LEVERAGING INNOVATION
FOR MODERN CITIES
1
ANNUAL REPORT 2020
CONTENTS
01
INTRODUCTION
Aboutthisreport
Ourcompetencies
Ourfocus
Ourgeography
Howwecreatevalue
Businessmanagementstructure
Businessmodel
Equitystory
2020inbrief
Chairman’sstatement
CEO’sstatement
02
MARKET OVERVIEW AND TRENDS
Anewphaseofcompetition
Marketfactorsandtheirimpactonthe
mainaspectsofourbusiness
Supplyandlandavailability
Constructioncosts
03
STRATEGY
Strategyoverview
Thestrategyto2024aimstoreinvent
eachstepofthevaluechain
Waystoachieveourstrategicgoals
Ourambitionsonthestrategichorizon
Financialtargets
04
PROJECT PORTFOLIO
Currentprojectportfolio
Additionstotheprojectportfolio
Integrateddevelopmentprojects
Business-classprojects
Comfort-classprojects
05
OPERATING RESULTS
Operatingresults
Anevenmoreattractiveprojectportfolio
Regionalsales
2
4
6
7
8
10
11
12
14
16
20
22
24
26
29
35
38
42
44
46
48
60
61
62
66
68
72
84
94
100
102
112
114
06
FINANCIAL RESULTS
07
SUSTAINABILITY
Introduction
Materialissuescoveredinthereport
Sustainabilitymanagement
Sustainabledevelopmentgoals
andaccomplishmentsin2020
Keyhighlightsandachievementsin2020
Stakeholderengagement
Occupationalhealthandsafety
Environment
Employees
Customers
Socialresponsibility
Innovation
Businessconduct
Riskmanagementframework
andkeyriskmanagementfunctions
GRIstandards
08
CORPORATE GOVERNANCE
Boardofdirectors
Boardcommittees
09
SHAREHOLDER INTERACTIONS
Sharevalueandshareholderreturns
Ownershipstructure
Dividendpolicy
Shareholderrelations
Analystcoverage
Investorcalendar2021
10
FINANCIAL STATEMENTS
Consolidatedfinancialstatements
ParentCompanyfinancialstatements
116
124
126
128
129
130
132
134
138
146
154
164
168
174
180
184
194
198
201
208
212
215
216
217
218
220
221
222
224
304
2
INTRODUCTION
3
ANNUAL REPORT 2020
INTRODUCTION
04 Aboutthisreport
06 Ourcompetencies
07 Ourfocus
08 Ourgeography
10 Howwecreatevalue
11 Businessmanagementstructure
12 Businessmodel
14 Equitystory
16 2020inbrief
20 Chairman’sstatement
22 CEO’sstatement
2 4
INTRODUCTION
5
5
ANNUAL REPORT 2020
ANNUAL REPORT 2020
ABOUT THIS
REPORT
ONE OF THE LARGEST PUBLIC
DEVELOPERS IN RUSSIA
TIME FRAME
ThisAnnualReportcontainsinformationon
EtalonGroup’sactivitiesforthe12months
of2020,aswellastheGroup’sconsolidated
auditedIFRSfinancialstatementsforthe
sameperiod.Thesectionsofthereport
thatprovideanoverviewoftheCompany
asawholeandofitsbusiness,aswell
asitseffortsinsustainabledevelopment,
corporategovernancepracticesand
investorrelations,alsocoverimportant
developmentsthattookplaceatthe
beginningof2021.
REPORTING FORM AND
STANDARDS
TheAnnualReportispresentedinthe
formofanintegratedreportwiththeaimof
informingallstakeholdersabouthowEtalon
Groupiscreatingvalueintheshort,medium
andlongtermforallofitsstakeholders.To
ensurethatthisinformationisfact-basedand
astransparent,accurateandup-to-dateas
possible,wewereguidedbybestreporting
practicesandstandards,andwealsoused
relevantmanagementreportingdata.
Thisyearwearecontinuingoureffortsto
improvethequalityandlevelofdetailinour
disclosureofinformationonsustainable
development.ThisAnnualReportwas
preparedinaccordancewithanumber
ofguidingprinciples,includingtheGRI
SustainabilityReportingStandards,which
areourprimarysourceofguidancefor
qualitativedisclosureofsustainability
information.Inaccordancewithstandard
102-55(GRI102:Disclosure,2016),this
reportincludesaGRIcontentindexas
theprimarynavigationtoolforusersof
thereport.Wealsoseektoadheretothe
principlesoftheUNGlobalCompact,
althoughwehavenotyetbecomea
full-fledgedmemberofthisorganisation.
MATERIAL ISSUES
Inaccordancewiththeabove-mentioned
reportingstandards,thisreportaddresses
allmaterialissuesrelatedtoEtalonGroup’s
economic,environmentalandsocial
impactthatcouldaffecttheassessments
anddecisionsofstakeholders.Wehave
identifiedandprioritisedtheseissuesbased
ontheirimportanceandtheavailabilityof
measurabledata.
FORWARD-LOOKING
STATEMENTS
andtheirpricingpolicies,product
development,commercialisation,technical
problems,supplydisruptions,etc.
Certainstatementsinthisreportareforward-
lookinginnature,andactualresultscould
differconsiderably.Inadditiontofactors
explicitlystatedinthereport,otherfactors
couldhaveamaterialimpactonactual
results.Thesefactorsinclude,butarenot
limitedto,thegeneralbusinessenvironment,
regulatorychanges,interestratefluctuations,
politicalevents,theactivitiesofcompetitors
Founded in 1987, Etalon Group is one of the largest
development and construction companies in Russia.
The Company focuses on residential real estate for
middle-class customers in Moscow, Moscow region
and St Petersburg. Vertical integration enables the
Company to control costs, quality and timing, while
also achieving best-in-class profitability at every stage
of project development.
EtalonGroup’sassetsinclude20projects
atthedesignandconstructionstages,
unsoldrealestateincompletedproperties
andcommercialrealestatewithanNSA
of2.8mnsqm,aswellaconstructionand
maintenancedivision.
AMONG THE 10
LARGEST DEVELOPERS
IN RUSSIA
intermsofdeliveryvolumes1
TOP
10
204 BLN
20 PROJECTS
RUB
inassets 2
AT THE DESIGN
AND CONSTRUCTION
STAGES
YEARS
IN THE
MARKET
>30
7.5MLN SQM
4.6 THOUSAND
EMPLOYEES
DELIVERED DURING
THE COMPANY’S
HISTORY
1 ERZ rating as of the end of 2020
2 Colliers International estimates as of 31 December 2020
6
INTRODUCTION
7
ANNUAL REPORT 2020
OUR COMPETENCIES
OUR FOCUS
1
DESIGN
Indesigningresidentialcomplexes,
EtalonGroupinvolvesbothitsown
in-housedesigninstituteandleading
architecturalfirmswithinternational
experience.
2
3
CONSTRUCTION
PROJECT MANAGEMENT
Wehaveextensiveexperiencein
theconstructionofresidentialreal
estate–frominfilldevelopmentto
integrateddevelopmentprojects.We
arealsoatrustedpartnerforindustrial
constructionprojects.
Wemanageprojectsofvaried
complexity,includinglarge-scale
developmentsforentireresidential
districts.
4
PROPERTY
MANAGEMENT
EtalonGroupmanages6mlnsqm
ofrealestateand27.4thousand
parkingspaces.
5
SALES
OursalesnetworkcoversMoscow,
StPetersburgand59citiesinother
regionsofRussia;wecooperate
withrealestateagenciesthroughout
thecountry.
6
B2B SERVICES
Weareconstantlydevelopingour
competenciesandintroducing
innovations:thisenablesustoprovide
servicesintheareasofgeneral
contracting,constructionoversightand
expertappraisal,geodeticsurveying,
documentpreparationandBIM
technologies,whilealsosharingour
expertisewithothercompanies.
Our strong portfolio is currently presented
in the mid-market and partially in the upper
segment in St Petersburg and the Moscow
Metropolitan Area.
Theseregionsandsegmentshaveimportant
advantages:resistancetomacroeconomic
changes,highgrowthpotentialand
excellentprofitability,whichtookonspecial
significanceinlightofthepandemicand
relatedrestrictionsthataffectedbusiness
andconsumeractivity.Thankstothestable
recoveryindemandaftertheliftingof
COVID-19-relatedrestrictionsinRussia’s
twobiggestcities,EtalonGroupwasable
todemonstratestrongresults,exceedingits
targetsfortheyearbyawidemargin.
Combinedwithbuyers’higherexpectations
inourkeyregionsintermsofthequality
ofthelivingenvironment,thiscreates
anexcellentfoundationforthescaleof
businessdevelopment,aswellasthe
introductionofnewtechnologiesand
modernapproachestodevelopment,
which,inturn,enablesustocreatevalue
forbuyersandinvestorsbyimprovingthe
cost-effectivenessandconsumerqualities
ofourproduct.
CURRENT ETALON
GROUP SEGMENTS
8
INTRODUCTION
9
ANNUAL REPORT 2020
8 7OFFICES
IN ST PETERSBURG 14 REPRESENTATIVE
OFFICES IN
OTHER RUSSIAN
CITIES
IN MOSCOW
OFFICES
OUR GEOGRAPHY
Our regional sales network covers
59 cities and contributes to Etalon
Group’s steady sales growth
Murmansk
Apatity
Kaliningrad
St Petersburg
Petrozavodsk
Severodvinsk
Arkhangelsk
Tver
Usinsk
Krasnogorsk
Moscow
Syktyvkar
Ukhta
Salekhard
Norilsk
Belgorod
Kirov
Saransk
Cheboksary
Rostov-on-Don
Penza
Krasnodar
Saratov
Volgograd
Samara
Sochi
Ekaterinburg
Ufa
Chelyabinsk
Izhevsk
Perm
Nadym
Noviy Urengoy
Gubkinskiy
Khanty-Mansiysk
Surgut
Noyabrsk
Nefteyugansk
Nizhnevartovsk
Tyumen
Orenburg
Magnitogorsk
Omsk
Ust-Ilimsk
Krasnoyarsk
Magadan
Elizovo
Petropavlovsk-
Kamchatskiy
Mirniy
Yakutsk
Neryungri
Blagoveschensk
Komsomolsk-on-Amur
Khabarovsk
Uzhno-
Sakhalinsk
EtalonGroupsalesoffices
EtalonGrouprepresentativeoffices
Establishedrelationships/partnershipswithlocalsalesagencies
Newcitiesaddedin2020
Tashtagol
Irkutsk
Chita
Birobidzhan
Ussuriysk
Vladivostok
1 Rosstat preliminary data for 12 months of 2020
TheCompany’spropertiesareinhigh
demandinresource-richregionsofRussia
withhighpercapitaincome.
REGIONAL PER CAPITA INCOME
COMPARED WITH RUSSIA’S
NATIONAL AVERAGE1
Chukotka
Yamalo-NenetsAD
NenetsAD
Moscow
Magadanregion
Sakhalinregion
Khanty-MansiAD
Kamchatskikrai
Tyumenregion
StPetersburg
Murmanskregion
Moscowregion
Sakha(Yakutia)
Khabarovskkrai
Primorskkrai
Sverdlovskregion
Arkhangelskregion
EtalonGroup’stargetregions
2.5x
2.5x
2.4x
2.1x
1.9x
1.7x
1.5x
1.5x
1.4x
1.4x
1.3x
1.3x
1.3x
1.2x
1.0x
1.0x
1.0x
10
INTRODUCTION
11
ANNUAL REPORT 2020
HOW WE
CREATE VALUE
BUSINESS MANAGEMENT
STRUCTURE
We create added value for our clients and
shareholders at every stage of development, from
the analysis and acquisition of land plots to the
operation of completed properties. Etalon Group
aims to maximise the return on investment at every
stage, while also creating value for its customers in
order to encourage loyalty to the Etalon brand.
Our Business management structure
corresponds to the geographies where we
operate and our main areas of business:
housing development, general contracting and
after-sales service. The Company has three
large operating divisions, whose activities are
controlled by Etalon Group.
CREATING A
COMFORTABLE LIVING
ENVIRONMENT
Whenplanningourresidentialcomplexes,
westrivetoadheretotheprinciplesof
newurbanismandparticipatorydesign:
werecruittopexperts,focusonadvanced
concepts(includingthe15-minutecity
principleandthemystreetstandardof
amenitiesandbeautification),useelements
ofsmarthomesystemsandcreatemodern,
comfortablepublicspacesaspartofour
projects.Weusedurable,environmentally
friendlymaterialsandresource-efficient
engineeringsolutionsduringconstruction.
ETALON GROUP BUSINESS
MANAGEMENT STRUCTURE
ETALON GROUP
ADDITIONAL
SERVICES FOR
RESIDENTS OF OUR
HOMES
ESTABLISHING SOCIAL
INFRASTRUCTURE AND
DEVELOPING LOCAL
COMMUNITIES
OurhomesareservicedbyEtalonGroup’s
ownservicecompany,whichgivesusan
advantage,aswearefamiliarwithallthe
featuresofourprojectsandtheneedsof
thetenants,whomwehaveaccompaniedat
everystepfromsigningthecontractatthe
presalestagetosettlingintotheirfinished
home.Weareconstantlyimprovingthe
Webuildeducational,medicalandsports
infrastructurebothaspartofourlarge-
scaleintegrateddevelopmentprojectsand
asseparateprojects.Thisenablesusto
ensureaccesstoqualityeducationformore
children.Inaddition,wecontributetothe
developmentoflocalcommunitiesbytaking
partinsocialprogrammes.
qualityandrangeofadditionalservicesfor
residents,aswellasouronlineplatform,
whichbringstogethervariousservicesand
opportunitiesforbuyersandresidents.
DEVELOPMENT
IN ST PETERSBURG
DEVELOPMENT IN
MOSCOW
CONSTRUCTION
AND MAINTENANCE
TheregionalofficesinMoscowand
StPetersburgareresponsibleforthe
Company’skeybusinessarea:residential
realestatedevelopment.Aseparatedivision
performsconstructionwork,carriesout
industrialconstructionunderexternal
contracts,andisalsoresponsibleforthe
operationofresidentialcomplexesbuiltby
EtalonGroup.
EtalonGroupisresponsibleforcarrying
outgeneralmanagementandstrategic
development,settingstandards,monitoring
complianceandimplementingpolicies
throughouttheCompany.
12
INTRODUCTION
13
ANNUAL REPORT 2020
BUSINESS MODEL
LAND PLOT
ANALYSIS AND
ACQUISITION
DESIGN AND
PERMITTING
MARKETING
AND ONGOING
SALES
EFFECTIVE
PROFIT
REINVESTMENT
R
E
I
N
V
E
S
T
M
E
N
T
T
N
E
M
P
O
L
E
V
E
D
VALUE
I
S
E
C
V
R
E
S
G
N
I
O
G
N
O
ONGOING
MAINTENANCE
FITTING-OUT
AND FURNISHING
PROJECT
MANAGEMENT
N
S T R U C TIO
GENERAL
CONTRACTING AND
SUBCONTRACTING
N
O
C
We choose projects that
provide a strong foundation
for quality products, and that
will ensure a high return on
invested capital.
Recent developments:
Aspartofthedigitalisationof
allbusinessprocesses,weare
introducingAI-poweredsystems
toanalyselandplotsandthe
competitiveenvironment,which
willallowustoquicklyprocess
incomingdataandselectplots
thatbestcomplementour
portfolio.
Thefull-scaleimplementa-
tionofastandardised-design
system,whichhasalreadygone
live,willenableustocalculate
projectbudgetsquicklyand
accuratelyandofferthebest
priceforattractiveplotswhile
maintainingtherequiredlevelof
profitability.
We have unique expertise
in project design thanks to
our in-house design insti-
tute, science and technology
centre, and cooperation with
leading architects.
We maintain effective
two-way communication with
our customers and maintain
a leading market position
despite fluctuations in the
macro environment.
Recent developments:
Theintroductionofastand-
ardised-designsystembased
onBIMtechnologieswillhelp
usreducedesigncostsand
timeinputandimproveproject
quality.
Recent developments:
Weareconstantlyimproving
oursalessystem,includingthe
developmentofdigitalchan-
nels.Theintroductionofdigital
systemstocreateperson-
alisedoffersandimprove
thecustomerexperience
throughouttheentirecustomer
journeyincreasescustomer
loyaltyanddrivesrepeatsales.
Our extensive project
management experience
helps to ensure the quality,
safety and timely delivery
of our projects, and also to
accurately forecast resources
and maintain stable returns
on investment.
Recent developments:
Onceourend-to-enddigital
architectureiscompletelyin
place,itwillenableustoseeall
processesataglanceandto
becomeevenmoreflexibleand
efficient.
We guarantee the quality and
cost-effectiveness of each
project, controlling project
safety using BIM technologies
and guaranteeing fulfilment of
the construction terms.
Recent developments:
Thedigitalisationofthebusi-
nessandtheintroductionof
newtypesofindustrialhousing
constructionandtheiradapta-
tiontoRussianconditionswill
makeourconstructionbusiness
moreprofitable.
By offering clients fitted-out
and furnished apartments,
we are able to reach a wider
potential audience of buyers,
thus increasing demand and
providing stable returns on
our operations.
Recent developments:
Extendingthelifecycleof
customerinteractionbasedon
anunderstandingofcustomer
expectationswillenableus
tocreatethemost-sought-
afterfinishingoptions,thereby
increasingsalesandproduct
satisfaction.
Efficient ongoing service
provides us with additional
revenue and helps us maintain
the good reputation of our
projects.
Recent developments:
End-to-enddigitalarchitec-
turewillenableustosendthe
operatingcompanydetailed
digitalmodelsofbuildingsin
ordertoensuremoreeffective
serviceandmaintenanceand
toimprovetheplatformfor
serviceprovision;feedback
fromresidentswillimprovethe
qualityandexpandtherange
ofservicesavailable,whichwill
thusincreasethedemandfor
thoseservices.
We invest generated income
into further growth and return
it to our shareholders in the
form of dividends.
Recent developments:
Theinitiativesenvisagedbythe
Company’snewstrategyare
aimedatachievingleadership
intermsofcostsandquality.
Thus,ourbusinessinvestments
willhaveamuchgreaterimpact,
andwewillbeabletopayout
moregenerousdividends.
14
INTRODUCTION
15
ANNUAL REPORT 2020
EQUITY
STORY
Etalon Group’s GDRs have traded on the Main
Market of the London Stock Exchange since
20 April 2011 and in the Level 1 quotation list
of Moscow Exchange since 31 January 2020
under the ticker ETLN.
WHY INVEST IN ETALON GROUP
ATTRACTIVE GROWTH PROFILE
SUPPORTED BY A DIVERSE
OFFERING AND A HIGH DEGREE
OF LOYALTY TO ETALON’S
PRODUCT
1
2
STRONG SALES AND REVENUE GROWTH
NEW SALES IN FY 20
REVENUE IN FY 20
79.9
BLN RUB
78.7
BLN RUB
fromRUB47.4blnin2016
fromRUB49blnin2016
Formoredetails,seethe“OperatingResults”and“FinancialResults”sections.
33 %
PRE-PPA GROSS
MARGIN
inFY20
1.2х
NET CORPORATE
DEBT / PRE-PPA EBITDA
inFY20,within
acomfortablelevel
below2x
Formoredetails,seethe“FinancialResults”section.
GENEROUS DIVIDEND POLICY
WITH A FIXED MINIMUM
PAYMENT AND AN ATTRACTIVE
DIVIDEND YIELD
SUSTAINABLE AND
RESPONSIBLE BUSINESS
3
4
5
DIVIDEND PAYMENTS
40 –70 %
12
OF CONSOLIDATED
IFRS NET PROFIT
RUB PER GDR
min.annualpayment
Formoredetails,seethe“ShareholderInteractions”section.
FOCUS ON ENVIRONMENTALLY FRIENDLY AND
RESILIENT URBAN DEVELOPMENT
-17 %
DECLINE IN SOLID
WASTE PRODUCTION
7
THS SQM
totalareaofsocial
infrastructuredelivered
in2020
Formoredetails,seethe“ProjectPortfolio”and“Sustainability”sections.
STRATEGIC INCENTIVES
BASED ON INNOVATIONS AND
DIGITALISATION ...
... TO RESULT IN A
MORE COST-EFFECTIVE,
SUSTAINABLE PRODUCT
AND INCREASED VALUE
FOR SHAREHOLDERS AND
STAKEHOLDERS
Formoredetails,seethe“Strategy”section.
STRONG FINANCIAL POSITION
WITH HEALTHY PROFITABILITY
AND DEBT PROFILE
IMPLEMENTATION OF ETALON
GROUP’S NEW STRATEGY TO 2024
TO OPEN UP NEW OPPORTUNITIES
FOR FURTHER GROWTH
16
INTRODUCTION
17
ANNUAL REPORT 2020
2020 IN BRIEF
FINANCIAL HIGHLIGHTS:
REVENUE
78.7 BLN
RUB
NET INCOME
2 BLN
RUB
NET CORPORATE DEBT / PRE-PPA EBITDA
1.2х
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
• RequestforlistingEtalonGroup’s
GDRsonMoscowExchangeand
admissiontotrading
• ApprovalbytheBoardof
Directorsofanewstrategyto
2024andadividendpolicywitha
payoutrangeof40–70%ofIFRS
netprofitandaminimumpayout
ofatleastRUB12pershare/GDR
1Q RESULTS:
NEW SALES
17.9 BLN
RUB
CASH COLLECTIONS
17.6 BLN
RUB
The Company’s
GDRs start trading
on Moscow
Exchange
Etalon Group’s GDRs
included in Moscow
Exchange’s Broad
Market Index
•
Inclusiononthelistof
systemicallyimportant
companies
• Deliveryofthefirstphaseofthe
Normandyresidentialcomplex
• DeliveryoftheSchastye v
• DeliveryoftheSchastye v
Kuskovoresidentialcomplex
Kuzminkakhand House on
Kosmonavtov residential
complexes
AVERAGE PRICE (TOTAL)/SQM
DELIVERIES, THS SQM
142.4 THS
RUB
88.5 ST PETERSBURG
2Q RESULTS:
NEW SALES
11.6 BLN
RUB
AVERAGE PRICE (TOTAL)/SQM
DELIVERIES, THS SQM
122 THS
RUB
15 MOSCOW
METROPOLITAN AREA
AVERAGE PRICE (APARTMENTS)/SQM
165.5 THS
RUB
CASH COLLECTIONS
AVERAGE PRICE (APARTMENTS)/SQM
13.9 BLN
RUB
159.1 THS
RUB
73 ST PETERSBURG
18
INTRODUCTION
19
ANNUAL REPORT 2020
OPERATING HIGHLIGHTS:
DELIVERIES
540 THS
SQM
RECORD NEW SALES
RECORD CASH COLLECTIONS
NEW STRATEGY TO 2024
UPDATED DIVIDEND POLICY
HIGH SAFETY STANDARDS
79.9 BLN
RUB
82 BLN
RUB
aimedatsustainableurban
developmentandinnovations
withmin.payment
ofRUB12perGDR
zerofatalitiesin2020;EtalonGroup’ssafety
indexreached86%(+6p.p.year-on-year)
SUSTAINABILITY HIGHLIGHTS:
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
• TheArchitecturalCouncilof
MoscowapprovestheZIL-Yug
project,theCompany’sflagship
residentialdistrictinMoscow
• DeliveryoftheBotanica
residentialcomplex
• StartofsalesattheProject on
Chernigovskaya Street
3Q RESULTS:
NEW SALES
24 BLN
RUB
• Schastyeresidentialcomplexes
projectnamedthewinnerinthe
“Information Modelling for
Residential Buildings”category
atthefourthRussiannational
competition“BIMTechnologies
2019/20”
• EtalonGroupprojectbecomes
thefirstinRussiatoundergoa
digitalexpertstatereview
• DeliveryoftheSchastye na
Sokole project
• LaunchofGeneration ZIL,
apublicinformationalmedia
platformdedicatedtothe
developmentoftheZIL-Yug
districtinMoscow
• StartofsalesattheSchastye
na Semyonovskoyresidential
complex
• CompanyhostsaCapital
MarketsDay,whereitpresents
itsnewstrategyto2024
• DeliveryoftheSchastye na
Presneand Okhta Houseprojects,
aswellasseveralbuildingsinthe
Galactica residential complex
• TheWingsandPetrovskiy
Landmarkresidentialcomplexes
namedwinnersattheEuropean
PropertyAwards2020
AVERAGE PRICE (TOTAL)/SQM
DELIVERIES, THS SQM
NEW SALES
AVERAGE PRICE (TOTAL)/SQM
DELIVERIES, THS SQM
159.4 THS
RUB
16 MOSCOW
METROPOLITAN AREA
26.4 BLN
RUB
158.4 THS
RUB
74 MOSCOW
METROPOLITAN AREA
4Q RESULTS:
CASH COLLECTIONS
AVERAGE PRICE (APARTMENTS)/SQM
CASH COLLECTIONS
AVERAGE PRICE (APARTMENTS)/SQM
21.2 BLN
RUB
186.3 THS
RUB
29.2 BLN
RUB
191.9 THS
RUB
273 ST PETERSBURG
20
INTRODUCTION
21
ANNUAL REPORT 2020
CHAIRMAN’S
STATEMENT
Whilethepandemichasimpactedthe
residentialdevelopmentsectorglobally,it
hasalsoservedtoacceleratepre-existing
trends,includingthedigitalisationof
businessprocesses.EtalonGroupwasno
exceptiontothisandin2020beganoffering
customersvirtualsitetoursandanarrayof
documentationonline,includingmortgage
applications.
Onthesupplyside,themarketisbecoming
increasinglyconsolidatedassmallerplayers
struggleundernewprojectfinancingrules.
Meanwhile,un-zonedpropertyisbecoming
increasinglyattractivetolargedevelopers
aslandbecomesmoreexpensivetobuy.
Moscowrenovationprogrammehasalso
madethemass-marketsegmentless
attractive.
EtalonGroup’soperatingperformancein
2020surpassedevenourmostoptimistic
forecasts.Growthwasdrivenbyour
attractiveportfolioofprojects,ourrapid
responsetochangesincustomerbehaviour
andeffectivestatemeasurestosupport
theaccessibilityofnewhousing.New
contractsalesandcashcollectionsreached
recordlevelsofRUB79.9billionandRUB
82.0billion,respectively,in2020.Revenue
fortheyearamountedtoRUB78.7billion,
andweachievedarecordpre-PPAgross
profitofRUB25.8billion,withagross
marginof33%justslightlybelowthe
strategictargetof35%.TheCompany’s
financialpositionimprovedduring2020,
withnetcorporatedebt/pre-PPAEBITDA
ratiodecliningto1.2xfrom1.9xattheend
of2019.
Thenewstrategyapprovedin2020aims
tobuildonthesuccessofpreviousyears
whilerespondingtomarkettrendsand
renderingEtalonGroupatechnology
leaderinitssector,bothintermsofdigital
transformationandintermsofadoptingnew
constructiontechniques.
Inlightofthesemajorshiftsinsupplyand
demand,theBoardofDirectorsworked
withmanagementtoreinventeachstepof
thevaluechain.Ourfirstareaoffocuswas
theend-to-enddigitalisationofbusiness
processesandthecreationofafullydigital
architecture.Aspartofthis,wehave
begunusingbigdata–poweredsystemsto
quicklyandaccuratelyassessalandplot’s
potential,aswellasGISscanningand
newmasterplanningsolutionstomakeit
possibletorenderadetailedmasterplan
andbudgetinunderaday.
Ournextaimistoapplythesedigital
businessprocessestoprojectsusing
newconstructiontechnologies.Weplan
todevelopourexistingcast-on-site
technologywhileaddingmodular,cross-
laminatedtimberandmodernprefabrication
techniquestoourportfolio.Weexpect
thatthisstrategy,combinedwiththe
standardisationofourproductandfloor
plans,willenableustomeetchanging
customerdemandwhileachievingthe
efficiencyandprofitabilityrequiredto
providegoodshareholderreturns.
Globaltrendshavebeguntoimpact
residentialdevelopmentinRussia.
Homebuyers’expectationsaregrowing
withregardstofeaturesofferedby
aspecificbuilding,livingspaceand
surroundingarea,especiallyinMoscow
andStPetersburg.Demandhasincreased
duetorecordaffordability,buthasbeen
constrainedbythelimitedupsidepotential
ofRussianhouseholdincomesinthe
medium-term.Thischangingconsumer
landscaperequiresnewapproachesto
planningandconstruction,withcareful
attentionpaidtointegratingmodern
urbanplanningtechniqueswithnewand
efficientconstructiontechnologiestohelp
maintainmargins.
Wewillsupplementourlandbankstructure
withun-zonedlandinthecomingyears,as
weapplyourexpertiseinrezoningtoensure
developmentcanstartassoonaspossible.
Atthesametime,weplantoexplorenew
geographieswithinRussiabyacquiringlocal
developersandexpandingourgreenfield
investments.By2024,weexpectthat10%
ofourportfoliowillbeoutsideofMoscow
andStPetersburg.
Wealsoplantousedigitaltechnologies
toexpandthecustomerjourney.We
havealreadylaunchedanupdatetothe
MyEtalonHomeapp,whichprovides
customerswithsupportateverystagefrom
searchtopost-saleservices,andhave
enabledpartnerstointegrateadditional
offeringstoenhancethelivingexperiencein
Etalon-managedbuildings.
Basedonthesestrategicpriorities,wehave
setambitiousgoalsfor2024includinga
2xincreaseinvolumesunderconstruction
anddoubledigitsalesgrowth.Ournew
constructiontechnologies,newproduct
approachandfullydigitalcustomerjourney
shouldhelpEtalontoachievethehighest
NPSandCLVlevelswhileourindustry-
leadingprofitabilitywillsupportsalesgrowth.
Thesebusinesstargetsarejustpartof
theplanswehavefortheyearsahead.As
EtalonGroupgrowsasabusiness,wewill
continuetoenhanceourcorporategovern-
ancepractices.Wehaveexpandedthe
responsibilitiesoftheInformationDisclosure
Committee,andareusingfeedbackfrom
adetailedperceptionstudytoimproveour
practices.Inordertoimprovethealignment
ofmanagementandshareholderinter-
ests,wehavealsodevelopedtheGroup’s
incentiveprogrammes.Theshort-term
programmeisbasedonkeyperformance
metrics,whilethelong-termprogramme
focussesonEtalonGroup’smarketcapi-
talisation,withpay-outsdependenton
performanceoverthreeyears.
TheBoardisalsoworkingtoimproveEtalon
Group’sstanceonsustainability.Aspartof
this,wehaveselectedsixUnitedNations
SustainableDevelopmentGoalsasthe
pillarsofoursustainabilitydevelopment:
GoodHealthandWell-Being,Affordable
andCleanEnergy,Industry,Innovation
andInfrastructure,SustainableCitiesand
Communities,ResponsibleConsumption
andProductionandClimateAction.Weare
planningtodevelopourinternalregulatory
documentsintheseareasfurtherbyimple-
mentingnewmanagementprocessesand
disclosinganupdatedlistofnon-financial
informationinthenewintegratedannual
report.Wearealsoplanningtosetspecific
andambitiousESGtargets.
IamconfidentthatEtalonGrouphas
therightpeopleandtherightstrategyto
transformthebusinessinawaythatwill
supportgrowth,efficiencyandshareholder
returns.Wearedevelopingthefuturetoday!
SERGEY
EGOROV
Chairman of the
Board of Directors
Dear shareholders,
In November 2020, the management team and I
presented the Company’s new strategy to 2024. This
was a significant event not only because it marked the
largely successful completion of our previous strategy,
but also because it demonstrated the resilience of
our business: we were able to successfully develop
and approve an ambitious new development strategy
while navigating the many challenges presented by the
COVID-19 pandemic. This success would not have been
possible without the hard work and dedication of our
employees and to them I extend my sincerest gratitude.
22
INTRODUCTION
23
ANNUAL REPORT 2020
CEO’S
STATEMENT
Operating and financial
performance
InthefaceoftheCOVID-19pandemic,
EtalonGroup’sFY2020newcontractsales
cameto538thssqmofNSAwortharecord
RUB80billion.Cashcollectionsalsoseta
newall-timehighatRUB82billion.These
resultswerebetterthanevenourmost
optimisticupdatedforecastfortheyear.
Ourperformancewaspossiblethanksto
acombinationoffactors,includingtimely
stepsbyEtalonGrouptomovekeysales
functionsonline,statesupportintheformof
subsidisedmortgageratesandsolidprice
growthacrossourportfolio.
Newsalestechnologieslikedynamicpricing
enabledustorespondmorepreciselyand
flexiblytomarkettrends,contributingtoan
increaseintheaveragepriceforapartments
toRUB192thspersqm.Strongaverage
priceperformancewaslikewisesupported
byfurthergrowthintheshareofbusi-
ness-classprojectsintheportfolio.
RevenuefortheyeardeclinedtoRUB
78.7billion,butallkeyprofitabilitymetrics
improvedyear-on-year.Pre-PPAgrossprofit
increasedby13%toRUB25.8billion,
withpre-PPAgrossmarginof33%almost
reachingourstrategictargetof35%.Thanks
toongoingmeasurestocontrolcosts,SG&A
expensesdeclinedby19%year-on-year
andamountedto12%ofFY2020revenue.
Thiscontributedtoyear-on-yearpre-PPA
EBITDAgrowthof47%,whilepre-PPA
EBITDAmarginroseby8p.p.to21%.
EtalonGroupimproveditsnetcorporate
debt/pre-PPAEBITDAratioto1.2xasof
year-end2020,comparedwith1.9xayear
earlier.Thankstoourstablebalancesheet
andstrongcashcollections,weareinagood
positiontocontinuetoadheretoourdividend
policywhilealsoprioritisinginvestmentsin
replenishingourlandbankduring2021.
Responding to COVID-19
wasnoexception.Whileexternalfactorslike
thetemporaryconstructionbanimplemented
inMoscowandMoscowregionwerebeyond
ourcontrol,theconstructiontechnologythat
EtalonGroupusesenabledustoquickly
restartworkoncetherestrictionswerelifted,
andtoacceleratethepaceofconstructionin
ordertokeepprojectsonschedule.
TheCompany’sresponsetoCOVID-19
focusedonprotectingthesafetyofour
employeesandcustomers,whilealso
ensuringthesustainabilityofthebusiness.
Wetransferredthemajorityofouroffice
employeestoremoteworkingarrangements,
whilethosestillcomingtoworkhadregular
medicalcheckstopreventinfectionsfrom
spreadingintheoffice.Forcustomers,we
acceleratedtherolloutofonlineandvirtual
salesplatforms,minimisedtheamountof
paperworkrequiringin-personmeetingsand
participatedinonlinemortgageissuance
programmesofferedbybanksoperatingin
Russia.
Embarking on a new strategy
Wepresentedanewstrategyto2024in
November2020andhavealreadybegun
todeliverresults.Oneofthekeyareas
offocusisimplementingnewbuilding
technologiessuchasmodular,CLTand
modernprefabrication.Wearecurrently
workingonthesetechnologies,andweare
ontracktolaunchourfirstpilotCLT-based
project,subjecttofinalapproval,in2021,
withtheothertechnologiesduetolaunchin
2022–2023.
Usinginnovativetechnologiestoachieve
adigitaltransformationinourbusiness
practicesisanotherkeyareaoffocus.We
arealreadyusingelementsofanend-to-end
digitalarchitecturethatwillintegrate
processesfrommarketanalysisandsite
planningtoconstruction,salesandongoing
buildingservicing.Weexpectthatfull
implementationofthisdigitalarchitecture
willsignificantlyenhancetheefficiencyof
ourbusiness.
Thepastyearpresentedunprecedented
challengesforcompaniesacrossmany
sectorsallovertheworld.EtalonGroupand
theresidentialdevelopmentsectorinRussia
Aswelooktogrowthebusiness,weare
adaptingourlandbankstrategyandour
geographicfocus.Intheyearsahead,in
additiontozonedlandplots,wewillseekto
acquirelower-costunzonedplots,usingour
zoningexpertisetostreamlinetheprocess
ofacquiringthenecessaryprojectdocu-
mentation.Wewillalsobelookingoutside
ofMoscowandStPetersburgtootherlarge
Russiancitieswithsufficientdemand.While
pricesareloweroutsideofRussia’s“two
capitals”,weareconfidentthattheefficiency
ofourbusinessandqualityofouroffering
willenableEtalonGrouptoachieveattrac-
tivemargins.
Finally,weareusingdigitaltechnologiesto
transformthecustomerexperience.This
includesstandardisationofourproducts
usingautomatedplanningsoftwarethatwill
enableustooffercustomersthefeatures
theywantinalivingspacewhilemaximising
efficiencyforthebusiness.Wearealso
refiningtheEtalonwebplatformandMy
EtalonHomemobileapptocoverthefull
customerjourney,fromsearchanddiscovery
ofanewpropertytopurchaseandfinancing,
aswellasthetransferoflegaltitle,ongoing
paymentsandservicing.Weaimtofurther
enhancecustomerloyaltyandimprovethe
customerjourney.
Outlook
Weexpect2021tobeayearofgrowthfor
EtalonGroup.InMarch2021,weannounced
planstoconductapotentialSPOtofinance
acquisitionstoreplenishourlandbank.While
theglobaleconomyisstillbesetwiththe
COVID-19pandemic,demandforhousing
inRussiaremainssolid,andaverageprice
performanceinthenewyearhasbeenstrong.
Welookforwardtoreportingtoyouregularly
aboutourprogressagainstourupdated
strategy,andIamconfidentthatwewill
achievetransformativechangethatwill
enhancethevaluewecreateforallofour
stakeholders.
ThankyouforyourinterestinEtalonGroup.
GENNADIY
SHCHERBINA
Chief Executive Officer
Dear shareholders,
In 2020, Etalon Group successfully overcame the
challenges presented by the COVID-19 pandemic
to deliver record-setting operational performance
and solid financial results.
With a new strategy focused on innovation in
business processes and building techniques, as
well as expansion in existing and new geographies,
we have set a course to significantly grow the size
and value of our business in the years ahead.
24
MARKET OVERVIEW AND TRENDS
25
ANNUAL REPORT 2020
MARKET OVERVIEW
AND TRENDS
26 A new phase of competition
Market factors and their
29
impact on the main aspects
of our business
Supply and land availability
35
38 Construction costs
2 26
MARKET OVERVIEW AND TRENDS
27
ANNUAL REPORT 2020
A NEW PHASE
OF COMPETITION
Last year served as a catalyst for important structural
changes in the competitive landscape. The preconditions
for these changes had been forming over the past
several years. Despite the fact that the number of
permits issued and the availability of new projects in
Moscow and St Petersburg are decreasing, the country
as a whole has seen an increase in investment in
development sites. Market consolidation continues: the
top 20 players are consolidating their positions, and the
competition between them is increasing.
Owing to the need for better living
conditions and a more comfortable living
environment, the demand for residential
real estate in Russia is expected to
continue to grow in the long term. In order
to overcome the shortage of living space,
renovation of buildings built between the
1950s and 1970s and redevelopment of
unused sites in regions outside Moscow
and St Petersburg will remain a key part of
state policy. However, this has a positive
impact only on companies that are capable
of managing change and demonstrating
flexibility in understanding changing trends
and consumer preferences while reducing
product costs.
PRICE PER SQM VS DELIVERY
VOLUMES IN RUSSIA
PRICE GROWTH RATES
2020
15 %
10 %
5 %
0 %
Long-term trend
2019
-2 %
0 %
2 %
4 %
6 %
8 %
VOLUME
GROWTH RATES
Stabilisation of demand amid economic stabilisation
Increasing the volume of construction through state support measures and urban development
programmes in regions beyond Moscow and St Petersburg
Source: Etalon Group analysis of data from Dom.rf
Prior to 2020, housing prices grew at
moderate rates despite an acceleration in
supply volumes. Amid a contraction in the
market and interruptions to construction
projects in 2020, supply decreased; this,
combined with a rise in housing affordability
and increased ability to invest in upgrading to
new housing, contributed to a rise in prices.
Low interest rates together with the need
to improve living conditions will support
prices even after the end of the mortgage
rate subsidy programme. At the same time,
a recovery in supply volumes over the long
term will help to stabilise prices and prevent
the market from overheating.
MACROECONOMIC
CONTEXT
The Russian economy has
proven to be more resilient to
the impact of the pandemic
than European countries; this
fact will also make Russia
a leader in terms of the
expected rate of recovery.
At the end of 2020, Russia was one of the
countries least affected by the pandemic.
The World Bank identified several key
factors that contributed to this; in particular,
fiscal stimulus measures (at 4 % of GDP)
and an expansionary monetary policy
revitalised economic activity based on
domestic demand. There was no additional
downturn in the SME services sector, as
restrictive measures related to the spread
of the pandemic were not introduced
a second time. Despite the fact that
budgetary and financial support measures
in Russia were relatively small compared
with developed economies, they were in line
with the volume of assistance provided in
comparable economies. Targeted support
for major sectors of the economy, including
the construction industry, successfully
stabilised the economy. The result was
a less severe downturn with potential for
a faster recovery.
Based on forecasts from Oxford Economics
and the European Commission, this smaller
economic decline in 2020 means that net
economic growth for the period 2020 to
2022 is expected to be positive 1.1 % for
Russia, while the Eurozone will still be at
negative 0.6 %.
GDP CONTRACTION AND RECOVERY FORECASTS, % growth
Net growth by 2022
IN 2020
2.1
i
a
n
h
C
A
S
U
i
a
s
s
u
R
y
n
a
m
r
e
G
1
e
n
o
z
o
r
u
E
e
c
n
a
r
F
i
m
o
d
g
n
K
d
e
t
i
n
U
-3.5
-3.7
-6.0
-7.8
-9.8
-9.9
Source: Data from Oxford Economics, European Commission
IN 2021
IN 2022
8.4
4.1
1.7
3.5
4.2
3.4
4.5
5.5
4.2
3.1
3.4
3.0
3.4
6.6
10.5 %
>15 %
4.8 %
0.6 %
A
S
U
i
a
n
h
C
i
a
s
s
u
R
y
n
a
m
r
e
G
1
e
n
o
z
o
r
u
E
e
c
n
a
r
F
i
m
o
d
g
n
K
d
e
t
i
n
U
1.1 %
y
n
a
m
r
e
G
1.1 %
i
a
s
s
u
R
i
a
n
h
C
A
S
U
1
e
n
o
z
o
r
u
E
e
c
n
a
r
F
1.2 %
m
o
d
g
n
K
d
e
t
i
n
U
i
-2 %
-2.5 %
-3.6 %
-5.4 %
-6.4 %
-0.6 %
-3 %
1 The eurozone includes 28 countries
28
MARKET OVERVIEW AND TRENDS
29
ANNUAL REPORT 2020
Russian state policy priorities
include increasing the
affordability of housing and
improving the quality of living
conditions.
In terms of the availability of living space
per capita, Russia still trails even Eastern
Europe, where there is an average of 31
sqm of living space per person. According
to the Strategy for the Development of the
Housing Sector of the Russian Federation
to 2025, the target is to reach 30 sqm of
housing stock per capita.
At the same time, more than 60 % of the
housing stock in the largest cities was
built before 1990, and it does not meet
the standards that current buyers look for
when planning a purchase. According to
Russia’s Housing Ministry, about 35 % of
the country’s housing stock was built before
1970 and needs to be renovated.
MARKET FACTORS
AND THEIR IMPACT ON THE MAIN
ASPECTS OF OUR BUSINESS
AMOUNT OF LIVING SPACE,
sqm/person1
19
26
33
33
36
39
39
30 TARGET BY 2025
w
o
c
s
o
M
g
r
u
b
s
r
e
t
e
P
t
S
w
a
s
r
a
W
l
m
o
h
k
c
o
t
S
Source: Rosstat, national statistical agencies
s
i
r
a
P
n
i
l
r
e
B
e
m
o
R
DEMAND
FACTORS
Due to low interest rates on
bank deposits and the state
programme to subsidise
mortgages, demand for housing
increased significantly in 2020.
Falling interest rates and the introduction
of taxes on income from large investments
have led to a deceleration in bank deposit
growth, as this has become a less attractive
option for individual savings. Starting
from 2015, the rates on rouble deposits
have been steadily decreasing, and they
were just keeping up with consumer price
inflation in December 2020: deposits
offered an average return of 3.4 % versus
CPI of 3.99 %2. While total deposits in the
Russian banking system in 2020 grew by
RUB 2.0 trillion, the increase was in fact
the result of funds being put into escrow
accounts for the purchase of real estate
(RUB 0.8 trillion) and the revaluation of FX
deposits in RUB terms. Excluding these
two factors and taking into account a USD
9 billion outflow from FX deposits, in RUB
terms total deposits actually shrank by RUB
1.5 trillion during 2020.
HOUSING STOCK OLDER
THAN 1990
61 %
57 %
62 %
DEPOSITS AND
RETURNS
23.2
24.2
26.0
28.5
30.5
32.5
Net deposits excluding exchange rate
revaluation of USD during 2020 and the
increase in escrow accounts3, RUB trn
s
t
n
a
t
i
b
a
h
n
i
n
o
i
l
l
i
m
1
t
s
a
e
l
t
a
h
t
i
w
s
e
i
t
i
C
>60 %
OF THE HOUSING STOCK
IN THE LARGEST CITIES
WAS BUILT BEFORE 1990
w
o
c
s
o
M
g
r
u
b
s
r
e
t
e
P
t
S
Source: Etalon Group analysis
THE STATE’S TARGET
PRIORITIES IN TERMS OF
HOUSING CONSTRUCTION ARE
TO IMPROVE THE HOUSING
CONDITIONS FOR AT LEAST
TO INCREASE CONSTRUCTION
VOLUMES TO AT LEAST
5
MLN FAMILIES
ANNUALLY
120 MLN SQM
PER YEAR
8.4 %
6.5 %
0.8
0.7
transferred to escrow
accounts
taken from
USD deposits
5.6 %
5.3 %
4.7 %
1.5
trn RUB
decrease
31 actual amount of deposits
in 2019 terms
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
3.4 %
0
2
0
2
Deposits, trn RUB
Interest rate on deposits
Source: Bank of Russia, National Rating Agency
1 Figures for 2019
2 Bank of Russia
3 Individual amounts in escrow accounts are recognised as savings according to the Bank of Russia’s methodology; however,
these sums were invested in real estate purchases and, in general, cannot be considered savings
30
MARKET OVERVIEW AND TRENDS
31
ANNUAL REPORT 2020
In addition, in 2020, mortgage rates in Russia declined at one of the fastest rates in the
world (down 170 basis points) compared with large economies such as Mexico, India and
Brazil that have traditionally high rates. This made housing investments a more attractive
option for investing savings in Russia.
Wage growth in St Petersburg and Moscow noticeably outpaced the growth in price
per sqm of housing, even amid the uncertain financial situation in service industries in 2020.
There was a similar trend in other major cities across the country.
DECREASE IN MORTGAGE RATES IN THE BIGGEST ECONOMIES IN 1H 2020
Western European countries
Eastern European countries
Developing countries
MORTGAGE RATE
11.0 %
Mexico
India
7.0 %
Brazil
Russia
Turkey
South
Africa
3.0 %
-25
-1.0 %
Hungary
USA
UK
Netherland
50
125
200
275
MORTGAGE RATE DECREASE IN BASIS POINTS FROM 4Q 2019 TO 2Q 2020
Source: Bank of Russia, data from The
Global Economy, the National Bank of
Mexico, the Central Bank of India, the FBN,
GOV.UK, the IMF
The notable decrease in mortgage rates in Russia in 2020 supported a general trend towards
record housing affordability despite a temporary drop in real incomes. Housing affordability
in Moscow, St Petersburg and across Russia as a whole has generally improved at a steady
pace over the last five years.
HOUSING AFFORDABILITY AND MORTGAGE RATES1
Affordability
Mortgage rate
MOSCOW
ST PETERSBURG
RUSSIA
1.4x
1.6x
1.7x
1.9x
2.0x
2.2x
1.6x
1.9x
2.0x
2.2x
2.1x
2.4x
1.6x
1.7x
1.9x
2.1x
2.1x
2.4x
13.3 %
12.4 %
13.2 %
12.1 %
13.4 %
12.5 %
10.7 %
10.7 %
9.6 %
9.9 %
9.6 %
9.9 %
10.6 %
9.6 %
9.9 %
GROWTH IN REAL ESTATE PRICES AND WAGES SINCE 2013
Wage growth rate
Price growth rate per sqm
Demand potential
THE LARGEST REGIONAL
METROPOLITAN AREAS
MOSCOW
ST PETERSBURG
105 %
37 %
30 %
11 %
11 %
8 %
76 %
31 %
26 %
19 %
17 %
10 %
93 %
56 %
45 %
10 %
10 %
8 %
2013
2014
2015
2016
2017
2018
2019
2020
2013
2014
2015
2016
2017
2018
2019
2020
2013
2014
2015
2016
2017
2018
2019
2020
Source: Rosstat, Dom.rf, Etalon Group analysis
Another factor that made investments in
real estate more attractive for individuals
was the transition to the use of project
financing and escrow accounts in the
residential development sector, which made
it possible to provide full state guarantees
for investments in housing still under
construction.
In December 2020, the volume of housing
under construction in Russia using the new
rules, which require that funds from buyers
be held in escrow accounts, exceeded the
volume under the old rules. According to
a joint survey by the Russian Public Opinion
Research Centre and Dom.rf, about 80 %
of Russians have a positive opinion of the
reform; 77 % note that, thanks to the reform,
the risks to homebuyers at the construction
stage have decreased.
The amount of funds that buyers of housing
during the construction stage in Russia
paid into escrow accounts increased
eightfold over the year: as of 1 January
2021, according to the Bank of Russia,
RUB 1.19 trillion had been placed in
escrow for development project financing.
In St Petersburg, escrow account balances
increased almost twentyfold; in Moscow,
growth was comparable to the national
average.
INCREASE IN DEVELOPER
ESCROW ACCOUNT
BALANCES FOR 2020, BLN RUB
RUSSIA
MOSCOW
ST PETERSBURG
148
1,192
69
523
3
60
8x
7.5x
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
7.8 %
0
2
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
7.7 %
0
2
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
7.6 %
0
2
0
2
9
1
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
19x
0
2
0
2
9
1
0
2
Source: Rosstat, Bank of Russia, Etalon Group analysis
Source: Bank of Russia, Etalon Group analysis
1 Ratio of average salary to average annuity payment
32
MARKET OVERVIEW AND TRENDS
33
ANNUAL REPORT 2020
DEPENDENCE OF MORTGAGE RATE
ON REPAYMENT TERM, 2010–2020
Current rates
Estimated values
15
13
11
9
7
5
3
160
200
240
280
320
360
Source: Bank of Russia, Etalon Group analysis
We estimate that 99 mln sqm of additional
demand was created in our core
geographies of Moscow and St Petersburg
as a result of the sharp decline in mortgage
rates in 2020. If mortgage rates continue
to fall from an average of 7.6 % to 7.0 %
by 2024, and if mortgage repayment
durations continue to improve, we estimate
further additional housing demand of 32 mln
sqm. Taking into account the current supply
volume, estimated at 46 mln sqm, as well as
the annual rate of property sales, it would
therefore take up to 20 years to fully meet
existing demand. A portion of the demand in
the lower price segment can be met through
Russia’s ongoing housing renovation
programme; however, a considerable share
of solvent buyers will continue to look
to purchase higher-quality properties.
SUPPLY AND DEMAND
IN MOSCOW AND
ST PETERSBURG
2020–2024, mln sqm
MORTGAGE RATE
9.0 %
-1.4 %
-0.6 %
7.6 %
7.0 %
991
9
202
321
46
Average term
280 (+50 months)
188
112
Average term
230 (+30 months)
Demand
2019
Additional
demand
2020
Supply 2020
(actual)
Demand
2020
Additional
demand
2021–2024
Supply
2021–2024
Demand
2024
Source: Etalon Group analysis of data from the Bank of Russia, Rosstat
A major factor supporting
demand in the long term will
be a change in the makeup of
buyers and their demands for
product quality.
In 2015, only 26 % of residential real estate
buyers were under the age of 40; now
millennials and older members of Generation
Z account for about 60 % of the demand for
residential real estate. As a rule, these are
people who did not have privatised housing
and who made their first and subsequent
purchases using mortgage financing,
which prompted them—with their limited
resources—to look for the best quality they
could get on their available budget.
SHARE OF
GENERATIONS Y AND
Z (UNDER 40) WITHOUT
PRIVATISED HOUSING
Generation Y (25–40)
Generation Z (<25)
2015
2020
Source: Etalon Group analysis
26 %
58 %
53 %
5 %
1 Includes mortgage rate decrease, term increase, impact of wages increase and of change in GDP
MORTGAGE RATE, %MORTGAGE REPAYMENT TERM, MONTHS 34
MARKET OVERVIEW AND TRENDS
35
ANNUAL REPORT 2020
The Russian state is taking
unprecedented measures to
support this category of potential
homebuyers, in the form of various
tax deductions and programmes
to support families with children
The share of people in Moscow who
were able to buy an apartment with
a mortgage in 2020 increased to 40 % of
total households; in Russia as a whole,
this figure reached 50 % on average. It is
precisely this generational shift, supported
by record affordability in Etalon Group’s
core geographies, that is creating the
preconditions for sustainable demand even
after the preferential mortgage programme
is phased out in July 2021.
SUPPLY AND LAND
AVAILABILITY
STATE SUPPORT PROGRAMMES FOR THE POPULATION
Up to RUB 1 mln
in state support for
families with children
Up to RUB 520 ths
in tax subsidies for the
purchase of real estate
Up to RUB 436 ths
in support for families from
regions outside Moscow
and St Petersburg
Up to RUB 390 ths
in tax subsidies for mortgage
interest payments
The change in industry regulations
together with an expanded role
for banks is facilitating a further
reduction in supply.
The general decline in the number of building
permits issued is driving a continuation in the
contraction in supply that began earlier. The
overall number of building permits issued
for housing in Moscow and St Petersburg
decreased by 14 % year-on-year in 2020.
The number of building permits issued in
St Petersburg decreased by 44 % year-on-
year in 2020. In Moscow, the number of
permits increased by 8 % year-on-year, but
the volume of housing covered by the 2020
permits represented a decrease of 48 %
year-on-year.
The cost of changing the permitted use
of a project in Moscow, depending on
the complexity of the project and its
location, is becoming a regular part of
the acquisition of land plots. This factor
also holds back small players. The cost of
changing the permitted use will represent
a significant part of the budgets for
development projects in New Moscow,
which, before the change, already
accounted for about 10 –15 % of the total
investment.
Source: Bank of Russia, Etalon Group analysis
UP TO RUB
2.3
MLN
NUMBER OF BUILDING
PERMITS ISSUED FOR HOUSING
DEVELOPMENT
394
554
457
745
208
179
Generational changes in the
consumer makeup are also having
an impact on market development
in terms of consumer preferences;
young people (late Generation Y
and Generation Z) value different
characteristics than Generation X,
and they are willing to pay extra
for them.
About 70 % of Generations Y and Z are
ready to increase their purchase budget
if residential properties are more energy-
efficient, have all the necessary amenities
and are made of more environmentally
friendly materials.
According to a joint study by Etalon Group
and the research company Celebrium-X,
safety is a common value shared by all
groups of buyers purchasing business-
class homes: they are all willing to pay
extra for a well-lit courtyard; they all
understand the additional costs of providing
around-the-clock security; the vast majority
would agree to pay more for an apartment
if the residential complex provided a facial
recognition system at the entrance to the
property grounds and an around-the-clock
concierge service. Smart home systems
are another common preference for
consumers. Nearly all respondents agree
(with a confidence index of 69–75) that this
option costs extra, and they’re willing to pay
more.
Buyers are demanding greater variety and
the ability to choose. There is growing
demand for the development of mixed
types of residential spaces, where there
is an opportunity for the development
of new-economy clusters and creative
industries: for example, modern studios
where one can live and work (light industrial)
or office space for small businesses on
the ground floors of buildings where
the employees of those businesses live
(live & work).
271
-72 %
239
315
181
213
220
474
237
-14 %
88
120
49
130
2015
2016
2017
2018
2019
2020
Moscow
St Petersburg
Source: Federal Service for State Registration, Cadastre and Cartography; State
Construction and Expert Review Service of St Petersburg; Committee of State Construction
Supervision of Moscow
36
MARKET OVERVIEW AND TRENDS
37
ANNUAL REPORT 2020
Developers have started to build
up their portfolios again, while the
number of sites is decreasing;
competition for new land among
the top 20 players is increasing,
driven by industry consolidation
in key regions.
CHANGES IN THE SHARE
OF INVESTMENTS IN SITES FOR
HOUSING DEVELOPMENT IN THE
OVERALL STRUCTURE OF REAL
ESTATE INVESTMENTS
Investments in residential development
sites continue to grow in terms of total
investment in major real estate markets.
After a decline in investments in 2016–2017
amid the transition to new industry
regulations, investors started to increase
investments to replenish their project
portfolios: investments in development sites
as a share of total investments in real estate
has roughly doubled each year, from 5 % in
2017 to 50 % in 2020. This reflects investors’
growing interest in the expansion of the
development business.
19 %
5 %
12 %
23 %
50 %
This is largely due to the fact that project
financing is too expensive for small players
but comfortable for market leaders; these
larger companies often prefer to use projects
owned by smaller industry players to expand
their own portfolios. Accumulating sufficient
reserves in escrow accounts to qualify for
reduced rates is a difficult challenge for
second-tier developers.
In Russia’s regions outside Moscow and
St Petersburg, this change in regulations
could even lead to a situation where local
players are unable to start new projects.
We believe that this creates an opportunity
for the largest “federal” players to enter new
regions and consolidate a significant market
share for themselves.
An additional factor holding back the rapid
growth of supply is the shortage of quality
land plots in Moscow and St Petersburg.
Only 8 % of land plots have all the permits
required for development. Another
60 % have only a portion of the required
documentation.
SHORTAGE OF LAND SUITABLE
FOR BUILDING IN MOSCOW
AND ST PETERSBURG
32 %
Non-zoned
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Source: Knight Frank
The consolidation trend in the industry continues and is picking up pace. By 2023 the top
20 developers are expected to account for a record 57 % of the supply in Moscow and
St Petersburg, while the number of small and medium-sized players will continue to decline.
THE TOP 20 DEVELOPERS WILL
STRENGTHEN THEIR POSITION
Total deliveries, mln sqm
Share of the top 20
16.0
16.4
17.1
14.0
32.6
60 %
Part of urban planning
documentation
8 %
Complete
urban planning
documentation
Source: Real Estate and Construction journal
57 %
3
2
0
2
–
1
2
0
2
40 %
39 %
45 %
46 %
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Source: Etalon Group analysis of ERZ data
Longer-term, the conditions for
entry into projects and the role
of the developer will change; the
ability to address the needs of
a wide range of stakeholders is
becoming an important attribute.
Today the concept of housing quality is
inextricably linked with the quality of the
living environment and lifestyle; it includes
the functionality of residential districts and
the development of local facilities, transport
accessibility, the provision of social
infrastructure facilities, the connectivity of
pedestrian routes and the zoning of property
grounds and common areas.
One indicator of the quality of urban master
planning in cities is the ability to propose
a strategy for sustainable economic
development and the well-being of
residents. Spatial planning documents are
increasingly focused on structuring mutually
beneficial terms and distributing risks
between city businesses, property owners,
city administrations and developers. Key
targets for development projects are no
longer square metres but indicators such
as declining unemployment, the percentage
of people employed in the service and
innovation economy, improvements in
public health and the city’s economic
growth.
The ability to structure high-yield projects
that have a considerable positive
socioeconomic impact on the area will
play an increasing role in real estate
development companies’ business models.
38
MARKET OVERVIEW AND TRENDS
39
ANNUAL REPORT 2020
CONSTRUCTION COSTS
Temporary cost increases
during the COVID period are
not long-term.
Last year, the introduction of restrictions
resulted in a labour shortage at construction
sites and an increase in costs related
to workplace management during the
pandemic. The depreciation of the rouble
and a rise in prices for rolled steel and
rebar, which are key materials used in
construction, also impacted construction
costs in 2020. At the same time, temporary
regulatory measures taken by the
government have stabilised the situation.
The average increase in construction costs
in Russia during 2020 was below 1 %.
Streamlining production
processes and cost reductions
will enable business expansion
and entry into regional markets
over the long term.
In contrast to Moscow and St Petersburg,
where the largest developers have focused
their operations, the regional market remains
largely fragmented. In Russia’s biggest
cities, the share of the top 20 players
is about 6 %; in 2020, they delivered
around 0.5 mln sqm out of total deliveries
of 8 mln sqm.
At the same time, both the volume of new
housing and the number of building permits
issued are decreasing in regional markets,
while new housing volumes in the traditional
regions of operations of St Petersburg
and Moscow, which is dominated by large
federal players, remain above 2015 levels,
despite recent declines.
NEW HOUSING SUPPLY, mln sqm
Mln sqm
Linear trend
ST PETERSBURG
MOSCOW
THE LARGEST REGIONAL
METROPOLITAN AREAS
4.0
5.2
23.6
5.0
3.5
3.5
3.4
3.9
3.1
3.0
3.4
3.4
3.5
22.0
22.6
21.9
20.6
20.5
2015
2016
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
Source: Unified Interdepartmental Statistical
Information System
The implementation of a renovation
programme and integrated development
projects in regions beyond Moscow and
St Petersburg will require the involvement
of large professional players. Their
participation in official renovation projects,
accompanied by opportunities to develop
large land plots, will not only reduce the
risk of low-quality supply but also help
to ensure that new residential areas are
created with adequate consideration for
creating jobs and social infrastructure. Cities
that choose this approach will benefit from
the large-scale redevelopment experience
of major federal players in developing
a comprehensive master plan, as opposed
to dividing territories up into small plots
for individual development by small local
players.
Moreover, involvement of federal players
that are likely to expand into regions outside
Moscow and St Petersburg will make it
possible to achieve the target indicators of
the Housing National Project, which calls
for the delivery of 120 mln sqm of housing
per year.
SHARE OF NEW HOUSING SUPPLY AND POTENTIAL UNDER THE NATIONAL PROGRAMME
11 %
Moscow and
St Petersburg
27 %
Large cities
62 %
Other regions
Source: Unified Interdepartmental Statistical
Information System, Dom.rf, Etalon Group analysis
SUPPLY IN 2020:
80.5
MLN SQM /
YEAR
120
MLN SQM / YEAR
POTENTIAL BY 2025:
39.5
MLN SQM /
YEAR
CHANGES IN THE CONSTRUCTION
COST AND AVERAGE PRICE PER
SQM OF HOUSING IN THE LARGEST
METROPOLITAN AREAS OUTSIDE
MOSCOW AND ST PETERSBURG
In turn, rising housing prices in the past year created the preconditions for large developers
to enter regions beyond Moscow and St Petersburg.
Price, cities with at least 1 million inhabitants
Cost, cities with at least 1 million inhabitants (growth rate)
PERIOD OF DECLINE
IN PROFITABILITY
PERIOD OF RECOVERY
IN PROFITABILITY
6 %
1 %
4 %
-0.4 %
-0.2 %
-3 %
7 %
5 %
6 %
2 %
5 %
1 %
2015
2016
2017
2018
2019
2020
Source: Unified Interdepartmental Statistical Information System, Dom.rf, Etalon Group analysis
Lower average prices in regional markets
mean that effective cost control measures
are necessary to achieve profitability levels
comparable to Moscow and St Petersburg.
The ability to offer a quality product at
affordable prices will remain a key factor for
successful expansion in regional markets
outside Russia’s two largest cities.
information exchange between all
project participants
• standardising and optimising their
product, including by increasing net
sellable area by correctly designing
partition walls, creating useful niches
and controlling the thickness of interior
partition walls.
To achieve this by optimising their value
chains, construction companies are:
•
improving the precision and depth
of exploratory studies, including by
working with big data analytics
• using technologies and materials that
reduce labour costs or the time needed
for construction and installation works
implementing BIM technologies and
developing tools for collaboration and
•
In the future, once the impact of these
steps has been exhausted, changes in
construction technologies should create
additional opportunities to further improve
management of costs and construction
timelines. One significant trend, for example,
is the shift towards modularisation and
off-site production, which should rebalance
the construction value chain.
40
MARKET OVERVIEW AND TRENDS
41
ANNUAL REPORT 2020
McKinsey & Company
forecast significant changes
in the construction business
value chain
New production technologies provide
opportunities like industrialisation and a shift
toward off-site production. Such changes
could lead to a 15 –20 % decrease in costs.
per year. Worldwide, labour productivity
growth in construction has averaged only
1 % a year over the past two decades,
compared with growth of 2.8 % for the total
world economy and 3.6 % in manufacturing.
The construction industry holds great
potential for players able to quickly innovate
and achieve productivity gains to achieve
significant breakthroughs compared
to peers. According to an analysis by
McKinsey, the industry globally loses about
USD 1.6 trillion in economic value added
Significant factors behind low productivity
in the construction industry include poor
project management and execution,
inadequate skills, inadequate design
processes, and inadequate investment
in skills development, R&D and innovation.
AVERAGE VALUE ADDED BY EMPLOYEES PER HOUR WORKED
PRODUCTIVITY LAG
1.63 TRN
USD
Source: McKinsey & Company
37/hour
25/hour
Global economy
Global construction sector
TECHNOLOGICAL IMPACT ON REDISTRIBUTION
IN THE VALUE CHAIN BY 2025, % value in productised value chain
Remaining value added
Value shifted
Value at risk
2 %
11 %
12 %
16 %
9 %
14 %
11 %
3 %
31 %
25 %
12 %
To achieve these structural changes,
companies need to develop their own R&D
capabilities, which initially will inevitably
affect the cost of the product. According
to McKinsey & Company data, global R&D
spending by the top 2,500 construction
companies grew by 77 % from 2013 to
2017. In addition, nearly two-thirds of the
interviewed decision-makers believe that
the COVID-19 crisis will accelerate industry
transformation, and half have already raised
investment in line with the shifts.
In Russia, where demand is heightened due
to the attractiveness of housing as a way
of investing savings and measures to make
housing more affordable, companies still
have an opportunity to revise their business
models and to introduce new technological
solutions that will radically change the
quality and speed of construction.
An overall assessment of the factors that
are going to influence the growth of the
development business indicates that there
is great potential for development in the
long term despite increasing competition.
30 %
15 %
ASSESSMENT OF FACTORS AFFECTING THE MAIN
COMPONENTS OF THE BUSINESS
Business impact
Positive
Negative
Negligble
OVERALL ASSESSMENT OF THE IMPACT OF FACTORS
BUSINESS MODEL COMPONENTS
Previously
In the short term
In the long term
SALES
1 %
2 %
3 %
1 %
1 %
1 %
2 %
5 %
AVAILABILITY OF SITES
AND TERMS OF ENTRY
CONSTRUCTION COST
1 %
1 %
9 %
9 %
15 %
8 %
12 %
9 %
3 %
1 %
10 %
7 %
IT solutions
Working
with land
Design and
engineering
Production
of materials
Production of
components
Equipment
manufacturing
Material
logistics
Equipment
leasing
Off-site
production
Primary
developer
Specialist
contractors
Source: McKinsey & Company
Source: Etalon Group analysis
Challenges requiring market leaders
to review their strategies
42
STRATEGY
43
ANNUAL REPORT 2020
STRATEGY
44 Strategy overview
46
The strategy to 2024 aims to reinvent
each step of the value chain
48 Ways to achieve our strategic goals
60
61 Financial targets
Our ambitions on the strategic horizon
44
STRATEGY
45
ANNUAL REPORT 2020
Our strategy is aimed
at strengthening Etalon
Group’s leading position
in residential development
and creating a product
that exceeds customers’
expectations. We see the
path to achieving these
goals in the development
of sound and sustainable
solutions that are based on
new technologies and that
meet the needs of society –
both today and in the future.
With the fast pace of change,
industry development trends and an
understanding of available resources
in mind, our strategy involves
rethinking all business processes:
from the purchase of land and project
design to construction, sales and living
in our residential complexes.
STRATEGY
OVERVIEW
Etalon Group’s previous strategy, which was presented
to the market in 2017, proved to be quite successful,
despite the fact that certain circumstances beyond our
control prevented us from meeting all of our targets.
RESULTS OF 2017–2021
STRATEGY IMPLEMENTATION
STRATEGIC GOALS STATED IN 2017
TARGET
STATUS
1
2
3
4
5
TO BECOME ONE OF THE LARGEST
DEVELOPERS IN THE ST PETERSBURG
AND MOSCOW MARKETS
TO BECOME ONE OF THE MOST
PROFITABLE PLAYERS IN THE RUSSIAN
RESIDENTIAL DEVELOPMENT MARKET
TO MAINTAIN A STRONG
FINANCIAL POSITION
TO CONTINUOUSLY INCREASE DIVIDEND
DISTRIBUTION
TO MAINTAIN A DISCIPLINED APPROACH
TO REGIONAL EXPANSION AND ACHIEVE
FURTHER PORTFOLIO DIVERSIFICATION
15%
MARKET SHARE IN
ST PETERSBURG
7%
IN MOSCOW
20%
CAGR FOR NET INCOME
2x
NET DEBT / EBITDA RATIO
40% 70%
OF IFRS NET PROFIT
ONLY VALUE-ACCRETIVE
EXPANSION
Successfully achieved in Moscow with
7 % market share
Failed in St Petersburg due to lack of
appropriate land bank
Failed to achieve due to weaker profitability
and numerous accounting adjustments
1.9х net corporate debt / pre-PPA EBITDA
despite large-scale M&A transaction in 2019
Despite a low net profit base, Etalon
updated its dividend policy, introducing
a guaranteed minimum dividend of
RUB 12 per GDR/share
Successful entry into business- and
premium-class segments with higher profit
margins
Avoided expansion into new regions, with
current product focused on Moscow and
St Petersburg
46
STRATEGY
47
ANNUAL REPORT 2020
THE STRATEGY TO 2024
AIMS TO REINVENT
EACH STEP OF THE
VALUE CHAIN
Current conditions and trends in industry development, as well as the
goal of improving business efficiency in changed circumstances, have
led us to a radical revision of our business model and the formation
of a new strategy to 2024. With the fast pace of change and an
understanding of available resources in mind, the strategy involves –
with fairly limited investments – the renewal of all business processes.
L A N D BANK
N D D I G I T A L ARC
HIT
E
E
-
O
D - T
N
E
C
T
U
R
D
E
E
S
I
G
N
PARTNERS
AND SUPPLIERS
NETWORK
S
A
L
E
S
MANAGEMENT
CONSTRU C T I O N
1
Long-term focus on
replenishing the land bank,
supported by the acquisition of
unzoned plots, broadening the
geography of projects through
expansion and inorganic
development
KEY EXPECTED RESULTS:
•
increase in portfolio size to
over 6 mln sqm
• a balanced structure of
land assets and long-term
growth in sales
2
3
4
5
6
Design based on modern
principles and urban
planning standards, offering
in-demand housing formats and
surroundings
KEY EXPECTED RESULTS:
•
improved product quality
• highly transparent processes
reduction of the time frame
•
from site search to the start
of construction by up to six
months
• creation of a unified system
for standardised design and
implementation of R&D
Speed and cost leadership
thanks to product
standardisation across the
entire range and leadership in
new building technologies
KEY EXPECTED RESULTS:
• pre-PPA gross profit margin
•
of 35%
twofold increase in
construction volumes with
stable overhead costs
KEY EXPECTED RESULTS:
• sustained double-digit sales
growth with the industry’s
highest NPS and CLV scores
reduction of marketing costs
by up to 20%
•
Extending the life cycle of
interaction with customers
based on an understanding
of their expectations from the
purchase of a new property
through inhabitancy and the
use of services
Product personalisation and the
tailoring of promotions through
big data analysis and the use of
artificial intelligence
End-to-end data transfer
across the entire value chain
through the introduction of a
unified digital architecture
KEY EXPECTED RESULTS:
• Decrease in SG&A to
revenue to the level of
4.5–5.5%
Leadership through
partnership and the creation
of a best-in-class platform for
housing construction
KEY EXPECTED RESULTS:
• A new management model
with seamless architecture
that is open to partners
and suppliers, enabling
rapid innovation and cost
reduction
PRINCIPLES
FOR ACHIEVING
STRATEGIC GOALS
•
Innovation: new
technologies and standards
enable us to achieve
new goals in the market
by reducing costs and
increasing the efficiency of
business processes
• Customer-centricity allows
us to prioritise the main
features of our product
and customer experience,
putting customer needs
at the heart of our
efforts to improve our
management model
• The sustainability of
solutions and processes
underlying the development
of our business allows us to
contribute in a meaningful
way to improving the
sustainability of the cities
where we operate
48
STRATEGY
49
ANNUAL REPORT 2020
WAYS TO ACHIEVE
OUR STRATEGIC GOALS
1
PARTNERS
Joint ventures
Share participation
Long-term exclusive
agreements
INTRODUCTION OF A UNIFIED
DIGITAL ARCHITECTURE
Our business will employ a digital architecture that enables
end-to-end data transfer across the entire value chain.
Our openness to new partners and suppliers will enable us to
build competencies quickly and at minimal cost. To do this, we
are implementing the Etalon.Partnership programme, which any
company or start-up can take part in.
UNIFIED
CLOUD-BASED
DIGITAL
PLATFORM
End-to-end data
transfer for the overall
value chain
In selecting each new project with the help
of an automated land search system, and
taking into account the customer experience
for comparable projects, we will decide
which product is best suited to a particular
location.
A big data-driven predictive analytics
system will analyse the current and future
competitive environment for any promising
project, as well as price levels and possible
volumes of property sales.
After building a GIS map of the area, the
computer-aided design system will make it
possible:
•
•
•
•
•
to develop a detailed master plan and
project budget in just one day,
to begin preparing the design and
working documentation,
to complete a project appraisal in a
completely electronic format,
to quickly transfer data to the BIM
environment and modify projects
manually, and
to subsequently use the design model to
supervise and coordinate construction.
This will enable Etalon Group to make all
processes as transparent as possible, to
reduce costs considerably and also to
shorten the time frame from site search to
the start of construction by up to six months.
After the completion of construction, the
design model in the BIM system will be
transferred to the service company, which
will then be able to use it for current and
future building repairs and renovations.
In addition, we will continue to collect
feedback from residents of the new
property to further improve our product.
This creates a closed loop aimed at the
constant improvement of our product and
the customer experience.
End-to-end digital architecture
saves time, money and materials
PRICING AND PRODUCT
LIMITATIONS INPUTS
MARKET
ANALYSIS
Big data system for real-time
and forecast data analysis (price,
demand, supply and competition
level for each particular location)
Automated screening of
appropriate land plots
Inputs for further
product improvement
GO/NO-GO
DECISION
MASTER PLANNING
AND CONCEPT
Express masterplan and budget
Automated data transfer to
BIM Revit
GIS
Land scanning with drones and
transfer to automated master-
planning solution
Deep integration with third-party
GIS services
DESIGN
Automated project documentation
Online permitting process
Automated working documentation
Full integration to BIM Revit
99% ACCURACY
AT MASTER-PLANNING STAGE
CONSTRUCTION
BIM 360 Build model for
construction coordination
and control
Dashboard for real-time cost
control
SERVICE
BIM model for ongoing
maintenance and building
repairment
Proposal request
Tendering best price
SUPPLIERS
Value for money solution
implementation
Materials and components
supply at contracted price
REDUCTION IN TIME FRAME BY UP TO 6 MONTHS
LIMITATION OF PREDEVELOPMENT STAGE EXPENSES
SALES
Feedback from Etalon
property residents
REAL-TIME MONITORING
OF COSTS AND TIMING
PRODUCT
FEEDBACK
50
STRATEGY
51
ANNUAL REPORT 2020
2
DESIGN AUTOMATION
The computer-aided design system uses a library of
standardised structural elements to create a large number of
unique product options in line with specifications. At the same
time, the quality of design solutions will improve, while the costs
and time frames for preparation of the design documentation
will be reduced. In addition, the system makes it possible to
continuously develop standardised projects to keep them up to
date and in line with customer requests.
DESIGN STAGE
AUTOMATION
Facade and engineering
solutions for each
residential property class
(Etalon.Start, Etalon.Comfort
and Etalon.Plus)
Different housing
construction technologies
(cast-on-site, modular,
CLT and prefabrication)
Target mixture
of studios, 1-, 2-
and 3+ bedroom
apartments
Library of
standardised built-in
commercial layouts
Library of
standardised
apartment
layouts
Standardised
social infrastructure
layouts
During the reporting year, we agreed on
an exclusive partnership with a leading
Russian design automation company. To
further improve our system, a joint venture
was created that will deal with modifications
and fine-tuning, including for more complex
tasks facing Etalon Group.
