VK Development Investor Conference in Kyiv May 18, 2006 Presented by Roman Lunin VK Development Investor Conference in Istanbul October 5, 2006 Presented.

VK Development

Investor Conference in Kyiv

May 18, 2006

Presented by Roman Lunin

VK Development

Investor Conference in Istanbul

October 5, 2006

Presented by Mr. Roman Lunin

Shopping Malls in Ukraine

Continued Lack of Space

Kyiv substantially lags behind other European capitals in terms of shopping space density

Shopping mall space in Kyiv can easily double or quadruple,

matching that of Budapest and Warsaw, respectively

Lack of space forms a strong window of opportunity for new development

0 200 400 600 800

Kyiv

Moscow

Warsaw

Paris

Budapest

Berlin

Prague

(sq.m/1000 inhabitants)

Shopping Space (m2/1,000 pop.)

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0 2000 4000 6000 8000

Warsaw

Kyiv

Moscow

Budapest

Prague

Berlin

Paris

October 5, 2006

Shopping Malls in Ukraine

Rates Still Comparatively Low

Despite lack of space and practically zero vacancy, rental rates for prime retail space in Kyiv remain modest compared to other European capitals

Developers in Kyiv and other cities are able to increase rents for existing and new space

Rents for new shopping malls in other cities match that of Kyiv

Rental rates are unlikely to shrink in the medium term

3

Rental Rates (USD/m2/year)

Shopping Malls in Ukraine

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4

The Highest Yield Market

Investment yields in Kyiv real estate remain the highest among European capitals

While rental rates are expected to remain stable or grow, lower yields in the future will bring substantial capital appreciation

High yields are also reflected in the rather high current cost of capital, which limits development of new projects

0% 5% 10% 15%

Kyiv

Moscow

Budapest

Warsaw

Prague

Berlin

Paris

Investment Yield

Shopping Malls in Ukraine

The Highest Yield Market

Investment yields in Kyiv real estate remain the highest among European capitals

While rental rates are expected to stay stable or grow, lowering yields in the future will bring substantial capital appreciation

High yields are also reflected in rather high current cost of capital, limiting the development of new projects

Investment Yield

0% 5% 10% 15% 20%

Kyiv

Moscow

Budapest

Warsaw

Prague

Berlin

Paris

May 18, 2006

Existing Kyiv Shopping MallsExisting Kyiv Shopping Malls

Malls Total space (m2)

Selling space (m2)

Year Launched

Karavan 47 000 33 000 2003-05

Promenada Center 40 000 15 000 2004

Ukraina 38 000 17 000 2003

Rhythm 32 000 16 000 2003

Metropolis 31 000 25 000 2004-05

Magellan 29 000 16 000 2004

Alta Center 23 200 17 000 2004

Metrograd 20 000 17 000 2002

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October 5, 2006

Malls Total space (m2)

Selling space (m2)

Expected Launch

Date

Mega (IKEA) 200 000 170 000 2008-09

Lybid Plaza 100 000 83 000 2008-10

Troitskiy Plaza 106 000 44 000 2007-08

Esplanada 125 000 55 000 2008-09

Petrivka Shopping Mall 137 000 53 000 2008-09

Kvadrat (Vyrlitsa) 60 000 40 000 2009

Lifestyle Center 50 000 32 000 2007-08

Mava 45 000 22 000 2007-08

Kyiv Shopping Malls in Pipeline

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Shopping Malls in Other Cities

Shopping mall development in Ukraine is mostly limited to Kyiv

Demand for shopping space in other cities, as well as rental rates, is often similar to Kyiv

With higher shopping mall density in Kyiv, the focus for new shopping mall development is gradually shifting to other cities

Opportunities for development in other cities: – Higher traffic can be achieved due to greater scarcity or complete lack of

modern shopping space, attracting tenants more quickly and providing opportunities to charge relatively higher rental rates

– Acquisition of new land plots in other cities is often less cumbersome in comparison to Kyiv

– Construction and exploitation costs of shopping mall in other major cities are slightly lower than in Kyiv

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October 5, 2006

Warehouse Market in Kyiv

The city’s warehousing market is the least developed of the property sectors…

…despite its potential as a regional logistics hub

Local warehousing stock is approx. 600,000 m2 – and only 26% of this is Class A or B

- 500 1,000 1,500 2,000

Kyiv

Sofia

Bucharest

Budapest

Prague

Warsaw

Moscow

Total Warehousing Stock (000’s of m2)

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October 5, 2006

Warehouse Market in Kyiv

On a per capita basis, Kyiv has only one-tenth the warehousing space of Budapest and just 8% of that in Prague

The market could immediately absorb at least 400,000 m2

Zero vacancy rates

Yields and rents exceed the European average

80% of current occupants are not satisfied with their space

- 500 1,000

Kyiv

Sofia

Bucharest

Budapest

Prague

Warsaw

Moscow

Warehousing space per 1,000 people

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Major Warehousing Projects

Warehousing Projects Gross Leasable Area (m2)

