#1Renaissance Capital 20th Annual Russia Investor Conference Etalon Group 21 June 2016#2Disclaimer 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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Etalon Group 1#3Today's presenting team Etalon Group Anton Evdokimov Chief Executive Officer Member of the Board of Directors With Etalon since 1998 Kirill Bagachenko Head of Corporate Investments and IR Member of the Board of Directors With Etalon since 2013 2#4Summary 12.9 bln RUB new sales +238% y-o-y 104.4 bln RUB open market In 2H 2015 Etalon Group delivered double-digit year-on-year increases in new sales. 1Q 2016 operating results showed even stronger growth, with new contract sales up 238% year-on-year to RUB 12.9 bln Etalon Group's portfolio value remains stable at RUB 104.4 bln, with 2.72 mln sqm of net sellable area value 31% consolidated gross margin 7.4 bln RUB net debt Consolidated gross profit margin remained unchanged at a high level of 31% Balance sheet remains very strong, with net debt of only RUB 7.4 bln, and net debt/EBITDA staying below 1.0x Etalon Group 3#5Contents 1 Operating Results 2 Landbank Valuation 3 Financial Results 4 Selected Projects 5 Appendix ✓ Etalon Group 4#61 Operating Results Etalon Group wwwwww PRZERAY EB EEEE 7777 177 Tsar's Capital 1st stage, 2013.#7In 2015 Etalon Group once again met its target for deliveries Deliveries, ths sqm +7% -13% 580 580 500 502 467 468 2013 2014 Planned deliveries 2015 Deliveries breakdown, ths sqm Project Tsar's Capital Samotsvety NSA delivered in 2015, ths sqm 160 128 Moscow Gates 66 66 Emerald Hills 65 59 Etalon City 43 2015 Swallow's Nest 40 Actual deliveries • Etalon Group delivered 14 residential buildings containing around 6,000 apartments Total Source: Company data 502 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 6#8Despite a turbulent macro environment, Etalon Group significantly outperformed guidance provided at the beginning of 2015 Number of contracts New contract sales, sqm New contract sales, RUB mln +13% +8% +16% -13% -16% -12% 9,045 457,056 39,961 7,841 6,932 356,075 385,252 35,080 30,227 2013 2014 2015 2013 2014 2015 2013 2014 2015 New contract sales y-o-y, RUB mln 13,309 +19% +41% 9,406 15,774 +27% 9,480 7,415 8,152 5,563 8,095 11,392 5,194 6,746 9,078 4,110 5,566 5,923 3,804 2012 2013 2014 2015 ■1Q 2Q 3Q 4Q Source: Company data Highlights Average price for apartments up to RUB 102.3 ths/sqm from RUB 95.1 ths/sqm in 2014 Average down payment reached 62%, significantly above the average of 50% envisaged by the business model Etalon Group Operating Landbank Results Valuation Financial Results Selected Projects Appendix 7#9In 2016 Etalon Group plans to return to a growth trajectory While new sales in 2H 2015 were very strong, inventory of completed and available for sale property is up y-o-y +34% In possession of this valuable stock, the Company decided to decrease slightly 2016 deliveries -16% At the same time, total volume of property under construction will increase to -1 mln sqm on the back of new launches +35% 581 502 432 321 220 212 2014 259 728 422 984 2015 2015A Actual deliveries, ths sqm Planned deliveries, ths sqm 2016F 2015 2016 ■NSA under construction bop, ths sqm ■Completed apartments eop, ths sqm ■Completed other premises eop, ths sqm Source: Company data Etalon Group Operating Results Together, these factors are expected to enable Etalon Group to increase new sales by over 20% 35,080 2015A >20% 2016F Actual new contract sales, RUB mln Planned new contract sales, RUB mln Landbank Valuation Financial Results Around half of new sales are expected to come from sell-down of the inventory of completed and available for sale NSA as of 31.12.2015 Selected Appendix Projects 8#101Q 2016 operating results outperformed expectations Number of contracts +156% 1,028 2,634 New contract sales, sqm New contracts sales, RUB mln +187% +238% 46,990 135,003 3,804 12,860 1Q 2015 1Q 2016 1Q 2015 1Q 2016 1Q 2015 1Q 2016 Average price, RUB/sqm 110,000 106,228 105,297 105,040 102,417 100,502 95,923 97,522 93,122 93,223 95,000 90,860 88,811 84,385 85,315 89,402 90,511 97,918 95,254 93,746 90,258 87,887 80,000 84,286 85,671 85,271 83,234 80,606 80,946 65,000 50,000 1Q13 2Q13 Source: Company data 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 ⚫apartments total • • Highlights Average down payment reached 66%, significantly above the average of 50% envisaged by the business model, up from 58% in 4Q 2015 Share of regional sales amounted to 34% Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 9#11Strong operating results backed by further rollout of the Moscow Metropolitan Area portfolio 1Q 2015 new contract sales by project, sqm 1Q 2016 new contract sales by project, sqm Samotsvety Rechnoy Other projects Landyshi 1% 1% Jubilee Estate 2% Other projects 2% Etalon City Jubilee Estate 17% Swallow's Nest 5% 7% 12% 7% Rechnoy 12% 7% Samotsvety Emerald Hills 10% Golden Star 7% 1% Moscow Gates Tsar's Capital 9% 14% Tsar's Capital 25% Swallow's Nest Moscow Gates 18% 18% 25% Etalon City Emerald Hills