The system already makes it possible to
choose the technology to be used for the
construction of a property, factoring in
the potential of the land plot. In the near
future, we plan to automate the master-
planning stage, which will enable us, right
up to the moment of acquiring a project,
to understand its future economics –
in just one day – with a high degree of
accuracy. By 2022, we plan to automate
the process of preparing design and
working documentation, to integrate
outgoing estimates from our system with
suppliers’ databases and also to enable
online certification of all of our new projects
thanks to the complete integration of our
CAD system with BIM Revit.
INPUT
MAINTAINING A DIVERSE
OFFERING WHILE
STANDARDISING OUR
PRODUCT
MULTIPLE
COMBINATIONS OF
REPEATED ELEMENTS
STANDARDISED
SECTION LAYOUTS
STANDARDISED
MASTER PLAN LAYOUT
TOWER
TOWER
TOWER 1
ZIL-YUG STAGE 1
STAND-ALONE
SECTION
CORNER
SECTION
TOWER 2
Multiple combinations
based on standardised
elements
Different buildings —
same approach
Fitted to the form of
each land plot
Same building – different
apartment layouts for
each floor
AUTOMATION
Automated master plan for each
construction technology and property class
Detailed budget and output for
RFP to suppliers
Full integration with BIM Revit
Online project certification
Automated project and working
documentation underway
R
E
S
U
L
T
S
Go/no-go
decision-making before land
acquisition backed by detailed
information on potential project
(99% accuracy)
One-day master-
planning stage
Full design stage
automation by 2022
(incl. project and working
documentation)
52
STRATEGY
53
ANNUAL REPORT 2020
3
MODULAR
CONSTRUCTION
CONSTRUCTION USING
CLT PANELS
MODERN
PREFABRICATION
STATE-OF-THE-ART
INDUSTRIAL TECHNOLOGIES
FOR HOUSING CONSTRUCTION
Achieving cost leadership is impossible without improving the
construction process for residential properties. As part of our
new strategy, we plan to supplement a technology we have
traditionally used – cast-on-site construction – with three new
methods of industrial housing construction:
ADVANTAGES:
• 40% shorter construction cycle
• >20% lower construction costs
• Limited CAPEX
• Zero waste
• Fully fitted out
FOCUS AREA
Short term:
• Apartments (as developer)
• Hotels (as general contractor)
Medium term:
•
Etalon.Start and Etalon.Comfort
residential buildings for mass- and
mid-market segments
We are developing modular technology
in Russia in partnership with a British
company. In 2021, we plan to begin the
process of certifying the technology for the
construction of multi-apartment residential
buildings, and also to roll out a mobile
factory on the grounds of our ZIL-Yug
project for the production of modules.
Before we receive full housing construction
certification, we will be able to launch
pilot projects in the form of non-residential
apartments, while also acting as a general
contractor and supplier of modules for the
construction of modular hotels. We plan
to launch our first project using modular
technology in 2022.
• 25% shorter construction cycle
• Same costs as cast-on-site
• No CAPEX
• Same strength as monolithic technology
• Climate positive
• Acoustic advantage
Short term:
• Facades for residential buildings
• Hybrid CLT apartments (as developer)
• Office buildings (as general contractor)
Medium term:
The first pilot project using hybrid
technology is planned for launch at the
end of 2021 in collaboration with Segezha
Group. Thanks to the exclusive terms of
cooperation, we were able to jointly develop
a project concept and adapt production to
the concept.
• Etalon.Plus residential buildings for the
high-end segment
In the near future, we plan to use CLT for
our buildings’ facade elements and for the
construction of non-residential apartments
in the upper price segment for this
technology, and also for the construction
of office buildings as a general contractor.
On the strategic horizon, we, together
with Segezha Group, expect to complete
the certification of the technology for the
construction of residential complexes in
the upper and – possibly in the future –
mid-price segments.
• 30%-50% shorter construction cycle
compared to traditional poured concrete
cast-on-site technology
• Construction costs lower by up to 20%
• Good energy efficiency and ergonomics
characteristics
• Construction generates less waste than
traditional buildings, including a 30%
reduction of steel waste
• Greater quality control due to a
controlled and consistent environment
Short term:
• Create a library of design solutions
related to new construction methods
• Pilot use of prefabrication technology
Medium term:
•
Product standardisation and transfer
to Unified 2.0 product using hybrid
technology
The idea behind modern prefabrication is
to assemble as many building components
as possible at the factory: from reinforced
concrete products to engineering systems
and finishing. We are currently looking for a
partner with international experience who
will be ready to manufacture prefabricated
components for our projects with a
guarantee of future capacity utilisation.
The supplementation of our product line
does not imply that we are giving up on
cast-on-site technology – the most flexible
technology available. However, we plan to
completely rethink our approach to using it:
• Version 2.0 of Etalon Group’s cast-
on-site blocks will involve complete
standardisation of planning and
technological solutions;
• R&D improvements will allow us to
further reduce costs and construction
time using this technology.
54
STRATEGY
55
ANNUAL REPORT 2020
4 CONSTRUCTION
SHORTENING PRODUCTION TIME
The introduction of new technologies will shorten production time
by three to six months. Shorter construction time will create an
opportunity for us to lengthen the presale period by a comparable
amount, and, as a result, to reduce the project financing rate to
almost zero.
TECHNOLOGY
PROJECT IMPLEMENTATION
CAST-ON-SITE
GROUND WORKS & PREPARATION
SAME
ON-SITE CONSTRUCTION
3
months
shorter
TRANSFER TO SERVICE COMPANY
INDUSTRIAL
GROUND WORKS & PREPARATION
1–2
months
longer
ON-SITE CONSTRUCTION
6
months
shorter
TRANSFER TO SERVICE COMPANY
PRODUCTION
up
to
9
months
PRESALES
3–6
months
longer
SALES
up
to
50%
3–6
months
shorter
30–40%
c.
SALES
POST-COMPLETION
20
c.
%
CONSTRUCTION PERMIT GRANTED
BUILDING COMPLETION AND DELIVERY
56
STRATEGY
57
ANNUAL REPORT 2020
5 LAND BANK
LONG-TERM FOCUS ON
EXPANDING OUR LAND BANK
We have supplemented our standard
approach to replenishing our project
portfolio and will now consider acquiring
not just zoned but also unzoned land plots.
This approach will allow us to reduce
expenditures on land in our cost structure
and to put optimal design solutions in
place. This is largely a consequence of
our experience in carrying out integrated
development projects, such as Galactica
and ZIL-Yug, which enabled us to
strengthen our competencies in this area.
LAND BANK
REPLENISHMENT
PRINCIPLES:
• Deficit compensation in St Petersburg
of c. 1 mln sqm, including up to 0.8 mln
sqm by the end of 2021
• Annual land bank replenishment by at
least the same amount as Etalon Group
plans to sell during the period
• Acquisition of new unzoned land in
Moscow and St Petersburg to ensure
market share growth by 2023–2024
• Only value-creative regional
expansion with limited entry cost
• Targeting presence in at least five
regions by 2024
• Target balanced portfolio of large-scale,
mid- and small-sized projects to ensure
diversified product offering
In addition to implementing projects in
Russia’s two biggest cities, we see good
opportunities to rapidly increase the scale
of our business through regional expansion.
The main criterion is the possibility of
maintaining profitability levels comparable
to those of our key regions. In this regard,
we will consider, first of all, cities with
a population of 1 million (or just under
a million) where at least 20–30% of the
population is capable of buying the most
affordable of our future products. We plan to
enter new regions both through the launch
of pilot projects and through partnerships
with or the acquisition of local players.
LAND BANK STRATEGY WILL SHIFT TO LONG-TERM
PLANNING TO ENSURE SUSTAINABLE NEW SALES GROWTH
LAND BANK STRUCTURE
BALANCED BY REGION
>6.0
MLN SQM
10%
40% 1
NOW
STRATEGY
FOCUS
MOSCOW,
ST PETERSBURG
MOSCOW,
ST PETERSBURG
PLUS NEW REGIONS
PERMITTING STAGE
PREFERABLY ZONED WITH
PROJECT DOCUMENTATION
UNZONED WITH AND WITHOUT
LANDLORD GUARANTEE OF RECEIPT
OF PLANNING PERMISSION, PLUS
ZONED TO COMPENSATE FOR
DEFICIT IN CORE REGIONS
TIME TO LAUNCH SALES
6–12
MONTHS
24–36
MONTHS
PERMITTING RISK
LOW
MODERATE
INVESTMENT HORIZON
SHORT
LONG
ACQUISITION COST
HIGH
MODERATE
IMPACT ON PROFITABILITY
NEGATIVE TO MODERATE
POSITIVE
Moscow
St Petersburg
New regions
2.8
MLN SQM
26%
74%
50% 1
2020
2024
Our approach to M&A remains practically
unchanged. Facing a portfolio deficit in St
Petersburg, as well as a desire to increase
our presence in other regions, we are ready
to consider the possibility of inorganic
growth if certain conditions are met:
• Land bank size of c. 1 mln sqm
• Only value-accretive transactions (gross
profit of 35%; ROIC of >20%)
• Limited overlap of project portfolio in
core regions
• High degree of transparency of both
business and ownership structure
• Considerable operating synergies
• Ability to implement new design and
construction solutions that are aligned
with the Company’s target offering
1 Including 20–30% of unzoned land for potential development
At the same time, we have accumulated,
since the acquisition of Leader-Invest, vast
experience in successfully integrating a
large portfolio of projects that can be used
in the future. The basis for inorganic growth
will be the creation of a new product that
offers higher margins and that will enable us
to maximise synergies.
58
STRATEGY
59
ANNUAL REPORT 2020
PRODUCT
STANDARDISATION
6 CONSTRUCTION
State-of-the-art industrial housing
construction technologies and a unique
digital architecture enable us to make
extensive use of the flexibility of standard
elements to create a high-quality
standardised product.
We have identified the most promising
construction technologies for each housing
class, and we are developing our own
facade solutions, concepts and layouts for
common areas, engineering solutions, as
well as ground-level layouts and plans for
parking lots. We have already created a
unified database of standardised apartment
layouts that contains at least 380 of the
most popular options that we can apply in
each segment.
OUR NEW CUSTOMER OFFERING IN RESIDENTIAL
REAL ESTATE DEVELOPMENT
Standardised product for:
% of new residential property offering
ETALON.
START
Mass-market residential
housing (economy)
20%
St Petersburg
regions
ETALON.
COMFORT
Mid-market segment
(comfort and business)
70%
Moscow
St Petersburg
regions
ETALON.
PLUS
High-end property
(premium and above)
10%
Moscow
St Petersburg
After updating its value chain, Etalon Group
will be able to offer an expanded range
of services for business that offer higher
margins than general contracting: from
analytics and design to fee development
and a single point of contact for new
housing construction technologies.
Development in this area will enable us to
reduce the R&D costs that we incur when
creating our new digital architecture.
B2C
B2B
7
8
SALES
EXTENDING THE
CUSTOMER LIFE CYCLE
partners and to add a cashback option for
additional services for homebuyers, which
will create more opportunities for us to
increase the share of secondary purchases
and an influx of new buyers.
One of the key elements of our strategy
is to create a better customer experience,
including through the further development
of online sales, as well as the creation
of a single client platform for buyers and
residents of our properties – the Etalon
My Home app 2.0 – which should become
the basis for increasing engagement with
our customers on issues related to further
improvement of our product. As part of
this project, we plan to expand the range
of added services in cooperation with new
SALES
PRODUCT PERSONALISATION AND
TAILORING OF PROMOTIONS
Our most important task is the full-fledged
transformation of our business processes
based on an analysis of the problems facing
our customers, and the introduction of
intelligent decision-making tools that also
speed up the decision-making process
within the Company. This is the key aspect
of our strategy to 2024 that will ensure
a progressive increase in customer loyalty
through the creation of value for them and
its qualitative embodiment in the finished
product.
The introduction of a big data analytics
system has enabled us to better
understand our customers: their patterns
of behaviour, interests, movements and
channels of communication. On the basis
of predictive analytics, we continue to
improve our communication policy and to
develop precise targeting tools and our
competence in terms of analysing one of
the most difficult stages of the customer
journey – choice.
We currently have strong NPS scores in
the sales-related stages of the customer
journey – at the level of around 60–70. We
are developing a system for evaluating and
analysing customer feedback at all stages
of the customer journey (online platforms,
calls, visits, transactions, living in finished
apartments) and for improving procedures
in order to increase customer satisfaction.
60
STRATEGY
61
ANNUAL REPORT 2020
OUR AMBITIONS
ON THE STRATEGIC HORIZON
FINANCIAL
TARGETS
The implementation of Etalon Group’s new strategy
will enable us to become not just a developer but a
technology company whose foundation is a fully digital
architecture that allows us to quickly adapt all processes
in accordance with the situation or established
goals. For investors and shareholders, this means a
good return on investment thanks both to improved
performance and a higher EBITDA multiple.
1
CREATE AN
EASILY SCALABLE
BUSINESS MODEL
2
DOUBLE THE VOLUME
OF ONGOING
CONSTRUCTION WHILE
MAINTAINING CONSTANT
OVERHEAD COSTS
3
BECOME A LEADING
NATIONWIDE PLAYER
4
PROMOTE A CONCEPT
OF SUSTAINABLE
AND PEOPLE-
CENTRED CITIES
5
ACHIEVE DOUBLE-DIGIT
SALES GROWTH
6
BECOME A LEADER
IN TERMS OF NPS
AND CLV
7
ACHIEVE
INDUSTRY-LEADING
PROFITABILITY
1H 2020 1
FLATTISH YEAR-ON-YEAR
2024
NEW CONTRACT
SALES GROWTH
STRONG DOUBLE-DIGIT
29%
14.1%
< REVENUE
GROWTH
1.8
NEGATIVE
12
RUB
PER GDR
PRE-PPA
GROSS MARGIN
SG&A TO REVENUE
PRE-PPA
EPS GROWTH
NET CORPORATE DEBT
TO PRE-PPA EBITDA
REPORTED
OCF
DIVIDENDS
1 Based on financial results as of 30.06.2020 (Financial position on 30.09.2020) and operating results for 9 months 2020
35%
10%
> REVENUE
GROWTH
2–3
POSITIVE
MIN. RUB
PER GDR 12
+
NET PROFIT
GROWTH UPSIDE
62
PROJECT PORTFOLIO
63
ANNUAL REPORT 2020
PROJECT
PORTFOLIO
66 Current project portfolio
68 Additions to the project portfolio
72
Integrated development projects
84 Business-class projects
94 Comfort-class projects
24 64
PROJECT PORTFOLIO
65
ANNUAL REPORT 2020
CONFIDENT
GROWTH
YEAR-ON-YEAR
MARKET VALUE
OF PROJECT
PORTFOLIO
BLN RUB
66
PROJECT PORTFOLIO
67
ANNUAL REPORT 2020
CURRENT PROJECT
PORTFOLIO
The market value of Etalon Group’s project portfolio
as of 31 December 2020 was RUB 191 billion. The
portfolio includes 63 projects with unsold NSA of
2.8 mln sqm divided between St Petersburg and the
Moscow Metropolitan Area.
About 98 % of our portfolio involves projects in the
mid- and upper price segments. At the same time, we
have enjoyed equal success in developing not only
medium-sized and small projects but also large-scale
integrated developments, such as Emerald Hills and
Galactica, which has an area of close to 1 mln sqm.
More than half of the projects in our land bank are at
various stages of construction. These include both
projects where sales were recently launched and
partially completed residential properties. This product
range allows us to offer clients a wide selection
of quality housing for any preferences—even on
a limited budget.
20
CURRENT PROJECTS
IN ST PETERSBURG
AND MOSCOW
METROPOLITAN AREA
on 31 December 2020
Our excellent reputation
and high-quality portfolio
of projects in Moscow
and St Petersburg are key
to ensuring steady sales
that enable stable perfor-
mance, even through the
most challenging times.
At year-end 2020, we had
a well-balanced portfolio of
over 2.8 mln sqm of NSA
in a variety of segments
and at different stages of
construction.
191
BLN RUB
MARKET VALUE OF
ETALON GROUP’S
PROJECT PORTFOLIO
on 31 December 2020
2.8
MLN SQM
UNSOLD NET
SALEABLE AREA
on 31 December 2020
#
Projects
Status
(THS SQM)
Total
NSA
Unsold
NSA
(THS SQM)1
Unsold
parkings
(LOTS)
Income
Construction
Outstanding
OMV
(Mln rub)
from sales
(Mln rub)2
budget
(Mln rub)3
budget
(Mln rub)3
CURRENT PROJECTS
ST PETERSBURG
1
2
3
4
5
Galactica
Construction
Project on Chernigovskaya Street
Construction
Petrovskiy Landmark
Etalon on the Neva
Domino
Construction
Construction
Construction
764
110
89
77
39
245
1,916
21,620
77,863
49,017
20,103
68
40
35
33
972
322
374
312
5,359
18,383
4,941
15,316
3,233
2,696
9,349
7,199
8,939
6,716
4,520
3,262
6,557
4,222
1,412
2,965
TOTAL ST PETERSBURG
1,078
420
3,896
37,849
128,111
72,454
35,259
MOSCOW METROPOLITAN AREA 4
Design
1,403
1,307
10,113
64,121
360,185
166,078
165,473
ZIL-Yug
Emerald Hills
Nagatino i-Land
Summer Garden
Silver Fountain
Wings
Normandy
Letnikovskaya Street
Mytishinskiy District
Fotievoi 5
Bolshaya Cherkizovskaya
Electrozavodskaya 60
Zorge 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Construction
Construction
Construction
Construction
Construction
Construction
Design
Design
Design
Design
Design
Design
857
329
278
226
184
124
63
93
11
7
9
12
6
6
28
301
36
121
48
29
63
82
11
7
9
12
5
3
290
1,519
60,209
39,799
3,614
1,467
23,237
73,177
31,493
29,981
270
1,494
31,812
17,409
4,022
1,587
17,973
45,493
18,745
2,769
30,947
16,087
483
198
717
322
72
46
63
99
34
37
3,029
15,989
6,814
20,315
7,002
8,980
4,469
1,640
556
1,192
1,941
7,678
4,243
1,526
2,382
2,881
1,517
729
2,092
1,217
1,256
1,533
714
676
392
868
860
6,719
7,782
880
8,405
4,469
1,639
556
1,147
1,905
463
689
Schastye na Semyonovskoy
(Izmailovskoye Shosse 20)
Construction
15
Schastye na Lomonosovskom
Construction
TOTAL MMA
3,609
2,062
15,798
127,255
660,446
317,337
237,743
TOTAL CURRENT PROJECTS
4,687
2,482
19,694
165,104
788,558
389,791
273,002
COMPLETED PROJECTS
Residential property in completed projects
Completed stand-alone commercial properties
TOTAL COMPLETED PROJECTS
3,332
8
3,340
350
8
358
6,799
25,195
283,567
55
591
6,854
25,786
283,567
TOTAL ETALON GROUP PROJECTS
8,027
2,840
26,548
190,890
1,072,125
389,791
273,002
PRODUCTION UNIT
Production Unit’s business and properties
18
12,640
12,640
TOTAL ASSETS VALUE
8,027
2,858
26,548
203,530
1,072,125
389,791
273,002
Source: Colliers International estimate as of 31 December 2020
1 Including parking: parking area in launched projects with partially sold parking lots is calculated as 30 sqm per parking space
2 Income from sales includes potential and received incomes as of 31 December 2020
3 Excluding land acquisition costs
4 Moscow, New Moscow and Moscow region within 30 km from Moscow Ring Road
68
PROJECT PORTFOLIO
69
ANNUAL REPORT 2020
ADDITIONS TO THE
PROJECT PORTFOLIO
Considering our strategic initiatives to 2024, our goal is
essentially to double our portfolio to more than 6 mln sqm.
MOSCOW METROPOLITAN AREA:
ST PETERSBURG:
The acquisition of Leader-Invest in
2019 enabled us to add more than
1.5 mln sqm to our Moscow portfolio. This
volume is enough for us to carry out our
development projects for the next few years.
Nevertheless, we continue to analyse and
consider for purchase promising land plots
in attractive areas of the capital.
Our land bank in St Petersburg is limited,
but we are working hard to add to our
portfolio in the region. In 2021, we expect to
add about 800 ths sqm to our land bank in
St Petersburg.
Making up for the shortage in St Petersburg
and subsequently adding—on an ongoing
basis—at least as much space as we plan
to sell the following year will help us balance
our portfolio in Moscow and St Petersburg
and further strengthen our positions in
Russia’s two largest cities.
1
OPTIMAL PORTFOLIO STRUCTURE
IN TERMS OF PROJECT SIZE
3
SHIFTING FROM A SHORT-TERM TO
A LONG-TERM FOCUS
We adhere to a land bank structure
with one anchor project of about 1 mln
sqm, 5–6 medium-sized projects and
up to 10 infill development projects.
2
OPTIMAL RATIO OF PROJECTS BY
HOUSING CLASS
We have enjoyed significant success in
the higher-class segment, starting with
the launch of our Silver Fountain project in
2017; our share of business- and premium-
class projects reached 71 % of our portfolio
at the end of 2020.
Due to the rising cost of land, the shortage
of quality land for construction and our
improved zoning competencies, we are
considering the purchase of unzoned land
and zoning it independently. This approach
has several distinct advantages despite
the longer time horizon to the start of
construction.
First, purchase and independent zoning
reduces the cost of land in a project’s
cost structure. Second, independent
zoning makes it possible to include
optimal architectural solutions and a
site development concept from the very
beginning. At the same time, we are
considering purchasing zoned plots to make
up for the shortage in the coming years.
OUR APPROACH
TO FURTHER
DIVERSIFICATION
OF OUR PORTFOLIO:
6
MLN SQM
TARGET
PORTFOLIO SIZE
IN 2024
Forecast
2.8
MLN SQM
PORTFOLIO SIZE
on 31 December 2020
2020
2021
2022
2023
2024
70
PROJECT PORTFOLIO
71
ANNUAL REPORT 2020
ST PETERSBURG
MOSCOW
5
3
PROJECTS
1
2
3
4
5
Galactica
Project on
Chernigovskaya Street
Petrovskiy Landmark
Etalon on the Neva
Domino
1
4
2
2
PROJECTS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
ZIL-Yug
Emerald Hills
Nagatino i-Land
Summer Garden
Silver Fountain
Wings
Normandy
Letnikovskaya Street
Mytishinskiy District
Fotievoi 5
Bolshaya Cherkizovskaya
Electrozavodskaya 60
Zorge 3
Schastye na
Semyonovskoy
(Izmailovskoye Shosse 20)
Schastye na
Lomonosovskom
9
4
13
10
15
6
7
5
8
1
3
12 11
14
Design stage
Under construction
Completed
Design stage
Under сonstruction
Completed
72
PROJECT PORTFOLIO
73
ANNUAL REPORT 2020
INTEGRATED
DEVELOPMENT
PROJECTS
ZIL-Yug
Galactica
Nagatino i-Land
p. 74
p. 80
p. 82
74
PROJECT PORTFOLIO
75
ANNUAL REPORT 2020
ZIL-YUG
MOSCOW
ZIL-Yug is a large-scale redevelopment project on the
grounds of the former ZIL plant in Moscow. With an area
of over 109 hectares, it is based on the “15-minute city”
concept and uses state-of-the-art technologies.
S
S
A
L
C
S
S
E
N
S
U
B
I
The development project was designed in collaboration
with the Dutch urban planning and architectural
company KCAP and leading Russian urbanists. Plans
call for the construction of 1.4 mln sqm of housing,
commercial real estate and public infrastructure by
2030. In terms of architectural quality and comfort, the
ZIL-Yug project will be able to compete with the central
districts of Moscow.
It will be home to modern residential areas and parks,
pedestrian embankments linking ZIL’s northern and
southern sites, as well as two pedestrian bridges
and three bridges for both vehicle and foot traffic.
Two mooring berths for water transport—ZIL and
Planet ZIL—will be built on an adjacent property.
In the summer of 2020, the city was presented with
the architectural and urban planning concept for the
development of the first phase of the ZIL-Yug residential
area, which is a model for the entire district—the
principles underlying the ZIL-Yug master plan were
clearly laid out:
•
• advanced technologies: from various housing
types and variable building heights to the use of
state-of-the-art prefabricated elements, modular
construction and CLT panels;
the principle of a 15-minute walking distance to
the main commercial, business and public spaces
from anywhere in the residential area—half of all
movement in the district will be carried out on
foot or by non-motorised transport (thanks to this
approach, people will be able to live, work and relax
in one place, which will make ZIL-Yug a new point of
attraction for city residents and businesses);
the “smart city” concept, which calls for the
creation of advanced digital infrastructure.
•
Standardised
offerings in
prefabricated
buildings
Hybrid buildings will
be erected around the
central passage and
square near the centre
of activity for the project
Moscow Central Circle
Modular buildings
that can be quickly
assembled and offer
rental apartments
next to the ZIL-Vostok
business district
P
r
o
s
p
e
k
t
i
L
k
h
a
c
h
e
v
a
M
o
s
c
o
w
R
i
v
e
r
Novinki
Backwater
First stage and second
stage in cast-on-site to test
demand for new layouts
from the Etalon 2.0 product
Buildings in backwater
eco-zone will use CLT
construction
76
PROJECT PORTFOLIO
77
ANNUAL REPORT 2020
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
University
Church
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
The district is located on the Moscow River
Embankment and the Naberezhnaya Nagatinskogo
Zatona, next to Tyufeleva Roshcha and Kozhukhovo
National Park. The area’s biggest potential is linked
to the river, which should become not only a key
recreational area but also an important transport
channel connecting the ZIL-Yug residential complex
with other parts of the city.
Dubrovka
Business
Center
Avtozavodskaya
THIRD RING ROAD
Tulskaya
Business
Center
University
Church
Museum
University
Business
Center
A
V
O
P
O
R
D
N
A
V
A
R
S
H
A
V
S
K
O
Y
E
Lanscape
Park
University
ZIL
Tekhnopark
Verkhnie Kotly
The residential district is adjacent to a large transport
hub and Prospekt Likhacheva. Its proximity to Moscow’s
main thoroughfares—the Third Ring Road and Prospekt
Andropova—will enable residents to reach the historic
Nagatinskaya
city centre in about 30 minutes by car or 25 minutes by
public transport. The ZIL and Tekhnopark metro stations
are within walking distance of the ZIL-Yug complex.
Kolomenskaya
Business
Center
T
K
E
P
S
O
R
P
S
H
O
S
S
E
University
Museum
Business Center
Church
Kolomenskoye
10 km
25 minutes to Red Square
7 km
15 minutes to the Garden Ring
Museum
Main Botanical
Garden
Ostankino
Park
Museum
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
Museum
Church
I
A
R
M
T
K
E
P
S
O
R
P
Business
Center
University
Museum
Aqueduct
Park
VDNKh
Losiny Ostrov
National Park
Malenkovskaya
University
Alekseevskaya
Business
Center
Sokolniki
Park
Moskva-3
T H I R D R I N G R O A D
Rizhskaya
University
Museum
University
Yekaterininskiy
Park
MSU
Botanical
Garden
Church
Business
Center
T
H
I
R
D
R
I
N
G
R
O
A
Business
Center
D
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Shelepikha
Filyovskiy Park
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Church
Ulitsa 1905 Goda
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
A
M
I
N
Y
E
V
S
Setun River
Valley Nature Park
University
Church
Business
Center
Business
Center
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
R
E
E N
T G
P R O S P E K
Business
Center
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
L
A
Lomonosovskiy
Prospekt
Matveyevskaya
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Church
Ochakovo
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Ozyornaya
Museum
Church
Marsovo
Pole
Church
University
Museum
University
New Holland
Island
Museum
University
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
University
Church
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
University
Business
Center
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
Church
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
78
PROJECT PORTFOLIO
79
ANNUAL REPORT 2020
NET SELLABLE
AREA1
THS SQM
MARKET
VALUE1
MLN RUB
FUTURE-ORIENTED HOUSE-
BUILDING TECHNOLOGIES IN LINE
WITH GLOBAL TRENDS:
•
•
the separation of pedestrian and traffic
flows will ensure hassle-free movement
throughout the area
relatively even distribution of public
spaces, parkland and social and
commercial facilities will ensure that
every resident is able to reach a variety
of infrastructure within a 15-minute walk
• high-standard urban-space
design—“my street” and “my district”
• excellent neighbourhood of low-rise and
high-rise buildings
•
landscaped terraces on the roofs of
buildings
• close proximity to a new business
cluster on the ZIL-Vostok site (more
than 500 ths sqm of office space by
2028)
•
the developed Marс Chagall embank-
ment with a length of more than 6 km
(comparable to the Naberezhnaya
Parka Gorkogo and Naberezhnaya
Vorobyovykh Gor)
• a residential area near water built to
the highest standards in terms of the
urban environment and quality of life
is a rare find in any city
SALES
REVENUE1
MLN RUB
1 Colliers International estimate as of 31 December 2020
Church
Avtozavodskaya
Kuntsevskaya
Minskaya
Victory
Park
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
80
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
University
THIRD RING ROAD
Museum
University
ZIL
A
V
O
P
O
R
D
N
A
University
Lanscape
Park
PROJECT PORTFOLIO
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
GALACTICA
Business Center
Church
Kolomenskoye
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
University
Business
Center
Church
Dubrovka
Business
Center
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Business
Center
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
University
Business Center
Church
Museum
S
S
A
Kolomenskaya
L
C
T
R
O
F
M
O
C
Kolomenskoye
Museum
Main Botanical
Garden
Ostankino
Park
Museum
VDNKh
University
Museum
Aqueduct
Park
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
Museum
81
Church
I
A
R
M
T
K
E
P
S
O
R
P
Business
Center
University
Alekseevskaya
Business
Center
Losiny Ostrov
National Park
Malenkovskaya
Sokolniki
Park
Moskva-3
Church
Business
Center
Business
Center
T H I R D R I N G R O A D
Rizhskaya
University
Museum
T
H
I
R
D
R
I
N
G
Business
Center
Business
Center
Yekaterininskiy
Park
NET SELLABLE AREA1
University
R
O
A
D
MSU
Botanical
Garden
Church
764 THS
SQM
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
R
E
E N
T G
P R O S P E K
Business
Center
MARKET VALUE1
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
L
A
Matveyevskiy
Forest
A
M
I
N
Y
E
V
S
Setun River
Valley Nature Park
University
Lomonosovskiy
Prospekt
Matveyevskaya
ANNUAL REPORT 2020
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
Olympic
Village Park
SALES REVENUE1
Church
Ochakovo
RIN S KIY P R
U
H
M IC
Ozyornaya
21,620 MLN
RUB
Museum
77,863 MLN
RUB
University
SHOSSE
Khoroshyovskaya
ZVENIGORODSKOYE
Begovaya
Museum
Church
Ulitsa 1905 Goda
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Shelepikha
Filyovskiy Park
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
ST PETERSBURG
The Galactica residential area on the grounds of the former
Warsaw railway station is the largest redevelopment project in the
centre of St Petersburg.
a
a
s
s
t
t
i
i
l
l
U
U
a
a
y
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a
a
k
k
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y
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n
n
a
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f
f
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o
r
r
t
t
i
i
M
M
a
a
y
y
a
a
l
l
a
a
M
M
Izmailovskiy Bulvar
Izmailovskiy Bulvar
a
a
s
s
t
t
i
i
l
l
U
U
a
a
y
y
a
a
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u
u
b
b
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l
A
A
A
A
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b
b
u
u
m
m
i
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n
n
a
a
y
y
a
a
U
U
l
l
i
i
t
t
s
s
a
a
Parfonovskaya Ulitsa
Parfonovskaya Ulitsa
Parfnovskaya Ulitsa
Parfnovskaya Ulitsa
Moskovskiy Prospekt
Moskovskiy Prospekt
a
a
l
l
a
a
n
n
a
a
K
K
o
o
g
g
o
o
n
n
d
d
o
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v
v
b
b
O
O
a
a
y
y
a
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n
n
h
h
z
z
e
e
r
r
e
e
b
b
a
a
N
N
l
l
i
i
a
a
n
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a
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K
K
y
y
n
n
d
d
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b
b
O
O
l
l
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i
a
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a
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K
K
y
y
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n
d
d
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b
b
O
O
l
l
a
a
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a
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K
K
o
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O
O
a
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a
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h
h
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e
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e
b
b
a
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N
N
Moskovskiy Prospekt
Moskovskiy Prospekt
A
A
l
l
b
b
u
u
m
m
i
i
n
n
n
n
a
a
y
y
a
a
Parfonovskaya Ulitsa
Parfonovskaya Ulitsa
U
U
l
l
i
i
t
t
s
s
a
a
a
a
s
s
t
t
i
i
l
l
Parfonovskaya Ulitsa
Parfonovskaya Ulitsa
U
U
a
a
y
y
a
a
n
n
n
n
m
m
u
u
b
b
A
A
i
i
l
l
Izmaylovskiy Bulvar
Izmaylovskiy Bulvar
l
l
M
M
a
a
a
a
y
y
a
a
M
M
i
i
t
t
r
r
o
o
f
f
a
a
n
n
y
y
e
e
v
v
s
s
k
k
a
a
y
y
a
a
U
U
l
l
i
i
t
t
s
s
a
a
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
Museum
Church
Marsovo
Pole
Church
University
16 km
25 minutes to the airport
5 km
10 minutes to Nevskiy Prospekt
Museum
University
New Holland
Island
Museum
University
University
Business
Center
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
University
Church
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
Church
The large-scale integrated development project is
situated across two districts—Admiralteiskiy and
Moskovskiy—on an area of about 36 hectares. The
residential complex includes 30 multi-storey brick-
monolithic buildings, which form an avenue that runs
lengthwise with closed courtyards between them. There
are also 3 schools, 10 preschools and public recreational
space. The northern and southern parts of the complex
are home to the Galactica Premium and Galactica Pro
business-light properties, which stand out thanks to their
apartment layouts and unique building features. In 2020
the Galactica residential complex won an Urban Award
for the best integrated development project.
The area where the Galactica residential complex is
located is flourishing as part of the historic centre
redevelopment programme. Thus, the complex
combines the advantages of a central location with
the diverse social and commercial infrastructure of a
residential district. Nearby are preschools, schools,
high schools, vocational schools and post-secondary
institutions, Lenta and Prisma grocery stores,
supermarkets, general stores, sports centres, cafes and
restaurants, museums and public gardens. Varshavskiy
Ekspress, a large shopping centre with a cinema, a
concert venue and a fitness area, is within easy reach of
the project.
The area has a well-developed network of surface
public transport, and there are three metro stations
within walking distance: Frunzenskaya, Baltiyskaya and
Moskovskie Vorota. The area is conveniently located
near important transport routes: Moskovskiy Prospekt,
Naberezhnaya Obvodnogo Kanala and Mitrofanievskoye
Shosse, as well as an access road onto the Western
High-Speed Diameter. The airport can be reached within
20 minutes by car.
1 Colliers International estimate as of 31 December 2020
82
PROJECT PORTFOLIO
83
ANNUAL REPORT 2020
S
S
A
L
C
S
S
E
N
S
U
B
I
NET SELLABLE AREA1
329 THS
SQM
MARKET VALUE1
23,237 MLN
RUB
SALES REVENUE1
73,177 MLN
RUB
NAGATINO
I-LAND
MOSCOW
Nagatino i-Land is a multifunctional development project with an
NSA of 329 ths sqm on a land plot of more than 14 hectares in the
Danilovskiy district, one of the most promising parts of the capital.
University
Developed in collaboration with the British firm AHR
Architects according to the “city within a city” concept,
the project combines an existing business cluster with
residential and commercial development.
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
Church
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
M
o
s
c
o
w
R
iv
e
r
P
l
a
n
n
e
d
r
o
a
d
w
a
y
M
o
s
c
o
w
R
v
e
r
i
l
P
a
n
n
e
d
r
o
a
d
w
a
y
Ulitsa Mustaya Karima
Planned roadway
Prospekt Andropova
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
University
Business
Center
Church
Dubrovka
Business
Center
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Business
Center
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
11 km
15 minutes to Red Square
7 km
10 minutes to the Garden Ring
Museum
Museum
Museum
University
Ostankino
Park
Main Botanical
Garden
Buildings with heights varying from 5 to 22 storeys will
be used to form residential areas with closed courtyards,
inside which will be public spaces for recreation,
games, socialising and sports. The layouts are diverse
and, along with traditional apartment formats, include
apartments with separate entrances and patios, as
well as penthouses with excellent views and ceilings
up to 3.9 metres high. Special attention was paid to
the grounds’ landscape design, which included the
development of a landscape park, pedestrian boulevards
and improvements to the embankment.
Malenkovskaya
A K A D E M I K A KORO LYOVA S TR E E T
A
R
M
T
K
E
P
S
O
R
P
Losiny Ostrov
National Park
VDNKh
Aqueduct
Park
Business
Center
Business
Center
Sokolniki
Park
Museum
Church
Church
VDNKh
I
Alekseevskaya
University
Moskva-3
T H I R D R I N G R O A D
University
D
H
R
R
T
I
I
Museum
University
Business
Center
Business
Center
Business
Center
Rizhskaya
Nagatino i-Land is being built on the banks of the
Moscow River, in an area with established infrastructure.
In the immediate vicinity is a modern office cluster and
two large shopping centres—Megapolis and Riviera.
The Moscow City business centre is only 20 minutes
away by car. Located not far from the residential complex
are three well-maintained parks—Kolomenskoye,
Kozhukhovo National Park and Tyufeleva Roshcha—and
the largest amusement part in Russia, Dream Island.
Yekaterininskiy
Park
MSU
Botanical
Garden
Business
Center
Church
A
R
O
N
D
G
With the Tekhnopark and ZIL metro stations located
within walking distance, the project offers excellent
transport accessibility. There are also convenient access
roads onto Prospekt Andropova, Kozhukhov Bridge and
the Third Ring Road.
Museum
Church
Marsovo
Pole
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
Setun River
Valley Nature Park
University
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
A
M
I
N
Y
E
V
S
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
Lomonosovskiy
Prospekt
Matveyevskaya
University
Ramenki
Museum
Business
Center
P R O S P E K
Business
Center
Ochakovo
Michurinskiy
Prospekt
50 Years
of October Park
Aminyevskaya
(under construction)
L
A
R
E
E N
T G
Church
O S P E K T
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Ozyornaya
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Church
Ulitsa 1905 Goda
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Filyovskiy Park
Shelepikha
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
Church
University
Museum
University
New Holland
Island
Museum
University
University
Church
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
University
Business
Center
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
Church
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
1 Colliers International estimate as of 31 December 2020
84
PROJECT PORTFOLIO
85
ANNUAL REPORT 2020
BUSINESS-CLASS
PROJECTS
Silver Fountain
Wings
Petrovskiy Landmark
Schastye na Presne
p. 86
p. 88
p. 90
p. 92
86
PROJECT PORTFOLIO
87
ANNUAL REPORT 2020
SILVER
FOUNTAIN
MOSCOW
Silver Fountain is Etalon Group’s first green-certified
business-class project in Moscow.
S
S
A
L
C
S
S
E
N
S
U
B
I
NET SELLABLE AREA1
226 THS
SQM
MARKET VALUE1
17,973 MLN
RUB
SALES REVENUE1
45,493 MLN
RUB
The multifunctional residential complex
being built in the Alekseevskiy district in
the North-Eastern Administrative Division
combines architectural traditions with
advanced technological solutions and
high environmental standards. The project
includes a free-standing office building
and three rows of residential buildings
of different heights, each of which forms
an inviting, self-sufficient residential
area. Surrounded by an old linden park,
the state-of-the-art buildings that make
up the complex form an seamless
architectural composition with cultural
heritage properties.
To reduce operating costs, the project
uses advanced engineering solutions and
elements of a smart home system, including
the installation of energy- and water-efficient
equipment, as well as an automated
water and electricity metering system.
Silver Fountain’s high degree of energy
efficiency and environmental friendliness
have been confirmed by a Green Zoom
platinum certificate.
Located within a 5–10-minute walk from
the Alekseevskaya metro station, next
to Prospekt Mira—one of the capital’s
main transport arteries—the project offers
excellent accessibility for both vehicle
and pedestrian traffic. Sokolniki Park,
Ekaterininskiy Park, VDNKh, Ostankinskiy
Garden and the Botanical Garden are all
within walking distance.
Tulskaya
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
Verkhnie Kotly
Church
A
V
O
P
O
R
D
N
A
T
K
E
P
S
O
R
P
THIRD RING ROAD
Museum
Avtozavodskaya
University
University
ZIL
Lanscape
Park
Tekhnopark
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
University
University
Business
Center
Church
Dubrovka
Business
Center
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Business
Center
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
Museum
University
10 km
30 minutes to Red Square
Business Center
Church
5 km
20 minutes to the Garden Ring
Kolomenskoye
1 km
10 minutes to Sokolniki Park
Museum
Main Botanical
Garden
Ostankino
Park
Museum
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
Museum
Church
I
A
R
M
T
K
E
P
S
O
R
P
Business
Center
University
Museum
Aqueduct
Park
VDNKh
Losiny Ostrov
National Park
Malenkovskaya
University
Alekseevskaya
Business
Center
Sokolniki
Park
Moskva-3
T H I R D R I N G R O A D
Rizhskaya
University
Museum
University
Yekaterininskiy
Park
MSU
Botanical
Garden
Church
Business
Center
T
H
I
R
D
R
I
N
G
R
O
A
Business
Center
D
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
A
M
I
N
Y
E
V
S
Setun River
Valley Nature Park
University
Church
Business
Center
Business
Center
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
R
E
E N
T G
P R O S P E K
Business
Center
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
L
A
Lomonosovskiy
Prospekt
Matveyevskaya
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Church
Ochakovo
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Ozyornaya
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Shelepikha
Filyovskiy Park
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Church
Ulitsa 1905 Goda
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
1 Colliers International estimate as of 31 December 2020
1 According to a valuation as of 31 December 2020.
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
Vasileostrovskaya
Church
Museum
University
Museum
Museum
Museum
Church
Marsovo
Pole
Church
University
Museum
University
New Holland
Island
Museum
University
University
Business
Center
Teatra Yunykh
Zriteley Garden
Business
Center
University
University
Church
Tekhnologicheskiy
Institut
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Frunzenskaya
T
K
E
P
S
O
R
Church
Church
O V S KIY P
LIG
Moskovskie Vorota
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
Business
Center
Business
Center
Business
Center
Museum
88
PROJECT PORTFOLIO
89
ANNUAL REPORT 2020
WINGS
MOSCOW
S
S
A
L
C
S
S
E
N
S
U
B
I
NET SELLABLE AREA1
184 THS
SQM
MARKET VALUE1
2,769 MLN
RUB
SALES REVENUE1
30,947 MLN
RUB
University
University
Church
Tulskaya
Created in collaboration with the British architectural firm Aedas and
the Moscow architectural firm ABD architects, the project is located
Tulskaya
in a prestigious green area of Moscow and successfully combines
state-of-the-art technical and architectural solutions and functional
public areas with carefully designed layouts.
Avtozavodskaya
THIRD RING ROAD
Tekhnopark
V
A
R
S
H
A
V
S
K
O
Y
E
A
V
O
P
O
R
D
N
A
Lanscape
Park
ZIL
University
University
Museum
THIRD RING ROAD
Museum
University
University
ZIL
Verkhnie Kotly
S
H
O
S
S
E
T
K
E
P
S
O
R
P
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Business
Center
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
Nagatinskaya
Business
Center
Kolomenskaya
Business
Center
Church
Dubrovka
Business
Center
16 km
Museum
Main Botanical
Garden
30 minutes to Red Square
Museum
Museum
University
Ostankino
Park
VDNKh
Aqueduct
Park
10 km
20 minutes to the Garden Ring
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
6 km
10 minutes to Botanical Gardens
Losiny Ostrov
National Park
Malenkovskaya
Museum
Church
Business
Center
I
A
R
M
T
K
E
P
S
O
R
P
University
Alekseevskaya
Business
Center
Sokolniki
Park
Moskva-3
University
Museum
Church
Kolomenskoye
Business Center
The residential complex includes three
multi-storey residential buildings, an
office and shopping centre, a school,
a kindergarten, a fitness centre with a
swimming pool, and underground parking.
Common areas inside the buildings—each
individually designed—have no fewer than
10 zones for various functional uses. The
main lobby will house a reception area and a
lounge area, storage rooms for bicycles and
prams, and rooms for washing pets. There
are plans to outfit the roofs of the complex
with spacious green terraces.
Due to the lack of dense development,
the apartments in the Wings residential
complex will offer beautiful views of
Sparrow Hills, Moscow State University,
Moscow City and green parkland. Every
apartment will be equipped with touchpads
for home management. An application will
give residents access to various services,
including food delivery, dry cleaning
and CCTV monitoring of the grounds
Business Center
University
surrounding their building, as well as the
ability to pay their utility bills. In addition,
residents will be able to take advantage of
a unique service offering fresh vegetables—
based on the “from garden to plate in one
day” principle—thanks to state-of-the-art
automated facilities for growing vegetables
in urban settings that use the latest lighting,
energy-saving, climate control and operating
technologies.
The project is located in Ramenki, one
of the most environmentally friendly
and picturesque areas of Moscow—and
completely devoid of industrial enterprises.
The property offers convenient access
to several main transport arteries: the
Moscow Ring Road, the Third Ring Road,
Michurinskiy Prospekt and Lobachevskogo
Street. The Michurinskiy Prospekt metro
station is located within a 10-minute walk.
Museum
Church
Kolomenskoye
T H I R D R I N G R O A D
Rizhskaya
University
Museum
University
Yekaterininskiy
Park
MSU
Botanical
Garden
Church
Business
Center
T
H
I
R
D
R
I
N
G
R
O
A
Business
Center
D
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
1 Colliers International estimate as of 31 December 2020
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Church
Ulitsa 1905 Goda
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Filyovskiy Park
Shelepikha
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
A
M
I
N
Y
E
V
S
Setun River
Valley Nature Park
University
Church
Business
Center
Business
Center
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
R
E
E N
T G
P R O S P E K
Business
Center
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
L
A
Lomonosovskiy
Prospekt
Matveyevskaya
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Church
Ochakovo
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Ozyornaya
Museum
Church
Marsovo
Pole
Church
University
Museum
University
New Holland
Island
Museum
University
University
Church
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
University
Business
Center
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
Church
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
90
PROJECT PORTFOLIO
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
PETROVSKIY
LANDMARK
University
Church
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
S
S
A
L
C
S
S
E
N
S
U
B
I
ST PETERSBURG
The Petrovskiy Landmark business-class residential complex is being
built in one of the most interesting and most promising areas of
central St Petersburg, on the picturesque shores of Petrovskiy Island.
University
Tulskaya
THIRD RING ROAD
Museum
University
University
ZIL
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
Business
Center
Church
Dubrovka
Business
Center
91
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Business
Center
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
University
Business Center
NET SELLABLE AREA1
Kolomenskaya
Museum
89 THS
SQM
Kolomenskoye
Church
Museum
Main Botanical
Garden
Ostankino
Park
Museum
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
Museum
Church
I
A
R
M
T
K
E
P
S
O
R
P
Business
Center
University
Museum
Aqueduct
Park
VDNKh
Losiny Ostrov
National Park
University
Alekseevskaya
MARKET VALUE1
Business
Center
T H I R D R I N G R O A D
University
T
Rizhskaya
4,941 MLN
RUB
Business
Center
Business
Center
University
Yekaterininskiy
Park
Museum
I
I
A
R
R
R
O
D
N
D
H
G
MSU
Botanical
Garden
Malenkovskaya
Church
Business
Center
Sokolniki
Park
Moskva-3
Business
Center
SALES REVENUE1
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
ANNUAL REPORT 2020
Setun River
Valley Nature Park
A
M
I
N
Y
E
V
S
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
O
R
O
A D
L
A
R
E
E N
T G
P R O S P E K
University
Lomonosovskiy
Prospekt
Matveyevskaya
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
15,316 MLN
RUB
Business
Center
Church
Ochakovo
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Church
Ulitsa 1905 Goda
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Filyovskiy Park
Shelepikha
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
Church
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
Ozyornaya
Museum
Church
Marsovo
Pole
Church
University
Museum
University
New Holland
Island
30 km
30 minutes to the airport
Museum
University
University
Business
Center
15 km
7 km
20 minutes to the Lakhta Centre
University
Church
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
NABEREZHNAYA OBVODNOGO
10 minutes to the Spit of Vasilievskiy Island
Baltiyskaya
K ANAL A
University
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
Church
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
The complex includes three modern
residential buildings, each with its own
individualised appearance. At the same
time, the buildings share European-style
brick architecture of the late 19th and early
20th centuries. The project also includes
an underground parking garage. For its
combination of architectural traditions
and new technologies, the project won
an award at the third Golden Trezzini
Awards for Architecture and Design
competition in 2020.
Its location near the Malaya Neva is one of
the property’s great advantages, and it was
used in the project’s design. The complex
is home to apartments with oversized
windows, panoramic or corner glazing,
or floor-to-ceiling windows offering access
to open balconies, enclosed balconies with
floor-to-ceiling windows or open terraces, or
glazed winter gardens.
The project is located in one of the most
prestigious locations in the central part
of St Petersburg, in close proximity to
the banks of the Neva River, parks and
garden squares. Various recreational areas,
including a yacht club, upscale restaurants,
Petrovskiy Park and parks on nearby
Krestovskiy Island, as well as stadiums
and sports facilities, are located nearby.
And since the island’s bridges are not raised
at night, there won’t be any delays reaching
the city’s business centre.
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
1 Colliers International estimate as of 31 December 2020
92
PROJECT PORTFOLIO
93
ANNUAL REPORT 2020
S
S
A
L
C
S
S
E
N
S
U
B
I
NET SELLABLE AREA1
6 THS
SQM
MARKET VALUE1
66 MLN
RUB
SALES REVENUE1
1,643 MLN
RUB
SCHASTYE
NA PRESNE
MOSCOW
Tulskaya
Verkhnie Kotly
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
University
THIRD RING ROAD
Museum
University
ZIL
Nagatinskaya
Business
Center
University
Verkhnie Kotly
University
Church
Tulskaya
V
A
R
S
H
A
V
S
K
O
Y
E
S
H
O
S
S
E
THIRD RING ROAD
Museum
University
University
ZIL
Avtozavodskaya
A
V
O
P
O
R
D
N
A
Lanscape
Park
Tekhnopark
T
K
E
P
S
O
R
P
Nagatinskaya
Business
Center
Kolomenskaya
University
Museum
Business Center
Church
Kolomenskoye
The Schastye na Presne residential complex is located in the pres-
tigious Presnenskiy district in the very centre of Moscow, not far from
the Moscow International Business Centre (Moscow City).
Business
Center
Museum
Main Botanical
Garden
Church
Dubrovka
Business
Center
Avtozavodskaya
Ostankino
Park
Museum
VDNKh
A K A D E M I K A KORO LYOVA S TR E E T
University
Museum
Aqueduct
Park
VDNKh
Losiny Ostrov
National Park
Business
Center
A
V
O
P
O
R
D
N
A
University
T
K
E
P
S
O
R
P
Lanscape
Park
Tekhnopark
This residential complex’s varied-height
tower (from 19 to 21 storeys) offers
apartments with ceiling heights ranging
from 3.6 to 5.1 metres. Panoramic windows
will allow residents to enjoy breathtaking
views of the Moscow City business
centre, the Moscow River Embankment,
Krasnogvardeyskie ponds and other
attractions in the centre of the capital.
Kolomenskaya
Museum
Church
Kolomenskoye
The Schastye na Presne residential complex
is within a 15-minute walk from the Ulitsa
1905 Goda metro station and near the
Business Center
I
A
R
M
T
K
E
P
S
O
R
P
Museum
Church
Business
Center
Malenkovskaya
Third Transport Ring and Zvenigorodskoye
Shosse. Just 100 metres from the
property is the picturesque and green
Krasnogvardeiskiy Bulvar, with its cascade
of ponds, behind which are Krasnaya
Presnya Park and the Moscow River
Embankment.
Rizhskaya
Alekseevskaya
Moskva-3
Business
Center
Sokolniki
Park
University
T
H
Church
Business
Center
Business
Center
T H I R D R I N G R O A D
University
Museum
I
R
D
R
I
N
G
R
Business
Center
University
Yekaterininskiy
Park
Shops, two preschools, a sports centre and
the Expocentre can be found within walking
distance of the complex.
MSU
Botanical
Garden
Business
Center
Church
A
O
D
Zenit
R
E
T
E
M
A
I
D
E D
E
P
S
-
H
G
I
H
N
R
E
T
S
E
W
Primorskaya
CPKiO
Park Tikhiy Otdykh
Seaside
Victory Park
Krestovskiy Ostrov
K R E S T O V S K I Y
A V E N U E
Museum
Botanicheskiy
Garden
Church
PETROVSKIY AVENUE
University
Museum
Chkalovskaya
Business
Center
Museum
University
Aleksandrovskiy
Garden
Sportivnaya
Peter and Paul
Fortress
Vasileostrovskaya
Church
Museum
Museum
University
Church
Museum
Business
Center
Khodynka
Field Park
Beryozovaya
Roscha Park
Begovaya
Museum
Khoroshyovskaya
ZVENIGORODSKOYE
SHOSSE
Shelepikha
Filyovskiy Park
Business
Center
D
A
O
R
G
N
I
R
D
R
I
H
T
Church
Ulitsa 1905 Goda
Business Center
Business
Center
Barrikadnaya
Museum
Business
Center
Krasnaya
Presnya Park
Delovoy Tsentr
Business
Center
Business
Center
Museum
Business
Center
Business
Center
Museum
Victory
Park
University
Church
7 km
12 minutes to Red Square
4 km
9 minutes to the Garden Ring
2 km
5 minutes to Krasnaya Presnya Park
Kuntsevskaya
Minskaya
Victory
Park
Matveyevskiy
Forest
A
M
I
N
Y
E
V
S
Setun River
Valley Nature Park
University
K
O
Y
E
S
H
O
S
S
E
O V A
H
K
O
R
O
A D
L
A
Business
Center
Business
Center
Troyekurovskaya
Grove
Business
Center
R
E
E N
T G
P R O S P E K
Business
Center
Lomonosovskiy
Prospekt
Matveyevskaya
Aminyevskaya
(under construction)
University
Ramenki
Museum
Business
Center
Church
Ochakovo
Michurinskiy
Prospekt
50 Years
of October Park
O S P E K T
RIN S KIY P R
U
H
M IC
Museum
Olympic
Village Park
University
Ozyornaya
Museum
Church
Marsovo
Pole
Church
University
Museum
University
New Holland
Island
Museum
University
University
Business
Center
Teatra Yunykh
Zriteley Garden
Tekhnologicheskiy
Institut
Business
Center
University
University
Church
University
NABEREZHNAYA OBVODNOGO
K ANAL A
Baltiyskaya
Ekateringof
Park
Museum
University
Business
Center
E
S
S
O
H
S
E
Y
O
K
S
V
E
I
N
A
F
O
R
T
I
M
Business
Center
Frunzenskaya
T
K
E
P
S
O
R
O V S KIY P
Church
LIG
M
O
S
K
O
V
S
K
I
Y
Moskovskie Vorota
Business
Center
P
R
O
S
P
E
K
T
Business
Center
Museum
Church
1 Colliers International estimate as of 31 December 2020
94
PROJECT PORTFOLIO
95
ANNUAL REPORT 2020
COMFORT-CLASS
PROJECTS
ST PETERSBURG
OKHTA
HOUSE
NET SELLABLE AREA 1
130 THS SQM
MARKET VALUE1
5,849 MLN RUB
SALES REVENUE1
13,122 MLN RUB
ST PETERSBURG
The Okhta House project consists of four
residential buildings, as well as underground
and above-ground parking. The ground
floors of the buildings house commercial
infrastructure. The residential part was
designed in accordance with the Company’s
new approach to creating an improved
product. Available to buyers is a wide
selection of apartments that meet different
needs and tastes, including finished
apartments. Playgrounds, recreational areas
and sports facilities are available on the
adjacent grounds. The property is built on
a site free of tightly packed buildings, near
the Okhta River and numerous parks, such
as Polyustrovskiy Park, Ilyinskiy Garden
and Armashevskiy Skver Park. Located in
such surroundings, Okhta House will enable
residents to enjoy countless opportunities
Church
Polyustrovskiy
Park
S H O S S E
V
O
K
I
T
E
G
R
E
N
E
Business
Center
BOLSHAYA PROKHOVSKAYA STREET
Business Center
T
K
E
P
S
O
R
P
Georgievskiy
Garden Square
Church
University
Business
Center
Church
Armashyovskiy
Skver Park
Museum
I
R E V O L U T S I
Business
Center
I
N
D
U
S
T
R
I
A
L
N
I
Y
Peredovikov
Garden
P
R
O
S
P
E
K
T
Malinovka
Park
S
S
A
L
C
T
R
O
F
M
O
C
for outdoor activities and walks in the
fresh air. Schools, preschools, healthcare
facilities, shops, beauty salons and sports
centres are all within walking distance.
Mitino
Emerald Hills
Landscape Forest Park
Museum
M
O
O
O
O
O
S
E
H
K
K
A
Y
S
S
S
S
E
E
V
L
L
Church
Volokolamskaya
University
Business Center
Opalikha
Pavshino
Business
Center
Business
Center
Penyagino
Krasnogorskiy
City Park
Krasnogorskaya
Opalikhovskiy
Forest
Park
The Okhta House residential complex is
in the Krasnogvardeiskiy district, which
offers excellent transport accessibility.
The area has two metro stations and a
well-developed road and rail network. The
Bolsheokhtinskiy and Nevskiy Bridges
provide convenient connections to the
city centre.
D
A
O
G R
W RIN
Business
Center
Lipovaya
Roshcha
NOVORIZH
Arkhangelskoye
O
C
S
O
M
University
Museum
Church
Y I N
E S
S
I L
S
S
E
O
H
S
E
Y
K
O
S
S
Y
O
O
K
H
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
Piskaryovskiy
Park
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
Lesnaya
Museum
Business
Center
A
L
A B
L
Y
U
K
H
E
R
A
Church
University
Church
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
Church
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Ulitsa
Skobelevskaya
Church
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
HOUSE
ON BLYUKHERA
Church
Georgievskiy
Garden Square
Polyustrovskiy
Park
S H O S S E
V
O
K
I
T
E
G
R
E
N
E
Business
Center
BOLSHAYA PROKHOVSKAYA STREET
Business Center
T
K
E
P
S
O
R
P
Church
Armashyovskiy
Skver Park
Museum
I
R E V O L U T S I
Business
Center
I
N
D
U
S
T
R
I
A
L
N
I
Y
Peredovikov
Garden
P
R
O
S
P
E
K
T
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
Piskaryovskiy
Park
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
Lesnaya
Museum
Business
Center
A
L
A B
L
Y
U
K
H
E
R
A
Church
Church
University
Business
Center
Malinovka
Park
University
Church
S
S
A
L
C
T
R
O
F
M
O
C
Church
Stroiteley
Park
30-letiya
Oktyabrya
Garden
Business
Center
Museum
University
Business
Center
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
P
R
O
N
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
S
L I G O V
K
S
V
O
N I G
R
E
H
C
R
K I Y P
Business
Center
Moskovskie
Vorota
Vozdukhoplavatelniy
Park
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Lanskaya
T
E
E
R
T
A S
Y
A
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
University
University
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
University
U
S
H
A
Stroganovskiy Park
KOVSKAYA NABEREZHNAYA
Church
Tikhiy
Otdykh Park
Museum
Museum
University
Church
Business
Center
Business
Center
Church
The House on Blyukhera residential
complex includes two 17-storey residential
buildings connected by a stylobate ground
floor. The colour scheme of the facades—
with terminal-section projections—gives
the project a compact and distinctive
appearance.
Emerald Hills
Landscape Forest Park
Volokolamskaya
Krasnogorskiy
City Park
Penyagino
Opalikha
Business Center
Mitino
University
Museum
Church
L
L
V
E
S
S
S
Y
A
K
K
H
O
O
O
O
O
M
Business
Center
Business
Center
Opalikhovskiy
Forest
Park
Krasnogorskaya
S
E
Pavshino
E
S
S
O
H
Business
Center
E S
K
O
Y
S
O
K
Y
E
S
H
O
E
S
S
I L
S
Y I N
Church
Museum
University
O
C
S
O
M
Arkhangelskoye
NOVORIZH
Lipovaya
Roshcha
D
A
O
G R
W RIN
When developing plans for the buildings’
apartments and public spaces,
the Company was guided primarily by
the desire to create a comfortable living
environment for future residents. A wide
range of apartments with classic and
European layouts, taking into account
the latest trends in the housing market,
includes living areas with well-designed,
functional use of space, large kitchens
and living rooms facing scenic streets, and
walk-in closets.
NET SELLABLE AREA 1
105 THS SQM
MARKET VALUE1
26 MLN RUB
SALES REVENUE1
8,411 MLN RUB
1 Colliers International estimate as of 31 December 2020
Vagonoremont
Park
Church
Business
Center
Severnye
Dubki Park
Beskudnikovo
Angarskie
Prudy Park
8 0 0 - L E T I Y A M O S K V Y S T R E E T
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
University
Church
Elektrozavodskaya
Grachyovskaya
N
O
R
T
Grachyovskiy
Park
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Orlovskiy
Garden
Church
Church
Deguninskiy Pond
Mosselmash
Seligerskaya
Svyatoslav
Fyodorov Park
Business
Center
The House on Blyukhera residential
complex is located in the vicinity of some
of the largest parks in St Petersburg:
Polyustrovskiy Park, the Forestry Academy
Park, the Polytechnic University Park and
Sosnovka. The property is located next to
the Evropolis shopping centre.
Bulvar Dmitriya
Donskogo
Ulitsa Starokachalovskaya
MOSCOW RING ROAD
Lesoparkovaya
Business
Center
Business
Center
Business
Center
Annino
Bitsa
Bitsa Park
Museum
Church
Church
VILAR
Botanical
Garden
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
Butovo
Forest Park
T
E
E
R
T
S
Y
Church
O
P
L Y A N
Church
S
H
O
S
S
E
Butovo
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Ulitsa
Skobelevskaya
Bulvar Admirala
Ushakova
Within walking distance of the project
are two metro stations: Lesnaya and
Ploshchad Muzhestva. Numerous public
transport routes pass along Prospekt
Marshala Blyukhera and Kushelevskaya
Road. The major arterial roads nearby—
Kantemirovskaya Street, Prospekt Marshala
Blyukhera, Lesnoy Prospekt, Ushakovskaya
Naberezhnaya and Vyborgskaya
Naberezhnaya—provide easy access for
vehicles, and Nevskiy Prospekt can be
reached in 15 minutes by car.
Church
Stroiteley
Park
30-letiya
Oktyabrya
Garden
Business
Center
Museum
University
Business
Center
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
O
N
P
R
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
S
L I G O V
K
S
V
O
N I G
R
E
H
C
R
K I Y P
Business
Center
Moskovskie
Vorota
Vozdukhoplavatelniy
Park
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Lanskaya
T
E
E
R
T
A S
Y
A
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
University
University
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
University
U
S
H
A
Stroganovskiy Park
KOVSKAYA NABEREZHNAYA
Church
Tikhiy
Otdykh Park
Museum
Museum
University
Church
Business
Center
Business
Center
Church
Vagonoremont
Park
Church
Business
Center
Severnye
Dubki Park
Beskudnikovo
Prudy Park
Angarskie
8 0 0 - L E T I Y A M O S K V Y S T R E E T
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
Orlovskiy
Garden
Church
Grachyovskaya
Church
N
O
R
T
Grachyovskiy
H
-
E
Park
A
S
T
E
X
P
R
E
S
S
W
A
Y
Deguninskiy Pond
Mosselmash
Business
Center
Seligerskaya
Svyatoslav
Fyodorov Park
Medvedkovskiy
Park
Medvedkovo
SHIROKAYA STREET
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Church
Gagarinskiy
Park
Church
Los
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Church
Yauza River
Park
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
M
A
L
Y
G
I
N
A
S
T
R
E
E
T
Business
Center
Torfyanka
Park
Babushkinskiy
Park
Business
Center
Babushkinskaya
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
University
Izmaylovo
Partizanskaya
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Business
Center
Semyonovskiy
Skver Park
University
Business
Center
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
University
Museum
University
Lefortovskiy
Park
Business
Center
Izmailovskiy
Park
Sokolinaya
Gora
University
Church
Elektrozavodskaya
Medvedkovskiy
Park
Medvedkovo
SHIROKAYA STREET
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Church
Gagarinskiy
Park
Church
Los
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Church
Yauza River
Park
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
M
A
L
Y
G
I
N
A
S
T
R
E
E
T
Business
Center
Torfyanka
Park
Babushkinskiy
Park
Business
Center
Babushkinskaya
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
University
Izmaylovo
Partizanskaya
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Business
Center
Semyonovskiy
Skver Park
University
Business
Center
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
University
Museum
University
Lefortovskiy
Park
Business
Center
Izmailovskiy
Park
Sokolinaya
Gora
96
PROJECT PORTFOLIO
97
Church
University
Business
Center
Malinovka
Park
ANNUAL REPORT 2020
University
Church
Armashyovskiy
Skver Park
Museum
I
R E V O L U T S I
Business
Center
I
N
D
U
S
T
R
I
A
L
N
I
Y
Polyustrovskiy
Park
S H O S S E
Church
Business
Center
Peredovikov
Garden
P
R
O
S
P
E
K
T
BOLSHAYA PROKHOVSKAYA STREET
Business Center
V
O
K
I
T
E
G
R
E
N
E
T
K
E
P
S
O
R
P
Georgievskiy
Garden Square
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
A
L
A B
Lesnaya
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
L
Y
U
K
H
E
R
A
Piskaryovskiy
Park
Business
Center
Museum
Business
Center
Church
Church
ST PETERSBURG
Church
Museum
Polyustrovskiy
Park
ETALON
ON THE NEVA
BOLSHAYA PROKHOVSKAYA STREET
Armashyovskiy
Skver Park
Peredovikov
Garden
R E V O L U T S I
Business
Center
Business
Center
V
O
K
I
T
E
G
R
E
N
E
Business Center
T
K
E
P
S
O
R
P
S H O S S E
Church
O
N
D
U
N
R
R
K
I
I
I
A
Y
P
P
S
S
E
T
T
L
I
Georgievskiy
Garden Square
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
Piskaryovskiy
Park
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
Lesnaya
Museum
Business
Center
A
L
A B
L
Y
U
K
H
E
R
A
Church
Church
University
Business
Center
Malinovka
Park
University
Church
Church
Stroiteley
Park
30-letiya
Oktyabrya
Garden
Business
Center
Museum
University
Business
Center
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
P
R
O
N
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
S
S
A
L
C
T
R
O
F
M
O
C
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
Baltiyskaya
Museum
Business
Center
Business
Center
Moskovskie
Vorota
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
K
S
V
O
S
L I G O V
N I G
R
E
H
C
R
K I Y P
Vozdukhoplavatelniy
Park
University
Business
Center
Borovaya
University
Church
Volkovskaya
MOSCOW REGION
Business
Center
T
E
R
T
University
Novaya
Derevnya
Lanskaya
E
EMERALD
HILLS
BELOOSTROVSKAYA STREET
KOVSKAYA NABEREZHNAYA
Chyornaya Rechka
Pionerskiy
Park
Stroganovskiy Park
Lesnaya
Business Center
University
University
University
Church
A S
U
H
A
S
O
O
H
R
K
K
A
Y
S
Z
V
T
Tikhiy
Otdykh Park
Museum
Museum
Business
Center
Church
Church
Business
Center
Church
Opalikha
Emerald Hills
Landscape Forest Park
Mitino
Museum
V
O
L
O
Volokolamskaya
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Opalikhovskiy
Forest
Park
Business
Center
S
H
O
S
S
E
University
Penyagino
Business
Center
Krasnogorskaya
Church
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
NOVORIZH
S
K
O
Y
Lipovaya
Roshcha
D
A
O
G R
W RIN
O
C
S
O
M
Museum
Arkhangelskoye
University
E
S
H
O
S
S
E
Y
M
O
N
O
C
E
R
E
P
P
U
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
Church
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Ulitsa
Skobelevskaya
Church
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Piskaryovskiy
Park
30-letiya
Oktyabrya
Garden
DOMINO
Business
Center
T
Y
K
A
O
S
B
R
K
A
Y
T
E
S
A
P
P
B
R
K
H
E
E
Z
O
O
A
R
N
B
Church
Church
Stroiteley
Park
University
Olimpiya
Garden
Emerald Hills
Landscape Forest Park
Mitino
Museum
V
O
L
O
Volokolamskaya
Church
Opalikha
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Opalikhovskiy
Forest
Park
Business
Center
S
H
O
S
S
E
University
Penyagino
Business
Center
Krasnogorskaya
Church
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
NOVORIZH
S
K
O
Y
Lipovaya
Roshcha
D
A
O
G R
W RIN
O
C
S
O
M
E
S
H
O
S
S
E
NET SELLABLE AREA 1
77 THS SQM
Arkhangelskoye
Museum
University
MARKET VALUE1
3,233 MLN RUB
SALES REVENUE1
9,349 MLN RUB
ST PETERSBURG
Museum
Business
Center
University
U
K
H
O
V
S
K
O
Y
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Vagonoremont
Park
Church
Angarskie
Prudy Park
8 0 0 - L E T I Y A M O S K V Y S T R E E T
Business
Center
Severnye
Dubki Park
Beskudnikovo
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
University
Orlovskiy
Garden
Church
Seligerskaya
Svyatoslav
Fyodorov Park
Business
Center
Grachyovskaya
N
O
R
T
Grachyovskiy
Park
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Church
Deguninskiy Pond
Mosselmash
NET SELLABLE AREA 1
39 THS SQM
MARKET VALUE1
2,696 MLN RUB
SALES REVENUE1
7,199 MLN RUB
Church
Museum
Bitsa Park
Bitsa
Annino
Business
Center
Business
Center
Business
Center
Lesoparkovaya
MOSCOW RING ROAD
Ulitsa Starokachalovskaya
Bulvar Dmitriya
Donskogo
The Etalon on the Neva residential
complex, consisting of 16 variable-height
sections, is located in the historic part of
St Petersburg’s Nevskiy district. The project
combines modern design with a well-crafted
living environment, creating a remarkable
atmosphere of privacy and comfort. Due
to its location along the Neva River, the
residential complex offers outstanding
views. One feature of the project is the
extraordinary apartment layouts: one-
and two-level “urban villas” with direct
access to adjacent grounds and the Neva
Embankment, as well as apartments with
large patios.
Bulvar Admirala
Ushakova
Ulitsa
Skobelevskaya
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
VILAR
Botanical
Garden
Butovo Forest
Park
Butovo
Forest Park
M
F
E
R
O
P
O
L
S
K
O
Y
E
Butovo
T
E
E
R
T
S
Y
S
H
O
S
S
E
Church
Church
Church
L Y A N
S
P
I
O
The property is a seven-minute walk
from the Elizarovskaya metro station.
Cafes and restaurants can be found on
Museum
Obvodniy
Kanal
Business
Center
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Business
Center
Moskovskie
Vorota
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
K
S
V
O
S
L I G O V
N I G
R
E
H
C
R
K I Y P
Vozdukhoplavatelniy
Park
Church
Business
Center
Severnye
Dubki Park
Vagonoremont
Park
the embankment next to the residence.
Within walking distance of the complex
are preschools, schools, colleges and
universities, sports facilities, a swimming
pool and an ice rink. The pleasant green
courtyards, parks and garden squares
surrounding Etalon on the Neva will enable
residents to enjoy family walks at any time
of the year. The city centre is very close:
it takes no more than seven minutes to
reach Ploshchad Aleksandra Nevskogo and
Nevskiy Prospekt.
8 0 0 - L E T I Y A M O S K V Y S T R E E T
Svyatoslav
Fyodorov Park
Grachyovskaya
Beskudnikovo
Grachyovskiy
Park
Mosselmash
Seligerskaya
Angarskie
Prudy Park
Orlovskiy
Garden
Business
Center
Deguninskiy Pond
T
R
O
V
S
K
O
Y
E
University
University
S
H
O
S
S
E
Church
Church
M
-
D
T
T
E
E
E
S
S
S
X
P
Y
A
A
R
R
N
H
O
W
I
Business
Center
Medvedkovskiy
Park
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Medvedkovo
SHIROKAYA STREET
Church
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Church
Yauza River
Park
T
E
E
R
T
S
A
Y
A
K
S
N
I
N
Y
A
T
M
A
L
Y
G
I
N
A
S
T
R
E
E
T
Church
Gagarinskiy
Park
Church
Los
Business
Center
Torfyanka
Park
Babushkinskaya
Babushkinskiy
Park
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
Izmaylovo
Partizanskaya
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Izmailovskiy
Park
Sokolinaya
Gora
Elektrozavodskaya
University
Semyonovskiy
Skver Park
Business
Center
University
Museum
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
Business
Center
University
University
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
Lefortovskiy
Park
NET SELLABLE AREA 1
857 THS SQM
Business
Center
MARKET VALUE1
1,519 MLN RUB
SALES REVENUE1
60,209 MLN RUB
The Emerald Hills residential complex was
the Company’s first—and is one of its
largest—projects in the Moscow region. It is
located just 9 kilometres from the Moscow
Ring Road and consists of 20 brick-
monolithic buildings, schools, preschools,
a clinic for adults and children with an
inpatient medical centre, an art school,
commercial infrastructure and underground
and above-ground parking.
Church
Museum
Polyustrovskiy
Park
The residential complex is located in one
of the most pristine parts of the Moscow
region and is surrounded by forested
parkland. A part of the forest adjoining
the complex has a landscaped park with
recreational areas and dedicated paths
for pedestrians and cyclists. Some of the
apartments offer forest views. In addition,
BOLSHAYA PROKHOVSKAYA STREET
Georgievskiy
Garden Square
Armashyovskiy
Skver Park
Peredovikov
Garden
R E V O L U T S I
Business
Center
Business
Center
V
O
K
I
T
E
G
R
E
N
E
Business Center
T
K
E
P
S
O
R
P
S H O S S E
Church
Church
O
N
D
U
N
R
R
K
I
I
I
A
Y
P
P
S
S
E
T
T
L
I
Malinovka
Park
University
Business
Center
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Church
Tikhiy
Otdykh Park
Lanskaya
E
E
R
T
A S
Y
A
University
T
University
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
Stroganovskiy Park
University
U
S
H
A
KOVSKAYA NABEREZHNAYA
Museum
Museum
University
Church
Business
Center
Business
Center
Church
S
S
A
L
C
T
R
O
F
M
O
C
MOSCOW
ETALON
CITY
Church
Opalikha
Emerald Hills
Landscape Forest Park
Mitino
Museum
V
O
L
O
Volokolamskaya
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Opalikhovskiy
Forest
Park
Business
Center
S
H
O
S
S
E
University
Penyagino
Business
Center
Krasnogorskaya
Church
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
NOVORIZH
S
K
O
Y
Lipovaya
Roshcha
D
A
O
G R
W RIN
O
C
S
O
M
Museum
Arkhangelskoye
University
E
S
H
O
S
S
E
most of the grounds of the complex itself is
reserved for landscaping and the installation
of recreational areas, sports facilities and
children’s playgrounds. The project includes
an open-air space museum.
The proximity of the Volokolamskoye
Shosse provides convenient vehicle access
to the Moscow Ring Road. Moscow can be
reached by surface transport by suburban
train from the Opalikha railway station or
by the second Moscow Central Diameter
rail line.
Ploshchad Muzhestva
University
30-letiya
Oktyabrya
Garden
Piskaryovskiy
Park
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
Lesnaya
Museum
Business
Center
A
L
A B
L
Y
U
K
H
E
R
A
Church
University
Church
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
Church
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Ulitsa
Skobelevskaya
Church
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Museum
University
Business
Center
Business
Center
Business
Center
Izmaylovo
Partizanskaya
Stroganovskiy Park and Ushakovskaya
Naberezhnaya are also located nearby.
The project offers excellent transport
accessibility: several public transport
stops and the Chyornaya Rechka metro
station are within a seven-minute walk. The
residential complex also offers convenient
I Z M A I L O V S K O Y E S H O S S E
exits onto Primorskiy Prospekt and the
Western High-Speed Diameter, which will
allow residents of the property to quickly
reach other districts and resort suburbs of
St Petersburg.
