#1Etalon Group 1H 2011 results Investor presentation October 2011#2B 1Grou Disclaimer IMPORTANT: You must read the following before continuing. The following applies to the presentation (the "Presentation") following this important notice, and you are, therefore, advised to read this important notice carefully before reading, assessing or making any other use of the Presentation. In assessing the Presentation, you unconditionally agree to be bound by the following terms, conditions and restrictions, including any modifications to them any time that you receive any information from Etalon Group Limited ("Etalon Group" or the "Company") as a result of such access. 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The Company's securities have not been and will not be registered in the Russian Federation or admitted to public placement and/or public circulation in the Russian Federationexcept as permitted by Russian law. This Presentation does not constitute or form a part of, and should not be construed as, (i) an advertisement of any securities of the Company, or an offer, or an invitation (including an invitation to make an offer) by or on behalf of the Company in the Russian Federation or in any other jurisdiction or (ii) any promise or representation that any such offer or invitation will be made and shall not form the basis of, nor may it accompany, nor form part of, any contract to acquire any securities of the Company in the Russian Federation or in any other jurisdiction. This Presentation is not directed to, or intended for distribution to or use by, any person or entity that a citizen or resident located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require registration of licensing within such jurisdiction. By attending this presentation, you agree to be bound by the restrictions in this disclaimer. > Etalon Group 2#3El Grou Today's presenting team Viacheslav Zarenkov Anton Evdokimov Dmitri Boulkhoukov CFO President With Etalon Group ■ Founding shareholder since 1998 Founded in 1987 Alexander Shkuratov Head of investments With Etalon Group since 2007 Head of strategy and business development With Etalon Group since 2007 > Etalon Group 3#41. Market environment 2. 1H 2011 Operating and Financial Performances AGENDA 3. New acquisitions 4. Selected projects update 5. Key takeaways#5B 1Grou At a glance Presence in rapidly growing markets Leader in St Petersburg* real estate market with ca. 11% market share (1) Strong presence in Moscow* real estate market Focus on upper economy class and lower middle class segments. Nationwide sales network. Strong delivery track record 2.8 mln sqm commissioned since inception in 1987 24 years of construction & development experience Liquidity and credit ratings Rapidly expanding projects portfolio ■ All stages of development cycle True vertical integration ■ Large-scale multi-phase projects Corporate governance Country-wide sales network ☐ Secure liquidity position supported Ticker ETLN:LI by pre-sales cash collections " Low leverage: 0.6x Net debt / EBITDA as of 31.12.2010 (3), Net cash = US$271 mln as of 30.06.2011 Market capitalization USD1,165 mln (12.10.2011) Share price USD3.95 (12.10.2011) Credit rating by S&P's: B/Stable/B (3) Projects portfolio focused on cash- flow generation Dominant player in "comfort class" in St Petersburg Sufficient land bank to support future recurring income. Land bank secured to 2x delivery volume by 2012 and 4x by 2014 Fully accomplished Board of Directors with appropriate representation of interests of all investor groups ■ Quarterly trading updates and semi-annual financial reporting Portfolio composition Total unsold NSA breakdown 14% 31% 55% SPMA as of 31.12.2010 Acquired in 2011 1% 1% 14% 39% 45% MMA as