H1 2012 investor presentation by AFI Development

Q2 2012 INVESTOR PRESENTATION July 2012

Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2

Contents 1. 2. 3. 4. 5.

AFI Development at glance Key Moscow projects Portfolio overview Company update a. Main financial highlights Projects update a. AFIMALL City project highlights b. AFIMALL City Operational Summary c. Yielding Properties d. Property under construction e. Projects next for development f. Pipeline and land bank Q 1 2012 Financial Results a. Income Statement b. Loans and Cash Position c. Balance Sheet

4 5 6 8 13 14 15 16 18 21 23 24 25

AFI Development at Glance Market Cap, as of August 17, 2012

US$ 0.39 bn

Market Cap, 12months average

US$ 0.55 bn

Price per share, as of 17 August, 2012

US$ 0.37

•Focus on unique large scale commercial and residential projects

NAV(Equity), June 30, 2012

US$ 1.605 bn

•Primary market: Moscow, Russia

NAV per share, June 30, 2012

US$ 1.53

Portfolio Value**

US$ 2.4 bn

•Full cycle real estate developer

BUSINESS

Portfolio Value breakdown**

FINANCIAL STABILITY

HISTORY

•Admitted to LSE in 2007 (Tickers: AFID.IL; AFRB.LN). Received premium listing in 2010

•16 completed projects with total c. 570K sqm of space TRACK RECORD

•Impeccable credit history •Market reputation for high quality and professional property management

•Free float – 35% AFIMALL 48%

•Substantial income generating portfolio. Major project AFIMALL (p.11) completed in Q2 2011

•Strong global brand

Projects close to completion 8%

•Secured financing for on-going projects •Low leverage: Debt/Total assets* is 26%

•Active on the market for 11years

Land Bank and Pipeline 2%

Projects under development 27%

•Strong liquidity position with around US$128.1 mn in cash as of June 30, 2012

BRAND Income Producing 15%

**Gross Value according to JLL's valuation as of June 30, 2012 and BV of land bank and pipeline projects

•Affiliate of Africa Israel Group (65% owner) , a major conglomerate with global focus on real estate, construction and infrastructure

PORTFOLIO

•1 project close to completion (p.17), 4 project under development (p.18) •Pipeline and land bank (p.21)

* Debt represents long-term and short-term loans 4

Key Projects in Moscow Current Portfolio Yielding Assets / Trading Stock Value (JLL): GLA: AFIMALL City Aquamarine II

Berezkovskaya

Plaza SPA*

Ownership:50% *Outside of Moscow

H2O

Plaza Spa*

Four Winds

US$ 1.5 bn 174.5K sqm

(excl. hotels)

NOI stab.:

US$ 196.7 mn

(AFID share)

GSA:

1.4K sqm

Price psqm: 13K – 15K

Number of keys: Paveletskaya, 1

Aquamarine Hotel

568 keys

Tverskaya Plazas Ib&II

Projects close to completion

Aquamarine III

Value(JLL): GLA: NOI stab.

US$ 193.6 mn 51K sqm

(AFID share):

US$ 21 mn

Value(JLL): GLA: NOI stab.

US$ 658.5mn 227 K sqm US$ 145 mn

Development Projects

Otradnoe

Tverskaya Plazas

Pochtovaya

(AFID share):

GSA: CF from sale:

501.2K sqm US$ 1.9bn

Value(JLL): BV:

US$ 211 mn

Kosinskaya

Pipeline and Land Bank

Paveletskaya, Phase # II

(as of 30.06.12): US$ US$ 37 mn Other Other

Note: the NOI projections are “forward looking statements” based on JLL valuation assumptions and Company estimations and they can be projects realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions

Portfolio Overview Track record* (sqm)

HOTEL 48,795

OFFICE 78,206

 

Delivered Under construction



and residential space

RESIDENTIAL 78,419



Current portfolio – c. 2 mn sqm



Active projects under development – c. 1.2 mn sqm



AFIMALL is the flagship yielding asset with 166K sqm GBA operation started in Q1 2011