Significant portfolio diversification with balanced share of Moscow Metropolitan Area projects • 50/50 balance between MMA and SPMA projects . Share of Etalon City amounted to 25% following launch of sales at six new residential buildings in 1Q 2016 • Project Golden Star, launched in November 2015, accounted for 7% of new sales in 1Q 2016 Source: Company data Summer Garden - a new project in the MMA sales portfolio . In late March, Etalon launched Summer Garden with a total NSA of 283 ths sqm Etalon Group Operating Results Landbank Valuation Financial Results Launched in late March, Summer Garden is a new and attractive addition to the Moscow Metropolitan Area sales portfolio Located on Dmitrovskoye Highway, the project benefits from both good transport accessibility and proximity to parks. It is situated in a pleasant area close to the Park Angarsk Prudy and Dmitrovsky Park. Seligerskaya metro station, for which construction recently started, is just 1.5 km from the complex, and there are plans to build another metro station adjacent to the site. Selected Projects Appendix 10 10#12Mortgage market rebounded after launch of State support programme Number of mortgage contracts 167 115 526 519 376 Share of mortgage sales, % 11% 20% 20% 15% 15% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 • • • Highlights Apartments at Etalon Group development projects in the Moscow and St. Petersburg Metropolitan Areas are eligible for the Russian Government's subsidised mortgage programme Etalon Group works with major domestic banks that offer subsidised mortgage programmes, including Sberbank, VTB24, Rosbank, Bank St. Petersburg and Absolut Bank Basic terms of the subsidised mortgage programme: • • • minimum down payment: 20% loan amount: up to RUB 8 million maturity: up to 30 years maximum interest rate: 12% Source: Company data Average mortgage rate in Russia (1) 15.0% 14.5% 14.2% 14.0% 14.4% 13.93% 13.58% 13.33% 12.59% 12.22% 13.5% 12% 13.0% 12.5% 12.0% 11.5% 11.0% Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 subsidised mortgage interest rate Sep-15 (1) CBR data Selected Projects Appendix Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Etalon Group Operating Results Landbank Valuation Financial Results 11#132 Landbank Valuation VIRUMAA Etalon Group Molodejny, 2014#14Etalon Group's portfolio value remains stable, with 2.72 mln sqm of net sellable area Open market value, RUB mln 104,286 104,384 89,253 71,934 55,185 43,171 2010 2011 2012 2013 2014 2015 Breakdown by region 43% ■ SPMA ■ MMA 57% • Market value of Etalon Group's portfolio as of 31 December 2015 remained stable at RUB 104.4 million • As Etalon Group's new sales in 2015 outperformed both the Company's own and market expectations, unsold NSA declined to 2.72 million sqm • The Company launched sales for two projects in 2015: Golden Star in Moscow (24% of launched premises sold after three months), and Landyshi in St. Petersburg (56% of launched premises sold after three months) The portfolio includes 581 thousand sqm of completed & available for sale property at projects that are completed or still underway, out of which completed & available for sale apartments account for 321 thousand sqm. JLL estimates potential income from the sale of these properties at RUB 44,731 million and RUB 35,142 million, respectively Source: JLL estimate as of 31.12.2015 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 13#15Projects in SPMA and MMA Projects in St. Petersburg Metropolitan Area Projects in Moscow Metropolitan Area Under construction Design stage Completed 1 8 6 Under construction Design stage Acquired in 2016 4 5 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 14#16Etalon Group portfolio: high quality projects diversified across the two most lucrative macro regions in Russia Project Total NSA Status ('000 sqm) (1) Unsold NSA (Etalon's share) | parking (lots), ('000 sqm) (1 # Unsold OMV (RUB mln) Income from sales (RUB mln) (2) Construction budget (RUB mln) (3) Outstanding budget (RUB mln) (3) Current Projects St. Petersburg Metropolitan Area (SPMA) 1. Galactica Design stage 798.4 646.4 2,976 10,787 72,311 43,374 40,235 2. Tsar's Capital Construction 390.9 170.8 1,946 10,350 30,225 14,823 2,845 3. Swallow's Nest Construction 335.1 96.4 1,416 6,700 23,431 13,630 710 4. Moscow Gates Construction 234.1 180.0 879 10,176 24,049 10,264 4,637 5. Samotsvety Construction 204.9 131.9 919 6,465 18,455 10,661 4,377 6. Molodejny Construction 112.1 17.5 382 929 8,703 3,971 271 7. Landyshi (Polyustrovskiy prospect) Construction 90.6 58.6 492 2,081 7,299 4,132 3,613 8. Technopark Design stage 61.3 61.3 363 1,103 6,002 3,571 3,089 9. Beloostrovskaya Design stage 39.5 39.5 277 498 3,949 2,482 2,473 10. Koroleva Design stage 6.0 6.0 35 167 610 362 331 Total SPMA 2,272.9 1,408.5 9,685 49,256 195,034 107,271 62,579 Moscow Metropolitan Area (MMA) 1. Emerald Hills 2. Etalon-City Construction 859.0 411.6 2,826 17,866 63,905 38,698 13,699 Construction 376.2 216.9 1,904 8,650 29,066 19,611 12,761 3. Summer Garden (Dmitrovskoe shosse) Construction 