According to its “blue chips” strategy in promising sectors of Russia ’s real economy, holding company “Interros” established open joint-stock company (OAO) “Open Investments” in the fall 2002. The mission of the Company is to capitalize unique opportunities available on the real estate market in the city of Moscow and in the Moscow Region, as well as in potential regions of Russia, by implementing the portfolio of highly efficient investment projects, and by attracting Russian and foreign investors, offering them a transparent and reliable structure of property, management, cash flows, and profit making. The goal of is to become one of the leading players on the real estate market in Moscow and, subsequently, in all Russia .

The original capital invested by Interros amounted to US$70 million. Taking into account anticipated investments, it is estimated that, by the end of 2004, the total equity of OAO “Open Investments” would reach US$140-160 million. The company will keep increasing its total profits and sustain current dividends payments to investors at a level of 25% of the net profit calculated on the basis of the International Accounting Standards (IAS). The strategic task of the Company is to arrange for public placement of its shares on international financial markets within 3 — 5 years.

The Board of Directors, now consisting of five members, has the functions of setting targets and working out strategy of company development, approving the investment policy and results of appraisal made by an independent appraiser. The membership of the Board implies optimum balance of the representatives of holding company “Interros”, independent directors and outside investors. Holding company “Interros” is represented in the Board by: Sergei Aleksashenko – Board Chairman (Managing Director of holding company “Interros”), Andrey Bourgov (Managing Director of holding company “Interros”) and Yekaterina Salnikova (Director on corporate structures of holding company “Interros”). Also, the Board of Directors includes two independent directors: Yevgeny Yasin (Research Director of State University  — Higher School of Economics) and Pavel Teplukhin (President of “Troyka Dialog” Managing Company). After placing shares in favor of outside investors, the latter will be given an opportunity to nominate up to three members of the Board of Directors. Such a structure of the Board of Directors is called upon to provide for reliable supervision over operations and transactions of the Company, and to ensure interests of minority shareholders.

In the near future, OAO “Open Investments” intends to substantially expand its operations on the real estate market in Moscow , and in the Moscow Region as well. The high potential of growth of this market is stimulated by a favorable macroeconomic situation in the country, the growing demand for real estate objects, which arises from the growth of income of population and expansion of activities of both the Russian and multinational corporations, as well as from shortage of areas as compared with the countries of Eastern Europe and especially with the highly developed Western countries. The real estate market of Moscow is characterized by a high level of yield: around 16 — 23% per annum, in US dollars, resulting from investments in existing objects and 20 – 45% per annum resulting from implementation of development projects. Furthermore, “Open Investments” plans to implement pilot projects in St. Petersburg , with the real estate markets of the most promising cities with over 1 million inhabitants being under study as well.

During the first year of its activity, the Company demonstrated a high level of financial efficiency of operations it carried out. According to the results for 2003 (as of December 31), Open Investments’ equity capital, calculated as per IAS, amounted to over US$74 million, which is 31% higher than the corresponding figure as of January 1, 2003. The total assets stood at over US$116 million (an increase by 106% as compared with January 1, 2003 ), revenues – over US$14 million, and net profit – over US$8 million. To increase the yield as calculating on the authorized capital, the Company increased the volume of borrowed funds up to US$25 million.

Through the first year of operations “Open Investments” company reached high level of financial effectiveness. As of December 31, 2003 , owners’ equity under IAS amounted to some $74 million (an increase by 31% in comparison with January 1, 2003 ). Since January 1, 2003 , company’s total assets have increased by 106% and reached $116 million, revenue and net profit amounted to $14 million and $8 million respectively. In order to increase yield on owners’ equity, “Open Investments” raised debt financing up to $25 million.

The Company owns the “A”-class office center situated in the center of Moscow in Novoslobodskaya Street , which was put into operation in December 2000. Premises utilization ratio of the Center made up 100% in the last year. Revenues amounted to US$3.3 million as of the end of 2003.

To date “Open Investments” owns “A”-level office center in Novoslobodskaya Street (Moscow ), which was put into operation in December 2000. Throughout 2003 the center’s premises utilization ratio was 100%. By the end of 2003 its revenues amounted to $3.3 million.

Three-star hotel OAO “Novotel Moscow Centre”, the controlling stake of which is also owned by OAO “Open Investments”, is situated near the Vsevolod Meyerhold Theater and Culture Center in Novoslobodskaya Street and was put into operation in September 2002. The agreement to run the hotel was concluded with leading French company ACCOR. Occupancy of the hotel in 2003 was 52.3%, the revenues amounted to $9.5 million.

In 2003 “Open Investments” started construction of “Pavlovo” cottage village in Istra District of Moscow Region, 14 km from the Moscow outer ring road in the Novorizhskoye direction. About 200 cottages of “A”-level are expected to be built there, with total sales revenues of $175 million in the next two years. The internal rate of return (IRR) is expected to be at least 35%. By the end of 2003 sales amounted to $ 37.7 million with average price of $ 1,700 per square meter.

In 2004, company is planning to launch the construction of a new office building located on Academician Sakharov Avenue (Moscow ), including the headquarters of one of the largest Russian banks — AKB “ROSBANK. Total investments are to be some $170 million with the internal rate of return (IRR) expected to amount to 23-25%. To implement this project “Open Investments” is going to invite a strategic investor from among foreign investments funds.

In 2004, “Open Investments” company together with the Arkady Raikin Culture Support and Development Fund are also planning to start construction of Arts, Culture and Entertainment Center named after Arkady Raikin, in Sheremetievskaya Street (Moscow North-East Administrative District). The project’s total investments are to be some $ 70 million with the internal rate of return (IRR) to amount to 20%.