INDEPENDENCE GROUP OF COMPANIES SUCCESSFULLY FINISHED 2009

Main conclusions according to 2009 results

· Independence Group of Companies is a leading player at the automobile sales and service market. The company is one of the top five major automobile retailers. The Group of Companies is represented by 15 dealerships and 13 service centers in Moscow.

· Independence Group of Companies has about 3,000 people on staff.

· The aggregate turnover of Independence Group of Companies was 25.4 billion roubles in 2009.

· According to 2009 results, the Group’s market share increased and amounted to 8.1 percent in Russia and 15.8 percent in Moscow.

· The total sales of Independence Group of Companies equaled 21,181 automobiles (Audi, BMW, Land Rover, Jaguar, Volkswagen, Volvo, Mazda, Ford, Peugeot.). The company has one of the minimal reductions in sales of new automobiles in the industry: 37 percent as opposed to 51 percent in Russia as a whole.

· Among automobiles sold by the company are: 19,065 new and 2,116 used.

· The volume of sales for after-sales services and spare parts was 21 percent.

· New business concept was implemented, which allowed to achieve the Group’s profit reduction by just 22 percent.

· The rate of sales reduction of the Independence Group of Companies was by 10 percent more restrained than the rate of sales reduction for brands from the company’s portfolio.

RESULTS AND OUTLOOK

The general evaluation of the market:

We have moderate expectations for 2010 and do not assume that the revival of the world economy would take place until the second half of this year. By our estimate, it will take up to three years to restore the sales level to pre-crisis standards. According to our forecast, from 1.4 to 1.5 million automobiles will be sold in Russia in 2010. The Russian market has already proven its significance for the world auto manufacturers, and they are already preparing themselves for 2012 and 2013 scenarios. Russia may not reach the 2008 sales level (from 2.8 million to 2.9 million automobiles) until 2013. In 2012, the market will return to the 2007 sales: 2.4 million cars. The years of 2009 and 2010 will be the years of transition.

We think that Independence Group of Companies has financial potential and flexibility and is able to continue its activity at efficient and competitive levels. As before, we are ready to ensure solid growth in 2010. Our unique situation allows us to receive profit from recovering demand at the Russian automobile market.

Financial results of the Independence Group of Companies:

According to 2009 results, the Independence Group of Companies sold 19,065 new automobiles on the Russian market. Compared with the previous year, the sales were reduced by 37 percent, which is by 14 percent better than the analogous figure at the foreign brand market in Russia. For brands presented by the company’s portfolio, the Group’s rate of sales reduction was by 10 percent slower than at the market on average.

In 2009, the aggregate turnover of the Independence Group of Companies was 25.4 billion roubles. The turnover reduction was just 22 percent, compared to 2008 (32.8 billion roubles). The Group’s financial reporting is prepared according to the international standards (IFRS). Financial audit of the Company’s activity is conducted by one of the automobile market leaders, Ernst & Young. According to open source data and independent experts’ evaluations, the Group of Companies ranks fourth in annual receipts among main automobile dealerships, and its turnover decline is significantly higher than that of its competitors.

Used automobile sales

In 2009, the company sold 2,116 used automobiles, which is by 4 percent lower than the 2008 figures. In 2009 an independent business branch was created, “Independence — Used Automobiles”, which brought together the resources of auto centers and professional staff. “Independence — Used Automobiles” consists of 18 technically equipped and prepared lots located in the eight administrative Moscow districts. The further geographical expansion of the branch is planned.

In 2010 the used automobiles sales are expected to grow by 75 percent within the Independence Group of Companies. The expected increase in profit of the branch will be 52 percent in 2010. The following factors will contribute to the sales development of this automobile segment: cancellation of a double tax for automobile dealerships, low consumer confidence and low demand for new automobiles during post-crisis period, higher demand and supply at the expanding used car fleet.

Service:

According to 2009 results, the turnover for mechanical work and sold spare parts increased by 17 percent compared with 2008. Expected growth in 2010 is more than 10 percent.

According to 2009 results, the turnover for completed body work and sold spare parts increased by 32 percent compared with 2008. Expected growth in 2010 is 25 percent.

Performance results for Independence-Finservice:

Financial branch of the Group, Independence-Finservice, provides insurance and financial services to clients of the Group of Companies. Like the rest of the company, Independence-Finservice has also successfully overcome 2009, the difficult year for automobile business. The growth of interest rates notwithstanding, Finservice and its partners managed to make a wide range of financing programs affordable to its clients, and reach a high credit sales volume in the fourth quarter. The company significantly increased the range of offered insurance products and services, including life and health insurance, real estate insurance, road assistance service Auto-Assistance.

Compared with 2008, Independence-Finservice not only maintained, but increased the share of insurance sales among buyers of the Group’s automobiles almost by 10 percent. In the previous year, 2009, the company multiplied 1.7 fold the number of clients who extended their insurance policies for another year through Finservice, which speaks volumes of clients’ loyalty to the company.