Sokolinaya
Gora
Elektrozavodskaya
Semyonovskaya
S H C H E R B A K O V S K AYA
Semyonovskiy
Skver Park
Lefortovskiy
Park
Izmailovskiy
Park
Business
Center
Business
Center
Business
Center
E
X
P
R
E
S
S
W
A
Y
N
O
R
T
H
-
E
A
S
T
University
University
University
University
Museum
Museum
O
O
O
O
G
U
D
N
N
R
K
B
Y
P
P
S
E
T
Church
Business
Center
Dzhamgarovskiy Park
SHIROKAYA STREET
Medvedkovo
Medvedkovskiy
Park
MOSCOW RING ROAD
The Domino comfort-class project on
Beloostrovskaya Street in the Primorskiy
district of St Petersburg is a 10-storey
building with underground and above-
ground parking for 219 vehicles. The
residential complex offers a wide range of
apartments with a variety of floor plans.
Most of the apartments are equipped with
spacious open or enclosed balconies;
apartments with panoramic windows are
also available. One of the features of the
project will be a closed, pedestrian-only
courtyard with a playground for children,
sports facilities, a recreation area and an
amphitheatre.
T
E
E
R
T
S
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Babushkinskaya
Babushkinskiy
Park
Gagarinskiy
Park
Yauza River
Park
Torfyanka
Park
Business
Center
Business
Center
Los
Church
Church
Church
I
L
T
T
E
E
S
Y
A
A
R
N
G
M
The Domino residential complex is located
in a pleasant area near the Naberezhnaya
Chyornoy Rechki. The Saltykovskiy Garden,
The Etalon City residential complex is
located in an environmentally friendly area
with well-developed infrastructure straddling
North and South Butovo. Surrounded by
forest, the property is adjacent to Butovo
Forest Park, the largest park in the Moscow
region, with an area of over 1.5 ths hectares.
The grounds of Etalon City feature a
landscape park and equipped playgrounds
and recreational areas; a preschool for
225 children was completed in early 2021,
and a school for 625 pupils is being built.
The ground floor of the high-rise buildings
houses a fitness centre with an area of
10 ths sqm and three swimming pools.
The project offers convenient access to
the Moscow Ring Road, Kaluzhskoye
Shosse and Varshavskoye Shosse, and
it is within walking distance of the Ulitsa
Skobelevskaya metro station.
The project concept features facades
with the appearance and atmosphere of
world capitals. Each building has a unique
facade and interior design reflecting the
architecture and views of one of the cities.
The facades of the second row of high-
rises, known as the Tokyo Towers, are
decorated with motifs from one of Japan’s
most famous engravings, The Great Wave
off Kanagawa.
NET SELLABLE AREA 1
366 THS SQM
MARKET VALUE1
1,725 MLN RUB
SALES REVENUE1
29,203 MLN RUB
1 Colliers International estimate as of 31 December 2020
Church
Armashyovskiy
Skver Park
Museum
I
R E V O L U T S I
Business
Center
I
N
D
U
S
T
R
I
A
L
N
I
Y
Polyustrovskiy
Park
S H O S S E
Church
Business
Center
Peredovikov
Garden
P
R
O
S
P
E
K
T
BOLSHAYA PROKHOVSKAYA STREET
Business Center
Georgievskiy
Garden Square
V
O
K
I
T
E
G
R
E
N
E
T
K
E
P
S
O
R
P
Church
University
Business
Center
Malinovka
Park
Emerald Hills
Landscape Forest Park
Mitino
Church
Opalikha
Business Center
Krasnogorskiy
City Park
Museum
V
O
L
O
K
O
L
A
M
S
K
Business
Center
O
Y
E
S
H
O
S
S
E
Opalikhovskiy
Forest
Park
University
Penyagino
Volokolamskaya
Business
Center
Krasnogorskaya
Church
Museum
Arkhangelskoye
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
D
A
O
G R
W RIN
O
C
S
O
M
NOVORIZH
Lipovaya
Roshcha
S
K
O
Y
E
S
H
O
S
S
E
University
Butovo
Forest Park
O
P
Church
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
Lesnaya
Museum
Business
Center
A
L
A B
L
Y
U
K
H
E
R
A
Church
University
Church
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
Church
T
E
E
R
T
S
Y
L Y A N
Ulitsa
Skobelevskaya
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Church
Stroiteley
Park
30-letiya
Oktyabrya
Garden
Business
Center
Museum
University
Business
Center
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
O
N
P
R
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
S
L I G O V
K
S
V
O
N I G
R
E
H
C
R
K I Y P
Business
Center
Moskovskie
Vorota
Vozdukhoplavatelniy
Park
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Lanskaya
T
E
E
R
T
A S
Y
A
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
University
University
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
University
U
S
H
A
Stroganovskiy Park
KOVSKAYA NABEREZHNAYA
Church
Tikhiy
Otdykh Park
Museum
Museum
University
Church
Business
Center
Business
Center
Church
Vagonoremont
Park
Church
Business
Center
Severnye
Dubki Park
Beskudnikovo
Prudy Park
Angarskie
8 0 0 - L E T I Y A M O S K V Y S T R E E T
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
Orlovskiy
Garden
Church
Grachyovskaya
Church
N
O
R
T
Grachyovskiy
H
-
E
Park
A
S
T
E
X
P
R
E
S
S
W
A
Y
Deguninskiy Pond
Mosselmash
Business
Center
Seligerskaya
Svyatoslav
Fyodorov Park
Medvedkovskiy
Park
Medvedkovo
SHIROKAYA STREET
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Church
Gagarinskiy
Park
Church
Los
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Church
Yauza River
Park
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
M
A
L
Y
G
I
N
A
S
T
R
E
E
T
Business
Center
Torfyanka
Park
Babushkinskiy
Park
Business
Center
Babushkinskaya
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
University
Izmaylovo
Partizanskaya
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Business
Center
Semyonovskiy
Skver Park
University
Business
Center
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
University
Museum
University
Lefortovskiy
Park
Business
Center
Izmailovskiy
Park
Sokolinaya
Gora
University
Church
Elektrozavodskaya
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
S
L I G O V
K
S
V
O
N I G
R
E
H
C
R
K I Y P
Business
Center
Moskovskie
Vorota
Vozdukhoplavatelniy
Park
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Lanskaya
T
E
E
R
T
A S
Y
A
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
University
University
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
University
U
S
H
A
Stroganovskiy Park
KOVSKAYA NABEREZHNAYA
Church
Tikhiy
Otdykh Park
Museum
Museum
University
Church
Business
Center
Business
Center
Church
Medvedkovskiy
Park
Medvedkovo
SHIROKAYA STREET
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Church
Gagarinskiy
Park
Church
Los
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Church
Yauza River
Park
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
M
A
L
Y
G
I
N
A
S
T
R
E
E
T
Business
Center
Torfyanka
Park
Babushkinskiy
Park
Business
Center
Babushkinskaya
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
University
Izmaylovo
Partizanskaya
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Business
Center
Semyonovskiy
Skver Park
University
Business
Center
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
University
Museum
University
Lefortovskiy
Park
Business
Center
Izmailovskiy
Park
Sokolinaya
Gora
Church
Stroiteley
Park
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
P
R
O
N
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
University
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Vagonoremont
Park
Church
Business
Center
Severnye
Dubki Park
Beskudnikovo
Angarskie
Prudy Park
8 0 0 - L E T I Y A M O S K V Y S T R E E T
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
University
Church
Elektrozavodskaya
Grachyovskaya
N
O
R
T
Grachyovskiy
Park
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Orlovskiy
Garden
Church
Church
Deguninskiy Pond
Mosselmash
Seligerskaya
Svyatoslav
Fyodorov Park
Business
Center
S
S
A
L
C
T
R
O
F
M
O
C
Church
Armashyovskiy
Skver Park
Museum
I
R E V O L U T S I
Business
Center
I
N
D
U
S
T
R
I
A
L
N
I
Y
Polyustrovskiy
Park
S H O S S E
Church
Business
Center
Peredovikov
Garden
P
R
O
S
P
E
K
T
BOLSHAYA PROKHOVSKAYA STREET
Business Center
V
O
K
I
T
E
G
R
E
N
E
T
K
E
P
S
O
R
P
Georgievskiy
Garden Square
Church
University
Business
Center
Malinovka
Park
Ploshchad Muzhestva
University
University
Museum
Lesotekhnicheskoy
Akademii Park
Kushelevka
P R O S PEKT M
A
R
S
H
A
L
A B
Lesnaya
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
L
Y
U
K
H
E
R
A
Piskaryovskiy
Park
Business
Center
Museum
Business
Center
Church
PROJECT PORTFOLIO
University
Church
Church
Stroiteley
Park
30-letiya
Oktyabrya
Garden
Business
Center
Museum
University
Business
Center
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
O
N
P
R
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Business
Center
Museum
Zavodskoy
Garden
Krupskoy
Garden
Museum
Obvodniy
Kanal
Business
Center
University
Olimpiya
Garden
Baltiyskaya
Museum
Business
Center
Business
Center
Moskovskie
Vorota
University
Business
Center
Borovaya
University
Church
Volkovskaya
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
K
S
V
O
S
L I G O V
N I G
R
E
H
C
R
K I Y P
Vozdukhoplavatelniy
Park
99
98
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Church
Tikhiy
Otdykh Park
Lanskaya
T
E
E
R
T
A S
Y
A
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
University
University
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
University
U
S
H
A
Stroganovskiy Park
KOVSKAYA NABEREZHNAYA
Museum
Museum
University
Church
Business
Center
Business
Center
Church
ANNUAL REPORT 2020
MOSCOW
Emerald Hills
Landscape Forest Park
Mitino
O
O
V
L
Church
Museum
SUMMER
GARDEN
Opalikhovskiy
Forest
Park
Krasnogorskaya
Volokolamskaya
Krasnogorskiy
City Park
Penyagino
Business
Center
Business
Center
Lipovaya
Roshcha
Pavshino
Opalikha
NOVORIZH
Business Center
University
Church
Y I N
E S
I L
S
L
E
E
S
S
S
S
Y
K
A
K
K
H
E
S
S
S
O
O
O
Y
M
O
O
K
H
D
A
O
G R
W RIN
O
C
S
O
M
Museum
Arkhangelskoye
University
O
Y
E
S
H
O
S
S
E
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
Business
Center
Church
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Ulitsa
Skobelevskaya
Church
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
ST PETERSBURG
Business
Center
Vagonoremont
Park
Church
Angarskie
Prudy Park
8 0 0 - L E T I Y A M O S K V Y S T R E E T
Business
Center
Severnye
Dubki Park
Beskudnikovo
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
University
Grachyovskaya
N
O
R
T
Grachyovskiy
Park
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Orlovskiy
Garden
Church
Church
Deguninskiy Pond
Mosselmash
Seligerskaya
Svyatoslav
Fyodorov Park
Business
Center
S
S
A
L
C
T
R
O
F
M
O
C
Medvedkovskiy
Park
MOSCOW RING ROAD
Business
Center
Dzhamgarovskiy Park
Museum
Medvedkovo
Polyustrovskiy
Park
SHIROKAYA STREET
S H O S S E
Church
Church
Church
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
M
G
N
A
Y
L
I
Yauza River
Park
T
E
E
R
T
V
S
O
A
K
Y
I
A
T
K
E
S
G
N
R
I
E
N
N
Y
A
E
T
BOLSHAYA PROKHOVSKAYA STREET
A
Business
Center
S
T
R
E
E
T
Business Center
Business
Center
Georgievskiy
Garden Square
Church
Business
Center
Babushkinskaya
University
T
K
E
P
S
O
R
P
Torfyanka
Park
Babushkinskiy
Park
Business
Center
Armashyovskiy
Skver Park
Church
I
R E V O L U T S I
Business
Center
Gagarinskiy
Park
I
N
D
U
S
T
R
I
A
L
N
I
Y
Church
Los
Peredovikov
Garden
P
R
O
S
P
E
K
T
Ploshchad Muzhestva
University
Church
Church
Museum
Museum
University
University
Business
Center
Business
Center
Izmaylovo
Business
Center
University
Piskaryovskiy
Park
Partizanskaya
S H C H E R B A K O V S K AYA
Semyonovskaya
30-letiya
Oktyabrya
Garden
Elektrozavodskaya
Lesotekhnicheskoy
Akademii Park
PROJECT ON
CHERNIGOVSKAYA
STREET
I Z M A I L O V S K O Y E S H O S S E
Sokolinaya
Gora
Semyonovskiy
Skver Park
Elizarovskaya
Lefortovskiy
Park
Izmailovskiy
Park
Zavodskoy
Garden
Kushelevka
Palevskiy
Garden
University
P R O S PEKT M
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
Lesnaya
E
X
P
R
E
S
S
W
A
Y
N
O
R
T
H
-
E
A
S
T
University
University
University
University
Museum
Museum
Museum
Museum
Museum
Church
Church
A B
A R
U
K
A D
S H
A
R
S
L
L
E
Y
A
H
A
K
R
U
H
T
Y
K
A
O
S
B
O
O
O
O
R
G
U
D
N
N
K
A
R
K
Y
B
T
V
E
S
S
A
Y
P
P
P
P
Y
Y
S
E
O
B
B
R
K
K
K
R
T
U
H
N
L
N
E
H
E
K
E
Z
O
O
O
O
O
O
O
V
A
A
E
R
S
A
A
N
B
Y
Y
Malinovka
Park
Krupskoy
Garden
Church
Stroiteley
Park
University
Olimpiya
Garden
Museum
Obvodniy
Kanal
Business
Center
University
Business
Center
Borovaya
University
Church
Volkovskaya
Baltiyskaya
Museum
Business
Center
Business
Center
Moskovskie
Vorota
Frunzenskaya
University
Business
Center
M
O
S
K
O
V
S
K
I
Y
P
R
O
S
P
E
K
T
Church
O S P E K T
T
E
E
R
T
A S
Y
A
K
S
V
O
S
L I G O V
N I G
R
E
H
C
R
K I Y P
Vozdukhoplavatelniy
Park
Business
Center
Novaya
Derevnya
Chyornaya Rechka
Church
Tikhiy
Otdykh Park
I
T
H
G
L
S
S
E
N
S
U
B
I
Lanskaya
E
E
R
T
A S
Y
A
University
T
University
K
S
V
O
K
H
Z
R
O
T
Pionerskiy
Park
BELOOSTROVSKAYA STREET
Business Center
Lesnaya
Stroganovskiy Park
University
U
S
H
A
KOVSKAYA NABEREZHNAYA
Museum
Museum
University
Church
Business
Center
Business
Center
Church
The Summer Garden residential complex
consists of 11 multi-storey residential
buildings, a block of non-residential
apartments, a school for 800 children, a
preschool for 150 children and a three-
storey shopping and entertainment centre
with a cinema with an area of about 30 ths
sqm. State-of-the-art, high-performance
technological solutions were used in
developing the property.
gardens in mind. The complex is designed
in accordance with the “city within a city”
concept—that is, all of the residential areas
have the necessary infrastructure for living,
which makes it possible to work, relax and
live in one area. Inviting entrance lobbies,
designer courtyards and walking areas also
create a comfortable living environment.
The 38-hectare Angarskiye Prudy Park and
an equestrian centre are within a 10-minute
walk from the complex.
Church
Opalikha
NET SELLABLE AREA 1
278 THS SQM
Church
Ploshchad Muzhestva
Museum
University
Museum
I
R E V O L U T S I
Business
Center
Armashyovskiy
Skver Park
I
N
D
U
S
T
R
I
A
L
N
I
Y
MARKET VALUE1
1,494 MLN RUB
Lesotekhnicheskoy
Akademii Park
Kushelevka
Peredovikov
Garden
P
R
O
S
P
E
K
T
Lesnaya
P R O S PEKT M
A
R
S
H
University
Piskaryovskiy
Park
Business
Center
A D
O
A R
Y
A
K
S
V
E
L
E
S H
U
K
SALES REVENUE1
31,812 MLN RUB
Museum
Malinovka
Park
University
Church
A
L
A B
L
Y
U
K
H
E
R
A
Church
Business
Center
R
P
R
B
S
O
A
K
Y
T
Church
Church
30-letiya
Oktyabrya
Garden
The project is divided into residential
areas, each of which has its own colour
facades. This highlights every square
in each residential property and, at the
same time, lends the complex as a whole
a unique, vivid appearance. The concept
for landscaping the adjacent grounds
was developed with the idea of different
Elizarovskaya
Zavodskoy
Garden
Krupskoy
Garden
Palevskiy
Garden
Stroiteley
Park
Business
Center
Business
Center
Business
Center
Business
Center
Business
Center
University
Museum
K
A
Y
T
V
E
S
S
A
P
Y
Y
B
B
K
K
K
R
U
H
N
N
H
E
E
Z
O
O
O
O
O
O
O
A
A
R
A
N
B
Y
Museum
Church
Polyustrovskiy
Park
S H O S S E
V
O
K
I
T
E
G
R
E
N
E
Business
Center
BOLSHAYA PROKHOVSKAYA STREET
Business Center
T
K
E
P
S
O
R
P
Georgievskiy
Garden Square
Church
University
Business
Center
Museum
Obvodniy
Kanal
Business
Center
Church
Museum
University
Olimpiya
Garden
Polyustrovskiy
Park
The complex’s convenient location at the
intersection of Dmitrovskoye Shosse from
the west and 800-letiya Moskvy Street from
the south makes it possible to reach any
place in the city quickly and easily.
V
O
K
Business
I
T
E
Center
G
R
E
N
E
Armashyovskiy
Skver Park
Frunzenskaya
Peredovikov
Garden
Baltiyskaya
R E V O L U T S I
Borovaya
Business
Center
Business
Center
Business
Center
Business
Center
University
University
University
Museum
S H O S S E
Church
Church
O
D
N
U
N
R
R
K
I
I
I
A
Y
P
P
S
S
E
T
T
L
I
Business
Center
University
Novaya
Derevnya
M
O
BOLSHAYA PROKHOVSKAYA STREET
S
K
O
V
S
K
Church
Business Center
T
K
E
P
S
O
R
P
T
E
E
R
T
A S
Y
A
K
S
V
O
S
L I G O V
R
K I Y P
O S P E K T
Volkovskaya
Business
Center
Vozdukhoplavatelniy
Park
Malinovka
Park
The residential complex on Chernigovskaya
Street, known as the Che Quarter, is being
built in a historic part of St Petersburg near
the Moscow Gate. On the grounds of the
project will be six monolithic buildings of
8–12 storeys, two preschools, above-ground
and underground parking, and interactive
8 0 0 - L E T I Y A M O S K V Y S T R E E T
areas for recreation, socialising and sports.
Vagonoremont
Park
Beskudnikovo
Angarskie
Prudy Park
Severnye
Dubki Park
Business
Center
T
R
O
V
S
K
O
Y
E
University
University
S
H
O
S
S
E
Church
M
D
I
Orlovskiy
Garden
Church
Grachyovskaya
Church
W
O
N
H
R
R
A
A
Y
P
X
S
S
S
E
E
E
T
T
-
Museum
University
Deguninskiy Pond
Olimpiya
Garden
Business
Center
Business
Center
Seligerskaya
Mosselmash
Grachyovskiy
Park
Svyatoslav
Fyodorov Park
Obvodniy
Kanal
The residential complex was conceived
as a new-format project combining the
best features of classical and modern
approaches. The residential area offers
a wide selection of apartments with a variety
of layouts and areas with high ceilings
(up to 3.6 metres on the upper floors),
French balconies with glazing to the floor
and spacious open-concept kitchen-living
rooms. The project won the Premiere of the
Frunzenskaya
Volkovskaya
Baltiyskaya
Borovaya
Business
Center
Business
Center
Business
Center
Business
Center
O S P E K T
M
O
S
K
O
V
S
K
University
University
University
P
R
O
S
P
E
K
T
Museum
L I G O V
Church
Church
K I Y P
N I G
A S
Y
I
R
T
T
V
E
E
E
S
S
Y
A
R
K
R
C
H
O
Moskovskie
Vorota
Vozdukhoplavatelniy
Park
Emerald Hills
Landscape Forest Park
Mitino
Museum
V
O
L
O
Volokolamskaya
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Opalikhovskiy
Forest
Park
Business
Center
S
H
O
S
S
E
University
Penyagino
Business
Center
Krasnogorskaya
Church
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
NOVORIZH
S
K
O
Y
Lipovaya
Roshcha
Museum
Arkhangelskoye
University
E
S
H
O
S
S
E
Ploshchad Muzhestva
University
Lanskaya
E
E
R
T
A S
Y
A
Pionerskiy
Park
Museum
K
S
V
O
K
H
Z
R
O
T
University
T
Piskaryovskiy
Park
University
Business
Center
Lesoparkovaya
Museum
Church
Business
Center
Ulitsa Starokachalovskaya
Annino
Business
Center
MOSCOW RING ROAD
Bitsa Park
Bulvar Dmitriya
Donskogo
VILAR
Botanical
Garden
Bitsa
Business
Center
Church
D
A
O
G R
W RIN
O
C
S
O
M
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Church
Ulitsa
Skobelevskaya
Bulvar Admirala
Ushakova
Butovo
NET SELLABLE AREA 1
110 THS SQM
30-letiya
Oktyabrya
Garden
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
Church
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Church
O
K
T
Y
A
B
R
S
K
A
Y
A
Church
Stroiteley
Park
Chyornaya Rechka
Church
Tikhiy
Otdykh Park
Lesotekhnicheskoy
Akademii Park
Kushelevka
BELOOSTROVSKAYA STREET
L
E
K
V
E
S
Business Center
S H
U
K
P R O S PEKT M
Stroganovskiy Park
A
R
S
H
A D
O
A R
Y
A
Lesnaya
University
U
S
H
A
Lesnaya
KOVSKAYA NABEREZHNAYA
Museum
A
L
A B
L
Y
U
K
H
E
R
A
University
Church
Business
Center
Business
Center
Church
Church
Business
Center
Church
MARKET VALUE1
5,359 MLN RUB
Business
Center
Museum
Business
Center
SALES REVENUE1
18,383 MLN RUB
Business
Center
University
Museum
P
R
O
N
S
P
E
K
T
O
B
U
K
H
O
V
S
K
O
Y
A
B
E
R
E
Z
H
N
A
Y
A
O
B
O
R
O
N
Y
Business
Center
Elizarovskaya
Palevskiy
Garden
Business
Center
Zavodskoy
Garden
Krupskoy
Garden
Museum
University
Museum
Business
Center
Museum
Lesoparkovaya
Museum
Church
Business
Center
Business
Center
Business
Center
MOSCOW
Annino
Vagonoremont
Park
Year award for urban residential property at
the 2020 Urban Awards in Moscow.
M
G
N
R
A
A
Y
S
E
E
T
T
L
I
Church
Church
Church
Church
Los
Business
Center
Dzhamgarovskiy Park
SHIROKAYA STREET
Yauza River
Park
Gagarinskiy
Park
Medvedkovo
Medvedkovskiy
Park
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
T
E
E
R
T
S
A
Y
A
K
S
N
I
N
Y
A
T
The Che Quarter offers excellent transport
MOSCOW RING ROAD
connections thanks to its location in the
Moskovskiy district, not far from the centre
of St Petersburg. The Moskovskie Vorota
metro station is a seven-minute walk away,
and the proximity of some of the city’s
main thoroughfares—Moskovskiy Prospekt,
Ligovskiy Prospekt and Naberezhnaya
Obvodngo Kanala—is a great benefit
for motorists. The Western High-Speed
Diameter can be reached in nine minutes
by car; the Ring Road, in 16 minutes; and
BELOOSTROVSKAYA STREET
Pulkovo Airport, in half an hour.
Lanskaya
E
Chyornaya Rechka
Novaya
Derevnya
Babushkinskaya
Babushkinskiy
Park
Pionerskiy
Park
Torfyanka
Park
Business
Center
Business
Center
Business
Center
Lesnaya
Business Center
University
University
A S
T
O
O
H
R
K
K
R
A
Y
S
Z
E
V
T
T
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
Izmaylovo
Partizanskaya
Elektrozavodskaya
University
Semyonovskiy
Skver Park
Business
Center
University
Lefortovskiy
Park
Museum
Business
Center
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
Business
Center
University
University
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Izmailovskiy
Park
Sokolinaya
Gora
Stroganovskiy Park
University
U
S
H
A
KOVSKAYA NABEREZHNAYA
Church
Tikhiy
Otdykh Park
Museum
Museum
University
Church
Business
Center
Business
Center
Church
Business
Center
Museum
Business
Center
Business
Center
Semyonovskaya
University
Izmaylovo
Partizanskaya
Elektrozavodskaya
University
Semyonovskiy
Skver Park
Business
Center
University
Museum
Lefortovskiy
Park
Business
Center
S H C H E R B A K O V S K AYA
I Z M A I L O V S K O Y E S H O S S E
Business
Center
University
University
B
U
D
Y
O
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Izmailovskiy
Park
Sokolinaya
Gora
S
S
A
L
C
T
R
O
F
M
O
C
Georgievskiy
Garden Square
Business
Center
I
Y
P
R
O
S
P
E
K
Church
T
N I G
R
E
H
C
Moskovskie
Vorota
University
Medvedkovskiy
Park
Medvedkovo
Church
MOSCOW
Lesoparkovaya
Annino
Museum
Emerald Hills
Landscape Forest Park
Mitino
Museum
V
O
L
O
Volokolamskaya
Church
Opalikha
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Opalikhovskiy
Forest
Park
Business
Center
S
H
O
S
S
E
University
Penyagino
Business
Center
NORMANDY
Bulvar Dmitriya
Donskogo
Ulitsa Starokachalovskaya
MOSCOW RING ROAD
Business
Center
Business
Center
Business
Center
Bitsa
Bitsa Park
Church
Church
VILAR
Botanical
Garden
Krasnogorskaya
Church
Pavshino
E S
Y
O
K
S
Y I N
I L
E
S
S
O
H
Business
Center
NOVORIZH
S
K
O
Y
Lipovaya
Roshcha
Museum
Arkhangelskoye
University
E
S
H
O
S
S
E
D
A
O
G R
W RIN
O
C
S
O
M
Church
Butovo
Forest Park
T
E
E
R
T
S
Y
L Y A N
O
P
Ulitsa
Skobelevskaya
Church
Bulvar Admirala
Ushakova
Butovo
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
S
H
O
S
S
E
Butovo Forest
Park
E
S
S
O
H
S
E
Y
O
K
S
V
A
H
S
R
A
V
Vagonoremont
Park
Church
Business
Center
Severnye
Dubki Park
Beskudnikovo
Angarskie
Prudy Park
8 0 0 - L E T I Y A M O S K V Y S T R E E T
University
D
M
I
T
R
O
V
S
K
O
Y
E
S
H
O
S
S
E
Grachyovskaya
N
O
R
T
Grachyovskiy
Park
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
Orlovskiy
Garden
Church
Church
Deguninskiy Pond
Mosselmash
Seligerskaya
Svyatoslav
Fyodorov Park
Business
Center
Emerald Hills
Landscape Forest Park
MOSCOW RING ROAD
Business
Center
Mitino
Museum
Dzhamgarovskiy Park
Volokolamskaya
V
O
L
O
SHIROKAYA STREET
Business Center
K
O
L
A
M
S
K
O
Y
E
Krasnogorskiy
City Park
Church
University
Opalikha
Church
Business
Center
Yauza River
Park
T
E
Opalikhovskiy
E
R
Forest
T
S
Park
A
Y
A
K
S
Y
E
S
I
N
E
Y
T
E
E
R
T
S
A
Y
A
K
S
Krasnogorskaya
N
I
N
Y
A
T
Church
A
Pavshino
T
S
R
E
O
S
S
Church
H
E S
Y
E
E
T
O
K
S
Y I N
I L
S
H
M
O
A
S
L
Y
S
E
G
I
N
Penyagino
Gagarinskiy
Park
Business
Center
Business
Los
Center
Lipovaya
Roshcha
D
A
O
G R
W RIN
O
C
S
O
M
Business
Center
Torfyanka
Park
NOVORIZH
S
K
O
Y
Business
Center
Babushkinskaya
Arkhangelskoye
Museum
Babushkinskiy
Park
University
E
S
H
O
S
S
E
S
S
A
L
C
T
R
O
F
M
O
C
University
Business
Center
Izmaylovo
MOSCOW RING ROAD
Partizanskaya
Bitsa Park
Bulvar Dmitriya
Donskogo
S H C H E R B A K O V S K AYA
VILAR
Botanical
Garden
I Z M A I L O V S K O Y E S H O S S E
Business
Center
Ulitsa Starokachalovskaya
Semyonovskaya
Elektrozavodskaya
Butovo
Forest Park
Business
Center
T
E
E
R
T
S
Y
L Y A N
O
P
University
Semyonovskiy
Skver Park
Ulitsa
Skobelevskaya
University
Church
Museum
Lefortovskiy
Park
Bulvar Admirala
Ushakova
Business
Center
Church
University
B
U
D
Y
O
E
S
S
O
H
S
E
Y
O
K
University
S
V
A
H
S
R
A
V
N
N
O
G
O
P
R
O
S
P
E
K
T
Museum
Butovo
Bitsa
Church
N
O
R
T
H
-
E
A
S
T
E
X
P
R
E
S
S
W
A
Y
S
I
M
F
E
R
O
P
O
L
S
K
O
Y
E
Izmailovskiy
Park
S
H
O
S
S
E
Butovo Forest
Park
Sokolinaya
Gora
Severnye
Dubki Park
Church
Business
Center
Business
Center
SCHASTYE
NA SEMYONOVSKOY
8 0 0 - L E T I Y A M O S K V Y S T R E E T
T
E
E
R
T
S
A
Y
A
K
S
N
I
N
Y
A
T
T
E
E
R
T
S
A
Y
A
K
S
Y
E
S
I
N
E
Y
Grachyovskaya
Beskudnikovo
Medvedkovo
Seligerskaya
Angarskie
Prudy Park
Yauza River
Park
SHIROKAYA STREET
Dzhamgarovskiy Park
Orlovskiy
Garden
T
R
O
V
S
K
O
Y
E
University
University
S
H
O
S
S
E
Church
Church
Church
Church
Church
Church
M
D
I
N
L
T
T
E
E
S
Y
A
A
R
N
G
M
I
Gagarinskiy
Park
Business
Center
Torfyanka
Park
Los
Medvedkovskiy
Park
MOSCOW RING ROAD
Business
Center
O
Grachyovskiy
Park
R
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H
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T
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X
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Deguninskiy Pond
Mosselmash
Business
Center
Svyatoslav
Fyodorov Park
Business
Center
Babushkinskaya
Babushkinskiy
Park
University
Church
distance, including Yauza River Park,
Torfyanka Park and Dzhamgarovskiy Park
with its cascade of ponds.
The property offers convenient transport
accessibility, with two metro stations, two
suburban train stations and surface public
transport stops nearby. The Moscow Ring
Road is less than a five-minute drive away,
which can then take residents wherever they
might want to go in the region.
The Normandy residential complex
consists of five buildings of 7 to 24 floors
with tranquil, unadorned facades and
bright architectural accents. The interior
is designed and planned down to the
last detail in terms of aesthetics and
comfort. Convenient pram storage rooms,
spacious halls, waiting areas for guests
and a concierge area are available for the
convenience of residents.
The project is conveniently located in a
picturesque green area in the north-east
of Moscow, near Losiny Ostrov National
Park. A low building density, well-developed
infrastructure and an abundance of parks
make this area of the capital attractive
for living and recreation. Several large
recreational areas are within walking
NET SELLABLE AREA 1
124 THS SQM
MARKET VALUE1
3,029 MLN RUB
SALES REVENUE1
15,989 MLN RUB
The Schastye na Semyonovskoy residential
complex will consist of a 13-storey
residential building with underground parking
and a parking lot for guests. One of the
features of the project will be apartments
with a variety of floor plans, including highly
glazed apartments, as well as apartments
with enclosed balconies or French balconies.
In addition, the apartments will not have
internal load-bearing walls, which will
enable future residents to arrange the space
however they see fit. The ground floor of the
residential complex will house commercial
and social infrastructure facilities with a
separate entrance, as well as a spacious
lobby, a pram storage room and other
public spaces necessary for the comfort
of residents. On the private landscaped
grounds adjacent to the complex, there will
be a children’s playground, sports facilities
and a softscaped recreational area.
The Schastye na Semyonovskoy residential
complex is located in a developed
green area of Moscow near some of the
capital’s largest parks: Sokolniki Park
and Izmailovskiy Park. The pleasant
Semyonovskiy Park and Public Garden is
250 metres from where the future residential
complex will be. Schools, preschools,
medical centres, shops, shopping and
entertainment centres and sports facilities,
including the Krylya Sovetov Stadium, are
within walking distance. The property’s
proximity to the Semyonovskaya and
Elektrozavodskaya metro stations
and Izmailovskoye Shosse, as well as
convenient exits onto the North-East
Expressway and the Third Ring Road,
will offer residents excellent transport
accessibility.
NET SELLABLE AREA 1
6 THS SQM
MARKET VALUE1
868 MLN RUB
SALES REVENUE1
1,517 MLN RUB
1 Colliers International estimate as of 31 December 2020
100
OPERATING RESULTS
101
ANNUAL REPORT 2020
OPERATING
RESULTS
102 Operating results
112 An even more attractive project portfolio
114 Regional sales
26 102
OPERATING RESULTS
103
ANNUAL REPORT 2020
OPERATING
RESULTS
Despite a challenging start to the year,
Etalon Group achieved its best-ever
operating results, easily exceeding even
its most optimistic forecast.
NEW CONTRACT
SALES
BLN RUB
in 2020
UP 3 % YEAR-ON-YEAR;
9 % ABOVE TARGET
2018
68.7
2019
77.6
NEW
CONTRACT
SALES
THS SQM
in 2020
8 % ABOVE TARGET
2018
2019
628.0
630.4
104
OPERATING RESULTS
105
ANNUAL REPORT 2020
124
149
CASH COLLECTIONS
BLN RUB
in 2020
UP 5 % YEAR-ON-YEAR
17 % ABOVE TARGET
2018
2019
62.8
77.7
AVERAGE PRICE
THS RUB/SQM
in 2020
UP 21 % YEAR-ON-YEAR
2018
2019
109
123
106
OPERATING RESULTS
107
ANNUAL REPORT 2020
AVERAGE PRICE
(APARTMENTS)
THS RUB/SQM
in 2020
UP 20 % YEAR-ON-YEAR
2018
124
2019
149
OPERATING
RESULTS
AT A GLANCE
Etalon Group fully achieved its delivery
and sales targets, having completed
the construction of 540 ths sqm of net
sellable area at 12 projects and having
sold over 538 ths sqm of NSA in residential
properties that have been completed or
are still under construction. Record-high
new contract sales in monetary terms and
cash collections, which amounted to RUB
80 billion and RUB 82 billion, respectively,
demonstrate the efficacy of the Company’s
pricing policy and sales strategy, which
focuses on monetary value as opposed
to volume, while also bolstering the
Company’s financial performance.
Cash collections of RUB 22.9 billion held in
escrow accounts during the year enabled
us to benefit from a reduced financing
rate of less than 3.5 % for projects that we
are building, in accordance with the new
regulations—and almost as low as 0 %
for some projects. At the same time, cash
collections in escrow still only make up
28 % of the total. We can use the remaining
72 %—an excellent basis for our operating
cash flow—for work on ongoing projects.
ROUBLE-
DENOMINATED
GROWTH DRIVEN
BY PRICING POLICY
AND NEW SALES
STRATEGY
In response to new industry regulations
last year, we changed our pricing policy by
increasing the price per sqm for projects
that were being built according to the
old rules. In addition, as part of the new
strategy introduced in the reporting year,
the Company deployed a dynamic pricing
system that made it possible to respond
more quickly and more flexibly to changes
in demand and to increase the profitability
of property sales across Etalon Group
as a whole. The new approach to pricing
drove up the price per sqm and resulted
in sales in rouble terms performing better
than sales in volume terms. The average
price per sqm for all types of properties
increased by 25 % over the year and
reached RUB 158 thousand in 4Q, up from
RUB 127 thousand a year earlier. The cost
of apartments increased by 23 % to RUB
192 thousand; in St Petersburg, dynamic
pricing increased the price per sqm for
apartments in comparable projects by even
more—25 %.
AVERAGE PRICE PER SQM IN 2019
AVERAGE PRICE PER SQM IN 2020
127 THS RUB
IN 4Q
158 THS RUB
IN 4Q
INCREASE IN AVERAGE PRICE
OVER THE YEAR
25 %
108
OPERATING RESULTS
109
ANNUAL REPORT 2020
IN 2020, AVERAGE PRICE
PER SQM FOR ALL TYPES
OF REAL ESTATE ROSE BY
%
25 year-on-year
In 2020, average price per sqm for all types
of real estate rose by 25% year-on-year,
while for apartments the average price
per sqm increased by 23% year-on-year.
Although our St Petersburg portfolio saw
prices rise quarter-on-quarter throughout
the year, overall performance was impacted
by the strict lockdown measures introduced
in the second quarter of 2020, especially
in Moscow. Prices recovered quickly in the
third quarter, however, and the average
price per sqm for apartment prices grew in
both quarters during the second half of the
year.
RECORD DOWN
PAYMENTS DRIVE
INCREASED CASH
FLOW
AVERAGE PRICE, THS RUB/sqm
4Q 2019
1Q 2020
2Q 2020
3Q 2020
4Q 2020
159.4
+25 %
158.4
127.1
142.4
122.0
AVERAGE PRICE (APARTMENTS), THS RUB/sqm
4Q 2019
1Q 2020
2Q 2020
3Q 2020
4Q 2020
207.9
165.5
196.4
156.3
130.6
131.6
199.1
159.1
135.5
214.5
186.3
149.2
221.1
+13 %
191.9
+23 %
162.7
+25 %
The average down payment remained high,
at 92 –93 %, over the last two quarters, up
from 83 % in 4Q 2019. Supporting factors
were the investment demand for real
estate, a state-backed mortgage support
programme and, of course, the considerable
share of business-class projects that we
offer (these apartments are usually paid for
in full upon purchase).
Amid an unprecedented decline in interest
rates, mortgage sales increased throughout
the year, reaching a record 65 % of all
home purchases in the fourth quarter. With
the extension of the preferential mortgage
programme until July 2021, we have reason
to expect a further expansion of mortgage
sales this year. At the same time, we do
not see any reason to expect a significant
decrease in demand for mortgages in
the mid-market segment even once the
programme is phased out, since the Bank
of Russia’s key rate is still at a historically
low level, which will keep mortgage
rates at a comfortable level for our target
audience.
AVERAGE DOWN PAYMENT
4Q 2019
1Q 2020
2Q 2020
3Q 2020
4Q 2020
92 %
93 %
83 %
85 %
86 %
SHARE OF MORTGAGE CONTRACTS
4Q 2019
1Q 2020
2Q 2020
3Q 2020
4Q 2020
63 %
44 %
64 %
65 %
47 %
44%
52 %
35 %
52 %
36 %
Сombined
St Petersburg
Moscow
All property types
Housing
110
OPERATING RESULTS
111
ANNUAL REPORT 2020
4Q 2020: MARKET
RECOVERY
AND A RAPID
IMPROVEMENT
IN PERFORMANCE
Despite the decrease in sales in the first
half of the year due to the spread of
COVID-19, the market quickly recovered
in the second half of 2020. We also saw
by the end of 2020 the first results from
the introduction of new technologies and
approaches to product creation established
by Etalon Group’s new strategy. The last
quarter of the year, which was the best in
the Company’s history in terms of the value
of new contract sales and cash collections,
made a major contribution to results for
the full year. We sold 167 ths sqm at a cost
of RUB 26.4 billion. Cash collections from
sales of RUB 29.2 billion represented 36 %
of the annual volume and were up by 55 %
year-on-year.
QUARTERLY OPERATING RESULTS:
4Q 2020
3Q 2020
2Q 2020
1Q 2020
4Q 2019
CHANGE
YEAR-ON-YEAR
IN 4Q 2020, %
New sales, sqm
166,788
150,451
94,984
125,971
171,530
New sales, RUB mln
26,418
23,983
11,585
17,936
21,795
Number of contracts
3,137
2,706
1,559
2,323
2,931
Cash collections, RUB mln
29,203
21,235
13,942
17,604
18,791
Average price, RUB/sqm
158,392
159,405
121,971
142,384
127,060
Average price (apartments), RUB/sqm
191,853
186,327
159,063
165,481
156,271
Deliveries, sqm
347,396
15,570
88,847
88,513
308,294
-3 %
21 %
7 %
55 %
25 %
23 %
13 %
OPERATING
RESULTS
BY REGION
Sales in the Moscow region were a major contributor to quarterly
results, with strong double-digit gains in all operating indicators.
In 4Q 2020, sales growth in St Petersburg was constrained by
limited supply; nevertheless, even with lower sales volumes in
sqm terms from a year earlier, sales were comparable in monetary
terms, and cash collections increased by 21 %.
A considerable improvement in nearly every
indicator in 4Q helped offset the decline
in sales seen at the beginning of the year
amid uncertainty and restrictions related to
the spread of COVID-19. In St Petersburg,
despite the limited supply of new projects,
sales in monetary terms were just 4%
lower than the year before, while increasing
by 8 % year-on-year in Moscow. Cash
collections in both regions were up from the
previous year.
REGIONAL DYNAMICS:
MOSCOW AND MOSCOW REGION
New sales, sqm
New sales, RUB mln
Number of contracts
Cash collections, RUB mln
Average price, RUB/sqm
Average price (apartments), RUB/sqm
Deliveries, sqm
ST PETERSBURG
New sales, sqm
New sales, RUB mln
Number of contracts
Cash collections, RUB mln
Average price, RUB/sqm
Average price (apartments), RUB/sqm
Deliveries, sqm
4Q 2020
4Q 2019
CHANGE, %
86,470
15,315
1,715
18,436
177,110
221,118
70,084
10,651
1,167
9,888
151,971
196,420
23 %
44 %
47 %
86 %
17 %
13 %
73,967
102,482
-28 %
80,318
11,103
1,422
10,767
138,241
162,723
273,429
101,445
11,144
1,764
8,903
109,850
130,579
205,812
-21 %
0 %
-19 %
21 %
26 %
25 %
33 %
NEW CONTRACT SALES, BLN RUB
CASH COLLECTIONS, BLN RUB
Moscow
St Petersburg
Moscow
St Petersburg
+8 %
46.7
43.2
-4 %
33.2
34.4
+7 %
48.7
45.7
+4 %
33.3
32.1
2019
2020
2019
2020
2019
2020
2019
2020
112
OPERATING RESULTS
113
ANNUAL REPORT 2020
AN EVEN MORE ATTRACTIVE
PROJECT PORTFOLIO
An important component of the Company’s success in the reporting year
was its project portfolio, which is well balanced by region and housing
class. The share of business-class projects for the year increased from
18 to 30 % by volume and from 31 to 45 % in monetary terms.
Despite the steady demand for our comprehensive development projects, such
as Galactica, which brought in 17.4 % of annual sales in volume terms, we have
noticed the increasing popularity of projects in the higher-class segment. For
example, our Wings project generated over 9 % of sales for the year, and 74 %
of the property’s apartments had been sold by the end of 2020. The Silver Fountain
project is also in great demand, accounting for 8 % of sales for the year.
SALES IN 20201
sqm
SALES IN 20192
sqm
9 %
9 %
8 %
8 %
5 %
5 %
4 %
1 %
1 %
1 %
1 %
2 %
2 %
2 %
4 %
5 %
6 %
8 %
17 %
11 % 8 % 7 % 6 % 5 % 5 % 4 % 1 % 1 % 1 % 2 % 2 % 2 % 2 % 2 % 3 % 3 % 4 % 6 % 11 % 16 %
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TOTAL SHARE OF CONTRACTS
TOTAL SHARE OF CONTRACTS
TOTAL SHARE OF CONTRACTS
TOTAL SHARE OF CONTRACTS
51 % IN MOSCOW
49 %IN ST PETERSBURG
48 % IN MOSCOW
52 %IN ST PETERSBURG
1
Percentages may not add up due to rounding
2
Percentages may not add up due to rounding
114
OPERATING RESULTS
115
ANNUAL REPORT 2020
SHARE OF PURCHASES
BY REGIONAL BUYERS,
BY CORE GEOGRAPHIES
Regional buyers accounted for
32.5 % of all transactions in 2020
St Petersburg
19.2 %
Moscow
13.3 %
REGIONAL
SALES
Etalon Group’s residential complexes are of interest not only to
residents of Moscow and St Petersburg but also to regional buyers
planning to move to Russia’s two biggest cities.
Our regional network covering 59 cities
throughout Russia has always played a
role in building sustainable sales growth,
and it became a competitive advantage
during the first wave of COVID-19. When
our sales offices were closed and we
were adapting to a new, remote form
of interaction with clients, our regional
network helped us support property sales
by selling apartments to buyers in regions
where severe restrictions had not been
introduced. In 2020, about 33 % of all sales
transactions were concluded through the
regional network.
ETALON GROUP’S REGIONAL
SALES GEOGRAPHY1
REGION
SHARE OF TOTAL CONTRACTS
Leningrad region
Yamalo-Nenets AD
Khanty-Mansi AD
Krasnoyarsk Krai
Murmansk region
Khabarovsk Krai
Krasnodar Krai
Sakha
Arkhangelsk region
OTHER RUSSIAN REGIONS
FOREIGNERS
TOTAL
2.8 %
1.6 %
1.4 %
1.2 %
1.0 %
0.9 %
0.9 %
0.7 %
0.7 %
20.5 %
0.7 %
32.5 %
OUTLOOK
We expect that further adherence to the
strategic course introduced by Etalon Group
in November 2020 and the launch of new
projects, in which we have fully incorporated
our strategic approach to creating modern,
technology-driven space, will strengthen
our position and contribute to a further
expansion of our business. A steady
increase in sales even under the challenging
conditions we faced in 2020 gives us reason
to believe that Etalon Group will continue
its strong performance in 2021. At the
same time, higher real estate prices give
us confidence in the fact that the course
we have chosen to increase the profitability
of our business will not only continue but
will even see a slight uptick relative to earlier
reporting periods.
1 Company data for FY 2020
116
116
FINANCIAL RESULTS
FINANCIAL RESULTS
117
117
ANNUAL REPORT 2020
ANNUAL REPORT 2020
FINANCIAL
RESULTS
26 118
FINANCIAL RESULTS
119
ANNUAL REPORT 2020
Etalon Group has
strengthened its financial
position substantially due to
its ongoing implementation
of strategic initiatives
and its balanced pricing
policy. The Company has
achieved significant growth
across almost all of its key
financial metrics.
78.7
BLN RUB
ETALON GROUP
2020 REVENUE
25.8
+13 %
YEAR-ON-YEAR
BLN RUB
PRE-PPA (PURCHASE PRICE
ALLOCATION) GROSS PROFIT
33 %
+6 P.P.
YEAR-ON-YEAR
PRE-PPA
GROSS MARGIN
+47 %
YEAR-ON-YEAR
16.5
BLN RUB
PRE-PPA EBITDA
21%
+8 P.P.
YEAR-ON-YEAR
PRE-PPA
EBITDA MARGIN
P&L
STATEMENT
The Company achieved record gross profit of RUB 22 billion for 2020, up 9 % year-on-
year; this was despite revenue dropping slightly due to construction restrictions in Moscow
and the Moscow region in the first half of the year due to COVID-19. Pre-PPA gross profit
increased by 13 % year-on-year in 2020 to RUB 25.8 billion. Meanwhile, the gross margin
expanded by 6 p.p. to 33 %, approaching the 35 % target in Etalon Group’s development
strategy through 2024.
PRE-PPA1 CONSOLIDATED
GROSS PROFIT, MLN RUB
CONSOLIDATED GROSS PROFIT,
MLN RUB
22,735
25,796
20,057
21,915
+13 %
+6 p.p.
+9 %
+4 p.p.
27%
33%
24%
28%
2019
2020
2019
2020
Pre-PPA gross profit
Pre-PPA gross profit margin
Gross profit
Gross profit margin
In its main residential development segment, the Company offset much of the revenue
decrease that occurred in the first half of the year due to temporary construction restrictions
in Moscow. Etalon Group’s residential development revenue for the 12 months of 2020 fell
by just 4 % year-on-year to RUB 70.5 billion, while gross profit increased by 7 % to RUB
21.1 billion. The segment’s pre-PPA gross profit rose 11 % year-on-year to RUB 25 billion
with a 35 % margin.
PRE-PPA1 RESIDENTIAL DEVELOPMENT
GROSS PROFIT, MLN RUB
RESIDENTIAL DEVELOPMENT GROSS
PROFIT, MLN RUB
22,420
24,987
19,742
21,127
+11 %
+5 p.p.
+7 %
+3 p.p.
1.2x
VERSUS 1.9Х
FOR 2019
NET CORPORATE
DEBT / PRE-PPA
EBITDA
19.6
-9 %
YEAR-ON-YEAR
BLN RUB
NET CORPORATE DEBT
as of 31 December 2020
The pre-PPA gross margin
widened to 33 %, close to the 35 %
target in Etalon Group’s strategy.
The pre-PPA margin for the
residential real estate development
segment was 35 %.
31 %
35%
27 %
30 %
2019
2020
2019
2020
Pre-PPA gross profit
Pre-PPA gross profit margin
Gross profit
Gross profit margin
1 Purchase price allocation capitalised in cost of sales
120
FINANCIAL RESULTS
121
ANNUAL REPORT 2020
One of the Company’s key priorities remains further optimising commercial and
administrative expenses, which fell by 19 % in absolute terms in 2020 and totalled 12 % of
revenue versus 14 % in 2019. Meanwhile, selling expenses decreased by 5 % in absolute
terms despite sales growing by 3 % year-on-year.
Pre-PPA net income nearly
doubled year-on-year to RUB
5.9 billion.
Net income was RUB 2,036 million versus RUB 186 million for 2019, while pre-PPA net
income grew an impressive 89 % from RUB 3,110 million for 2019 to RUB 5,875 million
for 2020.
GENERAL AND ADMINISTRATIVE
EXPENSES, MLN RUB
SELLING EXPENSES,
MLN RUB
6,992
7,280
5,235
3,318
4,822
4,560
-28 %
-5 %
-2 p.p.
10 %
9%
7%
5 %
6%
6%
2018
2019
2020
2018
2019
2020
G&A
G&A as % of revenue
Selling expenses
Selling expenses as % of revenue
The cost reduction in turn led Pre-PPA EBITDA to increase by 47 % to RUB 16.5 billion. The
Pre-PPA EBITDA margin widened by 8 p.p. to 21 %. EBITDA increased by 48 % year-on-year
to RUB 12.6 billion, while the EBITDA margin expanded by 6 p.p.
PRE-PPA1 EBITDA, MLN RUB
EBITDA, MLN RUB
11,175
16,482
8,497
12,601
+47 %
+8 p.p.
+48 %
+6 p.p.
13 %
21%
10 %
16 %
2019
2020
2019
2020
Pre-PPA EBITDA
Pre-PPA EBITDA margin
EBITDA
EBITDA margin
1 Purchase price allocation capitalised in cost of sales
PRE-PPA1 NET INCOME, MLN RUB
NET INCOME, MLN RUB
3,110
5,875
186
2,036
+89 %
+4 p.p.
7 %
4 %
20192
2020
0 %
2019
3 %
2020
Pre-PPA net income
Pre-PPA net income margin
Net income
Net income margin
Strong sales figures enabled Etalon Group to accelerate its cash-flow generation. Even
excluding funds in escrow accounts, the Company generated a positive operating cash
flow less interest paid of RUB 3.9 billion. Meanwhile, operating cash flow before interest
payments adjusted for funds arriving in the escrow account for 2020 almost doubled,
reaching a record RUB 26.8 billion. Net cash flow adjusted for proceeds deposited in escrow
returned to positive territory, totalling RUB 22.3 billion.
The balance of funds in escrow accounts as of 31 December 2020 was RUB 23.6 billion,
while cash collection on escrow for 2020 came to RUB 22.9 billion. After the transition
period ends and escrow accounts begin to open, the Company is set to return to generating
robust positive operating and free cash flows.
OPERATING CASH FLOW, MLN RUB
FREE CASH FLOW, MLN RUB
14,028
26,768
(15,932)
22,292
+91%
22,880
22,880
CASH
FLOWS
26.8
BLN RUB
CASH FLOWS ADJUSTED
FOR CASH COLLECTION
IN ESCROW ACCOUNTS
692
692
(588)
13,336
3,906
(16,624)
2019
2020
2019
2020
FY cash collections in escrow accounts
FY cash collections in escrow accounts
Operating cash flow (OCF) less interest paid
Free cash flow (FCF)3
1 Purchase price allocation
2 Pre-PPA net income for FY 2019 adjusted for gain from Leader-Invest bargain purchase, one-off acquisition and integration expenses
3 Free cash flow is calculated as profit for the year adjusted for depreciation, share-based payments,
impairments, interest, taxation, change in working capital, and change in invested capital
122
FINANCIAL RESULTS
123
ANNUAL REPORT 2020
BALANCE
SHEET
The Company had strengthened its financial position by the end of 2020. Gross debt was
down to RUB 50.5 billion, while cash and equivalents, including funds in escrow accounts,
increased by 55 % to RUB 49.5 billion. Net corporate debt fell by 9 % to RUB 19.6 billion.
The Net corporate debt / pre-PPA EBITDA ratio was just 1.2x. Taking into account funds
held on escrow, our net debt today would stand at just RUB 1 billion, one of its lowest
levels in recent years.
CASH AND EQUIVALENTS
increased by 55 %
in 2020
TO 49.5 BLN RUB
TOTAL DEBT,
BLN RUB
CASH AND CASH EQUIVALENTS,
BLN RUB
52.7
50.5
31.9
49.5
-4%
52.7
5.0
45.5
+55%
23.6
0.7
31.2
25.9
31.12.2019
31.12.2020
31.12.2019
31.12.2020
Project debt
Corporate debt
Cash in escrow accounts
Cash and cash equivalents1
NET DEBT (CASH),
BLN RUB
1.9x
21.5
1.2x
19.6
(0.7)
4.7x
(18.6)
31.12.2019
31.12.2020
L
E
V
E
L
E
T
A
R
O
P
R
O
C
L
E
V
E
L
T
C
E
J
O
R
P
Net project debt (cash)2
Net corporate debt to pre-PPA LTM EBITDA
Net corporate debt
Coverage ratio for project finance debt
Our debt obligations are still entirely rouble-denominated. A decrease in financing costs on
floating-rate loans and the refinancing of existing loans caused the average rate for our loan
portfolio to drop from 9.4 % at the end of 2019 and to 8.3 % as of 31 December 2020. This
leaves Etalon Group in good standing to achieve its strategic goals and pay dividends.
1 Including bank deposits over 3 months; excluding cash collections in escrow accounts
2 Project finance debt less cash in escrow accounts
124
SUSTAINABILITY
125
ANNUAL REPORT 2020
SUSTAINABILITY
126 Introduction
128 Material issues covered in the report
129 Sustainability management
130 Sustainable development goals
and accomplishments in 2020
132 Key highlights and achievements in 2020
134 Stakeholder engagement
138 Occupational health and safety
146 Environment
154 Employees
164 Customers
168 Social responsibility
174 Innovation
180 Business conduct
184 Risk management framework
and key risk management functions
194 GRI standards
126
SUSTAINABILITY
127
ANNUAL REPORT 2020
INTRODUCTION
One of the most important benchmarks for Etalon Group is the
sustainability of its business. The Company seeks to proactively
integrate ESG principles throughout its entire production cycle,
striving to reduce its negative impact on the environment, to
contribute to the development of the regions where it operates and
to promote the principles of fair competition and social responsibility.
Within Etalon Group, we pay
special attention to maintaining
and improving our high standards
of corporate culture, safety,
environmental friendliness and
information disclosure.
UN SUSTAINABLE
DEVELOPMENT
GOALS
When making disclosures, we continue
to be guided by the UN Sustainable
Development Goals to 2030. The UN
agenda and global goals serve as an
additional tool to ensure that Etalon
Group’s business strategy is in line with the
long-term development trajectory in the
regions where the Company operates and
also with the values of society. They also
help the Company improve its business
processes and innovate in areas where
such changes are timely and important for
the sustainability of businesses and local
communities.
Of the 17 UN Sustainable Development
Goals, we have chosen six key goals
related to our operations. We believe
that the nature of our business and our
capabilities enable us to have the greatest
impact in these areas and to make a major
contribution to achieving the Sustainable
Development Goals.
The goals that we focus on may change
as we refine our strategy in the area of
corporate and social responsibility and as
specific measurable targets are established.
ETALON GROUP’S KEY SUSTAINABLE DEVELOPMENT
GOALS UNDER OUR CURRENT STRATEGY ARE:
REPORTING
PRINCIPLES AND
FRAMEWORK
DISCLOSURE
STANDARDS
For 2020, the Company is once again
publishing a report on its sustainability
performance as part of its integrated
annual report. The report examines our
performance in our two key geographies:
St Petersburg and the Moscow Metropolitan
Area1. The financial indicators included
in the report are sourced from the
financial statements of Etalon Group or
its subsidiaries. Information regarding
Etalon Group’s employees is based on
the Company’s internal records. Statistics
on Occupational health and safety,
environmental protection, as well as other
non-financial information, are based on the
Company’s own data or those submitted
by its subcontractors. Our assessments
and forward-looking statements are
mainly based on our current expectations,
estimates of future events and trends that
affect the activities of Etalon Group or
that may affect them in the future. These
forecasts may not take into account certain
risk factors that could have a serious impact
on the implementation of the strategy
and results of Etalon Group, such as
macroeconomic changes.
When making disclosures, we are guided
by individual GRI standards (GRI Standards
2016, Water 2018, Occupational health and
safety 2018, Waste Management 2020).
From year to year, we aim to improve our
transparency and increase the volume of
information disclosed. In the reporting year,
for example, we expanded the disclosure of
information related to corporate governance:
the number of meetings of the Board of
Directors, issues addressed by the Board
of Directors and information on gender and
ethnic equality. As part of the implementation
of our strategy, we are now introducing a
number of new housebuilding technologies
and improving business processes to further
improve resource efficiency and reduce our
environmental impact, which is also reflected
in this report.
For more information, references to
disclosure standards are provided in the
index at the end of the “Sustainability”
section.
1 Moscow and the Moscow region within 30 km of the Moscow Ring Road
128
SUSTAINABILITY
129
ANNUAL REPORT 2020
MATERIAL ISSUES
COVERED IN THE REPORT
SUSTAINABILITY
MANAGEMENT
When choosing topics and
indicators for the report, we were
guided by their importance for
Etalon Group’s business as well
as the availability of information.
1
STAKEHOLDER
ENGAGEMENT
Ongoing stakeholder engagement is an
important part of the value chain. Honest
dialogue and being attentive to the needs of
all stakeholder groups enables Etalon Group
to improve its business processes and to
inform stakeholders about the Company’s
activities, priorities and implementation of
strategic initiatives. (p. 134)
2
IMPACT ON COMMUNITY
DEVELOPMENT
The Company contributes to the development
of the regions where it operates by building
social infrastructure, rebuilding and preserving
historical and cultural heritage sites, promoting
healthy lifestyles, supporting charitable
initiatives and carrying out awareness-raising
initiatives. In addition, Etalon Group strives to
support economic growth in the cities where
it operates by creating jobs, conducting joint
training and development programmes for
young professionals, maintaining a culture of
fair competition and preventing fraud. (p. 168,
180)
3
ENVIRONMENTAL
PROTECTION
4
OCCUPATIONAL
HEALTH AND SAFETY
5
INNOVATION
Etalon Group, independently or in
partnership with other companies, adapts
and implements new housing construction
technologies, and also develops and
improves digital technologies for design
and oversight of construction projects.
These initiatives are aimed not only at the
sustainability of the Company’s business
but also at the promotion of best practices
throughout the industry (for more details,
see p. 174).
The Company’s responsible approach to
reducing its impact on the environment
can be seen in its use of comprehensive
environmental monitoring measures and
in its search for and use of safe resources
and technologies that minimise its negative
impact on the environment not only at the
construction stage but also during the
operation of its properties (for more details,
see p. 146).
Due to the nature of the industry and the
scale of its business, Etalon Group pays a
great deal of attention to issues related to
protecting the lives and the health of the
employees at its construction sites. To ensure
a safe working environment, the Company
takes number of measures, including the use
and improvement of BIM-based monitoring
and accident prevention systems (for more
details, see p. 138).
6
EMPLOYEE DEVELOPMENT
AND TRAINING
7
EQUAL OPPORTUNITIES
FOR ALL
One of the components of the Company’s
sustainable development is a balanced
strategy in the area of personnel
management. Etalon Group implements
programmes aimed at creating a talent
pool and recruiting and retaining talented
employees, including through collaboration
with universities, education programmes for
staff, monetary and non-monetary incentive
systems and the creation of comfortable
conditions for professional growth (for more
details, see p. 154).
Equal opportunities for employees regardless
of their gender, age or cultural/ethnic
background allow all employees to realise
their potential and enable the Company
to create a strong professional team. At
Etalon Group, opportunities for development
are open equally to men and women, and
the Company’s attention to a reasonable
work-life balance enables employees to
successfully combine their work and family
responsibilities (for more details, see p. 162).
Etalon Group’s sustainability management system is based on
adherence to high standards of corporate governance, environmental
protection and the prioritisation of the long-term development goals of
our business and society. The Company supports the UN Sustainable
Development Goals, although it is not yet a member of the UN Global
Compact, and it adheres to the principles enshrined in the Universal
Declaration of Human Rights, a policy aimed at preventing any form of
discrimination, fraud and violations of the rules of fair competition.
procurement specialists. OHS issues fall
under the purview of the relevant services
and individual specialists at the level of the
management company, regional offices and
individual subsidiaries. Compliance with
environmental requirements is monitored
by environmental specialists within the
property development department in
Group companies. Internal oversight and
security services monitor compliance with
anti-corruption laws and internal corporate
ethics and anti-fraud policies. In addition,
Etalon Group operates a single hotline on
corruption, fraud and violations of corporate
ethics, which serves as an additional
tool for monitoring and compliance with
legal requirements and internal corporate
policies. More detailed information on the
management system for specific issues
under the ESG agenda is available in the
corresponding sections of this report.
The principles of sustainability management
are reflected in the following Company
standards and policies:
• Etalon Group Code of Corporate Ethics
• Regulation on Conducting Tenders
within Etalon Group
• Etalon Group Occupational Health and
Safety Policy
• Policy on Remuneration of Members of
the Board of Directors of Etalon Group
PLC
• Regulation on Etalon Group PLC
Committees (being updated)
• Etalon Group PLC Management Policy
(being updated)
• Regulation on the Corporate Secretary
of Etalon Group PLC
• Relationship Agreement with PJSFC
Sistema
Strategic issues related to sustainable
development come under the purview
of Etalon Group’s Board of Directors.
Operational management of the Company
as a whole, including in this area, is
the responsibility of the CEO and his
deputies in the relevant areas of business
development. In individual subsidiaries, the
implementation of policies and processes
related to corporate social responsibility
fall under the purview of the responsible
departments. For example, procurement
and oversight of compliance with the
tender policy fall under the purview of the
tender department, tender committees and
130
SUSTAINABILITY
131
ANNUAL REPORT 2020
SUSTAINABLE DEVELOPMENT
GOALS AND ACCOMPLISHMENTS
IN 2020
UN SUSTAINABLE
UN SUSTAINABLE
DEVELOPMENT GOALS
COMPANY ACTIONS
RESULTS
REPORT SECTION
DEVELOPMENT GOALS
COMPANY ACTIONS
RESULTS
REPORT SECTION
• Maintaining high Occupational health
• Zero fatalities and a 6 p.p.
and safety standards
• Providing accident insurance and
supplementary health insurance
• Harnessing environmental expertise
and implementing measures to reduce
the negative impact on the environment
throughout the project cycle
• Using environmentally friendly materials
and technologies
• Promoting a healthy lifestyle
increase in the safety index to
86 % (with a target value of 75 %)
• 2,585 employees insured under
the life insurance programme and
2,029 employees provided with
private health insurance policies
• 225 employees completed
Occupational health and safety
training (40 h/person)
Occupational health and
safety (p. 138)
People (p. 154)
• Promoting “green” construction
Implementing the latest digital
•
technologies at the project design stage
•
Implementing advanced digital
technologies
• Maintaining leadership in the use of
BIM technology and the full-scale
implementation of digital solutions to
create an even more efficient design
system
• Adapting and implementing new
industrial technologies for housing
construction
• Promoting best practices among
contractors and other industry
companies
Environment (p. 146)
Strategy (p. 42)
• For 2020, the Silver Fountain and
Botanica projects were certified
in line with the Green Zoom
standard
• Began implementation of
strategic initiatives on the
introduction of a standard design
system and new industrial
technologies for housing
construction that will increase
the energy efficiency of buildings
under construction
• A Company project underwent
Innovation (p. 174)
a completely digital state expert
review—a first for Russia
• Agreement with Segezha
Group on the development and
certification of CLT technology
for the Russian market,
preparations to pilot the use
of CLT
Strategy (p. 42)
• Building social infrastructure facilities in
the cities where the Company operates
•
• Taking part in charitable projects
• Collaborating with higher education
institutions to jointly develop training
programmes, educational events and
internships for students
In 2020, Etalon Group delivered
five educational institutions for
children with a total area of over
7 ths sqm, and three preschools
for 470 pupils and two schools
for 1,450 children are under
construction
Social responsibility
(p. 168)
Environment (p. 146)
• The volume of investments in
programmes for the development
of local communities increased
3,4x year-on-year
• The Company took part in
14 charitable programmes/
initiatives, providing RUB 46 mln
in charitable assistance
•
In 2020, the Company reduced
its energy consumption by 6 %
year-on-year to 65 mln kW·h1
• Fuel consumption decreased by
5 % year on year to 2.31 million
litres1
• The Company does not produce
waste in hazard classes
1–3 (hazardous waste); its
volume of non-hazardous waste
decreased by 17 % year-on-year,
and 233 tonnes of waste was
recycled1
• Expenses for waste management
amounted to RUB 13.5 mln; in
2021, the Company plans to
increase this cost item by 7 %1
• Carrying out a comprehensive
environmental impact assessment and
applying environmental measures at all
stages of project implementation
• Recycling all construction waste
capable of processing
• Selecting responsible suppliers and
environmentally friendly materials
• Selecting construction technologies
and design approaches, including BIM
technologies and computer-based
microclimate modelling, that help to
improve the environmental footprint and
energy efficiency of projects
1 Production unit data
132
SUSTAINABILITY
133
ANNUAL REPORT 2020
KEY HIGHLIGHTS
AND ACHIEVEMENTS IN 2020
OCCUPATIONAL
HEALTH AND SAFETY
SUSTAINABLE DEVELOPMENT
IN REGIONS OF OPERATIONS
0
FATAL ACCIDENTS
AT ETALON GROUP
CONSTRUCTION SITES
IN 2020
8,918
HOURS
OF OCCUPATIONAL
SAFETY TRAINING FOR
225 EMPLOYEES
EMPLOYEES
4,606
TOTAL HEADCOUNT
31 %
OF LEADERSHIP
POSITIONS AT ALL
LEVELS ARE HELD BY
WOMEN
2,029
EMPLOYEES
TOOK PART IN THE
PRIVATE MEDICAL
INSURANCE PROGRAMME
86 %
THE SAFETY INDEX
INCREASED BY 6 P.P.
YEAR-ON-YEAR
56 %
OF LINE EMPLOYEES
ARE WOMEN
16,150
HOURS
OF EMPLOYEE TRAINING
IN PROFESSIONAL
DEVELOPMENT
PROGRAMMES
9.2
MLN RUB
IN FINANCIAL
ASSISTANCE PROVIDED
TO EMPLOYEES
>7
THS SQM
AREA OF EDUCATIONAL
INSTITUTIONS
DELIVERED
>46
MLN RUB
AMOUNT OF CHARITABLE
ASSISTANCE PROVIDED,
AN INCREASE OF 9 %
YEAR-ON-YEAR
1,920
STUDENTS WILL
ATTEND SCHOOLS AND
PRESCHOOLS NOW BEING
BUILT BY ETALON GROUP
ENVIRONMENTAL
PROTECTION 1
1 Data for the production unit companies
0
FINES
FOR NON-COMPLIANCE WITH
ENVIRONMENTAL STANDARDS
-17 %
REDUCTION IN
CONSTRUCTION WASTE
FROM 203 THS T IN 2019
TO 168 THS T IN 2020
233
TONNES
OF CONSTRUCTION
WASTE RECYCLED
-6 %
REDUCTION IN
ELECTRICITY
CONSUMPTION FROM
69 MLN KW·H TO
65 MLN KW·H
-5 %
REDUCTION IN GASOLINE
AND DIESEL CONSUMPTION
FROM 2.44 MLN L IN 2019 TO
2.31 MLN L IN 2020
134
SUSTAINABILITY
135
ANNUAL REPORT 2020
STAKEHOLDER
ENGAGEMENT
Etalon Group values open and efficient
communications with its stakeholders, which is why
the Company keeps all interested parties informed
about its plans and other endeavours. In doing so,
the Company is also able to be better aware of what
our stakeholders want and expect. This means we
can prioritise what matters and better formulate our
development strategy.
1
HONEST DIALOGUE
2
ENSURING OPEN AND TRANSPARENT
ACCESS TO INFORMATION
Honest dialogue is fundamental to
maintaining a trusting relationship based
on respect. By maintaining relationships
with various groups of stakeholders, the
Company does its utmost to understand
each and every one of their interests,
needs, and expectations. This is
essential to establishing open, effective
communications.
Some stakeholders may have questions
about Company plans – the goals, scope
and scale, as well as the risks involved.
The solution is to provide stakeholders with
opportunities for discussion, and provide
full access to information not only before
important decisions are made, but also at
all stages of the implementation process.
This is what guarantees the kind of balanced
approach most stakeholders expect.
THE BASIC PRINCIPLES
OF STAKEHOLDER
ENGAGEMENT REMAIN
UNCHANGED:
Improving
Honest dialogue
and prioritisation
Ensuring access
to information and
inculcating a culture of
openness
Building trusting
relationships with
stakeholders
ANALYSIS AND
PLANNING:
Keeping abreast of best
practices and studying
what stakeholders need
and expect
CONSIDERING
STRATEGY:
identifying the
stakeholders and
defining the strategic
goals and priorities
ASSESSMENT AND
IMPROVEMENT:
accruing feedback, carrying
out an analysis, and
planning and implementing
improvements
3
PRIORITISING STAKEHOLDER
INTERESTS
4
TRUST
5
IMPROVEMENT
When making important decisions, Etalon
Group is always guided by the interests of
its stakeholders. This approach enables
the Company to create additional value
for stakeholders through strategic and
operational efficiency.
We believe that relationships built on
trust lead to a productive, stress-free
environment that enables people to
find solutions to whatever challenge
they’re facing. This is why Etalon Group
has a strong focus on ensuring mutual
understanding and loyalty from its
customers, employees, investors partners,
and society.
We invest in organisational and digital
solutions that simplify access to information
about the Company, as well as Etalon
Group’s services, and which allow
stakeholders to interact more effectively
with the Company.
PREPARING
RESOURCES:
Building teams and
developing resources,
as well as the capacity
for effective interactions
IMPLEMENTATION:
Implementing and ongoing
refinement of plans
DEVELOPING
AN APPROACH:
Determining the most
effective approach,
developing an interactive
process
136
SUSTAINABILITY
137
ANNUAL REPORT 2020
The frequency and channels of interaction with each group of stakeholders
differ depending on what is called for. Below is an overview of Etalon
Group’s approach to engaging with various groups of stakeholders.
CUSTOMERS
EMPLOYEES
BUSINESS PARTNERS
INVESTORS AND ANALYSTS
SOCIETY
KEY ISSUES
AND GOALS OF
INTERACTION
FORMS OF
INTERACTION
• The dissemination of information about
Etalon Group’s products
• Ensuring customers can give feedback
• Analysis of customer needs and what
•
they seek in our products
Improving every stage of the
customer journey
• Expanding the customer base and
encouraging repeat purchases
• A safe, healthy working environment
• Attracting, training and retaining competent
professionals
• Offering equal opportunity and inclusiveness
• Ensuring employees are fully informed about the
Company’s strategy and goals
• Streamlining the communication policy,
developing precise targeting tools and
competencies in analysis of the selection
stage of the customer journey
• Customising communication channels
•
and customer offers
Interacting with customers through
the hotline and social platforms, and
providing prompt, effective responses to
requests
Implementing and refining OHS systems
•
• Providing life insurance and supplementary health
insurance programmes
• Cooperating with universities that specialise in
issues related to the training of students from
institutions focused on the construction industry,
and recruiting them
• Adaptation programme for young professionals
• Training programmes and workshops for
employees
• Leveraging advanced visualisation
• Competitive salaries, a bonus system and
techniques, such as VR and developing
mobile applications to facilitate the
customer’s access to services, as well
as providing B2C services to foster
customer loyalty
non-monetary incentives
• Performance feedback and career planning
•
Implementing an anti-discrimination policy in
accordance with the Etalon Group Code of
Conduct and legal regulations
• Providing a social safety net for employees
• Disseminating important information via the
corporate intranet and e-mail
MAIN EVENTS
AND RESULTS
OF 2020
• The Company’s regional sales network
•
covers 59 cities in Russia
Implemented a big data-driven target
audience analytics system
• More than 75 thousand calls were
received over the year, with no lost calls
• Repeat purchases accounted for 25 % of
• No fatal accidents.
• The safety index increased by 6 p.p. to 86 %
• 504 Company employees underwent training; the
total duration of all training programmes exceeded
16 thousand hours – an average of 32 hours per
person
• 344 employees participated in the adaptation
total sales
programme
• 184 employees received financial support; the total
amount of payments exceeded RUB 9 million
• 44 people received a corporate pension
• Women account for 31 % of the Company's
management
• Agreement with National Research Moscow
State University of Civil Engineering on long-
term cooperation in the field of educational and
scientific activities
• Mutually beneficial cooperation
• Financial results and performance
• Responsible approach to conducting
business
Innovation
•
• Operational efficiency
• Etalon Group’s Investment case
• Company strategy
• Financial and operating results
• Dividend payments
• The Company’s activities in capital markets
• Environmental issues
• Social responsibility
• Taxes
• Creating jobs and improving living
conditions wherever the Company
is based
• Building and maintaining a solid
reputation
• Policy on combating corruption and
•
Increasing transparency and information
disclosure
•
violations of antimonopoly legislation,
enshrined in the Code of Corporate
Ethics and Regulations on Tendering
• Applying and disseminating advanced
technologies based on BIM (building
information modelling) to find
solutions that are more efficient and
ergonomic, as well as controlling
quality and timing throughout the
entire project life cycle
• Developing and implementing
advanced industrial technologies for
housing construction
• Operational synergy
• Exchanging experience and
employing best practices
• Rolling out a system to standardise
design and the first completely
electronic system in Russia
authorised by the state.
• An agreement was concluded with
Segezha Group on developing and
certifying CLT technology for the
Russian market
• New contract sales reached a record
RUB 80 billion in FY 2020
• Pre-PPA gross profit margin was
33 %, close to the 35 % target set
forth in the 2024 strategy
• Disclosing information on operational and
financial results, important corporate events
and stages in the implementation of projects
• Publishing annual reports, press releases,
presentations and other relevant information on
the Company’s website
Investing in the development of
cities where we operate: creating
a social infrastructure, restoring
historical monuments, supporting
and organising cultural and sports
events, as well as charitable
programmes
• Publishing press releases and
• Participating in conferences, organising
interviews
roadshows and site visits, holding meetings
and conference calls with investors and
analysts
• Maintaining channels of
communication with the media
• Visits to construction sites, hosting
presentations and events for
journalists covering Company
activities
• Publishing important information
and updating the project gallery on
the Etalon Group website
• Board of Directors set a minimum dividend
• Tax payments totalled RUB
4.6 billion
• There were 11,347 mentions of
Etalon Group in the media
• Etalon Group professionals took
part in more than 60 industry and
business events
• The Company launched an urban
planning laboratory and the
Generation ZIL media platform to
discuss the future of Moscow’s
ZIL-Yug district
payment of RUB 12 per share/GDR; dividends
paid for the year totalled RUB 3.5 billion. (USD
0.16 per GDR)—in full compliance with policy
• Etalon Group GDRs, previously traded only on
the London Stock Exchange, were listed on
Moscow Exchange, and were included in the
Level 1 quotation list, as well as the Moscow
Exchange Broad Market Share Index
• More than 60 conference calls with investors
and analysts were held, and 34 releases were
published on the regulatory website
• The Company conducted a perception study
among investors and analysts
• The Information Disclosure Committee was
reorganised, with an increase in the number
of members and an expansion in positions
and powers
• Expanded disclosure of financial information in
the Company’s IFRS financial statements
• The liquidity of Etalon Group GDRs more than
tripled year-on-year in 2020
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OCCUPATIONAL HEALTH
AND SAFETY
OCCUPATIONAL HEALTH & SAFETY
PROCESS MANAGEMENT
The health and safety of our employees is
Etalon Group’s main priority. The Company takes
a proactive approach to ensuring a safe working
environment and preventing the risk of injury,
implements advanced digital technologies, and
conducts regular monitoring and training. The result
has been a consistent increase in occupational
safety at construction sites and zero fatal accidents.