283.4 230.0 1,057 7,640 32,236 16,204 15,537 4. Silver Fountain (Alekseevskiy District) Design stage 182.9 169.6 2,160 7,810 24,977 8,780 8,637 5. Golden Star (Budennogo) 6. Losinoostrovskiy District Total MMA Total Current Projects Completed Projects Residential property in completed projects Completed stand-alone commercial properties Total Completed Projects All Projects Total Etalon Group Projects Construction 84.9 63.7 325 4,540 11,009 5,040 4,228 Design stage 91.5 83.9 851 2,943 10,602 4,424 4,369 1,878.0 1,175.7 9,123 49,449 171,794 92,756 59,231 4,150.8 2,584.2 18,808 98,705 366,828 200,027 121,810 1,259.0 115.9 2,369 5,156 18.9 1,278.0 18.9 134.8 58 2,427 524 5,680 84,334 737 85,070 5,428.8 2,719.1 21,235 104,384 451,898 200,027 121,810 Source: all numbers based on JLL report as of 31.12.2015 (1) Including parking with average area c. 30 sqm (2) Income from sales includes potential and received incomes as of 31.12.2015 (3) Excluding land acquisition costs → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 15#17New launches in 2016 will provide a further impulse for new sales New project to be launched in St. Petersburg Metropolitan Area Galactica Total NSA 798 ths sqm The project is located on a 38-hectare land plot by Moskovsky prospect and Naberezhnaya Obvodnogo Kanala, just south of central St. Petersburg, which makes it a prestigious location for both living and business. Project Galactica will create an entire new comfort-class residential district. The nearest metro stations, Frunzenskaya and Moskovskiye Vorota, are situated 10-15 minutes from the development. New project to be launched in Moscow Metropolitan Area Summer Garden Total NSA 283 ths sqm The project is situated in a pleasant area close to Dmitrovsky Park and the Veteran Theme Park. The project can be easily accessed from Yahromsky passage and Dmitrovskoye highway. Seligerskaya metro station, for which construction recently started, is just 1.5 km from the complex, and there are plans to build another metro station adjacent to the site. Source: Company data, NSA of the projects Galactica and Summer Garden based on JLL report as of 31.12.2015 → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 16#183 Financial Results Etalon Group Galant, 2014#19Consolidated revenue of RUB 42.4 bln in 2015, 18% lower vs. 2014 and 6% above 2013 Residential real estate development revenue, RUB mln Construction services revenue from third parties/external*, RUB mln +10% -36% -14% -54% 37,560 9,145 32,474 29,548 6,643 2013 2014 2015 Other revenue, RUB mln +62% +26% 5,053 4,012 3,117 2013 2014 2015 4,242 2013 2014 2015 Total revenue, RUB mln +6% -18% 51,481 39,921 42,404 2013 2014 2015 Source: IFRS financial statements * Long-term external contracts (Note 7 to Consolidated IFRS financial statements) Etalon Group Operating Landbank Results Valuation Financial Results Selected Projects Appendix 18#20Etalon Group maintained healthy profitability levels Residential real estate development adjusted gross profit (1), RUB mln 15,080 11,964 12,619 40% 40% 39% 2013 Construction services gross profit(2), RUB mln 829 337 9% 219 5% 5% 2014 2015 2013 Residential real estate development adjusted gross profit, mln RUB Adjusted gross profit margin, % Consolidated gross profit, RUB mln 2014 2015 Construction services gross profit, mln RUB Gross profit margin, % Consolidated adjusted gross profit(1), RUB mln 15,796 16,820 12,368 12,999 13,896 13,147 31% 31% 31% 33% 33% 33% 2013 Source: IFRS financial statements Etalon Group 2014 Consolidated gross profit, mln RUB Gross profit margin, % Operating Results 2015 Landbank Valuation Financial Results 2013 2014 2015 Consolidated adjusted gross profit, mln RUB Adjusted gross profit margin, % (1) Adjusted for interest in cost of sales (2) Long-term external contracts (Note 7 to Consolidated IFRS financial statements) Selected Projects Appendix 19#21Dividend payments increased by 118% in 2015 EBITDA, RUB mln Net income, RUB mln 10,611 9,430 7,675 6,664 8,369 814 5,429 -109 2013 2014 2015 2013 2014 -138 2015 Net income, mln RUB ■FX gain/loss, mln RUB Operating cash flow (1), RUB mln 1,585 514 141 -3,438 1H 2014 2H 2014 1H 2015 2H 2015 Source: IFRS financial statements (1) Operating cash flow less interest paid Etalon Group Dividends paid, RUB mln +118% 2,452 1,124 2014 2015 Operating Results Landbank Valuation Financial Results Selected Projects Appendix 20 20#22Strong balance sheet secures growth opportunities Strong liquidity position unchanged 18,516 19,414 12,007 12,017 30.06.2015 Debt, mln RUB Net debt, RUB mln 31.12.2015 ■Cash and cash equivalents, mln RUB (2) Gross debt composition (as of 31/12/2015)(1) Highlights 77% 23% All debt denominated in RUB 7,397 6,509 30.06.2015 31.12.2015 Net debt/EBITDA below 1.0x (1) (1) Audited IFRS financial statements for 12M 2015 (2) Including bank deposits in ST Investments ■Local bonds Bank loans Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 21#234 Selected Projects Etalon Group REMONTS ExpoForum, 2015#24Tsar's Capital May 2016 St. Petersburg