of 31.12.2010 Residential under construction Acquired in 2011 Residential design stage Completed residential Standing commercial Source: JLL report as of 31.12.2010, Company press releases St Petersburg metropolitan and Moscow metropolitan areas respectively (1) Average annual market share of total residential completions in the private sector (excluding individual construction) between 2000 and 2010 in St. Petersburg; (2) Net debt as of 31.12.2010, EBITDA for 2010; based on audited consolidated IFRS accounts of Etalon Group; (3) 'B' long-term & 'B' short-term corporate credit ratings of SSMO LenSpetsSMU with 'Stable' outlook (last reconfirmed on 06.11.2010); Etalon Group 5#61. Market environment 380 05 25#7B 1Grou Focus on Key Markets - Moscow and St. Petersburg Metropolitan Areas MMA and SPMA are the most attractive residential markets in Russia MMA & SPMA - most populated Russian regions... Total: 142mn (4) 22mn with growing demand for residential real estate Population growth/ (decline) in 2007-2010 (4) 85% 12% 1.3% 0.6% (0.4%) ■MMA ■ SPMA Other MMA SPMA Other Potential demand estimation (ths. households) Total # of households in target markets US$3-6 ths. per HH per month Households with income within target price-range (1 (1) 1,852 (7) 60% MMA SPMA 6,300 1,700 8,000 Residential real estate commissioning in Russia Households planning to improve living 1,111 Satisfied households conditions By value in US$ (2010) (5), (6) By volume in ths.sqm (2010) (5) (8) 56% 35% 53% 13% Total: US$48bn 72% 20% 8% Total: 33mn sqm ■MMA ■ SPMA ■Rest of Russia Source: Rosstat Lower income Higher income Households with preference for primary 622 market Secondary preference Indicative potential market (3) Regional demand 622+ Investment demand The above set of simple assumptions further supports the existence of significant unsatisfied demand for value-added housing in MMA and SPMA (1) Company estimates based on Rosstat's methodology and data; includes additional demand from mortgage users - share of sales with mortgage in total sales is 12%, according to MER (assuming no overlap between mortgage and instalments customers); (2) 1H2010 new supply volume of Middle Class residential properties on the primary market, according to MIAN and SPb Realty, converted from sqm into housing units, assuming that 1 flat = 85.3 sqm (average flat size in Russia in 2009, Rosstat)); (3) The demand structure shown on the pie chart is for indicative purposes; (4) Rosstat data as of January 2010; (5) Residential real estate commissioning, excluding individual construction; (6) Calculated as residential real estate commissioning volume in 2009 (excluding individual construction) multiplied by average real estate RUR prices on the primary market in 2009 and divided by end of period official CBR RUR/US$ exchange rate in 2010 (RUR/US$ 30.5); (7) 60% of households plan to improve living conditions (source - Rosstat; Comcon, 2010); (8) 56% of consumers prefer primary vs. secondary residential real estate market (Source -Metrinfo survey in Moscow, 1H 2010) → Etalon Group 7#8B 1Grou Moscow and St. Petersburg markets - price per m2 '000 RUB 200 160 120 80 60 40 40 '000 RUB Moscow 64 34 43 50 110 107 160 117 136 140 2002 2003 2004 2005 2006 2007 2008 2009 2010 June 2011 IRN Index* Source: IRN 100 60 80 60 60 40 40 20 20 15 20 St. Petersburg 26 28 28 56 56 63 80 70 770 70 73 2002 2003 2004 2005 2006 2007 2008 2009 Mass market 2010 June 2011 Source: SPb Reality * IRN Index is calculated on the basis of prices per sqm in both primary and secondary markets Prices stabilized after declining in 2009, have returned to pre-2008 levels Steady demand on strong market fundamentals > Etalon Group 80#9樂 2. 