,504 sq m of living space of which 3 are sold. Value is remaining 45 units (9+36). Building is assumed to be completed. HH, Muetzendorspteed 46, Hamburg ...... €0.8m* 18 units of which 14 are sold. 4 units and garages to sell. Assumed building is completed. HH, HH-Volksdorf, Fossredder, Hamburg ...... €0.875m* 12 units of which 9 are sold. 3 units and parking places to sell. Assumed building is completed. HH Wedel, Hamburg ...... €3.3m* In the first phase there are 6 units to be valued. In the next phase of 10 units, all are to be valued giving a total of 16 units and car parking spaces to be valued. HH Hafencity Dalmannkai, Hamburg ...... €4.38m* 24 units of which 11 are sold and 14 are reserved. Assume 13 units and parking places to sell. Assumed building is completed. HH, HH-Ottensen, Hamburg ...... €16.2m* 56 units — assume all units to sell and parking, plus 570 sq m of commercial space. Building is assumed completed. Olching, Bauraum 19, Munich ..... €0.635m* 39 units of which 36 are sold. Assume 3 are to sell plus parking and building is completed. Oberfoehringer Strasse 188, Munich ...... €7.5m* 58 units of which 4 are reserved so assume 58 to sell and construction completed. Alte Allee 3 BA, Munich ...... €8.0m Included in above TOTAL RESIDENTIAL ...... €76.09m TOTAL COMMERICAL & RESIDENTIAL ...... €147,520,000

* All construction costs assumed paid

B-10 THE COMPANY

ORCO PROPERTY GROUP 48 Bd Grand-Duchesse Charlotte L-1330 Luxembourg

SOLE COORDINATOR, BOOKRUNNER AND LEAD MANAGER

Citigroup Global Markets Limited Citigroup Centre Canada Square London E14 5LB United Kingdom

CO-LEAD MANAGER

Wood & Company Financial Services, a.s. Václavské námeˇstí 772/2 11000 Prague 1 Czech Republic

LEGAL ADVISERS TO THE COMPANY

As to Luxembourg Law As to Polish Law As to Hungarian Law Linklaters LLP Linklaters T. Komosa i Wspólnicy Andrékó Linklaters Ügyvédi Iroda 35 Avenue John F Kennedy Spółka Komandytowa Széchenyi rakpart 3. L-1855 Luxembourg Warsaw Towers Akadémia Bank Center ul. Sienna 39, 7th floor H-1054 Budapest 00-121 Warsaw Hungary Poland

As to French Law As to Czech Law Linklaters LLP Linklaters, v.o.s., advokátní kancelárˇ 25 rue de Marignan Palác Myslbek 75008 Paris Na Prˇíkopeˇ19 France 117 19 Prague 1 Czech Republic

LEGAL ADVISERS TO THE MANAGERS

As to French Law As to Czech Law As to Hungarian Law As to Polish Law Cleary Gottlieb Steen & Baker & McKenzie Baker & McKenzie Baker & McKenzie Hamilton LLP Praha City Center Andrássy út 102 Gruszczyn´ski i Wspólnicy 12, rue de Tilsitt Klimentská 46 1062 Budapest Kancelaria Prawna 75008 Paris 110 02 Prague 1 Hungary Spółka Komandytowa France Czech Republic Rondo ONZ 1 00-124 Warsaw Poland

AUDITORS

PricewaterhouseCoopers S.à r.l. 400, route d’Esch L-1471 Luxembourg

HRT Révision 23, Val Fleury L-1526 Luxembourg Printed by RR Donnelley 38398