RETAIL 346,648

OFFICE 99,617

Company track record – more than 570K sqm of commercial



*total gross area of projects shown inclusive of shares owned by partners and projects sold,

Aquamarine III delivery will add 78K sqm of high quality office stock to the Company yielding portfolio

exclusive of pipeline and land bank projects

Gross Value of portfolio of Properties breakdown** Projects under development 27%

Land Bank and Pipeline 2% AFIMALL 48%



Current portfolio value – US$ 2.4 bn**



Current MV of yielding properties – US$ 1.5 bn**



Selection of attractive pipeline projects provides with wide opportunities for future development

**Gross Value according to JLL's valuation as of June 30, 2012 and BV of land bank and pipeline projects

Projects close to completion 8%

Income Producing 15% 6

SECTION 1

Company Update

Projects Update Highlights in Q2 2012 Main Financial  H1 2012 revenue, including net proceeds from the sale of trading properties increased by 40% Y-o-Y to US$ 81.5 mn, driven by higher rental income. The contribution from AFIMALL City was US$ 42 mn  Gross profit for H1 2012 totaled with US$ 29.6 mn comparing to US$ 17.9 mn in H1 2011, an increase of 65% attributed mainly to the operation of AFIMALL  In Q2 2012 the Company recorded valuation loss on investment properties under development in the amount of US$173 mn, mainly due to decrease in the value of four projects: Bolshaya Pochtovaya, Kosinskaya, Tverskaya Plaza Ib and Tverskaya Plaza II. The decrease in value results from changes in master planning and development policies of the Moscow government  In addition, in Q2 2012 the Company recognized an impairment loss on inventory of real estate in the amount of US$65 mn that was recorded due to the decision to write-off the Botanic Garden project  As a result, loss for the six months to 30 June 2012 was US$240.6 mn compared to net profit US$28.7 mn for the six months to 30 June 2011. The driver for the loss was the revaluation and impairment losses  The Gross Value of the portfolio of properties reduced from circa US$2.8 mn as of 31 March 2012 to circa US$2.4 bn as of 30 June 2012 due to the valuation loss on investment properties under development and impairment loss on inventory of real estate as well as depreciation of the Russian rouble versus the US dollar by 11.9% in Q2 2012

ProjectsUpdate Updatein inQ2 Q22012 2012 Projects

RETAIL

AFIMALL:  Secured refinancing for the project with total credit line of US$ 640 mn in multiple currencies with total average interest rate around 8.24% compare to 9.5% . This deal was among the biggest financing transactions in the history of Russian real estate market  Reimbursed VAT in the amount of US$ 20 mn for the parking buy-out, including US$ 5 mn collected from rental inflow  679 parking lots are operating, additional 600 units will be launched in Q3 2012 and additional parking units will be launched in Q4 2012  Footfall is stable with a total daily average amount 30K visitors per day in spite of seasonal effect of weak summer months  AFIMALL won in the European Property Awards competition as a best trading entertainment Center in Europe

OZERKOVSKAYA III: OFFICE

 The Company has received Certificate of compliance (ZOS) and commissioning certificate*  AFI Development continues its marketing of the project to potential tenants and end users, with plans to dispose of the development in full or in part and/or lease it to high quality tenants

TVERSKIE PLAZAS:  Following the non-binding agreement between AFI Development and the City of Moscow, the City is progressing with renewing and re-approving the Company development rights and leasehold interests in land plots at the Plaza Ic, Plaza IIa and Plaza IV projects

HOTELS

 In August 2012 the loan facility provided for the project was fully repaid in the amount US$71 mn

PLAZA SPA ZHELEZNOVODSK(KALININA HOTEL):  During Q2 2012 the development of the Plaza Spa Hotel Zheleznovodsk (Kalinina Spa Hotel) was successfully completed and the project was put into operation. During the first months of operations, the hotel experienced significant demand from the customers and has already obtained positive feedback from the guests. Plaza Spa Hotel Zheleznovodsk is on track to establish itself as one of the leading hotels in its region * August 2012