Total NSA 391 ths sqm *JLL estimate as of 31.12.2015 December 2015 Open Market Value* RUB 10,350 mln Income from sales* RUB 30,225 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 23#25Moscow Gates May 2016 TOTOOME КВАРТИРЫ С ОТДЕЛКОЙ 380-05-25 December 2015 St. Petersburg Total NSA 234 ths sqm Open Market Value* RUB 10, 176 mln Income from sales* RUB 24,049 mln » Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 24 24#26Samotsvety May 2016 December 2015 St. Petersburg Total NSA 205 ths sqm Open Market Value* RUB 6,465 mln Income from sales* RUB 18,455 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 25 25#27Swallow's Nest May 2016 December 2015 St. Petersburg Total NSA 335 ths sqm Open Market Value* RUB 6,700 mln Income from sales* RUB 23,431 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 26 26#28Emerald Hills May 2016 December 2015 Moscow region Total NSA 859 ths sqm Open Market Value* RUB 17,866 mln Income from sales* RUB 63,905 mln » Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 27 22#29Etalon City May 2016 Moscow Total NSA 376 ths sqm *JLL estimate as of 31.12.2015 РЭТАЛОН - ИНВЕСТ KBAPTHPH3788888 December 2015 Open Market Value* RUB 8,650 mln Income from sales* RUB 29,066 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 28#30Landyshi May 2016 St. Petersburg Total NSA 91 ths sqm December 2015 Open Market Value* RUB 2,081 mln Income from sales* RUB 7,299 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 29 20#31Golden Star May 2016 Moscow Total NSA 85 ths sqm *JLL estimate as of 31.12.2015 December 2015 Open Market Value* RUB 4,540 mln Income from sales* RUB 11,009 mln » Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 30#32Galactica ! St. Petersburg Total NSA 798 ths sqm *JLL estimate as of 31.12.2015 Open Market Value* RUB 10,787 mln Income from sales* RUB 72,311 mln Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 31#33Summer Garden Moscow 6363 HOME ARSEN Total NSA 283 ths sqm Open Market Value* RUB 7,640 mln Income from sales* RUB 32,236 mln → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix *JLL estimate as of 31.12.2015 32#345 Appendix Etalon Group EEEEEEEEE TEELEEP EEFERE Golden Bay, 2008#35At a glance Presence in Russia's largest markets • Focus on middle class residential real estate in Moscow metropolitan area (MMA) and St. Petersburg metropolitan area (SPMA) •19% CAGR for deliveries over 2010-2015(1) Strong delivery track record . Over 28 years of construction & development experience • 5 mln sqm commissioned True vertical integration • Strategic vertical integration in key value-added segments of property development enables the Company to control costs, quality and timing • ⚫ 5,000 employees •Country-wide sales network covering 37 cities Diversified projects portfolio • Land bank of 2.72 mln sqm(2) • Land bank sufficient until 2019 • Projects well diversified by locations in SPMA and MMA Liquidity and credit ratings •Secure liquidity position supported by pre-sales cash collections model • Low leverage: 0.96x net debt / EBITDA (3) • Credit rating by S&P: B+/B(4) Corporate governance • 10 BoD members, 5 NEDS . • Board of Directors consists of professionals with broad range of experience and expertise, ensuring that the interests of all groups of shareholders are appropriately represented •Monthly visual updates on projects, quarterly trading updates and semi- annual financial reporting • ⚫ Official guidance on deliveries and new contract sales • Dividend policy aims to pay out 30% to 50% of IFRS net profit semi-annually (1) Company operating results; (2) JLL land bank valuation report as of 31.12.2015; (3) IFRS financial statements as of 31 December 2015; (4) 'B+' long-term & 'B' short-term corporate credit ratings of SSMO LenSpetsSMU (last reconfirmed on 03.06.2016). LSE ticker Share price Market capitalization Portfolio valuation (by Jones Lang La Salle) Portfolio composition (2) ETLN:LI USD 2.48 (14.06.2016) USD 724 mln (14.06.2016) RUB 104,384 mln (31.12.2015) 5% 43% 50% 57% 45% ■ SPMA ■ MMA ■ Projects under development Projects at design stage Projects completed Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 34#36Strategic vertical integration: control over costs, quality and timing Etalon Group operates in every part of the property development process My Te Land Acquisition and Permits Construction Materials (1) Design Effective Capital Recycling Construction Contracting and Commissioning Funding Independence from suppliers, but only in crucial areas Tower Cranes (2) Sales and Marketing Ongoing Maintenance and Service Control over costs, quality and timely delivery of projects Business stability and lower risk of dependence on counterparties Understanding of customer needs (sales network throughout the country) (1) Brick plant and concrete products plant. Own production only for "bottleneck" construction materials. (2) 62 tower cranes (Liebherr and Wolff). Data as of 31.12.2015 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 35#37Nationwide sales & marketing network supports sustainable