ANNUAL
REPORT ’22
BUILDING MODERN CITIES WITH CARE
Contents
1
INTRODUCTION
About this report 4
About Etalon Group 5
Our strengths 6
Acquisition of YIT Russia 7
Key regions and segments 10
Business management structure 12
Value creation 13
Investment case 14
2022 in brief 15
Chairman’s statement 17
CEO’s statement 18
2
MARKET OVERVIEW AND TRENDS
Macroeconomic context 20
Factors driving demand 21
Supply redistribution 24
Competitive environment 24
3
STRATEGY 2024
Strategy 2024 26
Strategic goals and
their implementation 27
Strategy for developing the value chain 28
Strategic initiatives 29
4
PROJECT PORTFOLIO
Portfolio highlights 33
Project portfolio additions 34
Current project portfolio 35
Integrated development projects 38
Business-class projects 47
Comfort-class projects 54
5
OPERATING RESULTS
Operating results 64
6
FINANCIAL RESULTS
Financial results 73
7
SUSTAINABILITY
Introduction 76
Stakeholder engagement 80
Occupational health and safety 85
Environment 90
Employees 94
Customers 101
Social responsibility 104
Innovations 114
Data protection and cybersecurity 121
Business conduct 122
Responsible supply chain 127
Risk management framework 132
GRI Standards 141
8
CORPORATE GOVERNANCE
Corporate governance 145
Board committees 152
10
FINANCIAL STATEMENTS
Consolidated financial statements 161
Parent Company financial statements 210
9
SHAREHOLDER INTERACTIONS
11
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures used
in the 2022 Annual Report 236
Shareholder interactions 155
Share value 156
Ownership structure 156
Dividend policy 157
Investor relations 157
Analyst coverage 158
Investor calendar 158
Bonds and credit ratings 159
2
ANNUAL REPORT 2022 1
IntroductIon
REPORT
2022
1 ANNUAL
INTRODUCTION
About this report 4
About Etalon Group 5
our strengths 6
Acquisition of YIt russia 7
Key regions and segments 10
Business management structure 12
Value creation 13
Investment case 14
2022 in brief 15
chairman’s statement 17
cEo’s statement 18
3
3
11ANNUAL REPORT 2022 1
1
IntroductIon
About
this report
Reporting period
Material issues
The Annual Report provides information on Etalon Group’s activities
Following the above-mentioned reporting standards, this report
in 2022 and its financial and non-financial results, including
addresses material issues related to Etalon Group’s economic,
its consolidated audited IFRS statements.
environmental and social impact that could affect the assessments
The sections of the report that provide an overview of the Company
and its business as well as its work in the areas of sustainability,
corporate governance practices and investor relations may
include events that occurred after the reporting date.
and decisions of stakeholders. We have identified and prioritised
these issues based on their importance to stakeholders and the
availability of measurable data.
Reporting form and standards
In 2023, consistent with the objectives set out in its ESG Policy,
the Company is publishing two separate reports for 2022: an Annual
Report and a Sustainability Report. This Annual Report informs
all stakeholders about how Etalon Group is creating value in the
short, medium and long term and outlines the Group’s sustainability
initiatives. More detailed ESG-related information is provided
in the Sustainability Report.
The Annual Report is based on best practices and standards as well
as relevant data from management reports, which ensures that the
information it contains is as transparent, accurate and relevant
as possible.
The Annual Report is consistent with a number of guidelines,
including the selected GRI Sustainability Reporting Standards. In line
with the requirements of the GRI Standards, this report includes a
GRI Index, which presents a clear structure for users
of the report.
Forward-looking statements
Certain statements in this report are forward-looking in nature, and
final results could differ considerably. In addition to factors explicitly
mentioned in the report, other factors could have a material impact
on actual results. These factors include, but are not limited to, the
general business environment, regulatory changes, interest rate
fluctuations, political events, the activities of competitors and their
pricing policies, product development, commercialisation, technical
problems, supply disruptions, etc.
External assurance
The report did not undergo external assurance.
4
ANNUAL REPORT 202211
1
IntroductIon
About
Etalon Group
Etalon Group is one of russia’s largest and
longest-established development and
construction companies. during the 35 years of
its existence, Etalon Group has become one of
the leading nationwide players, with operations
in eight regions of russia and the best margins
in the industry. As part of its strategy, the
company plans to further scale up its business
and improve its efficiency by increasing regional
expansion, developing new technologies and
digitalising the entire value chain.
In May 2022, the Сompany completed a lucrative
transaction to acquire YIT Russia that included 19
projects at the design and construction phases in five
regions of Russia, exclusive rights to Dispatcher 24
software for managing apartment buildings, project
design documentation and a library of standard
design solutions for cast-in-place construction
and buildings made of prefabricated panels, as
well as service companies with 2.5 mln sqm under
management.
Etalon Group’s assets as of the end of 2022 included
a land bank with a net sellable area of 6.4 mln sqm
as well as a construction and maintenance division
that includes the Company’s own general contracting
and subcontracting companies, service businesses,
as well as IT companies and manufacturing
enterprises, including a production facility for modular
construction.
38 %
pre-PPA
gross profit
margin
%
16 net profit
margin
5
11ANNUAL REPORT 2022 1
IntroductIon
AnnuAL rEPort 2022
About
Etalon Group
>35
Years in the market 1
8.6 MLN
SQM
Delivered throughout the
Company’s history
6.4 MLN
SQM
Project portfolio 2
288 BLN
RUB
In assets 2
8 REGIONS
St Petersburg, Moscow
and the Moscow region,
Kazan, Ekaterinburg, Omsk,
Novosibirsk and Tyumen
38
Projects at the design and
construction stages
TOP 3
Among the top
3 nationwide
developers 3
TOP 10
Among the top 10
companies in a rating of
confidence in developers
according to Forbes 4
TOP 5
Among the top 5 in terms
of the volume of housing
deliveries 5
1 As of the date of publication of the Annual Report.
2 According to Nikoliers’ valuation of Etalon Group’s assets as of 31 December 2022.
3 A rating of developers with operations in six or more regions in terms of the volume of ongoing construction as of
1 January 2023, according to data available from nash.dom.rf.
4 Position in a rating of confidence in Russian developers in the category of mass housing for 2022.
5 Rating of Russian developers in terms of the amount of floor space delivered in 2022, according to data available
Our
strengths
1
2
3
One of the largest nationwide
developers in Russia, with an
extensive geographical footprint
A company with a broad
range of competencies and an
integrated business model
New technologies and digital
solutions to improve business
efficiency
The Company’s current project portfolio
includes 38 projects in Russia’s largest
regions and in cities with a population
of more than 1 million (Moscow and the
Moscow region, St Petersburg, Omsk,
Novosibirsk, Ekaterinburg, Kazan, Tyumen).
The Company’s entry into fragmented
regional markets with an offer of an
affordable and high-quality product
provides the Group with opportunities
to expand its business and consolidate
the industry. In 2022, Etalon Group was
the leader in terms of expansion into new
regions (adding five regions during the
year), growth in construction volumes (up
38% year-on-year) and deliveries (up 74%
year-on-year).
For more information about the structure and
valuation of the Company’s portfolio, see the
section Project portfolio.
Etalon Group provides a full range of
project implementation services and the
preparation of all necessary documentation
right up to the sale, delivery and servicing of
new homes.
The Company’s business model is based
on the use of its software platform and
the integration of new technologies, which
supports the flexibility, efficiency and
scalability of projects as well as the ability
to quickly adapt operational processes to
changing market conditions.
In addition, the Company ensures strict cost
and quality control at all project stages,
including by achieving economies of scale
through centralised procurement, improving
its product in response to customer
feedback and automating support
functions.
For more on the business model and creating
additional value, see page 13.
Etalon Group is one of the leaders in the
Russian real estate market when it comes to
using digital solutions and innovations.6
The Company was one of the first in Russia
and the CIS countries to develop and
approve its own BIM design standard, and
it continues the systematic development of
its in-house design and construction know-
how. In 2022, the Company switched to the
full-scale use of standardised design and a
standardised product in regional projects;
the Company is also building a pilot modular
production facility and has already begun
assembling test modules.
The integration of technologies and
innovative approaches obtained as part
of the acquisition of YIT Russia not only
strengthens our competitive advantages
but also creates a foundation for successful
competition in new markets for the
Company.
For more about new technologies and digital
solutions, see Innovations on page 114.
from nash.dom.rf.
6 Since 2014, Etalon Group has been the industry leader in the field of BIM technologies in Russia according to Autodesk.
6
11 1
IntroductIon
Acquisition
of YIT Russia
In May 2022, the Сompany completed its acquisition of YIt russia, enlarging its land
bank with the addition of 19 projects at the design and construction phases in five
regions of russia – Moscow and the Moscow region, St Petersburg, the Sverdlovsk
region, Kazan and tyumen – with an nSA of more than 0.6 mln sqm.
Regional breakdown
Stages of construction
St Petersburg
Moscow and the
Moscow region
Kazan
Ekaterinburg and
the Sverdlovsk region
Tyumen
6
Ekaterinburg and the
Sverdlovsk region
3
3
5
2
Construction
Design
YIT Russia, as of 28 February 2022
Ekaterinburg
Moscow region
Kazan
Construction
Design
Completed
St Petersburg
Tyumen
19
5
projects in its portfolio
regions of operations
245 THS
SQM
under construction
0.6 MLN
SQM
of NSA
7
7
11ANNUAL REPORT 2022 1
IntroductIon
Acquisition
of YIT Russia
Dispatcher 24
THE LARGEST PRIVATE B2C
PLATFORM FOR HOUSING AND
COMMUNAL SERVICES IN RUSSIA
Dispatcher 24 is a contact centre and an
ecosystem for housing and communal services
� Affordable and high-quality services for customers
� Full-fledged dispatch service for a management company
or housing cooperative
� Utilities: data entry and payments
� Communication with the service company
� Additional services
In addition to the portfolio of projects, Etalon
Group received a number of digital products and
technologies as part of the transaction.
Synergistic effect:
� the possibility of creating fully
automated housing and communal
services enterprises
�
�
�
increased customer loyalty by combining
well-known brands with a solid reputation
integration with Etalon Group’s smart
home systems
integration with the Etalon Group’s digital
platform to receive feedback from
customers for further product
improvement
� scalable service business and ecosystem
development
48 %
revenue CAGR in
2018-2021
19 %
CAGR of the subscriber
base in 2018-2021
585 THS
apartments are under
management
>180
service organizations
in 28 cities
Area under service, mln sqm
37
6.3
BEFORE
TRANSACTION
(MANAGED BY
ETALON GROUP)
AFTER
TRANSACTION
(“DISPATCHER 24”
COVERAGE)
Innovative technologies
and design management
KEY PRINCIPLES OF
YIT RUSSIA DESIGN
MANAGEMENT
Standardisation
Project management
80% of building
components are
standardised; diversity
is achieved thanks
to the fact that 20%
of the elements are
non-standardised
proactive approach to
design management –
creating and following
housing construction
trends
Work with contractors
Innovation
framework agreements
with suppliers, established
pool of design contractors
centralised innovation
development process,
integrated innovation base
(all projects are created
using BIM technology)
Synergistic effect:
� strengthened competencies in the
development of standard projects
in regional markets
� ready-made database of reliable
suppliers and contractors for work
in regional markets
� expertise in flexible structures and
modular furnishing projects
� effective integration of projects
due to the complementarity of the
functionality of the YIT platform
with Etalon Group’s digital platform
8
11ANNUAL REPORT 2022 1
IntroductIon
Acquisition
of YIT Russia
YIt russia’s portfolio of projects, service business and building
management division as well as its innovative technologies not only
enable us to extract significant operational synergies from the pooling
of assets but also have a positive impact on our financial results.
the cost of acquiring the asset in monetary terms amounted to
ruB 1.9 billion at the fair value of identifiable assets of ruB 14.2 billion.
thus, the recognised benefit from the acquisition exceeded ruB
12 billion, which made it possible to obtain a record net profit in 2022.
