Our Strategy

To increase our presence in premium segment and to become the largest housing developer in the mid-market segment

Our goal is to create the largest player in the mid-market segment, with a portfolio that is well-diversified between Moscow and St Petersburg. While maintaining volumes in our core mid-market segment, we also aim to expand into the premium and mass-market segments, with the long-term goal of increasing these two segments to 35%-45% of our portfolio.

GOAL

Create the largest player in mid-market segment with a portfolio that is well-diversified between Moscow and St Petersburg
Use the current opportunity to consolidate business at minimal cost and to diversify portfolio in new markets/segments

Maintain a sustainable financial position by effectively managing the construction cycle

As our business expands, we will keep our debt at a comfortable level. Under new regulations on the financing of development projects, we will accelerate the pace of construction and start pre-sales of properties in order to reduce the cost of debt servicing.

For detailed information on our debt level please refer to section DEBT INSTRUMENTS.

Development Under Current Regulation

APPROACH:

Extension of the construction period to finance a project from property buyers’ funds
Distributing financing via corporate centre to cover financing gaps for Etalon projects

CASH FLOW AND COSTS:

Free cash flow can be distributed only after completion of construction due to regulatory restrictions on share purchase agreements
High financing costs due to high debt financing rates

Development Under New Regulation

APPROACH:

Pre-sales of property prior to construction to reduce the project financing rate to 4%-5%
Acceleration of the pace of construction to reduce the cost of servicing debt
Division of projects into smaller stages

CASH FLOW AND COSTS:

Cash flow distribution after construction is completed
The cost of construction will increase by 3 – 3.8%(1), which could be offset by price growth
Moderate impact on profitability owing to price increases in 2018 and early 2019

To increase the efficiency of the development business and monetise related business areas

We aim to improve operating efficiency by strengthening cost control, introducing cutting-edge technology-based monitoring systems, and continuous enhancement of our sales function. we also intend to monetise our maintenance business division.

Use the window of opportunity associated with changes in industry regulation to replenish a land bank with projects at an acquisition price lower than in the current portfolio.
Improve operating efficiency due to strengthened cost control.
Introduce modern digital cost control systems.
Effectively manage the construction cycle in the new regulatory environment to preserve a positive free cash flow.
Reduce selling expenses for each signed contract by improving the efficiency of the sales function.
Implement strict control over general and administrative expenses.
Sell non-core assets and projects with a low return on capital

Maintanance business monetisation

Over 5
MLN SQM

Over 21
THS LOTS

150,000
RESIDENTS

ANNUAL GROWTH BY
AT LEAST 10%

Scaling:

Scalable business model thanks to annual growth in deliveries of residential property by Etalon Group as well as ability to service third-party projects at no additional cost to Etalon Group
Synergy from cooperation with other Sistema’s portfolio companies

To pay consistently growing dividends

We will continue to adhere to our dividend policy, under which Etalon Group aims to pay out dividends equal to 40%-70% of consolidated IFRS net profit

For detailed information on our dividend history please refer to DIVIDENDS page.

To create environmentally friendly living spaces

At every stage of our construction projects, we strive to limit our impact on the environment, minimise energy costs and resource consumption, and provide future residents with a comfortable and environmentally friendly living space.

Strict compliance with environmental requirements and recommendations
Electricity consumption reduction
Fuel consumption reduction
Construction waste recycling
Use of modern engineering technologies allowing to decrease water consumption both on the construction sites and in our residential complexes
Use of environmental friendly materials and the technologies allowing us to improve energy efficiency of our residential complexes
Greening of the territories of our projects