contracting Powerful sales network across the country Regional population actively buys apartments in Moscow and St. Petersburg Monchegorsk Murmansk Apatity Etalon Group's regional sales geography(1) Region Leningrad region Khanty-Mansiysk AD Khabarovski krai Share of total contracts 3.0% 1.9% 1.7% Murmansk region 1.5% SPMA Arkhangelsk Yamalo-Nenets AD 1.1% Cherepovets Naryan-Mar Krasnoyarski krai 1.0% Novgorod Kostroma Yaroslavl Ukhta Norilsk Arkhangelsk region 1.0% Pskov Petropavlovsk- Tver Ivanovo Siktivkar Nadim Kamchatskiy Kamchatski krai 0.9% Yakutsk MMA Other Russian regions 20.1% Cheboksary Perm Kaluga Izhevsk Tyumen Penza Kazan Tolyatti Ekaterinburg Snezhinsk Noviy Urengoy Noyabrsk Khanty-Mansiysk Magadan Mirniy Foreigners 2.0% Total 34.0% Neryungri Krasnodar Surgut Nizhnevartovsk Chelyabinsk Astrakhan Omsk Krasnoyarsk Komsomolsk-on-Amur Bratsk Khabarovsk Novosibirsk Kholmsk Uzhno-Sakhalinsk Korsakov Blagoveshchensk Etalon Group's sales offices / representatives Established relationships / partnerships with local sales agencies Novokuznetsk • Irkutsk Ussuriysk Vladivostok The Group's flats are sold in 14 out of Russia's 15 richest regions Regional income per capita to Russia average (2) Nenets AD Moscow Yamalo-Nenets AD Sakhalin region Chukotka ● Etalon Group's sales force is focused on the regions with the largest income per capita • Key markets: SPMA and MMA • 37 cities covered with 9 sales offices in St. Petersburg and 18 more sales offices nationwide External professional marketing and sales service agents engaged nationwide 2.3x 2.1x 2.0x 1.9x 1.6x Khanty-Mansiysk AD 1.6x Magadan region Moscow region Tyumen region 1.5x 1.4x 1.3x St. Petersburg 1.3x Khabarovski krai 1.3x Sverdlovsk region 1.3x Murmansk region 1.2x Krasnodarski krai 1.2x Komi Russia average 1.2x (1) Source: company data for 1Q 2016 (2) Average monthly cash income per capita, Rosstat's preliminary estimates for 2M 2016 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Etalon Group's target regions Appendix 36#38Strong corporate governance and shareholder structure Corporate governance structure General Shareholders Meeting Board of Directors • Chairman (V. Zarenkov) Shareholder structure 1.0% 30.8% 44.1% Board Committees • 4 Executive Directors • 5 Non-Executive Directors, including 3 Independent Directors I | Strategy Committee Remuneration & Nomination Committee 16.4% 7.7% Zarenkov family Management Baring Vostok Free float Etalon Development Ltd Management Team Audit Committee As of 31 December 2015 Source: Company data Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 37#39INDEPENDENT NON-EXECUTIVE DIRECTORS EXECUTIVE DIRECTORS FOUNDING SHAREHOLDERS Viacheslav Zarenkov Chairman of the Board of Directors, Founding shareholder and President Board of Directors represents interests of all investor groups Dmitry Zarenkov Vice-President Experience and awards 46 years of experience in construction industry Honoured builder of Russia (1) Education • Institute of Civil Engineering, SPb University of Internal Affairs ⚫ PhD in Economics, PhD in Technical Sciences, PhD in Architecture, Professor Anton Evdokimov Chief Executive Officer Experience and awards 29 years of experience in construction industry Certificate of Honour of the Ministry of Regional Development Education Leningrad Engineering Construction Institute, SPb State University and International Banking Institute, Open University Business School (MSc in International finance, MBA in business strategy) Martin Cocker Independent Non- Executive Director Experience and awards • 21 years of experience in audit, 6 years - in construction industry Runs his own development business in Portugal Worked at Deloitte & Touche, KPMG and Ernst & Young in Russia, Kazakhstan and UK Education University of Keele Boris Svetlichny Chief Financial Officer Experience and awards • Over 27 years experience in finance and senior management with international and Russian companies • Recent experience included CFO position at Orange in Russia, VP for Finance at Vimpelcom and CFO at Golden Telecom Education University of Massachusetts (BBA in Accounting) Carnegie-Mellon University (MBA) Anton Poryadin Independent Non- Executive Director Experience and awards • 14 years of experience in strategy consulting at A.T. Kearney. Partner and Vice President at A.T. Kearney • Worked at Barents International Markets B.V., Torno Internazionale S.p.A., St. Petersburg Foundation for Enterprise Development Education • SPb Technical University, Business School at the University Of Rochester (1) Title granted by President of Russia Operating Etalon Group Experience and awards • 11 years' experience in corporate Experience and awards •19 years of experience in construction industry • Honoured builder of Russia (1); Certificate of Honour of the Ministry of Regional Development Education ⚫ Institute of Aeronautical Instrumentation, SPb University of Architecture & Civil Engineering, SPb University of Internal Affairs ⚫ PhD in Engineering Kirill Bagachenko Head of Corporate Investments and