Financial synergies:
� economies of scale
�
increased cash flows due to the merger of large
companies with a strong financial position
� the possibility of using YIT Russia’s credit lines at
lower rates
The rapid, seamless integration process also helped the
Company achieve operational and financial efficiency –
sales of YIT projects under the Etalon Group brand
began three months after the transaction, and the
following works were completed by the end of 4Q 2022:
the geographical distribution of
YIt russia’s projects and the company’s
experience in the residential real estate
market are perfectly in line with Etalon
Group’s strategic plans to 2024, which
include expanding the scope of activities
as well as strengthening market positions
and developing technologies.
The acquisition of the company’s projects in
five regions and the integration of innovative
technologies enabled us to do the following:
� accelerate regional expansion beyond
key regions with the support of product
standardisation; it was important to enter the
promising market of Kazan;
� strengthen loyalty to the Etalon brand in
regions of operations;
� promote projects started by YIT Russia through
Etalon Group’s extensive regional sales
network.
�
integration of architectural and planning solutions;
STRATEGIC GOAL
IMPACT OF TRANSACTION ON
ACHIEVEMENT OF THE GOAL
ETALON GROUP TODAY
4.3×
Increase in net profit in 2022 due to the
lucrative acquisition of a major player
with advanced technological expertise
due to the low level of corporate and
project-related debt, the combined
business of Etalon Group and YIt russia
has a strong cash position.
� combination of competencies for successful regional
business;
�
�
�
integration of YIT Russia projects into the Etalon sales
network;
integration of digital solutions – product
standardisation approach, Dispatcher 24 and others;
and
integration of design systems and completion of
product standardisation work.
CONCLUSION
OF DEAL
StArt oF SALES At
YIt ruSSIA ProJEctS undEr
tHE EtALon GrouP BrAnd
(3 MontHS AFtEr SIGnInG)
INTEGRATION
COMPLETED
May 2022
INTEGRATION
August 2022
4Q 2022
Expansion of the project
portfolio to over 6 mln sqm,
expansion into 5 new regions
by 2024
Digital and technological
business transformation
Entering a large new market
in Kazan (with no competition
with other nationwide
players) with a large
population and an income
level above the average in
Russia
Integrated product
management system
during design based on
standardisation, automation
and innovation
Ecosystem development
and customer loyalty
enhancement
Exclusive rights to the
Dispatcher 24 apartment
building management
program were purchased
Product standardisation
80% of YIT’s standardised
solutions have been
integrated into Etalon’s digital
platform
A nationwide player
operating in 8 regions of
Russia
A company that develops
modular technologies for
housing construction and
expands competencies
in terms of creating a
standardised product
Etalon’s customers show
a high degree of brand
loyalty due to continuous
improvements, ecosystem
development and response
to feedback
Reducing costs and
construction time, improving
housing affordability
and quality through
standardisation
9
11ANNUAL REPORT 2022 1
IntroductIon
Key regions
and segments
the Group’s portfolio is highly diversified and
includes quality projects in the affordable
segment and partially in the upper price segment
in St Petersburg, Moscow and the Moscow region,
as well as in five new regions: omsk, Ekaterinburg,
Kazan, tyumen and novosibirsk. considering
the high degree of competition, customer needs
and strategic objectives for business growth,
the company is increasing its offer in the mass
housing segment.
Approach to portfolio development
An attractive level of profitability and complementarity
remain the most important criteria for selecting projects
to expand the portfolio. In order to remain resilient to
macroeconomic changes and fluctuations in demand, the
Company aims to diversify its land bank in terms of the size
of projects and their geography.
In 2022, we increased the pace of implementation of our
regional expansion programme, which was launched in
May 2021, and we have already entered the markets of five
promising cities beyond Moscow and St Petersburg with a
population of over 1 million.
Our current portfolio includes real estate in the middle
and more affordable price segment; however, further
replenishment of the portfolio is aimed at the consistent
development of the most popular segment of residential
real estate, the mass segment, thus supplying the market
for high-quality affordable housing in Russia’s regional
markets and in peripheral areas around Moscow and
St Petersburg.
New regional markets and
peripheral areas of Russia’s
two largest cities
Increasing the supply in the
mass-market segment
P
R
E
M
I
U
M
PREMIUM
BUSINESS CLASS
COMFORT CLASS
UPPER ECONOMY CLASS
ECONOMY CLASS
Access to the mass segment and its affordability
are achieved through cost competition. Project
standardisation contributes to cost effectiveness, thanks
to attractive conditions for the purchase of materials and
equipment due to economies of scale.
M
I
D
-
M
A
R
K
E
T
St Petersburg
and Moscow
A portion of the projects
under construction and
completed projects from
the current portfolio
M
A
S
S
M
A
R
K
E
T
10
11ANNUAL REPORT 2022
1
IntroductIon
Our geography
Etalon Group’s expansion into regional markets enabled the company to become one of
the largest nationwide developers. the target regions for the company are large cities
with a population of more than 1 million and a developed real estate market. Entering less
competitive regional markets with a product for the large lower price segment provides
opportunities for business scaling on the strategic horizon.
8
REGIONS
OF OPERATIONS
25
SALES OFFICES
11
REPRESENTATIVE
OFFICES
Established relationships / partnerships with local sales agencies
Etalon Group’s sales offices / representatives
MOSCOW
MOSCOW
REGION
ST PETERSBURG
TYUMEN
REGION
SVERDLOVSK
REGION
NOVOSIBIRSK
REGION OMSK REGION
REPUBLIC OF
TATARSTAN
12.6
117.3
7.8
67.9
5.4
81.4
16.6
8.4
8.0
374.7
160.0
231.2
3.8
59.2
2.7
97.0
4.3
53.2
3.6
113.1
2.8
50.2
1.9
44.6
3.9
50.3
3.1
0.5
2.2
106.1
89. 0
134.2
Population, millions 1
Average per capita
income, RUB ths per
month 2
Volume of ongoing
construction, mln sqm 3
Average cost per sqm
in the primary market,4
RUB ths
1 Source: Rosstat, size of the resident population of the respective region as of 1 January 2022.
2 Estimate for the period from January to October 2022 based on preliminary data from Rosstat.
3 Volume of ongoing shared-equity housing construction, including on the basis of project financing through escrow accounts,
as of 1 January 2023. Source: nash.dom.rf.
4 Source: Rosstat, data for 4Q 2022 for all types of apartments sold in the primary market.
11
11ANNUAL REPORT 2022 1
IntroductIon
Business
management
structure
After expanding into regional markets, Etalon Group
revised its management structure and adapted it to its
new strategic goals, improving efficiency and speeding
up decision-making.
The overall management and planning of strategic
development as well as oversight of the implementation of
all initiatives are carried out by Etalon Group. The Company
consists of three large operating divisions in the regions
where the Group operates – St Petersburg, Moscow and
other regions – as well as a construction and maintenance
division and service companies whose operations are
controlled by Etalon Group.
This structure makes it possible to quickly adapt the business
for entry into new regions and for increasing the volume of
business, as well as reducing administrative overhead costs
during the implementation of the Company’s strategy and
improving efficiency.
ETALON GROUP
General management and strategic development, monitoring
compliance and implementing policies throughout the Company
Operations in St
Petersburg
Operations in the
Moscow region
Operations in other
Russian regions
Production and service
companies
Development and sales
Development and sales
Development and sales
Construction works,
industrial construction
under external contracts,
operation of the Group’s
residential complexes
Results achieved thanks to
the updated management
structure:
Understanding the
specifics of regional
markets
fast, high-quality
decision-making
Creation of separate
operational divisions
by region
Centralisation of
support functions
(finance and
accounting, HR,
legal support and
security)
full responsibility
for financial and
operational results
at the level of
each region
reduction of
administrative costs
Creation of new
divisions within the
Strategic Marketing
Department
customer and
brand focus
Creation of an
Innovation and
Development
Department
strengthening the
innovation and
IT functions
12
11ANNUAL REPORT 2022 1
IntroductIon
Value
creation
At every stage of its development, Etalon Group is
committed to maximising investment returns and
creating profit for stakeholders, thereby maintaining the
company’s investment appeal and encouraging loyalty
to the Etalon brand.
The stages of value creation and business model development
in accordance with the Company’s current strategic course are
discussed in detail in the Strategy section of this report.
In addition to actively replenishing our land bank,
we also manage land assets, thus ensuring high
returns on investment and diversification. We
are increasing the share of the affordable price
segment in our portfolio, while choosing projects
with target profitability that can become the
basis for creating a quality product.
We are continuously improving the quality of our
projects, and we consider the opinion of buyers,
thus improving the maintenance of our buildings
and expanding our range of services, including by
bolstering our competencies since the acquisition
of YIT Russia. Thanks to this approach, our
completed projects remain appealing to residents
and potential buyers in the long term.
We focus on customer requests and ensure high-
quality service and sales efficiency by focusing
on digitalisation in identifying target groups, as
well as studying best practices in the area of user
experience.
LAND ASSETS
DESIGN
OPERATIONS
MANAGEMENT
PRODUCTION
SALES
CONSTRUCTION/ASSEMBLY
We are developing state-of-the-art automated
digital design systems as well as affordable
products: we are increasing the variety of options
and reducing the cost by launching a library
of standardised elements, digital technical
specifications, as well as automated master
planning.
We are developing new industrial technologies
for housing construction: in 2022, we began the
production of test housing kits using modular
technology and plan to start scaling up its use.
We are committed to shortening the construction
cycle, reducing costs and improving safety. To do
this, in addition to using prefabricated cast-in-
place technology, we also use hybrid technology
and are actively developing modular technology
for housing construction
13
11ANNUAL REPORT 2022 1
IntroductIon
Investment case
rapid scaling and adaptation of our business at
a time of turbulence and market consolidation
1
2
3
Active expansion
of geographic footprint
Successful experience of
inorganic growth
Industry-leading
efficiency
4
5
Rapid introduction of
innovations for successful
cost competition
Commitment to
ESG values
The Company’s strategy to 2024 assumes a
Over the past three years, the Company has
More efficient work with prime cost due to
balanced portfolio of projects in at least eight
completed two M&A transactions that provided
standardisation and improvement of process
IN 2022, THE COMPANY:
regions with a volume of at least 6 mln sqm.
significant business synergies. At the beginning
management enabled the Company to take a
Since the beginning of 2021, thanks to organic
of 2019, Etalon Group acquired the Moscow
leading position in terms of profitability among
and inorganic growth, Etalon Group’s project
developer Leader-Invest, increasing the value
the largest developers. Pre-PPA gross margin
portfolio has more than doubled, from 2.8 mln
of the Company’s portfolio by 39%, from RUB 127
at the end of 2022 reached 38% (No. 2 among
sqm to 6.4 mln sqm, and the Company has
billion to RUB 177 billion. In 2022, Etalon Group
the largest Russian developers and above the
entered five new regions. Our strategic goal is
completed the acquisition of YIT Russia. The
industry average); in the segment of housing
to achieve a steady double-digit annual sales
successful integration of YIT Russia’s assets
development in regional markets, it reached
growth rate thanks to regional expansion and
was one of the key factors that enabled us
an impressive 43%. The Company’s net profit
business growth.
to significantly increase our construction and
margin is the highest in the industry, at 16%.
delivery volumes, while also strengthening our
competencies in terms of digitalisation, design
and building maintenance.