STRUCTURE OF ETALON
GROUP’S OHS SERVICE
Etalon Group’s OHS process-management
system includes the top management as
well as health and safety services at the
Group's local divisional and individual
organisational levels.
At the management company level, the
functional management of Occupational
health and safety processes is headed by
the Group’s CEO, while his deputy in the
construction department is responsible for
day-to-day processes.
The organisation and monitoring of health
and safety at the local division level and
the Group’s individual enterprises is the
responsibility of the relevant services and
health and safety specialists.
The organisation of safe working practices
and coordination of contractors’ activities
at Etalon Group’s construction sites, as well
as certification and training of workers and
engineering and technical personnel, are the
responsibility of general contractors, both
internal and external.
The main tasks of Etalon Group’s OHS
service specialists include:
•
Implementing the Group’s OHS policy
and the methodology for determining
the safety index and key OHS practices
and principles
• Monitoring and managing OHS risks
•
Informing and consulting managers and
employees on OHS issues
• Studying and disseminating best
practices in the field of OHS
• Organising work to prevent workplace
injuries and occupational illnesses, meet
OHS requirements and improve working
conditions
OHS specialists have broad powers that
allow them to monitor compliance with
the rules and regulations on OHS in Etalon
Group, which ensures a high level of safety
and helps prevent occupational injuries.
In 2021, as part of improvements to the
company’s organisational and management
structure, the Company plans to revise and
update the Regulations on the Occupational
Safety Management System at Etalon
Group. A new version of the Methodology
for Determining the Safety Index at Etalon
Group’s Construction Sites is also being
prepared for approval, including the
methodology to determine the fire safety
index and the degree of risk at Etalon
Group’s construction sites. The safety index
and the degree of risk are discussed in more
detail below, in the "OHS activities" section.
OCCUPATIONAL
HEALTH AND
SAFETY POLICY
Etalon Group’s Occupational
health and safety (OHS) policy
is based on the following
principles:
The priority of preserving the life and
health of employees
Strict adherence to current Russian
legislation, local regulations and internal
safety requirements
Application of leading industry standards
Continuous improvement and
development of our own know-how
Training and proactivity of employees
Etalon Group’s Occupational health and
safety policy and measures to ensure
occupational safety are regulated by the
following key documents:
• The Regulations on the Occupational
Safety Management System at Etalon
Group sets out the key principles for
managing the occupational safety
& health system and the rights and
obligations of divisions and officials in
the field of Occupational health and
safety, describes the organisation of
work for compliance with Occupational
health and safety standards at the
Group’s construction sites, preventative
measures, personnel training and
actions in case of accidents.
• The Methodology for Determining
the Safety Index at Etalon Group’s
Construction Sites regulates the
methodology for collecting data and
the subsequent calculation of the safety
index based on it.
Health and safety
process managemt
MANAGEMENT
COMPANY ETALON
GROUP
Coordination of activities and
management of the health and
safety service in the framework
of the local office
MOSCOW
REGIONAL OFFICE
ST PETERSBURG
REGIONAL OFFICE
Operational
health & safety
activity
CONTRACTOR
ORGANISATIONS
CONTRACTOR
ORGANISATIONS
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OUR OHS SYSTEM IS BASED ON THE PRINCIPLE OF
CONTINUOUS MONITORING AND DEVELOPMENT:
OHS
ACTIVITIES
C O N TINUOUS
I M P R OVEMENT
CONCEPT
Development of a key idea and
theoretical foundations of an
occupational health & safety
management system.
A
S
S
E
OHS TRAINING
IN 2020
T
E N
M
IMPROVEMENT
Based on the analysis
of the results, measures are
continuously implemented
to improve the efficiency
of the health & safety
management system.
S
S
E
S
S
A
ASSESSMENT
OHS monitoring, including
assessment and analysis
of processes for compliance with
the concept, target performance
indicators, Russian legislation
and other requirements.
S
S
M
E
N
T
ORGANISATION
Creation, implementation and
maintenance of a health and
safety management system.
OHS
MANAGEMENT
MODEL
ASSES S M E N T
PLANNING AND
IMPLEMENTATION
Objectives and the process
necessary to support results are
developed in accordance with
the concept, after which the health
& safety processes are applied
to ongoing activities.
Continuous safety monitoring
and further improvement of the
OHS system in the reporting year
resulted in zero fatal accidents.
The continuous monitoring system enables
us to increase safety at our construction
sites every year. In the event of an accident,
the Company investigates to determine and
address the causes of the incident.
Etalon Group’s subsidiaries submit monthly
reports to the OHS service of their local
administrations on the implementation
of OHS rules and regulations and on the
situation regarding workplace injuries.
This practice helps to analyse incidents of
industrial OHS violations at the Group level,
to identify patterns and weaknesses, and
thus to identify key areas for improving the
health and safety system. This approach
to the organising the OHS system allows
the Company to minimise safety violations,
prevent risks and avoid serious and fatal
injuries.
Equipment security protocol
All equipment used by Etalon Group is
certified in accordance with Russian legal
requirements. The Company also conducts
internal equipment inspections to ensure
correct installation and regular servicing.
Training
Etalon Group employees undergo training
and periodic testing of their knowledge in
accordance with current Russian legislation.
All managers responsible for safe working
practices are trained and periodically tested
(at least once every three years). This
training is conducted within the Company
or via a third-party educational organisation.
In addition, the Company conducts thematic
exercises, training and seminars. All
employees whose work involves being at a
construction site constantly or occasionally
must undergo OHS training courses and
certification tests. The training programmes
are regularly reviewed and improved.
In 2020, 8,918 hours of OHS training were
implemented, with 225 Etalon Group
employees taking part.
NUMBER OF ATTENDEES
TOTAL
PER PERSON
STUDY HOURS
ST PETERSBURG
Management staff
Line employees
MOSCOW REGION
Management staff
Line employees
TOTAL
39
149
12
25
1,418
6,168
432
900
225
8,918
36
41
36
36
40
Preventing workplace injuries
The Company implements a range of
measures to prevent injuries and OHS
violations, including using safe production
systems, administrative measures to
limit total time in contact with harmful
and hazardous production elements,
a preliminary risk analysis before
installing new equipment or applying new
technologies, and subsequent regular
monitoring of the implementation of risk
controls.
At the Company’s construction sites,
to give workers additional protection to
prevent falls from heights, catching nets
are used, protective screens are installed
on mounting horizons, a technological
map is being developed, and SkyReach
anchor devices are used to prevent falls
during the installation of formwork and while
performing concrete work.
At every construction site, during the
work shift, at least two workers constantly
monitor the condition of the collective
protective equipment being used and the
fencing around hazardous areas, and they
monitor for gaps, holes, and openings
in the elevator shafts on each storey.
The Company has strict rules regarding
the characteristics, installation, use and
dismantling of enclosing structures,
scaffolding and decking, compliance
with hazardous-area boundaries, and the
handling of flammable materials, as well as
rubbish and waste. Protective barriers are
designed for durability and resistance to
alternating force from both horizontal and
vertical uniformly distributed standard loads.
In order to prevent injuries at all construction
sites, the "degree of risk" indicator is used,
i.e. the quantitative degree of professional
risk of an accident at the control facility,
calculated using the Fine-Kinney Method.
The calculation of the risk-degree indicator
includes three components: the likelihood of
a risk, its frequency and its consequences.
Following the calculation, an indicator is
created for each facility: the higher it is, the
higher the risk level at the facility and the
more closely the Company monitors its OHS
status. In accordance with the assessment
scale, the degree of risk for this indicator is
nominally divided into several categories,
from low to very high:
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SPHERES REPRESENT
CONTROL POINTS
White spheres
represent control
points that have not
been checked yet
Orange spheres represents
control points that have been
checked and might have
safety violations
Etalon Group’s safety index
increased by 6 p.p. in 2020 to
86 % versus a target level of
75 %.
Green spheres
represent control
points that have
already been
checked
Improvement of the process and
tools for operational oversight and
monitoring construction safety
The Company conducts operational
oversight of compliance with OHS
standards at all levels. At the level of Etalon
Group subsidiaries, OHS engineers monitor
conditions, including working conditions, at
construction and production sites, factories
and company offices, as well as the work
of subcontractors. Employees of the OHS
departments of local offices also monitor
conditions, including working conditions, at
the Group’s construction sites.
The Company regularly conducts
independent assessments of the safety
index for individual facilities and for all of
the Group’s construction sites as a whole
and monitors the performance of the OHS
system and the functional chain of OHS
management processes via the safety index.
The organisation of regular, independent
monitoring based on the safety index at the
Company’s facilities is carried out by the
heads of Etalon Group’s local departments.
Etalon Group subsidiaries also undergo
scheduled and unscheduled inspections by
regulatory authorities.
RISK OF WORKPLACE ACCIDENT
PREVENTATIVE MEASURES BY ETALON GROUP
LOW
OHS system research at the facility
POSSIBLE
Inspection and analysis of OHS processes, increased focus on implementing all necessary
measures and procedures
SIGNIFICANT
Special control and monitoring of the facility for analysis and improvement
HIGH
Urgent briefing and knowledge-testing of engineering and technical personnel, immediate
improvement of OHS processes
VERY HIGH
Immediate termination of work until violations are removed
Regular monitoring and
improvement of OHS systems
and procedures resulted in
a significant decrease in the
overall risk level for all Etalon
Group facilities over the year.
RISK LEVEL DECREASED BY
36 % OVER
THE YEAR
Safety index
Since 2014, the Company has been
determining the level of OHS at construction
sites using the safety index, a tool
developed in-house. This index is based
on data about a number of key parameters
obtained during the monitoring of
construction facilities using BIM technology:
the ratio of the number of positive ratings to
their total number of ratings at the control
facility. The measurement range is from 0 %
to 100 %, while the target index for Etalon
Group is at least 75 %.
The main parameters when determining
Etalon Group’s safety index are:
• Prevention of falls: fencing balconies,
mounting levels, elevator shafts,
openings, open hatches, fencing at
foundation pits, etc.
• Work process: risks when performing
work, adherence to working methods,
correct use of personal protective
equipment
• Rubbish system and collection,
storage of materials and equipment:
cleanliness at control facilities, timely
rubbish collection, storage of materials
and equipment in accordance with
storage rules
• Operation of equipment, tools and
devices: hand tools, electric tools, crane
counterbalances, slings, machines and
equipment, lifting machines, etc.
• Scaffolding, walkways, ladders
• Electricity and lighting: condition,
serviceability and location of electrical
equipment, lighting of common areas,
local lighting of workplaces, equipment
earthing, etc.
• Fire extinguishers: availability,
serviceability, readiness for use,
placement in a strictly designated
area, etc.
The safety index allows for effective
monitoring of OHS practices and equipment
at Etalon Group’s construction sites,
to receive up-to-date information from
controlled sites in real time, to see the
locations of safety violations in 3D, and
to determine the locations of hazardous
situations that require immediate
intervention.
When conducting inspections using the
safety index tool, the inspector inputs
the appropriate assessment for the
control points (positive or negative) or, in
case of factors posing a critical degree
of risk, enters the relevant information
into a separate functional window of the
programme. When the inspection has
ended, the results are uploaded to the
BIM system, including the safety index
for the specific control points and a total
for the facility as a whole, as well as the
coordinates of control points requiring
a prompt response from the relevant
employees. The uploaded results and
actions needed to rectify the relevant safety
issues are transferred to relevant Etalon
Group employees.
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MONITORING
CONTRACTORS’
COMPLIANCE WITH
INDUSTRIAL SAFETY
REQUIREMENTS
Over the past four years, Etalon Group has
been using the occupational safety index to
verify compliance with occupational health
& requirements by third-party contractors
as part of an audit of these companies’
compliance with established criteria.
For example, this type of assessment is
conducted when holding tenders to select
a contractor or when deciding whether to
include or exclude a contractor from the
register of organisations accredited by the
Company.
SAFETY INDEX
DEVELOPMENT HISTORY
2014
2015
2017
The safety Index tool was
introduced into Etalon Group’s OHS
systems to monitor and assess
safety levels at construction sites.
Regular monitoring using this tool
is performed, at least once every
two weeks.
Etalon Group patented its
methodology and programme and
began to develop pilot projects for
the use of its OHS system for third-
party companies.
2018
2019
The methodology for assessing the
OHS index was updated to take into
account a risk-based approach and
the influence of the degree of risk.
All of Etalon Group’s construction sites
use their own web service to monitor OHS
measures using the capabilities of the ICCS
(Integrated Construction Control System)
digital platform; any user can quickly obtain
information about the health and safety
status from their mobile device, using a
number of dashboards within the system.
Developed the Fire-Safety Index for
construction camps; the data-processing
system is fully automated and allows regular
reports to be made.
Introduced a three-stage safety control
system at construction sites:
1. Daily monitoring of safety indicators
is carried out by the construction
supervisors and includes visiting
all workplaces and identifying and
immediately eliminating deficiencies.
2. Weekly monitoring is carried out by the
construction supervisors in conjunction
with section heads.
3. Monthly monitoring is carried out by
a commission with the participation of
the construction manager, site foreman
and relevant representatives of the
contractor.
2020
2021
Research and development of a
methodology to calculate other important
indicators for assessing the construction
process began within Etalon Group,
including the Construction Time Frame
Compliance Index, which is part of the
comprehensive Construction Operation
Safety Index assessment.
An update is being prepared to the
methodology for calculating the safety
index to take into account the criteria for
the human impact on the risk assessment.
Risk will be divided into two types: indirect
and direct. For each type, a separate
calculation is made of the impact on a
construction site’s overall safety index.
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ANNUAL REPORT 2020
ENVIRONMENT
Etalon Group strives to assess and minimise any
adverse impact on the environment at all project
implementation stages. The Company maintains
the highest environmental management standards,
employs the latest technologies, and aims to use
natural resources and energy rationally as well as
to reduce and recycle its waste. Etalon Group thus
strives to achieve significant cost savings for its
business while helping to preserve the environment
and natural diversity, as well as to create long-term
benefits for all stakeholders.
ETALON GROUP’S
ENVIRONMENTAL
MANAGEMENT
APPROACH
Etalon Group strives to limit the negative
environmental impact of its operations.
The Company strictly adheres to Russian
environmental legislation, including
conducting environmental assessments
and implementing measures to limit
its environmental impact at all project
stages. The Company also develops and
implements measures that improve the
efficiency of its resource usage.
At the preparation stage, the Company
conducts environmental surveys; assesses
noise levels, background air pollution and
soil quality; and determines the waste
hazard rating. Based on preliminary studies
and the scale and particulars of a project,
Etalon Group forecasts the possible
negative environmental impact from the
construction and commissioning stages.
When planning construction, standards
governing the permissible anthropogenic
impact on the environment are considered,
and measures are developed to reduce it:
these include land reclamation, preventing
the loss of natural resources, and preventing
harmful emissions into the soil and
atmosphere.
Construction is carried out according
to approved project documentation, in
compliance with all relevant technical
environmental regulations and factoring
in possible environmental risks. During
construction, the Company implements
measures to prevent environmental
pollution, including reclaiming land,
protecting the air basin and water resources,
imposing noise controls, and monitoring key
indicators.
Before commissioning facilities, the
Company develops and implements
measures to restore the environment,
conducts landscaping and beautification
projects, and creates recreation areas as
well as children’s play spaces and sports
grounds. The residential buildings at Etalon
Group’s facilities comply with sanitary
requirements governing heating, ventilation,
the microclimate and air quality, natural and
artificial lighting, levels of noise, vibration,
ultrasound and infrasound, electric
and electromagnetic fields and ionising
radiation.
2020 HIGHLIGHTS1:
WASTE MANAGEMENT
FINES OR SANCTIONS
for non-compliance with
environmental standards, losses
resulting from litigation of violations
of environmental standards
ZERO
-6% -5%
ELECTRICITY
USAGE CUT
from 69 mln to 65 mln
kW·h in 2020
1 Production unit data
FUEL
CONSUMPTION CUT
from 2.44 mln litres to
2.31 mln litres in 2020
SOLID WASTE
PRODUCTION
DECLINED
from 202.5 ths tonnes
to 167.9 ths tonnes in 2020
-17% 233
13.5
MLN RUB
WASTE
MANAGEMENT
COSTS FOR 2020
Etalon Group seeks to minimise its impact on the
environment throughout the construction cycle
and to plan projects that are energy and resource
efficient when they are finished
TONNES OF
REBAR SCRAP
SENT FOR
RECYCLING
148
SUSTAINABILITY
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ANNUAL REPORT 2020
ENVIRONMENTAL
MANAGEMENT
SYSTEM
The work of Etalon Group
specialists is governed by
environmental legislation,
including:
Federal Law No. 7-FZ on
Environmental Protection
Federal Law No. 174-FZ
on Environmental Assessment
Federal Law No. 89-FZ
on Production and Consumption
Waste
Land Code of the
Russian Federation
Water Code of the
Russian Federation
Federal Law No. 96-FZ on the
Protection of Atmospheric Air
SanPiN 2.2.1 / 2.1.1.1200-03
"Protection zones and sanitary
classification of enterprises,
structures and other facilities", as
well as internal policies and duty
descriptions
Environmental specialists are employed at
the functional subdivisions of the Moscow
and St Petersburg regional administrations
responsible for construction.
They participate in developing project
documentation from the viewpoint of
environmental legislation and standards,
take part in project evaluations, are involved
in resolving environmental protection
issues arising during the course of Etalon
Group’s activities, provide informational
and methodological support to the
Company’s structural divisions, and analyse
the construction process, and take part
in organising and coordinating initiatives
to improve the integrated quality and
environmental management system and are
involved in getting it certified.
The Etalon Scientific and Technical Centre
has a quality control department that
monitors and maintains the quality and
environmental management system.
Etalon Group’s environmental management
system is based on strict adherence to legal
requirements and internal policies, as well
as on developing measures to improve the
effectiveness of its environmental protection
measures.
The Company’s quality and environmental
policy1 did not change during the reporting
year. The policy is consistent with the
Company’s strategic goals and mission,
and includes its obligations to protect the
environment, meet mandatory requirements
and continuously improve. The policy also
serves as the basis for setting and analysing
the quality and environmental goals that
are communicated to personnel and
stakeholders.
A programme of measures for 2020 was
developed to meet the policy objectives.
This includes measures to prevent or
minimise the possible impact on air, soil
and water, and to minimise the impact
of noise and vibrations during building
and installation work. Materials and
equipment of a high environmental quality
are used, and environmental inspections
are conducted at construction sites.
Strict internal environmental monitoring of
facilities minimises the Company’s negative
impact on the environment, as confirmed
by the results of regulatory authorities’
external audits. For example, all facilities
in St Petersburg were commissioned
without any comments or instructions from
inspectors from the State Architecture and
Construction Inspectorate’s environment
sector.
During 2020, the Company operated
an integrated quality and environmental
management system in accordance with
ISO 9001: 2015 and ISO 14001: 2015.
The Company’s integrated management
system and quality and environmental
policy were audited by the Russian Register
Baltic Inspectorate. An external audit of
JSC Etalon LenSpetsSMU’s integrated
management system conducted in June-
July 2020 within the company’s structural
divisions and at Etalon Group’s construction
sites at the Etalon on the Neva and
Galactica Premium residential complexes
revealed no deviations from international
standard requirements. The certification
body noted compliance by JSC Etalon
LenSpetsSMU’s integrated management
system with ISO 9001: 2015 and MS ISO
14001: 2015 requirements relating to the
design and construction of buildings and
structures, and confirmed the validity of the
conformity certificates until 4 July 2023.
ENVIRONMENTAL
CERTIFICATION
CERTIFICATE
TERM
ISO 14001
Issued for three years until 4 July 2023, subject to annual inspection audits
ISO 9001
Issued for three years until 4 July 2023, subject to annual inspection audits
GOST R ISO
Issued for three years until 4 July 2023, subject to annual inspection audits
The Company conducts its own
environmental monitoring at various stages
during project life cycle, and regularly
prepares environmental reports for the
Group’s companies or at the request
of shareholders. In 2020, these reports
were provided within the framework
of reporting meetings on quality and
environmental issues between JSC Etalon
LenSpetsSMU—Etalon Group’s main
operating company in St Petersburg—and
NTC Etalon Ltd 2. Etalon Group’s internal
reports on the results of inspections of its
facilities for compliance with environmental
standards are independently audited.
1 JSC EtalonLenSpetsSMU unified policy on quality and environment
2 The Etalon Scientific and Technical Centre
RESPONSIBLE
SUPPLY CHAIN
ENVIRONMENTAL
PROTECTION
EFFORTS
The integrated management system
requirements apply to contractors
conducting construction and installation
works as well as materials suppliers.
Equipment and materials used at Etalon
Group facilities comply with hygiene and
ergonomic requirements, as well as current
SanPiN requirements (Etalon's products
have certificates of conformity, sanitary
and epidemiological summaries, quality
and fire safety certificates, etc.) and project
characteristic requirements. Construction
materials—sand, gravel, cement, concrete,
paints and varnishes, etc.—have all of the
requisite summaries and certificates.
Etalon Group is diligent when selecting
suppliers and contractors. The Company
has a system of tenders, (described in
more detail in the “Business conduct”
section) that sets formal criteria for selecting
suppliers. We give preference to the most
responsible companies, and conduct our
own incoming inspections of products. The
requirements of the integrated management
system are relayed to the general
contractors responsible for complying with
environmental legislation at construction
sites. When conducting works, general
contractors are obliged to comply with the
legal standards and requirements set out in
the project documentation regarding natural
resources, noise levels, air protection etc.
Compliance with environmental legislation
is monitored by Etalon Group’s quality and
environmental management department
and by the main administration of the state
construction inspectorate, when a facility is
commissioned.
Soil and vegetation preservation,
wildlife conservation
Water and effluent
During construction, the Company sources
all of its water from the municipal water
supply. Water use is strictly controlled:
Etalon Group installs meters to monitor
water volumes regularly, and observes
strict compliance with consumption limits.
During construction and commissioning,
the Company takes measures to cut water
consumption, including recycling water for
wheel-washing and using resource-efficient
engineering equipment and automated
water-metering systems.
At the planning stage of a construction
project, as well as at the construction stage
of the project, measures for implementing
environmental protection are factored in:
land reclamation, preventing the loss of
natural resources and preventing harmful
emissions into the soil. If there is a fertile
soil layer, it is removed, transported and
stored. Soil that is not suitable for reuse
is removed and disposed of. Special sites
are established for temporary storage
of soil intended for reuse. The Company
also takes measures to prevent or
reduce contamination of soil from fuels
and lubricants.
The Company also implements measures
to protect trees and shrubs, strives to
minimise felling, and when construction
is complete, it beautifies the territory by
planting trees and shrubs or even creating
parks and gardens at projects in large
residential areas.
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SUSTAINABILITY
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ANNUAL REPORT 2020
WATER
AND WASTE
MANAGEMENT
WATER USAGE1
INDICATOR
2018
2019
2020
Total water sourced, ths m3
Total waste water discharged, ths m3
1,230
750
1,159
801
1,275
845
The Company does not produce class 1–3 (hazardous) waste. We adhere to strict rules in
managing construction waste. We aim to send waste that can be reused for recycling, while
waste that cannot be recycled is sent to a landfill. More than 90 %2 of the waste is recycled.
PROTECTING THE
ATMOSPHERE
AND ENERGY
EFFICIENCY
To reduce pollutant emissions—depending
on the materials used and the work
technology and methods required—after
a building’s frame is completed, the
Company installs dense netting covering all
the storeys of the building and covers them
with film, or installs double-glazed windows,
and workers use special respirators.
Dust collectors are installed if necessary,
provided for in the working plan. Sanitary
protection zones are designed with dust
protection in mind. To reduce dust, vehicles’
wheels are washed before they leave the
construction site.
We no longer use diesel generators for
construction, instead using electricity from
the municipal grid, which enables us to
reduce emissions of nitrogen oxide and
small-soot particles into the atmosphere,
and to reduce energy consumption. Energy-
efficient and long-lasting LED lights are
used to illuminate staircases and spaces
at construction sites. As a result of these
measures, the Company systematically
reduced its electricity consumption by 0.6 %
year-on-year in 2018, by 4 % in 2019 and by
6 % in 2020 1.
ELECTRICITY CONSUMPTION 1
71.3
69
65
0.6 %
4 %
6 %
SOLID WASTE
MANAGEMENT IN 2020 2
93.4 %
Recycled
6.3 %
Landfill
0.3 %
Neutralised
The Company’s waste management expenses came to RUB 13.5 million for 2020, while the
Company plans to spend RUB 14.5 million on waste management in 2021—proportional
to the planned construction volume. The volume of waste generation decreased by 17 % in
2020, to 168 thousand tonnes, and 233 tonnes of rebar was sent for recycling.
8
1
0
2
9
1
0
2
0
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Electricity consumption,
mln kW·h
Reduction of electricity consumption
year-on-year
Etalon Group strives to reduce its
greenhouse gas emissions by cutting fuel
consumption as it optimises its logistics
routes. This is part of its improvement
of its organisational and management
structure, as well as its general focus on
increasing its operating efficiency. For
example, when delivering concrete mixture
to a construction site, the closest concrete
plants to the construction site are selected,
and when removing non-recyclable
construction waste, the closest special
landfills (specified in the waste management
technological regulations) are chosen. This
has led to a 5 % year-on-year reduction in
fuel consumption 1.
WASTE MANAGEMENT
FUEL CONSUMPTION 1
-5 %
INDICATOR
2018
2019
2020
Construction materials used, tonnes
956,781
1,000,315
1,056,250
Waste generated, tonnes
255,000
202,537
167,938
Hazardous waste (class 1–3)
-
-
-
Non-hazardous waste (class 4–5)
255,000
202,537
167,938
Sent for recycling (rebar), tonnes
n/a
347
233
Strict controls by the Company meant
that there were no significant spills of
pollutants in the reporting year.
2.78
2.44
2.31
87
–
–
2020 vs 2019
Petrol, mln litres
Diesel, mln litres
0.22
2.56
0.21
2.23
0.20
2.11
8
1
0
2
9
1
0
2
0
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Fuel consumption,
mln litres
Natural gas consumption,
ths m3
1 Production unit data
2 Information for Etalon Group's main general contractors, Novator and Rekonstruktsiya
152
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NEW
TECHNOLOGIES
AND METHODS
TO REDUCE THE
ENVIRONMENTAL
IMPACT
The introduction of digital
technologies allows us to create
more-effective planning solutions,
including energy-efficient
engineering "stuffing", optimal
building design and the most
environmentally friendly building
materials.
BIM technologies
Etalon Group applies BIM technologies
throughout the entire project life cycle.
At the design stage, BIM makes it possible
to visualise building systems, evaluate
various layout options and make them
compliant with regulations and standards.
The use of BIM software when planning
a building’s architectural appearance and
engineering systems allows for the creation
of parametric models with the allocation
of distinctive energy consumption zones
and heat-insulation structures, which
are subsequently included in energy
consumption calculation programmes.
Designers can thus optimise a building’s
energy, emissions, raw materials usage and
other metrics, while still using technologies
that surpass traditional methods in terms
of speed and cost. The introduction of
standard designs will increase design
efficiency by reusing and combining the
most successful solutions that have been
collected in special digital libraries of
structural, facade, engineering and planning
solutions, as well as by reducing the risk
of human errors.
As part of the standard design
implementation, the Company is now
preparing a draft proposal for digital
building systems for the ZiL-Yug project.
These workings will form the basis of
a corresponding library, which will be
used to create modern projects using the
latest digital solutions to ensure buildings
are highly environmentally friendly and
resource efficient.
CFD modelling
To calculate the optimal parameters of the
indoor microclimate, the Company uses
three-dimensional CFD (computational
fluid dynamics) computer modelling, which
makes it possible to predict the main
indoor comfort elements: temperature,
humidity, high-speed, gas and air flows.
CFD modelling provides a complete picture
of the air distribution at the initial design
stage. This enables us not only to visualise
the overall distribution of hydro-gasdynamic
flows and the influence of external factors
(solar radiation, atmospheric pressure,
flows from adjacent rooms or openings,
etc.), but also to evaluate parameters of
interest to us at any point in the room. All
of this information is then used to develop
project documentation, and enables Etalon
Group to create environmentally friendly
and energy-efficient premises with the most
comfortable microclimates.
Latest housebuilding technologies
and methods
The development and implementation of the
latest industrial housebuilding technologies
and methods will help reduce the negative
environmental impact. The company is
developing projects for the application
of modular technology and CLT panels1.
Etalon Group plans to adapt modular
housing construction technology to
Russian standards. Modular technology
has a number of advantages, including
environmental ones: it reduces the volume
of construction waste, it cuts energy
consumption and harmful emissions
at construction sites by reducing the
construction time by about 40 %, and the
design variability allows for the use of the
most environmentally friendly solutions in
the project, while using wood and metal
that can be recycled also reduces the
environmental impact.
A construction technology using CLT
panels is currently being developed jointly
with Segezha Group. This will reduce
the environmental impact through highly
energy-efficient technology and improved
thermal insulation performance. CLT
construction will reduce the carbon footprint
by cutting CO2 emissions by up to 75 %2.
The first hybrid technology pilot project
is to be developed jointly with Segezha
Group. Importantly, the exclusive
cooperation conditions meant that we were
able to develop a project concept and
adapt production to it. Thus, by the time
construction begins, all elements will fit our
pilot project perfectly.
More detail about the new technologies are
provided in the "Strategy" and "Innovation"
sections.
GREEN
CERTIFICATION
Modern ‘green’ technologies and methods make it
possible to reduce buildings’ resource consumption, as
well as to cut residents’ utility bills. Etalon Group’s Silver
Fountain and Botanica residential complex projects are
certified to the Russian Green Zoom standard3.
CASE STUDY
Botanica complex—the first facility
in St Petersburg certified under the
Green Zoom standard.
been allocated for green spaces, and an
avenue of limes has been created, which
the Company is careful to protect during
construction.
Etalon Group had already received a
platinum Green Zoom certificate for the
Silver Fountain residential complex in
Moscow. This complex uses progressive
engineering solutions and ‘green’
technologies, including efficient water
taps, indoor climate control, air-supply
units with heat recovery and the ability to
install charging stations for electric vehicles
at the request of residents. This means
future residents could save up to 37 %
on their energy bills. More than a third of
the area of the Silver Fountain complex has
As for the Botanica residential complex,
which was awarded a gold certificate at the
project-development stage, the Company
analysed multiple parameters, from the
location to the building itself: building
materials, internal ecology, innovation, water
and energy efficiency, noise insulation,
and the level of harmful emissions. The
complex has been checked for compliance
with requirements for optimising resource
consumption and reducing negative impacts
on health and the environment. Energy
modelling showed that the solutions applied
increased the facility’s energy efficiency by
43 % compared to similar facilities where an
environmental approach was not applied.
And residents of the eco-homes will garner
all of the benefits in several areas at once.
For example, the latest engineering systems
mean that future residents will be able
create an independent microclimate within
their home. Climatic valves on the windows
will provide fresh air without needing to
open the windows, and will protect against
draughts and street noise. The ventilated
facade will allow residents to keep warm
with less frequent reliance on heating
appliances.
In addition to comfort and economy, the
property's green system considers the local
ecology. Energy modelling has shown that
carbon dioxide emissions from Botanica's
buildings are 33 % lower. And the complex’s
buildings are equipped with an additional
system of drinking water purification
and filtration.
The project’s eco-ideology will also be
reflected in improvements to the local area,
where a unique landscape project has been
created: there is a green boulevard and an
alley of trees, bushes and various grasses.
Quiet courtyards, paths, flowerbeds, and
sports and recreation grounds provide a
neat continuation of the eco-concept.
1 CLT (Cross-laminated timber)
2 European Forest Week (19/11/2019), Stora Enso report “Massive wood construction in Europe on the example
of CLT: history & outlook”
3 Green Zoom is a Russian system for certifying real estate according to their energy efficiency and environmental standards
154
SUSTAINABILITY
155
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PEOPLE
People—employees, partners and customers—have been the
focus of Etalon Group’s attention for more than 30 years. Everyone
connected with Etalon Group’s story has made their own individual
contribution to it. Our more than 4.5 ths co-workers know what is
important to our clients. The experience, views and culture of each
one of our employees and partners help us change for the better
every day and improve the quality of life for our customers—creating
a modern living environment that is a comfortable and pleasant
space in which to live and work.
EMPLOYEES
4,606
4,915
TOTAL ETALON GROUP
HEADCOUNT IN 2020
TOTAL ETALON GROUP
HEADCOUNT IN 2019
WORKFORCE AND BREAKDOWN
OF EMPLOYEES BY AGE
NUMBER AND
PERCENTAGES OF MEN
AND WOMEN
NUMBER AND PERCENTAGES OF
EMPLOYEES IN MOSCOW AND
ST PETERSBURG
2020
2019
706
854
2,811
2,826
1,089
1,235
3,228
3,481
1,378
1,434
487
508
646
683
3,473
3,724
15 %
17 %
61 %
57 %
24 %
25 %
70 %
71 %
30 %
29 %
11 %
10 %
14 %
14 %
75 %
76 %
Under 30
30-50
Over 50
Male
Female
St Petersburg
regional
division
Moscow
regional
division
Production
unit
APPROACH TO
PERSONNEL
MANAGEMENT
At the Group level, we adhere
to the following principles:
maintaining the health and safety
of personnel;
providing all employees with
equal opportunities and fair
remuneration, depending solely on
each employee’s contribution to
the Company’s development;
maintaining open dialogue with
employees;
supporting professional
development and employee
engagement
Etalon Group’s human resources
management system includes personnel
services at the management company level,
headed by the Vice President for Human
Resources, as well as personnel services at
our subsidiaries.
At the management company, the focus is
on developing and implementing company-
wide personnel policies and processes.
The Vice President for Human Resources
oversees the work of the Heads of HR
administration, selection and training,
compensation and benefits, who
are responsible for developing and
implementing policies at Etalon Group
subsidiaries.
At the subsidiary level, personnel
management is carried out by personnel
services responsible for the recruiting,
induction, training and maintenance of
personnel records.
Our personnel management strategy
focuses on improving efficiency by
recruiting, developing and retaining talented
employees. This strategy involves the
following aspects:
• maintaining an effective incentive
system;
• developing human resources;
• maintaining a healthy corporate culture;
• maintaining a policy on avoiding
conflicts of interest;
• offering excellent customer service
and developing the skills of Etalon
Group employees through training
programmes;
• updating existing corporate HR
documents in line with the situation in
the labour market.
This approach enables us to improve
incentives for existing employees and make
Etalon Group a more attractive employer for
job seekers.
156
SUSTAINABILITY
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ANNUAL REPORT 2020
STAFF
DEVELOPMENT
Etalon Group provides its employees with a
variety of opportunities for professional and
career development:
OCCUPATIONAL HEALTH AND
SAFETY TRAINING IN 2020
St Petersburg
Moscow region
NUMBER OF PEOPLE TRAINED
Management
Line employees
225
39
12
149
25
TOTAL NUMBER
OF HOURS
Management
HOURS PER
PERSON
The following documents outline the
basic principles and mechanisms of the
Company’s personnel and social policies:
Etalon Group’s human resources function is
responsible for implementing and monitoring
the HR policy for the entire Company.
Line employees
1,418
432
6,168
900
36
36
8,918
40
41
36
• Competitive salaries and career planning
• Performance-based financial awards
• Training and continuing education
programmes
The Company invests in training its
employees either through third-party
educational platforms or the development
of in-house programmes and workshops
adapted for specific objectives or in
response to staff requests. Training is
offered in various fields: finance, personnel
management, sales, law, economic and
corporate security, and IT. Professional
development programmes promote
efficiency, team-building and the shared
attainment of the Company’s strategic
goals. We encourage personnel to aspire
to improve their qualifications: we often
cover some or all of the costs of training
that employees themselves choose in order
to increase their value as professionals. In
2020, the Company covered some of the
costs for the training of 40 employees in
programmes beyond in-house training.
In addition to improving the qualifications
of employees in the usual fields, such as
business and tax accounting, finance,
project management and personnel
management, the Company paid particular
attention in 2020—in connection with the
introduction of digital architecture for all
business processes and improvements to
the sales system—to training programmes
associated with digital technologies,
focusing on Autodesk Revit software in
particular, as well as training in the field of
IT and marketing. In order to ensure that our
team has the skills needed to achieve our
strategic goals, we have focused on training
programmes in areas like data science, data
management and analysis, software and
IT product management and application
interfaces. Some of the specific topics
included UX analytics, content marketing,
SMM and customer service.
Annual workshops and training courses
on Occupational health and safety are
an important part of training. In 2020,
225 Etalon Group employees took part
in such courses. These training courses
are discussed in more detail in the
“Occupational health and safety” section.
In connection with measures to prevent the
spread of COVID-19, Etalon Group made
an effort to take advantage of available
opportunities for remote learning during
the reporting year in order to maintain
the professional skills of its workforce,
including distance learning programmes and
resources available through its corporate
portal. In those professional fields where
remote learning is either impossible or
ineffective, the Company took all necessary
measures to arrange safe in-person
training to the extent necessary to maintain
a high level of workplace safety at the
Company’s facilities.
In expanding the opportunities available for
distance learning through its own platform,
Etalon Group launched a project in 2020
to create a specialised corporate portal
for training and development intended for
both Company employees and training
partners. The project is expected to be
completed in 2021.
• The Regulation on Remuneration,
Bonuses and Benefits and the
Regulation on Etalon Group Corporate
Awards govern the system of
remuneration and non-financial
incentives for employees.
• The Corporate Labour Policy and the
Regulation on Business Trips determine
the basic principles for working
arrangements.
The key principles of corporate ethics,
including the policy of avoiding conflicts of
interest, and also on combating corruption
and fraud, are reflected in Etalon Group’s
Code of Corporate Ethics and in the
Regulation on Etalon Group’s Fraud,
Corruption and Theft Prevention Hotline.
Both documents are described in more
detail in the “Business conduct” section.
• The Regulation on Employee Orientation
outlines the Company’s approach to the
integration of new employees.
The Occupational health and safety policy
and system are discussed in more detail in
the “Occupational health and safety” section.
• The Regulation on Recruitment and
the Regulation on Staff Training and
Development, prepared and approved in
2020, determine the mechanism for the
selection of personnel and the approach
to organising employee training and
development.
STAFF TRAINING
EMPLOYEE CATEGORY:
Management
Line employees
GENDER
Female
Male
NUMBER
OF PEOPLE
2020
NUMBER
NUMBER
OF HOURS
NUMBER
OF PEOPLE
NUMBER
2019
NUMBER
OF HOURS
TRAINED
OF HOURS
PER PERSON
TRAINED
OF HOURS
PER PERSON
504
172
332
184
320
16,150
5,870
10,280
4,433
11,717
32
34
31
24
37
974
257
717
311
663
33,289
9,883
23,406
6,990
26,299
34
38
33
22
40
PERSONNEL
MANAGEMENT
POLICY
158
SUSTAINABILITY
159
ANNUAL REPORT 2020
most prestigious in the Changellenge>> case
league line-up. The competition involves
solving urgent business problems and
helps the participants (students and recent
graduates) to study business processes in
several industries in just three weeks and
to understand the areas where they are
most interested in working. Etalon Group
presented its own case at Changellenge>>
Cup Russia, showcasing ZIL-Yug, which
one of our largest development projects.
This project involves using the smart city
concept to create a new multifunctional
urban zone covering an area of more than
100 hectares. Participants in the first round
of the championship worked on this case,
and submitted over 150 solutions for the
case, 11 of which reached the semi-finals.
The Company participated in this event with
the goal of finding talented young people
with systemic knowledge and energy.
Etalon Group has been running an
orientation programme for new employees
for more than five years, helping them
integrate into their new team and acquire
the skills they need, while also teaching
them about the Company’s history and
activities, corporate values and standards of
behaviour. Each new employee is assigned
a mentor, who monitors the employee’s
work, provides feedback and also prepares
interim and final assessments of their work.
We aim not only to ensure our employees’
professional development but also to
establish a healthy workplace atmosphere
and a close-knit team. As part of these
team-building efforts, Etalon Group
organises various sporting events for
employees and takes part in athletic
competitions held within the Sistema
ecosystem and in local team sporting
events, such as the Construction Workers
Spartakiad, which St Petersburg has been
hosting since 2003. Several Company
employees have had a band called Etalon
Group since 2019.
Many educational institutions
have their own employment
services that can recommend
successful students to leading
companies like Etalon Group.
DEVELOPING
OUR POTENTIAL
WORKFORCE
In order to ensure that we are
able to recruit and retain qualified
personnel, Etalon Group uses
various platforms to search for and
hire employees.
We also work with specialised universities to
ensure that specialists have the necessary
skills for a potential career with Etalon
Group. Our main source for recruiting is
online job search services. These provide
the largest pool of potential candidates and
the ability to identify potential employees for
a wide range of positions.
Etalon Group often uses social media
platforms, such as LinkedIn to search for IT
specialists, narrow-profile specialists and
creative professionals such as designers,
social media and online marketing
professionals. In order to recruit young
specialists, we cooperate with universities.
Many educational institutions have their own
employment services that can recommend
successful students to leading companies
like Etalon Group.
In order to provide the construction
industry with qualified personnel, Etalon
Group cooperates with leading specialised
universities, including St Petersburg State
University, Peter the Great St Petersburg
Polytechnic University and St Petersburg
State University of Architecture and Civil
Engineering (GASU). The company hosts
guest lectures and job fairs and takes part in
other events on university campuses.
We also run an internship programme,
which offers future construction specialists
the opportunity to gain experience both in
the office and at construction sites.
Since 2015, round tables have been
held in the Department of Construction
Project Management at the St Petersburg
State University of Architecture and Civil
Engineering involving GASU faculty and
students, as well as experts from Etalon
Group. In addition, educational programmes
have been established, methodological
materials developed and lectures given for
bachelor’s and master’s students at GASU.
Students are given opportunities at Etalon
Group to undergo practical training, to
complete internships for the implementation
of business cases and to conduct research
within the Company’s business units.
As part of its cooperation with universities,
Etalon Group signed an agreement with the
National Research Moscow State University
of Civil Engineering (NRU MGSU) on
18 November 2020 for the development of
long-term cooperation related to education
and scientific research. The Company
agreed with NRU MGSU on targeted
training and professional development for
specialists assigned by Etalon Group, on the
joint development of advanced educational
programmes and on academic staff
exchanges. In addition, the Company and
NRU MGSU plan to cooperate on scientific
research related to the introduction of new
materials and technologies: specialists from
the university and from Etalon Group will
work together to solve problems in the field
of analytics and standard-setting, to carry
out survey and design work and to conduct
applied scientific research in various
fields, including with the participation of
young scientists.
This sort of interaction with educational
institutions enables Etalon Group to
contribute to the education of young
specialists, while also offering top graduates
an opportunity to work for the Company.
In addition to direct cooperation with
universities, In 2020, Etalon Group became
the General Partner of the Changellenge>>
Cup Russia Case Championship. This is the
largest case championship in Russia and the
ORIENTATION PROGRAMME
FOR NEW EMPLOYEES
NUMBER OF EMPLOYEES TAKING PART
IN THE ORIENTATION PROGRAMME
2020
2019
2018
St Petersburg
Moscow
Production unit
TOTAL
61
163
120
344
109
94
112
315
86
80
112
278
160
SUSTAINABILITY
161
ANNUAL REPORT 2020
ETALON GROUP
SOCIAL POLICY
Taking care of the health and
safety of our employees is our
top priority
In addition to the proactive steps to create
a safe working environment and prevent
injuries at construction sites detailed in
the “Occupational health and safety”
section, we also devoted significant time
and effort in the reporting year—due to the
outbreak and spread of the coronavirus—to
arranging safe working conditions for our
office employees.
We had to respond to the new situation
quickly and in a flexible manner: we
introduced face-mask requirements and
temperature checks, set up an on-site
doctor’s office and gave due consideration
to spatial organisation and the movement
of staff. Older employees and those with
conditions that increased their risk of
infection and severe illness, and later all
other line employees, worked remotely
form April to August 2020 and from
October 2020 to February 2021. In addition,
more than 1,000 Group employees were
insured in 2020, through a programme that
provided compensation in case of a positive
COVID-19 diagnosis.
In addition to COVID insurance, Company
life and health insurance programmes for
staff remained in place, covering more than
2.5 thousand people.
The life insurance programme provides
around-the-clock life insurance for both
white- and blue-collar personnel. Etalon
Group provides accident insurance for
employees working at construction sites
and for those employees with high-risk jobs.
We provide employees with access to
quality healthcare and encourage active
lifestyles. As part of the employee benefits
package, Etalon Group offers an additional
private health insurance programme, which
2,029 Company employees took part in
last year.
Etalon Group strives to improve its
employees’ quality of life
Through partnership programmes, discounts
are available to Company employees for
insurance services, medical services,
fitness club memberships and educational
programmes at an online language school.
In addition, we offer employees the
opportunity to purchase apartments at a
discount, the size of which depends on the
employee’s service time with Etalon Group.
The Company supports employees in
difficult life situations. In addition, Etalon
Group provides financial assistance to
employees who retire from the Company,
as well as to existing employees when
they have a child. In 2020, 184 Company
employees received financial support, with
the total amount of payments coming to
more than RUB 9 million (compared with
224 people and RUB 10 million in 2019).
In 2020, payments for employees on
sick leave and maternity leave amounted
to RUB 79.6 million, compared with
RUB 61.9 million in 2019. Employees
who devote many years to Etalon Group
and make a significant contribution to
the Company’s development receive a
corporate pension. The number of people
receiving such a pension, 44, has not
changed over the last three years.
2,029
EMPLOYEES
TOOK PART IN
ADDITIONAL PRIVATE
HEALTH INSURANCE
PROGRAMME
184
EMPLOYEES
RECEIVED FINANCIAL
SUPPORT
EMPLOYEE LIFE AND
HEALTH INSURANCE
NUMBER OF EMPLOYEES TAKING PART IN THE LIFE AND
HEALTH INSURANCE PROGRAMME
St Petersburg
Moscow
Production unit
TOTAL
HEALTH INSURANCE
PROGRAMMES
NUMBER OF EMPLOYEES TAKING PART
IN HEALTH INSURANCE PROGRAMMES
St Petersburg
Moscow
Production unit
TOTAL
PAYMENTS
Death of a close relative
Birth of a child
Other
TOTAL
FINANCIAL ASSISTANCE
TO EMPLOYEES
MLN RUB
2018
489
339
1,466
2,294
2018
437
376
1,168
1,981
2020
483
602
1,500
2,585
2020
483
602
944
2,029
2019
506
683
1,500
2,689
2019
506
683
1,200
2,389
2020
2019
4.1
3.5
1.6
9.2
3.0
3.9
3.3
10.2
EMPLOYEE
EVALUATION AND
REMUNERATION
POLICY
Etalon Group adheres to the principle of
providing decent wages, which are based
solely on each employee’s value to the
Company and also provide motivation for
the achievement of business goals. The
Company:
• provides employees with clear and fair
remuneration that contributes to the
achievement of Etalon Group’s goals;
• applies a unified, systematic approach
to the remuneration of all employees in
all Etalon Group companies;
• determines remuneration based
on achievement of Etalon Group’s
operational and strategic goals and
the specific results of the work of each
employee;
• creates conditions for employees
to set ambitious goals and to take
responsibility for the achievement of
those goals.
Remuneration for Etalon Group employees
consists of a base salary, bonuses,
non-financial incentives and various
benefits. We study salary scales every year,
which helps us pay salaries at market levels,
i.e. higher than median wages.
We also strive for an open and honest
dialogue with employees, meaning
two-way communication about working
arrangements, job performance and
professional growth, as well as important
corporate issues. We notify employees at
least eight weeks in advance of significant
operational changes that could affect them.
The Company’s line employees receive
regular feedback from their immediate
supervisor. The Company periodically
conducts research and surveys among
its employees to assess their satisfaction
and performance. Another 360-degree
survey was conducted In 2020, to assess
29 executives (14 women and 15 men) in
the Group’s main business units in Moscow
and St Petersburg. About 110 Company
employees took part in the survey.
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WORK-LIFE
BALANCE
The Company recognises the importance
of a reasonable balance between one’s
work and one’s personal development.
We give our employees the opportunity
to successfully combine their work and
family responsibilities. In 2020, 93 Etalon
Group employees, including five men, took
advantage of the right to parental leave,
compared with 87 employees a year earlier;
34 employees (31 women and 3 men,
compared with 65 employees in 2019)
returned from parental leave and are still
working for the Company.
If necessary and if the nature of their work
permits it, we also allow our employees
to work on an individual schedule or
remotely. In 2020, 95 Company employees
(60 women and 35 men) worked on an
individual schedule, either remotely or
part-time.
EQUAL
OPPORTUNITIES
Etalon Group is committed to the principles
of the UN Global Compact, which call
on companies to support and observe
the provisions enshrined in the Universal
Declaration of Human Rights.
The Company adheres to a policy of zero
tolerance for discrimination on the basis of
age, skin colour, ethnicity, sex or any other
basis and makes every effort to ensure
that career opportunities at Etalon Group
depend solely on an employee’s personal
and professional qualifications. All Etalon
Group companies strive to maintain a
corporate culture based on mutual respect
and the active participation of all employees
in the life of the Company.
Despite the specific nature of the industry,
women account for around 30 % of
managers at all levels within Etalon Group.
At the same time, the percentage of women
in managerial positions in 2020, was even
a little higher than in the Group as a whole:
31.4 % versus 29.9 %. In the Group’s
management company, women account for
almost half the management team: 34 of 69
executives.
The composition of the Board of Directors
changed in 2020: it now includes nine
members, including two women.
ETALON GROUP
MANAGEMENT
NUMBER OF MANAGERS
AT ALL LEVELS
2020
2019
NUMBER
PERCENTAGE
NUMBER
PERCENTAGE
AGE
Under 30
30–50
Over 50
GENDER
Female
Male
TOTAL
78
752
208
326
712
1,038
8 %
72 %
20 %
31 %
69 %
93
719
260
339
733
1,072
9 %
67 %
24 %
32 %
68 %
PERCENTAGE OF WOMEN AMONG
ETALON GROUP EMPLOYEES IN 2020
ST PETERSBURG
SHARE, %
MOSCOW
SHARE, % PRODUCTION UNIT
SHARE, %
TOTAL
SHARE, %
MANAGERS
Female
Male
LINE EMPLOYEES
Female
Male
BLUE-COLLAR WORKERS:
Female
Male
79
119
199
90
40 %
60 %
69 %
31 %
88
135
257
166
39 %
61 %
61 %
39 %
159
458
487
482
26 %
74 %
50 %
50 %
326
712
943
738
31 %
69 %
56 %
44 %
109
6 %
109
6 %
1,778
94 %
1,778
94 %
164
164
SUSTAINABILITY
SUSTAINABILITY
CUSTOMERS
CUSTOMER
PROFILE1
ST PETERSBURG
OCCUPATION
Etalon Group targets middle-class customers who
seek improved living conditions for themselves
and their families. The vertical integration of the
business allows the Company to engage in two-way
communication with customers regardless of where
they are in their relationship with us – whether
searching for an apartment or living in finished
buildings that we service.
165
165
We use feedback from nearly
350,000 existing and potential
customers to constantly improve
our product, service quality and
range of services.
ANNUAL REPORT 2020
ANNUAL REPORT 2020
42
AVERAGE
CUSTOMER AGE
PURCHASE MOTIVE
AGE
38 %
19 %
11 %
11 %
8 %
4 %
3 %
2 %
1 %
1 %
1 %
66 %
21 %
8 %
2 %
2 %
7 %
16 %
29 %
35 %
13 %
1 %
Manager,
specialist
Director,
top manager
Public sector
employee
Business
owner,
entrepreneur
Public
official
Blue-collar
worker
Retiree
Homemaker
Student
Unemployed
Military
service
member
Place for
oneself or
family to live
Place for
children to
live
For
investment
purposes
Place for
parents to
live
Other
>60
50–59
40–49
30–39
20–29
<20
MOSCOW
OCCUPATION
PURCHASE BUDGET, MLN RUB
AVERAGE AREA OF ACQUIRED PROPERTY, SQM
REPEAT PURCHASE RATE
48 %
15 %
15 %
11 %
9 %
2 %
8
11
10
8
8
11
51
60
59
51
52
56
15 %
26 %
15 %
27 %
15 %
15 %
White-collar
professional
Business
owner,
entrepreneur
Senior
management
Other
Public
official
Student
White-collar
professional
Business
owner,
entrepreneur
Senior
management
Other
Public
official
Student
White-collar
professional
Business
owner,
entrepreneur
Senior
management
Other
Public
official
Student
White-collar
professional
Business
owner,
entrepreneur
Senior
management
Other
Public
official
Student
1 Etalon Group data
166
SUSTAINABILITY
167
ANNUAL REPORT 2020
24/7
SECURITY IS A
SOUGHT AFTER-
FEATURE AT OUR
PROJECTS
FURTHER PRODUCT
AND CUSTOMER
SERVICE
DEVELOPMENT
One of the most important
elements of our strategy involves
creating the best customer
experience throughout the
customer journey.
Variety and availability of choice are seeing
increased demand among customers.
There is growing demand for mixed types
of residential spaces, where there is an
opportunity to develop new economic and
creative industry clusters—for example,
modern studios where you can live and
work (light industrial) or office space for
small businesses on the ground floors
of buildings in which employees of such
companies live and work.
Studying the needs of target customers
helps us to take a strategic approach to
product and customer service development.
ordering finishing work from the Company,
which can also be used for additional
services, such as plumbing installation,
window washing and dry cleaning. After a
home is put into service, the app will receive
a push notification about the possibility of
receiving the keys and carrying out a final
home inspection. The process can also be
carried out online by sending all comments
through the app.
As a result, we will significantly increase
our customer value and satisfaction, which
will allow us to secure an influx of new
customers looking to buy housing in our
complexes and to fulfil our plans to increase
the scale of the business.
The purpose of the study was to learn
about the attitudes and preferences of
potential customers regarding more than
157 characteristics of modern housing. The
study assessed three key indicators: the
importance and desirability of each feature,
as well as respondents’ willingness to pay
for a feature.
The results of the study showed that
safety is a common value for all groups of
business-class homebuyers. Everyone is
willing to pay extra for a lighted courtyard,
everyone understands the additional
costs of providing 24/7 security, and the
overwhelming majority agree with an
increase in the cost of an apartment if the
residential complex has a face recognition
system at the entrance to the grounds and a
24/7 concierge service.
Another common denominator for
consumers is a smart home system. Almost
all respondents agree (confidence score of
69–75) that this option costs extra money,
and they are willing to pay extra.
We are actively improving the interface of
our sales website and customer dashboard,
creating new channels of interaction and
opportunities to provide feedback on
our product. In addition, we are devoting
particular attention to Etalon My Home, our
mobile app, which was created for residents
of our complexes.
This app should become the basis for
increasing our customers’ engagement
regarding questions concerning further
product improvement. Here we plan to
expand the range of added services in
cooperation with new partners. We believe
that increasing customer engagement
through added services will create more
opportunities for us in terms of increased
share of repeat purchases and an influx of
new customers.
We are considering combining sales and
service infrastructure into a single user-
friendly interface in the coming years.
Residents of the complexes we have built
will always see current offers in their app.
When purchasing an apartment, they will
earn bonuses that can be used when
WORKING WITH
CUSTOMERS
Etalon Group takes a customer-
oriented approach to doing
business. We work to understand
what is important for our current
and potential customers, creating
not just homes but also a
comfortable living environment
for them.
When restrictions were introduced to
combat the spread of COVID-19, Etalon
Group took every possible measure to
ensure that the situation did not affect the
residents of our buildings or the provision
of utilities. The service company began
actively developing remote communication
services and focused on phone calls and
requests sent via e-mail. Inquiries were
accepted as usual (24 hours a day), and all
requests and questions were processed
in full.
Additionally, in taking care of residents’
health, the Company began applying
comprehensive disinfection measures in
residential complexes during the first days
of the pandemic response. We regularly
disinfect entrances, vestibules, corridors,
elevator halls and cabins, staircases,
and contact surfaces. The following were
cleaned at least three times per day—door
handles, switches, handrails, railings,
mailboxes, windowsills, elevator buttons,
mirrors, and intercoms.
Etalon Group not only strives to maintain
a high level of service for its residential
complexes, but we also seek to better
understand the needs of our target
customers for continuous improvement
of projects and services. The Company
carefully studies the preferences and needs
of its target customers through a hotline,
call centres and the Etalon My Home
mobile app. Inquiries and feedback from
customers are received, and products
and services are developed on the basis
of this information. From the evolution of
our product to our sales, promotion and
follow-up service, we draw on customers’
requirements to create the best product
and customer experience.
In 2020, we received over 5,000 inquiries,
which helped us identify strengths and
areas for potential growth. In addition to
feedback from existing customers, the
Company also worked with Celebrium-X
to conduct an urban study of product
preferences exhibited by buyers of comfort-
and business-class apartments in Moscow.
168
SUSTAINABILITY
169
ANNUAL REPORT 2020
SOCIAL
RESPONSIBILITY
Etalon Group and its customers understand that
the concept of housing quality is now inextricably
linked with the quality of the surrounding area. For
many years, we have been investing in creating
comfortable surroundings and playing an active role
in the development of local communities: we develop
multifunctional projects and social infrastructure
facilities, preserve and reconstruct historical
monuments, support charitable programmes and
organise cultural and sporting events.
DEVELOPMENT
OF SOCIAL
INFRASTRUCTURE
Given the nature of our business, the
construction of schools, preschools,
medical facilities and other social
infrastructure is one of the key aspects of
the development of local communities.
In St Petersburg, the Company completed
three preschool—built within the Galactica
residential quarter—designed for a total
of 200 pupils, and began construction
of another, three-storey preschool for
220 pupils with a total area of more than
5 thousand sqm, a swimming pool, a music
room, a gymnasium, playrooms, sleeping
rooms, a medical station and a curriculum
office.
In 2020, Etalon Group also received
permits for the construction of a school for
825 pupils as part of the Galactica project.
In addition, the Company completed the
construction of a preschool in 2020, at the
House on Kosmonavtov residential complex
as well as a preschool for 140 children at
the Okhta House residential complex; the
390
CHILDREN
TOTAL CAPACITY OF
EDUCATIONAL FACILITIES
DELIVERED BY ETALON
GROUP IN 2020
Company also handed over to the city a
preschool with places for 80 children built
as part of the Fusion residential complex.
In the future, new preschools will appear in
other Group residential complexes as well:
in 3Q 2020, the Company received permits
for the construction of a preschool at the
House on Blyukhera residential complex
and another at the Petrovskiy Landmark
residential complex.
In Moscow during the reporting year,
Etalon Group received a statement of
conformity with requirements for the design
documentation for a preschool building at
the Etalon City residential complex. The
preschool was delivered in January 2021.
The modern three-storey building with an
underground service floor has a total area
of 3 thousand sqm. It can comfortably
accommodate nine groups of 25 children
aged 3–7. Thus, a total of 225 children can
attend the new preschool. In addition to
sleeping rooms, dressing rooms, canteens
and lavatories, the new preschool also has
rooms for sports and music, as well as
medical facilities. The closed landscaped
grounds include playgrounds with awnings
to offer protection from rain and snow.
elevator with an enlarged cab. With high
ceilings, daylighting and additional windows
in the classrooms that open onto an inner
atrium, the classrooms will be illuminated by
a large amount of natural light.
Group assisted with the procurement and
installation of educational equipment: the
Lyceum now has smartboards, screens for
an information area, equipment for music
rooms and chemistry labs, and much more.
A school for 625 pupils will also be built
on the grounds of the project. In 2019, the
initial design of the building was revised
at the initiative of the developer, and the
total area of the school was increased from
6.2 thousand sqm to 10.8 thousand sqm
to ensure that there would be a sufficient
amount of educational infrastructure for
the residents of the Etalon City residential
complex. Etalon Group began construction
in September 2020 and expects to complete
the facility by the end of 2021.
In addition to classrooms, the four-storey
building will house two gymnasiums with
dressing rooms and showers, a state-of-
the-art assembly hall with 375 seats, a
dining hall with 313 places and its own
kitchen, and a medical station. For children
with disabilities, the school will have an
As part of the comprehensive improvement
project, the grounds adjacent to the new
school will be equipped with sports grounds
covered with rubber surfaces, horizontal
bars and exercise equipment and a grass
football field; trees and bushes will be
planted, and a network of walking paths will
be arranged to connect the school grounds
with the surrounding residential buildings.
In addition to building schools as part of its
projects, the Company also helps expand
and improve the social infrastructure in
the cities where it operates. In August
2020, a ceremony took place to mark the
grand opening of the Pierre de Coubertin
Lyceum No. 211, in the Central district
of St Petersburg. The renovated Lyceum
was reopened after its first major overhaul
in the school’s 160-year history. Etalon
Educational infrastructure is one of the key
added values of our projects and one of the
basic conditions for creating a comfortable
urban environment; therefore, despite
the objective difficulties and restrictions
associated with the pandemic, Etalon Group
has paid and continues to pay special
attention to these facilities.
In 2020, Etalon Group delivered
five educational institutions for
children with a total area of over
7 ths sqm; three preschools
for 470 pupils and two schools
for 1,450 children are under
construction.
170
SUSTAINABILITY
171
ANNUAL REPORT 2020
PRESERVATION
OF CULTURAL
AND HISTORICAL
HERITAGE
Etalon Group is always cautious in its
approach to the history of the locations
where its residential complexes are built.
For example, the Company plays a role in
the construction of monuments dedicated
to Russian military veterans and in the
preservation of cultural heritage. Every year,
the Company pays tribute to veterans of
World War II and hosts commemorative
events involving the residents of its
residential complexes.
In January, just before the anniversary
marking the lifting of the siege of Leningrad,
Etalon Group helped organise events
for veterans, homefront workers and
inhabitants of the besieged city. Company
employees visited a branch of the Russian
Red Cross, where they greeted veterans
and presented them with flowers and gifts.
The next day, at Utkina Zavod, Etalon
Group employees and students from school
No. 690 laid flowers at the memorial to the
heroic defenders of Leningrad near the
Swallow’s Nest residential complex. The
memorial, which students have been looking
after for several years, was erected by the
Company in 2013.
Through its development projects, Etalon
Group strives to preserve cultural heritage
sites and to make them new focal points for
the development of modern, advanced and
multifunctional urban spaces.
One successful project that has managed to
preserve the historical heritage and breathe
new life into the area is the Silver Fountain
business-class residential complex, which
the Company is building in Moscow on the
site of the former Alekseevskaya water-
lifting station. The carefully reconstructed
19th-century Gothic industrial buildings
and the historical Wallace Fountain have
become the central attraction in the
public space surrounding the modern
residential complex.
In 2020, the Silver Fountain
residential complex
was named the winner
at the seventh NOPRIZ
International Professional
Competition in the following
categories:
“Best Project for the Improvement
and Creation of a Comfortable
Urban Environment”
“Best Premium Residential
Property Project”
“Best Project for the Restoration
(Reconstruction) of a Cultural
Heritage Site”
DEVELOPING
LOCAL
COMMUNITIES
Etalon Group strives to create
a comfortable environment
for living and for recreation,
while also encouraging good
relations between residents.
Events and initiatives to
strengthen communities
The company holds events to celebrate the
New Year, Knowledge Day, Cosmonautics
Day, Victory Day and Maslenitsa, and it also
arranges sporting events. In addition to
celebrations and subbotniks on the grounds
of residential complexes, a number of
initiatives and actions were held remotely In
2020, in connection with the pandemic.
For example, the Company held photo
contests called “Summer Petersburg”, “Pets
of Etalon” and “An Etalon-Style New Year”.
With restrictions on public events in place,
Etalon Group together with the Usadba Deda
Moroza amusement park and the Moscow
City Park installed a large number of Santa
Claus mailboxes at its residential complexes
in Moscow and St Petersburg to create a
holiday atmosphere for its customers.
During the pandemic, Etalon Group took
part in initiatives aimed at encouraging
people to follow the regulations on self-
isolation and to support those who, during
this difficult period, were working in order to
ensure our safety and comfort. The hashtag
#ostavaisyadoma (“stay home”) appeared
on billboards and in Etalon Group’s social
media accounts. The developer showed
solidarity with companies that placed calls
in their ads for people to stay home, shop
online, take care of their health and practise
good hygiene.
A large number of residents took part in
the “Spasibo” (“Thank You”) campaign
organised by the Company at the Emerald
Hills residential complex to thank doctors;
at the appointed time, residents went out
onto their balconies and shouted “Thank
you!” This sort of good-neighbourliness is
gratifying and inspiring.
We also took part in Mail.Ru’s Dobro initiative
and offered residents of our properties
help delivering food to elderly neighbours
who were in self-isolation because of
the COVID-19 pandemic. Several action
groups from Etalon’s residential complexes
responded to the call and disseminated
information to their neighbours.
COMMUNITY DEVELOPMENT
PROGRAMMES
2019
2020
Number of events/programmes
2
17
Amount invested in the
development of local
communities, RUB ths
871 3,821
172
SUSTAINABILITY
173
ANNUAL REPORT 2020
DEVELOPING LOCAL
COMMUNITIES
(CONTINUED)
3.8
MLN RUB
INVESTED IN THE
DEVELOPMENT OF LOCAL
COMMUNITIES IN 2020
Creating comfortable surroundings
Etalon Group pays careful attention to the
improvement of its residential complexes,
planning out in detail the location of walking
trails, recreation areas, sports facilities and
playgrounds, garden squares and green
areas on the grounds of its properties.
On the grounds of the Etalon City project
in Moscow, for example, a small private
botanical garden was built for a large variety
of plants; signs indicating their names were
added so that the residents of the complex
can not only admire the trees and shrubs
but also learn more about them.
At the Wings residential complex, another
Company project, there will be accessible
terraces on the upper floors of the towers
with observation decks, an amphitheatre
for holding open-air public events, a photo
studio in the form of a covered pavilion,
recreation and business areas and an
entire park filled with convertible spaces
that, depending on the needs of residents,
can be turned into a co-working space,
an outdoor cinema, an educational centre,
meeting rooms or playrooms for children.
In its development of the state-of-the-art,
multifunctional ZiL-Yug residential quarter,
Etalon Group’s flagship project in Moscow,
the Company employed the concept of
participatory design and launched the
Generation Zil media platform and urban
planning lab in order to involve a wide
range of the Russian and international
expert communities as well as Moscow
residents in discussions on the future of
the ZiL-Yug grounds. Workshops and
discussions at the Generation Zil urban
planning lab are helping with the formulation
of the best approach to combining various
typologies for development, public
spaces, social infrastructure, transport and
pedestrian links, and with the creation of a
modern district that will meet the needs of
new generations and offer a comfortable
place to live, work and relax seven days a
week at any time of the year.
In the spring and summer, the Company has
traditionally undertaken landscaping and
beautification work on the grounds adjacent
to its residential complexes. In addition to
planting trees and flowers in newly built
residential properties, Etalon Group began
the first stage of its greenspace expansion
in Linear Park at the Galactica project,
where about a dozen species of trees and
bushes were planted.
CHARITY
Etalon Group provides charitable assistance
to cultural institutions, donates funds for
the restoration of churches, finances sports
and recreational activities, and supports
charitable foundations.
The Company has been supporting the
Gift to an Angel fund and the Dobroshrift
project for several years. In the reporting
year, the Group also helped finance
projects run by the Sistema and Detsky
Kino-May foundations as well as a project
of the Russian Rugby Federation aimed
at developing and popularising rugby in
the country.
In addition, an Etalon Group team took
part in the AdVita foundation’s “What?
Where? When?” charity cup competition.
All funds raised from the competition were
used to pay for the work of the diagnostic
laboratories at the R. M. Gorbacheva
Research Institute of Paediatric Oncology,
Haematology and Transplantology.
In total, Etalon Group spent over RUB
46 million on charity programmes in 2020.
46,301
THS RUB
IN CHARITABLE AID
GIVEN IN 2020
CHARITY PROGRAMMES
2019
2020
Number of charity events/programmes
17
14
Amount of charitable assistance provided, RUB ths
42,495
46,301
174
SUSTAINABILITY
175
ANNUAL REPORT 2020
INNOVATION
BUILDING
INFORMATION
MODELLING
Creating residential complexes that meet high
standards for comfortable living, are modern and
fulfil customers’ needs requires the use of new
technologies and approaches throughout project life
cycles. Reviewing, adapting and applying innovative
solutions in all business processes is the cornerstone
of Etalon’s new strategy and the key to achieving
leadership in the industry.
BIM (building information modelling)
technology creates a 3D digital prototype of
a planned new building. Etalon is a pioneer
in the use of BIM in Russia. The Company
began designing and constructing residential
complexes using this innovative technology
in 2012, when it introduced its own BIM
standard, paving the way for a new level
of quality. Today, Etalon Group uses BIM
technology where possible at all stages of its
projects in St Petersburg and Moscow.
Benefits of BIM technologies include:
• Reducing possible human error through
the use of drones and video cameras
to enable complete video oversight of
construction work.
• Project management is based on actual
data; all interactions between the
customer and general contractor, as well
as work by the general contractor, are
on the basis of this information.
• The digital model is fully transparent,
which helps to effectively manage costs.
• Storing data in a single information
space enables rapid and open access
to information for all participants in
the process.
• Considerable detail in reporting for each
•
type of work.
In addition to the building model,
BIM provides analytical materials
and processed data in the form of
dashboards, which provide predictions
regarding project time frames in the
medium term, so that the risk of
missing deadlines can be assessed
accurately.
• The information can also be used
when holding tenders for contractors
(for example, to filter out applications
from contractors that underperformed
previously).
• Rapid access to information about
safety and potential hazards at a
construction site.
Etalon Group has been the BIM leader in
the Russian construction industry since
20141. Russia’s BIM Leaders Club (under
the auspices of Autodesk) is a non-profit
organisation that brings together national
architects, construction companies and
experts who have achieved outstanding
results using BIM technology and are ready
to share their knowledge and expertise with
other industry players.
1 The Etalon Science and Technology Centre has won an award for its BIM applications
In the fourth Russian BIM Technologies Competition (held in 2019/20),
Etalon’s Science and Technology Centre won the prize for Information
Modelling of Residential Buildings. It was awarded for the Company’s
Schastye (“Happiness”) residential projects in Moscow. Etalon Group also
received a special diploma for the introduction and large-scale use of
information modelling technology in the construction of the Silver Fountain
residential complex, also in Moscow.
Etalon is systematically introducing BIM
technology into the design and subsequent
stages of its investment and construction
projects, and is spreading knowledge of its
own BIM standard to real estate designers
outside the Group. The technology has been
tested at the construction planning stage,
and construction supervisory services
and geodetic services are making ever
greater use of it. Etalon Group’s Operations
Department is also preparing to incorporate
information models as part of its work.
In 2018, a lack of satisfactory construction
industry software led Etalon Group to begin
creating in-house IT functions to develop
applications capable of addressing its
needs. The results of this work are already in
use, and our other IT systems are now being
integrated with these applications.
•
The Group has found applications for
BIM technology beyond the development
of residential projects and monitoring
of construction work. It now also uses
information modelling technologies for:
• maintaining high standards of health
and safety at construction sites (see the
description of the safety index in the
Occupational health and safety section
of this report);
improving processes during the
transfer of ownership of apartments: an
online programme called “Transfer of
Apartments to Buyers”, developed in
2020, covers all aspects of transfer and
has already achieved impressive results
in both Moscow and St Petersburg,
bringing Etalon Group closer to its goal
of ownership transferring all apartments
immediately and without complaints
from buyers.
176
SUSTAINABILITY
177
ANNUAL REPORT 2020
BIM TECHNOLOGY
DEVELOPMENTS BY ETALON:
The Etalon Projects general data
environment and the construction
information classification system are
the two pillars of the Group’s digital
platform. Etalon Projects is a proprietary
tool developed by the Group for project
document flow using BIM technology
in web format. The tool integrates
construction work with office work,
and cloud applications with desktop
applications for all process participants,
from designer to construction worker.
Automation has drastically reduced the
time needed for generating construction
oversight reports. Previously, Company
employees had to manually transfer
information from the construction model to
formats that could be used by inspectors,
and this work took up to three days. The
new cloud service creates a tool for project
workflow from a web browser, which is tied
to the information model.
Etalon’s in-house document management
system is adapted to corporate
requirements and processes and has a
Russian-language interface. One tangible
advantage is that it is no longer necessary
to purchase licences and additional
programmes for reading and approving
project documentation, or expensive
graphic stations for construction workers
and customer services that need to view
the information models. The system is
being piloted and will soon be applied to all
new Group projects.
Development of Etalon Group’s digital
platform is ongoing. In 2021, modules
will be launched for automating quality
control, downloading construction control
forms and providing smart dashboards for
managers.
The Integrated Construction Control
System (ICCS) is a modular digital cloud
platform that makes it possible to monitor
progress in an investment and construction
project throughout the life cycle, using only
a browser and an Internet connection.
The following ICCS modules have been
brought into operation:
• Health and safety
Construction site safety monitoring
with a risk-based approach, using BIM
models.
• Fire safety
Fire safety monitoring at construction
workers’ accommodations. Monitoring
and measurement of accommodation
sites.
• Transfer of apartments to buyers
A tool that automates the process of
pre-commissioning and commissioning
of completed real estate projects.
• Monitoring by investors of timing
and volumes of construction work
(commissioned in 2020)
A tool for analysing progress in
construction work. Recording of
factually completed work in the BIM
model at the construction site, linked to
the construction schedule in the cloud
environment of the MS Project Server.
A new module, the “Engineer’s Interface for
Construction Monitoring”, is scheduled for
launch in 2021 and is designed to enable
full interaction between technical monitoring
and the BIM model of the construction
site. Etalon will also launch another
module, “Acceptance by the Management
Company”, in 2021. This module covers
transfer to a property management
company of common areas, engineering
systems and outdoor areas, and also
facilitates work with contractors’ warranties.
ICCS monitoring is now being tested in
pilot projects in St Petersburg: a preschool
at the House on Blyukhera residential
project (the first in Russia to undergo expert
assessment in BIM format using BIM rules);
and a preschool at the Petrovskiy Landmark
residential project. The portfolio of projects
involving web monitoring will gradually be
expanded.
CASE STUDY
A new preschool on Prospekt
Marshala Blyukhera in
St Petersburg, built by Etalon
Group, was the first construction
project in Russia to undergo a
state expert assessment in digital
format.
For the first time in Russia, a project
designed entirely with the use of BIM
technologies successfully passed a state
expert assessment in digital format. The
project, a preschool, was built as part
of Etalon Group's corporate programme
for the construction of socially important
infrastructure and is included in the register
of pilot projects of the Russian Ministry of
Construction, Housing and Utilities.
The pre-school project is special because
it used BIM technologies for other
purposes over and above project design.
An integrated digital model was created
that could be used for providing geodetic
support, managing construction work and
monitoring progress in implementation
(including compliance with safety rules
by workers). Etalon Group created the
new technology in-house, using its own
know-how.
This marked the first time in Russia that
an official assessment of a new social
facility was carried out digitally. The work
was carried out quickly, despite its novelty,
thanks to automation of the inspection
process (inspection of building geometry,
materials and compliance with standards).
The Ministry of Construction, Housing
and Utilities was closely involved in every
step of the design work and the actual
assessment. The creation of an IT model
of the kindergarten on Prospekt Marshala
Blyukhera was an important step towards the
introduction of BIM technologies throughout
the Russian construction industry. The main
practical outcome of this pilot project will be
the creation of a more advanced algorithm
for BIM technology use, adapted to the
needs of public bodies. This will make it
possible to automate more operations in the
future, further accelerating design work for
residential buildings and for commercial and
social infrastructure.
TRAINING AND INNOVATION
IN THE INDUSTRY
Etalon takes part in all major
BIM events and is keen to share
its knowledge and experience
with young specialists and other
industry colleagues.
