#1Etalon Group 4Q 2011 operating results Investor presentation January 2012#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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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#3Today's presenting team Viacheslav Zarenkov Anton Evdokimov Dmitri Boulkhoukov President CFO ■ Founding shareholder With Etalon Group Founded in 1987 since 1998 Alexander Shkuratov Head of investments With Etalon Group since 2007 Head of strategy and business development With Etalon Group since 2007 > Etalon Group 3#4AGENDA 1. Deliveries in 2011 2. Launch of sales on new projects 3. New sales contracts and transfers to customers 4. Other: ExpoForum 5. Key takeaways#51. Deliveries in 2011#6Description: Twenty 16- to 25-storey buildings using poured concrete technology with brick elements and ventilated facades NSA: 868,034 sqm Location: Krasnogorsk, Moscow Metropolitan Area Status: Phase I complete, Phase II at 10th floor Construction period: 2008-2016 Emerald Hills (MMA) 021 6#7The 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. Emerald Hills (MMA) A 7#8Emerald Hills (MMA) 80#9Description: Four 2- to 11-storey buildings using poured concrete technology NSA: 14,599 sqm Location: Historic Vasileostrovsky district of St. Petersburg Status: Complete Construction period: 2008-2011 Talisman (SPMA) 9#10The Talisman project is a middle class residential complex located in a prestigious region of St. Petersburg featuring a late 19th century architectural style. Talisman (SPMA) SP 10#11Description: Four 17- to 24-storey buildings using poured concrete technology with brick elements and ventilated facades. NSA: 207,405 sqm Location: Kalininsky district of St. St. Petersburg Status: Building 1 of 4 complete (Current completed NSA: 71,671 sqm) Planned construction period: 2008-2012 Orbit (SPMA) ΕΕΕΕΕΕ = 11 Z#12LIEBHER OLORING The Orbit project, due for completion in 2012, is located in close proximity to several parks, public transportation and social infrastructure like schools and clinics. The new complex features underground parking and two kindergartens, as well as consumer- oriented commercial premises on the ground floors of the residential buildings. Orbit (SPMA) EE E L 12#13Description: Thirteen buildings up to 25 floors using poured concrete technology with brick elements and ventilated facades. NSA: 601,758 sqm. Location: Primorsky district of St. Petersburg Status: 11 of 13 buildings complete Planned construction period: 2007-2012 F L F F = Jubilee Estate (SPMA) K-PAYTA СКИДКА of 30% Мы ОТКРЫТЫ EXKEAHEBHO 9-22 DECTURA Суперцена! Строительный двор CBETA 13#14A large-scale project that is the center of an entire new residential neighborhood, the first building was completed in 2008. Currently 11 buildings are completed. The Jubilee Estate project features multi-level underground parking, commercial premises, playgrounds, recreational areas and guest parking. The development is located in close proximity to the Komendantsky Prospekt metro station and major roadways. Jubilee Estate (SPMA) == 14#15The Jubilee Estate project was a significant source of cash collections over the past 4 years for Etalon Group. As we sell the remaining apartments of this completed project, Etalon has completed phase I of Jubilee's “twin" project in Moscow - Emerald Hills. = Ξ Ε Ε Ε Ε Ε EE F EG 15 Jubilee Estate (SPMA)#16Expanding Portfolio Providing for Robust Growth Sufficient land bank to increase deliveries 2x by 2012 and 4x by 2014 IPO proceeds 900 800 700 600 500 487 400 413 386 300 328 319 323 200 209 100 2008 2009 Source: company estimates, JLL report as of 31.12.2010 Project 1 Talisman 2 Jubilee Estate 78A building 6 3 Jubilee Estate 78A building 7 Jubilee Estate 78A building 4 5 Orbit building 1 6 Emerald Hills stage 1 Other Total 830 549 440 2010 