Сonstruction
volumes, ths sqm
Deliveries,
ths sqm
2
Project portfolio before
regional expansion, as of 1 January 2021
Project portfolio now,
as of 31 December 2022
4
+38 %
+74 %
1,164
735
844
421
2021
2022
2021
2022
Middle and premium segments
Mass segment
2.8
MLn SQM
×2
6.4
MLn SQM
+129 %
� completed work on the creation of a product
standard;
� rolled out a digital integration platform for
testing and prepared to put the system into
commercial operation;
� started production of test modules;
� implemented elements of the Digital
Neighbourhood system at a number of
projects in Moscow and St Petersburg;
� launched a procurement automation project
and transferred 95% of applications to the
digital ecosystem.
The large-scale application of a standardised
approach to design, the digitalisation of
operational processes and the development of
state-of-the-art house-building technologies
allows for more efficient cost management
and, consequently, makes the Company
more competitive in a market that is being
consolidated.
Innovative technologies make more efficient
implementation of the portfolio in the mass
segment possible: the share of this segment in
the portfolio has doubled since the beginning
of 2021.
By basing its approach to business on
the principles of social responsibility and
sustainability, the Company is able to build
partnerships with shareholders, investors and
customers. In 2022, we continued to implement
best ESG practices in our daily activities: we
developed and approved a Supplier Code
and continued to work on the establishment of
specific measurable goals and strategies in the
area of ESG as well as the implementation of a
pilot project for green certification of apartment
buildings according to a new standard.
the company’s global depositary
receipts remain undervalued, which
creates strong growth potential on
the strategic horizon.
14
11ANNUAL REPORT 2022 1
IntroductIon
2022 in brief
Implementation of the plans outlined in the strategy for 2022 enabled us to achieve
robust financial results. In the future, we will focus on new advances in technology,
improved operational efficiency to make a larger percentage of our product affordable,
successful regional expansion and the launch of new regional projects.
1Q
2Q
Etalon Group entered
A transaction was
The Schastye na
the Ekaterinburg market
completed to acquire
Semyonovskoy and Wings
to implement a housing
a 50% stake in Strana
residential complexes were
YIT Russia was
acquired.
The Green River
We introduced our own service for assessing the
Sales were launched at
residential complex in
investment appeal of development projects;
Omsk – a flagship project
the Board of Directors decided to postpone
Monograph, a comfort-
class residential complex
construction project.
Etalon LLC, a joint
delivered.
beyond Moscow and
consideration of the matter of dividend payments
in St Petersburg.
venture created with
Strana Development
Group to carry out
construction in Tyumen.
St Petersburg – was put
for 2021 until constraints currently in force are
on sale.
removed.
1Q22 RESULTS:
1H22 RESULTS:
19.7 BLn
ruB
32 %
New contract sales from the
beginning of the year
Increase in the
average price per sqm
y-o-y
175.7 tHS
SQM
Deliveries
21.2 BLn
ruB
Cash collections from the
beginning of the year
29.3 BLn
ruB
10 %
New contract sales from the
beginning of the year
Increase in the average
price per sqm
y-o-y
235.0 tHS
SQM
Deliveries
32.6 BLn
ruB
Cash collections from the
beginning of the year
15
15
11ANNUAL REPORT 2022 1
IntroductIon
2022 in brief
3Q
4Q
Sales began in the
A new phase of the
Sales began for a new
Sales began at the
Sales began at the new
The Che Quarter in
The final buildings at the
The Domino residential
An agreement was signed
Solnechniy residential
Domino Premium
phase of the Novoorlovskiy
new Schastye v Kazani
Schastye v Tyumeni
St Petersburg was
Rifey residential complex
complex in St Petersburg
on the construction and
district of Ekaterinburg.
residential complex was
residential complex in
residential complex.
residential complex.
delivered.
in the Sverdlovsk region
was delivered.
launched.
St Petersburg.
were delivered.
subsequent operation of
the interuniversity student
campus at the world-class
Eurasian Scientific and
Educational Centre in Ufa.
9M22 RESULTS:
12M22 RESULTS:
42.6 BLn
ruB
8 %
New contract sales from the
beginning of the year
Increase in the
average price per sqm
y-o-y
326.0 tHS
SQM
Deliveries
43.8 BLn
ruB
Cash collections from the
beginning of the year
71.8 BLn
ruB
6 %
New contract sales from the
beginning of the year1
Increase in the average
price per sqm
y-o-y
734.8 tHS
SQM
Deliveries
75.0 BLn
ruB
Cash collections from the
beginning of the year2
1
Including cumulative sales at YIT projects under development.
2 Including cash from YIT development operations.
16
16
11ANNUAL REPORT 2022 1
IntroductIon
Chairman’s
statement
dear shareholders,
Foreign-policy developments and changes in market
conditions in 2022 had a huge impact on global business
and the investment community. Etalon Group, like other
market players, had to adapt to the new environment
by taking a flexible approach to the restructuring of
its business management, operational processes and
supply chains. Last year’s results show that we were able
to respond to external challenges in a timely manner: we
transformed our approaches to business management,
bolstered our competencies when it comes to new
technologies and the efficiency of our internal processes,
and took advantage of opportunities for inorganic
growth. As a result of these changes, Etalon Group has
become stronger and more efficient, and we are better
prepared to work in a challenging market environment.
It was impossible that geopolitical tensions, sanctions pressure
and related restrictions, including the suspension of trading in
Russian securities on a number of international platforms, would
not have an impact on public companies. Nevertheless, Etalon
Group remains committed to respecting the rights of all groups
of investors, continues to disclose information to the same extent
and does not take any decisions that could adversely affect
a particular group of shareholders. Despite everything, we are
committed to complying with the principle of transparency
because we believe that feedback from shareholders and their
involvement in decision-making helps us correctly formulate our
shared strategic goals and plans for further action.
Alongside transparency, one of our key principles remains the
independence of the Board of Directors, which saw changes
to its membership during the reporting year, as Martin Cocker,
Oleg Mubarakshin and Maxim Berlovich all stepped down. In an
effort to continue to ensure balanced and impartial decision-
making, the Board of Directors nominated and approved a new
independent director, Vitaly Pyltsov, who has many years of
experience in finance, auditing and strategy development. Five
of the eight members of the Board of Directors are independent.
It should be noted that when making decisions at any level,
starting with the level of the Board of Directors, we are always
guided by the principles of corporate and social responsibility.
In 2021, we systematised our approach to this issue, approving
a single ESG policy for all Group companies, and we have
strictly followed the steps outlined in that policy ever since.
In particular, in the context of the policy, we plan to issue a
separate sustainability report this year. At the operational level,
we continue to implement best ESG practices, including by
taking measures to reduce our environmental impact, develop
local communities and integrate innovative technologies.
Since 2014, we have been using our own occupational
safety monitoring system based on information modelling
technologies, and we have not recorded a single fatal accident
in the past seven years. During the reporting year, we also
joined a public–private partnership project that is building
innovative student campuses: in December, we signed a
concession agreement for the construction and subsequent
operation of the interuniversity student campus at the world-
class Eurasian Research and Education Centre in Ufa.
Despite the external environment, we achieved during the
reporting year many of the goals that we had set for ourselves
for the strategic horizon. I would like to sincerely thank our
management and all our employees for their professionalism
and perseverance, as well as our shareholders for their support
and loyalty. I am confident that our openness, commitment to
the principles of responsible business and focus on results will
help us continue to successfully deal with all the challenges that
we encounter.
SERGEY EGOROV
Chairman of the Board of Directors
17
11ANNUAL REPORT 2022 1
IntroductIon
CEO’s
statement
dear shareholders,
the year 2022 was a jubilee year for Etalon Group:
in June we celebrated our 35th anniversary. during
this period, we have built one of the largest and most
efficient real estate and construction corporations in
russia with a respected and stable reputation. In recent
decades, we have significantly changed the scale of our
business, our approaches to design and construction
and our financial situation. But there are aspects that
have remained unchanged, such as the professionalism
and cohesion of our team, our customer focus and the
high level of service offered by Etalon Group.
The last few years have demonstrated that we are resilient
to crises and to any turbulence in the business environment.
Despite all the challenges of 2022, Etalon has remained true
to its principle of fulfilling its obligations to its customers,
employees and partners. In a short period of time, the team
managed to adapt to the new environment, not only keeping
the business stable but also achieving sustainable results.
In the reporting year, we continued to implement our
development strategy to 2024. We focused on the regional
expansion of our business and on the operational efficiency
of Etalon Group. As a result, we entered five new regional
markets and added approximately 20 projects to our portfolio.
Etalon Group now has a presence in eight Russian regions.
We also acquired YIT Russia, thereby expanding our business
and strengthening our leading position in the market. By
implementing digital cost control solutions, improving sales
efficiency and reacting promptly to external changes, we
achieved a record gross margin of 38%, exceeding the target
level of 35% set out in our development strategy.
Operating results
Over the past few years, Etalon Group has noticeably expanded
its project portfolio and geography of operations through
organic and inorganic growth. In 2022, we continued to develop
our land bank, expanding it to 6.4 mln sqm and raising the value
of our assets to a record RUB 288 billion, up 7% from 2021. This
was made possible thanks to the lucrative acquisition of YIT
Russia as well as the launch of new projects in regions such as
Omsk, Ekaterinburg, Tyumen and Kazan, among other things.
By adding projects to our portfolio that are at different stages
of completion, we increased the amount of NSA delivered
by 74% year-on-year to 735 ths sqm – a record high for
the Company. Since the Company was founded, we have
delivered a total of 8.6 mln sqm. And in 2022 Etalon Group
considerably bolstered its position among the five largest
developers in Russia.
In the reporting year, our sales volume amounted to 423 ths
sqm in terms of floor space and RUB 71.8 billion in monetary
terms including YIT Russia’s accumulated sales. Sales trends
varied throughout 2022. Nevertheless, the challenging
external environment and temporary supply constraints
at the beginning of the year were partially offset by the
active expansion of the Company’s portfolio, the improved
affordability of its product and the launch of new buildings
in the second half of 2022, which enabled the Company
to restore positive sales trends by the end of the year. An
important driver of the sales recovery in the new economic
environment was the increase in the share of regional projects
in the affordable price segment, including projects from
YIT’s portfolio.
Financial results
In a turbulent and increasingly competitive development
market, we focused on increasing our operational efficiency
and maintaining high margins. Among other things, we turned
our attention to technological transformation to reduce the
production cost of projects.
As a result, Etalon Group’s gross profit increased from RUB 27.8
billion to RUB 28.2 billion in 2022. Pre-PPA gross profit margin
once again showed year-on-year growth from 36% to 38% (and
43% in regional markets), exceeding the target of 35% set in
the Group’s strategy. Thanks to the lucrative acquisition of YIT
Russia, Etalon Group’s net profit more than quadrupled during
the year and reached a record RUB 13 billion. EBITDA in 2022
amounted to RUB 16.5 billion. Despite the costs associated with
the deal, EBITDA margin remained flat year-on-year at 20.5%.
In spite of the external environment, we managed to maintain
a comfortable level of leverage and low debt servicing costs.
The ratio of net corporate debt to pre-PPA EBITDA was less
than 1x, significantly below the target level of 2x–3x. The
average borrowing rate decreased from 6.5% at the end of
2021 to 5.2% as of 31 December 2022.