Gross Asset Value Gross Asset Value Portfolio value of the company fell by about 14% from $2.8 bn to $2.4 bn. This is driven by three factors:  Decrease in the valuations of four projects, which are classified as investment property under development (Pochtovaya, Kossinskaya, Tverskaya Plaza Ib and Tverskaya Plaza II) owing to changes in master planning and development policies of the Moscow government  Writing off Botanic Garden project, where the Company is a co-investor alongside a company owned by the local authorities, and a claim filed by the Moscow court on 2 August 2012 by a third party creditor is seeking to declare the main investor bankrupt. These two factors combined lower the portfolio value by around $240 mn  Q2 2012 Depreciation of ruble relative to dollar (11.9%) This factor resulted with portfolio value decrease by around $130 mn

US$ mn Investment Properties

BS Value as of June 2012

1,505

1,564

(98)

(22)

1,443

AFIMALL

1,160

1,205

(67)

1,160

138

142

(13)

138

Tverskaya Plaza (Ib, II)

101

111

(10)

(60)

Other

106

(8)

105

883

931

(11)

(152)

770

Tverskie Plazas (IV, IIa, Ic)

316

343

(2)

(25)

316

Ozerkovskaya III

178

191

(6)

194

Kosinskaya

146

153

(2)

(49)

102

Pochtovaya

213

214

(2)

(72)

141

Other

(14)

206

217

(13)

(65)

139

Trading Properties and Trading Properties under Development

Total Assets

BS value as of Mar-2012

Four Winds

Investment Properties under Development

Hotels

2Q Translation Revaluation Gain Reserve and (Loss) Additions

BS value as of Dec-2011

Botanic Garden

(7)

(65)

Others

141

145

(6)

139

102

(9)

2,684

2,814

(131)

(240)

2,445

*Tverskaya Plaza II and Plaza Ib were reclassified in Q2 2012 to investment property

Main valuation changes Q2 2012 Main valuation changes Q2 Main valuation changes Q22012 2012(1/2) (2/2)

BOTANIC GARDEN  The Company is a "co-investor" in the project together with a company fully owned by the City of Moscow, which is the main investor and beneficiary of land lease rights for Botanic Garden project

 •A claim filed with a Moscow court on 02.08.12 by a third party creditor is seeking to declare the main investor bankrupt, while its assets were previously arrested for the benefit of the same creditor  Based on legal opinion, we consider that any recovery of the Company's costs relating to its investments in the project is unlikely in case of the main investor’s bankruptcy

TVERSKAYA PLAZAS(IB&II)

KOSINSKAYA

POCHTOVAYA

 With regard to the implementation of the  Business activity is gradually moving in  During 2012 year the Moscow City Moscow Government development authorities have been in discussion with the south-western direction from the city program "New Moscow" from June AFID, suggesting that a change in center 2012 city administration is pursuing a planning density and land use for the site policy aimed at amending town planning  Competition in the subsector is  Business activity is gradually moving in increasing regulations, in part to minimize new the south-western direction from the city construction in city center  In view of the above trends the Company center due to the change in the City had to review the concept in order to  During 2011 - 2012 the Company had planning policy and applied restrictions keep the same rental level and to make been negotiating with Moscow City for new office constructions in the City the property of higher specification. Government the options of executing of Central District all projects in Tverskaya Zastava area  The Company updated the reconstruction  Based on the new projected gross concept envisaging additional elevators buildable area of the project, the and large areas, which has resulted in the independent appraiser, Jones Lang rentable space being reduced from 101K LaSalle, decreased the project value from sqm to 90K US$ 213.6 mn as at 31 March 2012 to US$ 140.5 mn as at 30 June 2012.