2011 2012 2013 2014 2015 2016 Actual Construction program Projects delivered in 2011 NSA, sqm 14,867 69,866 34,165 32,737 71,671 97,594 7,535 328,435 Etalon Group 16#172. Launch of sales on new projects#18Launch of sales on new projects 1. Jubilee Estate 78A, building 2 2. Jubilee Estate 78A, building 5 3. Emerald Hills, building 10 Overview of new buildings launched in 4Q 2011 NSA*, sqm Delivery 64,126 2012 Expected cash collections, US$ mn 120.1 32,109 2012 60.3 52,903 2012 129.1 4. Emerald Hills, building 11 69,583 2012 181.4 5. Emerald Hills, building 13 Total *Including parking lots 32,511 2012 75.5 251,232 566.4 Etalon Group 18#19Description: 13 buildings in "comfort" segment Planned NSA: 602 ths sqm Expected cash collections: US$ 1,137 mn Construction Period: 2007 - 2012 Jubilee Estate (SPMA)#20Description: 32 buildings in "comfort" segment Planned NSA: 868 ths sqm Expected cash collections: US$ 2,140 mn Construction Period: 2008 - 2016 Emerald Hills (MMA) !! 20 20#21bead BOLD 3. New sales contracts and transfers to customers#22New sales contracts and transfers to customers 350,000 300,000 New sales contracts, sqm 300,000 Transfers to customers, sqm 296,500 250,000 200,000 224,787 32% 212,277 250,000 27% 270,012 200,000 150,000 150,000 160,215 100,000 100,000 2007 2008 2009 2010 2011 2010 4Q Operating Results New Sales, sqm New sales, mn RUR 2H Deliveries NSA Delivered, sqm Transferred to customers, sqm Quarterly Summary New sales, sqm New sales, mn RUR Average price, RUR/sqm +10% 2011 4Q 2011 4Q 2010 Change, % 2011 2010 Change, % 84,093 6,031 73,522 4,852 14% 24% 270,012 18,306 212,277 14,106 27% 30% 2H 2011 204,040 160,875 2H 2010 Change, % 2011 2010 Change, % 150,454 147,119 36% 9% 328,435 274,558 208,998 250,711 57% 10% 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 73,522 4,852 59,638 65,994 4,158 69,721 62,544 3,781 63,737 4,336 68,030 84,093 6,031 60,453 71,718 ✓ Etalon Group 22 22#234. Other: ExpoForum#24OFORUM СГАЗПРОМ EXPOFORUM EXPOFORUM СГАЗПРОМ ExpoForum ГАЗПРОМ EXPOFORUM Description: St. Petersburg's largest exposition center, consisting of a congress centre, exhibition halls, two hotels (4-star and 3-star), two business centres, an administrative office, warehouse and open parking. EXPOFORUM Location: South of St. Petersburg Status: Groundbreaking took place on 23 November 2011 Planned construction period: 2011-2013 1 Sec-WT 2 Отели 3 Uen ГАЗПРОМ EXPOFORUM ОГАЗЛА EXPOFORUM હે પણ બસપો 24 24#25ORUM ГАЗПРОМ EXPOFORUM ВПРОМ POF GT STA EXPOFOR FORUM EX 88 The groundbreaking ceremony took place on 23 November 2011 and was attended by St. Petersburg Governor Georgy Poltavchenko and Gazprom CEO Alexey Miller TOP G EX ExpoForum ОГАЗЛА EXPOFC25#26Gu The project is expected to be completed in 2013, and the estimated value of the contract for the first stage of construction is RUR 14 billion, with the final amount to be determined based on the actual work carried out. ExpoForum 26#27Etalon CEO Viacheslav Zarenkov attended the process of piling the first pylon. ExpoForum M 27 OHO 7#28BAR 5. Key takeaways#29Key takeaways Deliveries outpace approved construction programme Deliveries increased by 57% y-o-y, including successful expansion into Moscow with the milestone first stage of Emerald Hills delivered on schedule ■ Total deliveries for the year ended 31 December 2011 equalled 328 thousand sqm Solid progress on sales For the year ended 31 December 2011, new contract sales increased 27% year-on-year (y-o-y) to 270,012 sqm and 30% y-o-y to RUR 18,306 mn ■ Sales growth supported by continued recovery in consumer activity Significant launches of sales on new projects ■ Pre-sales launched for five new buildings in 4Q 2011, representing 251,232 sqm of NSA ■ Expected cash collections from newly-launched sales equivalent of up to c. US$ 566 mn Strong balance sheet position to benefit from higher quality deal flow ■ US$ 446 mn in cash and cash equivalents and c. US$ 326 mn of mid- to long-term debt ■ We believe Etalon is well positioned to acquire more high-quality projects in order to create additional value for our shareholders. 