Strategic objectives
Etalon Group’s strategic goal is to become one of the leaders in
the industry in terms of business efficiency. Regional expansion
and technological transformation were initially among the
priority vectors of our strategy to 2024. In 2022, we were
convinced once again that we chose the right path. Expanding
into large regional markets enables us to ensure business
growth, while digitalisation and new technologies allow us to
keep production costs in check and remain competitive in terms
of overhead.
With market consolidation and with the entry of major players
into regional markets, we aim to make our product even more
affordable. In 2021, we worked on product standardisation,
and in 2022 we will apply the approach we developed to new
regional projects. We are also testing state-of-the-art modular
construction technology and preparing to launch our own
production facilities. The standardisation of our product and the
application of new approaches to construction enable us to
significantly reduce the need for materials and, consequently,
the production cost. In addition, our approach makes it possible
to improve the quality of construction while reducing project
time frames. All of these factors put in place the prerequisites
for us to compete successfully with other players and to
consolidate the market.
In conclusion, I would like to emphasise that Etalon Group is
ready for change and is able to take on potential challenges. In
2023, we will continue to move confidently towards our strategic
goals. I am convinced that, with a professional team, and with
a stable and flexible business model that ensures continuous
improvement of our efficiency and profitability, we will further
expand our business even if market conditions remain
challenging.
Thank you for your confidence in Etalon Group.
GENNADIY SHCHERBINA
Chief Executive Officer
18
11ANNUAL REPORT 2022 2
MArKEt o VErVIEw And trEnd S
AnnuAL rEPort 2022
REPORT
2022
2 ANNUAL
MARKET
OVERVIEW AND
TRENDS
Macroeconomic context 20
Factors driving demand 21
Supply redistribution 24
competitive environment 24
19
ANNUAL REPORT 202211 2
MArKEt o VErVIEw And trEnd S
Market overview
and trends
the year 2022 tested the resilience of the development
industry. the market was turbulent throughout the
year as a result of uncertain consumer demand, a
tight monetary policy, inflation and rapidly increasing
production costs.
A variety of instruments were utilised to support demand: state
mortgage programmes were extended, developers provided
individualised offers for mortgage subsidies as well as personal
discounts, and the key rate dropped in the second half of
2022. As a result, there was pent-up demand, but inflation risk
remained high at the same time, so consumers were looking for
alternative investments to preserve capital instead of putting
their money in savings deposits with low returns.
Key market players continued to expand their portfolios, and
developers also entered new regional markets and segments,
which were important means of diversifying their portfolios and
creating a quality offer in regional markets.
Macroeconomic context
the russian economy turned out to be more stable than
analysts were expecting in mid-2022, and the forecast growth
rate remains at the same level or higher than that of the Eu.
Despite challenges associated with the geopolitical context and tight
monetary policy, the Russian economy demonstrated strong GDP
results last year. In the middle of the year, IMF analysts predicted that
Russia’s GDP would decrease by 6%, while the World Bank estimated in
June a contraction of 8.9%. However, GDP was supported in the second
half of the year, largely thanks a strong budget surplus, driven by oil
and gas revenues, as well as the appreciation of the rouble and an
expansionary monetary policy. The result was a less severe recession
with underlying potential for rapid recovery and growth.
According to IMF forecasts, the Russian economy will expand by 0.3% in
2023, the same as in the Eurozone, and in 2024 Russia’s GDP will grow
by 2.1%, outpacing the majority of countries in the EU.
Russia
USA
Germany
EU
France
+4.3 p. p
-1.0 p. p
-0.5 p. p
-1.9 p. p
-1.0 p. p
United
Kingdom
-3.2 p. p
4.1 %
3.5 %
2.6 %
2.1 %
2.0 %
1.9 %
1.4 %
1.4 %
1.0 %
0.3 %
0.1 %
1.6 %
1.6 %
0.8 %
0.7 %
0.9 %
-2.2 %
-0.6 %
2022
2023
2024
High inflation during the year gave way to a steady
Key rate, annual %
Inflation, % year-on-year
deflationary trend, and the result for the year was better
than that of most Eu countries.
Inflation in Russia reached 11.9% in 2022, three times the Bank of
Russia’s target. Nevertheless, an inflationary spiral was avoided
thanks to a tight monetary policy in early 2022, and the inflation rate
began to decrease rapidly in the second half of 2022. According to
the Bank of Russia, inflation will return to target levels in 2024, while
the key rate will remain at 7.5% in 2023, dropping to 6.8% in 2024.
20
12
10
5
0
January
2022
February
2022
March
2022
April
2022
May
2022
June
2022
July
2022
August
2022
September
2022
October
2022
November
2022
December
2022
January
2023
20
11ANNUAL REPORT 2022 2
MArKEt o VErVIEw And trEnd S
Factors driving demand
More affordable housing in key regions of operations
the key demand driver in 2022 was the fact that mortgage-backed
purchases of housing in new developments became more affordable thanks
to state mortgage programmes and individualised offers from developers to
subsidise mortgage rates.
Average monthly income to mortgage payment
Weighted average interest rate on mortgage loans
One of the trends of 2022 was the opportunity for buyers to purchase real estate in
the primary market at subsidised mortgage rates. Due to the tight monetary policy in
April, the key rate was at 17%, and the state-backed preferential mortgage rate was
12%, which strongly discouraged consumers from purchasing property. However, a
subsequent reduction in the key rate and preferential mortgage rates supported sales,
while developers began offering subsidised preferential mortgages at record-low rates.
As a result, the ratio of average wages to monthly mortgage payments increased to
2.2x in the Russian Federation, 2.6x in Moscow and 2.7x in St Petersburg, which made
purchasing a home with a mortgage more affordable. In regional markets, since the
price of the average listing met the criteria for getting a preferential mortgage rate,
property also became more affordable beyond Moscow and St Petersburg.
In Russia
In Moscow
In St Petersburg
In the Sverdlovsk region
9.5 %
6.5 %
5.9 %
2.1 ×
2.0 ×
1.8 ×
4.3 %
2.2 ×
9.3 %
2.1 ×
6.6 %
6.3 %
2.3 ×
2.2 ×
4.3 %
2.6 ×
9.5 %
6.7 %
5.9 %
9.4 %
6.8 %
6.1 %
5.6 %
2.5 ×
2.4 ×
2.2 ×
4.0 %
2.7 ×
1.7 ×
1.9 ×
2.1 ×
2.1 ×
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
In the Omsk region
In Tatarstan
In the Tyumen region
In the Novosibirsk region
9.5 %
6.5 %
5.8 %
4.3 %
9.2 %
6.2 %
5.4 %
1.7 ×
1.5 ×
1.6 ×
1.6 ×
1.9 ×
1.9 ×
4.2 %
2.1 ×
9.5 %
2.7 ×
6.7 %
3.3 ×
5.9 %
3.4 ×
5.2 %
3.6 ×
6.6 %
6.0 %
5.5 %
2.0 ×
2.0 ×
2.0 ×
9.5 %
1.7 ×
1.4 ×
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
21
11ANNUAL REPORT 2022 2
MArKEt o VErVIEw And trEnd S
Factors driving demand
Need for improved living conditions
Considerable increase in mortgage lending
Population growth in megacities and ageing housing stock together with the russian government’s priority of
Preferential mortgages, subsidised mortgages from developers, and key mortgage programmes for regional
increasing the average amount of living space per person have been driving improvements to the quality of
markets and It specialists played a major role in supporting sales rates, while mortgage lending as a percentage of
housing conditions.
GdP reached 10%.
Russian housing stock by period of construction
after 1995
1971–1995
1946–1970
1921–1945
before 1920
Mortgage lending has been gaining new momentum from year
to year, and its share of retail lending has increased significantly,
from 40% in 2016 to 52% in 2022. Thanks to this instrument, more
and more families have an opportunity both to upgrade their
housing conditions and to purchase their first home.
Thanks to subsidised mortgages from developers and
preferential programmes from the state, last year’s results
surpassed the record set the previous year in terms of the
amount of mortgage loans granted to individuals for the
purchase of housing in the primary market, reaching RUB 2.1
trillion. And the weighted average mortgage rate in the primary
market reached a record low of 3.5%. According to the forecast
of the Bank of the Russia, the percentage of mortgage-backed
housing purchases is expected to rise to 12%–16% in 2023.
In terms of the amount of available living space both in
megacities and in the Russian Federation as a whole, the
average amount of space per person has been increasing. At
the same time, according to the Strategy for the Development
of the Construction Industry and Housing and Communal
Services of the Russian Federation for the period to 2030, the
amount of available living space per person should be no less
than 33.3 sqm.
Sixty-six per cent of the housing stock in the Russian Federation
was built before 1995. The quality of this housing no longer
meets the needs of the modern consumer, and buildings that
are more than 50 years old and in need of renovation account
for about 30% of Russia’s housing stock.
Russia’s unemployment rate in 2022 reached a record low of
3.7% of the working-age population, which in turn will stimulate
wage growth and make residential real estate more affordable.
Amount of living space, sqm/person
Unemployment in Russia
Share of mortgages as
percentage of retail lending
Moscow
St Petersburg
Warsaw
London
Stockholm
Rome
Berlin
22
33.3
Target by 2030
28
34
33
34
39
40
5.9 %
5.1 %
4.8 %
4.6%
4.3 %
3.7 %
46 %
46%
50 %
48 %
Amount of mortgage loans issued, RUB bln
52 %
Amount of mortgage loans issued during the year, RUB bln
Weighted average interest rate on mortgage loans in the primary market
2,063
1,880
9.4 %
8.3 %
1,500
871
923
5.8 %
5.9 %
3.5 %
2017
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
22
11ANNUAL REPORT 2022 2
MArKEt o VErVIEw And trEnd S
Factors driving demand
Considerable increase in mortgage lending
Capital preservation through low mortgage rates
Despite the impressive rate of mortgage lending and the
increase in the percentage of retail lending that mortgages
account for, the ratio of mortgage debt to GDP is 10% in the
Russian Federation, while this figure is above 50% in the United
States, the United Kingdom, Canada and Sweden.
There has been a steady downward trend in terms of the
amount of overdue mortgage debt relative to total mortgage
debt. Overdue debt in 2018 amounted to 0.96% of a total debt
of RUB 6.4 trillion; in 2022, the percentage decreased to 0.4% of
a total debt of RUB 13.9 trillion.
the lack of alternative ways to save capital during periods of economic uncertainty pushes investors and consumers
towards established instruments, one of which is real estate.
Capital and stock markets, derivatives and other risky
instruments fade into the background during periods of
economic instability. People increasingly choose simpler, more
conservative investment instruments where they can acquire
a physical asset while simultaneously earning a tax deduction
and thereby maximising profit.
Higher inflation and sanctions imposed on banks had a
negative impact on deposits in the first quarter of 2022. As a
result of a subsequent increase in the key rate and stabilisation
of the situation, the inflow of deposit funds returned to normal.
But even despite the inflow of funds into deposit accounts in
2022, the real rate of return was negative. As a result, according
to the Bank of the Russia, the average rate of return on rouble
deposits increased from 5.1% in 2021 to 5.4% in 2022, but the
inflation rate in 2022 was 11.9%.