IR NON-EXECUTIVE DIRECTORS Michael John Calvey Senior partner at Baring Vostok since 1999 Experience and awards • Member of the board of Europlan, Volga . Gas, Gallery Media Group Worked at EBRD, Salomon Brothers, Sovlink Corporation • Ex-Member of the board of CTC Media, Golden Telecom, Burren Energy Education • University of Oklahoma and London School of Economics • finance and asset management Previously held position of senior equity portfolio manager at TKB BNP Paribas Investment Partners • In 2013 voted one of the top three portfolio managers in Russia by Thomson Reuters Extel Survey Education ⚫ St. Petersburg State University of Economics and Finance Andrew Howat Independent Non- Executive Director Experience and awards • 31 years of experience in international finance, banking and investment businesses • Worked as a senior Director at ING Bank in the Corporate Banking and Financial Markets divisions, and as Managing Director of Butterfield Fulcrum • Chartered member of the Chartered Institute for Securities & Investment Education ⚫Farnborough College of Technology Selected Alexei Kalinin Senior partner at Baring Vostok Experience and awards • With Baring Vostok since 1999 • Worked at Alfabank and Alfa Capital • Chairman of the Board of Directors at Volga Gas, member of the board at Samarenergo and two Russian glass companies Education •Moscow Power Engineering University • PhD in Engineering Results Landbank Valuation Financial Results Appendix Projects 38 38#40Residential development scheme Timing 3-5 years Permission risk vs. Project value High permission risk Low entry price Total development period range: 39-59 months 12-18 months 18-30 months Medium-low permission risk Medium entry price Stages of residential Zoning & initial permit real estate Investment contract, planning & documentation construction development permit Revenue recognition Source: Company data Construction Pre-sale 1-2 months 3 months State commission Ownership rights registration Sales after commission ing For share participation agreements when the construction is completed and the building has been approved by the State commission for acceptance of finished buildings. For share accumulation agreements when the building has been approved by the State commission for acceptance of finished buildings and act of acceptance is signed by share accumulation cooperative. For 100% payment when sale-purchase agreement is signed. For less than 100% payment when preliminary agreement and act of acceptance is signed by client. Etalon Group focus Operating Etalon Group Results Landbank Valuation Financial Results Selected Projects Appendix 39 I I I I#41Typical project cost structure Materials cost structure* (RUB 12,000 18,000 per sqm of NSA) Sand Bricks 2% Crushed granite 3% 8% Cement 15% Metal products 23% Typical project lifecycle* Construction cost structure* (RUB 29,000-39,000 per sqm of NSA) Machinery VAT accrued 5% Materials 16% 49% Other 43% 19% Total cost structure* (RUB 59,000 - 72,000 per sqm of NSA) Project management Other 1% 2% 17% Wages Construction 56% Overhead expenses** Task Share,% Start, month Duration, months Predevelopment 3 0 8 Zero cycle works 7 2 10 Construction works 43 5 20 Facade works 11 16 10 Fit out works LO 5 18 10 MEP systems 14 7 21 Engineering facilities 15 5 Urban landscaping 2 24 23 6 0 5 *Source: Company estimates for typical project based on current portfolio average. Actual breakdown per project is subject to significant variation due to a number of factors. **including payroll tax Etalon Group Operating Results Landbank Valuation Financial Results Design Interest expense 5% 6% Sales costs 8% Construction timeline, months 8% Infrastructure 14% Land acquisition 10 15 20 25 30 Selected Appendix Projects 40#42Etalon Group has an extensive track record of successful industrial construction projects that meet the highest standards of quality Ford Motor Company Nissan plant ExpoForum *Expected date of completion 2007-2012 Expansion of existing production facilities, including a 25 ths sqm logistics area for finished goods, renovation of warehouse and overhaul of utility systems • This project was unique as work was carried out in the production area, next to the main production line, while it was in operation 2012-2014 Etalon Group is a long-time partner of Nissan in Russia, having acted as the general contractor for design and construction of the test track and new car storage areas in 2008 ⚫ In 2014 Etalon Group delivered 66 ths sqm of new factory space, including expansion of existing assembly lines, warehouse and office facilities 2011-2015 The largest commercial construction project in St. Petersburg in recent years Overall size of the complex is over 200 ths sqm 2 main exhibition halls, 3 exhibition pavilions, 2 hotels, 3 helicopter pads, parking and utilities infrastructure Capacity for up to 10 ths delegates UniPres UNIPRES Zvezda-Reduktor XBBEBDA State Hermitage Museum • 2014-2016* General contractor agreement for the construction of a 12,313 sqm manufacturing facility