The Group cooperates with universities
in St Petersburg that prepare specialists
for the construction industry: the ITMO
University, Peter the Great St Petersburg
Polytechnic University and St Petersburg
State University of Architecture and Civil
Engineering. Etalon Group provides
internships and site visits for students
every year. In 2017, the Etalon Science
and Technology Centre teamed with ITMO
University to design a study programme
for BIM technology specialists. In 2020,
a course on digital modelling of construction
safety was introduced for undergraduate
students at the Peter the Great
St Petersburg Polytechnic University.
In 2021, Russia’s first national-level BIM
skills competition for students of universities
and technical colleges will be launched and
organised by Etalon Group. The winners
will be offered internships at leading
construction companies and will be included
on the Company’s recruitment lists.
Etalon Group’s Science and Technology
Centre and its staff play an active part in
various working groups at the Ministry of
Construction, Housing and Utilities, offering
reports and helping to design solutions
for use throughout the industry. Group
staff are part of a ministry expert group
responsible for the phased implementation
of BIM technologies, as well as other
key working groups: for the design of an
electronic platform for the transition of
state assessments in the construction
industry to IT modelling; for the design and
implementation of a construction information
classifier; and for the Commission for
Digitalisation of the Construction Industry.
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STANDARDISED
DESIGN
Etalon is introducing a standard
design system based on BIM
technology as part of its new
development strategy.
The overall approach is to create projects
based on libraries of standard elements.
A range of combinations of repeating
elements can be formed using typical
layouts and standard structural and
engineering solutions (towers, detached
or corner sections, urban villas and other
housing types). Standardisation also
facilitates the apartment layout for each
floor of a new building. For example,
multilevel apartments with separate exits
on the ground floor, studios and small
apartments on lower floors and spacious
apartments with terraces on upper floors.
Various standard building solutions can be
combined into master plans for residential
complexes and whole districts (the basis of
computer-aided design systems).
Creating digital models and deploying
a standard design system is labour-
intensive during initial stages, but provides
transparency, convenience and time savings
in the future. As much more information is
entered into the model than when using a
traditional approach, the Company receives
much of the working documentation at the
first stage of a project, so that significantly
less time is spent on preparing cost
estimates. The quality of design solutions
is improved, while design time and costs
are reduced. The system also allows
standardised projects to be constantly
updated, which keeps them relevant and
ensures that they fulfil changing customer
needs.
The Company is currently working on a
standardised comfort-class product, Etalon.
Comfort, which should be completed by the
end of 2021.
Etalon Group intends to create libraries of
standard elements and solutions for the
following:
• Construction solutions
• Layout
• Engineering systems
• Lifts and stairways
• Facades
A library of layouts has already been created
using formats that the Company has already
used in its projects, and that have proved
most attractive and popular. It currently
contains around 385 layouts. Their number
will be reduced to 200-250 (the most
successful) in the future, offering a broad
selection of apartments as well as flexibility
to ensure that Etalon’s projects are unique.
Improvements in the efficiency and speed of
design are assured.
385 STANDARD LAYOUTS
XS
S
M
L
XL
MODULES CONCEPT
(ISOMETRY)
Module width based
on size of exterior tiles
NEW
CONSTRUCTION
TECHNOLOGIES
STUDIO
1-BEDROOM
2-BEDROOM
3-BEDROOM
4-BEDROOM
27
164
136
34
24
Designs based on carefully planned and well-matched standard elements
enable a wide range of options and a multiplicity of dimensions, as well
as maximise efficiency in the use of building materials. For example,
the dimensions of modules can be planned taking account of the step
dimensions of staircases, and the width and height of facade tiles.
Module size optimised
relative to dimensions
of staircase
One of Etalon Group’s priorities is to
certify and adopt environmentally friendly
technologies in residential construction in
Russia using CLT panels. Together with
Segezha Group, it plans to adapt and
certify CLT technology for the Russian
market, and is also preparing to produce
CLT panels to its standards for use in
new projects.
Etalon’s plans for the short term include
manufacturing facades for residential
buildings and constructing apartments
using hybrid CLT technology (as developer)
and office buildings (as general contractor).
Medium-term plans include the design
and construction of high-end (Etalon.Plus)
residential developments using CLT panels.
In addition to its libraries of typical
layouts, Etalon has begun work on a
library of standard engineering solutions.
A plan of basic engineering solutions has
been prepared, and Group specialists
are selecting the best of them based
on ergonomics and efficiency. Work is
advanced on a set of standard approaches
in construction operations: current work
is focused on procedures for assembling
reinforced concrete structures, to be
followed by the design of standard facade
solutions.
Etalon is also working on terms of reference
for smart building systems in the Zil-Yug
project in Moscow. These developments will
provide future standards for digital building
systems.
Features of buildings using CLT:
• hybrid buildings
• buildings made entirely from wood
Architectural solutions:
• unlimited architectural possibilities due
to excellent use properties of CLT panels
and elements
Benefits of CLT panels:
• Reduction of the production cycle
by 25 %
• High-quality precision assembly of
structures
• Reduction of construction waste
•
Increased strength and lightness (six
times lighter than reinforced concrete)
at costs comparable to block-and-slab
construction
• Low carbon footprint: reduction of
CO2 emissions by up to 75 %1
• Reduced energy consumption
in production and better
overall energy efficiency of buildings
• Better sound and heat insulation
•
Increased fire resistance
1 Source: European Forest Week (19/11/2019); report by Stora Enso “Massive wood construction in Europe on the
example of CLT: history & outlook”
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BUSINESS
CONDUCT
FAIR
COMPETITION
Etalon Group adheres to regulatory requirements
and upholds high ethical standards throughout its
operations. We aim to ensure that any contractors,
consultants and agents representing our interests also
follow legal requirements and best practices in terms
of Business conduct.
Our fundamental values and principles of
Business conduct, as well as the methods
we use to monitor corporate ethics rules,
are enshrined in Etalon Group’s Code of
Corporate Ethics and the Regulations
on Conducting Tenders. In accordance
with these documents, the Company
has established and maintains a zero-
tolerance policy towards corruption and
discrimination, as well as a fair selection
procedure for suppliers and contractors.
Etalon Group selects its suppliers and
contractors on a competitive basis. The
main principle in the selection process is to
ensure fair and open competition. Tender
procedures are governed by the Regulations
on Conducting Tenders:
• The Company does not permit violations
•
of antitrust laws, including unfair
competition;
In order to carefully monitor the selection
of contractors, the Company maintains
a master schedule—a complete list of
tenders for the performance of work, the
provision of services and the supply of
goods;
• All applicants must undergo a standard
screening process. The requirements
for applicants have been formalised and
include:
- positive experience working with large
construction companies;
- high quality in terms of the materials
supplied, equipment used and work
performed;
strict compliance with deadlines;
-
In addition to these documents, in 2020, the
Company developed and is implementing
"Regulations on the Hotline for Countering
Fraud, Corruption and Embezzlement".
The Regulations determine the main goals,
objectives, principles of the hotline, its
operating procedures and the distribution
of tasks and responsibilities between Etalon
Group and its subsidiaries.
- availability of sufficient human resources
and the necessary production and
technical facilities;
sound financial standing;
solid business reputation; and
-
-
- compliance with regulatory requirements,
including the availability of the necessary
licences and certificates.
In 2020, additional criteria for evaluating
candidates were introduced in terms of
technical and functional capabilities, as well
as financial and commercial requirements.
The first involves, inter alia, ensuring that the
project is completed on time in accordance
with Etalon Group’s schedule, as well as
confirming relevant project implementation
experience in terms of number, volume
and complexity.
• Companies that do not fulfil these
requirements and thus are not listed in
Etalon Group’s Register of Accredited
Counterparties and Suppliers are not
eligible to participate in tenders for
the performance of work for, or the
provision of supplies to, Etalon Group
for six months. Decisions to include a
counterparty in the Register or to remove
a counterparty from the Register are made
by the Accreditation Committee in the
region where the applicant company in
question is located.
• Group employees have no conflicts of
interest and do not create advantages
for individual suppliers or contractors.
The Company has a standing Tender
Committee, which is designed to ensure
open competition between counterparties
and to determine the best-possible
conditions for Etalon Group in terms of
collaboration. The Tender Committee
selects the winners of competitive tenders
and appoints experts on technical and
economic issues in the framework of the
tender process. The Tender Committee
also has the right to select a second
(reserve) winner in case the company that
wins the tender decides not to sign the
contract.
• For tenders totalling less than RUB 40
million, the winners are determined by
in-person or absentee voting by the
Tender Committee on the basis of the
proposals submitted by all participants. In
respect of larger contracts, an in-person
•
auction is conducted, and the winner is
determined by in-person voting on the part
of the Tender Committee. An in-person
procedure enables members of the Tender
Committee to make an informed decision
on the basis of a direct discussion.
• The Company creates a dossier on every
counterparty in the Register of Accredited
Counterparties and Suppliers that contains
information about the Company’s relations
with the counterparty, including an
assessment of its performance.
• The Company conducts random quarterly
reviews of counterparties on the basis
of the following key criteria: quality,
compliance with deadlines, safety,
fulfilment of contractual obligations
and accounts receivable owed to the
Company. Disreputable contractors are
excluded from the Register and are not
considered as candidates for collaboration
in the subsequent 12 months.
In 2020, 476 companies were included in the
Register of Accredited Counterparties and
Suppliers of Etalon Group in St Petersburg
and the Moscow region; 83 companies were
excluded from the Register.
In addition to the Register of Accredited
Counterparties and Suppliers, the
Company maintains a Register of
Strategic Partners for companies that
have a long history with Etalon Group.
Because of the Company’s proven track
record with its strategic partners, as well
as the opportunity to pool resources
and coordinate activities in a mutually
beneficial manner, Etalon Group can do
business with such companies without
conducting tender procedures. The choice
of a strategic partner in each specific case
is determined by the Tender Committee;
that said, the cost of services should
correspond to the rates established in
the Register of Strategic Partners for the
company in question.
• Decisions to include or exclude companies
from the Register of Strategic Partners are
made by the Accreditation Committee.
The Committee holds meetings on the
Register of Strategic Partners no more
than once every three months.
182
SUSTAINABILITY
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ANNUAL REPORT 2020
CODE OF
CORPORATE
ETHICS
In the event of a violation of internal
regulations by a Company employee,
disciplinary measures are applied to said
employee in accordance with labour
laws. If there is reason to believe that an
employee has committed an administrative
or criminal offence, information on the
alleged violation is transmitted immediately
to the relevant state oversight body
responsible for investigating administrative
or criminal offences.
In addition, Etalon Group conducts annual
ethics reviews. Employees complete a
questionnaire—the Declaration on Ethics
and Conflicts of Interest—as a means of
verifying whether they are in compliance
with the Company’s key requirements and
principles. Declarations are completed not
only as part of ethics reviews but also when
employees are hired and in cases where
a conflict of interest occurred during the
calendar year. The questionnaire enables
the Company to identify conduct violations,
as well as circumstances that require
further discussion and consideration by the
Company’s senior management.
Issues related to the clarification and
enforcement of the Code of Corporate
Ethics are the responsibility of Company
management and the Corporate Ethics
Officer. Employees at all levels, as well as
counterparties, are made familiar with the
Company’s anti-corruption policies and
procedures. Suppliers and contractors
planning to start cooperation with Etalon
Group are also subject to mandatory checks
by the Security Directorate to confirm their
financial stability, impeccable reputation and
honest business practices.
Etalon Group employees who need advice
or who wish to report conduct violations
may contact their immediate supervisor.
Concerning a number of issues, they may
contact the Corporate Conduct Officer
directly through official communication
channels (by email or by writing to the
Company’s head office). The Company
guarantees that any information provided
by employees about violations of the Code
will not be publicised and will not affect
the position of the employee reporting the
information. The Corporate Conduct Officer
is responsible for responding to conduct
violations, eliminating conflicts of interest
and clarifying the procedure for applying
the Code. The Officer may convene a
Commission on Corporate Conduct to
address challenging situations.
COUNTERPARTIES
INFORMED ABOUT ETALON
GROUP’S ANTI-CORRUPTION
POLICY IN 2020
COUNTERPARTIES
Number of suppliers
Share of total (%)
Number of counterparties
Share of total (%)
MOSCOW
ST PETERSBURG
540
30 %
1,261
70 %
1,340
40 %
2,009
60 %
TOTAL
1,880
36.5 %
3,270
63.5 %
ANTI-CORRUPTION
POLICY
The Code of Corporate Ethics establishes
the basic principles and measures of the
Company’s anti-corruption policy:
• The Company and its employees should
avoid situations in which there may be a
conflict of interest.
Since 2020, the Company has operated
a hotline for combating fraud, corruption
and embezzlement. The telephone and
email address of the hotline are publicly
available on the websites of the Company
and its individual projects. Any employee,
client, partner or person not related to the
Company who has information regarding
employees or counterparties of Etalon
Group about corrupt behaviour, violations
of business ethics or of Etalon Group
policies and procedures, violations of
current legislation, or other violations
and/or abuses of office may send a
message to hotmail@etalongroup.com
or call 8 800 300 81 03 to report these
cases. When processing information,
the confidentiality of the identity of the
applicant, and of the information submitted
is ensured, as is the anonymity of the
applicants who do not want to disclose their
personal data. Any measures of influence
against the person who provided the
information are prohibited.
In the reporting year, no court cases
were initiated against the Company or its
employees in connection with corruption.
• Etalon Group employees are required
to comply, both in Russia and abroad,
with the requirements and restrictions
established by anti-corruption laws.
• Etalon Group does not tolerate any form
of unlawful or unethical influence on the
decisions of state bodies in the interests
of the Company or Group companies,
including bribery, offering inappropriate
gifts, the practice of nepotism involving
civil servants, or engaging in charity
or sponsorship at the request of civil
servants in an effort to influence their
decisions in the Company’s favour.
• Etalon Group does not participate in
political activities and does not finance
political organisations.
• The employees of Etalon Group are
prohibited from representing the
Company in business relations with
organisations in whose activities they
have a significant personal interest
that differs from the interests of the
Group, including the financial and
equity interests of an employee or their
relatives.
• Employees are prohibited from engaging
in business and other commercial
activities that involve the use of the
Company’s assets, resources and/
or information, including business
contacts.
• Etalon Group Employees are prohibited
from accepting gifts either in kind or in
monetary terms from any third parties in
connection with the performance of their
official duties.
ANTI-
DISCRIMINATION
POLICY
In 2020, the Company had no
cases of violations of human rights
or incidents of discrimination.
In implementing its anti-discrimination
policy, Etalon Group is guided by the
following principles:
• Etalon Group does not tolerate any
form of discrimination based on age,
race, ethnicity, sex or other grounds in
accordance with the laws of the Russian
Federation.
• No form of harassment, including sexual
harassment, or coercion is acceptable,
whether in verbal, written, visual,
physical or other form.
• Etalon Group provides employees
with favourable conditions, as well as
equal opportunities to upgrade their
qualifications and achieve their potential.
• Etalon Group welcomes so-called work
dynasties, where specific skills are
passed down from one generation to
the next, but protectionism based on
nepotism is prohibited. The Company
limits cases of direct or indirect
subordination involving relatives.
• The Company ensures protection
against any form of discrimination. In
the implementation of the Company’s
personnel, wage and social security
policies, any preferences based on
nationality, gender, age, etc. are
prohibited.
184
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ANNUAL REPORT 2020
RISK MANAGEMENT
FRAMEWORK
AND KEY RISK MANAGEMENT
FUNCTIONS
KEY RISK MANAGEMENT
FUNCTIONS
Management is responsible for the
day-to-day implementation of Etalon
Group’s risk management assessment,
monitoring and mitigation procedures.
The main bodies responsible for risk
management are the Board of Directors,
and the Audit Committee. We also
believe that the Company’s functional
units play significant part in the risk
management system.
While ultimate responsibility for the Group’s
risk management rests with the Board of
Directors, the Audit Committee plays a
key role in this process. With assistance
from the Head of Internal Audit, the Audit
Committee oversees and challenges
management’s assessment of the principal
risks to the Group’s strategy and the risk
appetite for each of those risks, as well
as the effectiveness of established risk
management controls and assurance
activities. In addition, it sets the Group’s
risk management policies and procedures
and monitors compliance with the approved
policies.
The Board of Directors determines Etalon
Group’s strategy and agrees the nature
and profile of the risks it is willing to take to
achieve its strategic objectives. The Board
of Directors is accountable for ensuring that
a sound system of internal control and risk
management is in place, including approval
of all related policies that are recommended
by the Audit Committee.
Functional units implement the Risk
Management Policy in their respective area
and ensure timely and robust submissions
of significant risks to management.
Successful management of existing and emerging
risks is critical to the long-term sustainability and
success of our business and to the achievement of
our strategic objectives.
In order to successfully take advantage
of market opportunities, Etalon Group
must accept a certain degree of risk.
Risk management is therefore an
integral component of our corporate
governance system.
Our risk management policy focuses
on maintaining a medium to low and
predictable risk profile. We continuously
monitor all material risks to our operations,
taking action as necessary to mitigate
and manage them, as well as to anticipate
new risks.
We have developed a robust culture of
risk management at Etalon Group, which
we believe is important to delivering
sustainable value to our stakeholders: the
Company’s risk management systems
and processes are designed to minimise
potential threats to achieving our goals;
internal control and risk management
systems are continuously reviewed to
incorporate market best practices. Our risk
management view is cascaded top-down
from the Company’s Board of Directors
and through management, employee and
connected stakeholder activities, as we
believe that a proactive, risk-aware culture
across the business is crucial for effective
risk identification and mitigation.
Etalon Group takes a comprehensive
approach to implementation of its risk
management policy. Key policy principles
remain unchanged regardless of changes
in the Company's corporate governance or
shareholder structure.
The risk management process at Etalon
Group applies across all functions and
comprises four main stages: identification,
assessment, response and reporting.
IDENTIFICATION
ASSESSMENT
RESPONSE
REPORTING
Identification
Assessment
Response
Reporting
Once identified, risk factors
are assessed to determine
the potential quantitative and
qualitative impact that they
might have on Etalon Group’s
business, and the likelihood
that such an event may occur.
Together these make up a risk
profile.
Our aim is to identify and
assess risks at the earliest
possible stage and to
implement appropriate risk
responses and internal controls
in advance. In order to achieve
this, we have designed our
procedures with the aim of
creating shared responsibility
for risk identification while
avoiding gaps.
Risk identification requirements
are also taken into account
in the design of accounting
and documentation systems
in order to be able to identify
and process information on
potential risk triggers.
Ongoing monitoring processes
are embedded in our day-to-day
operations. These track the
effective application of internal
control and risk management
policies and procedures,
including internal audit and
specific management reviews.
Risk matrices and assurance
maps are used to re-evaluate
and adjust controls in response
to changes in Etalon Group’s
objectives, its business and the
external environment.
If management is comfortable
with the current risk score,
then the risk is accepted and
no further action is required.
Controls are implemented on an
ongoing basis, and management
monitors the risk, the controls
and the risk landscape to ensure
that the risk score stays stable
and in line with management’s
risk tolerance.
If, however, management
assesses that a risk is too high,
then an action plan is drawn
up in order to introduce new
or stronger controls that will
help to reduce the impact and/
or the likelihood of the risk to
an acceptable, tolerable and
justifiable level.
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RISKS
HIGH
MEDIUM
LOW
The Russian real estate market is cyclical
in nature and is generally dependent on
the state of the Russian economy, the
growth of which also tends to be cyclical.
Our business, financial condition, results of
operations and the value of different types of
properties related to our business activities
may, therefore, be adversely affected by the
cyclical nature of the real estate market and
the Russian economy in general.
Etalon Group develops and sells large-
scale housing construction projects in
Moscow and St Petersburg. Etalon Group’s
sales income depends, inter alia, on the
supply and demand in the market, price
per sqm, construction costs and ongoing
maintenance costs. These factors can
fluctuate over time due to changes in the
risks listed below; however, this list is not
exhaustive and only includes the main risks.
Negative
macroeconomic trends
Interest rates
Regional risks
Exchange
rate risks
Customers’
credit risk
Liquidity risk
Difficulties in
accessing capital
Changing consumer
preferences/market
trends
New changes
in regulations
Availability
of land
Availability of
construction
materials
An inability to recruit and
retain key personnel
Subcontractors
Accidents at
construction sites
Level of potential impact
Likelihood
RISK
WHY IT AFFECTS
THE COMPANY
MITIGATION/MINIMISATION
OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF
POTENTIAL IMPACT
MACROECONOMIC, INDUSTRY RISKS
NEGATIVE
MACROECONOMIC
TRENDS
Decrease in purchasing
power of Russian citizens
could negatively affect
demand.
Inflation, on the other hand,
could adversely affect
the Company and lead to
an increase in land cost,
materials and labour.
REGIONAL RISKS
Deteriorated economic
situation affecting all market
participants in key markets
could equally have a negative
impact on the Company.
CHANGING CONSUMER
PREFERENCES/MARKET
TRENDS
The Company’s ability
to manage inventory is
intrinsically linked to current
and forecast consumer
demand. Unanticipated
changes in consumer
preferences can have
an adverse effect on the
business, particularly given
long project life cycles in the
industry.
Medium likelihood /
medium level of
impact
Low likelihood / low
level of impact
Low likelihood /
medium level of
impact
•
• The Company can independently regulate the
volumes and rates of construction, depending
on actual demand for real estate in a given area.
In case of a decline in demand, the Company
may reschedule the launch and construction of
new projects to match potential construction
costs with expected cash collections
from sales.
• The Company maintains land bank volume
that is sufficient for 4–5 years of construction
and sales without new land acquisitions.
Real estate is viewed as a good investment
in a low-rate environment with new taxes
introduced on bank deposit interest income, as
well as a hedge against inflation: while inflation
was 4.91 % in 2020 and is expected to reach
around 4.7–5.2 % in 2021, an uptick in inflation
rates could lead potential buyers to accelerate
purchases.
• The Company has chosen to focus on Russia’s
two most resilient and economically stable
regions, where economic downturns are less
likely to affect demand than in other parts
of Russia.
• The Company is not dependent on any
development programmes financed by
the federal budget; therefore, its financial
position would not be affected by government
expenditure cuts on these programmes.
• The poured-concrete construction technology
allows for free-pattern floor plans and
architectural design flexibility, and it has the
advantage of high scalability.
• The Company has a substantial portfolio of
complementary business- and comfort-class
projects, with a wide range of apartments to
suit different tastes within each project.
• Etalon Group is developing alternatives to
its brick-monolithic construction techniques,
including modern prefabricated construction
methods, modular construction and
construction from CLT (cross-laminated timber)
panels, which can significantly reduce costs
and/or construction time, while improving the
quality of the final product.
• The Company conducts research, both with
the help of independent specialists and by
monitoring customers’ feedback at every stage
of cooperation, including after commissioning,
in order to monitor changes in demand and
adjust the product accordingly.
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ANNUAL REPORT 2020
RISKS
(CONTINUED)
RISK
WHY IT AFFECTS
THE COMPANY
MITIGATION/MINIMISATION
OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF
POTENTIAL IMPACT
RISK
WHY IT AFFECTS
THE COMPANY
MITIGATION/MINIMISATION
OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF
POTENTIAL IMPACT
REGULATORY RISKS
NEW CHANGES IN
REGULATIONS
OPERATIONAL RISKS
AVAILABILITY OF LAND
Medium likelihood /
medium level of
impact
The Company operates in
a business that is highly
regulated; any failure to
comply with the regulations
might negatively impact the
Company’s operating and
financial performance.
Failure to receive timely
approval of a project
might lead to delays in the
development process.
• The Company monitors any legislative changes
that may affect its business in order to address
them proactively and decrease associated
risks.
• Etalon Group’s management participates in
committees established by the industry in order
to reconcile different views and to develop
potential amendments with regard to regulatory
changes and additional requirements for
developers. For more details about the potential
impact of the new regulations, please see
page 35
• A strong financial position, efficient financial
planning, access to a variety of sources of
capital and one of the longest track records in
the industry enable Etalon Group to meet the
requirements of changing industry regulation,
as was the case with the introduction of
mandatory settlements using escrow accounts.
AVAILABILITY OF LAND
(CONTINUED)
AVAILABILITY OF
CONSTRUCTION
MATERIALS
An inability to find and
purchase adequately priced
land for future development
might negatively affect the
Company’s business and
its operational and financial
results.
• The Company maintains its land bank at a level
sufficient to ensure construction and sales for
a period of at least four years. The Company’s
current project portfolio of 2.8 mln sqm of
unsold NSA represents 5.3x the volume of new
contract sales for FY 2020.
• The Company’s territorial offices carry out
Low likelihood /
medium level of
impact
SUBCONTRACTORS
continuous monitoring of the land market and
maintain a database of sites whose parameters
(location, town planning and permits, proposed
terms of acquisition, etc.) satisfy the Company’s
marketing strategy, required profitability and
financial capabilities.
• Amendments to the Federal Law on Share
Participation Agreements for Construction
provide additional opportunities for the
Company to purchase new projects and
market entrants. Greater transparency in
zoning procedures and further experience in
zoning of plots during the implementation of
the Galactica and Zil-Yug projects enabled the
Company to revise its approach to replenishing
its land bank and to consider purchasing
unzoned plots and independent zoning.
Low likelihood / low
level of impact
Low likelihood / low
level of impact
Changes in exchange rates
could trigger an increase
in the cost of imported
materials; inflation, on the
other hand, could cause
an increase in the cost of
domestic materials.
Any supply interruption or
shortages could delay the
construction of our projects,
which, in turn, could harm
our reputation with our
customers and could result in
lost sales opportunities.
An inability to find qualified
subcontractors and enter into
subcontracting arrangements
on acceptable terms could
lead to an increase in costs.
Furthermore, the Company
relies on external
subcontractors to perform
certain types of construction
and development activities
and therefore, assumes
additional risks associated
with the subcontractors—low
quality of their work, delays,
accidents, etc.
The advantages of this approach include a
wider selection of building spots and lower
land acquisition costs. In addition, thanks to
a strategy aimed at achieving cost leadership,
Etalon Group plans to significantly increase its
competitiveness in purchasing new land plots
in Moscow and St. Petersburg, both zoned and
unzoned.
• The Company’s vertically integrated business
model helps maintain the optimal load of
companies with internal orders.
• As one of the biggest real estate developers
in Russia with over 30 years of operations and
с. 1 mln sqm under construction, the Company
can choose the most reliable external suppliers
and decrease costs of materials through bulk
purchases.
• The share of imported construction materials
and the cost of maintaining imported
equipment used in construction historically
constituted about 15 % of the total construction
budget of the Company’s facilities; therefore,
the change in price of imported materials/
equipment would not have a significant impact
on the cost of construction.
• The Company uses a tender procedure to
identify and select the best suppliers, as well as
to create a competitive environment.
• The Company constantly monitors and
evaluates its suppliers against various criteria.
• All subcontractors are subject to compulsory
annual accreditation to ensure compliance with
the Company’s requirements.
• The Company puts in place retention plans for
subcontractors to further control costs, quality
and timely delivery of projects.
• The Company requires its subcontractors to
provide weekly reports on work progress, its
safety index, etc.
• The Company conducts comprehensive
inspections at production sites of factories that
supply concrete and mortar mixes; all suppliers
are inspected against a comprehensive list of
over 40 items.
• Thanks to its vertically integrated structure,
the Company can minimise its dependence on
subcontractors in both construction and service
maintenance areas.
190
SUSTAINABILITY
191
ANNUAL REPORT 2020
RISKS
(CONTINUED)
RISK
WHY IT AFFECTS
THE COMPANY
MITIGATION/MINIMISATION
OF THE CONSEQUENCES
ACCIDENTS AT
CONSTRUCTION SITES
Etalon Group operates in
the construction industry,
where workplace accidents
relating to the Company’s
operations could be costly in
terms of potential liability and
reputational damage.
AN INABILITY TO
ATTRACT AND RETAIN
KEY PERSONNEL
COULD ADVERSELY
AFFECT THE
COMPANY’S BUSINESS
Etalon Group’s future
success depends on its
ability to find qualified
personnel in various business
areas. An inability to motivate
key personnel could also
have a negative impact on
operations.
FINANCIAL RISKS
DIFFICULTIES IN
ACCESSING CAPITAL
Real estate development is
a capital-intensive industry,
and the Сompany should
always have access to capital
to finance its projects.
• The Company complies with relevant health
and safety regulatory requirements.
• All employees attend workshops on
occupational safety.
• All equipment is certified by relevant authorities
and additionally inspected by the Company.
•
• The Company is a pioneer in Russia for using
Building Information Modelling to increase
safety at construction sites.
In 2020, the BIM-based security monitoring
tool, the Security index, continued to improve.
A methodology for calculating the construction
time compliance index is being developed,
which is included in a comprehensive safety
assessment, and an update is being prepared
into the safety index calculation methodology
to take into account the criteria of human
(employee) influence on the risk assessment.
• The Company maintains an extensive talent
pool to attract qualified staff for strategically
important positions. The pool is developed
through direct searches on job sites and
cooperation with verified recruitment agencies.
The Company looks for sector specialists at all
levels of management, and regularly adds new
applicants to the pool.
• The Company offers competitive salary
packages, life insurance, financial assistance,
and flexible working hours to motivate current
personnel.
• The Company’s funding sources are diversified,
including a variety of debt instruments, project
financing and cash collections from presales
(for projects sold under the old rules).
• With new amendments to the law on shared
construction, the Company successfully
introduced new schemes for working with
escrow accounts as part of project finance
agreements. As of the end of 2020, escrow
account coverage enabled the Company to
secure project financing at preferential rates of
0.01 % to 3.5 %.
• As a public company, Etalon Group also has
the ability to raise equity capital to finance large
acquisitions.
LIKELIHOOD / LEVEL OF
POTENTIAL IMPACT
Low likelihood / low
level of impact
Low likelihood / low
level of impact
Low likelihood /
high level of impact
RISK
LIQUIDITY RISK
CUSTOMERS’
CREDIT RISK
EXCHANGE RATE
RISKS
INTEREST RATES
WHY IT AFFECTS
THE COMPANY
MITIGATION/MINIMISATION
OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF
POTENTIAL IMPACT
Low likelihood /
high level of impact
• The Company adheres to a conservative
financing policy and strives to maintain low
debt levels, with a target Net corporate debt /
pre-PPA LTM EBITDA ratio of below 2x. FY
2020 Net corporate debt / pre-PPA EBITDA
ratio amounted to 1.2x.
The Company’s failure to
meet its financial obligations
could result in operational
delays, damage to its
reputation, increased credit
rates in the short term, and
bankruptcy in the long term.
The Company could suffer
financial losses if customers
fail to meet their contractual
obligation on financial
instruments used for the
purchase of real estate.
Appreciation of foreign
currencies against the
rouble could lead to an
increased burden for those
companies that issued
debt instruments in foreign
currencies. Furthermore, this
could lead to a price increase
of imported construction
materials.
An increase in mortgage
rates might limit customers’
ability to finance the
purchase of new apartments,
thus decreasing new sales
volume.
On the other hand, an
increase in the rates on the
Company’s outstanding
debt obligations will cause
unexpected growth in
expenditures.
• Receivables from customers are secured
against sold apartments.
Low likelihood / low
level of impact
Medium likelihood /
low level of impact
• The Company does not have any debt
instruments in foreign currencies. Its current
debt structure includes bonds denominated
in roubles issued by its subsidiaries,
LenSpetsSMU and Leader-Invest.
Imported goods make up only a small part
of the Company’s business costs; issues
related to the import of construction materials
are discussed further under "Availability of
construction materials" in the table on p. 189.
•
•
If mortgage interest rates increase or the
number of available mortgages decreases,
the Company could offer its customers more
instalment payment options.
Medium likelihood /
low level of impact
• To avoid paying high interest rates, the
Company might repay certain loans before
maturity; it could renegotiate loan terms or look
for alternative financing sources.
192
SUSTAINABILITY
193
ANNUAL REPORT 2020
ESG RISKS
Environmental, social, and governance
(ESG) risks and opportunities can impact
an entity’s capacity to meet its financial
commitments in many ways. Globally, real
estate companies have average exposure to
environmental risks and average exposure
to social risks compared to other industries,
but are relatively more exposed to social
factors such as labour availability and
workers’ safety, and environmental factors
such as greenhouse gas emissions, land
use, and water consumption.
ESG SECTOR RISK ATLAS1
0
2
4
6
8
10
12
14
RISK SCORE
SOCIAL EXPOSURE
Social risks include human capital
management, safety management,
community impacts, and consumer-
related impacts from customer service and
changing behaviour to the extent influenced
by environmental, health, human rights, and
privacy.
Measures to prevent and mitigate social
risks:
• Providing comfortable working
conditions, decent wages, a system of
monetary and non-monetary bonuses,
and measures of social support for
employees;
• Cooperation with educational
institutions, and offering internships
and training at Etalon Group to attract
the best graduates and enhance staff
potential;
• Strict adherence to legal requirements
in relation to safety, internal protocols
for checking equipment, multi-stage
safety monitoring at all facilities
using developments based on
BIM technologies, and systematic
improvement of the method for
calculating and monitoring the safety
index with the inclusion of additional
components (for example, fire safety
index, human impact factor); a
single digital space for monitoring
the construction process enables
the Company to quickly determine
the risk zones for workplace injuries
and take proactive measures; the
extensive capabilities of analytics
of safety indicators are the basis for
the systematic improvement of the
Occupational health and safety system;
• Development of local communities
through the creation of social
infrastructure, restoration of historical
monuments, support for cultural and
sports events, charity; the construction
of large residential complexes
involves the creation of commercial
infrastructure, which contributes to the
creation of new jobs and the economic
development of the surrounding region;
high standards for the living environment
increase the comfort of residents and
create a certain level of requirements for
the quality of housing in general, thereby
setting the bar for the industry;
• Studying customer preferences through
a wide sales network (internal data)
and conducting research enables the
Company to constantly update project
features in accordance with modern
standards and customer demand.
Real estate operators
Business and consumer services
Technology software and services
Healthcare
Consumer products
Telecom
Retail
Homebuilders and developers
Engineering and construction
Building materials
Transportation
Power generation (excl. coal)
Automobiles and auto parts
Power generation (coal)
Oil and gas
Metals and mining
ENVIRONMENTAL EXPOSURE
Environmental risks
Social risks
GOVERNANCE
Several ESG risks are described in more detail in the Company’s general list of
risks. The list below presents an overview of ESG risks in general and ways that the
Company seeks to mitigate them.
Environmental risks are weighted towards
exposure to increasing climate change
risk and includes greenhouse gas (GHG)
emissions, including carbon dioxide,
pollution, waste, and water and land
usage. Risk of remediation for biodiversity
or restitution for incorrect land use is
usually low for the construction of high-rise
buildings.
Measures to prevent and mitigate
environmental risks:
• Careful assessment of risks and their
possible impact on the environment
before the implementation of project;
• Development of a set of measures to
prevent or minimise any impact;
• Use of environmentally friendly materials
and technologies;
• Development of projects with high
standards of environmental friendliness,
as well as energy and resource
efficiency;
• Reduction of fuel and energy
consumption through lean use,
optimisation of logistics routes, use of
energy-efficient equipment;
• Reduction of dust and suspended
particle emissions into the atmosphere
through the use of environmentally
friendly materials and technologies,
the use of protective nets and fences,
and improvement of construction
technologies and the production chain;
• Compliance with the rules and
regulations for the treatment of water
and land resources, strict control and
accounting of water, its reuse, and
restoration of soil and vegetation cover.
1
ESG Industry Report Card: Building Materials And Engineering And Construction, 3 June 2019
The inherent complexity of projects
exposes companies to contingent liabilities,
and litigation risks grow in tandem with
challenges to complete a project profitably
and on time. These challenges include
client cancellations and delays, change
orders, and subcontractor risk. The
construction sector is also exposed to
bribery, corruption, and anticompetitive
practices. Ethical breaches typically result
in investigations by public authorities,
and large fines, settlement costs, and
reputational damage can affect financial
performance.
Measures to prevent and minimise risks
in the field of corporate governance:
• Strict adherence to legal regulations,
establishing and upholding internal
policies and monitoring of compliance
with rules and procedures for combating
corruption, fraud and violations of
corporate ethics;
•
•
• Formalised tender procedures for the
selection of suppliers and contractors;
Improvement of the management
structure and business processes, as
well as other measures listed in more
detail under "Operational risks" in the
table on p. 188;
Increasing transparency and
accessibility of information that
the Company discloses, improving
functional structures, as well as
standards and practices in the field of
information disclosure—for example,
the reformation of the Disclosure
Committee, and expanding the
transparency and detailing of financial
statements starting from 2020 by
including additional indicators and new
sections.
194
SUSTAINABILITY
195
ANNUAL REPORT 2020
GRI STANDARDS
GRI STANDARD
REPORT SECTION / COMMENTARY
DISCLOSURE
GRI STANDARD
REPORT SECTION / COMMENTARY
DISCLOSURE
GENERAL DISCLOSURE
ORGANISATION’S PROFILE
102-1
Name of the organisation
102-2
Activities, brands, products, and services
ETALON GROUP PLC
Project portfolio, p. 62
102-4
Number of countries where the organisation operates, and the
names of the countries where it has significant operations and/or
that are relevant to the topics covered in the report
Etalon Group operates in the following
regions of Russia: Moscow, the Moscow
region and St Petersburg.
Fully disclosed
Fully disclosed
Fully disclosed
ETHICS AND INTEGRITY
102-16
102-17
A description of the organisation’s values, principles, standards,
and norms of behaviour.
A description of internal and external mechanisms for:
i. seeking advice about ethical and lawful behaviour, and
ii.
organisational integrity;
reporting concerns about unethical or unlawful behaviour, and
organisational integrity
Business conduct, p. 180
Fully disclosed
Business conduct, p. 180
Fully disclosed
102-5
Ownership and legal form
Shareholder interactions, p. 212
Fully disclosed
GOVERNANCE
102-6
Markets served, including:
i. geographical locations where products and services are
Introduction, p. 5
Partially
disclosed
102-22
The reporting organisation shall report the following information:
a. Composition of the highest governance body and its
Corporate governance, p. 198
Fully disclosed
offered;
ii. sectors served;
iii. types of consumers and beneficiaries
102-7
Scale of organisation, including:
total number of employees;
i.
ii.
total number of operations,
iii. net sales (for private sector organisations) or net revenues (for
People, p. 154
Operating results, p. 100
Financial results, p. 116
Fully disclosed
public sector organisations);
iv. total capitalisation (for private sector organisations) broken
down in terms of debt and equity;
v. quantity of products or services provided.
102-8
Information on employees and other workers, including:
a. Total number of employees by employment contract
People, p. 154
Partially
disclosed
(permanent and temporary), by gender.
b. Total number of employees by employment contract
(permanent and temporary), by region.
c. Total number of employees by employment type (full-time and
part-time), by gender.
d. Whether a significant portion of the organisation’s activities are
performed by workers who are not employees.
e. Any significant variations in the numbers reported in
Disclosures 102-8-a, 102-8-b, and 102-8-c (such as seasonal
variations in the tourism or agricultural industries).
f. An explanation of how the data have been compiled, including
any assumptions made.
STRATEGY
102-14
The reporting organisation shall report the following information:
a. A statement from the most senior decision-maker of the
organisation (such as CEO, chair, or equivalent senior position)
about the relevance of sustainability to the organisation and its
strategy for addressing sustainability.
Chairman’s statement, p. 20
Fully disclosed
102-15
The reporting organisation shall report the following information:
a. A description of key impacts, risks, and opportunities.
Risk management framework, p. 184
Partially
disclosed
committees by:
independence;
i. executive or non-executive;
ii.
iii. tenure on the governance body;
iv. number of each individual’s other significant positions and
commitments, and the nature of the commitments;
v. gender;
vi. membership of under-represented social groups;
vii. competencies relating to economic, environmental, and social
topics;
viii. stakeholder representation.
102-23
The reporting organisation shall report the following information:
a. Whether the chair of the highest governance body is also an
executive officer in the organisation.
b. If the chair is also an executive officer, describe his or her
function within the organisation’s management and the reasons
for this arrangement.
102-26
102-35
The reporting organisation shall report the following information:
a. Highest governance body’s and senior executives’ roles in the
development, approval, and updating of the organisation’s
purpose, value or mission statements, strategies, policies, and
goals related to economic, environmental, and social topics.
The reporting organisation shall report the following information:
a. Remuneration policies for the highest governance body and
senior executives for the following types of remuneration:
i. Fixed pay and variable pay, including performance-based pay,
equity-based pay, bonuses, and deferred or vested shares;
ii. Sign-on bonuses or recruitment incentive payments;
iii. Termination payments;
iv. Clawbacks;
v. Retirement benefits, including the difference between benefit
schemes and contribution rates for the highest governance
body, senior executives, and all other employees.
b. How performance criteria in the remuneration policies relate
to the highest governance body’s and senior executives’
objectives for economic, environmental, and social topics.
Corporate governance, p. 198
Fully disclosed
Corporate governance, p. 198
Fully disclosed
Corporate governance, p. 198
Partially
disclosed
196
SUSTAINABILITY
197
ANNUAL REPORT 2020
GRI STANDARDS
(CONTINUED)
GRI STANDARD
REPORT SECTION / COMMENTARY
DISCLOSURE
GRI STANDARD
REPORT SECTION / COMMENTARY
DISCLOSURE
STAKEHOLDER ENGAGEMENT
306-4 Waste diverted from disposal
Environment, p. 146
102-40
List of stakeholder groups engaged by the organisation
Stakeholder engagement, p. 134
Fully disclosed
306-5 Waste directed to disposal
Environment, p. 146
102-43
The organisation’s approach to stakeholder engagement,
including frequency of engagement by type and by stakeholder
group, and an indication of whether any of the engagement was
undertaken specifically as part of the report preparation process.
Stakeholder engagement, p. 134
Fully disclosed
REPORTING PRACTICE
102-45
Entities included in the consolidated financial statements
Financial reporting
102-47
List of material topics
102-50 Reporting period
102-51
The date of the most recent previous report
Sustainability, p. 124
Sustainability, p. 124
2019 Annual Report
102-52 Reporting cycle (annual or biennial etc.)
Annual
Fully disclosed
Fully disclosed
Fully disclosed
Fully disclosed
Fully disclosed
Partially
disclosed
Partially
disclosed
Partially
disclosed
307-1
Non-compliance with environmental laws and regulations
Environment, p. 146
SOCIAL TOPICS
EMPLOYMENT
401-2
Benefits provided to full-time employees that are not provided to
temporary or part-time employees
People, p. 154
Fully disclosed
401-3
Parental leave
People, p. 154
Partially
disclosed
102-53 Contact point for questions regarding the report
Shareholder interactions, p. 212
Fully disclosed
LABOUR-MANAGEMENT RELATIONS
102-55 GRI content index
102-56
External Assurance (audit)
MANAGEMENT APPROACH
Sustainability, p. 124
Sustainability, p. 124
Fully disclosed
Fully disclosed
402-1
Minimum notice periods regarding operational changes
People, p. 154
Fully disclosed
OCCUPATIONAL HEALTH AND SAFETY
403-1
Occupational health and safety management system
Occupational health and safety, p. 138
Fully disclosed
103-1
Explanation of the material topic and its boundary
Sustainability, p. 124
Fully disclosed
403-2
Hazard identification, risk assessment, and incident investigation
Occupational health and safety, p. 138
Fully disclosed
103-3
The management approach and its components
Stakeholder engagement, p. 134
Environment, p. 146
People, p. 154
Partially
disclosed
ANTI-CORRUPTION
205-2
Communication and training about anti-corruption policies and
procedures
Business conduct, p. 180
Fully disclosed
ENVIRONMENTAL TOPICS
301-1
Materials used by weight or volume
302-1
Energy consumption within the organisation
Environment, p. 146
Environment, p. 146
303-1
Interactions with water as a shared resource
Environment, p. 146
303-3 Water withdrawal
303-4 Water discharge
Environment, p. 146
Environment, p. 146
306-2 Waste by type and disposal method
Environment, p. 146
Fully disclosed
Partially
disclosed
Partially
disclosed
Partially
disclosed
Partially
disclosed
Partially
disclosed
306-3 Waste generated
Environment, p. 146
Fully disclosed
403-5 Worker training on Occupational health and safety
Occupational health and safety, p. 138
Fully disclosed
403-9 Work-related injuries
Occupational health and safety, p. 138
TRAINING AND EDUCATION
404-1
Average hours of training per year per employee
People, p. 154
404-2
Programmes for upgrading employees' skills and transition
assistance programmes
People, p. 154
Partially
disclosed
Partially
disclosed
Partially
disclosed
DIVERSITY AND EQUAL OPPORTUNITY
405-1
Diversity of governance bodies and employees
People, p. 154
Fully disclosed
NON-DISCRIMINATION
406-1
Incidents of discrimination and corrective actions taken
Business conduct, p. 180
Fully disclosed
LOCAL COMMUNITIES
413-1
Operations with local community engagement, impact
assessments, and development programmes
Social Responsibility, p. 168
Fully disclosed
198
CORPORATE GOVERNANCE
199
ANNUAL REPORT 2020
CORPORATE
GOVERNANCE
201 Board of directors
208 Board committees
200
CORPORATE GOVERNANCE
201
ANNUAL REPORT 2020
The Group’s corporate governance framework
combines leadership with collaboration, and lies at
the heart of our robust decision-making process.
The Company continues to be committed to
maintaining the highest standards of corporate
governance based on the following principles:
BOARD
OF DIRECTORS
1
EQUAL TREATMENT OF ALL
SHAREHOLDERS AND STRICT
PROTECTION OF THEIR
LEGITIMATE INTERESTS
AND RIGHTS
2
TIMELY DISCLOSURE OF
RELIABLE AND ACCURATE
INFORMATION ABOUT THE
COMPANY’S ACTIVITIES
3
EFFICIENT AND RELIABLE
MAINTENANCE OF RECORDS OF
OWNERSHIP RIGHTS
4
OPEN DIALOGUE WITH ALL
STAKEHOLDERS AND RESPECT
FOR THEIR RIGHTS AND
LEGITIMATE INTERESTS
5
ACCOUNTABILITY OF THE
BOARD OF DIRECTORS
TO SHAREHOLDERS, AND
ACCOUNTABILITY OF EXECUTIVE
BODIES TO THE GENERAL
MEETING OF SHAREHOLDERS
AND THE BOARD OF DIRECTORS
The Company is governed by the General Meeting of
Shareholders and by the Board of Directors and its
committees, which act in accordance with the Company’s
statutory documents, resolutions passed by shareholders at
general meetings and applicable legislation.
The main objective of the Board of Directors (“the Board”) is to
ensure the Company’s long-term success and sustained returns for
shareholders. This includes setting strategic goals, overseeing financial
and human resource structures, reviewing management performance
and determining the Company’s risk appetite. The Board of Directors
sets the tone at the top and helps to establish the Company’s
management culture.
The Board is also driven by its advisory
role to complement and support the
executive team as it implements the
Company’s strategy.
The Board believes that it has the
necessary skills and experience to provide
effective leadership and control of the
Company. When recommending directors
for appointment, the Remuneration and
Nomination Committee ensures that
there is an appropriate balance of skills,
experience and backgrounds relevant to the
Company’s success.
The Board comprises independent
directors and non-executive directors.
Independent directors are an important
element of the contemporary corporate
governance system. The essential features
of independent directors are their autonomy,
independence of decision-making
and impeccable business reputation.
Independent directors play an important
role in determining the Company’s
development strategy and reviewing reports
on its implementation, evaluating the
performance of the Company’s executive
bodies and assessing the performance of
the risk management and internal control
systems. The Company highly appreciates
the contribution of independent directors
in enhancing the effectiveness of the Board
of Directors.
The non-executive directors provide an
essential independent element to the Board
and a solid foundation for strong corporate
governance. They are responsible for
constructively challenging the strategies
proposed by the executive directors
and scrutinising the performance of
management in achieving agreed goals and
objectives. They also play a key role in the
functioning of the Board and its committees.
Between them, the current non-executive
directors have an appropriate balance
of skills, experience, knowledge and
independent judgement to undertake their
roles effectively.
In 2020, the composition of the Board of
Directors underwent only minor changes. On
20 February 2020, the Company accepted
the resignation of Kirill Bagachenko,
Executive Director and Chief Financial
Officer. Ilya Kosolapov took over from Kirill
and was appointed Chief Financial Officer.
As of 31 December 2020 the Board of
Directors consisted of nine directors. One
director is an executive director, and eight
directors are non-executive directors, six of
whom are also independent directors.
202
CORPORATE GOVERNANCE
203
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STRUCTURE
THE BOARD OF DIRECTORS
As of 31 December 2020,
the Board and its committees
were structured as follows:
SHAREHOLDERS
THE BOARD
(leadership, strategy, risks,
governance, values and
standards)
AUDIT
COMMITTEE
REMUNERATION
AND NOMINATION
COMMITTEE
STRATEGY
COMMITTEE
INVESTOR RELATIONS
AND INFORMATION
DISCLOSURE
COMMITTEE
Martin Cocker
(Chairman)
Sergey Egorov
(Chairman)
Maxim Berlovich
(Chairman)
Petr Kryuchkov
(Chairman)
• Boris Svetlichny
• Ganna Khomenko
• Oleg Mubarakshin
• Ganna Khomenko
• Martin Cocker
• Charalampos Avgousti
• Dennis Vinokourov
• Nikolai Minashin
• Oleg Mubarakshin
• Sergey Egorov
• Gennadiy Shcherbina
• Artyom Zasursky
• Marina Ogloblina
• Dennis Vinokourov
EXECUTIVE MANAGEMENT
SERGEY
EGOROV
Chairman of the Board of Directors,
Chairman of the Remuneration
and Nomination Committee,
Non-Executive Director
Sergey Egorov was born in 1982. He
graduated from the Kyrgyz State National
University in 2004 with a degree in finance.
Since 2012, he has worked at Sistema,
currently as a Managing Partner and before
that as the Director of Special Projects.
Sergey also sits on the boards of directors
of certain Sistema portfolio companies.
Before joining Sistema, Sergey was a Vice
President at Intellect Telecom, and he
also has significant experience at several
companies including Sberbank Capital,
United Capital Partners and EY.
OLEG
MUBARAKSHIN
Non-Executive Director
Oleg Mubarakshin was born in 1968.
He graduated from the Moscow State
Academy of Law in 2000 with a degree in
law, and from the Finance Academy under
the Government of the Russian Federation
in 2002 with a degree in Finance. Since
2013, he has worked at Sistema, currently
as a Managing Partner and before that as
a Senior Vice President and the Head of
the Legal Function.
Before joining Sistema, he was the head
of legal at EastOne Group, and before that
he spent more than a decade at InBev
Group, where he rose to the position of
Vice President for Legal Affairs for Western
Europe.
MAXIM
BERLOVICH
Head of Moscow Operations,
Chairman of the Strategy Committee,
Executive Director
Maxim Berlovich was born in 1987.
He graduated from the Peter the Great
St Petersburg Polytechnic University in 2009
with a degree in world economy and from
the Vlerick Business School in 2013 with an
MBA degree.
Before joining Etalon Group in 2014, Maxim
was a deputy CEO of one of the largest
power grid construction companies in
Russia. From 2017 to 2019, he served as
the head of the Company’s construction
and maintenance division. In 2019, Maxim
became the Head of Moscow Operations.
204
CORPORATE GOVERNANCE
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ANNUAL REPORT 2020
THE BOARD OF DIRECTORS (CONTINUED)
MARINA
OGLOBLINA
GANNA
KHOMENKO
MARTIN
COCKER
BORIS
SVETLICHNY
DENNIS
VINOKOUROV
CHARALAMPOS
AVGOUSTI
Independent Non-Executive Director
Independent Non-Executive Director
Chairman of the Audit Committee,
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Marina Ogloblina was born in 1957. She
graduated from the Moscow Finance
University in 1980 with a degree in finance.
Most recently, she served as Minister for
Construction and the Residential and Utility
Sector of the Moscow region, before being
appointed as an advisor for construction
(with ministerial rank) to the regional
governor.
Prior to that, she worked for 20 years in
economic planning roles in the Moscow
city administration, eventually becoming
the Minister and the Head of the Economic
Planning and Development Department, and
also heading the city’s Main Supervision
Department.
Marina began her career at the State Bank
of the USSR before being appointed a
senior auditor for two districts of Moscow at
the Russian SFSR Finance Ministry’s Audit
Directorate. She also served as a professor
and the head of the Department of Finance,
Accounting and Audit at the Moscow
government’s Moscow State University of
Administration.
Ganna Khomenko was born in 1977. She
graduated from Keele University in 1999
with a degree in law and international
politics. She also completed a Legal
Practice Course at the College of Law in
Chester. She currently acts as a consultant
providing services in trust and corporate
administration, accounting and financial
management, and international tax planning,
and she also sits on the boards of Ros
Agro and Interpipe. Ganna previously held
a number of senior legal and management
positions.
Martin Cocker was born in 1959. He
graduated from the University of Keele
in 1981 with a joint honours degree in
mathematics and economics. From 1981 to
1992, he served as an auditor and later as
an audit manager and senior audit manager
at Ernst & Young (United Kingdom). From
1992 to 1995, he worked in the oil industry
with Amerada Hess before returning to the
audit profession in 1996 as a partner with
Ernst & Young in Moscow.
Between 1998 and 2007, Mr Cocker
occupied various management positions,
including the posts of audit director at
Deloitte & Touche (United Kingdom),
managing audit partner at KPMG
Kazakhstan (Almaty), managing audit
partner Central Asia at Deloitte & Touche
(Almaty) and managing partner at
Deloitte & Touche (St Petersburg).
He runs his own development business in
Portugal. Since 2010, Mr Cocker has been
an independent non-executive director
on the Company’s Board of Directors and
chairman of the Audit Committee.
Boris Svetlichny was born in 1961.
He graduated from the University of
Massachusetts in 1985 with a degree in
accounting and from Carnegie Mellon
University in 1992 with an MBA degree.
He brings to the Company 29 years
of international financial and senior
management experience. He has held
various senior finance positions at Orange
Business Services in Russia, VimpelCom
and Golden Telecom. From March 2014 to
August 2016, Mr Svetlichny served as the
CFO of the Company.
Dennis Vinokourov was born in 1969.
He graduated from the Moscow State
Institute of International Relations in 1993
with a degree in law with highest honours,
Central European University with a Master
of Laws degree, New York University with
a Master of Laws degree and the Stern
Business School with an MBA degree.
He has held senior investment roles at Vi
Holding Development, the Russian Direct
Investment Fund and East Capital. He
started his career as a corporate lawyer with
White & Case.
Charalampos Avgousti was born in 1982. He
graduated from the Democritus University
of Thrace in 2007 with a degree in law and
Northumbria University in Newcastle with
a Master of Laws degree in 2010. He is
the Founder and Managing Director of Ch.
Avgousti & Partners LLC (Advocates & Legal
Consultants).
Previously he worked at several law firms,
including E&G Economides LLC—Totalserve
Group and Nasos A. Kyriakides & Partners.
Mr Avgousti is a board member at CYTA
(Cyprus Telecommunication Authority), a
member of the Advisory Council of Limassol
for the Central Cooperative Bank, and until
February 2016 he was a board member
of Periferiaki Cooperative Credit Society
Nicosia Limited.
206
CORPORATE GOVERNANCE
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ANNUAL REPORT 2020
THE FOLLOWING
TABLE PROVIDES
THE NAME, AGE, YEAR
OF APPOINTMENT AND
POSITION ON THE BOARD
OF DIRECTORS FOR EACH
DIRECTOR
NAME
AGE
POSITION
FIRST YEAR APPOINTED
SERGEY EGOROV
OLEG MUBARAKSHIN
38
52
Chairman of the Board of Directors
Non-Executive Director
MAXIM BERLOVICH
33
Executive Director
2019
2019
2018
MARINA OGLOBLINA
63
Independent Non-Executive Director
2019
GANNA KHOMENKO
43
Independent Non-Executive Director
2019
MARTIN COCKER
61
Independent Non-Executive Director
2010
BORIS SVETLICHNY
59
Independent Non-Executive Director
2013
DENNIS VINOKOUROV
51
Independent Non-Executive Director
2018
CHARALAMPOS AVGOUSTI
39
Independent Non-Executive Director
2016
MATTERS SPECIFICALLY
RESERVED FOR THE
BOARD INCLUDE:
• approval of the Company’s long-term
objectives and corporate strategy;
• approval of material acquisitions,
disposals, investments, contracts,
expenditures and other transactions;
• approval, following a recommendation
from the Audit Committee, of interim
and final results, the annual report
and accounts, including the corporate
governance statement, the dividend
policy and any declaration of interim
dividends and the recommendation of
final dividends;
• approval, following a recommendation
from the Remuneration and Nomination
Committee, of any appointments to
the Board and of other key senior
management committee members;
review, following a recommendation
from the Audit Committee, of the
effectiveness of the internal control and
risk management systems; and
•
• approval of the Company’s corporate
governance policies and procedures.
BOARD FOCUS
DURING THE YEAR
In 2020, the Board addressed a wide variety of issues, including but not limited to:
• business strategy
• actions in response to the COVID-19
pandemic;
• budgets and long-term plans for the
•
Company;
review of estimates of future cash flows,
financing arrangements and fundraising;
• development of the Company’s
corporate governance;
• overall Group performance and future
•
•
capital expenditures;
financial statements and
announcements;
review of reports from the committees
reporting to the Board;
• shareholder feedback and reports from
brokers and analysts;
risk management and risk oversight.
•
BOARD ATTENDANCE
DURING THE YEAR
In 2020, the Board of Directors held five meetings in person, with an additional 14 meetings
held in absentia. While travelling was constrained due to the COVID-19 pandemic, the Board
meetings and committee sessions were held remotely.
ATTENDANCE AT
ATTENDANCE AT
IN-PERSON BOARD
BOARD MEETINGS IN ABSENTIA
MEETINGS
(WRITTEN RESOLUTIONS)
(A TOTAL OF FIVE IN 2020)
(A TOTAL OF 14 IN 2020)
BOARD DIVERSITY
AND EXPERTISE
BOARD
COMPOSITION
BOARD
NATIONALITY
22 %
Female
22 %
Cyprus
11 %
USA
SERGEY EGOROV
OLEG MUBARAKSHIN
MAXIM BERLOVICH
MARINA OGLOBLINA
GANNA KHOMENKO
MARTIN COCKER
BORIS SVETLICHNY
DENNIS VINOKOUROV
CHARALAMPOS AVGOUSTI
KIRILL BAGACHENKO (until February 2020)
5
5
5
4
5
5
5
5
5
1
14
14
14
14
14
14
14
14
14
1
REMUNERATION
78 %
Male
56 %
Russia
11 %
UK
Directors who are not independent. The
Policy came into force on 1 January 2020;
thus only independent directors received
remuneration for 2020.
On 17 July 2020, the Board approved the
Policy on Remuneration and Compensation
Payable to Members of Board of Directors,
which sets forth the principles, grounds,
conditions and procedure for payment of
remuneration to members of the Company’s
Board of Directors. According to the
above-mentioned Policy, no remuneration
for serving on the Board of Directors
will be paid to members of the Board of
208
CORPORATE GOVERNANCE
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ANNUAL REPORT 2020
BOARD
COMMITTEES
AUDIT
COMMITTEE
The Board has delegated specific
responsibilities to four committees:
the Audit Committee, the Remuneration
and Nomination Committee, the Strategy
Committee and the Investor Relations
and Information Disclosure Committee.
As of 31 December 2020, the
members of the Audit Committee
were as follows:
MARTIN COCKER
Committee Chairman and Independent
Non-Executive Director
BORIS SVETLICHNY
Independent Non-Executive Director
GANNA KHOMENKO
Independent Non-Executive Director
THE AUDIT COMMITTEE
HELD A NUMBER OF
MEETINGS IN 2020, WHERE
THE KEY MATTERS FOR
CONSIDERATION WERE:
•
•
the year-end financial results, together
with the associated report of the
external auditor;
the half-year interim results, together
with the associated report of the
external auditor;
• matters raised by the external auditor
as part of the audit process requiring
the attention of management and
the actions taken by management to
address those matters;
reviewing the performance and
independence of the external auditor;
recommending to the Board the
reappointment of the external auditor
and the fee for audit services;
•
•
•
• approving any non-audit services
proposed to be undertaken by the
external auditor during the year;
receiving reports from Internal Audit
on the results of their engagements
and considering the remedial actions
taken by management in respect of any
matters arising;
reviewing the accounting policies
adopted by the Group and approving
any changes to those policies on the
recommendation of management or the
external auditor.
•
Responsibilities:
External audit
• monitoring the integrity of the financial statements
of the Company and the Group prepared under
International Financial Reporting Standards (the
“Financial Statements”);
reviewing the Group’s internal controls and risk
management systems;
•
• monitoring and reviewing the effectiveness of the
Group’s internal audit function (“Internal Audit”);
• making recommendations to the Board, for
shareholders’ approval at a general meeting,
concerning the appointment of the external auditor
and approval of the remuneration and terms of
engagement of the external auditor;
reviewing and monitoring the external auditor’s
independence and objectivity and the effectiveness
of the audit process, taking into consideration
relevant professional and regulatory requirements;
•
• developing and implementing policy on the
engagement of the external auditor to supply
non-audit services, taking into account relevant
ethical guidance regarding the provision of non-audit
services by the external audit firm.
The Audit Committee continues to be
satisfied with the performance of Deloitte
and has recommended to the Board that
they be reappointed as auditors. The
Audit Committee also considered and
approved non-audit services performed
by the external auditor during the year to
ensure that those services did not threaten
the auditor’s independence. The Audit
Committee regularly meets with the external
auditor without management present.
Internal Audit
The Group’s Internal Audit function
provides independent objective assurance
and advisory oversight of the business’s
operations and systems of internal control
and helps the business accomplish its
objectives by bringing a systematic,
disciplined approach to evaluating
and improving the effectiveness of risk
management, control and governance
processes.
The Audit Committee regularly meets
with the head of Internal Audit without
management present.
Internal controls and risk
management systems
The Audit Committee, and the Board as a
whole, continues to ensure that effective
risk management systems are adopted to
ensure that key risks faced by Etalon Group
are identified and evaluated. Appropriate
limits and controls are set, maintained
and monitored to ensure compliance.
In particular, the risk management
framework identifies risks that might, if not
appropriately managed, materially affect the
Group’s ability to achieve its objectives or
that might lead to a material misstatement in
the Group’s financial results.
The Audit Committee periodically reviews
risk management policies and systems
to ensure that they remain appropriate,
relevant and comprehensive, taking into
account any variations in market conditions
and the Group’s activities. Reviews also
consider whether identified risks are being
managed effectively.
The Audit Committee is responsible for
overseeing how management monitors
compliance with the Group’s risk
management policies and procedures
and reviews the adequacy of the risk
management framework. In this, the Audit
Committee is assisted by the Internal Audit
function.
While progress continues to be made in
this area, the Audit Committee continues
to monitor the Group’s risk management
processes and to provide support for, and
oversight, the amendments undertaken.
While only members of the
Audit Committee are entitled to
attend meetings, the external
auditors, head of Internal Audit
and other members of senior
management are invited to
attend meetings as necessary
and appropriate.
All committees act within their
remit, report to the Board on their
activities and take decisions or make
recommendations to the Board
concerning decisions within their remit.
210
CORPORATE GOVERNANCE
211
ANNUAL REPORT 2020
REMUNERATION
AND NOMINATION
COMMITTEE
STRATEGY
COMMITTEE
As of 31 December 2020, the members of the
Remuneration and Nomination Committee were as
follows:
As of 31 December 2020, the members of the
Strategy Committee were as follows:
SERGEY EGOROV
Committee Chairman,
Board of Directors Chairman, Non-Executive Director
OLEG MUBARAKSHIN
Non-Executive Director
GANNA KHOMENKO
Independent Non-Executive Director
MARTIN COCKER
Independent Non-Executive Director
CHARALAMPOS AVGOUSTI
Independent Non-Executive Director
Responsibilities
The Committee advises the Board of Directors on the
remuneration of executive management and other senior
employees, and reviews the terms and conditions of
employment agreements for all senior appointments.
The Committee is also responsible for drafting the
selection criteria and appointment of members of
the Board of Directors and for reviewing the Board’s
structure, size and composition on a regular basis. In
undertaking this role, the Committee considers the
skills, knowledge and experience required at Etalon
Group’s stage of development and the requirements of
current legislation, and makes recommendations to the
Board as to any changes.
The Committee also considers and makes
recommendations regarding the membership of the
Audit Committee, Strategy Committee and Investor
Relations and Information Disclosure Committee.
The Committee held a number of meetings in 2020 at
which it considered the Board remuneration policy, as
well as changes to the membership of the Board and its
committees.
MAXIM BERLOVICH
Committee Chairman,
Executive Director
OLEG MUBARAKSHIN
Non-Executive Director
SERGEY EGOROV
Non-Executive Director
GENNADIY SHCHERBINA
Chief Executive Officer
DENNIS VINOKOUROV
Independent Non-Executive Director
MARINA OGLOBLINA
Independent Non-Executive Director
ARTYOM ZASURSKY
PJSFC Sistema, Vice President and Head of Strategy
Responsibilities
The Strategy Committee’s terms of reference set
out its responsibilities in detail. In summary, the
Strategy Committee’s role is to assist the Board in
fulfilling its oversight responsibilities relating to Etalon
Group’s medium- and long-term strategic direction
and development. The Strategy Committee provides
advice and expertise so that strategic options may be
explored fully before being tabled at Board meetings for
deliberation and approval.
The Strategy Committee held several meetings in 2020,
where the key matters for consideration were Etalon
Group’s strategy, buyback, changes to the current
dividend policy, review of Etalon Group’s development
priorities and strategic guidelines, further improvements
in operational efficiency and consideration of new
development opportunities.
INVESTOR RELATIONS AND
INFORMATION DISCLOSURE
COMMITTEE
On 17 July 2020, the Board of Directors approved
the transformation of the Information Disclosure
Committee into the Investor Relations and Information
Disclosure Committee.
As of 29 January 2021, the members of the Investor
Relations and Information Disclosure Committee were
as follows:
PETR KRYUCHKOV
Director for Corporate Investment and Strategy
at Etalon Group
DENNIS VINOKOUROV
Independent Non-Executive Director
NIKOLAI MINASHIN
Managing Director for Investor Relations
at PJSFC Sistema
As of 31 December 2020, the members of the
Investor Relations and Information Disclosure
Committee were as follows:
PETR KRYUCHKOV
Director for Corporate Investment and Strategy
at Etalon Group
DENNIS VINOKOUROV
Independent Non-Executive Director
Responsibilities
The Investor Relations and Information Disclosure
Committee is responsible for improving communication
between institutional investors, shareholders and other
stakeholders arising from the Company’s public status
and determining the key principles for information
disclosure. The Committee analyses the Etalon Group
Information Disclosure Policy on a regular basis and
makes recommendations to the Board regarding any
changes.
The Investor Relations and Information Disclosure
Committee held several meetings in 2020, where it
considered matters of insider information disclosure,
adjustment of the Group’s approach to insider dealing
and dealing of persons discharging managerial
responsibilities.
CHIEF
EXECUTIVE
OFFICER
The Chief Executive Officer at Etalon
Group is Gennadiy Shcherbina, who
has worked in the construction industry
for many years, having started his career
with Etalon Group in 2003. He has been
in charge of Etalon Group’s St Petersburg
operations since 2007. Gennadiy holds a
PhD in economics, and he graduated from
the Marshal A. A. Grechko Naval Academy
and the St Petersburg State University for
Architecture and Civil Engineering.
The CEO’s responsibilities include the
implementation of decisions of the Board of
Directors and the development of plans and
programmes for the Company’s activities.
The CEO is accountable to the Board of
Directors.
Key responsibilities:
(a) implementation of strategic and
business decisions as approved by the
Board of Directors;
(b) management of day-to-day operations;
(c) representation of Etalon Group interests
in negotiations pertaining to any
transactions made by Etalon Group
companies.
212
SHAREHOLDER INTERACTIONS
213
ANNUAL REPORT 2020
SHAREHOLDER
INTERACTIONS
215 Share value and shareholder returns
216 Ownership structure
217 Dividend policy
218 Shareholder relations
220 Analyst coverage
221 Investor calendar 2021
214
SHAREHOLDER INTERACTIONS
215
ANNUAL REPORT 2020
As a publicly traded company,
Etalon Group has enjoyed
successful relations with capital
markets for 10 years.
SHARE VALUE
AND SHAREHOLDER RETURNS
Since April 2011, Etalon Group’s global
depositary receipts GDRs have been traded
on the London Stock Exchange, which is
still our main trading venue. To expand its
investor base, the Company submitted an
application to Moscow Exchange in January
2020 and then successfully completed the
listing process for its GDRs.
Etalon Group securities are included in
Moscow Exchange’s Level 1 quotation
list, and they have been traded under the
ticker ETLN since 3 February 2020. Since
March 2020, they have been included in the
calculation base for Moscow Exchange’s
Broad Market Index.
KEY INFORMATION
LSE
(as of 11 February 2021)
Ticker
Market
MOEX
(as of 11 February 2021)
ETLN: LI
Ticker
ETLN: RX
MAIN MARKET
Full name
Global depositary receipts
for ETALON GROUP PLC
ordinary shares
FTSE Sector
Real Estate Investments &
Services
FTSE Subsector
Real Estate Ownership &
Development
MIFID Status
Regulated Market
Short name
ETLN-gdr
Type of security
Depositary receipts for
shares of a foreign issuer
ETALON GROUP GDR PERFORMANCE IN 2020
40
SHARE PERFORMANCE, %
TRADED VALUE, USD ths
10,000
20
0
-20
-40
-60
8,000
6,000
4,000
2,000
0
January 2020
March 2020
May 2020
July 2020
September 2020
November 2020
January 2021
ETLN traded value, USD ths (RHS)
RTSI (LHS)
ETLN GDR (LHS)
SEDOL
B5TWX80
Listing level
Level 1
ISIN NUMBER
US29760G1031
ISIN NUMBER
US29760G1031
Etalon Group’s GDRs have increased
in value by 6 % since the beginning of
2020, outpacing the Broad Market Index.
COST OF ONE GDR
In USD (closing price)
1.81
In Russian roubles (closing price)
133.24
52-week maximum price (USD)
2.25
52-week maximum price (RUB)
143.00
52-week minimum price (USD)
1.00
52-week minimum price (RUB)
77.80
MARKET CAPITALISATION
Market capitalisation (USD mln)
533.9
Market capitalisation (RUB mln)
39,300
TRADING VOLUME
Trading volume for 2020 (USD mln)
121.9
Trading volume for 2020 (RUB mln)
9,997
AVERAGE DAILY TRADING
VOLUME (ADTV)
USD mln1
Partly due to its listing on Moscow Exchange, the
liquidity of Etalon Group’s GDRs more than tripled
year-on-year in 2020. The ADTV for Etalon Group’s
GDRs increased from USD 300 ths in 2019 to
USD 990 ths in 2020.
0.30
1 Bloomberg. Changes in results are calculated without rounding
225%
0.99
145%
0.74
2019
1H 2020
FY 2020
216
SHAREHOLDER INTERACTIONS
217
ANNUAL REPORT 2020
OWNERSHIP
STRUCTURE
DIVIDEND
POLICY
During the reporting period, Etalon
Group’s share capital and the number of
shares issued by the Company remained
unchanged. As of the end of 2020, the
Company had 294,957,971 outstanding
ordinary shares in addition to 20,000
redeemable preference shares with neither
voting rights nor the right to receive
dividends.
Sistema remains the Company’s majority
shareholder. In January 2021, Prosperity
Capital Management—one of the largest
Russia-focused asset managers in the world
with around USD 3.9 billion in assets under
management—purchased a stake in Etalon
Group: the fund acquired 5.34 % of the
Company’s GDRs and became its largest
minority investor.
The free float percentage increased from
62 to 68 % in 2020, making Etalon Group a
leader among publicly traded Russian real
estate developers. At the moment, PJSFC
More than 70 % of the Company’s diverse
base of institutional investors are located in
Scandinavia, the United Kingdom and the
United States of America.
decided to supplement it with a minimum
guaranteed dividend payment of RUB 12
per share/GDR, provided the Company’s
EBITDA / interest expense ratio does not fall
below 1.5x.
Our business’s core principle is to create
value for shareholders and investors,
including through the distribution of
dividends. Since 2013, the Company
has steadily increased the target level
for dividend payments from 15–30 % to
40–70 % of its IFRS net profit, as approved
in May 2017. As part of its review of the
dividend policy in January 2020, the Board
of Directors decided to keep the range
of dividend payments unchanged but
DIVIDEND RATIO
% of consolidated IFRS net profit
Nov 2013
15–30 %
THE COMPANY’S
SHAREHOLDING STRUCTURE 1
GEOGRAPHICAL DISTRIBUTION OF
INSTITUTIONAL INVESTORS2
DIVIDEND
PAYMENTS
25.6 %
PJSFC Sistema
5.3 %
Prosperity
Capital
0.8 %
Management
16 %
Continental
Europe
12 %
Asia
15 %
US
May 2016
May 2017
30–50 %
Jan 2020
MINIMUM
DIVIDEND PAYMENT
12
RUB/GDR
40–70 %
40–70 %
18
19
16 3
CENTS/GDR
CENTS/GDR
CENTS/GDR
3.6
BLN RUB
3.6
BLN RUB
3.5
BLN RUB
68.3 %
Free Float
28 %
UK
30 %
Scandinavia
2018
2019
2020
1 According to Etalon Group data as of 26 January 2021
2 Ipreo, data as of 10 February 2021; notification forms
3 RUB 12 per share at the exchange rate of the Bank of Russia three business days before the date of payment (16 December 2020)
218
SHAREHOLDER INTERACTIONS
219
ANNUAL REPORT 2020
SHAREHOLDER
RELATIONS
We continued to develop our shareholder relations
practices in 2020, including by conducting a
comprehensive perception study and creating
the renewed Information Disclosure and Investor
Relations Committee.
Throughout 2020, and despite COVID-
19-related restrictions, Etalon Group’s
management and IR team used every
available opportunity to maintain virtual
contact with the investment community:
they communicated with investors by
means of correspondence and online
conferences, and they also held more than
60 calls with investors and analysts.
In order to further improve our relations
with investors in the reporting year, the
Company, together with BNY Mellon’s
Global Investor Relations Advisory team
and the market data provider IHS Markit,
conducted a perception study to gather
investment community feedback on the
Company’s strategy, management team,
investment case and communications
efforts. The results of the study helped
us to better understand how investors
and analysts perceive our investment
story, to identify focus areas and growth
points, and to incorporate these results
into our IR action plan and strategy for the
coming years.
The next step was a decision of the Board
of Directors to transform the Information
Disclosure Committee into the Investor
Relations and Information Disclosure
Committee. The new committee is tasked
with developing a unified strategy for
interaction with investors and information
disclosure, providing effective feedback
between the investment community and
the Board of Directors, and making Etalon
Group’s securities a more attractive
investment. Nikolai Minashin, Managing
Director of Investor Relations at PJSFC
Sistema, joined the committee in
early 2021.
Determining the Company’s main growth
areas, creating a unified IR strategy and
drawing on new expertise will establish an
excellent basis for improving our practices
in the areas of investor relations and
information disclosure.
The following are the members
of the Investor Relations and
Information Disclosure Committee
(as of 29 January 2021):
Petr Kryuchkov,
Committee Chairman, Director of Corporate
Investments and Strategy;
Dennis Vinokourov,
Independent Non-Executive Director;
Nikolai Minashin,
Managing Director of Investor
Relations, PJSFC Sistema.
As part of our regulatory
disclosures, we published
the following information
throughout the year:
Results of shareholder meetings
Results of key meetings of the
Board of Directors
Information on changes in the
ownership structure
Information on important
personnel changes in the
management structure
Quarterly operating results
Financial results for the half-year
and year
Following best practices
for investor relations and
disclosure of additional
information, the Company
also published the following:
News about important stages of
project implementation, including
acquisition, obtaining permits, the
start of sales and delivery
Visual information on the status of
project implementation
The results of evaluations of the
Company’s project portfolio
THE CAPITAL
MARKETS DAY
The live broadcast of Etalon’s
virtual CMD in November 2020
was attended by more than
140 investors, analysts and
other participants.
In addition, the Capital Markets Day (CMD)
held in November with the participation of
the Company’s management and members
of the Board of Directors, was a landmark
event in 2020 in terms of our efforts to
improve transparency and open dialogue
with investors and analysts. At the event,
Etalon Group presented its new strategy
to 2024, which calls for accelerating
changes and taking advantage of promising
opportunities for business growth.
Etalon Group’s CMD was held in a format
that was new for us and for the Russian
market as a whole: Etalon Group became
one of the first companies to present its
strategy completely online, with viewers
able to ask questions through a web
interface. The CMD brought together more
than 250 people who connected to the live
stream or watched a recording of the event.