Ratio of mortgage debt to GDP, by country
Overdue debt on mortgage loans, RUB bln
Amount of deposits and rate of return
Negative real income on deposits
10 %
11 %
21 %
Russia
Hungary
Poland
Germany
France
USA
UK
Canada
Sweden
43 %
44 %
56 %
66 %
73 %
88 %
Amount of overdue mortgage debt, RUB bln
Deposits, RUB trn
Share of overdue mortgage debt relative to total mortgage lending portfolio, %
Interest rate on deposits
Inflation
Interest rate on deposits
72
59
55
61
64
0.96 %
0.84 %
0.77 %
0.51 %
0.40 %
6.5 %
24.2
28.5
5.6 %
30.5
4.7 %
26.0
5.3 %
36.6
34.7
32.8
5.1 %
5.4 %
3.4 %
11.94 %
8.39 %
-6.5 %
5.1 %
5.4 %
6.5 %
5.38 %
5.3 %
5.6 %
4.7 %
4.91 %
4.27 %
3.05 %
3.4 %
2.52 %
2018
2019
2020
2021
2022
2016
2017
2018
2019
2020
2021
2022
2016
2017
2018
2019
2020
2021
2022
23
11ANNUAL REPORT 2022 2
MArKEt o VErVIEw And trEnd S
Supply
redistribution
Shift in main supply and demand to regional markets – large cities
home to major companies and new industrial centres
Competitive environment
Improved affordability and
increased demand in regional markets
Increase in investments and creation of
new jobs in regional markets
Industry
consolidation
As a consequence of the pandemic, there has been a trend
in recent years towards remote work in many sectors of the
economy: IT, services, consulting and even residential real
estate development prefer to keep some of their staff out of
the office, which enables them to save on administrative costs.
More and more companies from Moscow and St Petersburg
are hiring personnel from other regions to work remotely, which
gives those employees an opportunity to earn more than they
would in the local labour market. Moreover, many applicants,
seeing positive changes in regional cities, are deciding to
relocate from metropolitan areas to more environmentally
friendly cities. Regional markets are seeing the development of
effective demand that is being fuelled by preferential mortgage
programmes: general programmes as well as specialised
programmes for IT workers, families and others.
In Moscow and St Petersburg, the limit for preferential
mortgages is RUB 12 million, but the price of an average listing
of 50 sqm in Moscow typically exceeds the limit by a large
amount, and it is near the limit in St Petersburg. As a result, the
decision to apply for a preferential mortgage is a difficult one.
At the same time, the average listing price in regional markets
does not exceed the limit, which is RUB 6 million, thus enabling
access to mortgages at a reduced interest rate.
Percentage of average price of 50 sqm listing
covered by preferential mortgage limit
Wage growth in regional markets in 2022
outstripped inflation
Percentage of average price of 50 sqm listing covered by
preferential mortgage limit
12
MLN RUB
Moscow
St Petersburg
18.7
64 %
Moscow
11.6
104 %
St Petersburg
11.9 %
inflation in Russia
9 %
9 %
The country’s economy faced a challenging environment in
2022, as it became necessary to find new markets for exports
and to invest in the development of enterprises manufacturing
products for import substitution. A significant percentage
of investments were made in regional markets. For example,
capital investments in Tatarstan, the Sverdlovsk region and the
Tyumen region in 2022 increased by 27%–29%; the average for
the Russian Federation as a whole was only 20%.
The implementation of large infrastructure projects in regional
megacities creates new growth points. The creation of
new jobs helped reduce the unemployment rate. In all of
Etalon Group’s new regions of operations, unemployment
fell below 5% – a psychologically important level – which is
considered low, indicating that regional markets are healthy.
The decline in unemployment to record low levels in regional
markets as well as the migration of qualified personnel from
Moscow and St Petersburg led to wage growth in the regions
that outstripped inflation.
The unemployment rate in regional markets
dropped considerably below the psychologically
important level of 5%
Omsk region
Novosibirsk region
Tyumen region
Sverdlovsk region
Republic of Tatarstan
6
MLN RUB
Republic of Tatarstan
6.7
89 %
Republic of Tatarstan
Sverdlovsk region
5.7
106 %
Novosibirsk region
5.3
113 %
Tyumen region
4.8
124 %
Omsk region
4.5
135 %
Sverdlovsk region
Novosibirsk region
Tyumen region
Omsk region
9 %
8 %
7 %
6 %
5 %
4 %
3 %
2 %
1 %
16 %
14 %
15 %
13 %
17 %
9 %
8 %
7 %
6 %
5 %
4 %
3 %
2 %
1 %
2017
2018
2019
2020
2021
2022
the trend towards industry consolidation continues and
by 2026 the top 20 developers are expected to account
for a record 49% of the supply of apartment buildings
in the key regions of Etalon Group’s operations, and
the number of small and medium-sized players will
continue to decline.
One of the main factors driving the decrease in the number
of small players in the market remains the complicated
procurement and transportation process that supports
uninterrupted operating capacity for construction. And
since the key rate was high throughout the year, it became
increasingly difficult for a large number of small and medium-
sized players to conclude new financing agreements, so the
rate of organic portfolio growth through the acquisition of land
plots slowed down considerably, while key market players had
an opportunity to actively expand their land banks thanks to
free cash savings or through inorganic growth.
Top 20 developers will strengthen their position
Total delivery of apartment buildings, mln sqm
Market share of top 20
49 %
49.5
37 %
17.6
43 %
43 %
47 %
44 %
18.6
18.2
19.4
20.1
2018
2019
2020
2021
2022
2023–2026
Data on Etalon Group’s delivery of apartment buildings in key regions is from
Dom.rf: Moscow, the Moscow region, St Petersburg, the Republic of Tatarstan, the
Omsk region, the Tyumen region, the Sverdlovsk region and the Novosibirsk region.
Data on expectations for 2023–2026 was taken from ERZ.rf.
24
11ANNUAL REPORT 2022 3
StrAtEGY 2024
REPORT
2022
3 ANNUAL
STRATEGY
2024
Strategy 2024 26
Strategic goals and
their implementation 27
Strategy for developing
the value chain 28
Strategic initiatives 29
2525
11ANNUAL REPORT 2022 3
StrAtEGY 2024
Strategy
2024
digitalisation of the entire value chain and the development of an
affordable product in regional markets will ensure more dynamic
development of the company’s business in a challenging market
environment.
The acquisition of new projects as well as
further expansion into regional markets
will facilitate the implementation of the
Company’s plans to increase the scale
of its business. Taking new industry
challenges into account, the Company
will improve its business efficiency through
the development of an affordable
product and standardisation as well as
the development of proprietary software
that will shorten the construction cycle
and reduce costs.
Etalon Group’s strategy involves the
re-engineering of all the Company’s
business processes: from working with
land assets and design to construction,
the sale of apartments and residential
occupancy at Etalon Group complexes.
In accordance with its strategy, Etalon
Group is focused on developing
technologies that can already effectively
reduce costs and that offer high
potential for commercialisation. By
incorporating positive changes in its key
processes, Etalon Group is adapting its
operations to a changing environment
and creating sustainable long-term
competitive advantages and value for all
stakeholders.
AnnuAL rEPort 2022
26
26
11 3
StrAtEGY 2024
Strategic goals and
their implementation
our current strategy was approved in late 2020. Since its announcement, we have been consistently
achieving our goals, demonstrating excellent profitability, actively expanding our regional presence and
bolstering our position as one of the largest technologically advanced nationwide players.
2024
2020
2022
STRATEGIC GOAL
STRATEGY ANNOUNCEMENT
CURRENT PROGRESS
Key qualitative strategic goals:
PROGRESS IN 2022:
Digitalisation of the
value chain, from
land acquisition to
after-sales service
� The development of individual
modules of the digital platform was
completed, and testing of the modules
began; notably.
PROJECT PORTFOLIO,
MLN SQM
NUMBER OF REGIONS
OF OPERATIONS
6.0+
8
SALES GROWTH IN
MONETARY TERMS
DOUBLE-DIGIT
GROWTH
PRE-PPA GROSS
MARGIN
RATIO OF NET
CORPORATE DEBT TO
PRE-PPA EBITDA
RATIO OF SELLING
AND ADMINISTRATIVE
EXPENSES TO REVENUE
>35 %
2 × –3 ×
10 %
1
3.3
2
+3 %
29 %2
1.8 ×
10 %
1
In the context of the announced strategy, this metric is indicated as of the end of 2019.
2 Based on 1H 2020 financial results.
3 Taking into account the costs associated with the acquisition and integration of YIT as well as the launch of sales at new projects.
6.4
8
ABOVE
TARGET
-15 %
(decrease in the face of a sharp
rise in the key rate and negative
geopolitical factors)
ON TRACK
(return to annual growth
thanks to expansion into
regional markets and a more
affordable product)
Development of
modular housing
construction and
prefabrication
technologies
38 %
0.9 ×
15 % 3
ABOVE
TARGET
BELOW
TARGET
ON TRACK
(factoring in technological
advancements, we expect this
metric to recover)
� The design process was automated
(a library of architectural solutions
and master planning elements was
developed).
� Testing of the system for digital
technical specifications got under way.
� Modules were tested, and construction
of the Company’s own modular
production facility began
� Prefabricated elements were used
successfully in a number of Company
projects
� A pilot project for the use of easy-
to-assemble piping systems and
partitions was launched.
Centralisation of
procurement to
achieve economies
of scale
� The majority of procurement was
transferred to a digital ecosystem.
� A project to automate procurement
procedures was launched, increasing the
speed of processing requisitions by 24%
and reducing personnel costs by 9%.
27
ANNUAL REPORT 202211 3
StrAtEGY 2024
Strategy for developing
the value chain
the transformation of our business model will enable us to adapt to changing conditions and
create an environment for the sustainable development of the company as an innovative
construction and development business.
I E D M ANAGEM
E
N
T
A D M I N I S T R AT I O N
N I F
U
LAND ASSET MANAGEMENT
In the property development stream, in the
context of industry consolidation and facing
a high degree of competition for land assets,
the Group aims to implement projects with
high margins and expand its presence in
regional markets.
SERVICES
We are developing our property management
business: by improving the quality of customer
relations and providing additional services at the
occupancy stage, we are committed to further
increasing customer loyalty and generating
repeat purchases.
PROCUREMENT
We prefer to choose counterparties through a
competitive selection procedure and arrange
uninterrupted supplies with due regard for cost-
effectiveness and production efficiency, including
through automation and digitalisation of our
procurement activities. Centralised procurement
helps us achieve economies of scale.
DESIGN
At the design stage, the main priority is product
standardisation, which enables the Company
to make its product more affordable, which is
especially important at a time of expansion into
regional markets. The development of digital
tools for procurement, long-term planning and
the effects of economies of scale will also help
optimise costs.
CONSTRUCTION
We continue to develop prefabrication and
modular housing construction technologies, which
enable us to reduce the amount of work performed
at construction sites by manufacturing certain
elements off-site. We are building our own modular
production facility and have started manufacturing
the first pilot modules, and we are also testing
prefabricated piping systems and partitions. New
technologies have enabled us to improve business
efficiency and speed up construction.
SALES
We are constantly improving our approach to
effective sales and improving the quality of
customer relations in order to encourage loyalty
and repeat purchases.
28
11ANNUAL REPORT 2022 3
StrAtEGY 2024
Strategic
initiatives
1Increasing business scale
through the development of
mass-market projects and
operations in new regions
the main objective of the company’s land bank
strategy is to ensure a balanced portfolio and
maintain a minimum balance of nSA that is
sufficient to scale up the company’s business.
today, the company is successfully implementing
a strategic regional expansion programme
and has already launched new projects in the
affordable price segment in five regional markets
in addition to its three key regions of operations:
Moscow, the Moscow region and St Petersburg.
Etalon Group’s key goal in terms of quality
affordable housing is to become a cost leader:
ensuring the best production price while
maintaining the high quality of its product.