and a 3,588 sqm administrative building Turnkey project involving the full construction cycle 2015-2016* Overhaul of production lines and the renovation of administrative and service buildings for Zvezda-Reduktor, a subsidiary of Zvezda, Russia's largest manufacturer of compact, high-RPM Diesel engines Contract covers a total area of 9,854 sqm 2015-2016* Construction of part of the Restoration and Storage Centre of the State Hermitage Museum in St. Petersburg Contract is worth RUB 1.6 billion Due to be completed in 4Q 2016 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 41#43Income statement RUB mln Revenue 1H13 1H14 1H15 2013 2014 2015 16,635 14,539 18,148 39,921 51,481 42,404 Cost of sales (11,064) (10,759) (12,584) (27,553) (35,685) (29,405) Gross profit 5,571 3,780 5,564 12,368 15,796 12,999 General and administrative expenses (1,387) (1,957) (2,021) (3,157) (4,178) (4,348) Selling expenses (460) (577) (619) (1,023) (1,474) (1,411) Other expenses, net (96) (166) (341) (40) (913) (991) Results from operating activities 3,628 1,080 2,583 8,148 9,231 6,249 Finance income 434 391 998 691 1,717 1,686 Finance costs (142) (242) (593) (342) (553) (504) Net finance income 292 149 405 349 1,164 1,182 Profit before income tax 3,920 1,229 2,988 8,497 10,395 7,431 Income tax expense (822) (302) (795) (1,833) (2,026) (2,002) 3,098 927 2,193 6,664 8,369 5,429 Profit for the period Profit attributable to: Owners of the Company Non-controlling interest Profit for the period Source: IFRS financial statements for 1H13, 1H14, 1H15, 2013, 2014, 2015 Etalon Group Operating Results 3,083 927 2,188 6,629 8,345 5,399 15 5 35 24 30 3,098 927 2,193 6,664 8,369 5,429 Landbank Valuation Financial Results Selected Projects Appendix 42#44Balance sheet RUB mln 1H13 1H14 1H15 2013 2014 2015 RUB mln 1H13 1H14 1H15 2013 2014 2015 Assets Equity and Liabilities Non-current assets Equity PP&E 1,853 2,326 2,349 1,962 2,503 2,479 Share capital Investment property 638 1,052 618 1,142 808 538 Retained earnings 14,967 14,983 14,983 14,967 14,983 14,999 25,771 30,259 37,011 29,332 36,537 39,697 Other long-term investments 241 684 684 275 1,036 578 Total equity attributable to equity holders of the Company 40,738 45,242 51,994 44,299 51,520 54,696 Trade and other receivables 390 756 2,164 1,332 2,521 3,303 Non-controlling interest 394 387 170 387 351 147 Deferred tax assets 433 710 1,040 560 885 1,159 Total equity 41,132 45,629 52,164 44,686 51,871 54,843 Other non-current assets 10 10 10 10 10 5 Non-current liabilities Total non-current assets 3,565 5,538 6,865 5,281 7,763 8,062 Loans and borrowings 10,750 Current assets Inventories 44,056 Trade and other receivables Short-term investments Cash and cash equivalents Other current assets 57,132 61,131 14,387 17,746 15,926 3,824 5,493 2,122 8,559 9,635 10,042 20 5,008 8,139 50,057 57,525 15,078 15,074 1,221 14,631 67,722 18,227 Trade and other payables Provision 1,041 10,050 13,375 10,176 12,411 678 4,024 13,138 785 2,854 923 61 91 112 89 114 117 Deferred tax liabilities 402 650 733 Total non-current liabilities 12,254 1,249 11,469 18,760 11,876 16,835 826 1,456 1,810 15,988 11,532 Current liabilities 18 66 7 66 7 Loans and borrowings Total current assets 70,846 Total assets 74,411 90,024 89,287 95,562 96,152 78,289 83,570 88,517 98,221 96,280 106,283 Trade and other payables Provisions 2,359 18,399 267 Total current liabilities Total equity and liabilities 21,025 74,411 1,339 1,636 1,665 2,234 38,464 25,228 27,008 27,574 35,452 95,562 96,152 83,570 96,280 106,283 4,689 5,141 3,043 3,880 6,276 32,436 18,451 22,300 21,460 25,630 3,546 Source: IFRS financial statements for 1H13, 1H14, 1H15, 2013, 2014, 2015 → Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 43#45Cashflow statement RUB mln Operating Activities Profit for the period Adjustments for: Depreciation Loss (gain) on disposal of PP&E Impairment loss on investment property 1H13 1H14 1H15 2013 2014 2015 3,098 927 2,193 6,664 8,369 5,429 168 204 213 343 417 406 (27) (46) 20 (15) (52) (65) 60 166 280 215 Impairment loss on inventories 85 30 466 514 Finance income, net (319) (149) (405) (337) (1,164) (1,182) Income tax expense 822 302 795 1,833 2,026 2,002 Cash from operating activities before changes in working capital 3,742 1,383 3,012 8,488 10,342 7,319 Change in inventories (1,957) (6,763) (2,418) (7,837) (6,890) (8,255) Change in accounts receivable (3,243) (2,093) (366) (5,080) (1,427) (3,958) Change in accounts payable 1,478 10,135 (1,461) 4,880 1,184 2,369 Change in provisions Change in other current assets Income tax paid Interest paid (317) (324) (600) 1,109 594 1,315 12 (11) 25 (59) 59 (632) (742) (1,605) (907) (1,645) (2,146) (871) (683) (1,180) (1,724) (1,588) (2,516) Net cash from/(used in) operating activities (1,788) 902 (4,618) (1,046) 511 (5,813) Investing Activities Proceeds from disposal of non-current assets 57 52 29 15 66 188 Interest received 351 342 802 611 823 1,311 Acquisition of PP&E (160) (364) (95) (431) (653) (369) Loans given (37) (16) (4) (55) (178) (123) Loans repaid 17 79 