Etalon Group Signs Strategic Agreement with Sberbank

15 October 2014

 

Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and longest-established development and construction companies, announces it has signed a strategic partnership agreement with Sberbank to 2024. The agreement covers a broad range of potential areas, ranging from project finance, funding of investment transactions, mortgage lending to individuals, joint public-private partnerships, as well as industrial and infrastructure construction. The potential amount of this new 10-year phase of the strategic partnership is estimated at up to RUB 150–200 billion. 

The partnership is already active, with Sberbank providing bank guarantees for the Unipres Corporation factory construction agreement.  Several project finance agreements have also been signed between Sberbank and Etalon Group for the Company’s Emerald Hills project in the Moscow Metropolitan Area, with RUB 7.6 billion of funding already invested and an additional RUB 5 billion remaining to be financed.

Etalon Group has been working with Sberbank for over 14 years, during which period the Company has built more than 200ths sqm of real estate with financing support from the bank.  Sberbank participated in the placement of Eurobonds by Etalon Group subsidiaries, and has provided bank guarantees of over RUB 1 billion for construction services projects. In addition, Sberbank has been Etalon Group’s largest mortgage lending partner for many years.

Etalon Group CEO Anton Evdokimov said: “Where others see threats, we see opportunities for continued sustainable growth and development. This strategic partnership with Sberbank is an important step for Etalon because it secures long-term cooperation with Russia’s largest lending institution across a range of areas that will help us to continue our sustainable growth. We have already achieved good results with Sberbank on both residential development and industrial construction projects – and we look forward to expanding this in new directions.”

Sberbank Senior Vice President Alexander Bazarov said: “We have worked long and hard at securing this strategic partnership, and I am very happy that we have reached a final agreement. There are few companies on the market today that can boast not only the ability to make such long-term plans, but also the capacity to take concrete steps to implement them.”

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 <br/>E: info@etalongroup.com 

EM

Sam VanDerlip <br/>T: +44 7554 993 032<br/>T: +7 499 918 3134<br/>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 27-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 3.9 million sqm. The Company is currently implementing its post-IPO construction programme, which is on track to achieve fourfold growth in construction volumes between 2010 and 2016 (from 209 ths sqm to 800 ths sqm).  Etalon Group’s CAGR for deliveries in 2010-2013 was 31%.

Etalon Group’s strong reputation among consumers supports its pre-sales business model, which helps the Company to minimise external financing needs for ongoing projects while maintaining a secure liquidity position: net cash as of 30 June 2014 was USD 10 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 over 4,500 people, and its nationwide sales and marketing network covers 36 Russian cities.

As of 31 December 2013, Etalon Group’s portfolio comprised 28 projects, with a total of 3.44 million sqm of unsold net sellable area. Jones Lang LaSalle valued this portfolio at USD 2,727 million, a 15% increase in the market value from YE 2012.

For the year ended 31 December 2013, Etalon Group's new contract sales totalled 356 ths sqm, or RUB 30,227 million. Deliveries in 2013 totalled 468 ths sqm. The Company recorded revenue of RUB 39.9 billion and EBITDA of RUB 9.4 billion, with an EBITDA margin of 24% for the year ended 31 December 2013.

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

<hr/>

16 October 2014