Standardisation
Land affordability
Reducing specific overhead
costs when scaling up
Results in 2022:
Entering regional markets and the
lower price segment in traditional
markets with a standardised product
make it possible to engineer the cost of
construction and installation works and
to obtain better terms when purchasing
construction materials and equipment
as a result of economies of scale.
In the face of increasing competition
in the industry, making the Company’s
product line more affordable is a key
component of its product strategy. The
introduction of product standards that
help reduce the cost of production
facilitates a further increase in
construction and sales volumes at
target margins. In 2022, the Company
worked on developing standard
solutions and updating its library
of apartment and section layouts
while factoring in the integration of
innovative YIT solutions.
1 The average selling price per sqm of
housing in regional markets in 4Q 2022.
The development of partnership
arrangements to take part in projects
through the creation of joint ventures
with local players, the conclusion of
investment agreements with regional
governments, as well as other
partnership arrangements and the
purchase of existing businesses (M&A)
will greatly reduce the cost of taking
part in projects in the context of the
rapid consolidation of the industry.
Thanks to an effective regional business
management system achieved through
the centralisation of the back-office,
procurement and design functions, we
will be able to count on project margins
that are commensurate with those of
our key markets.
Increased affordability as a result of lower costs
and greater competitiveness
� Expansion of the Company’s geographic
footprint to eights regions, including five
new regional markets (Omsk, Kazan,
Ekaterinburg, Novosibirsk, Tyumen)
� Transition to a standardised product
for the middle-class and mass-market
segments, and applying the new product
standard both in our new regions of
operations and for projects being built
in outlying areas around Moscow and St
Petersburg
� The gross margin of regional projects
reached 43% with an average selling price
of RUB 123.6 thousand per sqm.1
Work aimed at efficiency improvements
will enable the Company to make
housing more affordable for Etalon
Group customers. At the same time,
having a reserve under management
enables the Company to improve
affordability at a competitive price
during market downturns, and to support
margins during periods of recovery.
At the same time, our consumers are able
to customise the product thanks to the
development of a methodology for large-
scale customisation during the design
phase, which enables the Company
to meet the needs of a wide range of
consumers with comparable incomes.
Efficiency gains from changes in the market environment
UNDER
THE CURRENT
STRATEGY
BEFORE ADOPTING
THE STRATEGY
TO 2024
HIGH QUALITY OF
PRODUCT + ATTRACTIVE
PROFIT MARGIN
CONSIDERABLE COST
REDUCTION THROUGH
STANDARDISATION
POTENTIAL TO MAKE PRODUCT
MORE AFFORDABLE AND
HEDGE RISKS ASSOCIATED
WITH INCREASED
CONSTRUCTION COSTS
ABOVE MARKET AVERAGE
PRODUCTION COST
COST OF LAND
MARGIN 30%
PRODUCTION COST
COST OF LAND
29
ANNUAL REPORT 202211 3
StrAtEGY 2024
Strategic
initiatives
2Development of
components of software
platform for efficient
management of business
growth and development of
new product solutions
Expanding the scale of our business generates
a need for faster decision-making and more
transparency in our business processes. our
priority was to build a business management
software platform that includes in a single
seamless cycle all stages involved in the creation
of a development project – from market analysis
to construction, collecting feedback at the stage
of occupancy and property management, and
customer and partner relations.
the following are the key projects involved in the
development of the software platform:
Predictive analytics
Digital technical
specifications
Master planning robot
Installation of an AI-based location
analytics system to determine the most
important parameters in selecting the
project segment and forecasting the
cost per sqm.
Etalon Group is planning, during the
strategic horizon, to automate the
process of creating and revising its
technical design specifications, as well
as to link its technical specifications
with its library of structural elements
and materials through its BIM system.
Automated master planning with
functions for creating concepts for
mixed-use development morphotypes,
including transportation and
social infrastructure, site-specific
solutions, ready-made collections of
standardised design solutions and
algorithms for use at the design and
working-documentation stages.
CONTRUST
Centralised
procurement
BIM during operations
Launch of a real-time construction
oversight system that uses digital
tools to manage the timing, cost and
quality of in-progress investment and
construction projects.
Proprietary information systems have
been developed that customers can
use to follow daily updates and project
dynamics, leave comments and
monitor progress in terms of document
approval.
Automation of the centralised
procurement and supply system
aimed at reducing costs and
construction time.
The existence of an automated
centralised procurement system as part
of the software platform enables the
rapid integration of new suppliers and
reorientation towards new procurement
channels; it will also make it possible
to optimise supply chains and achieve
economies of scale when managing
a business with a broad geographic
footprint.
Integration of utilities and
telecommunication systems into a
single network in order to reduce costs
and provide seamless services for
the developer and the management
company.
Results in 2022:
� As part of design automation, prototypes
of architectural solutions and master
planning elements (modular grid, zoning,
logistics, etc.) were developed.
� Testing of individual modules of the
CONTRUST platform, a real-time
construction oversight system, is ongoing.
� Automation of the process of creating
and adjusting the technical design
specifications was completed, and pilot
testing is under way.
� About 95% of requisitions for materials
were transferred to the digital ecosystem.
the digitalisation of processes makes
it possible to greatly reduce the time
needed to retrieve information, to
reduce the overall project completion
time, to achieve an exceptional level
of security and, in general, to improve
the efficiency of work processes.
30
ANNUAL REPORT 202211 3
StrAtEGY 2024
Strategic
initiatives
3
Development of
new technologies
Etalon Group is transitioning to off-site
production, incrementally increasing the degree
of prefabrication in the context of existing cast-
in-place technology (installation of manufactured
panels for external and internal load-bearing
walls, application of modular components and
engineering systems) and developing a new
technology – modular housing construction.
Development of modular
technology
Prefabrication: development of an
off-site production facility
Since 2021, the Che Quarter and Galactica projects have
been using hybrid technology, which increases the amount
of prefabrication from 20% to 40% of the cost of construction
and installation works. This is achieved thanks to factory-
made structural elements for buildings, such as internal
partitions and prefabricated facade panels.
Etalon Group properties also use technology for prestressed
floor slabs. The main advantage of this technology is
the considerable length of spans that can be achieved
with minimal production costs and installation time while
maintaining a high degree of reliability.
In the future, the Company will increase prefabrication by
means of off-site production of key assemblies, engineering
systems, plumbing and other finishing details insofar as
customers’ preferences shift towards shorter wait times
between the acquisition of a mortgage for a property under
construction and moving into a finished apartment. This
technology has the potential to increase prefabrication to
60% of the cost of construction and installation works.
Modular technology involves off-site production. Focusing on
cost reduction, Etalon Group is developing technologies for
prefabricated apartment buildings, the construction cycle
of which may be reduced by 15%–20% by moving 85% of the
construction cycle for a modular building off-site.
The modules are made of lightweight steel elements to
optimise transport and assembly at the construction site.
The technological solutions employed improve insulation in
comparison with traditional technology. At the same time, the
technology enables Etalon Group to maintain all of its existing
apartment layouts.
The modular technology was successfully tested in late 2022,
and production of test modules got under way.
The strategy calls for the Company to
build its own modular production facility:
DELIVERY:
2023
FIRST PHASE
PRODUCTION
CAPACITY:
2024
SECOND PHASE
1,000
MODULES PER YEAR
Results in 2022:
� Pilot production of modules and
production of test modules began.
� Piloting of prefabricated construction
of piping systems and partitions for
further testing at regional projects was
completed.
31
ANNUAL REPORT 202211 4
ProJEct PortFoLIo
REPORT
2022
4 ANNUAL
PROJECT
PORTFOLIO
Portfolio highlights 33
Project portfolio additions 34
current project portfolio 35
Integrated development projects 38
Business-class projects 47
comfort-class projects 54
32
32
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Portfolio
highlights
the year 2022 was a successful one for Etalon Group
in terms of replenishing its project portfolio. thanks
to the acquisition of YIt russia, the company was
able to expand its geographic footprint by adding
promising new projects to its portfolio. As of the
end of the year, the company had 6.4 mln sqm of
housing of various classes in its portfolio and was
carrying out construction work on 28 properties.
272 BLN
RUB
Portfolio
market value
+6% y-o-y
Current project portfolio
Project portfolio by region, sqm (unsold NSA)
As of 31 December 2022, the market
value of Etalon Group’s project portfolio
was RUB 272 billion. The portfolio
includes 38 projects with a total NSA
of 6.4 mln sqm in St Petersburg, Moscow,
the Moscow region, Omsk, Tyumen,
2020
26%
2021
14 %
31 %
Novosibirsk, Ekaterinburg and Kazan.
2022
14 %
26 %
74 %
55 %
60 %
2.8 MLN SQM
RUB 191 BLN
6 MLN SQM
RUB 256 BLN
6.4 MLN SQM
RUB 272 BLN
St Petersburg
Moscow and the Moscow region
Other regions
2022 portfolio breakdown, sqm (unsold NSA)
Comfort
Business
Premium
Construction
Design
Completed
Flagship projects, up to 1 mln sqm
Mid-size projects, 50–300 ths sqm
Small-size projects, 5–30 ths sqm
Our portfolio consists of comfort- and
Thirty-eight Etalon Group properties are at various stages of development. These
business-class projects. In addition, we
include recently acquired projects as well as residential complexes where project
are implementing several integrated
phases are under construction. We firmly believe that it is important to provide
development projects, such as Zil-
buyers with a large selection of real estate from different housing segments
Yug, Nagatino i-Land, Galactica and
so that everyone can find an offer that meets their needs in terms of budget,
Green River.
location, floor space, etc.
33
ANNUAL REPORT 202211 4
ProJEct PortFoLIo
Project portfolio additions
Our approach to further
diversification of our portfolio:
In May 2022, Etalon Group completed its acquisition
of YIt russia, including a portfolio of projects with
an nSA of more than 0.6 mln sqm, exclusive rights
to dispatcher 24 software for managing apartment
buildings, project design documentation and a library of
standard design solutions for cast-in-place construction
and buildings made of prefabricated panels.
The integration of YIT Russia enabled Etalon Group to achieve
several important goals, including expanding the scope of
its operations and bolstering its market position. YIT Russia’s
projects are a perfect addition to Etalon Group’s portfolio: the
land bank acquired included 19 projects at the design and
construction phases in five regions of Russia: Moscow and the
Moscow region, St Petersburg, the Sverdlovsk region, Kazan
and Tyumen.
Thanks to YIT’s successful experience in regional markets,
reliable reputation and experienced construction and sales
experts, Etalon Group was able to accelerate its regional
expansion, ramping up the pace of construction of its projects
in Ekaterinburg and Tyumen as well as adding promising new
projects to its portfolio. In addition, the acquisition of YIT Russia
enabled the Company to enter one of the most promising
markets in Russia, Kazan, thereby expanding its geographic
footprint to eight regions while also increasing its supply in
Moscow and St Petersburg.
The Company also sees huge potential from the acquisition
with respect to further transforming the technological aspect of
its business and becoming a leader in terms of the adoption of
new technologies. Combining the design solutions developed
by YIT Russia and Etalon Group will further accelerate the
Company’s work on standardisation and the creation of the
best product in the market. In addition, the Dispatcher 24
platform will help the Company take a leading position among
Russian providers of additional services for residents, and
integration with the platform will enable seamless feedback for
further product improvement.
1
Optimal portfolio structure in terms of
project size
We maintain a land bank structure that
envisages 1 anchor project of about 1 mln sqm,
5–6 medium-sized projects and up to 10 infill
development projects.
2
Regional expansion
Launching operations and expanding our
business in Russian cities with a population of
over a million. In 2022, the Company launched
new projects in Omsk, Ekaterinburg, Kazan
and Tyumen.