At the CMD, the management team and
members of the Board of Directors of Etalon
Group spoke about the main focal points
of the new strategy, planned changes
and expected quantitative and qualitative
results; presented the first successful results
of strategic initiatives and specific cases
reflecting the Company’s new approach to
doing business, such as the ZIL-Yug project,
which takes into account current trends in
urban planning and combines traditional
cast-on-site and state-of-the-art industrial
construction technologies.
The strong interest in the presentation
of our strategy and feedback from the
investment community clearly indicate that
we have chosen the right course in terms
of expanding our interaction with investors
and further improving the quality of the
information we publish.
The market response has reinforced our
decision to regularly inform the investment
community and in as much detail as
possible about our interim results and
further plans for the implementation of the
new strategy so that our initiatives are in
line with shareholder interests, the market
situation and current trends. We commented
on our progress and future plans for the
first time in early 2021 on a conference call
dedicated to our operational results for
2020, and we plan to continue discussing
on a regular basis with the investment
community the steps we are taking to
implement the strategy and the results of
those steps.
220
SHAREHOLDER INTERACTIONS
221
ANNUAL REPORT 2020
ANALYST
COVERAGE
6 OF 9 ANALYSTS THAT CURRENTLY
RATE ETALON GROUP SHARES
HAVE A BUY RECOMMENDATION
Etalon Group’s operations are covered by
analysts from 10 international and Russian
brokerage firms who prepare reviews
of Russian companies in the residential
real estate development sector. Regular
meetings, calls and e-mail correspondence
with analysts help us provide complete
and accurate coverage of the Company’s
operations based on a comprehensive
understanding of our strategy,
performance, assets and the work of the
management team.
In 2020, the European brokerage firm
Wood & Co began covering the Company’s
operations for the first time. In addition, the
following brokerage firms prepare reports
and analytical notes on Etalon Group’s
operations: Goldman Sachs, J.P. Morgan,
VTB Capital, Renaissance Capital, BCS,
Sberbank CIB, Gazprombank, Aton, and
Sova Capital.
BUY
67 %
HOLD
33 %
25%1
GROWTH
POTENTIAL
2.27
USD
AVERAGE TARGET PRICE
COMPANY
ANALYST
DATE
RECOMMENDATION
Goldman Sachs
Andrey Pavlov-Rusinov
19 January 2021
J.P. Morgan
Elena Jouronova
15 October 2020
VTB Capital
Maria Kolbina
23 November 2020
BCS
Anastasia Egazaryan
14 January 2020
Buy
Hold
Hold
Hold
Sberbank CIB
Fedor Kornachev
21 September 2020
Review
Renaissance Capital
Artem Yamschikov
15 July 2020
Gazprombank
Marat Ibragimov
15 October 2020
Aton
Mikhail Ganelin
20 January 2021
Sova Capital
Artur Galimov
16 July 2020
Wood & Co
Jakub Caithaml
10 September 2020
Buy
Buy
Buy
Buy
Buy
1 The growth potential of the Company’s GDRs is calculated relative to the price at the close of trading on 11 February 2021: USD 1.81 per GDR
INVESTOR
CALENDAR 2021
The calendar indicates preliminary dates. Exact dates
may vary, and conferences may be cancelled.
APRIL
APRIL
MAY
PUBLICATION
CONFERENCE
CONFERENCE
1Q 2021
Operating Results
Moscow Exchange
Conference
Sova Capital
Conference
24–26
JUNE
MAY–JUNE
MAY
CONFERENCE
CONFERENCE
CONFERENCE
Annual Renaissance
Capital Conference
Annual Sberbank CIB
Conference
Wood & Co
Conference for Retail
JULY
SEPTEMBER
OCTOBER
PUBLICATION
PUBLICATION
PUBLICATION
1H 2021
Operating Results
1H 2021
Financial Results
9M 2021
Operating Results
NOVEMBER
OCTOBER–NOVEMBER
ROADSHOW
CONFERENCE
Offline/Virtual NDR
MOEX Conference
8–9 NOVEMBER
7–10 DECEMBER
CONFERENCE
CONFERENCE
Goldman Sachs 13th
CEEMEA Conference
Wood’s Annual Winter
Conference
CONTACT
INFORMATION
ETALON GROUP IR TEAM
Petr Kryuchkov,
Vice President for Corporate
Investments and Strategy
petr.kryuchkov@etalongroup.com
Alexandr Ugryumov,
Head of Capital Markets
alexandr.ugryumov@etalongroup.com
Zakhar Ivanov,
Head of IR and ESG
zakhar.ivanov@etalongroup.com
IR CONTACTS
ir@etalongroup.com
Tel.: +44 (0)20 8123 1328
GDR Depository Bank
The Bank of New York Mellon
101 Barclay Street
New York 10286
Attention: ADR Division
Fax: +1 212 571 3050
ETALON GROUP CONTACT
INFORMATION
Etalon Group PLC
2–4 Capital Centre
Arch. Makariou III Avenue
Nicosia, Cyprus
Tel.: +44 (0)20 8123 1328
Fax: +44 (0)20 8123 1328
222
FINANCIAL STATEMENTS
223
ANNUAL REPORT 2020
FINANCIAL
STATEMENTS
224 Consolidated financial statements
304 Parent Company financial statements
224
FINANCIAL STATEMENTS
225
ANNUAL REPORT 2020
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
BOARD OF DIRECTORS
AND OTHER OFFICERS
CONTENTS
BOARD OF
DIRECTORS
Board of Directors and other Officers
Consolidated Management Report
Corporate Governance Report
Responsibility statement
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
225
226
229
231
239
241
243
244
246
SERGEY EGOROV
(appointed on 19 February 2019)
OLEG MUBARAKSHIN
(appointed on 19 February 2019)
MARINA OGLOBLINA
(appointed on 19 February 2019)
GANNA KHOMENKO
(appointed on 19 February 2019)
MARTIN ROBERT COCKER
(appointed on 12 November 2010)
BORIS SVETLICHNY
(appointed on 15 April 2013)
CHARALAMPOS AVGOUSTI
(appointed on 10 November 2016)
MAKSIM BERLOVICH
(appointed on 27 April 2018)
DENIS VINOKUROV
(appointed on 9 November 2018)
KIRILL BAGACHENKO
(appointed on 15 November 2013 and
resigned on 20 February 2020)
SECRETARY
INDEPENDENT AUDITORS
G.T. Globaltrust Services Limited
Deloitte Limited
Themistokli Dervi, 15
Margarita House, 5th floor, flat/office 502
1066 Nicosia
Cyprus
Certified Public Accountants and
Registered Auditors
24 Spyrou Kyprianou Avenue
1075, Nicosia
Cyprus
REGISTERED OFFICE
2-4 Arch. Makariou III Avenue
Capital Center, 9th floor
1065 Nicosia
Cyprus
226
FINANCIAL STATEMENTS
227
ANNUAL REPORT 2020
CONSOLIDATED
MANAGEMENT REPORT
The Board of Directors of Etalon Group PLC
(the “Company”) presents to the members
its Consolidated Management Report
together with the audited Consolidated
Financial Statements of the Company and
its subsidiaries (together referred to as the
“Group”) for the year ended 31 December
2020. The Group’s financial statements
have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the European Union
and the requirements of the Cyprus
Companies Law, Cap. 113.
REVIEW OF THE DEVELOPMENT AND
PERFORMANCE OF THE GROUP’S
BUSINESS AND ITS POSITION
The results of the Group for the year
ended 31 December 2020 are set out on
page 239 of the consolidated financial
statements.
(a) Revenue
The Group’s total revenue for the year
ended 31 December 2020 amounted
to RUB 78,655 million compared to
RUB 84,330 million for the year ended
31 December 2019, a decrease of
RUB 5,675 million or 7 %.
Revenue of the reportable segment
“Residential development” decreased by
RUB 3,008 million or 4 %, due to a decrease
in the revenues recognised from the sales of
flats by RUB 698 million or 1 %, a decrease
in the revenues recognised from the sales of
parking places by RUB 1,232 million or 24 %,
and a decrease in the revenues recognised
from the sale of built-in commercial premises
by RUB 1,078 million or 18 %.
External revenues of the reportable segment
“Construction services” decreased by
RUB 2,474 million or 44 % mainly due to the
overall reduction of activity in the sector as
the result of the COVID-19 pandemic.
External revenues of the reportable
segment “Other” decreased by
RUB 193 million or 4 % due to a decrease
in the sales of construction materials by
RUB 246 million or 9 % and a decrease in
rental revenue by RUB 181 million or 21 %
partially offset by an increase in the sale
of stand-alone commercial premises by
RUB 122 million and an increase in other
revenue related to servicing of premises by
RUB 112 million or 7 %.
The decrease of revenue was mainly
driven by overall turbulence as the
result of COVID-19 pandemic (refer to
paragraph “COVID-19 and other significant
events” below).
(b) Gross profit
Gross profit for the year ended 31 December
2020 amounted to RUB 21,915 million
compared to RUB 20,057 million for the
year ended 31 December 2019, an increase
of RUB 1,858 million or 9 %, which was
mainly driven by the increase in gross profit
of the reportable segment “Residential
development” by RUB 1,385 million or 7 %.
(c) Results from operating activities
Profit from operating activities during the
year ended 31 December 2020 amounted
to RUB 10,218 million compared to
RUB 6,484 million for the year ended
31 December 2019, an increase of
RUB 3,734 million or 58 %.
During the year ended 31 December 2020,
general and administrative expenses
decreased by RUB 2,045 million or
28 %, selling expenses decreased by
RUB 262 million or 5 %, other expenses,
net decreased by RUB 151 million or
9 %, as compared to the year ended 31
December 2019.
(d) General and administrative expenses
The decrease in general and administrative
expenses was mainly caused by contraction in
payroll and related taxes by RUB 1,601 million
or 33 %, other taxes by RUB 277 million or
53 % and audit and consulting services by
RUB 192 million or 45 %.
interest income – financing component
under IFRS 15 by RUB 77 million or 105 %.
borrowings), secures the Group’s solid over-
performance of the ratio, currently being
minus 3.16.
(e) Selling expenses
The decrease of RUB 262 million was driven
by a decrease in advertising expenses
by RUB 640 million or 36 %, partially
offset by an increase in agency fees by
RUB 358 million or 36 % and an increase in
payroll and related taxes by RUB 97 million
or 11 %.
(f) Other expenses, net
During the year ended 31 December
2020, other expenses, net, decreased by
RUB 151 million or 9 % mainly due to a
decrease in impairment loss on inventories
of RUB 611 million or 47 %, partially offset by
a decrease in gain from disposal of property,
plant and equipment by RUB 223 million
or 81 %, loss on disposal of inventories
under construction and development of
RUB 200 million and contingent consideration
for acquisition of Leader-Invest of
RUB 143 million, that were incurred in 2020.
(g) Net finance costs
Net finance costs for the year ended
31 December 2020 increased by
RUB 783 million or 17 % as compared to the
year ended 31 December 2019.
Finance income decreased by
RUB 975 million or 33 % mainly due to a
decrease in interest income on cash and
cash equivalents and bank deposits by
RUB 991 million or 47 %, mainly caused
by a significant decrease of the Bank of
Russia key rate (from 6,25 % at 31.12.2019
to 4.25 % as at 31.12.2020), and substantial
introduction of escrow accounts that led to
decrease of cash volume, and a decrease
in the amount credited to the income
statement in respect of the unwinding of the
discount on trade receivables of RUB 71
million or 10 %, offset by an increase in
Finance costs decreased by
RUB 192 million or 2 % due to a decrease
in financing component under IFRS 15
by RUB 1,220 million or 47 %, partially
offset by an increase in borrowing costs
by RUB 537 million or 12 % due to the
transition from the scheme of customer
financing to the bank project financing
scheme, and an increase in the amount
debited to the income statement in respect
of the unwinding of the discount on other
payables by RUB 744 million or 435 %,
which was mainly caused by unwinding of
the discount on long-term accounts payable
for the acquisition of land plot (82 % share in
LLC “Specialized Developer “ZIL-YUG”).
(h) Income tax expense
Income tax expense for the year ended
31 December 2020 amounted to
RUB 2,686 million compared to an income
tax expense of RUB 1,585 million during the
year ended 31 December 2019.
(i) Profit for the year
The profit for the year ended 31 December
2020 amounted to RUB 2,036 million,
compared to a profit of RUB 186 million for
the year ended 31 December 2019.
(j) Adjusted net debt/adjusted EBITDA
and net corporate debt/adjusted
EBITDA ratios
As described in note 23 and in the
Supplementary Information section,
certain bank loans are subject to restrictive
covenants which are calculated based on
the consolidated financial statements of
the Group. The loans used to finance the
acquisition of JSC “Leader Invest” require
the Group to maintain adjusted net debt/
adjusted EBITDA ratio below 4. The current
structure of the Group’s adjusted net debt,
being negative (specified assets exceed
The Group also monitors the ratio of net
corporate debt (total loans and borrowings
less secured project financing less cash and
cash equivalents less bank deposits over
3 months) to adjusted EBITDA. Following
the transition to settlements with customers
through escrow accounts and to financing
of construction by means of project
financing, the classical net debt/EBITDA
indicator distorts the actual debt burden. At
the appropriate level of coverage of project
loan with cash on escrow accounts, nominal
interest rates on such debt are reduced to
near-zero values, while market rates vary
from 8-10 % per annum. As of 31 December
2020, the ratio amounted to 1.19 which is
in line with the Group’s target for the ratio
being less than 2-3x.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced
by the Group are disclosed in the notes 1(b),
2(d) and 26 of the Consolidated Financial
Statements.
FUTURE DEVELOPMENTS
OF THE GROUP
The Board of Directors expects continued
growth in the Group’s operations in
all markets of its presence, and the
improvement in the financial position and
financial performance of the Group.
BRANCHES
The Group operated through branches
in Moscow and Saint Petersburg and 15
representative (sales) offices across the
Russian Federation during the year ended
31 December 2020. The Company did not
operate through any branches other than in
Moscow and Saint Petersburg.
USE OF FINANCIAL INSTRUMENTS
BY THE GROUP
The classes of financial instruments used
by the Group, the Group’s financial risk
management objectives and policies as
well as the Group’s exposure to credit risk,
liquidity risk and market risk are disclosed
in the note 26 of the consolidated financial
statements.
DIVIDENDS
On 20 July 2020, the Board of Directors
recommended a final dividend of RUB 12
per share for the year ended 31 December
2019. The final dividend for the total amount
of RUB 3,539 million was approved by the
Annual General Meeting of shareholders
on 23 October 2020, and the dividends
were paid on 16 December 2020. Up to
the date of approval of these consolidated
financial statements, no dividends were
recommended for distribution for the year
ended 31 December 2020.
CHANGES IN THE COMPANY’S
SHARE CAPITAL
ACTIVITIES RELATED TO RESEARCH
AND DEVELOPMENT
There were no changes in the Company’s
share capital during 2020.
The Group has not undertaken any activities
in the field of research and development
during the year ended 31 December 2020.
CHANGES IN THE COMPOSITION,
ALLOCATION OF RESPONSIBILITIES OR
COMPENSATION OF THE BOARD OF
DIRECTORS
The changes in the composition and
allocation of responsibilities of the Board
228
FINANCIAL STATEMENTS
229
ANNUAL REPORT 2020
CONSOLIDATED
MANAGEMENT REPORT
CONTINUED
of Directors during 2020 are disclosed
in the Board of Directors and other
Officers section of these consolidated
financial statements. The changes in the
compensation of certain members of the
Board of Directors are disclosed in note 10
to these consolidated financial statements.
COVID-19 AND OTHER
SIGNIFICANT EVENTS
As the Russian Federation produces and
exports large volumes of oil and gas, its
economy is particularly sensitive to the price
of oil and gas on the world market. In March
2020 oil prices dropped by more than 40 %,
which resulted in the immediate weakening
of Russian Ruble against major currencies.
In addition, starting from early 2020, a
new coronavirus disease (COVID-19)
began rapidly spreading all over the world
resulting in an announcement of pandemic
status by the World Health Organization
in March 2020. Responses put in place
by the Russian Federation to contain the
spread of COVID-19 resulted in significant
operational disruption for many companies
and had a significant effect on businesses
across a wide range of sectors, including,
but not limited to such impacts as
disruption of business operations as a result
of interruption of production or closure
of facilities, supply chain disruptions,
quarantines of personnel, reduced demand
and difficulties in raising financing.
The quarantine measures introduced in the
Russian Federation included the closure
of the Group’s sales offices. In addition,
the Government of Moscow imposed a
temporary ban on construction works that
lasted from the 13th of April until the 12th
of May.
The Group managed to provide the
necessary conditions for the safe conduct of
construction works on all of its construction
sites. In the Moscow region, the Group
resumed construction shortly after the
temporary ban on construction was lifted
due to the flexible construction technology
and the availability of its own general
contractors and sub-contractors. In Saint-
Petersburg construction works continued
uninterrupted. As a result, all projects that
were planned for completion during the year
ended 31 December 2020 were completed
on time.
In the first weeks following the introduction
of restrictive measures, the Group launched
an online real estate sales service, formed
operational teams of managers, and
strengthened its call center. The Group
developed a new model of interaction with
clients including virtual showrooms and
virtual and augmented reality projects that
provide a complete picture of the future
apartments.
The Group’s office-based employees were
successfully moved to remote working.
The quarantine measures, accompanied
by the reduction in the disposable
income of households and the increase
in unemployment rates, led to the overall
decrease of the demand for real estate.
At the same time, the Government of the
Russian Federation implemented various
measures to support both the construction
industry and its clients, including the
introduction of the preferential 6,5 % p.a.
mortgage program and an increase of
its price limits on apartments, that had a
significant positive impact on the demand
for real estate.
As of the reporting date, most of the
restrictions imposed by the government
authorities in the Russian Federation due to
the COVID-19 pandemic have been lifted,
including on the operation of the Group’s
sales offices, and the Group observes that
the demand for real estate has recovered.
Significant events subsequent to the
reporting date are disclosed in note 33 of
the Consolidated Financial Statements.
INDEPENDENT AUDITORS
On 20 October 2020, the Annual General
Meeting of shareholders of the Company
appointed Deloitte Limited as auditor of the
Company to hold office until the conclusion
of the next annual general meeting and
authorised the Board of Directors to fix the
auditor’s remuneration.
CORPORATE
GOVERNANCE REPORT
COMPANY’S INTERNAL CONTROL AND
RISK MANAGEMENT IN RELATION TO
THE PREPARATION OF THE FINANCIAL
STATEMENTS
The main documents regulating the
activities of the Company are the Cyprus
Companies Law, Cap. 113, the UKLA
Listing, Prospectus and Disclosure and
Transparency Rules, together with the
Memorandum and Articles of Association
of the Company. The Company has also
enacted a number of governance policies
and procedures, such as the Management
Policy and Committee terms of reference,
to ensure that a proper system of corporate
governance is in place.
The Board of Directors is responsible
for the preparation of the consolidated
financial statements that give a true and fair
view in accordance with the International
Financial Reporting Standards as adopted
by the European Union (IFRS-EU) and the
requirements of the Cyprus Companies
Law, Cap. 113, and for such internal control
as the Board of Directors determines is
necessary to enable the preparation of
consolidated financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial
statements, the Board of Directors is
responsible for making an assessment of
the Group’s and the Company’s ability to
continue as a going concern, taking into
account all available information about
the future and for disclosing any material
uncertainties related to events or conditions
that may cast significant doubt upon the
Group’s and the Company’s ability to
continue as a going concern.
The Audit Committee is responsible for
monitoring the financial reporting process
and the integrity of the Company’s financial
statements. It is also responsible for
reviewing internal controls, overseeing
how management monitors compliance
with the Group’s risk management policies
and procedures, the effectiveness of
the Group’s Internal Audit function and
the independence, objectivity and the
effectiveness of the external audit process.
The Audit Committee is also responsible for
considering the terms of appointment and
remuneration of the external auditor.
Each of the subsidiaries of the Group
keeps accounting records for statutory
purposes. The preparation of consolidated
IFRS financial statements involves the
transformation of the statutory accounting
records into IFRS and the consolidation of
financial statements. The Group continues
the process of implementing a single
Group-wide information system featuring
automated consolidation of the accounts
that will strengthen internal control and risk
management in relation to the preparation of
the consolidated financial statements.
The Group believes that its financial
reporting functions and internal control
systems are sufficient to ensure compliance
with the requirements of the FSA’s
Disclosure and Transparency Rules as a
listed company and with the requirement of
Cyprus Companies Law, Cap. 113.
SIGNIFICANT DIRECT OR INDIRECT
SHAREHOLDINGS (INCLUDING
INDIRECT SHAREHOLDINGS THROUGH
PYRAMID STRUCTURES AND
CROSS-SHAREHOLDINGS)
Those charged with governance are
responsible for the implementation
of internal control necessary for the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error, and in particular for the
design, implementation and maintenance of
internal control to prevent and detect fraud
and error.
The share capital of the Company is GBP
34,748 divided into 294,957,971 ordinary
Shares having the par value of GBP
£0.00005 each and 20,000 preference
shares having the par value of GBP 1 each.
193,747,322 ordinary shares (65,7 %)
are deposited for the issuance of Global
Depositary Receipts (GDRs) pursuant
to the Deposit Agreement between the
Company and the Bank of New York
Mellon. The GDRs represent one ordinary
share each and are listed and traded on
the Main Market of the London Stock
Exchange. Starting from 3 February 2020,
the Company’s GDRs started trading on
Moscow Stock Exchange.
As at 31 December 2020, the Company was
aware of the following interests in its share
capital:
SHAREHOLDERS
Free float
Sistema PJSFC
Management of the Company
TOTAL
%
73.6
25.6
0.8
100
THE HOLDERS OF ANY SHARES WITH
SPECIAL CONTROL RIGHTS AND A
DESCRIPTION OF THESE RIGHTS
The Company does not have any shares
with special control rights.
RESTRICTIONS IN EXERCISING OF
VOTING RIGHTS OF SHARES
The 20,000 preference shares having
the par value of GBP 1 each issued by
the Company, bear no voting rights.
The Company does not have any other
restrictions in exercising of the voting rights
of its shares.
THE RULES REGARDING THE
APPOINTMENT AND REPLACEMENT OF
BOARD MEMBERS
The Company may by ordinary resolution
appoint any person as a director and may by
ordinary resolution of which special notice
has been given, in accordance with sections
178 and 136 of the Cyprus Companies Law,
cap. 113 (the Law), remove a director. Any
such director will receive special notice of
the meeting and is entitled to be heard at
230
FINANCIAL STATEMENTS
231
ANNUAL REPORT 2020
CORPORATE
GOVERNANCE REPORT
CONTINUED
the meeting. Any director has to confirm in
writing that he is eligible under the Law.
A director may resign from office as a
director by giving notice in writing to that
effect to the Company, which notice shall
be effective upon such date as may be
specified in the notice.
THE RULES REGARDING THE
APPOINTMENT AND REPLACEMENT OF
BOARD MEMBERS (CONTINUED)
The directors have the power from time to
time, without sanction of the Company in
general meeting, to appoint any person to
be a director, either to fill a casual vacancy
or as an additional director.
The office of a director shall be vacated if
the director:
(a) becomes of unsound mind or an order
is made by a court having jurisdiction
(whether in Cyprus or elsewhere) in
matters concerning mental disorder for
their detention or for the appointment
of a receiver, curator or other person to
exercise powers with respect to their
property or affairs; or
(b) is prohibited from acting as director
in accordance with section 180 of the
Law; or
(c) becomes bankrupt or makes any
arrangement or composition with their
creditors generally or otherwise has
any judgment executed on any of their
assets; or
(d) dies; or
(e) resigns their office by written notice to
the Company; or
(f) the Company removes them from their
position in accordance with section
178 of the Law.
BY ORDER OF THE BOARD OF DIRECTORS
CHARALAMPOS AVGOUSTI
SERGEY EGOROV
Director
Director
Nicosia
22 March 2021
RESPONSIBILITY
STATEMENT
OF THE DIRECTORS AND MANAGEMENT OF THE COMPANY
IN ACCORDANCE WITH THE TRANSPARENCY LAW
THE RULES REGARDING THE
AMENDMENT OF THE ARTICLES OF
ASSOCIATION
Subject to the provisions of the Law, the
Company may, by special resolution, alter
or add to its articles of association. Any
alteration or addition shall be as valid as if
originally contained therein, and be subject
in like manner to alteration by special
resolution.
We, the members of the Board of Directors
and the Company officials responsible for
the drafting of the consolidated financial
statements of ETALON GROUP PLC (the
‘Company’), the names of which are listed
below, in accordance with the requirements
of the Section 9 of the Transparency
Requirements (Security Admitted to
Trading) Law 190(I)/2007 (hereinafter
the “Transparency Law”), as amended,
confirm that we have complied with the
requirements in preparing the financial
statement and that to the best of our
knowledge:
(a) The consolidated annual financial
statements for year ended 31 December
2020:
(i) Have been prepared in accordance with
the International Financial Reporting
Standards (IFRS) as adopted by the
European Union (EU), in accordance
with the provisions of section 9(4) of the
Transparency Law and in accordance
with Cyprus Companies Law, Cap.113;
(ii) Give a true and fair view of the
assets, liabilities, financial position
and profit or loss of the Company
and the undertakings included in the
consolidated financial account as a
whole, and
(b) The management report provides a fair
overview on information required as per
Section 9(6)(a) of the Transparency Law.
SERGEY EGOROV, Chairman of the Board of Directors
MAKSIM BERLOVICH, Member of the Board of Directors
OLEG MUBARAKSHIN, Member of the Board of Directors
MARINA OGLOBLINA, Member of the Board of Directors
GANNA KHOMENKO, Member of the Board of Directors
MARTIN ROBERT COCKER, Member of the Board of Directors
BORIS SVETLICHNY, Member of the Board of Directors
CHARALAMPOS AVGOUSTI, Member of the Board of Directors
DENIS VINOKUROV, Member of the Board of Directors
GENNADII SHCHERBINA, Chief Executive Officer
ILYA KOSOLAPOV, Chief Financial Officer
22 March 2021
232
FINANCIAL STATEMENTS
233
ANNUAL REPORT 2020
Deloitte Limited
24 Spyrou Kyprianou Avenue
CY-1075 Nicosia, Cyprus
Mail: P.O.Box 21675
CY-1512 Nicosia, Cyprus
Tel: +357 22 360 300
Fax: +357 2 5 360 400
infonicosia@deloitte.com
www.deloitte.com/cy
Independent Auditor’s Report
To the Members of Etalon Group PLC
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Etalon Group PLC (the “Company”) and its
subsidiaries (the “Group”), which are presented in pages 19 to 87 and comprise the consolidated
statement of financial position as at 31 December 2020 and the consolidated statements of profit or loss
and other comprehensive income, changes in equity and cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the
Cyprus Companies Law, Cap. 113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We remained independent of the Group
throughout the period of our appointment in accordance with the International Ethics Standards Board
for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards ( IESBA Code) together with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independent Auditor’s Report (continued)
To the Members of Etalon Group PLC
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Why the matter was determined to
be a key audit matter
Revenue recognition
How the matter was addressed in the audit
Our audit procedures included amongst others:
In accordance with IFRS 15 Revenue
from Contracts with Customers, the
Group recognizes revenue from sale of
real estate inventories as performance
obligations are satisfied (i.e. over time)
or when performance obligations are
satisfied (i.e. at a point
in time)
depending on the type of contract and the
date of its registration with the state
authorities.
We consider revenue recognition under
IFRS 15 to be a key audit matter due to:
•
•
significance of judgments
applied when determining at the
reporting date percentage of
construction completion and the
progress toward satisfying the
Group’s performance obligations
and cost to completion under
share participation agreements
giving rise to over-time revenue
recognition;
the complexity of judgements
involved in determining the
financing component for the
particular share participation
agreements, as well as
calculating the correct portion to
be recognized in profit or loss of
the reporting period.
The accounting policies on revenue
under share participation agreements
and key sources of estimation
uncertainly are disclosed in Note 2(d)
and Note 3(i). For other disclosures of
revenue refer to Note 6.
•
•
We analyzed the Group’s contracts with customers to
identify the rights and obligations of the parties, challenged
the appropriateness of revenue recognition method used by
the Group, taking into account current legal practices in
respect of such contracts.
We obtained an understanding, assessed design and
implementation and tested the operating effectiveness of
controls over the construction costs budgeting process and
assessed the appropriateness of assumptions related to
estimating the planned costs and expected construction
timeline, which are used by the Group’s management in
measuring the progress toward completion when revenue
is recognized over time. In addition, we performed a
retrospective analysis of the Group’s fulfilment of the
budgets and construction milestones in the past.
On a sample basis, we verified the costs of particular
construction stages in accordance with the agreements with
contractors signed by the reporting date to the costs in the
respective stages of the construction budgets. In addition,
we
inspected a sample of primary documentation
supporting the cost of construction incurred by contractors
by the reporting date.
We also verified the Group’s calculations of recognized
revenue and significant financing component by
performing the following:
•
on a sample basis, we traced input data in the
calculations to the respective share participation
agreements;
we verified that the discount rates applied by the
Group reflect the credit characteristics of the party
receiving financing in the contract, and that the
rates determined at contract inception are applied
consistently over the contract term;
we checked the arithmetical accuracy of the
Group’s calculations.
12
We reviewed the disclosures in the consolidated
financial statements for compliance with the
requirements of IFRS 15.
All the above procedures were completed in a
satisfactory manner.
13
234
FINANCIAL STATEMENTS
235
ANNUAL REPORT 2020
To the Members of Etalon Group PLC
Independent Auditor’s Report (continued)
Why the matter was determined to
be a key audit matter
How the matter was addressed in the audit
Net realizable value of inventories
The Group has significant inventory
balance (refer to Note 17 in the
consolidated financial statements),
which includes real estate under
construction and development, as well
as completed properties, construction
materials and other inventories. The
Group measures its inventories at the
lower of cost and net realizable value.
We consider this area to be a key audit
matter because it requires use of
observable and unobservable inputs and
application of a significant degree of
judgment when developing assumptions,
in particular in relation to:
•
•
•
the cost to complete construction;
expected timing and prices of sales;
the level of overhead expenses as
percentage of revenue;
the discount rate used to arrive to
the present value of the future
expected cash flows.
•
The accounting policies on inventories
key sources of estimation uncertainly
are disclosed in Note 2(d) and
Note 3(h).
Our audit procedures included amongst others:
We evaluated the appropriateness of management’s
assumptions applied in calculating the carrying value of
inventories including:
•
understanding the Group’s processes and
•
•
procedures for developing assumptions used;
assessing the appropriateness of the discount rate
used;
reviewing, recalculating and critically assessing
the reasonableness of the assumptions used in
calculation of allowance for inventories
considering:
•
historical turnover and prices of sales in
these and/or similar projects;
price growth rates for future sales;
budgeted costs to complete construction;
budgeted general, administrative and selling
expenses.
•
•
•
We also assessed whether the disclosure in the
consolidated financial statements in respect of the
inventory allowances is in compliance with IFRS
requirement.
All the above procedures were completed in a
satisfactory manner.
Independent Auditor’s Report (continued)
To the Members of Etalon Group PLC
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the Consolidated Management Report and the Responsibility Statement of the
Directors and management of the Company in accordance with the Transparency Law of the Directors
and Management of the Company, which are presented in pages 4 to 11, and the supplementary
information included in pages 88 to 89 presented for the purpose of additional analysis, but does not
include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the
Consolidated Financial Statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a
true and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
14
15
236
FINANCIAL STATEMENTS
237
ANNUAL REPORT 2020
Independent Auditor’s Report (continued)
Independent Auditor’s Report (continued)
To the Members of Etalon Group PLC
To the Members of Etalon Group PLC
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
(continue)
•
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control;
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control;
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Board of Directors;
• Conclude on the appropriateness of the Board of Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern;
•
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that
achieves a true and fair view;
• Obtain sufficient and appropriate audit evidence regarding the financial information
of the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the consolidated financial statements
of the current period, and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the
following information in our Independent Auditor’s Report, which is required in addition to
the requirements of International Standards on Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Group on 19 December 2019 by an Extraordinary
Meeting of shareholders. Our appointment has been renewed annually by shareholder
resolution representing a total period of uninterrupted engagement appointment of two
years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated financial statements expressed in this
report is consistent with the additional report to the Audit Committee of the Company, which
we issued on 19 March 2021 in accordance with Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation
537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are
no non-audit services which were provided by us to the Group and which have not been
disclosed in the consolidated financial statements or the consolidated management report.
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
•
•
•
In our opinion, based on the work undertaken in the course of our audit, the
Consolidated Management Report has been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap. 113, and the information given is
consistent with the consolidated financial statements.
In light of the knowledge and understanding of the Group and its environment
obtained in the course of the audit, we are required to report if we have identified
material misstatements in the Consolidated Management Report. We have nothing
to report in this respect.
In our opinion, based on the work undertaken in the course of our audit, the
information included in the corporate governance report in accordance with the
requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the
Cyprus Companies Law, Cap. 113, and which is included as a specific section of the
Consolidated Management Report, have been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap. 113, and is consistent with the
consolidated financial statements.
In our opinion, based on the work undertaken in the course of our audit, the
corporate governance report includes all information referred to in subparagraphs
(i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies
Law, Cap. 113.
In light of the knowledge and understanding of the Group and its environment
obtained in the course of the audit, we are required to report if we have identified
material misstatements in the corporate governance statement in relation to the
information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of
the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.
16
17
238
FINANCIAL STATEMENTS
239
ANNUAL REPORT 2020
Independent Auditor’s Report (continued)
To the Members of Etalon Group PLC
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s
members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and
Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for any other purpose or to any other person to
whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Kerry
Whyte.
Kerry Whyte
Certified Public Accountant and Registered Auditor
for and on behalf of
Deloitte Limited
Certified Public Accountants and Registered Auditors
Nicosia, 22 March 2021
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
MLN RUB
NOTE
2020
2019
Revenue from sale of real estate accounted for at historical cost
51,801
62,609
Revenue from sale of real estate acquired through business combinations and recognised at fair value at initial recognition
18,675
10,875
Other revenue
REVENUE
8,179
10,846
6
78,655
84,330
Cost of sales of real estate accounted for at historical cost
(33,744)
(44,150)
Cost of sales of real estate acquired through business combinations and recognised at fair value at initial recognition
(15,605)
(9,592)
Other cost of sales
COST OF SALES
Gross profit from sales of real estate accounted for at historical cost
Gross profit from sales of real estate acquired through business combinations and recognised at fair value at initial
recognition
Gross profit from other sales
GROSS PROFIT
General and administrative expenses
Selling expenses
Impairment loss on trade and other receivables
Gain from bargain purchase
Other expenses, net
RESULTS FROM OPERATING ACTIVITIES
Finance income—interest revenue
Finance income – other
Finance costs
NET FINANCE COSTS
POFIT BEFORE INCOME TAX
Income tax expense
PROFIT FOR THE YEAR
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
(7,391)
(10,531)
(56,740)
(64,273)
18,057
18,459
3,070
1,283
788
315
21,915
20,057
(7,280)
(4,822)
(476)
729
–
(1,573)
(1,724)
10,218
6,484
1,887
129
2,872
119
(7,512)
(7,704)
(5,496)
(4,713)
4,722
1,771
7
(5,235)
(4,560)
26 (b)(iii)
(329)
27
8
11
11
11
12
(2,686)
(1,585)
2,036
2,036
186
186
18
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
240
FINANCIAL STATEMENTS
241
ANNUAL REPORT 2020
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
MLN RUB
PROFIT ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interest
PROFIT FOR THE YEAR
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interest
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
EARNINGS PER SHARE
Basic and diluted earnings per share (RUB)
NOTE
2020
2019
2,036
–
2,036
2,036
–
2,036
795
(609)
186
795
(609)
186
MLN RUB
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Investment property
Other long-term investments
Trade and other receivables
Deferred tax assets
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
22
6.90
2.70
Inventories under construction and development
Inventories – finished goods
Other inventories
Advances paid to suppliers
Costs to obtain contracts
Contract assets
Trade receivables
Other receivables
Short-term investments
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
NOTE
2020
2019
13
14
15
18
16
17
17
17
18
18
18
18
19
20
3,508
691
424
4,253
6,692
3,561
1,065
190
4,692
3,921
15,568
13,429
102,179
85,270
11,291
14,286
1,975
8,137
840
7,138
6,358
6,991
212
1,133
9,750
752
2,463
7,444
5,486
203
25,830
31,128
170,951
157,915
186,519
171,344
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
242
FINANCIAL STATEMENTS
243
ANNUAL REPORT 2020
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2020 (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
MLN RUB
EQUITY AND LIABILITIES
EQUITY
Share capital
Share premium
Reserve for own shares
Retained earnings
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Non-controlling interest
TOTAL EQUITY
NON-CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
Contract liabilities
Provisions
TOTAL CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
NOTE
2020
2019
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
21
21
21
23
25
24
16
23
25
25
24
2
2
15,486
15,486
(1)
(1)
35,586
37,089
51,073
52,576
–
–
51,073
52,576
34,636
42,258
26,734
3,227
129
7,930
116
6,463
69,429
52,064
15,869
10,434
21,399
19,142
28,351
36,439
398
689
66,017
66,704
186,519
171,344
MLN RUB
CAPITAL
PREMIUM
OWN SHARES
EARNINGS
TOTAL
INTEREST
SHARE
SHARE
RESERVE FOR
RETAINED
NON-
CONTROLLING
TOTAL
EQUITY
Balance as at 1 January 2019
2
15,486
(1)
39,802
55,289
2
55,291
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit for the year
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
–
–
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Dividends to equity holders
Dividends to non-controlling shareholders of JSC
"Leader-Invest"
Acquisition of subsidiary with NCI (note 27)
Acquisition of NCI (note 21)
TOTAL TRANSACTIONS WITH OWNERS
BALANCE AS AT 31 DECEMBER 2019
–
–
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
795
795
795
795
(609)
(609)
186
186
(3,577)
(3,577)
–
(3,577)
–
–
(13)
(13)
–
69
15,289
15,289
(14,669)
(14,600)
69
–
(3,508)
(3,508)
607
(2,901)
15,486
(1)
37,089
52,576
–
52,576
MLN RUB
CAPITAL
PREMIUM
OWN SHARES
EARNINGS
TOTAL
INTEREST
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
SHARE
SHARE
RESERVE FOR
RETAINED
NON-
CONTROLLING
TOTAL
EQUITY
Balance as at 1 January 2020
2
15,486
(1)
37,089
52,576
–
52,576
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit for the year
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
–
–
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Dividends to equity holders
TOTAL TRANSACTIONS WITH OWNERS
BALANCE AS AT 31 DECEMBER 2020
–
–
2
–
–
–
–
–
–
–
–
2,036
2,036
2,036
2,036
(3,539)
(3,539)
(3,539)
(3,539)
15,486
(1)
35,586
51,073
–
–
–
–
–
2,036
2,036
(3,539)
(3,539)
51,073
These Consolidated Financial
Statements were approved by the
Board of Directors on 22 March 2021
and were signed on its behalf by:
CHARALAMPOS AVGOUSTI
SERGEY EGOROV
Director
Director
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
244
FINANCIAL STATEMENTS
245
ANNUAL REPORT 2020
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
MLN RUB
OPERATING ACTIVITIES:
PROFIT FOR THE YEAR
ADJUSTMENTS FOR:
Depreciation
Gain on disposal of property, plant and equipment
Gain on disposal of investment property
Loss on disposal of inventories under construction and development
Impairment loss on inventories
Impairment loss on trade and other receivables, advances paid to suppliers and investments
26 (b)(iii)
Gain on disposal of subsidiary
Gain from bargain purchase
Significant financing component from contracts with customers recognised in revenue
Savings on escrow-backed loans recognised in revenue
Finance costs, net
Income tax expense
CASH FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS
Change in inventories
Change in accounts receivable
Change in accounts payable
Change in provisions
Change in contract assets
Change in contract liabilities
27
11
12
24
18
25
NOTES
2020
2019
MLN RUB
NOTES
2020
2019
13, 14
8
8
8
17
2,036
186
Proceeds from disposal of property, plant and equipment
INVESTING ACTIVITIES:
481
(51)
(103)
200
676
418
–
–
542
(274)
(13)
–
1,287
578
(87)
(729)
(1,210)
(1,703)
(448)
5,496
2,686
10,181
–
4,713
1,585
6,085
(15,619)
12,506
2,642
544
24,390
(9,511)
(278)
(4,675)
(8,088)
(420)
(1,219)
9,290
Proceeds from disposal of investment property
Interest received
Acquisition of property, plant and equipment
Loans given
Loans repaid
Proceeds from disposal of subsidiaries, net of cash disposed of
Acquisition of subsidiary, net of cash acquired
Acquisition of other investments
Disposal of other investments
NET CASH FROM/(USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES:
Proceeds from borrowings
Repayments of borrowings
Acquisition of non-controlling interest
Payments for lease liabilities, excluding interest
Dividends paid
NET CASH (USED IN)/FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations
265
440
1,103
(396)
(216)
2
–
–
(139)
105
346
76
2,167
(496)
48
–
19
(10,481)
(75)
1,359
1,164
(7,037)
8,691
30,332
(10,108)
(4,432)
–
(14,600)
(645)
(939)
(3,527)
(3,599)
(5,589)
6,762
(5,322)
8,237
31,128
23,066
24
(175)
15, 19
15, 19
23
23
21 (e)
28
CASH GENERATED FROM OPERATING ACTIVITIES
8,553
17,275
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
20
25,830
31,128
Income tax paid
Interest paid
NET CASH (USED IN)/FROM OPERATING ACTIVITIES
(4,647)
(4,803)
(897)
(3,939)
(4,824)
8,512
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to,
and forming part of, the consolidated financial statements set out on pages 246 to 303
246
FINANCIAL STATEMENTS
247
ANNUAL REPORT 2020
NOTES
TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1. BACKGROUND
a) ORGANISATION AND OPERATIONS
Etalon Group PLC (Etalon Group Public Company Limited before 27 July 2017 and Etalon
Group Limited before 5 April 2017) (the “Company”) and its subsidiaries (together referred to
as the “Group”) comprise Russian joint stock companies and limited liability companies, as
defined in the Civil Code of the Russian Federation, and companies located abroad.
The Company was incorporated on 8 November 2007 in the Bailiwick of Guernsey.
On 5 April 2017, the Company migrated from Guernsey, Channel Islands, and was registered
in the Republic of Cyprus under the name of Etalon Group Public Company Limited.
On 27 July 2017, the Annual General Meeting of Shareholders resolved to change the
name of the Company from Etalon Group Public Company Limited to Etalon Group PLC.
On 8 August 2017, the change of the Company’s name was approved by the Registrar of
Companies and Official Receiver of the Republic of Cyprus.
The Company’s registered office is located at:
2-4 Arch. Makariou III Avenue
Capital Center, 9th floor
1065 Nicosia
Cyprus
The Group’s principal activity is residential development in the Saint-Petersburg metropolitan
area and the Moscow metropolitan area, both of which are located in the Russian Federation.
In April 2011, the Company completed an initial public offering and placed its ordinary
shares in the form of global depository receipts (“GDR”) on the Main Market of the London
Stock Exchange.
b) BUSINESS ENVIRONMENT
Starting from early 2020, a new coronavirus disease (COVID-19) began rapidly spreading
all over the world resulting in an announcement of pandemic status by the World Health
Organization in March 2020. Responses put in place by the Russian Federation to contain
the spread of COVID-19 resulted in significant operational disruption for many companies
and had a significant effect on businesses across a wide range of sectors, including, but
not limited to such impacts as disruption of business operations as a result of interruption
of production or closure of facilities, supply chain disruptions, quarantines of personnel,
reduced demand and difficulties in raising financing.
The quarantine measures introduced in the Russian Federation included the closure of the
Group’s sales offices. In addition, the Government of Moscow imposed a temporary ban on
construction works that lasted from the 13th of April until the 12th of May.
The quarantine measures, accompanied by the reduction of disposable income of households
and the increase in unemployment rates, led to the overall decrease of the demand for real
estate. At the same time, the Government of the Russian Federation implemented various
measures to support both the construction industry and its clients, including the introduction
of the preferential 6,5 % p.a. mortgage program and an increase of its price limits on
apartments, that had a significant positive impact on the demand for real estate.
As of the reporting date, most of the restrictions imposed by the government authorities in
the Russian Federation due to the COVID-19 pandemic have been lifted, including on the
operation of the Group’s sales offices, and the Group observes that the demand for real
estate is recovering.
The Group’s operations are primarily located in the Russian Federation. Consequently, the
Group is exposed to the economic and financial markets of the Russian Federation, which
display the characteristics of an emerging market. The legal, tax and regulatory frameworks
continue development, but are subject to varying interpretations and frequent changes
which contribute together with other legal and fiscal impediments to the challenges faced by
entities operating in the Russian Federation.
Starting in 2014, the United States of America, the European Union and some other countries
have imposed and gradually expanded economic sanctions against a number of Russian
individuals and legal entities. The imposition of the sanctions has led to increased economic
uncertainty, including more volatile equity markets, a depreciation of the Russian rouble, a
reduction in both local and foreign direct investment inflows and a significant tightening in the
availability of credit. As a result, some Russian entities may experience difficulties accessing
the international equity and debt markets and may become increasingly dependent on state
support for their operations. The longer-term effects of the imposed and possible additional
sanctions are difficult to determine.
The consolidated financial statements reflect management’s assessment of the impact of the
Russian business environment on the operations and the financial position of the Group. The
future business environment may differ from management’s assessment.
2. BASIS OF
PREPARATION
a) STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted by the European Union
(EU), and the requirements of the Cyprus Companies Law, Cap. 113.
b) BASIS OF MEASUREMENT AND GOING CONCERN PRINCIPLE
The consolidated financial statements are prepared on the historical cost basis.
Management prepared these consolidated financial statements on a going concern basis.
When making an assessment of the Group’s ability to continue as a going concern over
the next 12 months, the management took into account all available information about the
future, noting that there are no material uncertainties related to events or conditions that may
cast significant doubt upon the Group’s ability to continue as a going concern.
c) FUNCTIONAL AND PRESENTATION CURRENCY
The national currency of the Russian Federation is the Russian Rouble (“RUB”), which is
the Company’s functional currency and the currency in which these consolidated financial
statements are presented. The functional currency of most of the most Group’s subsidiaries,
including foreign operations, is the RUB, as the activities of foreign operations are carried
out as an extension of the activities of the Group in the Russian Federation.
All financial information presented in RUB has been rounded to the nearest million.
248
FINANCIAL STATEMENTS
249
ANNUAL REPORT 2020
d) USE OF ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.
Critical accounting judgments
The following is the critical accounting judgement (apart from judgements involving
estimation which are dealt with separately below), made during the year that had the most
significant effect on the amounts recognised in the consolidated financial statements.
Effective from 1 January 2019, the Group ceased capitalisation of borrowing costs into the
cost of inventories under construction and development, revenue for which is recognized
over time. The change in accounting policy was driven by a change in significant judgment
that the land cost, being the part of inventory (work-in-progress), is not a qualifying asset for
capitalisation of borrowings costs as defined in IAS 23 Borrowing Costs.
Key sources of estimation uncertainty
Information about assumptions and estimation uncertainties that have a significant risk of
resulting in a material adjustment within the next financial year is included in the following
notes:
• Note 6 – revenue: measurement of the progress towards complete satisfaction of the
performance obligation, including estimation of the total costs to satisfy the performance
obligation;
• Note 17 – inventories – impairment provisions: the discount rate and the years of
turnover of parking places; recognition of obligations for the construction of social
infrastructure: construction budgets and timing of construction;
• Note 26(b)(ii) – measurement of Expected Credit Loss (ECL) allowance for trade and
other receivables and contract assets: probability of default and loss given default;
• Note 27 – acquisition of subsidiary: fair value of the assets acquired and liabilities assumed.
e) CHANGES IN ACCOUNTING POLICIES
The Group has consistently applied the accounting policies to all periods presented in these
consolidated financial statements.
i) New Standards and Interpretations
The Group adopted all new standards and interpretations that were effective from 1 January
2020. The adoption of these standards and interpretations did not have any material effect
on the Group’s consolidated financial statements.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS ISSUED
BUT NOT YET EFFECTIVE
The following amendments to the standards and interpretations are effective for annual
periods beginning on or after 1 January 2021. The Group has not yet analysed the likely
impact of the new standards and interpretations on its financial position or performance.
• Amendments to IFRS 3 Business Combinations – Reference to the Conceptual
Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead
of the 1989 Framework. They also add to IFRS 3 a requirement that, for obligations within
the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, an acquirer
applies IAS 37 to determine whether at the acquisition date a present obligation exists as
a result of past events. For a levy that would be within the scope of IFRIC 21 Levies, the
acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a
liability to pay the levy has occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognise
contingent assets acquired in a business combination.
The amendments are effective for business combinations for which the date of acquisition
is on or after the beginning of the first annual period beginning on or after 1 January 2022.
Early application is permitted if an entity also applies all other updated references (published
together with the updated Conceptual Framework) at the same time or earlier.
•
IFRS 17 Insurance Contracts (effective for annual periods beginning on or after
1 January 2023);
• Amendments to IAS 1 Presentation of Financial Statements – classification of liabilities
as current or non-current – (effective for annual periods beginning on or after 1 January
2023);
• Amendments to IFRS 9 Financial Instruments as a result of the 2018-2020 Annual
Improvements to IFRSs. – fees in the “10 percent” test for derecognition of financial
liabilities (effective for annual periods beginning on or after 1 January 2022);
• Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in
Associates – sale or contribution of assets between an investor and its associate or joint
venture (effective date to be determined by the IASB);
• Amendments to IAS 16 Property, Plant and Equipment, prohibiting companies from
deducting from the value of property, plant and equipment the amounts received from
sale of manufactured items while the company is preparing the asset for its intended use
(effective for annual periods beginning on or after 1 January 2022);
• Amendments to IAS 37 – costs to be included in assessing onerous contracts (effective
for annual periods beginning on or after 1 January 2022);
• Other annual improvements to IFRSs.
3. SIGNIFICANT
ACCOUNTING
POLICIES
a) BASIS OF CONSOLIDATION
(i) Business combinations
The Group accounts for business combinations using the acquisition method when control
is transferred to the Group. The Group controls an entity when it is exposed, or has rights, to
variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The identifiable assets acquired and the liabilities assumed, as well as the consideration
transferred in the acquisition are measured at their acquisition-date fair values.
The Group recognises goodwill as of the acquisition date as acquisition-date fair value
consideration transferred plus the amount of any non-controlling interest in the acquiree plus
the acquisition-date fair value of the acquirer’s previously held equity interest in the acquire
(in a business combination achieved in stages) less the net of the acquisition-date amounts
of the identifiable assets acquired and the liabilities assumed.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is
recognised in profit or loss immediately. Transaction costs are expensed as incurred.
Any contingent consideration is measured at fair value at the date of acquisition. If an
obligation to pay contingent consideration that meets the definition of a financial instrument
is classified as equity, then it is not remeasured and settlement is accounted for within
equity. Otherwise, other contingent consideration is remeasured at fair value at each
reporting date and subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
250
FINANCIAL STATEMENTS
251
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls another entity when
it holds more than half of the voting rights of the other entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases. The Group’s significant
subsidiaries are disclosed in note 32.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated.
b) FOREIGN CURRENCY
Transactions in foreign currencies are translated to the functional currency of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortised cost in the functional currency at the beginning of
the period, adjusted for effective interest and payments during the period, and the amortised
cost in foreign currency translated at the exchange rate at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured
at fair value are retranslated to the functional currency at the exchange rate at the date
that the fair value was determined. Foreign currency differences arising in retranslation are
recognised in profit or loss. Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate at the date of the transaction.
c) FINANCIAL INSTRUMENTS
(i) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are
originated. All other financial assets and financial liabilities are initially recognised when the
Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component)
or financial liability is initially measured at fair value plus, for an item not at fair value through
profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or
issue. A trade receivable without a significant financing component is initially measured at
the transaction price.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; fair value
through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment;
or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group
changes its business model for managing financial assets, in which case all affected
financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions
and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is to hold assets to collect contractual
cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is
not designated as at FVTPL:
•
•
it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This
election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described
above are measured at FVTPL.
Financial assets – Business model assessment
The Group makes an assessment of the objective of the business model in which a financial
asset is held at a portfolio level because this best reflects the way the business is managed
and information is provided to management. The information considered includes:
•
the stated policies and objectives for the portfolio and the operation of those policies in
practice. These include whether management’s strategy focuses on earning contractual
interest income, maintaining a particular interest rate profile, matching the duration of
the financial assets to the duration of any related liabilities or expected cash outflows or
realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Group’s
•
•
management;
the risks that affect the performance of the business model (and the financial assets held
within that business model) and how those risks are managed;
the frequency, volume and timing of sales of financial assets in prior periods, the reasons
for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for
derecognition are not considered sales for this purpose, consistent with the Group’s
continuing recognition of the assets.
Financial assets – assessment whether contractual cash flows are solely payments of
principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial
asset on initial recognition. ‘Interest’ is defined as consideration for the time value of
money and for the credit risk associated with the principal amount outstanding during a
particular period of time and for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and
interest, the Group considers the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term that could change the
timing or amount of contractual cash flows such that it would not meet this condition. In
making this assessment, the Group considers:
terms that may adjust the contractual coupon rate, including variable-rate features;
• contingent events that would change the amount or timing of cash flows;
•
• prepayment and extension features; and
•
terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse
features).
252
FINANCIAL STATEMENTS
253
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
A prepayment feature is consistent solely with the payments of principal and interest
criterion if the prepayment amount substantially represents unpaid amounts of principal
and interest on the principal amount outstanding, which may include reasonable additional
compensation for early termination of the contract. Additionally, for a financial asset acquired
at a discount or premium to its contractual par amount, a feature that permits or requires
prepayment at an amount that substantially represents the contractual par amount plus
accrued (but unpaid) contractual interest (which may also include reasonable additional
compensation for early termination) is treated as consistent with this criterion if the fair value
of the prepayment feature is insignificant at initial recognition.
Financial assets – Subsequent measurement and gains and losses
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss.
Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial
liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it
is designated as such on initial recognition. Financial liabilities at FVTPL are measured at
fair value and net gains and losses, including any interest expense, are recognised in profit
or loss. Other financial liabilities are subsequently measured at amortised cost using the
effective interest method. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or
loss.
The Group has fixed rate bank loans for which the banks have the option to revise the
interest rate following the change of key rate set by the Central Bank of Russia (CBR). The
Group have an option to either accept the revised rate or redeem the loan at par without
penalty. The Group considers these loans as in essence floating rate loans.
(iii) Modification of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the Group evaluates whether the cash flows
of the modified asset are substantially different. If the cash flows are substantially different
(referred to as ’substantial modification’), then the contractual rights to cash flows from the
original financial asset are deemed to have expired. In this case, the original financial asset is
derecognised and a new financial asset is recognised at fair value.
The Group performs a quantitative and qualitative evaluation of whether the modification
is substantial, i.e. whether the cash flows of the original financial asset and the modified
or replaced financial asset are substantially different. The Group assesses whether the
modification is substantial based on quantitative and qualitative factors in the following
order: qualitative factors, quantitative factors, combined effect of qualitative and quantitative
factors. If the cash flows are substantially different, then the contractual rights to cash flows
from the original financial asset deemed to have expired. In making this evaluation the Group
analogizes to the guidance on the derecognition of financial liabilities.
If the cash flows of the modified asset carried at amortised cost are not substantially
different, then the modification does not result in derecognition of the financial asset. In this
case, the Group recalculates the gross carrying amount of the financial asset and recognises
the amount arising from adjusting the gross carrying amount as a modification gain or loss in
profit or loss. The gross carrying amount of the financial asset is recalculated as the present
value of the renegotiated or modified contractual cash flows that are discounted at the
financial asset’s original effective interest rate. Any costs or fees incurred adjust the carrying
amount of the modified financial asset and are amortised over the remaining term of the
modified financial asset.
Financial liabilities
The Group derecognises a financial liability when its terms are modified and the cash flows
of the modified liability are substantially different. In this case, a new financial liability based
on the modified terms is recognised at fair value. The difference between the carrying
amount of the financial liability extinguished and the new financial liability with modified
terms is recognised in profit or loss.
If a modification (or exchange) does not result in the derecognition of the financial liability
the Group applies accounting policy consistent with the requirements for adjusting the gross
carrying amount of a financial asset when a modification does not result in the derecognition
of the financial asset, i.e. the Group recognises any adjustment to the amortised cost of the
financial liability arising from such a modification (or exchange) in profit or loss at the date of
the modification (or exchange).
Changes in cash flows on existing financial liabilities are not considered as modification if
they result from existing contractual terms, e.g. changes in fixed interest rates initiated by
banks due to changes in the CBR key rate, if the loan contract entitles banks to do so and
the Group have an option to either accept the revised rate or redeem the loan at par without
penalty. The Group treats the modification of an interest rate to a current market rate using
the guidance on floating-rate financial instruments. This means that the effective interest rate
is adjusted prospectively.
The Group performs a quantitative and qualitative evaluation of whether the modification
is substantial considering qualitative factors, quantitative factors and combined effect of
qualitative and quantitative factors. The Group concludes that the modification is substantial
as a result of the following qualitative factors:
• change in the currency of the financial liability;
• change in collateral or other credit enhancement;
•
• change in the subordination of the financial liability.
inclusion of conversion option;
For the quantitative assessment the terms are substantially different if the discounted
present value of the cash flows under the new terms, including any fees paid net of any
fees received and discounted using the original effective interest rate, is at least 10 per
cent different from the discounted present value of the remaining cash flows of the original
financial liability. If an exchange of debt instruments or modification of terms is accounted
for as an extinguishment, any costs or fees incurred are recognised as part of the gain
or loss on the extinguishment. If the exchange or modification is not accounted for as an
extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are
amortised over the remaining term of the modified liability.
(iv) Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from
the financial asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of
the risks and rewards of ownership and it does not retain control of the financial asset.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged
or cancelled, or expire. The Group also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are substantially different, in which case
a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount
extinguished and the consideration paid (including any non-cash assets transferred or
liabilities assumed) is recognised in profit or loss.
254
FINANCIAL STATEMENTS
255
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
(v) Offsetting
Evidence that a financial asset is credit-impaired includes the following observable data:
Financial assets and financial liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group currently has a legally
enforceable right to set off the amounts and it intends either to settle them on a net basis or
to realise the asset and settle the liability simultaneously.
(vi) Impairment
Financial instruments and contract assets
The Group recognises loss allowances for ECLs on:
financial assets measured at amortised cost;
•
• debt investments measured at FVOCI; and
• contract assets.
The Group uses a simplified approach to measure loss allowance at an amount equal to
lifetime ECLs for trade receivables and contract assets that result from transactions that
are within the scope of IFRS 15, irrespective of whether they contain a significant financing
component or not.
Lifetime ECLs are the ECLs that result from all possible default events over the expected
life of a financial instrument. The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed to credit risk.
For measuring of loss allowance for trade receivables and contract assets, the Group
allocates those financial assets into the following two categories based on shared credit risk
characteristics that are determined by existence of a collateral:
• Trade receivables and contract assets arising from sales of real estate;
• Trade receivables and contract assets arising from provision of construction services and
other operations.
The Group does not transfer title for sold properties to customers until they settle their
accounts in full. In case a customer fails to settle obligations in a reasonable time as
determined in their sales contract, the Group initiates termination of the sales contract, the
properties are returned to the Group and in addition, the Group withholds a penalty from the
amount of consideration it returns to the customer. The properties are subsequently sold
to other customers, and the cash flows from sale of collateral are included into the cash
flows that the Group expects to receive under the initial contract. The Group estimates and
recognises ECLs on trade receivables based on its own statistics about contract termination
and credit losses incurred.
For the second category of receivables and contract assets, the Group calculates ECL
based on individual credit risk ratings of each debtor and the remaining terms to maturity.
The Group determines the inputs for calculation of ECL such as probability of default and
loss given default using both internal and external statistical data. ECLs are a probability-
weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance
with the contract and the cash flows that the Group expects to receive).
The Group defines default event when a financial asset is more than 90 days past due or it
is unlikely that the debtor’s obligations to the Group will be repaid in full without the Group
taking such actions as the sale of the collateral (if any).
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised
cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’
when one or more events that have a detrimental impact on the estimated future cash flows
of the financial asset have occurred.
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being more than 90 days past due;
•
the restructuring of a loan or advance by the Group on terms that the Group would not
consider otherwise;
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
•
•
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the
gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no
reasonable expectations of recovering a financial asset in its entirety or a portion thereof.
The Group individually makes an assessment with respect to the timing and amount of
write-off based on whether there is a reasonable expectation of recovery of a financial asset.
The Group expects no significant recovery from the amount written off. However, financial
assets that are written off could still be subject to enforcement activities in order to comply
with the Group’s procedures for recovery of amounts due.
d) ADVANCES PAID AND CONTRACT LIABILITIES
Due to the nature of its activities, the Group receives significant advances from customers
(designated as contract liabilities), and makes significant prepayments to sub-contractors
and other suppliers. Advances paid are recognised on an undiscounted basis. The Group
adjusts contract liabilities for the significant financing component if the timing of payments
agreed to by the parties provides the Group with a significant benefit of financing.
e) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and bank balances and call deposits
with original maturities of three months or less. In accordance with IFRS 9, cash and cash
equivalents are classified at amortised cost.
f) PROPERTY, PLANT AND EQUIPMENT
(i) Recognition and measurement
Property, plant and equipment is stated at cost, net of accumulated depreciation and
accumulated impairment loss.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The
cost of self-constructed assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the asset to a working condition for their intended use,
the costs of dismantling and removing the items and restoring the site on which they are
located, and borrowing costs on qualifying assets for which the commencement date for
capitalisation is on or after 1 January 2008, the date of transition to IFRSs.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognised net within “other income” in profit or loss.
256
FINANCIAL STATEMENTS
257
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied
within the part will flow to the Group and its cost can be measured reliably. The carrying
amount of the replaced part is derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or
other amount substituted for cost, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment, since this most closely
reflects the expected pattern of consumption of the future economic benefits embodied in
the asset. Leased assets are depreciated over the shorter of the lease term and their useful
lives unless it is reasonably certain that the Group will obtain ownership by the end of the
lease term. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
Buildings and constructions
Machinery and equipment
Vehicles
Other assets
7-30 years
5-15 years
5-10 years
3-7 years
Depreciation methods, useful lives and residual values are reviewed at each financial
year-end and adjusted if appropriate. No estimates in respect of plant and equipment were
revised in 2020.
g) INVESTMENT PROPERTY
Investment property is measured at cost less accumulated depreciation and any
accumulated impairment losses.
Any gain or loss on disposal of investment property (calculated as the difference between
the net proceeds from disposal and the carrying amount of the item) is recognised in profit
or loss.
h) INVENTORIES
Inventories comprise real estate properties under construction and development (including
residential premises, stand-alone and built-in commercial premises) when the Group acts in
the capacity of a developer, finished goods, and construction and other materials.
The Group accounts for stand-alone and built-in commercial properties within inventories
because it does not intend to engage in renting-out those assets and keeping those as
investment properties to generate rental income and benefit from appreciation. Properties
classified as inventory may be rented out on a temporary basis while the Group is searching
for a buyer. Inventories are measured at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
The cost of real estate properties under construction and development is determined on
the basis of specific identification of their individual costs. The costs of individual residential
units and built-in commercial premises are arrived at by allocating the costs of a particular
development project to individual apartments and built-in premises on a pro rata basis
relative to their size.
Since 1 January 2017, for items on which revenue is recognized over time, real estate
property under construction and development is treated as an asset ready for sale in its
current condition and is not a qualifying asset for the capitalization of borrowing costs.
The costs of real estate property comprise costs of construction and other expenditure
directly attributable to a particular development project.
The cost of inventories, other than construction work in progress intended for sale, is based
on the weighted average cost formula and includes expenditure incurred in acquiring the
inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. Cost of manufactured inventories and work in progress includes
an appropriate share of overheads based on normal operating capacity. Transfer from real
estate properties under construction and development to the stock of finished goods occurs
when the respective building is approved by the State commission established by the local
regulating authorities for acceptance of finished buildings and the building is ready for housing.
The Group’s inventory is not limited to 12 months and may be of longer term since the
development cycle exceeds 12 months. Inventories are classified as current assets even
when they are not expected to be realised within twelve months after the reporting date.
i) REVENUE
(i) Revenue from sale of real estate properties (including flats, commercial premises
and parking places)
Revenue is measured based on the consideration specified in a contract with a customer
adjusted for the effect of the time value of money (significant financing component) if the
timing of payments agreed to by the parties provides the customer or the Group with
a significant benefit of financing. The timing of satisfaction of the Group’s performance
obligations does not necessarily correspond to the typical payment terms, as the Group
either accepts full down payments at the inception of construction, or provides instalment
plans for the whole period of construction or beyond it.
The Group recognises revenue when (or as) it transfers control over an asset to a customer.
Transfer of control may vary depending on the individual terms of the sales contracts.
For contracts for the sale of finished goods, the Group generally considers that control have
been transferred on the date when a buyer signs the act of acceptance of the property.
For each performance obligation satisfied over time (promise to transfer an apartment
specified in the contract with a customer in a multicompartment building under
construction), the Group recognises revenue over time by measuring the progress towards
satisfaction of that performance obligation using the input method.
The Group applies the input method because it believes that there is a direct relationship
between the Group’s inputs and the transfer of control of goods or services to a customer.
The measurement of the value to the customer of the goods or services transferred to date,
applied under the output method, is not available for the Group without undue cost. The
Group excludes from the input method the effects of any inputs that do not contribute to the
Group’s progress in satisfying the performance obligation.
Under the input method, revenue is recognised on the basis of costs incurred relative to the
total expected costs to the satisfaction of that performance obligation that is the proportion
of costs incurred to date to construct a multicompartment building to the total costs to
construct the building in accordance with a business plan.
The progress is considered to be the same for all apartments within a building, irrespective
of their floors, and revenue is recognised with respect to apartments that are contracted
under share participation agreements. Costs used to measure progress towards complete
satisfaction of performance obligation include costs of design and construction of a
multicompartment building and exclude the cost of acquisition of land plots. The cost of
acquisition of land plot is recognised in cost of sales consistently with the transfer to the
customers of the apartments to which the land plot relates.
258
FINANCIAL STATEMENTS
259
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
In relation to sales via housing cooperatives, revenue is recognized on the date when sold
real estate property is transferred to, and accepted by, the cooperative. Before that date, the
respective building has to be approved by the State commission for acceptance of finished
buildings.
When adjusting the promised amount of consideration (monetary or non-monetary) for a
significant financing component, the Group applies discount rates that would be reflected in
a separate financing transaction between the entity and its customer at contract inception
that is typically the average mortgage rate for contract assets and the Group’s incremental
borrowing rate for contract liabilities.
When the Group finances construction of residential buildings using project financing
backed by balances on escrow accounts, it adjusts transaction price for the difference
between interest expense on borrowings calculated using the base interest rate and the
preferential interest rate. Interest rate on project financing depends on the proportion of
balances on escrow accounts to the balance of project loan and varies from base interest
rate (no balances on escrow accounts) to preferential interest rates (balances on escrow
accounts exceed or equal balance of project loan).
As a practical expedient, the Group does not adjust the promised amount of consideration
for the effects of a significant financing component if the Group expects, at contract
inception, that the period between the transfer of a promised good to a customer and the
customer’s payment for that good will be one year or less.
COSTS TO OBTAIN CONTRACTS
The Group recognises as an asset the incremental costs of obtaining a contract with a
customer. These costs usually include sales commissions and insurance payments for
share participation agreements. Such assets are amortised on the basis of the progress
towards complete satisfaction of respective performance obligations and are included into
selling expenses.
(ii) Revenue from construction services
For accounting purposes, the Group distinguishes two types of construction contracts:
1) Contracts for provision of construction services;
2) Contracts for construction of an asset.
For the first type of contracts, revenue from construction services rendered is recognized
in the consolidated statement of Profit or Loss and Other Comprehensive Income when the
Group transfers control of a service to customer. These contracts are normally short-term,
therefore revenue is recognised when the customer signs the act of acceptance of the
construction service.
For the second type of contracts revenue is recognized over time by measuring progress
towards complete satisfaction of the performance obligation at the reporting date, measured
based on the proportion of contract costs incurred for work performed to date relative to the
estimated total contract costs, using the input method. Contract costs are recognised as
expenses in the period in which they are incurred except when the costs are the costs that
generate or enhance resources of the entity that will be used in satisfying a performance
obligation in future.
Some or all of an amount of variable consideration is included in the transaction price only
to the extent that it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur when that uncertainty associated with the variable
consideration is subsequently resolved.
The Group accounts for a contract modification (change in the scope or price (or both)) when
that is approved by the parties to the contract.
Where the outcome of a performance obligation cannot be reasonably measured, contract
revenue is recognised to the extent of costs incurred in satisfying the performance obligation
that is expected to be recovered.
When it becomes probable that total contract costs will exceed total contract revenue, the
Group recognises expected losses from onerous contract as an expense immediately.
(iii) Revenue from sale of construction materials
Revenue from the sale of construction materials is recognised in the consolidated statement
of profit or loss and other comprehensive income when the Customer obtains control of a
promised asset.
j) LEASES
Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control
the use of an identified asset for a period of time in exchange for consideration.
The Group recognises right-of-use assets and lease liabilities primarily for its operating
leases of land plots for development purposes.
The Group does not present right-of-use assets for land plots separately in the statement
of financial position but includes such assets within inventories under construction and
development. The depreciated part of right-of-use asset arising from lease of land plots is
recognised within cost of sales on the same basis as the cost of acquisition of land plots,
see note 3(h)(i).
The Group presents lease liabilities in “Trade and other payables” (note 25) in the statement
of financial position.
In accordance with IFRS 16 variable payments which do not depend on an index or rate, i.e.
do not reflect changes in market rental rates, should not be included in the calculation of
lease liability. In respect of municipal (or federal) land leases where the lease payments are
based on cadastral value of the land plot and do not change until the next potential revision
of that value or payments (or both) by the authorities, the Group determined that these lease
payments are not considered as either variable (that depend on an index or rate or reflect
changes in market rental rates) or in-substance fixed, and therefore these payments are not
included in the measurement of the lease liability.
The lease liability is initially measured at the present value of the outstanding lease payments
at the commencement date, discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the
Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and
decreased by lease payment made. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, a change in the estimate of the amount
expected to be payable under a residual value guarantee, or as appropriate, changes in the
assessment of whether a purchase or extension option is reasonably certain to be exercised
or a termination option is reasonably certain not to be exercised.
LEASE MODIFICATIONS
A lessee accounts for a lease modification as a separate lease if both:
(a) the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
(b) the consideration for the lease increases by an amount commensurate with the stand-
alone price for the increase in scope and any appropriate adjustments to that stand-
alone price to reflect the circumstances of the particular contract.
For lease modifications that are not accounted for as separate leases, lease liabilities are
remeasured by discounting the revised lease payments using revised discount rates and
making corresponding adjustments to the right-of-use assets.
260
FINANCIAL STATEMENTS
261
ANNUAL REPORT 2020
3. SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
k) INCOME TAX
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognised in profit or loss except to the extent that it relates to a business combination, or
items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
period, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years. Current tax payable also includes
any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
•
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit or
loss;
temporary differences related to investments in subsidiaries and associates to the extent
that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax assets and liabilities, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
In accordance with the tax legislation of the Russian Federation, tax losses and current tax
assets of a company in the Group may not be set off against taxable profits and current tax
liabilities of other Group companies. In addition, the tax base is determined separately for
each of the Group’s main activities and, therefore, tax losses and taxable profits related to
different activities cannot be offset.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible
temporary differences, to the extent that it is probable that future taxable profits will be
available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
IFRIC 23 Uncertainty over Income Tax Treatments clarified how to account for a tax
liability or a tax asset when there is an uncertainty over income tax treatments by the
taxation authorities. The tax amounts recorded in these consolidated financial statements
are consistent with the tax returns of the Group’s subsidiaries and therefore no uncertainty
is reflected in measurement of current and deferred taxes, as the Group believes that
it is probable that the taxation authorities will accept the treatment in tax returns. The
Group will reassess its judgements and estimates whenever there is a change in facts and
circumstances—e.g. examinations of taxation authorities, changes in tax legislation or
expiration of rights to examine tax amounts.
4. DETERMINATION
OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of
fair value, for both financial and non-financial assets and liabilities. Fair values have been
determined for measurement and for disclosure purposes based on the following methods.
When applicable, further information about the assumptions made in determining fair values
is disclosed in the notes specific to that asset or liability.
5. OPERATING
SEGMENTS
a) NON-DERIVATIVE FINANCIAL ASSETS
The fair value of trade and other receivables, excluding construction work in progress
and held to maturity investments, is estimated as the present value of future cash flows,
discounted at the market rate of interest at the reporting date. This fair value is determined
for disclosure purposes.
b) NON-DERIVATIVE FINANCIAL LIABILITIES
Fair value, which is determined for disclosure purposes, is calculated based on the present
value of future principal and interest cash flows, discounted at the market rate of interest
at the reporting date. In respect of the liability component of convertible notes, the market
rate of interest is determined by reference to similar liabilities that do not have a conversion
option. For finance leases, the market rate of interest is determined by reference to similar
lease agreements.
Further information about the assumptions made in measuring fair values in course of
business combinations is included in the note 27 – Acquisition of subsidiary.
The Group has three reportable segments, as described below, which are the Group’s
strategic business units. The strategic business units offer different products and services,
and are managed separately because they require different technology and marketing
strategies. The following summary describes the operations in each of the Group’s
reportable segments:
• Residential development. Includes construction of residential real estate including flats,
built-in premises and parking places.
• Construction services. Includes construction services for third parties and for internal
purpose.
• Other operations. Include selling of construction materials, construction of stand-
alone premises for commercial use and various services related to sale and servicing
of premises. None of these meets any of the quantitative thresholds for determining
reportable segments during the year ended 31 December 2020 or 2019.
Performance of the reportable segments is measured by the management based on gross
profits, on the way in which the management organises the segments within the entity for
making operating decisions and in assessing performance.
Starting from 2020, the performance of the reportable segment “Residential development” is
additionally assessed on the basis of gross profit adjusted for purchase price allocation from
acquisition of Leader-Invest. The information for that reportable segment in respect of the
year ended 31 December 2019 is provided for the comparability purposes.
General and administrative expenses, selling expenses, finance income and finance costs
are treated as equally attributable to all reporting segments and are not analysed by the
Group on a segment-by-segment basis and therefore not reported for each individual
segment.
262
FINANCIAL STATEMENTS
263
ANNUAL REPORT 2020
c) RECONCILIATIONS OF REPORTABLE
SEGMENT REVENUES AND GROSS PROFIT
MLN RUB
2020
2019
RECONCILIATION OF REVENUE
Total revenue for reportable segments
Elimination of inter-segment revenue
CONSOLIDATED REVENUE
97,263
100,143
(18,608)
(15,813)
78,655
84,330
RECONCILIATION OF GROSS PROFIT ADJUSTED FOR PURCHASE
PRICE ALLOCATION FROM ACQUISITION OF LEADER-INVEST TO
PROFIT BEFORE TAX
Total gross profit for reportable segments adjusted for purchase price
allocation from acquisition of Leader-Invest
25,796
22,735
Purchase price allocation from acquisition of Leader-Invest included in cost of
sales
(3,881)
(2,678)
CONSOLIDATED GROSS PROFIT
21,915
20,057
UNALLOCATED AMOUNTS
General and administrative expenses
Selling expenses
(5,235)
(4,560)
(329)
–
(7,280)
(4,822)
(476)
729
(1,573)
(1,724)
2,016
2,991
(7,512)
(7,704)
4,722
1,771
5. OPERATING
SEGMENTS
(CONTINUED)
The transition from the scheme of customer financing to the bank project financing backed
by escrow accounts led to the emergence of significant assets and liabilities that are
attributable only to the reportable segment Residential development and are not attributable
to other segments. Under the circumstances, the Board of Directors elected to focus on
the measures of profit or loss of each reportable segment. Therefore the information about
reportable segments’ assets and liabilities, including the amounts for the year ended 31
December 2019, were excluded from the information about reportable segments.
a) INFORMATION ABOUT REPORTABLE SEGMENTS
RESIDENTIAL
CONSTRUCTION
DEVELOPMENT
SERVICES
OTHER
TOTAL
2020
2019
2020
2019
2020
2019
2020
2019
70,476
73,484
3,137
5,611
5,042
5,235
78,655
84,330
MLN RUB
External revenues
INCLUDING:
St. Petersburg metropolitan area
Moscow metropolitan area
30,649
32,463
39,827
41,021
INTER-SEGMENT REVENUE
–
–
16,459
15,187
2,149
626
18,608
15,813
TOTAL SEGMENT REVENUE
70,476
73,484
19,596
20,798
7,191
5,861
97,263
100,143
Etalon without Leader-Invest
51,801
62,609
19,422
20,798
6,693
5,538
77,916
88,945
Impairment loss on trade and other receivables
Leader-Invest sub-group
18,675
10,875
174
–
498
323
19,347
11,198
GROSS PROFIT ADJUSTED FOR PURCHASE PRICE
ALLOCATION FROM ACQUISITION OF LEADER-INVEST
24,987
22,420
251
110
558
205
25,796
22,735
Gross profit adjusted for purchase price allocation from
acquisition of Leader-Invest, %
35 %
31 %
Gain from bargain purchase
Other expenses, net
Finance income and interest revenue
Finance costs
CONSOLIDATED PROFIT BEFORE INCOME TAX
GROSS PROFIT
INCLUDING:
St. Petersburg metropolitan area
Moscow metropolitan area
GROSS PROFIT, %
INCLUDING:
St. Petersburg metropolitan area
Moscow metropolitan area
21,127
19,742
251
110
537
205
21,915
20,057
8,556
7,571
12,571
12,171
30 %
27 %
28 %
32 %
23 %
30 %
b) GEOGRAPHICAL INFORMATION
In presenting information on the basis of geographical information, revenue is based on the
geographical location of properties. Non-current assets exclude financial instruments and
deferred tax assets.