1H 2011 Operating and Financial Performances ம 777 IN THRE 407 LILE#10B 1Grou Solid trading results in 1H 2011 New sales contracts are 41% up Y-o-Y Indication of solid revenue for 2011 126 122 272 278 86 104 192 +41% YOY 147 +10% YOY 2H 2010 Transferred to customers, ths sqm 1H 2010 2H 2010 1H 2011 1H 2010 New sales, ths sqm New sales, mn USD Source: management accounts Source: management accounts Significant increase in deliveries 413 323 2008 2009 209 2010 59 +113% YOY 150 124 1H 2010 2H 2010 1H 2011 Delivered NSA, ths sqm Source: management accounts Average USD/RUB fx rate 6 m 2010 30.05 Average USD/RUB fx rate 6 m 2011 28.56 114 1H 2011 In 2Q 2011 Etalon continued to make solid progress with new sales contracts Etalon believes that the primary driver for increase in new sales is continued recovery in residential mass market segment in target cities, combined with high level of consumer confidence associated with Etalon brand and its long term track record Exit of no-name or small-scale developers post-crisis also driving consistently improving sales In 2Q 2011 additional efforts made on large apartments (3 rooms/2 bedrooms) with lower-than-average selling prices per sqm. Large apartments were harder to sell during the crisis, but improving market conditions enabled Etalon to convert inventories into sales and cash flow Transfers to customers demonstrated solid growth both in 1Q and 2Q and are indicative both of construction and pre-sales processes > Etalon Group 10 10#11B 1Grou Strong Financial Performance Revenue (USD mln) 669 636 9% 574 60 36 54 465 58 47 330 302 541 555 33 470 285 243 27 128 22% 47 Net Profit and EBITDA (USD mln) 239 25% 227 38% 162 154 34% 38 124 3 99 تبال 68 2008 2009 2010 1H2010 1H2011 2008 2009 2010 1H2010 1H2011 ■Residential development Construction services to 3rd parties ■Other (1) Source: audited consolidated IFRS accounts for 2008, 2009, 2010 and reviewed IFRS accounts for 1H 2011 Average USD/RUB fx rate 6 m 2010 30.05 Average USD/RUB fx rate 6 m 2011 28.56 EBITDA Net profit EBITDA margin % 96 96 (1) Includes 'Other operations' reporting segment (selling of construction materials, construction of stand-alone premises for commercial use and various services related to sale and servicing of premises) and 'Other revenues' (reflect revenues from operations not classified under any of the three reporting segments) (2) EBITDA is defined as profit (loss) for the period before interest and related income / (expenses), income tax expense, depreciation and amortization > Etalon Group 11#12B 1Grou Robust Balance Sheet Debt cash flows maturity profile (as of 30/06/2011; USD mln) 61 27 84 65 94 331 2011 2012 2013 2014 2015 Total 148 Leverage and credit rating 80 138 Debt composition (as of 30/06/2011) By type of facility 0.0% 22.1% ■CLN 32.5% 45.4% Bank loans 8.7% By currency 41.1% Local bonds 50.2% Loans from other parties RUR (2) (@13.9%) USD (3) (@9.6%) EUR (@EURIBOR +7.00%) (4) Net cash (at 30/06/2011), USD mln Financing strategy S&P rating (5) SSMO LenSpetsSMU Международная рейтинговая компания: Стандард Пур B/Stable/B BiruA 1.2x 0.6x 0.3x ЗАО СМО «Тинск 31-Dec-08 31-Dec-09 31-Dec-10 Net debt, USDmln Net debt / EBITDA 271 331 602 06.11.2010 Net Cash Debt Cash Source: audited consolidated IFRS accounts for 2008, 2009, 2010 and reviewed IFRS accounts for 1H 2011 Longer debt maturities (3-5 years) Decrease the cost of funding Conservative approach to leveraging End of period USD/RUB rate at 30 June 2010 30.48 End of period USD/RUB rate at 30 June 2011 28.08 (1) Without expected interest payments; (2) Weighted-average cost of debt on local bonds, bank loans and loans from other parties (all RUR-denominated); (3) Weighted- average cost of debt on CLN and bank loans (US$-denominated); (4) Interest rate on bank loans (EUR-denominated); (5) Net debt is calculated as Long-term debt (carrying amount) + Loans and borrowings (short-term at carrying amount) - Cash & Cash Equivalents - Cash deposits included in ST Investments (5) Reconfirmed 8 times since 2006 (including 4 times in 2009); Etalon Group 12#13- H Венские Кондитерские 3. New acquisitions САЛОН КРАСОТЫ#14B 1Grou New Acquisitions Pulkovskoe Shosse, St. Petersburg Project description 2.1 ha land plot area; original NSA of 50 ths sqm upgraded to 63 ths sqm ☐ Project acquired in 2Q 2011 ☐ The site is located in the south of the Moskovsky district of St. Petersburg, 2 km from Pulkovo Airport The site is close to the Pulkovskoe highway (which puts the centre of St Petersburg approximately 15 minutes away by car) and within a five minute walk of a number of bus stops The complex is within walking distance from shopping and entertainment zone which comprises the LETO Shopping Mall, O'KEY Supermarket, Castorama DIY, LENTA, Pulkovo III Shopping Mall & Entertainment Centre and a METRO Cash & Carry NSA Increase (ths sqm) 26% 50 63 June 2011 October 2011 proyezd 5-y Predportovyy proye Project Location Pulkovskoye shosse 6-y Predportovyy proyezd Pulkovskoye shosse stantsiya Aeroport % > Etalon Group 14 14#15B 1Grou New Acquisitions Pulkovskoe Shosse, St. Petersburg The building site has been prepared for construction to start. PULKOVSKOE SHOSSE 15#16B 1Grou New Acquisitions Pulkovskoe Shosse, St. Petersburg The LETO shopping mall is located in close proximity to the site, and contains hypermarkets, clothing shops and a broad range of other stores. PULKOVSKOE SHOSSE EIC 16#17B 1Grou New Acquisitions Pulkovskoe Shosse, St. Petersburg The area is well developed, with a number of car dealerships and other shops near the development site. 8817AA 178 9007HRAL 800 LAND ROVER PULKOVSKOE SHOSSE JUAR 17#18B 1Grou New Acquisitions Pulkovskoe Shosse, St. Petersburg The southern region of St. Petersburg has good transportation infrastructure and offers residents a wide range of consumer shops. C888 TE 24 PULKOVSKOE SHOSSE 18#19B 1Grou New Acquisitions Dmitrovskoe Shosse, Moscow ☐ ■ Project description 10.3 ha land plot area; original NSA of 220 ths sqm upgraded to 350 ths sqm Project acquired in 2Q 2011 The site borders Yahromsky passage to the north and Dmitrovskoye highway to the east, and can be accessed easily from either of these major transport routes The centre of Moscow can be reached by car in approximately 20 minutes Beskudnikovo railway station, Savelovskoe direction is just 1.5 km from the complex There are plans to build a metro station, Yubileinaya, adjacent to the site in the next few years, and there are also a number of bus stops situated within walking distance NSA Increase (ths sqm) 220 59% 350 June 2011 ■ October 2011 Angarskaya ulitsa Korovinskoye shosse Ulitsa Sofi Kovalevskoy Project Location Ikshinskaya ulitsa Yakhromskiy proyezd Dmitrovskoye shosso A-104 A-104 ulitsa 800-letiya Moskvy ulitsa 800-letiya Moskvy Korovinskiy proyezd Dmitrovskoye Beskudnikovskiy bui'var A-104 Bubninskiy proyezd Beskudnikovskiy proyezd > Etalon Group 19#20B 1Grou New Acquisitions Dmitrovskoe Shosse, Moscow The new development will revitalize a neighbourhood made up primarily of Soviet-era buildings DMITROVSKOE SHOSSE SUNDQVIST Qualty inguticus fir you +358 6 781880 FINLAND 20 20#21B 1Grou New Acquisitions Dmitrovskoe Shosse, Moscow A large park with recreation areas and ponds is located in close proximity to the development site. DMITROVSKOE SHOSSE 21#22B 1Grou New Acquisitions Dmitrovskoe Shosse, Moscow The area is surrounded by green a wooded zone. DMITROVSKOE SHOSSE 22#23B 1Grou New Acquisitions Dmitrovskoe Shosse, Moscow The territory of an old factory will be cleared for the