SECTION 2

Projects Update

AFIMALL City Project Highlights KEY ADVANTAGES     

The largest mall in the city center Best quality construction and fit-out Attractive consumer target group, employed by worldwide institutional companies in the surrounding offices Perfect tenant mix: Banana Republic, Inditex, H&M, X5 Good transport accessibility – metro station underneath, 100 m distance to the Third Transport Ring PROJECT HIGHLIGHTS (as of June 2012)

Ownership

100%

Land area

4.4 ha in the unique business district

GBA, sqm

333,928

GLA, sqm Parking units, #

107,142 2,035*

Forecast NOI*(stab.)

US$ 132.7 mn

Average rent per sqm pa

US$ 1,245 per sqm pa

Market Value (JLL as of 30.06.2012)

US$ 1,160 mn

Space leased

76% * Additional 665 parking lots are classified as trading property under development as the Company holds negotiations for their disposal with VTB Bank

Surrounding offices and apartments GBA: • Already completed – 1.1 mn sqm • In mid-term GBA to reach – 1.6 mn sqm • Total pipeline – over 2.5 mn sqm Source: http://eng.citynext.ru 13

AFIMALL City Operational Summary ACHIEVEMENTS Operation:  The footfall is very stable despite of summer time (c. 30K visitors per day on average) driven by launching parking facility and marketing campaign and careful negotiations with tenants Finance:  On June 29, 2012 VTB Loan Facilities early provided for Moscow-City Project realization were fully refinanced. New Loan Facility (refinancing) has been provided by Russian Commercial Bank, Cyprus (Group VTB) on the amount of 21bn rubles which embraces 5 tranches. 

The loan facility has differentiated interest rates which are currency dependent 9.5% for loans drawn down in Rub and 3months LIBOR+6,7% for loans drawn down in US$.

 The company reimbursed VAT in the amount of US$ 20 mn on parking buy-out, where US$ 5 mn was collected from rental inflow

AFIMALL parking:

 Company put parking into operation and received commissioning certificate for 679 parking lots, while 600 units are expected to put into operation during Q3 2012 and the rest of the parking lots are expected to be launched till the year end  The Company is continuing its negotiations with VTB Bank to dispose 665 parking spaces

Daily average footfall in AFIMALL (‘000 visitors)

30K

25 20 15

10 NEXT STEPS ON TRACK TO PROJECT PROMOTION  Improve operations at AFIMALL 5  Settle the agreement on disposition of 665 parking units to VTB bank 0  Finalize parking construction in Q3 2012, get permission documents by the end of 2012  Increase occupancy level and number of visitors  Stabilize tenant mix through reduction of tenants rotation  Introduce more aggressive advertising campaign starting in O3 2012

2012

Yielding Properties

Building

Ownership

AFIMALL

Four Winds

Berezkovskaya

Paveletskaya, bld. 1

Four Winds Tverskaya Plaza Tvesrkaya Plaza II Fitness and Retail Ib

H2O

Aquamarine Hotel

Plaza Spa

Kalinina

TOTAL

100%

50%

74%

99.1%

100%

50%

100%

50%

100%

Location

Moscow

Kavkaz

GBA, sqm

333,928

31,000

11,612

16,512

10,698

4,925

5,700

2,095

11,130

25,000

9,526 462,126

GLA, sqm

107,142

21,950

10,250

14,085

8,996

4,726

5,510

1,913

159 keys

274 keys

134 keys 174,572

Parking lots (total), # Ocupancy rate, %

2,700 76%

142

300

126

100%

91%

100%

92%

99%

98%

72%

Average rent, $/sq m

1,245

1,428

549

251

254

540

1,403

1,036

ADR 192

ADR 105

Market rent, US$, (JLL)