3
Making our product more affordable
and ensuring that it is of the
highest quality
The Company’s portfolio includes both
business-class projects and affordable
housing in its key regions of operations as well
as beyond Moscow and St Petersburg. The
Company’s priority in regional markets as well
as in commuter towns around Moscow and St
Petersburg is to develop an affordable, high-
quality product through the introduction of
uniform standards and digital technologies.
8 regions
+5 regions in 2022
34
11ANNUAL REPORT 2022 TOTAL NSA
THS SQM
UNSOLD NSA
THS SQM1
UNSOLD
PARKING
SPACES
OMV
RUB MLN
INCOME FROM
SALES
RUB MLN 2
CONSTRUCTION
BUDGET
RUB MLN 3
OUTSTANDING
BUDGET
RUB MLN 3
4
ProJEct PortFoLIo
Current project portfolio
St Petersburg
PROJECT
1
Galactica
2
Domino
3
Project on Professor Popov Street
(Petrogradskiy district)
4
Project on Kievskaya Street
5
6
Monograph
Pushkin Village
7
Class!
8
9
Shushary, Shkolnaya, zone 9
Shushary, Shkolnaya, zone 25
10
Novoorlovskiy
11
iLona
12
Wellamo
13
Tsarskoselskie holmi
STATUS
Construction
Construction
Design stage
Design stage
Construction
Design stage
Construction
Construction
Construction
Construction
Construction
Construction
Design stage
14
Project on Chernigovskaya Street
Construction
15
Project in the Krasnogvardeiskiy district
Design stage
665
40
61
35
36
143
42
28
35
49
23
7
13
129
24
130
30
53
34
33
117
42
28
35
20
17
3
13
67
24
1,135
330
493
278
100
634
100
100
100
321
139
25
0
854
217
TOTAL St Petersburg
1,330
645
4,826
51,053
238,228
1
Including parking. The parking area at 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 31.12.2022.
3 Excluding land acquisition costs.
13,101
3,175
90,174
10,604
50,576
4,227
6,371
1,621
10,123
34,379
11,053
10,850
1,414
1,679
2,748
1,771
968
1,328
1,570
3,212
869
571
7,273
1,251
7,537
6,746
20,379
7,302
4,685
6,052
9,563
6,437
1,881
2,291
22,724
7,475
5,006
3,788
13,375
3,960
2,680
3,312
3,855
2,180
519
1,119
10,456
3,507
119,613
4,502
3,392
13,169
3,922
2,665
3,292
1,686
1,252
210
1,110
2,282
3,506
59,830
Source: Nikoliers estimate as of 31.12.2022
10
2
3
11
15
12
4
1
14
5
7
8
9
13
6
35
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Current project portfolio
Moscow and the Moscow region
PROJECT
1
2
3
Zil-Yug
Nagatino i-Land
Voxhall
4
Silver Fountain
5
Wings
6
Emerald Hills
7
8
9
Project on Oktyabrskaya Street
Design stage
Fotievoi 5
Zorge 3
Design stage
Design stage
10
Bolshaya Cherkizovskaya Street 4
Design stage
11
Desyatka
Construction
STATUS
TOTAL NSA
THS SQM
UNSOLD NSA
THS SQM1
UNSOLD
PARKING
SPACES
OMV
RUB MLN
INCOME FROM
SALES
RUB MLN 2
CONSTRUCTION
BUDGET
RUB MLN 3
OUTSTANDING
BUDGET
RUB MLN 3
Construction
1,253
1,083
10,097
86,797
470,235
237,268
224,477
Construction
Construction
Construction
Construction
Construction
32,234
84,655
253
66
190
169
431
10
11
12
7
32
186
63
49
26
4
10
11
12
7
38
1,148
563
1,056
215
120
81
72
99
46
8,005
7,692
2,032
0
981
1,640
796
288
248
1,943
32,910
47,747
39,470
59,965
4,848
6,090
3,845
2,058
8,144
6
39,051
14,993
21,711
18,998
10,708
2,604
2,177
2,664
1,452
2,747
27,802
12,962
2,883
5,507
2,501
2,604
2,177
2,664
1,452
2,122
TOTAL Moscow and the Moscow region
2,434
1,490
13,745
142,408
759,967
354,372
287,150
Source: Nikoliers estimate as of 31.12.2022
1
Including parking. The parking area at launched projects with partially sold parking lots is calculated as 30 sqm per 1 parking space.
2 Income from sales includes potential and received incomes as of 31.12.2022.
3 Excluding land acquisition costs.
4
7
10
9
5
8
3
1
2
11
36
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Current project portfolio
Other regions
PROJECT
Omsk
1
Green River
Novosibirsk region
STATUS
TOTAL NSA
THS SQM
UNSOLD NSA
THS SQM1
UNSOLD
PARKING
SPACES
OMV
RUB MLN
INCOME FROM
SALES
RUB MLN 1
CONSTRUCTION
BUDGET
RUB MLN 2
OUTSTANDING
BUDGET
RUB MLN 2
Construction
1,440
1,376
12,546
12,359
160,356
78,254
77,055
2
Project in Novosibirsk
Design stage
275
275
995
4,482
35,228
24,582
24,476
Ekaterinburg
Project in Ekaterinburg
Construction
1,625
1,619
5,097
3
4
5
Suomen Ranta
Rauta
6
Baltym Park
7
Rifey
Tyumen
8
9
Project in Tyumen
City Zen
Kazan
10
Schastye v Kazani
11
Kvartal Suita
12
Green
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
34
103
234
18
219
59
56
31
23
26
95
225
5
109
40
57
19
11
355
550
0
0
809
753
554
182
87
22,175
1,403
2,703
525
428
2,161
889
3,135
3,058
325
258,563
104,389
103,823
5,048
12,939
29,430
2,144
9,594
5,454
13,227
6,791
2,555
2,448
7,873
26,558
1,087
6,167
4,270
7,320
3,047
1,550
2,059
7,406
26,015
28
5,916
3,253
7,237
2,221
693
10-12
Kazan
3-7
Ekaterinburg
8-9
Tyumen
1
Omsk
2
Novosibirsk
TOTAL CURRENT PROJECTS
COMPLETED PROJECTS
Residential property in completed projects
Completed stand-alone commercial properties
TOTAL COMPLETED PROJECTS
TOTAL ETALON GROUP PROJECTS
PRODUCTION UNIT
Production Unit's business and properties
7,881
5,992
40,499
247,104
1,539,528
741,530
607,161
3,413
0
3,413
11,293
417
3
420
6,412
18
7,867
24,837
300,332
123
7,867
24,960
300,332
48,366
272,064
1,839,855
741,530
607,161
16,310
16,310
TOTAL ASSETS VALUE
11,293
6,429
48,366
288,374
1,839,855
741,530
607,161
1 Sales revenue includes potential and received revenues as of 31 December 2022.
Source: Nikoliers estimate as of 31.12.2022
2 Excluding land acquisition costs.
37
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
PROJECTS
INTEGRATED
DEVELOPMENT
38
38
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Zil-Yug
AVtoZAVodSKAYA St.
ZIL-
YUG
25
min
to red Square
7 km
15
min
to the Garden ring
5 km
Zil-Yug is a large-scale integrated development project
on the grounds of the former ZIL plant in Moscow. the
project entails the transformation of the industrial zone
into a multifunctional space based on the “15-minute
city” principle: the creation of a new district consisting of
housing, social amenities and business centres, where all
the necessary infrastructure is within a 15-minute walk from
anywhere in the neighbourhood.
1 According to the valuation by Nikoliers as of 31 December 2022.
2021
2030
СONSTRUCTION TIMELINE
470.2 BLN
RUB
Income from sales 1
86.8 BLN
RUB
Market value 1
1,253 THS
SQM
Net sellable area 1
39
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Zil-Yug
AVtoZAVodSKAYA St.
About the project
Experts in urban planning, sociology and other related fields
were engaged to create the development plan, and local
residents were also consulted: the project was discussed on
Generation Zil, an urban planning and media platform. When
planning the neighbourhood, special attention was paid to the
organic development of the site, taking into account nearby
areas, the development of transport infrastructure, and the
creation within the neighbourhood of a highly diverse urban
environment to meet the needs of a variety of lifestyles.
The project involves a mix of all types of urban buildings,
from townhouses to apartment towers. On the western side
of the site, the project’s first phase, adjacent to the Chagall
Embankment, blends seamlessly into the surrounding natural
environment. This part of the complex includes low- and
medium-rise residential buildings surrounded by water and
landscaped public parks. Closer to the metro, the project takes
on more and more urban features. Thus, the areas adjacent
to the metro station and business cluster form a modern
urban space filled with commercial, leisure and business
infrastructure: social and cultural facilities, multifunctional
centres, municipal buildings, etc.
Well-designed transport links, including for pedestrians
and cyclists, expand the space of every resident to
include not only the courtyard of their building but also
tree-lined streets, parks, a unique landscaped area
along the Moscow River extending over 10 km, along with
the Chagall Embankment, piers, and areas for sports and
recreation. It takes no more than 15 minutes on foot or by
bicycle to reach the nearest amenities. Public spaces –
private courtyards, tree-lined streets and squares inside
the complex as well as public embankments and parks –
have an intuitive design that makes their intended
purpose clear.
Location
The complex is located on the banks of the Moscow River
and the Novinki Backwater, next to the modernised and
fully developed Chagall Embankment. Since the project
is located in a green area surrounded by parks, such
as Tyufeleva Roshcha and Kozhukhovo National Park,
residents will feel like they are in complete harmony with
nature. Along the Moscow River Embankment, which
stretches for more than 6 km, there is also a park with
a large number of walking trails, jogging and cycling
paths, as well as a riverside amphitheatre. Plans are also
in place to add swimming pools, a garden on the water
and architectural installations.
Its proximity to the Third Ring Road and Prospekt
Andropova ensures excellent transport accessibility for
the residential complex, which is also within walking
distance of the ZIL, Tekhnopark and Avtozavodskaya
metro stations.
40
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Nagatino i-Land
AndroPoVA AVE.
NAGATINO
I-LAND
15
min
to red Square
11 km
10
min
to the Garden ring
7 km
nagatino i-Land is a true residential island in the middle
of Moscow. the project is located in the danilovskiy
district of the Southern Administrative division, very
close to the nagatino i-Land business cluster and Port
Plaza, occupying a site with banks of the Moscow river
on two sides. the nagatino i-Land complex will include
residential and commercial space along with social
amenities with a total nSA of about 253 ths sqm.
1 According to the valuation by Nikoliers as of 31 December 2022.
2019
2026
СONSTRUCTION TIMELINE
84.7 BLN
RUB
Income from sales 1
32.2 BLN
RUB
Market value 1
253 THS
SQM
Net sellable area 1
41
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Nagatino i-Land
AndroPoVA AVE.
About the project
The project concept — maximum comfort for every resident –
combines the features of a modern urban space with elements
of nature to create an organic, balanced living environment.
The buildings in the project are of varied heights – from 5 to
35 storeys. The complex’s multilevel structure and excellent
insolation will enable residents to enjoy sunshine and fresh
air all year round. The apartments overlook the picturesque
embankments of the Moscow River, quiet green courtyards that
are free of cars as well as the project’s own landscape park.
The buildings of Nagatino i-Land form cosy neighbourhoods
and courtyards that are accessible only to residents of the
complex, where there will be recreation areas, artificial ponds
as well as spaces for socialising and sports.
the complex’s multilevel
structure and excellent
insolation will enable residents
to enjoy sunshine and fresh air
all year round.