new construction site ABTOCTEKAA 8-4826)-820-82-55 DMITROVSKOE SHOSSE 23 23#24El 1 Grou New Acquisitions Rechnoy, St. Petersburg Project description ☐ Project Location Rybatskiy prospekt ■ 2.1 ha land plot area; NSA of 105 ths sqm Project acquired in 3Q 2011 The site is located in the south of the Nevsky district of St. Petersburg and borders Rybatsky Prospect and the Neva River The site is located approximately one kilometre from the Rybatskoe metro station and from a railway station of the same name. It is also within a two-kilometre proximity to the St. Petersburg ring road Construction is expected to start in 2012 Concept Shlissel'burgskiy prospekt Karavaevskaya ulitsa TP- Ulitsa Dmitriya Ustinova reka Neva Pnbrezhnaya ulitsa 2 Etalon Group 24#25B 1Grou New Acquisitions Rechnoy, St. Petersburg The complex will be located on the bank of the Neva River, with a view of the Bolshoi Obukhovskiy bridge, part of the St. Petersburg Ring Road RECHNOY 25 25#26B 1Grou New Acquisitions Rechnoy, St. Petersburg Water taxis and a boat pier are located next to the construction site on the Neva. RECHNOY 26 26#27B 1Grou New Acquisitions Rechnoy, St. Petersburg The new buildings will stand out against the old, Soviet-era apartment blocks that make up the surrounding neighbourhood. RECHNOY 27 27#28B 1Grou New Acquisitions Rechnoy, St. Petersburg Parks and recreation areas are in close proximity to the construction site. RECHNOY 28#297 КАРУСЕЛЬ Фамили INTERSPORT 888 4. Update on selected projects#30B 1Grou Selected projects update Emerald Hills The Emerald Hills complex includes a wide range of infrastructure, including a school and pre-school, recreation zones and squares. A shopping and entertainment centre is also planned, in addition to individual stores and even a medical clinic. Stage 1 of the complex is currently nearing completion, as can be seen in this photograph. 021M73 EMERALD HILLS 30 30#31B 1Grou Selected projects update Emerald Hills For the Emerald Hills complex we used modern ventilated facades, which help significantly increase the efficiency of the buildings' heating system during the winter, and helps keep the interiors cooler during hot periods in the summer. EMERALD HILLS IT. 31#32B 1Grou Selected projects update Emerald Hills The heating plant for the Emerald Hills project is fully automated and built using the latest technologies available. Today the heating plant is 90% complete and is on schedule to begin functioning on time for the completion of Stage 1 of the building project. The heating plant has six boilers with a total capacity of 78 MWt. Hot water is supplied to the residents of the Emerald Hills complex by heat exchangers located directly in each of the buildings. EMERALD HILLS 32 32#33B 1Grou Selected projects update Emerald Hills Foundation work on Stage 2 of the Emerald Hills complex, shown in this photograph, has been completed and construction of the buildings has passed the second floor. VM 3TAMCH E EMERALD HILLS D L 33#34B 1Grou Selected projects update Jubilee Estate The complex will consist of 13 residential buildings of up to 25 floors and multi-level underground parking. The poured concrete technology was used for construction, with brick accents and ventilated facades. As of 3Q 2011, 10 buildings from the total 13 are delivered JUBILEE ESTATE 34#35B 1Grou Selected projects update Jubilee Estate The ground floors of the residential buildings will be occupied by consumer-oriented commercial premises. The complex also feature children playgrounds, guest parking and recreational areas JUBILEE ESTATE 35#36B 1Grou Selected projects update Jubilee Estate The remaining 3 buildings under construction are scheduled to be delivered by the end of 2011 (1 building) and in 2012 (2 buildings) 131212 JUBILEE ESTATE 36#37KEY TAKEAWAYS#38El Grou Key takeaways ☐ Better than expected progress on acquisitions 518 ths sqm of NSA acquired since IPO, more than 40% out of planned at IPO Most of the acquisitions were financed via operating cash flow IPO proceeds largelly remain on the balance sheet Solid progress on sales ■ New contracts concluded in 1H 2011 up 41% compared to 1H 2010 (by area contracted) Progress in MMA ■ New project on Dmitrovskoe Shosse acquired (NSA 220 ths sqm, upgraded to 350 ths sqm), 5 new projects in the course of DD and negotiations ■ Etalon-City: Master plan is expected to be approved by Moscow authorities by the end of 2011. Construction permit for 1st stage of Etalon-City is planned to be obtained during H1 2012 ☐ Emerald Hills: Delivery of 1st stage of Emerald Hills on schedule for 2011. Pre-sales of 2nd stage under way Robust EBITDA growth and better than expected margins 1H 2011 EBITDA is up 25% in US$ compared to 1H 2010, EBITDA margins increased to 38% Strong balance sheet position to benefit from higher quality deal flow ■ Net cash as of 30/06/2011 is USD 271 mln ■ Long-term debt properly balanced between RUR and USD ✓ Etalon Group 38#39B 1Grou Clear Strategy Intended to Crystallize Value for Shareholders Geographical expansion Focus on St. Petersburg and Moscow Metropolitan areas ■ Further develop regional sales network Home building business model Focus on residential development ☐ Vertical integration only in "bottleneck" areas Optimum land bank build-up No projects held for future development Efficient reinvestment of capital: quality business model Dominant player in <<comfort class>>> in Russia Offering the best quality products Maintain strong brand recognition Aim to increase shareholder value Prudent financing Focus on pre-sales financing Conservative borrowing strategy with extended debt maturity > Etalon Group 39#40Q & A SESSION#41APPENDIX#42B 1Grou Income Statement mn USD Revenue 2008 2009 2010 1H2010 1H2011 573.7 635.6 668.7 Cost of sales (368.4) (347.0) (364.6) 302.1 (169.3) 329.6 (166.4) Gross profit 205.4 288.6 304.1 132.8 163.1 General and administrative expenses (62.0) (45.3) (67.4) (32.1) (35.7) Selling expenses (18.1) (4.1) (19.4) (7.2) (11.8) Other expenses, net (6.0) (6.2) (5.8) (3.3) 1.3 Results from operating activities 119.3 233.0 211.5 90.2 116.9 Finance income 7.0 7.1 9.3 5.6 8.2 Finance costs (50.5) (33.0) (22.0) (7.5) (0.7) Net finance costs (43.5) (25.9) (12.6) (1.9) 7.5 Share of profit of equity accounted investees (net of income tax) 0.2 0.1 0.0 0.0 0.0 Profit before income tax 75.9 207.1 198.9 88.3 124.5 Income tax expense (28.7) (45.1) (44.6) (20.3) (28.2) 47.2 162.0 154.3 68.0 96.3 Profit for the period Profit attributable to: Owners of the Company Non controlling interest Profit for the period 31.2 155.4 152.3 67.3 95.3 16.0 6.6 1.9 0.7 1.0 47.2 162.0 154.3 68.0 96.3 Source: audited consolidated IFRS accounts for 2008, 2009, 2010 and reviewed IFRS accounts for 1H 2011 > Etalon Group 42 42#43B 1Grou Balance Sheet mn USD ASSETS 01/01/2008 2008 2009 2010 1H2011 mn USD 01/01/2008 2008 2009 2010 1H2011 EQUITY AND LIABILITIES Non-current assets Equity PP&E 36.2 38.2 55.0 54.5 60.4 Share capital 0.04 0.03 0.03 0.03 0.04 Other long-term investments 2.5 2.7 1.1 1.3 3.6 Share premium 0 66.4 64.5 64.0 549.8 Retained earnings Trade and other receivables 20.3 20.2 26.7 29.7 29.0 (16.9) 13.5 176.1 333.2 458.7 Total equity attributable to equity Deferred tax assets 42.9 40.4 36.9 8.6 15.7 (16.9) 80.0 240.6 397.3 1,008.5 holders of the Company Other non-current assets 4.4 1.2 0.1 1.1 0.2 Non-controlling interest 11.0 20.2 25.6 15.1 17.3 Total non-current assets 106.4 102.7 119.7 95.1 108.9 Total equity (5.9) 100.1 266.2 