According to 2009 results, the branch’s turnover decreased by 22 percent compared with 2008. Expected volume gain in 2010 is 30 percent.

Performance of the Auto Body Repair Center:

The Center for Auto Body Repair demonstrated significant performance results in 20009. The Center’s gross sales increased more than twofold compared with 2008. Expanded cooperation with various insurance companies, joint efforts in creating new products made the Center a preferred supplier of body repair services for partners-insurance companies.

In the beginning of 2010, the Auto Marine project was launched for yacht, motorboat and hydrocycle repair. Another service, Independence Auto Assistance is planned to be launched: road assistance (evacuation, sending a claim commissioner to the sight of a vehicle accident).

Anti-crisis measures and market share increase:

The Independence Group of Companies completed negotiations with the main banks-creditors, successfully underwent debt reconstruction, and continues to meticulously follow its loan obligations. The debt load of the Group was less than 3x EBITDA in the end of 2009.

The Group’s successful adaptation to crisis conditions and the projects implemented in 2009 allowed the company to increase its market share. The company’s market share for brands was 8.1 percent in Russia and 15.8 percent in Moscow. In 2008 the company’s market share was 6.7 percent in Russia and 14.9 percent in Moscow.

The company’s market share growth and the increase in profit from after-sales automobile service allowed to minimize the crisis’ influence on its financial performance in 2009. Additional measures aimed to increase effectiveness, including management centralization and cost reduction program, ensured the growth of overall business effectiveness by 25 percent compared with 2008, and allowed to maintain the pre-crisis level of EBITDA.

Implementation of the new business concept and anti-crisis measures:

In order to reach maximal effectiveness, in the beginning of 2009 the Group of Companies adopted a new business model and focused on four business units:

1. Sales and service of new automobiles.

2. Sales of used automobiles.

3. Financial services.

4. Auto body work.

Also in the beginning of 2009, the company began to implement anti-crisis strategy. The main goals of the program were effective management of constant expenses (including control of interest rate payments of loans, decreasing rental costs, utilities, etc.) and maximization of floating capital. As a result, without losing sales effectiveness, the Group’s floating capital was reduced 1.5 times, and the leftover funds in the Company’s circulation were reduced more than four times. Even in the event of a pessimistic scenario at the automobile market, when the profit from new automobile sales is minimal, the Company’s management would be able to provide for all the Company’s needs by means of profit from auto service (mechanical and body work centers) and its business branch, Finservice.

The concept of anti-crisis measures was developed and implemented in 2009, which increased the Company’s effectiveness. The following measures were taken: maximizing the proceeds from after-sales service; expanding production line; developing package proposals for products; centralizing back offices, including financial department, marketing, IT service department, legal department, purchasing department and human resources department.

With the purpose to reduce expenses, purchasing was also centralized. Due to a more careful attitude towards stock at warehouses, greater savings were achieved. The Group of Companies conducted the transfer of obligations into functional currency, froze a number of expenses, which lead to the more detailed control and optimization of floating capital structure.

Partial staff reduction was conducted. The system of motivation of the front-office personnel aimed at results was implemented, and motivation of back-office personnel—aimed at effectiveness and achievement of goals. The new approach to personnel motivation was developed. The main goal of a new personnel remuneration system, which was implemented in 2009, increased the Company’s effectiveness by means of personnel motivation, aimed at both personal performance and the Company’s performance as a whole. Presently there are 3,000 people on staff in all the Group’s branches. The system of shared responsibility of the personnel was implemented.

The Company’s performance results in 2009 demonstrated the swiftly adopted business model’s vitality during the recession and the Company’s ability to react to unprecedented market conditions.

PLANS FOR 2010

“Taking into consideration the general market tendencies, we may speak of the fact that Independence Group of Companies not only successfully lived through the hardest year for the Russian automobile business, but was able to use the situation positively and change according to new demands.

One of the Company’s most important priorities in 2010 was shaping long-term trusting relations with clients. We are striving to strengthen our competitive positions in order to achieve high customer satisfaction by taking measures aimed at increasing the quality of customer service in the Group’s automobile dealerships.

The Company’s main activity in 2010 will focus on the development of “Used automobiles” projects, after-sales services, as well as the development of the financial services branch, Finservice. The Independence Group of Companies plans not only to maintain its position at the market, but actively work on increasing market share and ensuring the Company’s growth by way of developing new business models and M&A. One of the main goals will also be the full capacity operation of Autokraft, the biggest automobile dealership in Russia, which began operating this March, and the opening of the multifunctional complex Audi Center Moscow in the second quarter of 2010.

According to experts’ forecast, the pending utilization program, local production development, and soft lending programs will undoubtedly facilitate the new automobiles sales in 2010.”

Eric Blondo, General Director of the Independence Group of Companies