Etalon Group Board Meeting Results

04 July 2013

 

The Board of Directors of Etalon Group Limited (“Etalon Group” or the “Company”, LSE ticker: ETLN), one of Russia’s largest and long established residential real estate developers, held a meeting at Ogier House, St Julian’s Avenue, St Peter Port, Guernsey, on 4 July 2013.

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The Board’s Audit Committee, Strategy Committee and Nomination and Remuneration Committee also met, making the following recommendations:

  1. To remove Dmitri Boulkhoukov from the Board of Directors;
  2. For Company management to appoint an experienced and professional Head of Investor Relations by 20 July 2013 ;
  3. For the Board of Directors to begin development of the Company’s strategy for the period 2018-2023.

In addition, the Audit Committee completed its audit of the Vodopribor transaction and confirmed that the transaction was concluded in good faith and to the Company’s benefit.

The Board of Directors approved the following resolutions at today’s meeting:

  1. To approve the Company’s corporate governance policy;
  2. To remove Dmitri Boulkhoukov from the Board of Directors;
  3. To assign oversight of the Company’s Investment Department to Boris Svetlichniy;
  4. To assign to the Company’s management the task of employing an experienced professional for the position of Head of Investor Relations by 20 July 2013;
  5. To establish the Company’s dividends policy by 15 October 2013;
  6. The Board of Directors approved the decision of the Audit Committee regarding the Vodopribor transaction, having confirmed it was concluded in good faith and to the Company’s benefit;
  7. The Board of Directors approved the recommendation of the Strategy Committee relating to the development of the Company’s strategy for 2018-2023.

The Company also provides the following additional comment regarding anonymous online posts that have appeared recently on several websites with open content policies (internet forums and social networks). The posts contained information questioning a major transaction (the “Transaction”) undertaken by the Company in Moscow, and made accusations against one of its top managers.

The Company strongly refutes the allegations made regarding the Transaction.

An investigation by the company's Internal Audit team, and supervised by the Audit Committee of the Board of Directors, concluded that the Transaction was conducted on arms-length commercial terms and there was no direct or indirect benefit or participation by any managers of the Company in the Transaction.

All new acquisitions or projects initiated by the Company are subject to a rigorous investment process, which includes engagement of third party advisory firms for due diligence (legal, financial, tax) and review and approval by an Investment Committee comprising eight senior officers of the Company including the Chairman of the Board of Directors and President of the Company, Viacheslav Zarenkov.

Other recent announcements are available on the Etalon Group website: www.etalongroup.com/investors/news/

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Etalon Group IR Team

T: +44 (0) 20 8123 1328

E: info@etalongroup.com

M: Communications

Sam VanDerlip

T: +44 (0) 7554 993 032

E: vanderlip@mcomgroup.com

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About Etalon Group

History and Overview

Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest residential real estate developers. With a more than 25-year history, the Company has one of the longest and most successful track records in the Russian real estate industry.

Today Etalon Group is a leading player in Russia’s “Golden Triangle” – St Petersburg, Moscow and the greater Moscow area, with a dominant position in the “comfort class” segment. The Company’s strong foothold in these markets is reinforced further by its unique nationwide sales network covering 9 of the 10 wealthiest regions of Russia, and spanning 30 cities in total. The sales network generates up to 30% of Etalon Group’s revenue, and has been an important source of stable demand even throughout the crisis.

Etalon Group is one of the only truly vertically integrated businesses in the Russian real estate sector. The Company does everything from acquiring land to sales and cash collections from its customers, which enables it to maximise margins throughout the value chain, and reduces exposure to cost inflation from external service providers. Etalon Group is a company of scale, with a total of 40 business units that employ over 4,000 people, two strong management companies, five general contractors, 16 subcontractors, a crane company, a brick factory and a nationwide sales network.

Etalon Group’s strong financial position is driven by its effective pre-sales business model. The Company aims to pre-sell 70-90% of all residential space before a building is delivered. It also targets an average down payment of 50%. This allows Etalon Group to finance the construction process using money from customers, as opposed to using the loans or funding from shareholders.

In addition to homebuilding, Etalon Group’s long history and superior quality offering has helped it to become a trusted industrial construction partner for clients like General Motors, Toyota, Ford Motors, Bosch, Siemens, Nissan, Suzuki and Gazprom in northwest Russia.

Since 20 April 2011, Etalon Group Limited has had its GDRs traded on the Main Market of the London Stock Exchange.

Operational and Financial Highlights

As of 31 December 2012, Etalon Group’s portfolio comprised 35 projects, with a total of 3.58 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. Jones Lang LaSalle valued this portfolio at USD 2,369 million, a 38% increase in the market value from YE 2011.

For the year ended 31 December 2012, Etalon Group’s new contract sales totalled 316,466 sqm, or RUR 23,739 million. Deliveries in 2012 totalled 363 thousand sqm.

The Company recorded revenues of RUB 26.9 billion and EBITDA of RUB 6.9 billion, with an EBITDA margin of 26% for the year ended 31 December 2012, making it one of the most profitable players in the sector.

Etalon Group’s net cash position at 31 December 2012 was RUB 890 million, leaving it well positioned to fund continued dynamic growth.

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5 July 2013