412.3 1,025.9 Current assets Non-current liabilities Inventories 636.9 996.2 883.5 841.6 992.4 Long-term debt 190.5 63.5 85.1 219.9 272.7 Trade and other receivables 94.5 112.2 128.2 130.1 177.1 Short-term investments 0.8 1.1 0.9 Cash and cash equivalents 37.4 80.9 Other current assets 0.5 0.2 113.0 0.8 11.2 119.3 1.9 Long-term trade and other payables 2.6 1.8 12.6 8.6 4.6 27.7 575.0 Provisions 2.9 2.6 2.7 2.7 2.7 1.1 Deferred tax liabilities 4.1 9.5 27.8 1.3 0.7 Total current assets 770.1 1,190.7 1,126.4 1,104.0 Total assets 876.5 1,293.4 1,246.1 1,199.1 1,773.3 1,882.2 Total non-current liabilities 200.2 77.5 128.2 232.4 280.7 Current liabilities Loans and borrowings Trade and other payables Provisions Total current liabilities Total equity and liabilities 76.0 165.7 108.2 46.7 593.4 898.7 679.8 468.6 12.8 51.4 63.6 39.0 682.2 1,115.8 851.6 554.4 876.5 1,293.4 1,246.1 1,199.1 1,882.2 58.1 480.3 37.2 575.6 Source: audited consolidated IFRS accounts for 2008, 2009, 2010 and reviewed IFRS accounts for 1H 2011 > Etalon Group 43#44B 1Grou Cashflow Statement mn USD 2008 2009 2010 1H2010 1H2011 mn USD 2008 2009 2010 1H2010 1H2011 OPERATING ACTIVITIES: INVESTING ACTIVITIES: Proceeds from disposal of non-current Profit for the year 47.2 162.0 154.3 68.0 96.3 1.9 3.4 1.0 0.2 3.4 assets Adjustments for: Interest received 3.5 6.3 3.1 2.0 2.4 Depreciation and amortisation 7.7 6.5 9.4 4.9 4.4 Acquisition of PP&E (17.9) (7.0) (10.8) (6.0) (6.7) (Gain)/loss on disposal of PP&E 0.2 (2.0) (0.0) 0.4 (2.1) Loans given (3.4) (8.4) (3.5) (3.1) (2.1) Loss on disposal of subsidiaries 0 0 0.2 0.4 0.0 Share of profit on equity accounted investees Loans repaid 0.7 0.2 2.0 0.3 1.9 (0.2) (0.1) 0.0 0.0 0.0 Acquisition of subsidiaries, net of cash 0.0 0.5 0.3 0.0 0.0 Gain (loss) on disposal of other investments acquired 0.0 0.0 0.0 0.3 (0.8) Disposal of subsidiaries, net of cash 0.0 Finance cost, net 44.9 24.3 16.1 2.4 (7.4) disposed of 0.0 0.0 (1.2) (1.4) 0.0 Impairment losses on loans given 2.0 2.4 0.0 0.0 0.0 Acquisition of other investments 0.0 0.0 Net cash used in investing activities (15.2) (9.1) (4.9) (18.3) (30.5) (18.3) (22.6) (17.3) Income tax expense 28.7 45.1 44.6 20.3 28.2 Cash from operating activities before changes in working capital FINANCING ACTIVITIES: 130.6 238.2 224.6 96.7 118.6 Proceeds from IPO 0.0 0.0 0.0 0.0 472.2 Change in inventories (530.0) Change in accounts receivable Change in accounts payable 476.3 81.6 (42.7) (26.0) (6.6) (196.2) (219.2)| 50.0 49.8 (0.2) (78.2) (62.1) Proceeds from issue of share capital 78.4 0.0 0.0 0.0 0.0 Change in provisions 48.2 13.2 (24.2) (22.7) Change in other currents assets 0.0 (0.5) (1.1) 0.6 (15.3) (5.3) 1.0 (32.0) Acquisition of non-controlling interest Proceeds from disposal of non-controlling interest (0.4) 0.0 (3.2) (3.0) 0.0 0.0 0.0 0.0 0.0 0.8 Proceeds from borrowings 283.4 272.2 355.3 137.2 79.8 Repayments of borrowings Income tax paid (27.6) Interest paid (28.4) Net cash provided by operating activities 26.5 68.6 (15.9) (35.6) (19.3) (26.0) (26.8) (10.1) (39.0) 16.3 (48.0) (19.2) Dividends paid (314.6) (303.4) (283.7) (182.1) (27.2) (0.8) (1.0) (1.3) (1.3) 0.0 Net cash (used in)/from financing (62.2) activities 46.0 (32.1) 67.1 (49.2) 525.7 Net increase in cash and cash equivalents 57.3 31.6 9.9 (63.4) 445.2 Cash and cash equivalents at the end of Source: audited consolidated IFRS accounts for 2008, 2009, 2010 and reviewed IFRS accounts for 1H 2011 95.6 107.5 119.7 47.5 565.3 the period Etalon Group 44#45El Grou 900 800 700 600 500 Expanding Portfolio Providing for Robust Growth 413 400 300 200 100 2008 323 2009 Sufficient land bank to 2x deliveries by 2012 and 4x by 2014 IPO proceeds 209 319 2010 2011 Source: company estimates, JLL report as of 31.12.2010 