21 85 174 66 Acquisition of subsidiaries, net of cash acquired 10 Disposal of subsidiaries, net of cash disposed of (7) (3) (20) 7 (Acquisition)/disposal of other investments 2,850 (964) (598) 1,606 3,038 1,155 Net cash used in investing activities 3,071 (871) 152 1,821 3,277 2,228 Financing activities Acquisition of non-controlling interest Proceeds from borrowings (66) (10) (83) (20) 2,785 5,627 4,707 5,937 10,763 9,480 Repayments of borrowings (6,624) (4,278) (2,323) (9,668) (8,498) (6,281) Acquisition of own shares Dividends paid Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Effect of FX rate fluctuations Cash & cash equivalents at the end of the period Source: IFRS financial statements for 1H13, 1H14, 1H15, 2013, 2014, 2015 16 16 16 (1,834) (1,124) (2,452) (3,839) 1,365 484 (3,741) 1,074 743 (2,556) 1,396 (3,982) (2,966) 4,862 (2,842) 399 8,559 100 9,635 (607) 10,042 389 1,630 (257) 8,139 14,631 11,532 Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 44#46EBITDA calculation RUB mln 1H13 1H14 1H15 2013 2014 2015 Comprehensive income 3,098 927 2,193 6,664 8,369 5,429 Income tax expense 822 302 795 1,833 2,026 2,002 Interest expense on loans and finance leases 115 140 15 233 295 19 Net foreign exchange loss 70 438 109 138 Interest income on bank deposits (342) (307) (686) (583) (729) (1,089) Interest income on loans and receivables (9) (35) (116) (28) (94) (222) Net foreign exchange gain (48) (814) Bank fees and commissions 40 42 49 80 117 95 Interest in COS Depreciation 354 340 272 779 1,024 897 168 204 213 343 417 406 EBITDA 4,198 1,683 3,173 9,430 10,611 7,675 1H13 1H14 1H15 2013 2014 2015 + Depreciation to COGS (Note 13 PP&E) 149 160 167 292 271 284 Depreciation to selling expenses 1 1 3 1 4 6 (Note 13 PP&E) Depreciation to G&A expenses (Note 13 PP&E) 18 19 19 39 94 63 Depreciation to Investment property 24 24 11 48 48 (Note 14 Investment property) Depreciation to other non-current assets Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 5 LO 45 55#47Working capital calculation RUB mln Total inventory 1H13 1H14 1H15 2013 2014 2015 44,056 57,132 61,131 50,057 57,525 67,722 Current part + Trade and other receivables 14,387 17,746 15,926 15,078 15,074 18,227 - Trade and other payables 18,399 32,436 18,451 22,300 21,460 25,630 - Provisions 267 1,339 1,636 1,665 2,234 3,546 Non-current part + Trade and other receivables 390 756 2,164 1,332 2,521 3,303 - Trade and other payables 1,041 678 4,024 785 2,854 923 - Provisions 61 91 112 89 114 117 Adjustments - Cumulative borrowing costs capitalized during the period (Note 11 Finance income and finance costs) 3,457 4,660 6,636 4,092 5,416 7,977 + Cumulative borrowing costs that have been included into the cost of sales (Note 11 Finance income and finance costs) 864 1,629 2,585 1,289 2,313 3,210 -Income tax receivable (Note 18 Trade and other receivables) 307 85 467 103 159 358 +Income tax payable (Note 25 Trade and other payables) 13 116 10 248 380 125 Working capital 36,178 38,090 50,490 38,970 45,576 54,036 ✓ Etalon Group Operating Results Landbank Valuation Financial Results Selected Projects Appendix 46#48FCF calculation RUB mln 2013 2014 2015 1H14 2H14 1H15 2H15 Comprehensive income 6,664 8,369 5,429 927 7,442 2,193 3,236 Adjustment for: Depreciation 343 417 406 204 213 213 193 Loss/(gain) on disposal of PP&E (15) (52) (65) (46) (6) 20 (85) Impairment loss on investment property 280 215 60 220 166 49 Impairment loss on inventory 466 514 85 381 30 484 Loss on disposal of subsidiaries Finance income, net (337) (1,164) (1,182) (149) (1,015) (405) (777) Income tax expense 1,833 2,026 2,002 302 1,724 795 1,207 Income tax paid (907) Interest paid (1,724) (Increase)/Decrease in working capital (Increase)/Decrease in invested capital (1,645) (2,146) (1,588) (2,516) (683) (6,903) (6,598) (8,470) (416) (587) (181) (742) (903) (1,605) (541) (905) (1,180) (1,336) FCF (1,462) (76) (5,994) 944 (312) 590 (275) (666) (7,542) (4,845) (3,625) (66) (4,684) (115) (1,310) (Increase)/Decrease in working capital based on CF 2013 2014 2015 1H14 2H14 1H15 2H15 statement + Change in inventories Change in accounts receivable Change in accounts payable (7,837) (6,890) (8,255) (6,763) (5,080) (1,427) (3,958) (2,093) 4,880 1,184 2,369 10,135 (127) (2,418) (5,837) 666 (366) (3,592) 8,951 (1,461) 3,830 Change in provisions 1,109 594 1,315 (324) 918 (600) 1,915 Change in other current assets 25 (59) 59 (11) (48) 59 Working capital change (6,903) (6,598) (8,470) 944 (7,542) (4,845) (3,625) + (Increase)/Decrease in invested capital based on CF 2013 2014 2015 1H14 2H14 1H15 2H15 statement Acquisition of PP&E (431) (653) (369) (364) (289) (95) (274) Proceeds from disposal of non-current assets 15 66 188 52 14 29 159 Invested capital change (416) (587) (181) (312) (275) (66) (115) → Etalon Group Operating Landbank Results Valuation Financial Results Selected Appendix Projects 47#49Etalon Group Limited Redwood House St Julian's Avenue St Peter Port Guernsey GY1 1WA Etalon Group Tel: +44 (0)20 8123 1328 Fax: +44 (0)20 8123 1328 Email: [email protected] 48