MLN RUB
2020
2019
2020
2019
REVENUES
NON-CURRENT ASSETS
St. Petersburg metropolitan area
Moscow metropolitan area
37,679
40,976
40,640
43,690
78,655
84,330
2,982
1,217
4,199
3,190
1,436
4,626
264
FINANCIAL STATEMENTS
265
ANNUAL REPORT 2020
6. REVENUE
MLN RUB
Sale of flats – transferred at a point in time
Sale of flats – transferred over time
Sale of built-in commercial premises – transferred at a point in time
Sale of built-in commercial premises – transferred over time
Sale of parking places – transferred at a point in time
Sale of parking places – transferred over time
2020
2019
13,781
14,032
48,077
48,524
1,973
2,815
2,199
1,631
3,033
2,833
3,521
1,541
TOTAL REVENUE – SEGMENT RESIDENTIAL DEVELOPMENT (note 5 (a))
70,476
73,484
Long term construction contracts – transferred over time
Short term construction services – transferred at a point in time
TOTAL REVENUE OF SEGMENT CONSTRUCTION SERVICES (note 5 (a))
Sale of construction materials – transferred at a point in time
Sale of stand-alone commercial premises – transferred over time
Other revenue – transferred over time
TOTAL OTHER REVENUE (note 5 (a))
2,368
769
3,137
2,429
122
1,807
4,358
4,922
689
5,611
2,675
–
1,695
4,370
TOTAL REVENUES FROM CONTRACTS WITH CUSTOMERS
77,971
83,465
Rental revenue (note 5 (a))
TOTAL REVENUES
684
865
78,655
84,330
CONTRACT BALANCES
The following table provides information about receivables, contract assets and contract
liabilities from contracts with customers
MLN RUB
Trade receivables
Contract assets
Contract liabilities
2020
2019
10,413
12,073
7,138
2,463
(28,351)
(36,439)
Contract assets primarily relate to the Group’s rights to consideration for work completed
but not billed at the reporting date on sale of flats and built-in commercial premises under
share participation agreements and for long-term construction contracts. Contract assets
are transferred to trade receivables when the rights become unconditional.
Payment terms for contracts on the sale of flats and built-in commercial premises under
share participation agreements usually include advance payments, payments in installments
until the date of completion of construction and for specific projects – payment in arrears of
2 to 5 years after the date of completion of construction.
Contract liabilities include advance consideration received from customers.
The explanation of significant changes in contract asset and contract liability balances
during the reporting period is presented in the table below.
MLN RUB
BALANCE AT 1 JANUARY
Revenue recognised in the reporting year that was included in the contract liability balance at the
beginning of the year
2020
2019
CONTRACT
CONTRACT
CONTRACT
CONTRACT
ASSETS
LIABILITIES
ASSETS
LIABILITIES
2,463
(36,439)
1,244
(27,149)
–
33,524
–
28,984
Increases due to cash received, excluding amounts recognized as revenue during the year
–
(24,037)
–
(28,590)
Acquisition through business combination
–
–
134
(7,065)
Transfers from contract assets recognised at the beginning of the year to receivables
(1,552)
–
(1,037)
–
Increase as a result of changes in the measure of progress
6,077
–
2,049
–
Financing component under IFRS 15
BALANCE AT 31 DECEMBER
CHANGE DURING THE YEAR
150
(1,399)
73
(2,619)
7,138
(28,351)
2,463
(36,439)
4,675
8,088
1,219
(9,290)
The following table includes revenue expected to be recognised in the future related to
performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.
31 DECEMBER 2020
2021
2022
2023
TOTAL
MLN RUB
Residential development
28,867
9,270
691
38,828
Construction services
569
–
–
569
Construction of stand-alone commercial
premises
2,591
1,931
–
4,522
TOTAL
32,027
11,201
691
43,919
31 DECEMBER 2019
2020
2021
2022
2023
TOTAL
MLN RUB
Residential development
23,294
5,434
869
98
29,695
Construction services
2,313
–
–
–
2,313
TOTAL
25,607
5,434
869
98
32,008
The Group applies a practical expedient included in par. 121 of IFRS 15 and does not
disclose information about its remaining performance obligations for contracts that have an
original expected duration of one year or less.
266
FINANCIAL STATEMENTS
267
ANNUAL REPORT 2020
7. GENERAL AND
ADMINISTRATIVE
EXPENSES
MLN RUB
Payroll and related taxes
Services
Other taxes
Audit and consulting services
Depreciation
Bank fees and commissions
Repair and maintenance
Materials
Other
TOTAL
2020
2019
3,224
4,825
655
244
237
227
111
75
50
412
460
521
429
218
156
102
73
496
5,235
7,280
Remuneration of the statutory audit firm for the year ended 31 December 2020 amounted to
RUB 7.7 million for audit services (2019: RUB 5.9 million) and RUB 0.9 million for other assurance
services (2019: RUB 3 million). Remuneration of other members of the statutory auditors’ network
for the year ended 31 December 2020 amounted to RUB 4.7 million for audit services (2019:
RUB 4.7 million) and RUB 0.8 million for other assurance services (2019: RUB 7.9 million).
8. OTHER
EXPENSES, NET
MLN RUB
2020
2019
OTHER INCOME
Fees and penalties received
Gain on disposal of investment property
Gain on disposal of property, plant and equipment
Reversal of impairment of an investment in an associate
Gain on disposal of subsidiary
OTHER INCOME
OTHER EXPENSES
Impairment loss on inventories (note 17)
Other taxes
Loss on disposal of inventories under construction and development
Fees and penalties incurred
Cost of social infrastructure for completed projects
Сontingent consideration for acquisition of Leader-Invest
Charity
Other expenses
OTHER EXPENSES, NET
220
103
51
38
–
151
563
(676)
(265)
(200)
(67)
(178)
(143)
(38)
(569)
153
13
274
–
87
74
601
(1,287)
(493)
–
(231)
(125)
–
(29)
(160)
(2,136)
(2,325)
(1,573)
(1,724)
9. PERSONNEL
COSTS
MLN RUB
Wages and salaries
Social security contributions
2020
2019
7,121
1,567
8,688
8,030
1,729
9,759
Remuneration to employees in respect of services rendered during the year is recognised
on an undiscounted basis as an expense in the consolidated statement of profit or loss and
other comprehensive income as the related service is provided. A liability is recognised for
the amount expected to be paid under short-term cash bonus or other profit-sharing plans
if the Group has a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee, and the obligation can be estimated reliably.
The Group pays fixed contributions to Russia’s State pension fund and has no legal or
constructive obligation to pay further amounts.
During the year ended 31 December 2020, personnel costs and related taxes included
in cost of production amounted to RUB 4,480 million (year ended 31 December 2019:
RUB 4,032 million). The remaining part of personnel expenses was subsumed within general
and administrative expenses and selling expenses in the total amount of RUB 4,208 million
(year ended 31 December 2019: RUB 5,727 million).
The average number of staff employed by the Group during the year ended 31 December
2020 was 4,671 employees (year ended 31 December 2019: 4,821 employees).
10. SHARE-
BASED PAYMENT
ARRANGEMENTS
SHARE OPTION PROGRAMME (EQUITY-SETTLED)
On 8 June 2018, the Company granted awards in the form 5,550,000 GDRs of the Company’s
ordinary shares under the Company’s management incentive plan to senior management
team employees and executive directors. There were no vesting conditions in the share
based payment, but a restriction (lock up period) of 7 years, during which the participants
were not entitled to sell, transfer or otherwise dispose any respective GDRs received from the
Group, unless such sale, transfer or disposal has been approved by the Group.
Following the share based payment dated 8 June 2018, the Group has no share-based
payment arrangements in place.
As of the date these consolidated financial statements have been authorised for issue,
senior management team employee currently employed by the Group, continues holding the
granted GDRs.
268
FINANCIAL STATEMENTS
269
ANNUAL REPORT 2020
12. INCOME TAX
EXPENSE
The Company’s applicable tax rate under the Cyprus Income Tax Law is 12.5 %. The Cypriot
subsidiaries’ applicable tax rate is 12.5 %. For the Russian companies of the Group the
applicable income tax rate is 20 % (year ended 31 December 2019: 20 %).
MLN RUB
2020
2019
CURRENT TAX EXPENSE
Current year
(Over)/under-provided in prior year
DEFERRED TAX EXPENSE
Origination and reversal of temporary differences
INCOME TAX EXPENSE
3,991
3,390
(4)
9
3,987
3,399
(1,301)
(1,814)
2,686
1,585
Reconciliation between tax expense and the product of accounting profit multiplied by the
applicable tax rate 20 %:
MLN RUB
Profit before income tax
Theoretical income tax at statutory rate of 20 %
ADJUSTMENTS DUE TO:
(Over)/under-provided in prior year
Tax losses for which no deferred tax asset was recognised
Write-off of previously recognised deferred tax assets
Tax effect of dividends from Russian subsidiaries
Expenses not deductible and income not taxable for tax purposes, net
INCOME TAX EXPENSE
2020
2019
4,722
944
(4)
84
273
233
1,156
2,686
1,771
354
9
–
–
115
1,107
1,585
11. FINANCE
INCOME AND
FINANCE COSTS
MLN RUB
2020
2019
RECOGNISED IN PROFIT OR LOSS
FINANCE INCOME
Interest income under the effective interest method on:
- Cash and cash equivalents (except bank deposits)
- Unwinding of discount on trade receivables
- Bank deposits – at amortised cost
- Interest income – financing component under IFRS 15
518
634
585
150
1,358
705
736
73
TOTAL INTEREST INCOME ARISING FROM FINANCIAL ASSETS
MEASURED AT AMORTISED COST
1,887
2,872
Gain on write-off of accounts payable
Impairment (loss)/reversal on investments
Net foreign exchange gain
FINANCE INCOME – OTHER
FINANCE COSTS
Financial liabilities measured at amortised cost:
- Interest expenses- financing component under IFRS 15
- Interest expenses – borrowing costs
- Interest expense on leases
- Unwinding of discount on other payables
Impairment loss on advances paid to suppliers
Other finance costs
Net foreign exchange loss
FINANCE COSTS
NET FINANCE COSTS RECOGNISED IN PROFIT OR LOSS
105
(12)
36
129
(1,399)
(4,924)
(167)
(915)
(9)
(98)
–
(7,512)
(5,496)
111
8
–
119
(2,619)
(4,387)
(233)
(171)
(102)
(20)
(172)
(7,704)
(4,713)
In addition to interest expense recognised in the consolidated statement of profit or loss
and other comprehensive income, the following amounts of borrowing costs and significant
financing component have been capitalised into the cost of real estate properties under
construction and development (revenue for which is not recognised over time):
MLN RUB
2020
2019
Borrowing costs and significant financing component capitalised during the year
274
397
Weighted average capitalisation rate
14,86 %
14,86 %
During the year ended 31 December 2020, borrowing costs and significant financing
component that have been capitalised into the cost of real estate properties under
construction and development (revenue for which was not recognised over time) in the
amount of RUB 212 million (year ended 31 December 2019: RUB 1,164 million), were
included into the cost of sales upon construction and sale of those properties—including
borrowing costs in the amount of RUB 116 million (year ended 31 December 2019:
RUB 808 million) and significant financing component in the amount of RUB 96 million (year
ended 31 December 2019: RUB 356 million).
270
FINANCIAL STATEMENTS
271
ANNUAL REPORT 2020
13. PROPERTY,
PLANT AND
EQUIPMENT
During the year ended 31 December 2020, depreciation expense of RUB 239 million (year
ended 31 December 2019: RUB 281 million) has been charged to cost of sales, RUB 13
million (year ended 31 December 2019: RUB 16 million) to cost of real estate properties
under construction and development, RUB 28 million to other expenses, net (year ended
31 December 2019: RUB 12 million) and RUB 179 million (year ended 31 December 2019:
RUB 218 million) to general and administrative expenses.
MLN RUB
COST
BUILDINGS
MACHINERY
CONSTRUCTION
AND CONSTRUCTIONS
AND EQUIPMENT
VEHICLES
OTHER
L AND
IN PROGRESS
TOTAL
Balance at 1 January 2019
2,344
2,537
133
270
121
210
5,615
Additions
Acquisition through business combination
Disposals
Transfers
319
372
(188)
81
66
6
27
–
64
20
(130)
(42)
(39)
3
–
14
–
–
(1)
–
154
5
(2)
(98)
630
403
(402)
–
BALANCE AT 31 DECEMBER 2019
2,928
2,482
118
329
120
269
6,246
Balance at 1 January 2020
Additions
Disposals
Transfers
BALANCE AT 31 DECEMBER 2020
DEPRECIATION AND IMPAIRMENT LOSSES
Balance at 1 January 2019
Depreciation for the year
Disposals
Balance at 31 December 2019
Balance at 1 January 2020
Depreciation for the year
Disposals
BALANCE AT 31 DECEMBER 2020
CARRYING AMOUNTS
Balance at 1 January 2019
Balance at 31 December 2019
Balance at 1 January 2020
Balance at 31 December 2020
2,928
144
(215)
70
2,927
(378)
(287)
105
(560)
(560)
(232)
182
(610)
1,966
2,368
2,368
2,317
2,482
118
329
120
269
6,246
90
5
83
(113)
(12)
(33)
–
–
69
–
(3)
–
143
465
–
(376)
(139)
–
2,459
111
448
117
273
6,335
(1,788)
(159)
(91)
(18)
(163)
(61)
94
36
25
(1,853)
(1,853)
(140)
101
(73)
(73)
(16)
(199)
(199)
(69)
10
22
(1,892)
(79)
(246)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,420)
(525)
260
(2,685)
(2,685)
(457)
315
(2,827)
749
629
629
567
42
45
45
32
107
121
210
3,195
130
120
269
3,561
130
120
269
3,561
202
117
273
3,508
14. INVESTMENT
PROPERTY
MLN RUB
COST
Balance at 1 January
Acquisition through business combination
Additions
Disposals
BALANCE AT 31 DECEMBER
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Balance at 1 January
Depreciation for the period
Disposals
BALANCE AT 31 DECEMBER
2020
2019
1,375
–
–
(358)
1,017
(310)
(37)
21
(326)
587
838
15
(65)
1,375
(281)
(31)
2
(310)
Carrying amount at 1 January
CARRYING AMOUNT AT 31 DECEMBER
1,065
306
691
1,065
The Group’s investment properties represent various commercial property. The Group
accounts for investment properties at cost less accumulated depreciation and impairment
losses.
As at 31 December 2020, the fair value of investment property amounted to
RUB 1,027 million (31 December 2019: RUB 1,289 million), which was determined based
on discounted cash flows from the use of the property. Fair value estimate represents level
3 of the fair value hierarchy. The Group did not identify any indicators of impairment as at 31
December 2020 and 31 December 2019, and did not recognise any impairment losses for
investment property during the year ended 31 December 2020 and 2019.
272
FINANCIAL STATEMENTS
273
ANNUAL REPORT 2020
15. OTHER
LONG-TERM
INVESTMENTS
MLN RUB
2020
2019
b) UNRECOGNISED DEFERRED TAX LIABILITY
Loans – at amortised cost
Investment in associate
Bank promissory notes – at amortised cost
Loss allowance for loans given
Loss allowance for promissory notes
321
124
3
448
(24)
–
424
106
–
96
202
(11)
(1)
190
As at 31 December 2020, bank promissory note in the amount of RUB 3 million (31
December 2019: nil) was pledged as security for secured bank loan, see note 23.
The Group’s exposure to credit, currency and interest rate risks related to other investments
is disclosed in note 26.
16. DEFERRED
TAX ASSETS AND
LIABILITIES
a) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
MLN RUB
Property, plant and equipment
Investments
Inventories
Contract assets and trade and other receivables
Deferred expenses
Loans and borrowings
Provisions
Contract liabilities and trade and other payables
Tax loss carry-forwards
OTHER
Tax assets/(liabilities)
SET OFF OF TAX
2020
178
169
9,269
1,750
19
52
141
5,285
1,295
155
ASSETS
LIABILITIES
2019
2020
2019
288
26
6,541
698
483
53
614
(255)
(28)
(3,522)
(4,034)
(1,051)
(73)
(5,179)
(3,605)
–
(729)
(130)
(95)
(29)
(37)
2020
(77)
141
5,747
(2,284)
19
(78)
46
NET
2019
(763)
(47)
1,362
(2,907)
(246)
24
577
1,483
(11,146)
(2,706)
(5,861)
(1,223)
845
78
–
(341)
(1)
(241)
1,295
(186)
844
(163)
18,313
11,109
(19,551)
(13,651)
(1,238)
(2,542)
(11,621)
(7,188)
11,621
7,188
–
–
NET TAX ASSETS/(LIABILITIES)
6,692
3,921
(7,930)
(6,463)
(1,238)
(2,542)
At 31 December 2020, a deferred tax liability arising on temporary differences of
RUB 70,777 million (31 December 2019: RUB 66,132 million) related to investments in
subsidiaries was not recognized because the Company controls whether the liability will be
incurred and it is satisfied that it will not be incurred in the foreseeable future.
c) MOVEMENT IN TEMPORARY DIFFERENCES DURING THE
PERIOD
MLN RUB
Property, plant and equipment
Investments
Inventories
Contract assets and trade and other receivables
Deferred expenses
Loans and borrowings
Provisions
Contract liabilities and trade and other payables
Tax loss carry-forwards
Other
1 JANUARY
RECOGNISED
2020
IN PROFIT OR LOSS
(763)
(47)
1,362
(2,907)
(246)
24
577
(1,223)
844
(163)
(2,542)
685
188
4,385
623
265
(102)
(531)
(4,638)
451
(25)
1,301
31 DECEMBER
2020
(77)
141
5,747
(2,284)
19
(78)
46
(5,861)
1,295
(186)
(1,238)
1 JANUARY
RECOGNISED
THROUGH BUSINESS
31 DECEMBER
ACQUISITION
MLN RUB
2019
IN PROFIT OR LOSS
COMBINATION
Property, plant and equipment
Investments
Inventories
Contract assets and trade and other receivables
Deferred expenses
Loans and borrowings
Provisions
Contract liabilities and trade and other payables
Tax loss carry-forwards
Other
(692)
(28)
3,909
(4,915)
(330)
20
362
2,898
73
(90)
1,207
16
(2)
2,623
1,837
84
7
109
(3,023)
236
(73)
1,814
2019
(763)
(47)
1,362
(2,907)
(246)
24
577
(87)
(17)
(5,170)
171
–
(3)
106
(1,098)
(1,223)
535
–
844
(163)
(5,563)
(2,542)
274
FINANCIAL STATEMENTS
275
ANNUAL REPORT 2020
17. INVENTORIES
MLN RUB
INVENTORIES UNDER CONSTRUCTION AND DEVELOPMENT
Own flats under construction and development
Built-in commercial premises under construction and development
Parking places under construction and development
2020
2019
81,898
70,831
14,453
8,526
8,406
8,394
104,877
87,631
• Discount rates—11,5 % – 25 % per annum, a rate within this range was used, depending
on year of recognition of land component and stage of the project.
Project 2, year ended 31 December 2015
The fair value of the investments rights acquired equal to RUB 4,522 million.
The following key assumptions were used by the appraiser:
Less: Allowance for inventories under construction and development
(2,698)
(2,361)
• Cash flows were projected based on the business plans for construction of residential
TOTAL INVENTORIES UNDER CONSTRUCTION AND DEVELOPMENT
102,179
85,270
INVENTORIES – FINISHED GOODS
Own flats
Built-in commercial premises
Parking places
Less: Allowance for inventories – finished goods
TOTAL INVENTORIES – FINISHED GOODS
OTHER INVENTORIES
Construction materials
Other
Less: Allowance for other inventories
TOTAL OTHER INVENTORIES
TOTAL
a) BARTER TRANSACTIONS
4,684
2,426
5,993
7,157
2,563
5,495
13,103
15,215
(1,812)
(1,466)
11,291
13,749
1,297
700
1,997
939
760
1,699
(22)
(29)
1,975
1,670
115,445
100,689
During 2013 – 2019, the Group entered into several transactions for the acquisition of
investment rights for land plots in five construction projects, where certain parts of the
acquisition price had to be paid by means of transfer of specified premises constructed on
these land plots. The Group included the land component of these construction projects into
inventories at fair value of the investment rights acquired, while the respective liabilities to the
sellers of land plots (landlords) were recognised within contract liabilities. Such liabilities will
be settled against revenue recognised from transfer of specified premises to these landlords.
The fair values of land plots were determined by independent appraisers based on
discounted cash flows from the construction and sale of properties. The details of
transactions are specified below.
property;
Inflation rates—4,5 %-6,4 % per annum;
•
• Discount rate—23 % per annum.
Project 3, year ended 31 December 2017
The fair value of the investments rights acquired equal to RUB 4,395 million.
The following key assumptions were used by the appraiser:
•
Cash flows were projected based on the business plans for construction of residential
property;
Inflation rates—2,5 %-4 % per annum;
•
• Discount rate—13 % per annum.
Project 4, year ended 31 December 2017
The fair value of the investments rights acquired equal to RUB 1,800 million.
The following key assumptions were used by the appraiser:
• Cash flows were projected based on the business plans for construction of residential
property;
Inflation rates—2,5 %-4 % per annum;
•
• Discount rate—13 % per annum.
Project 5, year ended 31 December 2019
The Group entered into a transaction for the acquisition of investment rights for two land
plots where part of the acquisition price is to be paid by means of transfer of certain
premises that were in the course of construction on the previously acquired land plots.
The fair value of the investments rights acquired equal to RUB 1,193 million was determined
based on discounted cash flows from the construction and sale of properties in previously
acquired land plots.
The following key assumptions were used by the appraiser:
Project 1, years ended 31 December 2013-2016
• Cash flows were projected based on the business plans for construction of residential
The fair value of the investments rights acquired equal to RUB 1,862 million (land plot
acquired in 2013), RUB 3,835 million (land plot acquired in 2014), RUB 3,105 million (land
plot acquired in 2015), RUB 222 million (land plot acquired in 2016).
The following key assumptions were used by the appraiser:
• Cash flows were projected based on the business plans for construction of residential
•
property;
Inflation rates—4,5 %-6,4 % per annum, a rate within this range was used, depending on
year of recognition of land component;
property;
Inflation rates—0,9 % – 1 % per annum;
•
• Discount rate—12,78 % per annum.
Accordingly, at 31 December 2020, the cost of land plots (Project 1) measured as described
above and related to sold premises, was recognised in cost of sales during 2013—2020
in the amount of RUB 8,514 million, while the remaining balance of RUB 260 million is
included into finished goods and RUB 250 million – into inventories under construction and
development.
276
FINANCIAL STATEMENTS
277
ANNUAL REPORT 2020
17. INVENTORIES
(CONTINUED)
At 31 December 2020, the cost of land plots (Project 2) measured as described above and
related to premises sold under share participation agreements concluded since 1 January
2017, was recognised in cost of sales during the year ended 31 December 2020 in the
amount of RUB 3,712 million, while the remaining balance of RUB 10 million is included in
finished goods and RUB 799 million in inventories under construction and development.
At 31 December 2020, the cost of land plots (Project 3) measured as described above and
related to premises sold under share participation agreements concluded since 1 January
2017, was recognised in cost of sales during the year ended 31 December 2020 in the
amount of RUB 4,132 million, while the remaining balance of RUB 66 million is included in
finished goods and RUB 197 million in inventories under construction and development.
At 31 December 2020, the cost of land plots (Project 4) measured as described above and
related to premises sold under share participation agreements concluded since 1 January
2017, was recognised in cost of sales during the year ended 31 December 2020 in the
amount of RUB 1,770 million, while the remaining balance of RUB 13 million is included in
finished goods and of RUB 17 million in inventories under construction and development.
At 31 December 2020, the cost of land plots (Project 5) measured as described above and
related to premises sold under share participation agreements, was recognised in cost of
sales during the year ended 31 December 2020 in the amount of RUB 396 million, while
the remaining balance of RUB 797 million is included in inventories under construction and
development.
In the course of implementation of several development projects the Group has to construct
and transfer certain social infrastructure to City authorities. As at 31 December 2020,
the cost of such social infrastructure amounts to RUB 1,001 million and is included into
the balance of finished goods and inventories under construction and development (31
December 2019: RUB 1,219 million). These costs are recoverable as part of projects they
relate to. The cost of social infrastructure is recognised in cost of sales consistently with the
transfer to the customers of the apartments to which this social infrastructure relates.
b) ALLOWANCE FOR IMPAIRMENT OF INVENTORIES
The following is movement in the allowance for impairment of inventories:
MLN RUB
Balance at 1 January
Impairment loss on inventories (note 8)
BALANCE AT 31 DECEMBER
2020
2019
3,856
676
2,569
1,287
4,532
3,856
As at 31 December 2020, the net realizable value testing resulted in an amount which was
less than the carrying amount by RUB 4,532 million (31 December 2019: RUB 3,856 million)
and the respective allowance was recognised in other expenses, see note 8. As at 31
December 2020, the allowance of RUB 4,283 million relates to parking places (31 December
2019: RUB 3,414 million).
The balance of parking places is equal to RUB 14,519 million as at 31 December 2020
(31 December 2019: RUB 13,889 million). An impairment allowance was made based on the
following key assumptions:
• Cash flows were projected during the expected period of sales equal to years of turnover
of parking places determined based on historical information on contracts concluded
with customers;
• Discount rate –10,96 % per annum;
•
•
Inflation rates—3,55—4,19 % per annum;
In case there was no historical information on sales of certain parking places, the Group
considered historical information in relation to similar parking places.
Growth of discount rate
Growth of inflation rates
Reduction of turnover of finished goods
Reduction of revenue from uncontracted parking places
Growth of discount rate
Growth of inflation rates
Reduction of turnover of finished goods
Reduction of revenue from uncontracted parking places
The determination of net realizable value for parking places is subject to significant
estimation uncertainty and, as such, the impairment allowance is judgmental. Changes in
the above assumptions – in particular the discount rate and the years of turnover of parking
places – could have a material impact on the impairment allowance amount.
The following table demonstrates changes in key inputs and sensitivity of measurement of
allowance for impairment:
CHANGE OF
IMPACT ON ALLOWANCE
IN MONETARY
PARAMETER
FOR IMPAIRMENT
TERMS (MLN RUB)
31 DECEMBER 2020
2 %
2 %
1
2 %
5 %
-7 %
3 %
2 %
207
(278)
104
83
31 DECEMBER 2019
CHANGE OF
IMPACT ON ALLOWANCE
IN MONETARY
PARAMETER
FOR IMPAIRMENT
TERMS (MLN RUB)
2 %
2 %
1
2 %
5 %
-6 %
4 %
3 %
159
(199)
121
101
c) RENT OUT OF PROPERTY CLASSIFIED AS INVENTORIES—
FINISHED GOODS
The Group has temporarily rented out a part of certain items of property classified
as inventories—finished goods in these consolidated financial statements. As at
31 December 2020, the total carrying value of these items of property was RUB 361 million
(31 December 2019: RUB 327 million). The Group is actively seeking buyers for these
properties.
d) PLEDGES
As at 31 December 2020, inventories with a carrying amount of RUB 16,505 million
(31 December 2019: RUB 7,139 million) are pledged as security for borrowings, see note 23.
e) COST OF ACQUISITION OF CONSTRUCTION PROJECTS (LAND
PLOTS)
The following table summarises cash spent on acquisition of construction projects (land
plots) and related costs incurred during the reporting period.
MLN RUB
2020
2019
Cost of acquisition of rights for land plots during the year
Including fees for changing of the type of permitted use of land plots
Capitalised lease payments for land plots
TOTAL
1,496
539
896
2,392
3,706
805
1,020
4,726
278
FINANCIAL STATEMENTS
279
ANNUAL REPORT 2020
18. CONTRACT
ASSETS, TRADE
AND OTHER
RECEIVABLES
19. SHORT-TERM
INVESTMENTS
The Group’s exposure to credit and currency risks and impairment losses related to trade
and other receivables are disclosed in note 26.
MLN RUB
2020
2019
LONG-TERM TRADE AND OTHER RECEIVABLES
Trade receivables
4,082
4,596
Less: Allowance for doubtful trade accounts receivable
(27)
(57)
LONG-TERM TRADE RECEIVABLES LESS ALLOWANCE
4,055
4,539
Other receivables
Less: Allowance for doubtful other accounts receivable
LONG-TERM OTHER RECEIVABLES LESS ALLOWANCE
Advances paid to suppliers
231
(34)
197
1
164
(11)
153
–
TOTAL LONG-TERM TRADE AND OTHER RECEIVABLES
4,253
4,692
SHORT-TERM TRADE AND OTHER RECEIVABLES
Contract assets
Trade receivables
Less: Allowance for doubtful trade accounts receivable
SHORT-TERM TRADE RECEIVABLES LESS ALLOWANCE
Advances paid to suppliers
Less: Allowance for doubtful advances paid to suppliers
SHORT-TERM ADVANCES PAID TO SUPPLIERS LESS ALLOWANCE
VAT recoverable
Income tax receivable
Financial asset arising from preferential rate on escrow-backed loans
Other taxes receivable
Other receivables due from related parties
OTHER RECEIVABLES
Less: Allowance for doubtful other accounts receivable
Short-term other receivables less allowance
7,138
6,993
(635)
13,496
8,384
(247)
8,137
3,656
1,434
1,053
70
187
2,463
8,134
(690)
9,907
9,988
(238)
9,750
3,231
696
–
73
108
1,521
2,130
(930)
6,991
(752)
5,486
TOTAL SHORT-TERM TRADE AND OTHER RECEIVABLES
28,624
25,143
TOTAL
MLN RUB
Bank promissory notes – at amortised cost
Bank deposits (over 3 months)
Loans – at amortised cost
Loss allowance for loans given
TOTAL
32,877
29,835
2020
2019
91
100
109
300
(88)
212
108
80
146
334
(131)
203
The Group’s exposure to credit, currency and interest rate risks related to other investments
is disclosed in note 26.
20. CASH
AND CASH
EQUIVALENTS
MLN RUB
Cash in banks, in RUB
Cash in banks, in USD
Cash in banks, in EUR
Cash in banks, in GBP
Petty cash
Cash in transit
Short-term deposits (less than 3 months)
TOTAL
2020
2019
10,456
18,423
163
18
2
2
1
89
15
2
2
–
15,188
12,597
25,830
31,128
The Group keeps significant bank balances in major Russian banks with credit ratings
assigned by international rating agencies of BBB-, ВВ+, ВВ, BB-, В+, В, B-, as well as in
foreign bank with credit rating А+.
At 31 December 2020, the most significant amount of cash and cash equivalents held with one
bank totalled RUB 13,707 million (31 December 2019: RUB 10,309 million). At 31 December
2020, the Group had outstanding loans and borrowings with the same bank that held the
most significant amount of cash and cash equivalents in the amount of RUB 28,342 million
(outstanding loans and borrowings with the same bank that held the most significant amount
of cash and cash equivalents at 31 December 2019: nil). The bank has a Standard & Poor’s/
Moody’s credit rating credit rating of BBB-.
At 31 December 2020, short-term deposits bore interest rate ranging from 2.27 % to 4.56 %
per annum (31 December 2019: 3.73 % to 6.7 % per annum).
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and
liabilities are disclosed in note 26.
BANK BALANCES ON ESCROW ACCOUNTS –
SUPPLEMENTARY DISCLOSURE
MLN RUB
2020
2019
Bank balances in escrow accounts
23,572
692
Bank balances kept in escrow accounts are not included in the balance of cash and cash
equivalents in the Group’s consolidated statement of financial position. They represent
funds received by authorized banks from escrow-account holders – participants of
share participation agreements for construction of real estate as a means of payment of
consideration under such agreements. The funds will be transferred to the Group’s bank
accounts upon completion of construction of respective real estate.
The table below demonstrates the movement of funds on escrow accounts during the
reporting period.
MLN RUB
Balance at 1 January
Receipts of funds on escrow accounts
Release of funds from escrow accounts
BALANCE AT 31 DECEMBER
2020
2019
692
22,880
-
23,572
-
692
-
692
280
FINANCIAL STATEMENTS
281
ANNUAL REPORT 2020
During the year ended 31 December 2020, the Company paid dividends in the amount of
RUB 3,527 million (year ended 31 December 2019: RUB 3,577 million).
e) NON-CONTROLLING INTERESTS IN SUBSIDIARIES
On 19 February 2019, the Group acquired a 51 % stake in JSC “Leader-Invest” (note 27).
The non-controlling interest was measured as a 49 %-share of the recognised amounts of
the acquiree’s net identifiable assets and amounted to RUB 15,289 million. On 16 August
2019, the Group acquired the remaining 49 % of the share capital of JSC “Leader-Invest”
for the consideration of RUB 14,600 million, while the carrying amount of the share of net
assets acquired amounted to RUB 14,669 million. The excess of RUB 69 million of the share
of net assets acquired over the consideration transferred was recognised as an increase in
retained earnings.
22. EARNINGS
PER SHARE
The calculation of basic earnings per share is based on the profit attributable to ordinary
shareholders of the Company divided by the weighted average number of ordinary shares
outstanding during the year, as shown below. The Company has no dilutive potential
ordinary shares.
NUMBER OF SHARES UNLESS OTHERWISE STATED
2020
2019
Issued shares at 1 January
294,954,025
294,954,025
Weighted average number of shares for the year ended 31 December
294,954,025
294,954,025
Profit attributable to the owners of the Company, mln RUB
Basic and diluted earnings per share (RUB)
2020
2,036
6.90
2019
795
2.70
21. CAPITAL
AND RESERVES
a) SHARE CAPITAL
The table below summarizes the information about the share capital of the Company.
NUMBER OF SHARES
UNLESS OTHERWISE STATED
ISSUED SHARES
2020
2019
ORDINARY
PREFERENCE
ORDINARY
PREFERENCE
SHARES
SHARES
SHARES
SHARES
Par value at the beginning of the year
0.00005 GBP
1 GBP
0.00005 GBP
1 GBP
On issue at the beginning of the year
294,957,971
20,000
294,957,971
20,000
PAR VALUE AT THE END OF THE YEAR
0.00005 GBP
1 GBP
0.00005 GBP
1 GBP
ON ISSUE AT THE END OF THE YEAR,
FULLY PAID
294,957,971
20,000
294,957,971
20,000
At 31 December 2019 and at 31 December 2020, the number of authorised and issued
shares was 294.957.971. All issued ordinary shares are fully paid.
The holders of ordinary shares are entitled to receive dividends and to one vote per share at
meetings of the Company.
b) SHARE PREMIUM
The Company’s share premium account originated from the initial public offering
of 71,428,571 ordinary shares at a value USD 7 each in form of global depository
receipts (GDR’s) on the London Stock Exchange on 4 April 2011, and from issuance of
117,647 ordinary £0.01 shares for a consideration of USD 82,352,900 in March 2008.
c) RESERVE FOR OWN SHARES
During 2011-2017, the Company acquired 8,216,378 GDRs (Global Depositary Receipts) for
own shares under the GDRs repurchase programme.
During the year ended 31 December 2018, the Group transferred 8,212,432 shares to certain
members of its key management personnel as part of their remuneration, see note 10. As at
31 December 2020 and 31 December 2019, the total number of own shares acquired by the
Group amounted to 3,946 shares or 0.001 % of issued share capital.
The consideration paid for own shares, including directly attributable costs, net of any tax
effects, is recognised as a deduction from equity. When own shares are sold or reissued
subsequently, the amount received is recognised as an increase in equity, and the resulting
surplus or deficit on the transaction is transferred to/from retained earnings.
GDR BUYBACK PROGRAMME
On 24 January 2020, the Board of Directors of the Company authorised a buyback
programme to purchase up to 10 % of the Company’s issued capital in the form of GDR until
14 April 2021. On 22 March 2020, the program was approved by the extraordinary general
meeting of shareholders. As at 31 December 2020, no shares have been purchased.
d) DIVIDENDS
As the majority of the Company’s subsidiaries are incorporated in the Russian Federation,
and in accordance with Russian legislation, the subsidiaries’ distributable reserves are
limited to the balance of retained earnings as recorded in their statutory financial statements
prepared in accordance with Russian Accounting Principles.
282
FINANCIAL STATEMENTS
283
ANNUAL REPORT 2020
23. LOANS AND
BORROWINGS
This note provides information about the contractual terms of the Group’s interest-bearing
loans and borrowings, which are measured at amortised cost. For more information about
the Group’s exposure to interest rate, foreign currency and liquidity risk, see note 26.
MLN RUB
CURRENCY
OF 31 DECEMBER
MATURITY
FACE VALUE
AMOUNT
FACE VALUE
NOMINAL INTEREST RATE AS
YEAR OF
CARRYING
2020
2019
CARRYING
AMOUNT
MLN RUB
2020
2019
SECURED BANK LOANS
NON-CURRENT LIABILITIES
Secured bank loans
Secured project financing
Unsecured bank loans
Unsecured bond issues
CURRENT LIABILITIES
Current portion of secured bank loans
Current portion of unsecured bank loans
Current portion of unsecured bond issues
26,571
27,965
4,995
1,375
1,695
–
4,316
9,977
34,636
42,258
2,329
4,988
8,552
2,393
4,438
3,603
15,869
10,434
The reconciliation of movements of liabilities to cash flows arising from financing activities
during the reporting period is presented in the table below.
MLN RUB
Secured bank loans
Secured project financing
Unsecured bank loans
Unsecured bond issues
1 JANUARY
PROCEEDS FROM
REPAYMENT OF
2020
BORROWINGS
BORROWINGS
OTHER
CHANGES
31 DECEMBER
2020
30,358
-
8,754
13,580
52,692
787
5,782
2,122
-
8,691
(2,236)
-
(4,518)
(3,354)
(10,108)
(10)
(787)
5
22
(771)
28,899
4,995
6,363
10,248
50,505
MLN RUB
2019
BORROWINGS
BORROWINGS
CHANGES
(NOTE 27)
2019
1 JANUARY
PROCEEDS FROM
REPAYMENT OF
OTHER
SUBSIDIARIES
31 DECEMBER
Secured bank loans
Unsecured bank loans
Unsecured bond issues
1,622
9,298
9,992
20,912
30,048
284
-
30,332
(1,313)
(1,469)
(1,650)
(4,432)
(220)
25
(78)
(273)
221
616
5,316
6,153
30,358
8,754
13,580
52,692
CHANGES FROM
ACQUISITION OF
During the year ended 31 December 2020, the Group received new credit line facilities to
finance construction of residential buildings with variable interest rates adjusted based
on the volume of escrow accounts balances (designated as “Project financing” in these
consolidated financial statements). The loans’ rates have two components: the base rate and
the preferential rate applied to debt covered by escrow account balances. In case of excess
of balances on escrow accounts over outstanding loans, the rate is capped depending on
the amount of the excess.
Secured bank loan
Secured bank loan
Secured project financing
Secured project financing
Secured bank loan
Secured bank loan
Secured project financing
Secured project financing
Secured bank loan
UNSECURED BANK LOANS
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
UNSECURED BOND ISSUES
Unsecured bonds
Unsecured bonds
Unsecured bonds
Unsecured bonds
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
CBR’s key rate + 3 %
CBR’s key rate + 2,35 %
0,01 % – 9,5 %
0,01 %-7,1 %
CBR’s key rate + 3,5 %
10,00 %
0,01 %-7,1 %
0,01-9 %
10,50 %
7,15 %
9,25 %
CBR’s key rate + 1 %
4,25 – 8,9 %
8,75 %
4,25 – 8,7 %
CBR’s key rate + 1,75 %
4,25 % – 9,70 %
CBR’s key rate + 1,75 %
4,50 % – 9,00 %
8,30 %
11,70 %
8,95 %
11,85 %
7,95 %
2027
2024
2025
2024
2022
2020
2024
2022
2023
2022
2022
2021
2021
2021
2022
2021
2021
2021
2020
2020
2021
2022
2021
2020
35,023
33,896
30,658
30,358
14,642
14,522
14,642
14,566
13,700
13,529
15,224
15,000
3,402
1,539
482
–
440
445
373
2,814
1,372
482
–
407
404
366
–
–
460
332
–
–
–
–
–
460
332
–
–
–
6,371
6,363
8,754
8,754
2,124
2,124
827
482
751
501
501
500
435
250
–
–
819
482
751
501
501
500
435
250
–
–
–
902
740
–
902
740
1,502
1,502
501
501
500
1,458
250
1,200
1,200
501
501
500
1,458
250
1,200
1,200
10,289
10,246
13,652
13,580
5,215
3,919
1,155
–
5,181
3,911
1,154
–
5,213
5,022
3,363
54
5,166
5,005
3,355
54
51,683
50,505
53,064
52,692
284
FINANCIAL STATEMENTS
285
ANNUAL REPORT 2020
23. LOANS AND
BORROWINGS
(CONTINUED)
As of 31 December 2020, the weighted average interest rate on current credit portfolio
amounted to 8,31 % p.a. (31 December 2019: 9,47 % p.a.).
24. PROVISIONS
Bank loans are secured by:
•
inventories with a carrying amount of RUB 16,505 million (31 December 2019:
RUB 7,139 million), see note 17;
• pledge of bank promissory note in the amount of RUB 3 million (31 December 2019: nil),
note 15;
• pledge of 48 % of shares in subsidiary company JSC “Zatonskoe” which represents
RUB 2,866 million in its net assets 1 (31 December 2019: 68 % of shares represents
RUB 4,198 million in net assets);
• pledge of 100 % of shares in subsidiary company LLC “Specialized Developer
“LS-Rielty” which represents RUB 4,151 million in its net assets 1 (31 December 2019:
RUB RUB 2,259 million in net assets);
• pledge of 100 % shares of JSC “Leader-Invest” and 100 % of other 45 subsidiary
companies of JSC “Leader-Invest” which collectively represent RUB 43,927 million in net
assets 1 (31 December 2019: RUB 36,059 million in net assets);
• pledge of 100 % shares of JSC “Etalon LenSpetsSMU”, LLC “ZhK Moskovskiy” and LLC
“Zolotaya Zvezda”, which collectively represent RUB 45,994 million in net assets 1 (31
December 2019: RUB 46,695 million in net assets);
• pledge of 98,3 % shares of LLC “Specialized Developer “Serebryaniy Fontan” which
represents RUB 3,487 million in its net assets.
The bank loans are subject to certain restrictive covenants. Financial covenants are based
on the individual financial statements of certain entities of the Group, as well as on the
consolidated financial statements of the Group. Operating covenants prescribe certain legal
actions to be executed by the Group or the level of operations to be maintained with a bank.
Except as described further, there has been no breach of any of the financial covenants
during the reporting period. However, at the end of the year, the Group breached operating
covenants on several loans. The Group obtained waivers from the banks, and the obligations
were not transferred to current liabilities.
MLN RUB
WARRANTY
PROVISION FOR
FOR ONEROUS
PROVISION
DEFERRED WORKS
CONTRACTS
LITIGATIONS
AND CL AIMS
TOTAL
PROVISION
PROVISION FOR
Balance at 1 January 2019
121
909
52
–
1,082
Provisions made during the year
48
403
–
93
544
Assumed through business combination
–
47
–
95
142
Provisions used during the year
(53)
(822)
–
(54)
Provision reversed during the year
–
(30)
(4)
(929)
(34)
BALANCE AT 31 DECEMBER 2019
116
507
48
134
805
Balance at 1 January 2020
116
507
48
134
805
Provisions made during the year
173
1,825
–
5
2,003
Provisions used during the year
(54)
(1,905)
–
(52)
Provision reversed during the year
(106)
(58)
(23)
(83)
(2,011)
(270)
BALANCE AT 31 DECEMBER 2020
129
369
25
4
527
Non-current
Current
129
–
–
–
129
–
369
25
4
398
129
369
25
4
527
a) WARRANTIES
The provision for warranties relates mainly to the residential units sold during the year. The
provision is based on estimates made from historical experience from the sale of such units.
The Group expects the expenses to be incurred over the next three years on average. The
warranty provision relates to construction works done.
b) PROVISION FOR DEFERRED WORKS
The Group records provisions in respect of the Group’s obligation to incur additional costs
associated with landscaping and other works after finishing the construction of apartment
buildings. The provision is estimated based on historical experience. The Group expects the
expenses to be incurred over the next year.
1 *net assets are based on individual IFRS accounts of the relevant companies.
286
FINANCIAL STATEMENTS
287
ANNUAL REPORT 2020
25. CONTRACT
LIABILITIES,
TRADE AND
OTHER PAYABLES
MLN RUB
LONG-TERM
Trade payables
Lease liabilities
Other payables
SHORT-TERM
Contract liabilities
Trade payables
VAT payable
Payroll liabilities
Income tax payable
Other taxes payable
Lease liabilities
Other payables
TOTAL
2020
2019
25,695
1,462
998
1,365
41
400
26,734
3,227
28,351
36,439
6,396
5,382
3,466
3,383
928
183
874
105
302
348
864
673
9,260
8,377
49,750
55,581
76,484
58,808
Long-term trade payables mainly consist of an obligation equal to RUB 25,245 million
(31 December 2019: nil) for acquisition of 88 % of share capital of LLC “Specialized
Developer “ZIL-YUG” (an entity owning the land plot in the Moscow metropolitan area),
payable in 2022-2024. In addition, the short-term part of the obligation in the amount of
RUB 2,265 million (31 December 2019: nil) is included into short-term trade payables. The
carrying amounts of these payable were calculated by discounting the consideration of
RUB 32,200 million payable in 2021-2024 described in the note 30 (b) to reflect the time
value of money.
Short-term other payables mainly consist of an obligation equal to RUB 6,847 million (31
December 2019: RUB 6,394 million) to construct social infrastructure objects and a liability
of RUB 1,928 million (31 December 2019: RUB 1,096 million) to the City authorities for
change of intended use of land plot recognised as part of inventories.
Contract liabilities include advances from customers in the amount of RUB 1,777 million
which will be satisfied after 12 months from the reporting date (31 December 2019:
RUB 2,563 million). They are classified within short-term liabilities as the development cycle
of construction projects exceeds one year.
The Group’s exposure to currency and liquidity risk related to trade and other payables is
disclosed in note 26.
26. FINANCIAL
INSTRUMENTS
AND RISK
MANAGEMENT
a) ACCOUNTING CLASSIFICATIONS AND FAIR VALUES
The following table shows the carrying amounts and fair values of financial assets and
financial liabilities, including their levels in the fair value hierarchy.
The Group uses the following hierarchy for determining and disclosing the fair value of
financial instruments:
Level 1 inputs
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2 inputs
Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3 inputs
Level 3 inputs are unobservable inputs for the asset or liability.
31 DECEMBER 2020
MLN RUB
CARRYING AMOUNT
FAIR VALUE
AT AMORTISED COST
TOTAL
LEVEL 1
LEVEL 2
TOTAL
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
Loans and receivables (excluding taxes receivable and advances paid to suppliers)
14,194
14,194
Bank deposits (over 3 months)
Bank promissory notes
Cash and cash equivalents
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
Secured bank loans
Secured project financing
Unsecured bank loans
Unsecured bond issues
Trade and other payables
31 DECEMBER 2019
MLN RUB
Bank deposits (over 3 months)
Bank promissory notes
Cash and cash equivalents
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
Secured bank loans
Unsecured bank loans
Unsecured bond issues
Trade and other payables
100
100
94
94
–
–
–
13,846
13,846
100
100
93
93
25,830
25,830
25,830
–
25,830
40,218
40,218
25,830
14,039
39,869
(28,899)
(28,899)
–
(30,438)
(30,438)
(4,997)
(4,997)
(4,592)
(4,592)
(6,363)
(6,363)
–
(6,526)
(6,526)
(10,246)
(10,246)
(10,147)
–
(10,147)
(44,175)
(44,175)
–
(37,179)
(37,179)
(94,680)
(94,680)
(10,147)
(78,735)
(88,882)
CARRYING AMOUNT
FAIR VALUE
AT AMORTISED COST
TOTAL
LEVEL 1
LEVEL 2
TOTAL
80
80
203
203
–
–
–
13,272
13,272
80
80
231
231
31,128
31,128
31,128
–
31,128
45,144
45,144
31,128
13,583
44,711
(30,358)
(30,358)
–
(31,233)
(31,233)
(8,754)
(8,754)
–
(8,805)
(8,805)
(13,580)
(13,580)
(15,066)
–
(15,066)
(18,533)
(18,533)
–
(17,497)
(17,497)
(71,225)
(71,225)
(15,066)
(57,535)
(72,601)
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
Loans and receivables (excluding taxes receivable and advances paid to suppliers)
13,733
13,733
288
FINANCIAL STATEMENTS
289
ANNUAL REPORT 2020
26. FINANCIAL
INSTRUMENTS
AND RISK
MANAGEMENT
(CONTINUED)
Fair values of financial assets and financial liabilities were determined by quantitative
maturity analysis of contractual cash flows according to remaining contractual maturities,
discounted using the following Central Bank of Russia rates:
Receivables (excluding taxes receivable
and advances paid to suppliers)
Weighted average rate on mortgages
issued during the year
7,36 %
9,56 %
DISCOUNTING FACTOR
2020
2019
Loans given
Unsecured loans and bond issued, and
trade and other payables
Bank promissory notes
Weighted average interest rates on
loans to non-financial organizations
Weighted average interest rate
on deposits of non-financial
organizations
6,88 %
8,33 %
6,88 %
8,33 %
4,30 %
5,87 %
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
•
liquidity risk;
• market risk.
This note presents information about the Group’s exposure to each of the above risks,
the Group’s objectives, policies and processes for measuring and managing risk, and the
Group’s management of capital. Further quantitative disclosures are included throughout
these consolidated financial statements.
Risk management framework
The Group’s risk management policies are established to identify and analyse the risks
faced by the Group, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group’s activities. The Group, through its training
and management standards and procedures, has developed a disciplined and constructive
control environment in which all employees understand their roles and obligations.
b) CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from cash and
cash equivalents, deposits with banks as well as credit exposures to customers, including
outstanding trade and other receivables.
Credit risk with regards to cash and cash equivalents and deposits with banks is managed
by placing funds primarily in the banks listed in note 20.
Credit risk connected with trade receivable arising from the sale of apartments to individuals
is managed by securing those receivables against sold apartments. A significant share of
such sales is made on a prepayment basis.
To manage the credit risk of trade receivables from legal entities the Group has established
a credit policy under which each new customer is analysed individually for creditworthiness
before the Group’s standard payment and delivery terms and conditions are applied.
(i) Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics
of each customer. As at 31 December 2020, receivables from one customer equalled
to RUB 284 million or 2 % of the Group’s consolidated trade and other receivables (31
December 2019: RUB 610 million or 4 %).
(ii) Exposure to credit risk
The carrying amount of financial assets and contract assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was as follows:
MLN RUB
31 DECEMBER 2020
31 DECEMBER 2019
CARRYING AMOUNT
FINANCIAL ASSETS AND CONTRACT ASSETS
Loans and receivables (excluding taxes receivable,
advances paid to suppliers), including contract assets 1
Bank promissory notes
Bank deposits (over 3 months)
Cash and cash equivalents
10,627
7,409
94
100
25,830
36,651
203
80
31,128
38,820
The amount of trade and other receivables including contract assets represents the
maximum exposure to credit risk without taking account of trade receivables covered by
collateral.
The maximum exposure to credit risk for trade receivables at the reporting date by
geographic region was concentrated in the St. Petersburg region.
The maximum exposure to credit risk for trade receivables at the reporting date by type of
customer was concentrated on industrial customers—legal entities included in the segment
“Construction services”.
MATURITY ANALYSIS AND IMPAIRMENT
The ageing of trade receivables at the reporting date was:
GROSS
IMPAIRMENT
GROSS
IMPAIRMENT
MLN RUB
Not past due
Past due 0-30 days
Past due 31-90 days
Past due 91-120 days
Past due more than 120 days
2020
7,650
(7)
10,293
318
395
198
2,514
11,075
–
–
–
(655)
(662)
461
513
60
1,493
(305)
12,820
(747)
2019
(153)
(5)
(275)
(9)
The ageing of loans given at the reporting date was:
MLN RUB
Not past due
Past due 0-30 days
Past due more than 120 days
GROSS
IMPAIRMENT
GROSS
IMPAIRMENT
2020
(24)
–
(88)
(112)
342
–
88
430
120
46
86
252
2019
(10)
(46)
(86)
(142)
1 presented net of receivables arising from the sale of real estate that is secured by a pledge of the sold real estate (see 3(c)(vi)).
290
FINANCIAL STATEMENTS
291
ANNUAL REPORT 2020
26. FINANCIAL
INSTRUMENTS
AND RISK
MANAGEMENT
(CONTINUED)
Allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during
reporting period was as follows:
MLN RUB
Balance at 1 January
Amounts written off
Net remeasurement of loss allowance
BALANCE AT 31 DECEMBER
2020
2019
747
(137)
52
662
719
(89)
117
747
The Group calculates lifetime expected credit losses for trade receivables at an individual
asset and a collective level. All individually significant assets were individually assessed
for impairment. Assets that were not individually significant were collectively assessed for
impairment. Collective assessment was carried out by grouping together assets with similar
risk characteristics.
In assessing collective impairment, the Group used historical information published by
Moody’s Investors Service about the probabilities of default (PD) and losses given default
(LGD) for issuers with different credit ratings and financial instruments with different durations.
To assess the probability of default of individual debtors, the Group assigned to them
credit ratings similar to the classification of Moody’s Investors Service. Speculative ratings
(speculative-grade) were assigned to debtors that do not have official ratings and are not
undergoing bankruptcy procedures. Such counterparties represent a major part of the
Group debtors.
The Group defines a default event when a financial asset is more than 90 days past due.
The Group established an allowance for accounts receivable arising from the sale of real
estate, in accordance with the methodology, described in the note 3(c)(vi).
During the reporting period, there were no changes in the quality of the collateral. There
were no changes in the collateral policies of the Group during the year 2020.
Allowance for impairment in respect of other receivables
The movement in the allowance for impairment in respect of other receivables during the
reporting period was as follows:
MLN RUB
Balance at 1 January
Amounts written off
Net remeasurement of loss allowance
BALANCE AT 31 DECEMBER
2020
2019
763
(72)
273
964
524
(129)
368
763
Allowance for impairment in respect of financial investments (loans given and
promissory notes)
The movement in the allowance for impairment in respect of loans given during the reporting
period was as follows:
MLN RUB
Balance at 1 January
Amounts written off
Net remeasurement of loss allowance
BALANCE AT 31 DECEMBER
2020
2019
143
(43)
12
112
157
(6)
(8)
143
Allowance for impairment of cash and cash equivalents
The Group assessed impairment of cash and cash equivalents on the 12-month expected
loss basis that reflects the short maturities of the exposures. The Group considers that its
cash and cash equivalents have low credit risk based on the external credit ratings of the
counterparties. The Group uses a similar approach for assessment of expected credit losses
for cash and cash equivalents to those used for debt securities.
Allowance for impairment in respect of advances paid to suppliers
During the reporting period, the movement in the allowance for impairment in respect of
advances paid to suppliers, which are outside the scope of IFRS 9, was as follows:
MLN RUB
Balance at 1 January
Amounts written off
Increase during the year
BALANCE AT 31 DECEMBER
2020
2019
238
(68)
77
247
348
(212)
102
238
The Group includes a specific loss component that relates to individually significant
exposures in its allowance for impairment of advances paid to suppliers.
c) LIQUIDITY RISK
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it
will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
Each year the Group prepares a cash flow budget to forecast possible liquidity deficits and
to define the sources of financing of those deficits.
292
FINANCIAL STATEMENTS
293
ANNUAL REPORT 2020
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements. It is not expected that the cash
flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts. However, repayment of secured project financing may occur prior to their
contractual maturities—as soon as construction projects are completed and funds from
escrow accounts are released.
IN RUB
USD 1
EUR 1
AVERAGE RATE
REPORTING DATE SPOT RATE
2020
2019
2020
2019
31 DECEMBER
31 DECEMBER
72.32
82.84
64.62
72.32
73.88
90.68
61.91
69.34
CONTRACTUAL MATURITIES OF FINANCIAL LIABILITIES WERE AS FOLLOWS:
(ii) Interest rate risk
26. FINANCIAL
INSTRUMENTS
AND RISK
MANAGEMENT
(CONTINUED)
31 DECEMBER 2020
MLN RUB
CARRYING
CONTRACTUAL
AMOUNT
CASH FLOWS
0 – 12
MTHS
1-2
YRS
2-3
YRS
3-4
YRS
4-5
YRS
OVER
5 YRS
NON-DERIVATIVE FINANCIAL LIABILITIES
Loans and borrowings
Trade and other payables (excluding taxes payable
and contract liabilities)
50,505
42,313
60,507
18,994
11,779
9,984
11,395
4,358
3,997
42,315
11,810
1,881
9,836
18,569
217
2
Lease liabilities
1,862
1,460
593
366
183
25
26
267
94,680
104,282
31,397
14,026
20,003
29,989
4,601
4,266
31 DECEMBER 2019
MLN RUB
CARRYING
CONTRACTUAL
AMOUNT
CASH FLOWS
0 – 12
MTHS
1-2
YRS
2-3
YRS
3-4
YRS
4-5
YRS
OVER
5 YRS
NON-DERIVATIVE FINANCIAL LIABILITIES
Loans and borrowings
Trade and other payables (excluding taxes payable
and contract liabilities)
52,692
16,495
66,263
14,655
17,164
10,227
9,847
6,864
7,506
16,587
10,155
3,032
1,271
1,217
867
45
Lease liabilities
2,038
2,622
972
806
388
182
20
254
71,225
85,472
25,782
21,002
11,886
11,246
7,751
7,805
d) MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
(i) Currency risk
The Group’s exposure to foreign currency risk is limited. As at 31 December 2020 and
31 December 2019 the Group’s net positions in foreign currency were as follows:
MLN RUB
USD
GBP
EUR
USD
GBP
2020
Cash and cash equivalents (see note 20)
NET EXPOSURE
163
163
2
2
18
18
89
89
2
2
2019
EUR
15
15
The following significant exchange rates applied during the year:
Interest rate risk is the risk that changes in floating interest rates will adversely impact the
financial results of the Group. The Group does not use any derivative instruments to manage
interest rate risk exposure.
PROFILE
At the reporting date the interest rate profile of the Group’s interest-bearing financial
instruments was:
MLN RUB
FIXED RATE INSTRUMENTS
Financial assets
Financial liabilities
VARIABLE RATE INSTRUMENTS
Financial liabilities
CARRYING AMOUNT
2020
2019
19,806
17,598
(22,602)
(22,009)
(2,796)
(4,411)
(29,765)
(31,356)
(29,765)
(31,356)
CASH FLOW SENSITIVITY ANALYSIS FOR VARIABLE RATE INSTRUMENTS
MLN RUB
200 BP INCREASE 100 BP DECREASE
200 BP INCREASE
100 BP DECREASE
PROFIT OR LOSS
EQUITY
31 December 2020
Variable rate instruments
Cash flow sensitivity (net)
31 December 2019
Variable rate instruments
Cash flow sensitivity (net)
(595)
(595)
(627)
(627)
298
298
314
314
(595)
(595)
(627)
(627)
298
298
314
314
FAIR VALUE SENSITIVITY ANALYSIS FOR FIXED RATE INSTRUMENTS
The Group does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss. Therefore a change in interest rates at the reporting date would not
affect profit or loss.
294
FINANCIAL STATEMENTS
295
ANNUAL REPORT 2020
26. FINANCIAL
INSTRUMENTS
AND RISK
MANAGEMENT
(CONTINUED)
e) CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor
and market confidence and to sustain future development of the business. The Group
manages its capital to ensure that entities in the Group will be able to continue as going
concerns while maximising the return to equity holders through the optimisation of the debt
and equity balance. The management of the Group reviews the capital structure on a regular
basis. As part of this review, the management considers the cost of capital and the risks
associated with it.
The capital structure of the Group consists of net debt (total loans and borrowings
offset by cash and bank balances and bank deposits over 3 months) and equity of the
Group (comprising issued capital and retained earnings as detailed in note 21). Certain
subsidiaries of the Group may be subject to externally imposed capital requirements in
accordance with Russian law.
The Group’s debt to capital ratio at the end of the reporting period was as follows:
MLN RUB
Loans and borrowings, note 23
Less: cash and cash equivalents, note 20
2020
2019
50,505
52,692
(25,830)
(31,128)
Less: bank deposits over 3 months, notes 19 and 15
(100)
(80)
NET DEBT
TOTAL EQUITY
Debt to capital ratio at end of period
24,575
21,484
51,073
52,576
0,48
0,41
At 31 December 2020, lease liabilities of RUB 1,888 million (31 December 2019:
RUB 2,038 million) are included in trade and other payables (see notes 25 and 28) and are
not included in the total amount of borrowings.
27. ACQUISITION
OF SUBSIDIARY
On 19 February 2019, the Group acquired 51 % of the shares and voting interests in
JSC “Leader-Invest” from Sistema PJSFC and its affiliates for the cash consideration of
RUB 15,185 million. JSC “Leader-Invest” is a Moscow-based residential developer focusing
on projects in the comfort, business and premium-class segments. As at 19 February 2019,
its portfolio included 31 projects under construction and development or at the design
stage, unsold inventory at twelve completed residential complexes, and commercial real
estate, with a total NSA of 1.3 million square meters.
The primary reason for the acquisition was to increase the Group’s share of the Moscow
residential real estate market and to replenish its land bank.
Consideration transferred
The acquisition-date fair value of the total consideration transferred (cash payment)
amounted to RUB 15,185 million.
Сontingent consideration
The Group has agreed to pay the selling shareholders the Group’s share of dividends
received from Leader-Invest’s affiliate company for three years following the acquisition as
a deferred adjustment to the consideration described above. Due to the uncertainty of the
outcome, the Group did not adjust the cost of combination in these consolidated financial
statements.
During the year ended 31 December 2020, the Group paid out the consideration in the
amount of RUB 143 million, which was recognised within net other expenses.
Acquisition-related costs
The Group incurred acquisition-related costs of RUB 256 million related to external legal
fees and due diligence costs, which have been included in administrative expenses in the
Group’s consolidated statement of profit or loss and other comprehensive income.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities
assumed at the acquisition date.
MLN RUB
NON-CURRENT ASSETS
Property, plant and equipment
Investment property
Other long term investments
Deferred tax assets
CURRENT ASSETS
Inventories
Trade and other receivables
Advances issued
Short-term investment
Cash and cash equivalents
Other current assets
NON-CURRENT LIABILITIES
Loans and borrowings
Long-term trade and other payables
Deferred tax liabilities
CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
Provisions
TOTAL IDENTIFIABLE NET ASSETS
Total identifiable net assets acquired (51 %)
Non-controlling interest (49 %)
RECOGNISED FAIR
NOTE
VALUES ON ACQUISITION
13
14
403
838
4
94
45,655
1,057
1,781
752
4,704
187
(5,779)
(998)
(5,657)
(374)
(11,322)
24
(143)
31,202
15,913
15,289
Trade and other receivables comprised gross contractual amounts due of RUB 1,383 million,
of which RUB 326 million was expected to be uncollectable at the date of acquisition.
296
FINANCIAL STATEMENTS
297
ANNUAL REPORT 2020
27. ACQUISITION
OF SUBSIDIARY
(CONTINUED)
Indemnification assets
The seller in a business combination had contractually indemnified the Group for the
outcome of uncertainties related to specific liabilities, including losses above a specified
amount by specified subsidiaries, liabilities arising from tax contingencies and recultivation
costs above specified limit.
The Group did not recognise such liabilities at the acquisition date and therefore did not
recognise any indemnification assets.
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were
as follows.
INVENTORIES
The acquiree’s inventories are mainly represented by real estate development projects at
different stages of development.
The fair values of real estate development projects were determined by an independent
appraiser based on discounted cash flows from the construction and sale of such real estate.
The following key assumptions were used by the appraiser:
• Cash flows were projected based on the business plans for construction and sale of real
estate;
Inflation rates—in the range 3,5 %-4,5 % per annum;
•
• Discount rates—12,3 % – 23 % per annum, depending on the class of the project, stage
of development of a particular project and the availability of construction permits.
Bargain purchase
The Group recognised the excess of the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed over consideration transferred in the amount of
RUB 729 million as a gain from bargain purchase in its consolidated statement of profit or loss
and other comprehensive income.
From the date of acquisition to 31 December 2019 JSC “Leader-Invest” and its subsidiaries
contributed revenues of RUB 11,198 million and a loss of RUB 3,145 million.
If the acquisition of the business had occurred on 1 January 2019, management estimates that
consolidated revenue would have been RUB 86,132 million, and consolidated loss for the year
would have been RUB 58 million. In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have been the same if the
acquisition had occurred on 1 January 2019.
28. LEASES
The Group leases a number of land plots for the purpose of the construction of residential
and commercial premises for sale, as well as land plots occupied by its own production and
office facilities. The leases typically run for the years of construction of premises for sale.
The following table summarises the movement in the right-of-use assets and lease liabilities
during the reporting period.
MLN RUB
CONSTRUCTION
AND EQUIPMENT
TOTAL
INVENTORIES UNDER
PROPERTY, PL ANT
RIGHT-OF-USE ASSETS
Balance at 1 January 2020
Additions to right-of-use assets
Modifications of lease contracts
Depreciation charge
BALANCE AT 31 DECEMBER 2020
LEASE LIABILITIES
Balance at 1 January 2020
Settlement of lease liabilities, including interest
Interest expense on lease liabilities
Additions to lease liabilities
Modifications of lease contracts
BALANCE AT 31 DECEMBER 2020
2,080
482
(31)
(136)
2,395
1,636
(632)
132
481
(31)
1,586
400
69
(41)
(116)
312
402
(180)
35
66
(47)
276
2,480
551
(72)
(252)
2,707
2,038
(812)
167
547
(78)
1,862
MLN RUB
CONSTRUCTION
AND EQUIPMENT
TOTAL
INVENTORIES UNDER
PROPERTY, PL ANT
RIGHT-OF-USE ASSETS
Balance at 1 January 2019
Additions to right-of-use assets
Termination of lease contracts
Depreciation charge
Acquired through business combination
BALANCE AT 31 DECEMBER 2019
LEASE LIABILITIES
Balance at 1 January 2019
Settlement of lease liabilities, including interest
Interest expense on lease liabilities
Additions to lease liabilities
Termination of lease contracts
Assumed through business combination
BALANCE AT 31 DECEMBER 2019
1,786
4
–
(342)
631
2,079
1,786
(975)
190
4
–
631
1,636
135
134
(39)
(149)
319
400
135
(197)
43
136
(34)
319
402
1,921
138
(39)
(491)
950
2,479
1,921
(1,172)
233
140
(34)
950
2,038
Future cash outflows to which the Group is exposed that are not reflected in the
measurement of lease liabilities arising from variable lease payments amount to
RUB 812 million (31 December 2019: RUB 789 million).
298
FINANCIAL STATEMENTS
299
ANNUAL REPORT 2020
29. CAPITAL
COMMITMENTS
As at 31 December 2020, the Group had no capital commitments (31 December 2019: nil).
30. CONTINGENCIES
a) INSURANCE
The insurance industry in the Russian Federation is in a developing state and many forms
of insurance protection common in other parts of the world are not yet generally available.
The Group does not have full coverage for its plant facilities, business interruption, or third
party liability in respect of property or environmental damage arising from accidents on
Group property or relating to Group operations. Until the Group obtains adequate insurance
coverage, there is a risk that the loss or destruction of certain assets could have a material
adverse effect on the Group’s operations and financial position.
b) LITIGATION
During the year ended 31 December 2019 and 2020, the Group was involved in a number
of court proceedings (both as a plaintiff and a defendant) arising in the ordinary course of
business.
One of the Group’s subsidiaries was involved in an arbitral process as defendant, where
plaintiff obliges the Group to purchase from the plaintiff 22 % of share capital of LLC
“Specialized Developer “ZIL-YUG” for the consideration of RUB 7,305 million. The Group
declined to proceed with the acquisition since the project planning documentation provided
by the plaintiff contradicted technical and economical parameters established in the initial
tender documentation and agreed with the plaintiff.
On 30 July 2020, a mediation agreement, involving independent professional mediator of the
Board of Mediators for Conciliatory Procedures at the Chamber of Commerce and Industry
of the Russian Federation was prepared and signed by the parties. Under the terms of the
agreement, the Group accepted project planning documentation provided by the plaintiff,
and the plaintiff agreed to transfer to the Group the remaining 88 % of share capital of LLC
“Specialized Developer “ZIL-YUG” for the consideration of RUB 32,200 million payable in
2021-2024.
As a result of the mediation agreement, the plaintiff dismissed the claims to the Group
described above.
In the opinion of management, there are no other current legal proceedings or other claims
outstanding, which could have a material effect on the result of operations or financial
position of the Group and which have not been accrued or disclosed in these consolidated
financial statements.
31. RELATED PARTY
TRANSACTIONS
a) TRANSACTIONS WITH MANAGEMENT
(i) Management remuneration
Key management received the following remuneration during the year, which is included in
personnel costs (see note 9):
MLN RUB
Short-term employee benefits – salaries and bonuses
Termination benefit paid to key management personnel
2020
312
3
315
2019
1,599
57
1,656
During the year ended 31 December 2020 and 2019, the Group did not grant any loans and
pensions to its key management personnel.
During the year ended 31 December 2020, the remuneration of the members of the Board of
Directors of the Company amounted to RUB 28 million (2019: RUB 48 million).
b) TRANSACTIONS WITH OTHER RELATED PARTIES
The Group’s other related party transactions are disclosed below.
MLN RUB
Other related parties
TRANSACTION VALUE
OUTSTANDING BAL ANCE
2020
409
409
2019
113
113
2020
218
218
2019
613
613
All outstanding balances with related parties are to be settled in cash. None of the balances
are secured.
(ii) Expenses
MLN RUB
Other related parties
TRANSACTION VALUE
OUTSTANDING BAL ANCE
2020
(178)
(178)
2019
(123)
(123)
2020
(116)
(116)
2019
(221)
(221)
All outstanding balances with related parties are to be settled in cash. None of the balances
are secured.
(iii) Loans
MLN RUB
Loans given
Loans received
AMOUNT LOANED / RECEIVED
OUTSTANDING BAL ANCE
2020
(5)
(1,210)
(1,215)
2019
4
(298)
(294)
2020
2
2019
6
(5,145)
(3,935)
(5,143)
(3,929)
All outstanding balances with related parties are to be settled in cash. None of the balances
are secured.
(iv) Other transactions
MLN RUB
Current accounts in banks – related parties
Proceeds from investments in associates
Interest payable
TRANSACTION VALUE
OUTSTANDING BAL ANCE
2020
262
12
157
431
2019
(469)
117
(51)
(403)
2020
276
–
(6)
270
2019
14
–
(163)
(149)
300
FINANCIAL STATEMENTS
301
ANNUAL REPORT 2020
32. GROUP
ENTITIES
SIGNIFICANT SUBSIDIARIES
SUBSIDIARY
COUNTRY OF
31 DECEMBER
31 DECEMBER
INCORPORATION
2020
2019
“Etalon Group company” AO
Russian Federation
100,00 %
100,00 %
LLC “EtalonAktiv”
Russian Federation
100,00 %
100,00 %
JSC “Etalon LenSpetsSMU”
Russian Federation
100,00 %
100,00 %
JSC “Novator”
Russian Federation
100,00 %
100,00 %
JSC “LenSpetsSMU-Reconstruktsiya”
Russian Federation
100,00 %
100,00 %
LLC “Etalon-Invest”
Russian Federation
100,00 %
100,00 %
JSC “Zatonskoe”
Russian Federation
100,00 %
100,00 %
LLC “SPM-Zhilstroy”
Russian Federation
100,00 %
100,00 %
LLC “Specialized Developer “Serebryaniy Fontan”
Russian Federation
99,97 %
99,97 %
LLC “Specialized Developer “Etalon Galaktika”
Russian Federation
100,00 %
100,00 %
LLC “Specialized Developer “Etalon Development”
Russian Federation
100,00 %
100,00 %
JSC “Leader-Invest”
Russian Federation
100,00 %
100,00 %
LLC “Razvitiye”
Russian Federation
100,00 %
100,00 %
LLC “Specialized Developer “ZIL-YUG”
Russian Federation
100,00 %
12,00 %
LLC “Specialized Developer “MBI”
Russian Federation
100,00 %
100,00 %
JSC “Lobachevskogo 120”
Russian Federation
100,00 %
100,00 %
As at 31 December 2020, the Group controlled 119 legal entities (31 December 2019: 128).
Their assets, liabilities, revenues and expenses have been included in these consolidated
financial statements. The above is a list of the most significant subsidiaries.
33. EVENTS
SUBSEQUENT TO
THE REPORTING
DATE
OPERATING EVENTS
Commitment for acquisition of a land plot
The Group is finalising negotiations on the acquisition of a land plot located in the
St. Petersburg metropolitan area for the consideration of RUB 1,100 million payable in
2021-2022
Share capital increase and offering of newly issued ordinary shares
On 26 February 2021, the Board of Directors of the Company held a meeting where it was
proposed that extraordinary general meeting of shareholders (“EGM”) of the Company
authorises the Board of Directors to consider a potential share capital increase for a potential
public or private placement. If approved, proceeds from such placement will enable the
Company to replenish and develop its land bank, as well as finance the early development of
new projects.
Subject to approval of EGM, the authorised share capital of the Company will be increased
from £34,747.899 to £39,172.2686 by the creation of 88,487,391 ordinary shares of
nominal value of £0.00005 each, and the authority will be given to the Board of Directors
to allot and issue, out of the authorised but unissued share capital of the Company, up to
88,487,391 ordinary shares at par or at a premium as they deem appropriate, and such
authority to expire on 22 March 2023. The share capital increase is expected to be structured
in the form of one or several public and /or institutional offerings of newly issued ordinary
shares represented by GDRs.
On 22 March 2021, the EGM resolved that the authorised share capital of the Company be
increased from £34,747.899 to £39,172.2686 by the creation of 88,487,391 ordinary shares
of nominal value of £0.00005 each.
FINANCING EVENTS
Subsequent to the reporting date, the Group has repaid loans and borrowings outstanding
as at 31 December 2020 for the total amount of RUB 2,609 million and unsecured bonds for
the total amount of RUB 1,257 million.
Subsequent to the reporting date, the Group has obtained additional tranches of loans for
the total amount of RUB 6,019 million with nominal interest rates of 0,01 % – 10,5 % and
repayable by 2025.
Subsequent to the reporting date, coupon rate on JSC «Leader-Invest» unsecured bond issue
decreased from 11,7 % to 7,95 %.
302
FINANCIAL STATEMENTS
303
ANNUAL REPORT 2020
SUPPLEMENTARY
INFORMATION
In this note, additional information is disclosed. We believe that the adjusted net debt/
adjusted EBITDA ratio, together with measures determined in accordance with IFRS,
provides the readers with valuable information and a further understanding of the underlying
performance of the business.