1,152

1,279

550

286

320

540

2,000

2,500

ADR 244

ADR 120

ADR 121

Class 12 months Forward E, US$ mn**

Retail

Office B

Street retail Street retail

Street

Hotel

MV(AFID share),US$ mn** CAP Rate 30.6.12 - JLL

Office A

72.5

30.7

3.3

3.6

2.5

1.5

2.8

0.9

3.0

4.3

2.1

127

1,160

138

29.4

28.9

1,531

10%

12%

13%

13.75%

9%,13% 9%, 12.5%

9.5%

13%

* Including parking area ** Based on JLL valuation as of 30.06.2012

Property under Construction

Ozerkovskaya III KEY ADVANTAGES  Located in Zamoskvorechye, Moscow’s prestigious business area within the Garden Ring  3-rd phase of Ozerkovskaya Embankment development site  4 Class A office buildings comprising one complex

ACHIEVEMENTS Construction: PROJECT HIGHLIGHT

100 % of share

 The Company has delivered the project in Q2 2012; received ZOS and commissioning certificate Operation Strategy:

Year of construction

2012

Ownership

50%

Location

Moscow

GBA

78.6K

GLA

51.1K

Parking units

557

 The project has been put on the market for both lease up and sale; the average market rate in this area in shell & core state is close to US$ 800-850 psm pa. The Company has started aggressive marketing of the project Finance:

 Upon completion and partial lease of the project the Company aimed to refinance the loan facility in US$ with lower interest rate payment. Negotiations with banks are ongoing TARGETS

UD$ 387.3 mn

(JLL valuation, as for 30.06.2012)

MV, AFID share only

 Complete construction of Ozerkovskaya III and proceed with lease up/sale

US$ 193.7 mn

(JLL valuation, as for 30.06.2012)

Loan Balance

US$ 24.2 mn

(30.06.2012)

Projects under Development

KOSINSKAYA

Projects under Projects underDevelopment Development(1/2) DESCRIPTION: • Convenient access to the main motorways, close proximity to nearest metro station • Unique concept for accommodation of small shops, offices, warehouses and retails TARGETS: • Secure and construct utilities • Secure bank financing

PARAMETERS Type

Retail

Land plot, Ha

OTRADNOE

TARGETS: • Secure financing •

8ha

GBA, sqm

111.7K

GLA, sqm

89.7K

Outstanding investment costs

US$ 56mn

Stab. NOI (JLL est.)

US$ 22.7K

MV(JLL as f 30.06.2012)

DESCRIPTION: • Located on 32 ha site in the town of Odintsovo, one of the newest and most environmentally clean areas bordering Moscow • Project includes multifunctional infrastructure with schools, kindergardens and sports facilities for children • Construction permit received; tender for main constructor has been issued

DATA

PARAMETERS Type Land plot, Ha GBA, sqm GSA/GLA, sqm Parking units, # Outstanding investment (Based on JLL, 30.06.12)

US$ 102.3 mn

DATA Residential 31.8 703.3K 436K/37K 2,053 US$ 871 mn

Begin construction works Expected CF from Sales (Based on JLL, 30.06.12) Average price, psqm MV(JLL as f 30.06.2012)

US$ 1.3 nb US$3.0K US$ 108.5 mn 19

TVERSKAYA PLAZAS

Projects under Development (2/2) Projects next for Development DESCRIPTION: • Located in one of Moscow’s most central neighborhoods near Belorussky rail terminal, on the intersection with Tverskaya Street • Excellent access both by public and private transport

PARAMETERS

DATA

Type

Office

Land plot(total), Ha

1.85

GBA, sqm

169.7K

GLA, sqm

107.2K

CURRENT STATUS: • Design stage

Plaza Ic:

24.2K/7.0K

Plaza IIa

7.6K

Plaza IV:

68.4K

Parking Units, # Outstanding investment costs

POCHTOVAYA

MV(JLL as f 30.06.2012)

DESCRIPTION: • The project is located in the Moscow Central District on the Yauza river bank; total site area is 5.65 ha • Attractive neighborhood which benefits from the developed social infrastructure; transport, shops and cultural amenities

PARAMETERS Type

1.8K US$ 357 mn US$ 307.2 mn

DATA Residential

Land plot, Ha

5.65ha

GBA, sqm

170.3K

GSA/GLA, sqm # of parking spaces

TARGETS:

