Etalon Group Update on Strategy

23 September 2016

Etalon Group Update on Strategy

Etalon Group Limited ("Etalon Group" or the "Company"), one of Russia's largest and longest-established development and construction companies, announces that its management team, ahead of a scheduled Board of Directors meeting, has completed an assessment of strategic opportunities for expansion into new geographies as part of the strategic review presently under way. After careful research and consideration, management will recommend that the Board of Directors approve a strategy that preserves Etalon Group's current geographic focus.

Strong brand recognition and operating expertise in Moscow, the Moscow region and St. Petersburg give the Company clear competitive advantages, and with high-quality projects currently available it will be possible to continue to grow market share in the middle-class residential development segment in these geographies. Etalon Group management has concluded that the growth opportunities already present in these regions currently represent the best way to expand the business and create shareholder value. Therefore, under the new strategy, the Company will focus on acquisition of highly-profitable projects in these three regions, and will not seek to expand into new regions in the short term.

As Etalon Group will not proceed with expansion into new regions in the near term, Anton Evdokimov, who held the post of Vice President for business development in new regions, will leave the Company's management team. Mr. Evdokimov will remain a member of the Board of Directors, and he will continue to sit on the Audit and Strategy Committees.

Etalon Group's new strategy is due to be discussed by the Board of Directors in mid-November 2016, after which the Company will communicate it to the market.

This and other recent announcements are available on the Etalon Group website: http://www.etalongroup.com/investors/news/ 

Etalon Group IR Team

T: +44 20 8123 1328 

E: info@etalongroup.com 

EM

Sam VanDerlip

T: +44 7554 993 032

T: +7 499 918 3134

E: vanderlip@em-comms.com

About Etalon Group

Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest development and construction corporations. The Company focuses on middle class residential real estate in the Moscow and St. Petersburg metropolitan areas, where it operates through Etalon Invest and LenSpetsSMU subsidiaries. With a 29-year history, Etalon Group has one of the longest and most successful track records in the Russian real estate industry.

Since its inception, Etalon Group has commissioned 5 million sqm. Etalon Group's CAGR for deliveries in 2010-2015 was 19%.

Etalon Group's strong reputation among consumers supports its pre-sales business model, which helps the Company to minimise external financing needs for on-going projects while maintaining a secure liquidity position: net debt as of 31 December 2015 was RUB 7,397 million.

The Company is vertically integrated, which helps it to control costs, quality and timing, as well as to demonstrate best-in-class profitability. Etalon Group employs 5,000 people, and its nationwide sales and marketing network covers 37 Russian cities.

As of 31 December 2015, Etalon Group's portfolio comprised 28 projects, with a total of 2.72 million sqm of unsold net sellable area. JLL valued this portfolio at RUB 104,384 million.

For the year ended 31 December 2015, Etalon Group's new contract sales totalled 385 ths sqm, or RUB 35,080 million. Deliveries in 2015 totalled 502 ths sqm.

The Company recorded revenue of RUB 42.4 billion and EBITDA of RUB 7.7 billion for the year ended 31 December 2015.

Etalon Group Limited's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011.