AFI Development PLC expects to record a net valuation loss on investment properties under development and impairment loss on inventory of real estate during the second quarter 2012 of circa USD 240 million before taxes. The valuation loss on investment properties under development reflects a decrease in the value of the Company's four projects, which are classified as investment property under development - Pochtovaya, Kossinskaya, Tverskaya Plaza Ib and Tverskaya Plaza II. The projects are currently being valued by the independent appraiser.

The valuation loss results from changes in master planning and development policies of the Moscow government: the company received information/confirmation of these changes and made revisions in its relevant projects during the period June - August 2012.