Sistema Signs Relationship Agreement with Etalon Group

19 February 2019

 

ETALON GROUP PLC ("Etalon Group", or the "Company"), one of Russia’s largest and longest-established development and construction companies, announces that it has signed a relationship agreement (the "Relationship Agreement") with Capgrowth Investments Limited ("Capgrowth"), a subsidiary of Sistema PJSFC ("Sistema"), which yesterday announced the acquisition of 25% of Etalon Group’s issued share capital (in the form of Global Depository Receipts) from the family of Etalon Group founder Viacheslav Zarenkov, making Sistema the largest shareholder in Etalon Group. The Relationship Agreement sets out key elements of the relationship between the two parties, with a focus on upholding high standards of corporate governance and ensuring that the parties continue to act in the interests of all shareholders of Etalon Group.

In order to provide additional assurances to minority shareholders of Etalon Group, the Company and Sistema (through its subsidiary Capgrowth, which is the entity that directly holds the Etalon Group GDRs purchased by Sistema) agreed, among other matters, the following:

  1. acknowledgement by the parties that the Company will be managed in accordance with the principles of good governance set out in the corporate governance regime adopted by the Company and to continue to refine its transparency and disclosure practices;
  2. that all transactions or arrangements between Sistema and Etalon Group will be conducted at arm's length basis;
  3. that representatives of Sistema at the Company’s Board of Directors will not vote on any transaction or arrangement between Sistema and Etalon Group;
  4. Sistema has confirmed its current intention to maintain Etalon Group as a publicly-listed company;
  5. Sistema acknowledges and agrees that it shall use its commercially reasonable endeavours to procure that Etalon Group executes its dividend policy as adopted by its Board of Directors and effective as of the date of the Relationship Agreement, unless otherwise approved by the Board of Directors.

The full text of the Relationship Agreement is available on the Etalon Group website.

This and other recent announcements are available on the Etalon Group website: 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 Etalon LenSpetsSMU subsidiaries. With a more than 30-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 6.3 million sqm.

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 2017 was RUB 9.7 billion.

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 thousand people, and its nationwide sales and marketing network covers 58 Russian cities.

As of 30 June 2018, Etalon Group's assets comprised 39 projects and a construction and maintenance division, with a total of 2.73 million sqm of unsold net sellable area. Knight Frank valued the Company’s assets at RUB 132,487 million.

For the year ended 31 December 2018, Etalon Group's new contract sales totalled 628 ths sqm, or RUB 68,731 million. Deliveries in 2018 amounted to 479 ths sqm.

The Company recorded revenue of RUB 70.6 billion and EBITDA of RUB 13.2 billion for the year ended 31 December 2017.

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

In February 2019 Etalon Group acquired 51% of the shares of Leader-Invest, one of Moscow’s largest residential developers in terms of land bank and number of projects currently available for sale. Leader-Invest's portfolio includes 31 projects under construction or at the design stage, with a focus on infill development projects and integrated development of large-scale mixed use projects in the comfort-, business- and premium-class segments. At the time of acquisition, Leader-Invest also had unsold inventory at eight completed residential complexes, and commercial real estate, with a total NSA of 1.3 million sq m. As of 1 October 2018, Colliers International valued Leader-Invest's portfolio at RUB 66,645 million.

As a result of the acquisition of Leader-Invest, Etalon Group will become the largest residential developer in Moscow in terms of number of projects offered to the market, and the second-largest in terms of sales and construction volumes. In St Petersburg the Company will maintain its position among the market leaders. Etalon Group plans to complete the full integration of Leader-Invest by the end of 3Q 2019.

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 20 February 2019