2 Etalon Group 2 29#30Clear 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 2 Etalon Group 3 30#31APPENDIX#32At a glance Presence in rapidly growing markets Dominant player in "comfort class" in Russia ◉ Leader in St Petersburg* real estate market with ca. 11% market share (1) Strong presence in Moscow* real estate market Liquidity and credit ratings ☐ Secure liquidity position supported by pre-sales cash collections Low leverage: 0.6x Net debt / EBITDA as of 31.12.2010(3), Net cash US$120 mln as of 31.12.2011 Credit rating by S&P's: B/Stable/B (3) Strong delivery 3 mln sqm delivered since inception in 1987 track record 24 years of construction & development experience ◉ All stages of development cycle Rapidly expanding projects portfolio ☐ True vertical integration ◉ Large-scale multi-phase projects Corporate governance ◉ Country-wide sales network Ticker ETLN:LI Market capitalization US$ 1,380 mln (23.01.2012) Share price US$ 4.68 (23.01.2012) Portfolio composition Total unsold NSA breakdown 14% ■ Projects portfolio focused on cash- flow generation Sufficient land bank to support future recurring income. Land bank secured to 2x delivery volume by 2012 and 4x by 2014 31% 55% SPMA as of 31.12.2010 MMA as of 31.12.2010 Acquired in 2011 Fully accomplished Board of Directors with appropriate representation of interests of all investor groups ■ Quarterly trading updates and semi-annual financial reporting 14% 39% 45% 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 LenSpets SMU with 'Stable' outlook (last reconfirmed on 10.01.2012); on 10.0 ②Etalon Group 32#33MMA Unique Price, Product and Market Combination Etalon Group is attractively positioned in high quality, yet affordable real estate segment Real estate price segments of presence vs. competitors Supply structure by volume (2) (2H 2010) St. Petersburg SPMA Regions PIK SU-155 (1) LSR SU-155 (1) RGI International PIK SU-155 (1) 9% 14% 77% LSR Total: 1.1 mn sqm Moscow 10% LSR 46% Etalon Group 44% RGI International Sistema-Hals Mirland Total: 1.9 mn sqm Don-Stroy (1) Inteco (1) Lower Medium Upper Lower Medium Upper Premium Class Economy Class Middle Class Panel Poured concrete I Moscow region 5%1% 94% Total: 3.7 mn sqm Economy class Source: SPB Realty, MIAN Middle class Premium class ■ Etalon Group is positioned in Upper Economy Class and Lower Middle Class - market segment with fewer number of competitors ■ Economy Class and Middle Class price segments dominate both SPMA and MMA real estate markets, with marginal share of premium class ■ Competitive pricing combined with upscale poured concrete technology is able to target a very wide universe of customers (1) Non-public peers (2) Based on the total area of residential apartments available for sale on primary market at the end of 2H 2010 2 Etalon Group | 3 33#34Nationwide Sales & Marketing Network Supports Sustainable Contracting Powerful sales network across the country Regional population actively buys apartments in Moscow and St. Petersburg Murmansk Monchegorsk ArkhangelskNaryan-Mar (Nenetskiy AD) SPMA Cherepovets Yaroslavl • Ukhta MMA Noviy Urengoy (Yamalo-Nenetskiy AD) Etalon Group's regional sales geography (2010) (2) Region Leningrad region Khanty-Mansijsk AD Yamalo-Nenets AD Kamchatsky Krai Share in sales 3.9% 3.2% 2.0% 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- Noyabrsk (Yamalo- Nenetskiy AD) Mirniy Magadan Petropavlovsk- Kamchatskiy The Group's flats are sold in 9 out of 10 richest Russian regions Disposable income (US$) (1 Chelyabinsk Mansiysk Surgut Moscow 1,343 NenetsAD 