Expected Launch

Global Center 136,000 2007

Alacor Logistics Park 133,000 2007

Kyiv Ring Road Logistics Complex 88,000 2007

Brovary Logistics Complex 80,000 2007

Komora-S 26,000 2007

Chaika Commercial Warehouse 23,000 delivered 2006

Ost-West Express 20,000 delivered 2006

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A Developer’s Market

The market is just beginning to emerge in Ukraine: lack of financing and managerial resources means developers are often restricted to one or two projects, and most of these projects are typically delayed as a result

Emerging developers: – ХХI Century– Nest-Hanner – IKEA

Competitive advantages of VK Development: – Management and project development resources– Access to capital markets– Ability to acquire land for development– Thorough understanding of logistics business– Existing database of potential lessees

0

50

100

150

200

250

300

2001 2002 2003 2004 2005

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VK Supermarket Will Act as Anchor

Sales CAGR of 115% for 2001-2005 2005 sales grew 110% y-o-y to USD 232 million 2006 sales expected to grow 90% y-o-y to USD 440 million Sales projected to grow at a CAGR of 54%

in 2005-2010 and reach USD 2 billion by 2010

VK Net Sales (2001-2005, USD m)

0

250

500

750

1000

1250

1500

1750

2000

2250

2001 2003 2005 2007 2009

VK Net Sales (2001-2010, USD m)

October 5, 2006

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Velyka Kyshenya on Capital Markets

In December 2005 VK accessed international capital markets with a private placement through Dragon Capital of 10% for USD 27.5 million (MC of USD 275 million)

In March 2006 VK placed an additional 2% for USD 7.75 million (MC of USD 387.5 million)

Current market capitalization: USD 406 million, implying a 48% increase since December 2005

VK is planning an IPO in London in the second half of 2007

275

388 406

0

100

200

300

400

500

December March October

VK Market Capitalization(December 2005 – October 2006, USD

m)

October 5, 2006

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VK Development Background

Like other retailers, Velyka Kyshenya requires more space To boost VK’s expansion options and capitalize on the

booming domestic shopping mall market, the owner of VK has created a spin-off company to handle the chain’s construction and project development, VK Development

Focus will be on the development of modern shopping malls in other cities and Kyiv, as well as other attractive development opportunities, namely in warehousing

VK Development will independently manage development of the malls at all stages: site selection; financing; acquisition of planning and construction permits; project development and construction; letting and day-to-day operations

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Project Description

VK Development has a massive land bank of 34 hectares in Kyiv, Poltava and several other cities. Sites were selected for their potential as locations for new shopping malls and entertainment facilities

Modeled after VK’s successful existing malls, VKD plans to build more than 250,000 m2 of modern shopping and entertainment space in six locations from 2006-2008

VK supermarkets and hypermarkets are expected to anchor the new malls at competitive prices

Also, VKD has 48 hectares of land suitable for a major warehousing project of 195,000 m2 close to Kyiv-Boryspil International Airport (KBP)

VK Shopping Mall Concept

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VK Development is focusing on the development of:– Mega-malls with total space of more than 50,000 m2 – Malls with space of up to 50,000 m2 – Convenience malls with space of 12,000-16,000 m2

Each mall concept has been carefully developed with a thorough assessment of the location’s current and future competitive environment and target audience preferences

Based on marketing research results, the space split and rental rates for the following groups of tenants will be selected:

– Anchor tenants: grocery, white goods, DIY super/hypermarkets– Other retail galleries: branded stores and boutiques – Entertainment facilities: fast food, bowling, cinemas, nightclubs, etc.

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Mega-Malls

Concept

Space:

Min. of 50,000 m2

Locations:

Promising areas of development

Availability of sufficient transport infrastructure

Current projects:

Kyiv Kollektorna

Construction term:

18-24 months

Malls

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Concept

Space:

20,000-50,000 m2

Location:

High-traffic crossroads

Close to large/dense residential districts

Current projects:

Kyiv Bilychi, Poltava, Rivne, Ivano-Frankisvk

Construction term:

12-18 months

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Convenience Malls

Concept

Space:

12,000-16,000 m2

Location:

Immediately adjacent to large residential areas

Current projects:

Chernivtsi

Construction term:

6-12 months

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October 5, 2006

Concept

Space:

195,000 m2

(4 stages of 15,000/60,000/ 60,000/60,000 m2)

Location of Current Project:

Close to Kyiv-Boryspil International Airport (KBP)

Construction term:

36 months

Warehouse/Logistics Center

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October 5, 2006

Project Overview

Shopping Malls Warehouse

Land Plots (hectares) 34.5 48.0

Planned Projects 6 1 (4 stages)

Expected Construction Area (m2) 255,800 195,300

Expected Construction Costs (USD m) 185 100

Expected Annual Normalized Net Operating Income (USD m)

34.5 15.8

Avg. Net Rental Yield (%) 22.2 18.7

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Financing

VK Development will be seeking to attract about USD 83 m in equity to launch construction at the selected locations and expand its land bank

Subscription to the first tranche of equity financing of USD 37 m is expected in November 2006

New equity will be raised through the placement of shares in a Ukrainian-registered OJSC (open joint-stock company), with a subsequent listing on the PFTS, Ukraine’s premier stock exchange, providing investors with liquidity

Debt financing of about USD 155 m will be raised through financing from local banks