Outstanding investment costs

 Design stage

Average price MV (JLL as f 30.06.2012)

57.6K/37.2K 1,8K US$ 288 mn US$ 6K US$ 140.0 mn

Pipeline and Land Bank

Project

Type

GBA upon completion (sqm)

Land (ha)

BV(as of 30.06.2012)

Park Plaza Kislovodsk

Hotel resort

5.3

40,000

10,000

Versailles, Kislovodsk

Hotel resort

0.6

11,762

9,000

Ruza

Mixed use

387

n/a

4,000

St. Petersburg

Mixed use

3.7

n/a

2,000

Paveletskaya, II

Mixed use

4.0

106,250

11,500

158,012

37,000

TOTAL

Extensive land bank  Land bank – projects currently put on hold Land bank strategy  Activate projects upon securing required financing and evaluation of demand level from prospective tenants/buyer 

Full flexibility regarding future development in various cycles of the economy – the major competitive advantage for the Company

Note: MV upon completion and GBA upon completion are “forward looking statements” based on JLL valuation assumptions and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions

SECTION 3

Q2 2012 Financial Results

Income Statement Q2 2012 US$ '000

Q1 2012 US$ '000

H1 2012 US$ '000

37,082 36,805 277

36,847 35,307 1,540

73,929 72,112 1,817

1,983 (18,964) (9,905) (112) 10,084 257 (173,478) 4,055 (3,217) 838

122 (16,277) (3,358) (246) 17,088 2,337 1,068 3,463 (1,891) 1,572

2,105 (35,241) (13,263) (358) 27,172 2,594 (172,410) 7,518 (5,108) 2,410

Results from operating activities

(162,299)

22,065

(140,235)

Finance income Finance costs Net finance income Profit before income tax Tax expense Profit for the period Profit attributable to: Owners of the Company Non-controlling interests Profit for the period Earning per share Basic and deluted earnings per share (cents)

(9,150) (17,685) (26,835) (254,579) 6,066 (248,513)

9,918 (15,971) (6,053) 16,012 (8,139) 7,873

768 (33,655) (32,888) (238,567) (2,073) (240,640)

(241,946) (6,567) (248,513)

7,888 (15) 7,873

(234,058) (6,582) (240,640)

(23.09)

0.75

(22.34)

NARRATIVE Revenue Rental income Construction consulting/management services Other income Operating expenses Administrative expenses Other expenses Profit on disposal of investments in subsidiaries Valuation gains on investment property Net proceeds from sale of trading properties Carrying value of trading properties sold Profit on disposal of trading properties

 Revenues for the six months to 30 June 2012, including net proceeds from the sale of trading properties increased by 40% year -on- year to US$81.5 mn, driven by higher rental income. The contribution from AFIMALL City was US$42 mn  In Q2 2012 the Company recognized valuation loss on investment properties under development in the amount of US$179 mn, mainly due to decrease in the value of the Company's four projects: Bolshaya Pochtovaya, Kosinskaya, Tverskaya Plaza Ib and Tverskaya Plaza II. The decrease in value results from changes in master planning and development policies of the Moscow government.  In Q2 2012 the Company recorded an impairment loss on inventory of real estate in the amount of US$65 mn due to its decision to write-off the Botanic Garden project  During Q2 2012 the Russian rouble depreciated versus the US dollar by 11.9%. As a result, the Company recorded FX loss of approximately US$11 mn compared to a gain of US$7.8 mn in Q1 2012  The Gross Value of the portfolio of properties reduced from circa US$2.8 bn as at 31March 2012 to circa US$2.4 bn as at 30 June2012 due to the valuation loss on investment properties under development and impairment loss on inventory of real estate as well as depreciation of the Russian rouble versus the US dollar in Q2 2012  Financial expenses include onetime expenses of circa US$ 9 mn due to the refinance of AFIMALL