The below non-IFRS measures should be considered and read in addition to, but not as a
substitute for, the information contained in the consolidated financial statements. Non-IFRS
measures are not uniformly defined by all companies, including those in the Group’s
industry. Therefore, the non-IFRS measures used by the Group may not be comparable to
similar measures and disclosures made by other companies.
ADJUSTED NET DEBT/ADJUSTED EBITDA RATIO
MLN RUB
Loans and borrowings
Less: cash and cash equivalents
Less: bank deposits over 3 months, note 19
2020
2019
50,505
52,692
(25,830)
(31,128)
(100)
(80)
Add: contract liabilities, reportable segment Residential development
25,530
32,798
Less: Inventories under construction, note 17
ADJUSTED NET DEBT
Gross profit
Less: General and administrative expenses
Less: Selling expenses
Adjusted operating profit
Add: Depreciation and amortisation
EBITDA
Add: Purchase price allocation from acquisition of Leader-Invest included in
cost of sales
ADJUSTED EBITDA
ADJUSTED NET DEBT/ADJUSTED EBITDA
(102,179)
(85,270)
(52,074)
(30,988)
2020
2019
21,915
20,057
(5,235)
(4,560)
12,120
481
12,601
3,881
(7,280)
(4,822)
7,955
542
8,497
2,678
16,482
11,175
(3.16)
(2.77)
Adjusted net debt represents net total of loans and borrowings less cash and cash
equivalents and bank deposits over 3 months adjusted for contract liabilities in the
Residential development segment less balance of inventories under construction and
development. Adjusted net debt measures the Group’s net indebtedness that provides an
indicator of the overall balance sheet strength.
Adjusted EBITDA represents gross profit for the year adjusted by general and administrative
expenses, selling expenses, depreciation and amortisation and effect of purchase price
allocation from acquisition of subsidiary.
The result is the equivalent of profit (loss) for the year before net finance costs, income tax
expense, depreciation and amortization and effect of purchase price allocation, impairment
loss on trade and other receivables, gain from bargain purchase from acquisition of
subsidiary and other operating expenses.
We believe that adjusted EBITDA provides useful information to investors because it is an
indicator of the strength and performance of our ongoing business operations, including our
ability to fund discretionary spending such as capital expenditures and other investments
and our ability to incur and service debt.
Adjusted net debt/adjusted EBITDA ratio is used by creditors, credit rating agencies and
other stakeholders.
NET CORPORATE DEBT/ADJUSTED EBITDA
Net corporate debt represents net debt as defined in the note 26 (e) adjusted for the amount
of project financing (borrowings backed by balances on escrow accounts).
MLN RUB
Loans and borrowings
Less: secured project financing
TOTAL CORPORATE BORROWINGS
Less: cash and cash equivalents
2020
2019
50,505
52,692
(4,995)
–
45,510
52,692
(25,830)
(31,128)
Less: bank deposits over 3 months, notes 15 and 19
(100)
(80)
NET CORPORATE DEBT
19,580
21,484
NET CORPORATE DEBT/ADJUSTED EBITDA
1.19
1.92
Net corporate debt and Adjusted net debt are not balance sheet measures under IFRS and
they should not be considered as an alternative to other measures of financial position.
Although Net corporate debt and Adjusted net debt are non-IFRS measures, they are widely
used to assess liquidity and the adequacy of a company’s financial structure. The Group
believes that Net corporate debt and Adjusted net debt provide an accurate indicator of its
ability to meet financial obligations, represented by gross debt, from available cash and future
proceeds from sales. However, the use of Net corporate debt and Adjusted net debt effectively
assumes that gross debt can be reduced by cash. In fact, it is unlikely that the Group would,
or could, use all of its cash to reduce gross debt all at once, as those Group companies which
sell properties using shared construction agreements are not entitled to use cash received
from their customers for any purposes until commissioning of the relevant project.
THE MOVEMENT OF THE PURCHASE PRICE ALLOCATION (PPA)
FROM THE ACQUISITION OF LEADER-INVEST, RECOGNISED
WITHIN PROPERTY, PLANT AND EQUIPMENT, INVESTMENT
PROPERTY, INVENTORIES
PPA is a significant non-operational factor that significantly affects the Group’s financial
performance and will continue to do so in the next few years. The disclosure increases the
transparency of the reporting and enables users of the financial statements to correctly
assess the effect of PPA on the financial results.
MLN RUB
Balance at 1 January
2020
2019
25,695
–
Adjustment to fair value of identified net assets of Leader-Invest
–
29,386
Included in Cost of sales
Included in General and administrative expenses
Included in Other expenses, net
BALANCE AT 31 DECEMBER
(3,881)
(2,678)
–
(918)
(38)
(975)
20,896
25,695
304
FINANCIAL STATEMENTS
305
ANNUAL REPORT 2020
PARENT COMPANY
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
CONTENTS
Board of Directors and other Officers
Management Report
Responsibility statement of the Directors and management of the Company
in accordance with the Transparency Requirements
Independent Auditors’ Report
Statement of financial position
Statement of profit or loss and other comprehensive income
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
BOARD OF DIRECTORS
AND OTHER OFFICERS
BOARD OF
DIRECTORS
305
306
310
311
317
318
319
320
321
SERGEY EGOROV
(appointed on 19 February 2019)
OLEG MUBARAKSHIN
(appointed on 19 February 2019)
MARINA OGLOBLINA
(appointed on 19 February 2019)
GANNA KHOMENKO
(appointed on 19 February 2019)
MARTIN ROBERT COCKER
(appointed on 12 November 2010)
BORIS SVETLICHNY
(appointed on 15 April 2013)
CHARALAMPOS AVGOUSTI
(appointed on 10 November 2016)
MAKSIM BERLOVICH
(appointed on 27 April 2018)
DENIS VINOKUROV
(appointed on 9 November 2018)
KIRILL BAGACHENKO
(appointed on 15 November 2013 and
resigned on 20 February 2020)
SECRETARY
INDEPENDENT AUDITORS
G.T. Globaltrust Services Limited
Deloitte Limited
Themistokli Dervi, 15
Margarita House, 5th floor, flat/office 502
1066 Nicosia
Cyprus
Certified Public Accountants and
Registered Auditors
24 Spyrou Kyprianou Avenue
1075, Nicosia
Cyprus
REGISTERED OFFICE
2-4 Arch. Makariou III Avenue
Capital Center, 9th floor
1065 Nicosia
Cyprus
306
FINANCIAL STATEMENTS
307
ANNUAL REPORT 2020
MANAGEMENT
REPORT
The Board of Directors presents its
report together with the audited financial
statements of Etalon Group PLC (the
“Company”) for the year ended 31
December 2020.
COUNTRY OF INCORPORATION
Etalon Group PLC was registered in the
Republic of Cyprus on 5 April 2017. Its
registered office is 2-4 Arch. Makariou III
Avenue, Capital Center, 9th floor, 1065
Nicosia, Cyprus.
In April 2011, the Company completed an
initial public offering and placed its ordinary
shares in the form of global depository
receipts (“GDR”) on the London Stock
Exchange’s Main Market. In 2017 the
Company was re-domiciled from Guernsey
to Cyprus.
PRINCIPAL ACTIVITIES
The principal activities of the Company,
which are unchanged from last year, are
the holding of investments and provision of
financing to related parties.
The Company’s financial statements
have been prepared in accordance with
International Financial Reporting Standards
as adopted by the European Union (IFRS-
EU) and the requirements of the Cyprus
Companies Law, Cap. 113.
CHANGES IN GROUP STRUCTURE
On 30 November 2020, the Company’s
subsidiary, Etalon Group Limited,
approved a transfer to the Company of
440.250 shares in JSC GK Etalon with
nominal value of RUB 1.200. As a result of
the transaction, the Company increased
its share of ownership in JSC GK Etalon to
26.16%.
REVIEW OF DEVELOPMENTS,
POSITION AND PERFORMANCE
OF THE COMPANY’S BUSINESS
The profit of the Company for the year
ended 31 December 2020 was Russian
Ruble (‘RUB’)’000 8.018.572 (2019: profit
of RUB’000 2.266.908). The main source
of profit for the period is the change in fair
value of investments in subsidiaries in the
amount of RUB’000 4.458.099 (2019: the
dividend income from subsidiaries in the
amount of RUB’000 1.647.653).
On 31 December 2020, the total
assets of the Company were
RUB’000 73.746.552 (31 December 2019:
RUB’000 69.145.867) and the net assets
were RUB’000 73.057.213 (31 December
2019: RUB’000 68.578.137). Investment in
subsidiaries was RUB’000 64.769.755 (31
December 2019: RUB’000 60.311.656).
The financial position, development and
performance of the Company as presented
in these financial statements are considered
satisfactory.
More details are set out on pages 317 and
318 (statement of financial position and
statement of profit or loss and other
comprehensive income).
RESEARCH AND DEVELOPMENT
ACTIVITIES
The Company did not carry out any research
and development activities during the year.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced
by the Company are disclosed in Note 3 of
the financial statements.
This operating environment may have
a significant impact on the Company’s
operations and financial position.
Management is taking necessary measures
to ensure sustainability of the Company’s
operations. However, the future effects of
the current economic situation are difficult
to predict and management’s current
expectations and estimates could differ
from actual results.
USE OF FINANCIAL INSTRUMENTS BY
THE COMPANY
The Company's activities expose it to
a variety of financial risks: market risk,
currency risk, credit risk and liquidity risk.
The Company's risk management program
focuses on the unpredictability of financial
markets and seeks to minimize potential
adverse effects on the Company's financial
performance. The Board provides principles
for overall risk management, such as foreign
exchange risk, interest rate risk, credit risk
and liquidity risk.
The detailed analysis of the Company’s
exposure to financial risks as at the
reporting date and the measures taken by
the Management in order to mitigate those
risks are disclosed in Note 3 of the financial
statements.
FUTURE DEVELOPMENTS OF THE
COMPANY
The Board of Directors does not expect
any significant changes or developments
in the operations, financial position and
performance of the Company in the
foreseeable future.
SHARE CAPITAL
During the year ended 31 December 2020,
there were no changes to the share capital
of the Company.
ACQUISITION OF OWN SHARES
As of 31 December 2020 the total number
of own shares acquired by the Company
amounted to 3.946 shares or 0,001% of
issued share capital.
BOARD OF DIRECTORS
The members of the Board of Directors of
the Company at 31 December 2020 and at
the date of this report are shown on page
305. The details of all appointment and
resignations of Directors are shown on page
305.
COVID-19 AND OTHER SIGNIFICANT
EVENTS
As the Russian Federation produces and
exports large volumes of oil and gas, its
economy is particularly sensitive to the price
of oil and gas on the world market. In March
2020, oil prices dropped by more than 40%,
which resulted in the immediate weakening
of Russian Ruble against major currencies.
In addition, starting from early 2020, a
new coronavirus disease (COVID-19)
began rapidly spreading all over the world
resulting in an announcement of pandemic
status by the World Health Organization
in March 2020. Responses put in place
by the Russian Federation to contain the
spread of COVID-19 resulted in significant
operational disruption for many companies
and had a significant effect on businesses
across a wide range of sectors, including,
but not limited to such impacts as
disruption of business operations as a result
of interruption of production or closure
of facilities, supply chain disruptions,
quarantines of personnel, reduced demand
and difficulties in raising financing.
the Government of Moscow imposed a
temporary ban on construction works that
lasted from the 13th of April until the 12th
of May.
The Group managed to provide the
necessary conditions for the safe conduct of
construction works on all of its construction
sites. In the Moscow region, the Group
resumed construction shortly after the
temporary ban on construction was lifted
due to the flexible construction technology
and the availability of own general
contractors and sub-contractors. In Saint-
Petersburg construction works continued
uninterrupted. As a result, all projects that
were planned for completion during the year
ended 31 December 2020 were completed
on time.
In the first weeks following the introduction
of restrictive measures, the Group launched
an online real estate sales service, formed
operational teams of managers, and
strengthened its call center. The Group
developed a new model of interaction with
clients including virtual showrooms, virtual
and augmented reality projects that provide
a complete picture of the future apartments.
authorities in the Russian Federation due to
the COVID-19 pandemic have been lifted,
including on the operation of the Group’s
sales offices, and the Group observes that
the demand for real estate has recovered.
INDEPENDENT AUDITORS
On 20 October 2020, the Annual General
Meeting of shareholders of the Company
appointed Deloitte Limited as auditor of the
Company to hold office until the conclusion
of the next annual general meeting and
authorised the Board of Directors to fix the
auditor’s remuneration.
DIVIDENDS
On 20 July 2020, the Board of Directors
recommended that the Company pay a
final dividend for FY 2019 in the amount of
RUB 12 per share. The final dividend for
the total amount of RUB 3 539 million was
approved by the Annual General Meeting of
shareholders on 23 October 2020, and the
dividends were paid on 16 December 2020.
The Group’s office-based employees were
successfully moved to remote working.
BRANCHES
The Company did not operate through
any branches during the year ended 31
December 2020.
The quarantine measures, accompanied
by a reduction in the disposable income
of households and an increase in
unemployment rates, led to the overall
decrease of the demand for real estate.
At the same time, the Government of the
Russian Federation has implemented
various measures to support both the
construction industry and its clients,
including the introduction of a preferential
6,5% p.a. mortgage program and an
increase of its price limits on apartments,
that had a significant positive impact on the
demand for real estate.
The quarantine measures introduced in the
Russian Federation included the closure
of the Group’s sales offices. In addition,
As of the reporting date, most of the
restrictions imposed by the government
308
FINANCIAL STATEMENTS
309
ANNUAL REPORT 2020
CORPORATE
GOVERNANCE REPORT
COMPANY’S INTERNAL CONTROL AND
RISK MANAGEMENT IN RELATION TO
THE PREPARATION OF THE FINANCIAL
STATEMENTS
uncertainties related to events or conditions
that may cast significant doubt upon the
Company’s ability to continue as a going
concern.
The main documents regulating the activities
of the Company are the Cyprus Companies
Law, Cap. 113, the UKLA Listing, Prospectus
and Disclosure and Transparency Rules,
together with the Memorandum and
Articles of Association of the Company.
The Company has also enacted a number
of governance policies and procedures to
ensure that a proper system of corporate
governance is in place, such as the
Management Policy and Committee terms of
reference.
The Board of Directors is responsible for
the preparation of the financial statements
that give a true and fair view in accordance
with the International Financial Reporting
Standards as adopted by the European
Union and the requirements of the Cyprus
Companies Law, Cap. 113, and for such
internal control as the Board of Directors
determines is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the
Board of Directors is responsible for making
an assessment of the Company’s ability to
continue as a going concern, taking into
account all available information about
the future and for disclosing any material
Those charged with governance are
responsible for implementation of internal
control necessary for the preparation of
financial statements that are free from
material misstatement, whether due to fraud
or error, and in particular for the design,
implementation and maintenance of internal
control to prevent and detect fraud and error.
The Audit Committee is responsible for
monitoring the financial reporting process
and the integrity of the Company’s financial
statements. It is also responsible for
reviewing internal controls, overseeing
how management monitors compliance
with the Company’s risk management
policies and procedures, the effectiveness
of the Company’s Internal Audit function
and the independence, objectivity and the
effectiveness of the external audit process.
The Audit Committee is also responsible for
considering the terms of appointment and
remuneration of the external auditor.
The Company believes that its financial
reporting functions and internal control
systems are sufficient to ensure compliance
with the requirements of the FSA’s Disclosure
and Transparency Rules as a listed company
and with the requirements of Cyprus
Companies Law, Cap. 113.
SIGNIFICANT DIRECT OR INDIRECT
SHAREHOLDINGS
As at 31 December 2020, the Company is
aware of the following interests in its share
capital:
SHAREHOLDERS
Free float
Sistema PJSFC
Management of the Company
TOTAL
%
73,6%
25,6%
0,8%
100%
THE HOLDERS OF ANY SHARES WITH
SPECIAL CONTROL RIGHTS AND A
DESCRIPTION OF THESE RIGHTS
The Company does not have any shares with
special control rights.
THE RULES REGARDING THE
AMENDMENT OF THE ARTICLES OF
ASSOCIATION
Subject to the provisions of the Law, the
Company may, by special resolution, alter
or add to its articles of association. Any
alteration or addition shall be as valid as if
originally contained therein, and be subject
in like manner to alteration by special
resolution.
The office of a director shall be vacated if:
(a) he becomes of unsound mind or
an order is made by a court having
jurisdiction (whether in Cyprus or
elsewhere) in matters concerning mental
disorder for his detention or for the
appointment of a receiver, curator or
other person to exercise powers with
respect to his property or affairs; or
(b) he is prohibited from acting as director
in accordance with section 180 of the
Law; or
(c) becomes bankrupt or makes any
arrangement or composition with his
creditors generally or otherwise has any
judgment executed on any of his assets;
or
(d) he dies; or
(e) he resigns his office by written notice to
the Company; or
(f) the Company removes them from their
position in accordance with section
178 of the Law.
RESTRICTIONS IN EXERCISING OF
VOTING RIGHTS OF SHARES
The 20.000 preference shares having the par
value of GBP 1 each issued by the Company,
bear no voting rights. The Company does not
have any other restrictions in exercising of
the voting rights of its shares.
THE RULES REGARDING THE
APPOINTMENT AND REPLACEMENT OF
BOARD MEMBERS
The Company may by ordinary resolution
appoint any person as a director and may by
ordinary resolution of which special notice
has been given, in accordance with sections
178 and 136 of the Cyprus Companies Law,
cap. 113 (the Law), remove a director. Any
such director will receive special notice of
the meeting and is entitled to be heard at
the meeting. Any director has to confirm in
writing that he is eligible under the Law.
A director may resign from office as a
director by giving notice in writing to that
effect to the Company, which notice shall be
effective upon such date as may be specified
in the notice. The directors have the power
from time to time, without sanction of the
Company in general meeting, to appoint any
person to be a director, either to fill a casual
vacancy or as an additional director.
BY ORDER OF THE BOARD
OF DIRECTORS
CHARALAMPOS AVGOUSTI
Director
Nicosia,
26 April 2021
310
FINANCIAL STATEMENTS
311
ANNUAL REPORT 2020
RESPONSIBILITY
STATEMENT
OF THE DIRECTORS AND MANAGEMENT OF THE COMPANY
IN ACCORDANCE WITH THE TRANSPARENCY REQUIREMENTS
(SECURITIES ADMITTED TO TRADING) LAW OF 2007
Deloitte Limited
24 Spyrou Kyprianou Avenue
CY-1075 Nicosia, Cyprus
Mail: P.O.Box 21675
CY-1512 Nicosia, Cyprus
Tel: +357 22 360 300
Fax: +357 2 5 360 400
infonicosia@deloitte.com
www.deloitte.com/cy
Independent Auditor's Report
To the Members of Etalon Group PLC
Report on the Audit of the Financial Statements
(a) The annual financial statements for year
(b) The Management Report includes a
Opinion
We, the members of the Board of Directors
and the Company officials responsible for
the drafting of the financial statements of
ETALON GROUP PLC (the ‘Company’),
the names of which are listed below, in
accordance with the requirements of the
Section 9 of the Transparency Requirements
(Security Admitted to Trading) Law
190(I)/2007 (hereinafter the “Transparency
Law”), as amended, confirm that we have
complied with the requirements in preparing
the financial statement and that to the best
of our knowledge:
ended 31 December 2020:
(i) Have been prepared in accordance with
the International Financial Reporting
Standards (IFRS) as adopted by the
European Union (EU), in accordance
with the provisions of section 9(4) of the
Transparency Law and in accordance
with Cyprus Companies Law, Cap.113;
(ii) Give a true and fair view of the assets,
liabilities, financial position and profit or
loss of the parent Company included in
the financial account, and
fair review of the development and
performance of the business and the
position of the Company, together with
a description of the principal risks and
uncertainties that the Company face.
The management report provides a fair
overview on information required as per
Section 9(6)(a) of the Transparency Law.
We have audited the financial statements of parent company Etalon Group PLC (the "Company"), which
are presented in pages 14 to 38 and comprise the statement of financial position as at 31 December 2020
and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for
the year then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of
the parent company Etalon Group PLC as at 31 December 2020, and of its financial performance and its
cash flows for the year then ended in accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.
113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Financial Statements section of our report. We remained independent of the Company throughout the
period of our appointment in accordance with the International Ethics Standards Board for Accountants'
International Code of Ethics for Professional Accountants (including International Independence Standards)
("IESBA Code") together with the ethical requirements that are relevant to our audit of the financial
statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
SERGEY EGOROV, Chairman of the Board of Directors
MAKSIM BERLOVICH, Member of the Board of Directors
OLEG MUBARAKSHIN, Member of the Board of Directors
MARINA OGLOBLINA, Member of the Board of Directors
GANNA KHOMENKO, Member of the Board of Directors
MARTIN ROBERT COCKER, Member of the Board of Directors
BORIS SVETLICHNY, Member of the Board of Directors
CHARALAMPOS AVGOUSTI, Member of the Board of Directors
DENIS VINOKUROV, Member of the Board of Directors
GENNADII SHCHERBINA, Chief Executive Officer
ILYA KOSOLAPOV, Chief Financial Officer
312
FINANCIAL STATEMENTS
313
ANNUAL REPORT 2020
Independent Auditor's Report (continued)
Independent Auditor's Report (continued)
To the Members of Etalon Group PLC
Why the matter was determined
to be a key audit matter
Fair value of investments in subsidiaries
As at 31 December 2020, the carrying
value of the Company’s investments in
subsidiaries is RUB'000 64,769,755 which
represented 88% of the total assets of the
Company. The fair value hierarchy of
investments in subsidiaries belongs to
Level 3 as a fair value measurement uses
unobservable inputs that require significant
adjustment.
for
The Company’s accounting policy
investments in subsidiaries, disclosed in
Note 2, is to measure them at fair value
through profit or
loss and significant
estimates and judgments are disclosed in
Note 4.
Determination of fair value of investments
in subsidiaries is a key audit matter given
the significance of the balance and the
significant degree of judgement involving
estimations associated with the fair value
assessment.
How the matter was addressed in the audit
Our audit procedures included amongst others:
of
the methodology
-we obtained understanding of key controls over
processes and procedures for developing assumptions
used.
-we have reviewed the report by independent valuer on
which the valuation was based
- evaluating, with the assistance of internal experts, the
the
appropriateness
reasonableness of
the
estimation of fair value of investments in subsidiaries as at
31 December 2020;
-we assessed the competence, capabilities and objectivity
third party valuer, as well as
of management’s
independence;
- evaluating the appropriateness of management’s
assumptions used in calculating the fair value of
investments in subsidiaries including:
•
the assumptions underlying
and
•
assessing the appropriateness of the discount
rate used;
reviewing, recalculating and critically assessing
the reasonableness of the assumptions
including:
•
historical turnover and prices of sales in
these and/or similar projects;
budgeted costs to complete construction;
budgeted general, administrative and
selling expenses;
•
•
- total area available for sale and actual sales occurring
before 31 December 2020
- assessing completeness and accuracy of cash flows from
financing activities through review of existing portfolio of
loans and borrowings
- assessing whether the disclosure in the financial
statements in respect of the fair value accounting of
investments in subsidiaries and disclosures for significant
accounting judgments and estimates are in compliance
with IFRS requirements.
All the above procedures were completed in a satisfactory
manner.
To the Members of Etalon Group PLC
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud (continued)
Recoverability of loans receivable
receivable
At 31 December 2020, the Company had
related parties
from
loans
amounting to RUB'000 8,134,746, which
represented 11% of the total assets of the
Company.
The Company’s accounting policy for loans
receivable is disclosed in Note 2 and
significant estimates and judgments are
disclosed in Note 4.
The recoverability of the loans receivable
and the estimation of expected credit
losses (“ECL”) is a key audit matter due to
the significance of the balances and the
significant degree of judgement involving
the ECLs
estimations associated with
assessment.
Our audit procedures included amongst others:
- we obtained understanding of key controls over
processes and procedures for developing assumptions
used.
- assessing the appropriateness of the methodology
applied for estimation of expected credit losses for loans
receivables disclosed in Note 10;
- testing the completeness and accuracy of the data used
in the calculation of ECLs, through reconciliation to the
source systems and testing inputs;
- assessing mathematical accuracy of the model used for
calculation of ECLs;
- identification and measurement the individually assessed
provisions,
- assessing whether the disclosure in the financial
statements in respect of the ECL disclosures and
significant accounting judgments and estimates are in
compliance with IFRS requirements.
All the above procedures were completed in a satisfactory
manner.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the Management Report and the Responsibility Statement of the Directors and
Management of the Company in accordance with the Transparency Law, which are presented in pages 2
to 7, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
314
FINANCIAL STATEMENTS
315
ANNUAL REPORT 2020
Independent Auditor's Report (continued)
To the Members of Etalon Group PLC
Responsibilities of the Board of Directors and those charged with governance for the Financial
Statements
The Board of Directors is responsible for the preparation of financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European Union
and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board
of Directors determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors;
• Conclude on the appropriateness of the Board of Directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company's ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or conditions may cause the Company
to cease to continue as a going concern;
•
Independent Auditor's Report (continued)
To the Members of Etalon Group PLC
Auditor's Responsibilities for the Audit of the Financial Statements (continued)
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves a true and fair view.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period, and are therefore
the key audit matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following
information in our Independent Auditor's Report, which is required in addition to the requirements of
International Standards on Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Group on 19 December 2019 by an Extraordinary Meeting of
shareholders. Our appointment has been renewed annually by shareholder resolution representing a total
period of uninterrupted engagement appointment of two years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the financial statements expressed in this report is consistent with the
additional report to the Audit Committee of the Company, which we issued on 23 April 2021 in accordance
with Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and
Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which
were provided by us to the Company and which have not been disclosed in the financial statements or the
management report.
316
FINANCIAL STATEMENTS
317
ANNUAL REPORT 2020
Independent Auditor's Report (continued)
To the Members of Etalon Group PLC
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
•
•
•
In our opinion, based on the work undertaken in the course of our audit, the management report
has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113,
and the information given is consistent with the financial statements.
In light of the knowledge and understanding of the Company and its environment obtained in the
course of the audit, we are required to report if we have identified material misstatements in the
management report. We have nothing to report in this respect.
In our opinion, based on the work undertaken in the course of our audit, the information included
in the corporate governance statement in accordance with the requirements of subparagraphs (iv)
and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is
included as a specific section of the management report, have been prepared in accordance with
the requirements of the Cyprus Companies Law, Cap. 113, and is consistent with the financial
statements.
In our opinion, based on the work undertaken in the course of our audit, the corporate governance
statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph
2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
In light of the knowledge and understanding of the Company and its environment obtained in the
course of the audit, we are required to report if we have identified material misstatements in the
corporate governance statement in relation to the information disclosed for items (iv) and (v) of
subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to
report in this respect.
Other Matters
This report, including the opinion, has been prepared for and only for the Company's members as a body
in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017
and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other
purpose or to any other person to whose knowledge this report may come to.
We also have reported separately on the consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2020.
The engagement partner on the audit resulting in this independent auditor's report is Kerry Whyte.
Kerry Whyte
Certified Public Accountant and Registered Auditor
for and on behalf of
Deloitte Limited
Certified Public Accountants and Registered Auditors
Nicosia, 26 April 2021
STATEMENT
OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
ASSETS
NON-CURRENT ASSETS
Investments in subsidiaries
Loans receivable
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Loans receivable
Other receivables and prepayments
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY
Share capital
Share premium
Reserve for own shares
Capital contribution
Retained earnings
TOTAL EQUITY
CURRENT LIABILITIES
Other payables and accruals
Borrowings
TOTAL CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
NOTE
2020
2019
9
10
10
11
12
13
13
13
13
14
15
64,769,755
60,311,656
6,008,715
8,451,946
70,778,470
68,763,602
2,126,031
—
349,435
300,922
492,616
81,343
2,968,082
382,265
73,746,552
69,145,867
2,266
2,266
15,486,109
15,486,109
(694)
(694)
16,584,198
16,584,198
40,985,334
36,506,258
73,057,213
68,578,137
17,424
25,251
671,915
542,479
689,339
567,730
73,746,552
69,145,867
On 26 April 2021, the Board of Directors of
Etalon Group PLC authorized these financial
statements for issue.
CHARALAMPOS AVGOUSTI
SERGEY EGOROV
Director
Director
The notes on pages 321 to 339 are an integral part of these financial statements
318
FINANCIAL STATEMENTS
319
ANNUAL REPORT 2020
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTE
RUB’000
2020
2019
RUB’000
9
4,458,099
1,189,623
Balance at 1 January 2019
2,266
15,486,109
16,584,198
(694)
37,816,736
69,888,615
SHARE CAPITAL
PREMIUM
CONTRIBUTION
OWN SHARES
RUB’000
RUB’000
RUB’000
RUB’000
SHARE
CAPITAL
RESERVE FOR
RETAINED
EARNINGS
RUB’000
TOTAL
RUB’000
Change in fair value of investments in subsidiaries
Interest income
Interest expenses
435,797
424,174
PROFIT FOR THE YEAR
16(v)
(24,340)
(21,416)
Profit for the year
Dividend income from subsidiaries
16(vi)
3,870,116
1,647,653
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
(Impairment)/reversal of impairment on trade, other receivables and loans
16(iii), (iv), 9
(1,551,724)
77,438
Administrative expenses
Other expenses
Other income
5
(148,468)
(189,619)
TRANSACTIONS WITH OWNERS
(28,249)
(8,204)
Dividends paid
–
241
TOTAL TRANSACTIONS WITH OWNERS
OPERATING PROFIT BEFORE NET FINANCE INCOME
7,011,231
3,119,890
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,266,908
2,266,908
2,266,908
2,266,908
(3,577,386)
(3,577,386)
(3,577,386)
(3,577,386)
Finance income
Finance expenses
1,115,244
67,388
(105,533)
(919,032)
Balance at 1 January 2020
2,266
15,486,109
16,584,198
(694)
36,506,258
68,578,137
Balance at 31 December 2019
2,266
15,486,109
16,584,198
(694)
36,506,258
68,578,137
NET FINANCE INCOME/(EXPENSES)
6
1,009,711
(851,644)
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE YEAR
8,020,942
2,268,246
Profit for the year
PROFIT FOR THE YEAR
8
(2,370)
(1,338)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
8,018,572
2,266,908
TRANSACTIONS WITH OWNERS
OTHER COMPREHENSIVE INCOME FOR THE YEAR
–
–
Dividends paid
TOTAL TRANSACTIONS WITH OWNERS
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
8,018,572
2,266,908
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,018,572
8,018,572
8,018,572
8,018,572
(3,539,496)
(3,539,496)
(3,539,496)
(3,539,496)
BALANCE AT 31 DECEMBER 2020
2,266
15,486,109
16,584,198
(694)
40,985,334
73,057,213
The notes on pages 321 to 339 are an integral part of these financial statements
The notes on pages 321 to 339 are an integral part of these financial statements
320
FINANCIAL STATEMENTS
321
ANNUAL REPORT 2020
NOTES
TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year before tax
ADJUSTMENTS FOR:
NOTES
RUB’000
2020
2019
RUB’000
8,018,572
2,266,908
1. GENERAL
INFORMATION
Change in fair value of investments in subsidiaries
9
(4,458,099)
(1,189,623)
(Impairment)/reversal of impairment on trade, other receivables and loans
16(iii), (iv), 9
1,551,724
(77,438)
Loss from write-off of loans and receivables
Reversal of prior year over accrual
Dividend income from subsidiaries
Interest income on bank deposits
Interest income on loans issued
Interest expenses
Foreign exchange (gains)/losses, net
CASH FLOWS USED IN OPERATIONS BEFORE CHANGES IN WORKING CAPITAL
Change in other receivables and prepayments
Change in other payables and accruals
NET CASH (USED IN)/FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of loans by subsidiaries
Repayment of interest on loans by subsidiaries
Dividends received from subsidiaries
NET CASH FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
NET CASH USED IN FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
5
5
–
1,785
(12,133)
(114,823)
16(vi)
(3,870,116)
(1,647,653)
(26)
(95)
16(iii)
(435,771)
(424,079)
16(v)
24,340
21,416
(1,010,146)
851,338
(191,655)
(312,264)
(39,431)
359,462
11,040
(16,941)
(220,046)
30,257
16(iii)
16(iii)
282,066
1,287,255
–
853,327
16(vi)
3,867,746
1,511,762
4,149,812
3,652,344
(3,539,496)
(3,577,386)
(3,539,496)
(3,577,386)
390,270
105,215
81,343
101,196
21,005
(125,068)
Cash and cash equivalents at end of year
12
492,618
81,343
Non-cash transactions are disclosed in notes to these financial statements
The notes on pages 321 to 339 are an integral part of these financial statements
2. SUMMARY
OF SIGNIFICANT
ACCOUNTING
POLICIES
COUNTRY OF INCORPORATION
Etalon Group PLC (the “Company”) was incorporated on 8 November 2007 in Bailiwick of
Guernsey as a limited liability company under the Companies (Guernsey) Law. Its registered
office was St. Julian’s Avenue, Redwood House, St. Peter Port, Guernsey, GY1 1WA, the
Channel Islands.
In April 2011, the Company completed an initial public offering and placed its ordinary
shares in the form of global depository receipts ("GDR") on the London Stock Exchange's
Main Market.
On 5 April 2017, the Company migrated from Guernsey, Channel Islands, and was registered
in the Republic of Cyprus under the name of Etalon Group Public Company Limited. Its
registered office became 2-4 Arch. Makariou III Avenue, Capital Center, 9th floor, 1065
Nicosia, Cyprus.
On 27 July 2017, the shareholders at the Annual General Meeting resolved to change the
name of the Company from Etalon Group Public Company Limited to Etalon Group PLC.
On 8 August 2017, the change of the Company’s name was approved by the Registrar of
Companies and Official Receiver of the Republic of Cyprus.
PRINCIPAL ACTIVITY
The principal activity of the Company, which remained unchanged from the prior year, is the
holding of investments and provision of financing services to related companies.
The principal accounting policies applied in the preparation of these financial statements are
set out below.
BASIS OF PREPARATION
а) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance with IFRS as adopted by the
European Union (IFRS-EU) and the requirements of the Cyprus Companies Law, Cap. 113.
The Company has also prepared consolidated financial statements in accordance with
IFRS as adopted by EU and Cyprus Companies Law, Cap. 113 for the Company and its
subsidiaries (the “Group”). The consolidated financial statements can be obtained from the
registered office of the Company at 2-4 Arch. Makariou III Avenue, Capital Center, 9th floor,
1065 Nicosia, Cyprus and the Company’s website.
Users of these separate financial statements should be read together with the Group’s
consolidated financial statements as at and for the year ended 31 December 2020 in order
to obtain a proper understanding of the financial position, the financial performance and the
cash flows of the Company and the Group.
322
FINANCIAL STATEMENTS
323
ANNUAL REPORT 2020
2. SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
b) BASIS OF MEASUREMENT
The financial statements have been prepared under the historic cost conversion except
for investments in subsidiaries that are measured at fair value. The preparation of financial
statements in conformity with IFRS-EUs requires the use of certain critical accounting
estimates and requires management to exercise its judgment in the process of applying
the Company's accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 4 to the financial statements.
c) GOING CONCERN
Management prepared these financial statements on a going concern basis. In making
this judgement management considered the impact of Covid-19 as discussed in the
Management Report and the Group financial statements.
FOREIGN CURRENCY TRANSLATION
(I) FUNCTIONAL AND PRESENTATION CURRENCY
The financial statements are presented in Russian Rubles (RUB), which is the Company's
functional and presentation currency.
All financial information has been rounded to the nearest thousand, except when otherwise
indicated.
(II) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are re-measured.
Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of profit or loss and other
comprehensive income.
ADOPTION OF NEW AND REVISED IFRS-EUS
During the current year the Company adopted all the new and revised International
Financial Reporting Standards (IFRS) that are relevant to its operations and are effective
for accounting periods beginning on 1 January 2020. This adoption did not have a material
effect on the accounting policies of the Company.
NEW STANDARDS AND INTERPRETATIONS
A number of new standards and amendments to standards are effective for annual periods
beginning after 1 January 2021 and earlier application is permitted.
The Company has not early adopted these new or amended standards in preparing these
financial statements and has not yet analysed the likely impact of the new standards and
interpretations on its financial position or performance.
• Amendments to IFRS 3 – Reference to the Conceptual Framework;
•
IFRS 17 Insurance Contracts (effective for annual periods beginning on or after 1 January
2023);
• Amendments to IAS 1 – classification of liabilities as current or non-current – (effective
for annual periods beginning on or after 1 January 2023);
• Amendments to IFRS 9 as a result of the 2018-2020 Annual Improvements to IFRSs. –
fees in the "10 percent" test for derecognition of financial liabilities (effective for annual
periods beginning on or after 1 January 2022);
• Amendments to IFRS 10 and IAS 28 – sale or contribution of assets between an investor
and its associate or joint venture (effective date to be determined by the IASB);
• Amendments to IAS 16, prohibiting companies from deducting from the value of
property, plant and equipment the amounts received from sale of manufactured items
while the company is preparing the asset for its intended use (effective for annual
periods beginning on or after 1 January 2022);
• Amendments to IAS 37 – costs to be included in assessing onerous contracts (effective
for annual periods beginning on or after 1 January 2022);
• Other annual improvements to IFRSs.
FINANCIAL INSTRUMENTS
(I) FINANCIAL ASSETS
The Company’s financial assets, classified at amortised cost category as defined by IFRS 9,
comprise of loans receivable, other receivables and cash and cash equivalents.
The Company derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred. Any interest in transferred financial assets that is
created or retained by the Company is recognised as a separate asset or liability.
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS
The Company classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or
loss), and
those to be measured at amortised cost.
The classification and subsequent measurement of debt financial assets depends on: (i) the
Company's business model for managing the related assets portfolio and (ii) the cash flow
characteristics of the asset. On initial recognition, the Company may irrevocably designate a
debt financial asset that otherwise meets the requirements to be measured at amortized cost
or at fair value through other comprehensive income (FVOCI) or at fair value through profit
or loss (FVTPL) if doing so eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
A financial asset is measured at amortised cost if it meets both of the following conditions
and is not designated as at FVTPL: it is held within a business model whose objective
is to hold assets to collect contractual cash flows; and its contractual terms give rise on
specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding. These assets are subsequently measured at amortised cost
using the effective interest method. The amortised cost is reduced by impairment losses
(see “Impairment of financial assets” below). Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is
recognised in profit or loss.
IMPAIRMENT OF FINANCIAL ASSETS
The impairment model under IFRS 9 – an “expected credit loss” (ECL) model – applies to
financial assets measured at amortised cost and debt investments at FVOCI, but not to
investments in equity instruments.
The Company assesses on a forward-looking basis the ECL for debt instruments measured
at amortised cost.
324
FINANCIAL STATEMENTS
325
ANNUAL REPORT 2020
2. SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
The financial assets at amortised cost consist of loans receivable, other receivables and
cash and cash equivalents.
Under IFRS 9, loss allowances are measured on either of the following bases:
• 12-month expected credit losses: these are expected credit losses that result from
•
possible default events within the 12 months after the reporting date, and
lifetime expected credit losses: these are expected credit losses that result from all
possible default events over the expected life of a financial instrument.
Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date
has increased significantly since initial recognition and 12-month ECL measurement applies
if it has not.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for receivables.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECLs, the Company considers reasonable
and supportable information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis, based on the Company’s
historical experience and informed credit assessment and including forward-looking
information.
The Company considers a financial asset to be in default when:
•
•
there is a breach of financial covenants by the debtor; or
information developed internally or obtained from external sources indicates that the
debtor is unlikely to pay its creditors, including the Company, in full (without taking into
account any collateral held by the Company).
Irrespective of the above analysis, the Group considers that default has occurred when a
financial asset is more than 90 days past due.
The maximum period considered when estimating ECLs is the maximum contractual period
over which the Company is exposed to credit risk.
Measurement of Expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses
are measured as the present value of all cash shortfalls (i.e. the difference between the
contractual cash flows due to the entity in accordance with the contract and the cash flows
that the Company expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted from
the gross carrying amount of the assets. Impairment losses related to trade and other
receivables are presented separately in the statement of profit or loss.
Investments in subsidiaries
Subsidiaries are all the entities which the Company has control. The Company controls
an entity when the Company is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over
the entity.
As at 31 December 2018 considering the fact that the Company financial statements
are publically available and can be used by investors for their economic decisions, the
management has decided that measurement of investments in subsidiaries at fair value
would provide more reliable and more relevant information about the Company’s financial
position than the measurement of investments at cost. Therefore the Сompany management
decided to change the accounting policy and from 2018 financial statements started to
measure investments in its subsidiaries at fair value in accordance with IFRS 9.
Investments in subsidiary companies are classified as investments at fair value through
profit or loss and are measured at fair value. Gains or losses on investments in subsidiary
companies are recognised in profit or loss.
Fair value hierarchy
The Сompany uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
• Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
• Level 3 inputs are unobservable inputs for the asset or liability.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition loans and receivables are
measured at amortised cost using the effective interest method, less any impairment losses.
Loans and receivables are held to collect the contractual cash flows, and their contractual
terms give rise on specified dates to cash flows that are solely payments of principal and
interest. Such financial assets are classified at amortised cost in accordance with IFRS 9.
The company assessed individual impairment based on discounted cash flows attributed to
certain loans amount.
For others loans and receivables the Company calculates ECL based on of the credit risk
rating assigned to respective debtors and the remaining maturity of financial instruments.
The Company determines the inputs for calculation of ECL such as probability of default and
loss given default using both internal and external statistical data.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities
of three months or less. Bank overdrafts that are repayable on demand and form an integral
part of the Company’s cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows. In accordance with IFRS 9, cash
and cash equivalents are classified at amortised cost.
(II)
FINANCIAL LIABILITIES
The Company has the following non-derivative financial liabilities: loans and borrowings,
trade and other payables.
At initial recognition, the Company measures a financial liability at its fair value plus
transaction costs that are directly attributable to the issuance of the financial liability.
Financial liabilities are subsequently measured at amortised cost using the effective interest
method.
The Company derecognises a financial liability when its obligations specified in the contracts
are discharged or cancelled or expire.
The Company recognises financial assets or financial liabilities in its statement of financial
position when it becomes party to the contractual provisions of the instrument and, as a
consequence, has a legal right to receive or a legal obligation to pay cash.
326
FINANCIAL STATEMENTS
327
ANNUAL REPORT 2020
2. SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONTINUED)
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Other payables and accruals
Other payables and accruals represent amounts outstanding at the reporting date and are
recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate method.
Tax
Tax is recognised in the statement of profit or loss and other comprehensive income, except
to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
Current income tax is calculated on the basis of the tax laws enacted or substantively
enacted at the reporting date in the country in which the Company operates and generates
taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. If applicable tax regulation
is subject to interpretation, it establishes a provision where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a liability in the
financial statements in the period in which the dividends are appropriately authorised and
are no longer at the discretion of the Company. More specifically, interim dividends are
recognised as a liability in the period in which these are authorised by the Board of Directors
and in the case of final dividends, these are recognised in the period in which these are
approved by the Company's shareholders.
Share capital
Ordinary shares are classified as equity. The difference between the fair value of the
consideration received by the Company and the nominal value of the share capital being
issued is taken to the share premium account. The capital contribution reserve relates to the
fair value of the shares issued to the shareholders in exchange for investment in subsidiary
(Note 13).
The preference shares bear no voting rights and no rights to dividend, and shall be
redeemed within thirty days of giving notice by the Company to a holder of shares at a
price per share at which each share was issued. Since the option to redeem the Company's
shares are at the discretion of the Company and not the holders of the shares, the
preference shares are classified as equity.
Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements granted to
employees is generally recognized as an expense, with a corresponding increase of share
options reserve in equity, over the vesting period of the awards. The amount recognized
as an expense is adjusted to reflect the number of awards for which the related service
conditions are expected to be met, such that the amount ultimately recognized is based on
the number of awards that meet the related service conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant-date fair value of
the share-based payment is measured to reflect such conditions and there is no true-up
for differences between expected and actual outcomes. For share based-payment awards
with vesting market conditions, which creates variability in the number of equity instruments
that will be received by employees, the Company determines the grant-date fair value of the
3. FINANCIAL RISK
MANAGEMENT AND
TAX RISK
right to receive a variable number of equity instruments reflecting the probability of different
outcomes.
Interest income
Interest income includes loan interest income which is recognised in the statement of profit
or loss on an accrual basis using the effective interest rate method.
Interest expenses
Interest expenses include interest expense on amounts payable to related parties which is
recognised in the statement of profit or loss on an accrual basis using the effective interest
rate method.
Dividend income
Dividend income is recognised in the statement of profit or loss and other comprehensive
income when the right to receive payment is established.
Finance income
Finance income includes foreign exchange gains, which are recognised in the statement of
profit or loss and other comprehensive income as incurred.
Finance expenses
Finance expenses include foreign exchange losses and bank charges, which are recognised
in the statement of profit or loss and other comprehensive income as incurred and on an
accrual basis, respectively.
FINANCIAL RISK FACTORS
The Company's activities expose it to credit risk, liquidity risk, market price risk and currency
risk, arising from the financial instruments it holds. The Board of Directors has overall
responsibility for the establishment and oversight of the Company’s risk management
framework.
The Company’s risk management policies are established to identify and analyse the risks
faced by the Company, to set appropriate risk limits and controls and monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect
market conditions and the Company’s activities.
CREDIT RISK
Credit risk arises when a failure by counter parties to discharge their obligation could reduce
the amount of future cash inflows from financial assets on hand at the reporting date.
Credit risk arises from cash and cash equivalents as well as credit exposures to outstanding
receivables and committed transactions.
Credit risk with regards to cash and cash equivalents is managed by placing funds primarily
in the banks with high credit-ratings assigned by international credit-rating agencies.
In order to minimise credit risk of other receivables, the Company has a policy of dealing
with creditworthy counterparties, obtaining sufficient collateral, where appropriate, and
monitoring on a continuous basis the ageing profile of its receivables as a means of
mitigating the risk of financial loss from defaults.
The Company considers the probability of default upon initial recognition of an asset and
whether there has been a significant increase in credit risk on an ongoing basis throughout
328
FINANCIAL STATEMENTS
329
ANNUAL REPORT 2020
3. FINANCIAL RISK
MANAGEMENT AND
TAX RISK
(CONTINUED)
each reporting period. To assess whether there is a significant increase in credit risk the
company compares the risk of a default occurring on the asset as at the reporting date with
the risk of default as at the date of initial recognition. It considers available reasonable and
supportive forwarding-looking information.
In particular, the following indicators are incorporated:
internal credit rating;
•
• external credit rating (as far as available);
•
future cash flows from construction projects are compared to the current value of the
financial asset;
• actual or expected significant adverse changes in business, financial or economic
conditions that are expected to cause a significant change to the borrower’s ability to
meet its obligations;
• actual or expected significant changes in the operating results of the borrower/
counterparty;
• significant increases in credit risk on other financial instruments of the same borrower/
counterparty;
• significant changes in the value of the collateral supporting the obligation;
• significant changes in the expected performance and behaviour of the borrower/
counterparty, including changes in the payment status of counterparty in the group and
changes in the operating results of the borrower.
The Company’s current credit risk grading framework comprises the following categories
and the assumptions underpinning the Company's expected credit loss model:
CATEGORY
Performing
Doubtful
In default
Write-off
DESCRIPTION
BASIS FOR RECOGNISING
EXPECTED CREDIT LOSSES
The counterparty has a low risk of default and
does not have any past-due amounts
Amount is >30 days past due or there has been
a significant increase in credit risk since initial
recognition
12-month ECL
Lifetime ECL—not credit-impaired
Amount is >90 days past due or there is evidence
indicating the asset is credit-impaired
Lifetime ECL— credit-impaired
There is evidence indicating that the debtor is in
severe financial difficulty and the Group has no
realistic prospect of recovery
Amount is written off
The carrying amount of financial assets represents the maximum credit exposure.
The tables below detail the credit quality of the Company’s financial assets, as well as the
Company’s maximum exposure to credit risk by category of financial assets:
31.12.2020
NOTE
Loans receivable
Other receivables
Cash and cash equivalents
11
12
13
31.12.2019
NOTE
Loans receivable
Other receivables
Cash and cash equivalents
11
12
13
"12-MONTH/
LIFETIME ECL"
Lifetime ECL
Lifetime ECL
12-month
"12-MONTH/
LIFETIME ECL"
Lifetime ECL
Lifetime ECL
12-month
GROSS CARRYING
LOSS ALLOWANCE
NET CARRYING AMOUNT
AMOUNT
14,140,993
(6,006,247)
350,822
492,616
(1,387)
–
8,134,746
349,435
492,616
GROSS CARRYING
LOSS ALLOWANCE
NET CARRYING AMOUNT
AMOUNT
12,198,255
(3,746,309)
8,451,946
301,614
81,343
(692)
–
300,922
81,343
Allowance for impairment in respect of loans given
The movement in the allowance for impairment in respect of loans given during the reporting
period was as follows:
BALANCE AT 1 JANUARY
Change of impairment for the period
FOREX
BALANCE AT 31 DECEMBER
LIQUIDITY RISK
2020
RUB’000
(3,746,309)
(1,547,668)
(712,270)
(6,006,247)
2019
RUB’000
(4,257,627)
75,792
435,526
(3,746,309)
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset.
The Company’s approach to managing liquidity is to ensure, as far as possible, that it
will always have sufficient liquidity to meet its liabilities when due, under both normal
and stressed conditions, without incurring unacceptable losses or risking damage to the
Company’s reputation.
The Company’s management monitors its liquidity on a continuous basis and acts
accordingly. Each year the Company prepares a cash flow budget to forecast possible
liquidity deficits and to define the sources of financing of those deficits.
31 DECEMBER 2020
Borrowings
Other payables and accruals
TOTAL
31 DECEMBER 2019
Borrowings
Other payables and accruals
TOTAL
CARRYING
AMOUNTS
RUB’000
CONTRACTUAL
BETWEEN 0-12
CASH FLOWS
RUB’000
MONTHS
RUB’000
671,915
17,424
689,339
542,479
25,251
567,730
684,187
17,424
701,611
563,047
25,251
588,298
684,187
17,424
701,611
563,047
25,251
588,298
The following are the contractual maturities of financial liabilities, including estimated interest
payments:
MARKET PRICE RISK
Market risk is the risk that changes in market prices, interest rates and equity prices will
affect the Company's income or the value of its holdings of financial instruments.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to
changes in market interest rates. Loans receivable and borrowings issued at fixed rates
expose the Company to fair value interest rate risk. The Company's management monitors
the interest rate fluctuations on a continuous basis and acts accordingly.
330
FINANCIAL STATEMENTS
331
ANNUAL REPORT 2020
3. FINANCIAL RISK
MANAGEMENT AND
TAX RISK
(CONTINUED)
CURRENCY RISK
Sensitivity analysis
Currency risk is the risk that the value of financial instruments will fluctuate due to changes
in foreign exchange rates. Currency risk arises when future commercial transactions and
recognised assets and liabilities are denominated in a currency that is not the Company's
functional currency.
The Company is exposed to foreign exchange risk arising from various currency exposures
primarily with respect to US Dollars (US$) and Euro (EUR). The Company's management
monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
RUB’000
ASSETS
US DOLLAR
Cash and cash equivalents
Loans receivable
Other receivables
TOTAL
EURO
Cash and cash equivalents
Other receivables
TOTAL
LIABILITIES
US DOLLAR
Other payables and accruals
Borrowings
TOTAL
EURO
Other payables and accruals
TOTAL
NET POSITION
US Dollar
EURO
158,885
6,608,667
74
6,767,626
6,522
268,464
274,986
(207,967)
(671,915)
(879,882)
(16,480)
(16,480)
76,586
5,572,412
132,441
5,781,439
1,030
188,132
189,162
(236,732)
(542,479)
(779,211)
(8,747)
(8,747)
5,887,744
258,506
5,002,228
180,415
The following significant exchange rates applied during the year:
IN RUB
USD 1
EUR 1
AVERAGE RATE
REPORTING DATE SPOT RATE
2020
2019
31 DECEMBER
31 DECEMBER
72.15
82.45
64.73
72.50
2020
73.88
90.68
2019
61.90
69.34
A 10 % strengthening of the US$ against the RUB at 31 December 2020 and 31 December
2019 would have increased equity and profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant. For a
10 % weakening of the US$ against the RUB, there would be an equal and opposite impact
on profit and equity.
US DOLLAR
US DOLLAR
EQUITY 2020
PROFIT OR LOSS 2020
RUB’000
588,774
RUB’000
588,774
EQUITY 2019
PROFIT OR LOSS 2019
RUB’000
500,223
RUB’000
500,223
A 10% strengthening of the Euro against the RUB at 31 December 2020 and 31 December
2019 would have increased equity and profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant. For a
10% weakening of the Euro against the RUB, there would be an equal and opposite impact
on profit and equity.
EURO
EURO
EQUITY 2020
PROFIT OR LOSS 2020
RUB’000
25,851
RUB’000
25,851
EQUITY 2019
PROFIT OR LOSS 2019
RUB’000
18,042
RUB’000
18,042
A 10% strengthening of the GB Pound against the RUB at 31 December 2020 and 31
December 2019 would not have any material effect on equity and profit or loss.
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are discussed
below.
Estimation of expected credit losses
Expected credit losses are an estimate weighted by the probability of credit losses. Credit
losses are measured as the present value of all expected cash losses. The amount of
expected credit losses is discounted using the effective interest rate on the relevant financial
asset.
The Company measures ECL and recognises credit loss allowance at each reporting date.
The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is
determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all
reasonable and supportable information that is available without undue cost and effort at the
end of each reporting period about past events, current conditions and forecasts of future
conditions.
4. CRITICAL
ACCOUNTING
ESTIMATES AND
JUDGEMENTS
332
FINANCIAL STATEMENTS
333
ANNUAL REPORT 2020
4. CRITICAL
ACCOUNTING
ESTIMATES AND
JUDGEMENTS
(CONTINUED)
In assessing ECL, the Company used information published by Moody’s Investors Service
about the probabilities of default (PD) and losses given default (LGD) for counterparties with
different credit ratings and financial instruments with different durations.
Loss given default is an estimate of the loss arising on default. It is based on the difference
between the contractual cash flows due and those that the lender would expect to receive,
taking into account cash flows from collateral and integral credit enhancements.
6. NET FINANCE
INCOME/
(EXPENSES)
Foreign exchange gains
FINANCE INCOME
Foreign exchange losses
Bank charges
FINANCE EXPENSES
2020
RUB’000
1,115,244
1,115,244
(105,098)
(435)
(105,533)
2019
RUB’000
67,388
67,388
(918,726)
(306)
(919,032)
NET FINANCE INCOME/(EXPENSES)
1,009,711
(851,644)
7. SHARE-
BASED PAYMENT
ARRANGEMENTS
GDR BUYBACK PROGRAMME
On 24 January 2020, the Board of Directors of the Company authorised a buyback
programme to purchase up to 10 % of the Company’s issued capital in the form of GDR until
14 April 2021. On 22 March 2020, the program was approved by the extraordinary general
meeting of shareholders. As at 31 December 2020, no shares have been purchased.
8. INCOME TAX
EXPENSE
The tax on the Company’s profit before tax differs from the theoretical amount that would
arise using the applicable tax rate as follows:
Profit before tax
Tax calculated at the applicable tax rate of 12,5 %
(2019: tax rate of 12,5 %)
Tax effect of expenses not deductible and income
not taxable for income tax purposes, net
Tax withheld on dividends from Russian Federation
Notional Interest Deduction (NID)
Application of group relief
Tax for the period
2020
RUB’000
8,020,942
2019
RUB’000
2,268,246
1,002,618
283,531
(951,042)
(236,777)
2,370
(41,896)
(9,680)
2,370
1,338
(40,592)
(6,162)
1,338
Probability of default constitutes a key input in measuring ECL. Probability of default is
an estimate of the likelihood of default over a given time horizon, the calculation of which
includes historical data, assumptions and expectations of future conditions.
The other assumptions and methods used for estimating of expected credit losses are
disclosed in note 2 (“Impairment of financial assets”, “Loans and receivables”) and note
3 (“Credit risk”).
• Fair value of investments in subsidiaries
The fair value of investments in subsidiaries are assessed by an independent appraiser.
The fair value of investments in subsidiaries recorded in the statement of financial
position cannot be derived from active markets, and they are determined using valuation
techniques including the discounted cash flows model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, estimates and
assumptions were made, and a degree of judgment has been applied in establishing fair
values. Changes in assumptions about these factors could affect the reported fair value of
investments in subsidiaries. The assumptions and methods used for estimating the fair value
of investments in subsidiaries are disclosed in Note 9.
• Functional currency
The Management of the Company has considered which currency is the currency of the
primary economic environment in which the Company operates. In making this assessment,
Management has used judgment to determine the functional currency that most faithfully
represents the underlying transactions, events and conditions of the Company. Management
has concluded that the functional currency of the Company is the RUB because the
Company is seen as an extension of its subsidiaries operating in the Russian Federation.
Insurance expenses
Legal, consulting and other professional services
Staff costs (Note 16(i))
Payroll tax
Auditors’ remuneration
Accounting and administration expenses
Social insurance contribution
Secretarial fees
Reversal of prior year over accrual of staff costs
Other expenses
TOTAL
2020
RUB’000
59,366
44,122
31,791
8,712
7,708
5,114
2,740
1,048
(12,133)
–
148,468
2019
RUB’000
13,426
180,893
51,138
19,738
27,486
8,371
827
778
(114,823)
1,785
189,619
Reversal of prior year accrual include the amounts of staff costs, that were over-accrued in
the previous year. In 2019, the excessive accruals were written off, since the obligations to
certain directors no longer existed.
Remuneration of the statutory audit firm for the year ended 31 December 2020 amounted to
RUB 7.7 million for audit services (2019: RUB 5.9 million).
5. ADMINISTRATIVE
EXPENSES
334
FINANCIAL STATEMENTS
335
ANNUAL REPORT 2020
9. INVESTMENTS
IN SUBSIDIARIES
At beginning of year 01 January
Change in fair value of investments in subsidiaries
AT END OF YEAR 31 DECEMBER
2020
RUB’000
60,311,656
4,458,099
64,769,755
2019
RUB’000
59,122,033
1,189,623
60,311,656
The Company’s main subsidiaries, which are unlisted, are as follows:
NAME
PRINCIPAL ACTIVITY
COUNTRY OF
31 DECEMBER 2020
31 DECEMBER 2019
Etalon Group Limited
Holding of investments
Elzinga Holdings Limited
Holding of investments
Fagestrom Limited
Provision of financing services
JSC GK Etalon
Holding of investments
INCORPORATION
Cyprus
Cyprus
Cyprus
Russia
99,99 %
100 %
100 %
26,16 %
99,99 %
100 %
100 %
1 %
10. LOANS
RECEIVABLE
The investments are measured at fair value.
In 2020, there was a transfer of shares of JSC GK Etalon from a Company’s subsidiary,
Etalon Group Limited, to the Company. As a result of the transaction, the valuation of the fair
value of the investment in JSC GK Etalon increased and the valuation of the fair value of the
investment in Etalon Group Ltd decreased.
The effect of these changes in fair value have been accounted for as part of the valuation.
As at 31 December 2020 and 31 December 2019 the Company holds 26,16% and 1% in JSC
GK Etalon respectively, but the Company is exposed to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over other
subsidiaries owning the remaining 73,84% and 99% in the subsidiary at each reporting date.
The fair value of investments in subsidiaries at 31 December 2020 and 31 December 2019
was assessed by an independent appraiser. The fair value hierarchy of investments in
subsidiaries belongs to Level 3 as a fair value measurement uses unobservable inputs that
require significant adjustment.
To determine the fair value of investments in subsidiaries, the independent appraiser
projected cash flows from development projects and objects completely constructed
and owned by the respective subsidiaries. These cash flows were adjusted by the fair
value of other assets and liabilities controlled by those subsidiaries, and minority interest,
where applicable and discounted at an-applicable, risk-adjusted rate. The fair value has
been reduced by the payables of the subsidiaries towards the Company. The provision
made against loans from subsidiaries as described in Note 10 has therefore resulted in a
corresponding increase in the fair value of investments in subsidiaries at 31 December 2020.
The key assumptions used in the estimation of the fair value of subsidiaries are set out
below.
CAPM (discount rate)
18.47 %
19.00 %
31 DECEMBER 2020
31 DECEMBER 2019
The values assigned to the key assumptions represented management’s assessment
of future trends in residential development and were based on historical data from both
external and internal sources.
The cash flows projections included specific estimates for 8 years.
As a result of this assessment, the Company has recognized an increase in the fair value
of investments in subsidiaries in the amount of RUB’000 4.458.099 for the year ended 31
December 2020 (31 December 2019: increase of RUB’000 1.189.623).
Sensitivity analysis
The following tables demonstrate changes in key inputs and sensitivity of fair value
measurement:
31 DECEMBER 2020
Growth of discount rate
Growth of cost of construction projects
Reducing of revenue from construction projects
Growth of expenses on non-developer types of activities
31 DECEMBER 2019
Growth of discount rate
Growth of cost of construction projects
Reducing of revenue from construction projects
Growth of expenses on non-developer types of activities
NON-CURRENT
Loans to related parties (Note 16(iii))
TOTAL NON-CURRENT LOANS RECEIVABLE
CURRENT
Loans to related parties (Note 16(iii))
TOTAL CURRENT LOANS RECEIVABLE
TOTAL LOANS RECEIVABLE
CHANGE OF
IMPACT ON
IN MONETARY
PARAMETER
FAIR VALUE
TERMS,
RUB'000
1 %
5 %
(5 %)
5 %
1 %
5 %
(5 %)
5 %
(2,56 %)
(1,659,089)
(11,61 %)
(7,517,902)
(16,60 %)
(10,754,329)
(3,82 %)
(2,471,086)
(1,77 %)
(1,069,408)
(10,92 %)
(6,584,595)
(14,93 %)
(9,004,814)
(5,72 %)
(3,451,783)
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
RUB’000
6,008,715
6,008,715
2,126,031
2,126,031
8,134,746
8,451,946
8,451,946
–
–
8,451,946
Due to the significant devaluation of the RUB against the US$ subsequent to the issuance of
US$-denominated loans, the Company concluded that there is an objective evidence that an
impairment loss on loans has been incurred.
The Company assessed individual impairment based on discounted cash flows attributed for
part of its loans through their recoverable amount.
The recoverable amount of loans was determined based on the present value of the
expected cash flows to be received from the loans, discounted at the original effective
interest rate of 3,5%, and a provision in the amount of RUB’000 5.968.063 was recognised
as at 31 December 2020 (31 December 2019: RUB’000 3.683.671).
For others loans, the Company calculates ECL based on of the credit risk rating assigned to
respective debtors and the remaining terms to maturity. The Company determines the inputs
for calculation of ECL such as probability of default (PD) and loss given default (LGD) using
both internal and external statistical data.
If the LGD rates on loans and receivables had been 10 per cent higher (lower) and PD rates
on loans and receivables had been 0,5 per cent higher (lower) as of 31 December 2020, the
loss allowance on loans and receivables would have been RUB’000 3.787 higher (lower).
There has been no change in the estimation techniques or significant assumptions made
during the current reporting period in assessing the loss allowance for these financial assets.
The Board of Directors believes carrying values of loans approximate its fair value. The fair
value hierarchy of loans receivable belongs to Level 3.
336
FINANCIAL STATEMENTS
337
ANNUAL REPORT 2020
11. OTHER
RECEIVABLES AND
PREPAYMENTS
Receivable from related parties (Note 16(iv))
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
349,435
349,435
RUB’000
300,922
300,922
The fair values of other receivables and prepayments approximate their carrying amounts.
For receivables, the Company calculates ECL based on of the credit risk rating assigned to
respective debtors and the remaining maturity of the financial instruments. The Company
determines the inputs for calculation of ECL such as probability of default and loss given
default using both internal and external statistical data.
12. CASH AND CASH
EQUIVALENTS
Cash at bank
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
492,616
RUB’000
81,343
13. SHARE CAPITAL
AND SHARE
PREMIUM
At 31 December 2019 and at 31 December 2020, the authorized share capital of the
Company was GBP 14.748 divided into 294.957.971 ordinary shares having a par value of
GBP £0,00005 each. All issued ordinary shares are fully paid. The holders of ordinary shares
are entitled to receive dividends and to one vote per share at meetings of the Company.
14. OTHER
PAYABLES AND
ACCRUALS
During the year ended 31 December 2017, the Company issued 20.000 preference shares
of GBP 1 each. The shares bear no voting rights and no rights to dividend and shall be
redeemed within thirty days of giving notice by the Company to a holder of shares at a price
per share at which each share was issued. Preference shares were fully paid in February
2017. Since the option to redeem the Company's shares is at the discretion of the Company
and not the holders of the shares, the preference shares are classified as equity.
15. BORROWINGS
NAME
"At 31 December 2019
and 31 December 2020"
NUMBER OF
ORDINARY
SHARES
NUMBER OF
SHARE CAPITAL
RESERVE FOR
SHARE PREMIUM
REDEEMABLE
PREFERENCE
SHARES
RUB’000
OWN SHARES
RUB’000
RUB’000
TOTAL
RUB’000
294,954,025
20,000
2,266
(694)
15,486,109
15,487,681
(i) Own shares
As of 31 December 2020 and 31 December 2019, the total number of own shares acquired
by the Company amounted to 3.946 shares or 0,001% of issued share capital.
(ii) Share premium
The Company’s share premium account originated from initial public offering of 71
428 571 ordinary shares at a value USD 7 each in form of global depository receipts (GDR`s)
on the London Stock Exchange on 4 April 2011, and from issuance of 117 647 ordinary
£0.01 shares for a consideration of USD 82.352.900 in March 2008.
(iii) Share options reserve
The share options reserve is used to recognise the value of equity-settled share-based
payments provided to certain members of the Company’s subsidiaries’ key management
personnel up to 2018, as part of their remuneration.
16. RELATED
PARTY
TRANSACTIONS
(iv) Dividends
As at 31 December 2020, the retained earnings were RUB’000 40.985.334 (31 December
2019: RUB’000 36.506.258). During the year ended 31 December 2020, the AGM of
shareholders approved Board of Directors recommendation for dividends in the amount of
RUB’ 000 3.539.496 (31 December 2019: RUB’000 3.577.386).
(v) Capital contribution
Capital contribution represents the excess of the deemed cost of shares in its subsidiary,
Etalon Group Limited, transferred to the Company by its shareholder in 2008, over the
book value of these shares as at the date of transaction. Deemed cost was determined at
the date of transfer by reference to the terms of a transaction with an unrelated party for
the acquisition of a minority stake in the Company which took place close to the date of
issuance of shares by the Company.
Accrued audit fees
Other payables and accruals
Accrued accounting and administration expenses
Remuneration payable to Board of Directors
TOTAL
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
13,832
1,419
2,173
–
17,424
RUB’000
11,714
1,105
853
11,579
25,251
The fair value of other payables and accruals which are due within one year approximates
their carrying amount at the reporting date.
CURRENT
Borrowings from subsidiary (Note 16(v))
TOTAL CURRENT BORROWINGS
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
RUB’000
671,915
671,915
542,479
542,479
On 14 August 2018, the Company signed a loan agreement with a related party for a total
amount of US$10.000.000. The loan bears interest of 4% per annum.
In December 2020, the Company signed an amendment agreement for the loan contract,
extending the repayment date from 31 December 2020 to 30 June 2021.
The Board of Directors believes carrying values of loans approximate its fair value. The fair
value hierarchy of loans belongs to Level 3.
The following transactions were carried out with related parties:
Directors’ remuneration (Note 5)
Payroll and social tax (Note 5)
TOTAL
2020
RUB’000
31,791
11,452
43,243
2019
RUB’000
51,138
20,565
71,703
As at 31 December 2020, outstanding balances of remuneration payable to the Board of
Directors was nil (Note 15) (31 December 2019: RUB’000 11.579).
338
FINANCIAL STATEMENTS
339
ANNUAL REPORT 2020
(ii) Year-end balances
(vi) Dividend income/dividend receivable from subsidiary companies
Receivables from subsidiary companies (Note 11)
Borrowings from subsidiary company (Note 15)
Loans due from subsidiary companies (Note 10)
(iii) Loans due from subsidiary companies
On 1 January
Loans repaid during the year
Interest charged
Interest repaid during the year
(Impairment)/reversal of impairment for loans
receivable
Foreign exchange gains/(losses)
ON 31 DECEMBER (NOTE 10)
31 DECEMBER 2020
31 DECEMBER 2019
RUB’000
349,435
(671,915)
8,134,746
2020
RUB’000
8,451,946
(282,066)
435,771
–
(1,547,668)
1,076,763
8,134,746
RUB’000
300,922
(542,479)
8,451,946
2019
RUB’000
10,863,179
(1,287,255)
424,079
(853,327)
75,792
(770,522)
8,451,946
As at 31 December 2020, the loans amounted to RUB’000 8.134.746 (31 December 2019:
RUB’000 8.451.946), were denominated in US Dollars and Russian rubles and bear interest
3,5-6 % per annum. During 2019, the loans were prolonged from 31 December 2019 to
31 December 2021 and 31 December 2025. Modification of loans maturity dates had no
material impact on the fair value of the loans.
(iv) Receivables from subsidiary companies
On 1 January
Transfers of funds under reimbursement
agreements
Write-off of receivables
(Impairment)/reversal of impairment for receivables
Dividends receivables (Note 16(vi))
Dividends paid for prior period (Note 16(vi))
Foreign exchange gains/(losses)
ON 31 DECEMBER (NOTE 11)
(v) Borrowings from subsidiary company
On 1 January
Interest accrued
Foreign exchange losses/(gains)
ON 31 DECEMBER (NOTE 15)
2020
RUB’000
300,922
174,180
(3,360)
(696)
–
(130,330)
8,719
349,435
2020
RUB’000
542,479
24,340
105,096
671,915
2019
RUB’000
547,614
(356,785)
(2,987)
1,646
132,379
–
(20,945)
300,922
2019
RUB’000
585,688
21,416
(64,625)
542,479
17. EVENTS
AFTER THE
REPORTING
PERIOD
On 1 January
Dividends declared by subsidiaries
Income tax withheld on dividends (Note 8)
Dividends settled by subsidiaries in shares
Dividends received from subsidiaries in cash prior
year
Dividends received from subsidiaries in cash
current year
Foreign exchange losses
On 31 December (Note 16(iv))
2020
RUB’000
132,379
16,976,026
(2,370)
(13,105,910)
(130,330)
2019
RUB’000
–
1,647,653
(1,338)
–
–
(3,867,746)
(1,511,762)
(2,049)
–
(2,174)
132,379
SHARE CAPITAL INCREASE AND OFFERING
OF NEWLY ISSUED ORDINARY SHARES
On 26 February 2021, the Board of Directors of the Company held a meeting where it was
proposed that an extraordinary general meeting of shareholders (“EGM”) of the Company
authorises the Board of Directors to consider a potential share capital increase for a potential
public or private placement. If approved, proceeds from such placement will enable the
Company to replenish and develop its land bank, as well as finance the early development of
new projects.
Subject to approval of EGM, the authorised share capital of the Company will be increased from
£34,747.899 to £39,172.2686 by the creation of 88,487,391 ordinary shares of nominal value of
£0.00005 each, and the authority will be given to the Board of Directors to allot and issue, out of
the authorised but unissued share capital of the Company, up to 88,487,391 ordinary shares at
par or at a premium as they deem appropriate, and such authority to expire on 22 March 2023.
The share capital increase is expected to be structured in the form of one or several public and /
or institutional offerings of newly issued ordinary shares represented by GDRs.
On 22 March 2021, the EGM voted in favor of the proposed share capital increase and
subsequent offering of newly issued ordinary shares in the form of GDRs.
On 19 April 2021, the Company announced the results of a Board of Directors meeting held
on 16 April 2021, at which the Board of Directors reviewed and approved an offering of up to
88,487,391 ordinary shares of the Company representing 30% of the Company’s total issued
ordinary shares.
The Offering will consist of an offering of rights to subscribe for New Shares to eligible existing
holders of the Company’s equity securities followed by a marketed offering to institutional
investors of any New Shares not taken up during the Rights Offering in the form of global
depositary receipts (“GDRs”). The subscription price for each of the Rights Offering and the
Rump Offering will be USD 1.7 per New Share (or GDR).
There were no other material events after the reporting period, which have a bearing on the
understanding of the financial statements of the Company for the year ended 31 December 2020.
340
FINANCIAL STATEMENTS
ALTERNATIVE PERFORMANCE
MEASURES USED IN THE 2020
ANNUAL REPORT
We have included certain measures of financial and operating
performance in Annual Report, defined below, that are not recognised
by international financial reporting standards (IFRS). We have included
these APMs for the reasons described below; however, these
measures should not be used instead of, or considered as alternatives
to, our historical financial results based on IFRS.
THE COMPANY HAS DEFINED THE FOLLOWING:
FINANCIAL METRICS:
• Net corporate debt: loans and
OPERATING METRICS:
• Pre-PPA gross profit: gross profit less
purchase price allocation (PPA) from the
acquisition of Leader-Invest included in
the costs of sales.
• EBITDA: gross profit minus general
and administrative expenses, minus
selling expenses, plus depreciation and
amortisation.
• pre-PPA EBITDA1: gross profit
minus general and administrative
expenses, minus selling expenses,
plus depreciation and amortisation,
plus purchase price allocation from the
acquisition of Leader-Invest included in
the cost of sales.
borrowings minus cash and cash
equivalents, minus bank deposits with
terms over 3 months, minus secured
project financing.
• Net corporate debt to pre-PPA
EBITDA: ratio calculated by dividing
net corporate debt by pre-PPA EBITDA
(each as defined above).
We use these measures as the principal
metrics for evaluating the impact of the
total size of our net borrowings on our
operations, and our ability to service our
debt and to maintain the liquidity and
solvency of our business.
• Pre-PPA gross profit margin: Pre-PPA
gross profit as defined above divided by
revenue.
• Pre-PPA EBITDA margin: Pre-PPA
EBITDA as defined above divided by
revenue.
• Operating cash flow adjusted for cash
collections held in escrow accounts:
net cash (used in)/from operating
activities plus interest paid, plus receipt
of funds on escrow accounts.
• Free cash flow: profit for the year
We believe that the inclusion of pre-PPA
gross profit, EBITDA, pre-PPA EBITDA,
as well as pre-PPA gross profit margin,
EBITDA and pre-PPA EBITDA margins
is necessary because they (i) enhance
investors’ understanding of our financial
performance, (ii) are used by us as
important supplemental measures
to assess the Company’s financial
performance, including our ability to fund
discretionary spending such as capital
expenditures and other investments and
our ability to incur and service debt,
and (iii) pre-PPA EBITDA is a measure
incorporated into certain financial ratios in
our loan instruments.
adjusted for depreciation, impairments,
interest, taxation, change in working
capital, and change in invested capital.
• Free cash flow adjusted for cash
collections held in escrow accounts:
profit for the year adjusted for
depreciation, impairments, interest,
taxation, change in working capital, and
change in invested capital, plus receipt
of funds on escrow accounts.
We use these measures as we believe
these indicators are important for better
understanding of the Company’s cash
flow generating performance during the
transition period to operating under the
escrow account scheme.
• New contract sales (pcs): number of
sales contracts that have been entered
into with customers (regardless of
whether contracts were subsequently
terminated).
• New contract sales (sqm): net sellable
area of flats, commercial premises and
parking places for which sales contracts
have been entered into with customers
(regardless of whether contracts were
subsequently terminated).
• New contract sales (RUB): monetary
value of sales contracts for flats,
commercial premises and parking
places for which contracts have been
concluded with customers (regardless
of whether contracts were subsequently
terminated).
• Cash collections (RUB): actual amount
of money received by the Company for
concluded contracts during the reported
period, including cash collection to
escrow accounts.
• Deliveries (sqm): total net sellable area
of the project that was commissioned.
Includes apartments built-in commercial
premises, as well as parking places and
social infrastructure that are part of the
project.
We use these operating measures as
the principal metrics for evaluating the
Company’s operating performance. These
are the most commonly used metrics in
our industry, and they are frequently used
by securities analysts, investors and other
interested parties.
1 Pre-PPA EBITDA is the Company’s disclosure is defined as adjusted EBITDA in the supplementary information to the IFRS statements
ETALON GROUP IR TEAM
Phone: +44 (0) 20 8123 1328
Email: ir@etalongroup.com
ETALON GROUP WEBSITE
www.etalongroup.com
TWITTER
twitter.com/EtalonIr
ANNUAL REPORT
2020
etalongroup.com