1,247 Stavropol Orenburg Nizhnevartovsk Uzhno- Sakhalinsk Yamalo-Nenets AD 1,084 Chukotka 1,064 Sakhalin 1,025 Khabarovsk Krasnoyarsk Irkutsk Etalon Group's sales offices / representatives Khanty-Mansijsk AD St. Petersburg Kamchatsky Krai 995 873 1866 Nakhodka Magadan Yakutia 841 789 Vladivostok Russia average 603 Established relationships/partnerships with local sales agencies Etalon Group sales force is focused on the regions with the largest disposable income ☐ 30 cities covered with 10 sales offices in ■ ■ Key markets: SPMA and MMA St. Petersburg and 10 sales offices nationwide External professional marketing and sales service agents engaged nationwide Etalon Group's target regions (1) Average monthly disposable income, Rosstat data as of 3Q 2010; RUR values were converted into US$ at official CBR average exchange rate in 3Q 2010 (30.62 RUR/US$); (2) Source: management accounts ✓ Etalon Group 34 =4#35Strategic Vertical Integration: Control Over Costs, Quality and Timing Etalon Group operates in every part of property development process Land Acquisition & Permits Industrial Construction PULKOVO NISSAN Ford GM SIEMENS (3) Effective Capital Recycling Design Independence from suppliers, but only in crucial areas (1) Construction materials Construction, contracting & commissioning (2) Sales & Marketing Tower Cranes Leasing Funding Ongoing Maintenance & Service Control over costs, quality & timely delivery of the projects Business stability and lower risk of counterparties' dependence (1) Brick plant and concrete products plant. Own production only for "bottleneck" construction materials (2) 38 Liebherr tower cranes (of which 37 were manufactured in 2006-2008). Data as of 31.12.2010 (3) Construction to third parties Understanding of customer needs (sales network throughout the country) 35 2 Etalon Group 3#36Operations in Moscow* Set to Repeat the Success of St Peterburg's Business* Projects in St. Petersburg Metropolitan Area 5 6 12 11 2 Completed 9 8 D 10 4 อ 3 7 13 Projects in Moscow Metropolitan Area 2 3 # Under construction (1) # Design stage (1) Newly acquired projects In the course of DD and negotiations * Moscow metropolitan and St Petersburg metropolitan areas respectively (1) Project numbers in square correspond to the projects in the table on next page Etalon Group 36 36#37On Track with Plans Announced at IPO Construction period 2011 2012 2013 2014 2015 2016 Status Total NSA Unsold NSA ('000 sqm) ('000 sqm) OMV(1) (US$mn) Construction Outstanding Unsold parking (lots) (1) budget budget(1) (US$mn) (US$mn) St. Petersburg 1 Jubilee Estate Construction 602 377 416 2,201 738 208 2 Tsar's Capital (Kremenchugskaya str. 11) Planning permit 459 459 126 1,638 789 789 3 Swallow's Nest (Oktyabrskaya embankment 118) Construction 319 319 42 2,182 376 376 permit 4 Moskovskiy (Moskovsky prospect 115) 5 Orbit 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 70 26 257 107 107 9 Pulkovskoe shosse Planning permit 63 63 n/a n/a TBD TBD 10 Etude 11 Prestige 12 Talisman 13 Rechnoy Completed and unsold residential developments Completed stand-alone commercial properties Construction 23 15 11 138 28 Construction 21 20 26 96 36 22 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 37#38Robust Balance Sheet Debt cash flows maturity profile (as of 31/12/2011; US$ mln) 66 99 74 104 2012 2013 120 2014 82 326 2015 Total Net cash (at 31/12/2011), US$ mln 326 446 Debt composition (as of 31/12/2011) By type of facility By currency 22% 36% ■Local bonds ■ CLN USD 34% ■ EUR 52% 42% ■Bank loans ■RUR 14% Financing strategy ■Longer debt maturities (3-5 years) Decrease the cost of funding Conservative approach to leverage, less than 2.0 net debt/EBITDA Net cash Debt Cash End of period US$/RUR rate at 31 December 2011 End of period EUR/RUR rate at 31 December 2011 32.20 41.67 2 Etalon Group | 3 38#39On Track with Plans Announced at IPO Construction period Unsold 2011 2012 2013 2014 2015 2016 Status Total NSA ('000 sqm) NSA (¹) ('000 sqm) OMV(1) (US$mn) parking (1) (lots) Construction Outstanding Unsold (1) budget budget(1) (US$mn) (US$mn) St. Petersburg 1 Jubilee Estate Construction 602 377 416 2,201 738 208 2 Tsar's Capital (Kremenchugskaya str. 11) Planning permit 459 459 126 1,638 789 789 3 Swallow's Nest (Oktyabrskaya embankment 118) Construction 319 319 42 2,182 376 376 permit 4 Moskovskiy (Moskovsky prospect 115) 5 Orbit 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 70 26 257 107 107 9 Pulkovskoe shosse Planning permit 63 63 n/a n/a TBD TBD 10 Etude 11 Prestige 12 Talisman 13 Rechnoy Completed and unsold residential developments Completed stand-alone commercial properties Construction 23 15 11 138 28 Construction 21 20 26 96 36 22 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 Moscow 1 Emerald Hills 2 Etalon-City Construction 868 847 258 4,773 1,072 1,019 Planning permit 270 270 92 2,022 372 372 3 Dmitrovskoe shosse Planning permit 350 350 n/a n/a TBD TBD (1) Source: company data, JLL valuation report dated 31.12.2010 ✓ Etalon Group 39#40Focus on Key Markets - Moscow and St. Petersburg Metropolitan Areas MMA and SPMA are the most attractive residential markets in Russia - most MMA & SPMA 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$48bn Source: Rosstat 20% 8% 72% Total: 33mn sqm ■MMA ■ SPMA ■Rest of Russia Lower income Higher i income Households with preference for primary 622 market Secondary preference Indicative potential market (3) Regional demand 622+ Investment demand The above set of simple assumptions further supports the existence of significant unsatisfied demand for value-added housing in MMA and SPMA (1) Company estimates based on Rosstat's methodology and data; includes additional demand from mortgage users - share of sales with mortgage in total sales is 12%, according to MER (assuming no overlap between mortgage and instalments customers); (2) 1H2010 new supply volume of Middle Class residential properties on the primary market, according to MIAN and SPb Realty, converted from sqm into housing units, assuming that 1 flat = 85.3 sqm (average flat size in Russia in 2009, Rosstat)); (3) The demand structure shown on the pie chart is for indicative purposes; (4) Rosstat data as of January 2010; (5) Residential real estate commissioning, excluding individual construction; (6) Calculated as residential real estate commissioning volume in 2009 (excluding individual construction) multiplied by average real estate RUR prices on the primary market in 2009 and divided by end of period official CBR RUR/US$ exchange rate in 2010 (RUR/US$ 30.5); (7) 60% of households plan to improve living conditions (source - Rosstat; Comcon, 2010); (8) 56% of market in 2009 and divided by end of period official CBR RUR/USS exchange rate in 2010 (RUR/USS 30.5); (7) 50% of h Etalon Group 1 40#41Revenue recognition scheme Timing Stages of residential real estate development Cash & revenue recognition Installment programs 3-5 years Total development period range: 39-59 months 12-18 months Investment contract, Zoning & initial permit documentation Permission risk vs. Project value High permission risk Source: Company data I + I I I I I I Low entry price I 18-30 months 6-8 months Construction planning & construction permit Pre-sale Up to 90% pre-sold and accounted in cash flows Medium-low permission risk Medium entry price 3 months State commission Act of acceptance signed Ownership rights registratio n Revenue is recognized when the Act of acceptance is signed by the buyer Etalon Group provides its customers various instalment plans The terms of these installment programs are agreed on individual basis Etalon Group focus I 2 Etalon Group 1 41