ETALON GROUP PLC (“Etalon Group” or the “Company”), a Cyprus-registered company and one of Russia’s largest development and construction companies, provides an update on the impact of current geopolitical developments on the Company.
Recently, a number of governments, including those of the United States, the United Kingdom and the European Union, have adopted new sanctions against certain individuals and entities in Russia. Neither Etalon Group nor any of its subsidiaries or governance bodies is a target of these sanctions. In addition, a number of foreign companies operating in Russia have also decided to limit, halt or cease operations in the country. Developments relating to these matters are highly unpredictable, occur swiftly and often with little notice. As such, it is currently impossible to fully assess the long-term impact of these initiatives on Etalon Group’s business.
The Company also acknowledges that supply chain disruptions for certain materials and engineering equipment, combined with exchange rate volatility, may have a significant impact on construction costs.Furthermore, the recent increase in the key rate by the Central Bank of Russia from 9.5% to 20%, and subsequent rise in mortgage rates which has occurred, may negatively impact sales performance going forward.
Etalon Group has a robust financial position, significant cash liquidity and low leverage that is fully denominated in roubles. As of 31 December 2021, the Company had RUB 42.1 billion in cash and cash equivalents and RUB 59.8 billion in cash in clients’ escrow accounts, based on management accounts. The Company works with a large number of banks that are currently able to perform the operations required to serve the Company’s needs.
Although there is currently no prohibition on dividend distribution by the Cyprus-based parent company of Etalon Group, certain provisions of sanctions as well as rules introduced by the Central Bank of Russia make it very difficult to conduct the necessary intra-group transactions, which may affect the ability to pay dividends under the current dividend policy.
Etalon Group continues to operate and fulfil its obligations to its customers, partners and employees, although the Company can provide no assurance that the current geopolitical situation and the resulting economic developments in Russia will not adversely affect operations and financial results in the future. The abovementioned events have had, and may continue to have, a negative impact on the trading price of the Company’s GDRs.
In light of the significant degree of uncertainty and rapidly changing macro environment, Etalon Group cannot be sure of its ability to achieve any of its announced strategic targets. Updated guidance will be provided as and when appropriate.
The Company will continue to closely monitor sanctions and is assessing contingency plans to address potential developments.
This and other announcements are available on the Etalon Group website:
T: +44 (0) 20 8123 1328
T.: +44 207 002 7859
About Etalon Group
Founded in 1987, Etalon Group is one of the largest development and construction companies in Russia. The Company focuses on middle class residential real estate in the Moscow and St Petersburg metropolitan areas. In 2021, the Company began a regional expansion programme and has already launched new projects in Omsk, the Novosibirsk region as well as Ekaterinburg and Tyumen. With a 35-year history, Etalon Group has one of the longest and most successful track records in the Russian real estate industry. Since its foundation, Etalon Group has commissioned 7.9 million sqm of real estate.
Thanks to its integrated business model, Etalon Group is able to create added value for customers and shareholders at every stage of development, from land plot analysis and acquisition to the operation and maintenance of existing properties. Etalon Group employs over 4,600 people, and its nationwide sales and marketing network covers 59 Russian cities.
Etalon Group’s total assets comprise 20 projects under development, unsold inventory at completed residential complexes and commercial properties, with total unsold NSA of 2.8 million sqm, as well as a construction and maintenance division. Colliers International valued the Company’s total assets at RUB 204 billion as of 31 December 2020.
In 2021, Etalon Group’s new contract sales totalled 446 ths sqm, or RUB 84.4 billion.
The Company’s revenue in 2020 amounted to RUB 78.7 billion, with EBITDA of RUB 12.6 billion.
Etalon Group’s GDRs have traded on the Main Market of the London Stock Exchange since 20 April 2011 and on the Level 1 quotation list of Moscow Exchange since 31 January 2020 under the ticker ETLN.
This announcement may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company’s current view with respect to future events and are subject to risks relating to future events and other risks, including the ongoing geopolitical situation, the expansion of sanctions imposed on certain individuals and entities in Russia by the United States, United Kingdom and European Union, volatility in interest and exchange rates, uncertainties and assumptions relating to the Company’s business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.