Company Announcements

29 March 2023

Etalon Group Announces Record Net Profit for 2022

ETALON GROUP PLC ("Etalon Group" or the "Company"), one of Russia's largest and longest-established development and construction companies, announces the publication of its audited consolidated IFRS financial statements for the full year ended 31 December 2022.

FY 2022 financial highlights:

• Revenue for 2022 amounted to RUB 80.6 billion.
  
• Gross profit reached RUB 28.2 billion. Gross profit margin increased by 3 p.p. to 35%.
  
• Gross profit before purchase price allocation (PPA) for the period amounted to RUB 30.5 billion; pre PPA gross profit margin increased by 2 p.p. to 38%.
  
• EBITDA amounted to RUB 16.5 billion; EBITDA margin in 2022 was 20%.
  
• Pre-PPA EBITDA amounted to RUB 18.8 billion, and pre-PPA EBITDA margin was 23%.
  
• Net profit increased by 332% to RUB 13.0 billion.
  
• Net corporate debt as of 31 December 2022 was RUB 14.5 billion, and the ratio of net corporate debt to pre-PPA EBITDA was 0.77x.
  
• Funds in escrow accounts reached RUB 60.4 billion.

"In the face of turbulence and growing competition in the development market, we focused on improving operational efficiency and maintaining high margins. In 2022, we undertook a great deal of work to improve the quality of our portfolio, including by acquiring other players with attractive land banks. In addition, we focused our efforts on the technological transformation of our business, which will enable us to successfully compete in the market by reducing project production costs.

"As a result, gross profit increased in 2022 from RUB 27.8 billion to RUB 28.2 billion. Pre-PPA gross profit margin increased year-on-year once again, from 36% to 38%, exceeding our strategic target of 35%. In our main segment, residential development, pre-PPA profit margin increased from 38% to 40%.

"Thanks to the conclusion of a deal with YIT on favourable terms, net profit for the year increased more than fourfold, reaching a record RUB 13 billion.

"Recognising the strategic importance of new technologies for business development, we continue to actively develop digital products and technologies for industrial housing construction. Our comfortable financial position and proprietary solutions developed as part of our technological transformation have made it possible for us to achieve our strategic goals."

Commenting on the financial results for FY 2022, Etalon Group's Chief Financial Officer, Ilya Kosolapov, added:

"Despite market turbulence and the increase in our gross debt, we were able to maintain leverage at a comfortable level while also keeping the cost of debt servicing down. The ratio of net corporate debt to pre-PPA EBITDA was less than 1x, well below our target of 2x-3x. The average interest rate on our loan portfolio decreased from 6.5% at the end of 2021 to 5.2% as of 31 December 2022. At the same time, funds released from escrow accounts for delivered buildings provided additional liquidity. All of these factors have enabled us to achieve our strategic objectives, including the development of new technologies and the acquisition of new projects, while also implementing projects from our current portfolio."

This and other recent announcements are available on the Etalon Group website: https://www.etalongroup.com/investor-relations/investor-news/.

Contact details

Etalon Group

IR Team

+44 (0) 20 8123 1328

Email: ir@etalongroup.com

EM

E-mail: etalon@em-comms.com

About Etalon Group

Founded in 1987, Etalon Group is one of Russia's largest development and construction companies. 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, Ekaterinburg, Tyumen and Kazan. 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 delivered 8.6 mln 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 assets comprise 38 projects at the design and construction stages, unsold inventory at completed residential complexes and commercial properties, with total unsold NSA of 6.4 mln sqm, as well as a construction and maintenance division. According to Nikoliers, the value of Etalon Group assets as of 31 December 2022 was RUB 288 billion.

In 2022, Etalon Group's new contract sales totalled 292 ths sqm, or RUB 58.7 billion, not including accumulated new contract sales at YIT Russia as of its acquisition.

The Company's revenue in 2022 amounted to RUB 80.6 billion, with EBITDA of RUB 16.5 billion.

Etalon Group's GDRs have traded on the Main Market of the London Stock Exchange since 20 April 2011 (under the ticker ETLN) and in the Level 1 quotation list of Moscow Exchange since 31 January 2020.