Loans and Cash Position as of Dec 31, 2011 Gross balance of the loan portfolio (as of June 30, 2012) – US$ 685,3 mn; (as of March 31, 2012 – US$ 703.6 mn) Total cash balance (as of June 30, 2012) – US$ 128,1 mn

* Fully repaid on July 03, 2012

Balance Sheet # (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) (36)

NARRATIVE Investment property Investment property under development Property, plant and equipment Long-term loans receivable Inventory of real estate VAT recoverable Intangible assets

6/30/2012 US$ mn

3/31/2012 12/31/2011 US$ mn US$ mn

Changing Q2 US$ mn %

1443.130 769.011 95.014 0.040 0.0 1.078 0.153

1452.9 1042.0 104.3 0.0 72.0 6.2 0.2

1403.6 983.6 92.0 0.0 66.2 5.4 0.2

(9.8) (273.0) (9.3) (0.0) (72.0) (5.1) 0.0

-1% -26% -9% -8% -100% -83% 0%

2308.4

2677.6

2551.0

(369.2)

-14%

6.0 132.7 1.2 0.8 75.5 1.1 128.1

10.4 134.1 1.3 0.9 91.8 0.7 104.1

11.1 129.6 0.7 0.8 107.2 n/a 84.8

(4.4) (1.4) (0.1) (0.1) (16.3) 0.4 24.0

-42% -1% -7% -12% -18% 61% 23%

Current assets TOTAL ASSETS Equity

345.4 2653.8

343.3 3020.9

334.1 2885.1

2.1 (367.1)

1% -12%

Share capital Share premium Translation reserve Retained earnings Total equity attributable to owners of the Company Non-controlling interest TOTAL EQUITY

1.0 1763.4 (192.1) 43.6 1615.9 (2.9)

1.0 1763.4 (112.5) 285.4 1937.3 3.8

1.0 1763.4 (178.5) 277.5 1863.5 3.9

0.0 0.0 (79.6) (241.8) (321.4) (6.7)

0% 0% 71% -85% -17% -177%

1613.0

1941.1

1867.4

(328.1)

-17%

Long-term loans and borrowings Long-term amounts payable Deferred tax liability Deferred income

570.5 35.1 141.9 21.8

620.4 38.4 150.9 24.2

528.1 71.6 142.1 22.6

(49.9) (3.3) (9.0) (2.4)

-8% -9% -6% -10%

Non-current liabilities

769.3

834.0

764.5

(64.7)

-8%

Short-term loans and borrowings Trade and other payables Income tax payable

130.7 140.8 0.0

102.0 143.8 n/a

99.0 154.1 0.2

28.7 (3.0) n/a

28% -2% n/a

271.5 1040.8

245.8 1079.8

253.3 1017.7

25.7 (39.0)

10% -4%

2653.8

3020.9

2885.1

(367.1)

-12%

Non-current assets Trading properties Trading properties under construction Inventory Short-term loans receivable Trade and other receivables Income tax receivable Cash and cash equivalents

TOTAL LIABILITIES

(37) TOTAL EQUITY AND LIABILITIES

$2.4 mn) was driven by exchange rates influence and loss from valuation

ď&#x192;&#x2DC; In June 2012 Company signed a new loan facility

agreement with a bank of the VTB Group on the total

Liabilities

Current liabilities

ď&#x192;&#x2DC; The main decrease in the company portfolio ($2.8 mn to

credit line of RUR 21 bn (US$ 640 mn), one of the biggest financing transaction in the Russian real estate market. The five tranches of the loan can be drawn down by the Company in US Dollars or in Russian Roubles

Contact Information

Registered office AFI DEVELOPMENT PLC 25 Olympion St., Omiros & Araouzos Tower, 3035 , Limassol, Cyprus. Tel: +357 25 340 058

Principal office of operating subsidiary AFI RUS 16 A Berezhkovskaya Embankment, building 5, Moscow, 121059, Russian Federation. Tel: +7 495 796 99 88 http://investors.afi-development.ru