386 487 830 549 440 I 2012 2013 2014 2015 2016 I Future pipeline (unquantifiable) > Etalon Group 45 45#46B 1Grou On Track with Plans Announced at IPO Construction period 2011 2012 2013 2014 2015 2016 Status Total NSA Unsold NSA ('000 sqm) ('000 sqm) OMV(1) Unsold (US$mn) parking (lots) Construction Outstanding budget (1) (US$mn) budget(1) (US$mn) St. Petersburg 1 Jubilee Estate 2 Tsar's Capital (Kremenchugskaya str. 11) 3 118) 4 Moskovskiy (Moskovsky prospect 115) 5 Orbit Construction 602 377 416 2,201 738 208 Planning permit 459 459 126 1,638 789 789 Swallow's Nest (Oktyabrskaya embankment Construction 319 319 42 2,182 376 376 permit Planning permit 259 259 111 1,286 431 431 Construction 207 169 107 926 244 191 6 Uralskaya str. 2 Planning permit 165 165 48 600 307 307 7 Obukhovskoy oborony prospect 110 Planning permit 101 101 28 746 134 134 8 Smolenskaya str. 9 Planning permit 70 9 Pulkovskoe shosse Planning permit 63 10 Etude 11 Prestige 12 Talisman 13 Rechnoy Completed and unsold residential developments Completed stand-alone commercial properties Construction 23 Construction 21 2652 70 26 257 107 107 63 n/a n/a TBD TBD 15 11 138 28 28 20 26 96 36 22 29 22 29 Delivered 15 8 19 110 20 5 Planning permit 105 105 n/a n/a TBD TBD 1,122 34 54 795 8 39 20 52 61 1 Emerald Hills 2 Etalon-City 3 Dmitrovskoe shosse Moscow Construction 868 847 258 4,773 1,072 1,019 Planning permit 270 270 92 2,022 372 372 Planning permit 350 350 n/a n/a TBD TBD Etalon Group 46 46#47El Grou Operations in Moscow* Set to Repeat the Success of St Peterburg's Business* Projects in St. Petersburg Metropolitan Area 6 12 D 8 2 10 4 9 3 7 13 Projects in Moscow Metropolitan Area 1 3 2 Completed # Under construction (1) Design stage (1) Newly acquired projects In the course of DD and negotiations * Moscow metropolitan and St Petersburg metropolitan areas respectively (1) Project numbers in square correspond to the projects in the table on previous page ✓ Etalon Group 47#48B 1Grou Nationwide Sales & Marketing Network Supports Sustainable Contracting Powerful sales network across the country Regional population actively buys apartments in Moscow and St. Petersburg Murmansk Monchegorsk Arkhangelsk Naryan-Mar (Nenetskiy SPMA Cherepovets Yaroslavl MMA AD) Ukhta Noviy Urengoy (Yamalo-Nenetskiy AD) Etalon Group's regional sales geography (2010) (2) Region Share in sales Leningrad region 3.9% Khanty-Mansijsk AD 3.2% Yamalo-Nenets AD 2.0% Kamchatsky Krai 1.9% Sakhalin region 1.2% Magadan region 0.9% Yakutia 0.6% Nenets AD 0.2% Other Russian regions 9.9% Foreigners 0.6% Total: 28.5% Norilsk Yakutsk Kazan Nizhny Tagil Khanty- Chelyabinsk Mansiysk Noyabrsk (Yamalo- Nenetskiy AD) Mirniy Magadan Surgut Stavropol Orenburg Nizhnevartovsk Petropavlovsk- Kamchatskiy The Group's flats are sold in 9 out of 10 richest Russian regions Disposable income (US$) (1) Moscow 1,343 NenetsAD 1,247 Uzhno- Sakhalinsk Yamalo-Nenets AD 1,084 Chukotka 1,064 Sakhalin 1,025 Khabarovsk Krasnoyarsk Irkutsk Etalon Group's sales offices / representatives Nakhodka Khanty-Mansijsk AD St. Petersburg Kamchatsky Krai Magadan Yakutia 995 873 866 841 1789 Vladivostok Russia average 603 Established relationships/ partnerships with local sales agencies ☐ Etalon Group sales force is focused on the regions with the largest disposable income ☐ 30 cities covered with 10 sales offices in ■ Key markets: SPMA and MMA St. Petersburg and 10 sales offices nationwide External professional marketing and sales service agents engaged nationwide (1) Average monthly disposable income, Rosstat data as of 3Q 2010; RUB values were converted into US$ at official CBR average exchange rate in 3Q 2010 (30.62 RUR/US$); (2) Source: management accounts Etalon Group's target regions → Etalon Group 48