Strategy

In light of the current global liquidity crisis, which has affected the Russian economy and the real estate sector in particular, Sistema-Hals is taking measures to overcome the current challenging market conditions and to reposition the Company for growth for the medium and long term as the economic situation improves in Russia and globally. In December 2008 Sistema-Hals announced its revised business strategy and cost optimisation programme for 2009.

Updated Construction Strategy

Sistema-Hals' project portfolio is divided into 2 categories:

• category one - projects with financing either in place or expected to come, that can be carried out with co-investors and are either at or ready to move into construction stage;
• category two - projects which offer long-term prospects and/or are at an early stage of development.

In 2009, Sistema-Hals will focus primarily on its category one projects with updated deadlines for their completion. These projects include:

• Leningradsky Towers business centre (39 Leningradsky Prospekt, Moscow);
• Residential complexes Emerald Valley (111A Rublevskoye Shosse, Moscow), Primavera (4 Nakhimovsky Prospekt, Moscow), Diplomat (39 Michurinsky Prospekt, Moscow) and 25 Dnepropetrovskaya Ulitsa, Moscow;
• LETO retail and entertainment centre (7 Pulkovskoye Shosse, St Petersburg);
• Kamelia health spa complex (84 Kurortny Prospekt, Sochi);
• 7 projects which form part of the Moscow City Telephone Network programme. These projects include 5 Vsevolzhsky Pereulok; 19 Daev Pereulok; 3 ul. Zorge; 5/1 Miliutinsky Pereulok; 34 ul. Nagatinskaya; 11 Rogozhsky Val; and 5 Stolyarny Pereulok, all in Moscow, completion deadline - 2010-2012;
• The reconstruction of Detsky Mir (5 Teatralny Proyezd, Moscow).