Proximity to the centre of Moscow is combined with
outstanding conditions for peaceful relaxation. The goal
of the project is to create a green residential zone in
the middle of the city: more than 25% of the grounds will
enjoy the benefits of a landscaping programme that will
include a single landscape park for the entire project,
tree-lined pedestrian boulevards, garden squares and
a green promenade. At the same time, the residents of
Nagatino i-Land will feel close to nature even inside their
apartments: the project offers exclusive housing designs
with private terraces as well as spacious apartments
with ceilings up to 3.3 metres high and spectacular
apartments with panoramic views of the Moscow River
Embankment.
Nagatino i-Land is a project that meets all the
demands of a state-of-the-art development. Residents
will enjoy comfort and safety thanks to top-of-the-
line engineering solutions: monolithic buildings with
enhanced soundproofing, a heating control system
in every apartment, a state-of-the-art fire safety
system, high-speed silent lifts and a supply and
exhaust ventilation system that ensures that the air is
continuously exchanged.
Location
With the Tekhnopark and ZIL metro stations within easy
reach as well as convenient access onto two main
thoroughfares – Prospekt Andropova and the Third Ring
Road – the project offers residents excellent transport
options. At the same time, the project is only four metro
stops from the very heart of the city – the Kremlin and
the Bolshoi Theatre.
42
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Galactica
MItroFAnIEVSKoYE SHoSSE — oBVodnIY KAnAL EMB. —
VArSHAVSKIY ProEZd
GALACTICA
25
min
to the airport
16 km
10
min
to nevskiy Prospekt
5 km
Galactica is the largest redevelopment project in
central St Petersburg, on the grounds of the former
warsaw railway line. the residential complex consists
of 30 multi-storey brick monolithic buildings that form
an avenue that runs lengthwise with closed courtyards
between them. the project also includes 3 schools, 10
preschools and a public space with sports grounds and
recreation areas.
1 According to the valuation by Nikoliers as of 31 December 2022.
2016
2023
СONSTRUCTION TIMELINE
90.2 BLN
RUB
Income from sales 1
13.1 BLN
RUB
Market value 1
665 THS
SQM
Net sellable area 1
43
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Galactica
MItroFAnIEVSKoYE SHoSSE — oBVodnIY KAnAL EMB. —
VArSHAVSKIY ProEZd
About the project
The project offers a wide range of apartments with both classic
and atypical layouts. Virtually every apartment has a balcony,
sunroom or open terrace, and there are options with oversized
windows, master bedrooms and spacious kitchens.
The northern and southern parts of the complex are home
to the Galactica Premium and Galactica Pro business-light
properties, which are notable for their apartment layouts and
unique building features.
Location
The residential complex is located in the central part of
St Petersburg, straddling the Admiralteiskiy and Moskovskiy
districts, alongside Naberezhnaya Obvodnogo Kanala and
Moskovskiy Prospekt. A wide range of commercial, social and
recreational infrastructure is within walking distance, including
Varshavskiy Ekspress, a shopping and entertainment complex
with a cinema, a concert venue and a sports area, as well
as supermarkets, department stores, restaurants and cafes,
garden squares and museums. 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.
44
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Green River
KIroVSKIY AdMInIS trAtIVE dIStrIct,
VoLGoGrAd SKAYA St.
GREEN
RIVER
25
min
to the airport
13 km
20
min
to the historical
city centre
10 km
Green river, a large-scale residential complex in omsk,
is Etalon Group’s first project beyond Moscow and St
Petersburg. developed in line with the “city within a
city” concept, the project offers a large selection of
apartments of different sizes with a variety of floor
plans: from classic to open-plan layouts.
AnnuAL rEPort 2022
2022
2030
СONSTRUCTION TIMELINE
160.4 BLN
RUB
Income from sales 1
12.4 BLN
RUB
Market value 1
1.4 MLN
SQM
Net sellable area 1
1 According to the valuation by Nikoliers as of 31 December 2022.
45
11 4
ProJEct PortFoLIo
Green River
KIroVSKIY AdMInIS trAtIVE dIStrIct,
VoLGoGrAd SKAYA St.
About the project
Location
Particular attention has been paid to developing the grounds
of the property: a wide promenade passing through varying
terrain will join the project’s open public spaces, such as
playgrounds and sports facilities, recreation areas and
landscaped garden squares. The plans for the first phase of the
project include a pump track as an additional recreation space.
The track’s state-of-the-art surface, high-quality fencing and
well-designed course will ensure safety.
In 2022, Etalon Group launched sales at the first phase of the
project, which includes 14 residential buildings, a preschool,
commercial premises, parking lots and landscaped courtyards.
The Green River residential complex is located on the left
bank of the Irtysh River, in the Kirovskiy district of Omsk,
which is the most promising, best-equipped and most
modern district in the city. The construction site occupies
the area from Baucentre on Volgogradskaya Street to
Kondratyuka Street and Verkhnedneprovskaya Street.
Schools, preschools, sports facilities and grocery stores
are all within a 10-minute walk.
nearby public transport stops
and major thoroughfares
provide convenient transport
connections for residents.
46
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
PROJECTS
BUSINESS
CLASS
47
47
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Voxhall
4 LEtnIKoVSKAYA St.
VOXHALL
25
min
to red Square
5 km
15
min
to the Garden ring
1 km
Voxhall, a multifunctional business-class complex
located on Letnikovskaya Street, in the prestigious
Zamoskvorechye district in the heart of Moscow,
includes a seven-section residential complex and two
aparthotel towers. the residential building is designed
as a single urban block with its own commercial
amenities to complement the extensive infrastructure
already available in the district.
1 According to the valuation by Nikoliers as of 31 December 2022.
2021
2025
СONSTRUCTION TIMELINE
32.9 BLN
RUB
Income from sales 1
8.0 BLN
RUB
Market value 1
66 THS
SQM
Net sellable area 1
48
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Voxhall
4 LEtnIKoVSKAYA St.
About the project
The project offers unique architecture and an excellent location
combined with functional layouts, panoramic windows, master
bedrooms, high ceilings, designer lobbies, a living environment
designed by well-known companies and high-quality
construction and finishing materials. The living environment is
well suited to the district’s status: the dynamically zoned interior
space was designed to ensure harmony with nature.
The project offers wonderful views thanks to its convenient
location 5 km from the Kremlin and near the Moscow River
Embankment. In 2022, Etalon Group launched sales at the first
phase of the project, which includes 14 residential buildings, a
preschool, commercial premises, parking lots and landscaped
courtyards.
Construction and installation works are currently ongoing.
Location
The multifunctional business-class complex is located in
the very heart of the capital, in the immediate vicinity of the
Paveletskaya metro station. The complex is easily accessible
by personal and public transport. Only 350 metres away, to
the north of Letnikovskaya Street, is Paveletskiy station, where
Aeroexpress trains depart for Domodedovo Airport.
The property’s excellent transport accessibility is coupled
with the district’s wide range of developed infrastructure and
amenities as well as proximity to a promenade and parks.
Residents will have access to all the benefits of living in the
prestigious centre of Moscow, with its modern residential,
business and entertainment infrastructure alongside cultural
attractions and the city’s main business centres. Voxhall is near
business districts where a number of financial institutions and
major companies are headquartered.
Just four minutes from the residential complex, a new
landscape park has been laid out on Paveletskaya
Square, with an underground shopping centre, fountains,
developed green space and an open-air amphitheatre.
Gorkiy Park, one of the largest and most popular
recreational areas in the capital, can be reached in
20 minutes by scooter.
49
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Silver Fountain
16 noVoALEKSEEVSKAYA St.
SILVER
FONTAIN
30
min
to red Square
10 km
20
min
to the Garden ring
5 km
the Silver Fountain business-class residential complex is
located in the historical Alekseevskiy district of Moscow. the
complex consists of five buildings, including residential and
commercial buildings as well as a business centre, social
amenities and parking facilities. the project is being built
among 19th-century architectural monuments, with a restored
vintage fountain, in the middle of a century-old linden alley,
that serves as the centrepiece of the entire complex.
1 According to the valuation by Nikoliers as of 31 December 2022.
2017
2023
СONSTRUCTION TIMELINE
47.7 BLN
RUB
Income from sales 1
7.7 BLN
RUB
Market value 1
190 THS
SQM
Net sellable area 1
50
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Silver Fountain
16 noVoALEKSEEVSKAYA St.
About the project
The total NSA of the project will be 190 ths sqm, including a two-
level underground parking garage for more than 2 thousand
vehicles.
The facades of the first phase of the Silver Fountain residential
complex emphasise its relationship to its immediate
surroundings and the seamless use of architectural techniques
typical of this part of Moscow. High windows without horizontal
lattices draw attention to the brickwork while illuminating the
interior as much as possible.
To ensure efficient operations, 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. The residential complex’s third building has
been certified as a smart home and included in the register
of new smart buildings established by the Unified Register of
Russian Developers. Silver Fountain’s high degree of energy
efficiency and environmental friendliness have been confirmed
by a Green Zoom platinum certificate.
Location
Thanks to its location 500 metres from the Alekseevskaya metro
station, alongside 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.
51
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Petrovskiy
Landmark
7 PEtroVSKIY SPIt
PETROVSKIY
LANDMARK
30
min
to the airport
30 km
20
min
to the Lakhta centre
15 km
10
min
to the Spit of Vasilievskiy Island
7 km
this business-class residential complex, located on
the neva embankment, in one of the most interesting
and most promising areas in central St Petersburg, was
delivered in early 2022. the project was designed by the
well-known architectural firm Intercolumnium.
1 According to the valuation by Nikoliers as of 31 December 2022.
2018
2021
СONSTRUCTION TIMELINE
19.1 BLN
RUB
Income from sales 1
7.6 BLN
RUB
Market value 1
62 THS
SQM
Net sellable area 1
52
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
Petrovskiy
Landmark
7 PEtroVSKIY SPIt
About the project
Location
The residential complex is located on Petrovskiy Island,
a prestigious and rapidly developing part of the city.
The historical city centre can be reached in 10 minutes
by car. In such a location, residents have every possible
opportunity to lead an active lifestyle and to relax in a
peaceful environment.
Three metro stations are located within walking distance,
but not on Petrovskiy Island itself, which ensures excellent
transport accessibility while maintaining the district’s
peaceful island-like atmosphere. Not far from Petrovskiy
Landmark is a riverside yacht club with a large marina
and service area. The neighbouring Krestovskiy Island
is home to a high-end residential development and
extensive recreation, leisure and sports facilities.
Each of Petrovskiy Landmark’s buildings has its own unique
design; at the same time, the entire complex shares a unified
style thanks to details made of natural Jurassic stone, niello and
Flemish brick. The suspended facades of building A are made of
hand-moulded red brick; the ground floors, where commercial
premises are housed, feature panoramic windows and are
adorned with light-coloured stone. Similar in style to classical
architecture, the building blends in with the symmetrical
architecture of the Petrograd Side, which can be seen through
the building’s windows. The location next to the Malaya Neva
is one of the property’s biggest selling points, and it was used
in the project’s design. The complex offers apartments with
oversized windows, panoramic or corner glazing as well as
floor-to-ceiling windows offering access to open balconies,
enclosed balconies with floor-to-ceiling windows, open terraces
or glazed winter gardens.
The complex features a central air-conditioning system, silent
lifts, round-the-clock monitoring of utility systems, a closed
heating system, underground parking and a preschool.
The stylish design of the inner courtyards, with small
architectural shapes, benches and elegant lamps, is part of the
project’s overall concept.
the location next to the Malaya
neva is one of the property’s
biggest selling points, and it was
used in the project’s design.
53
11ANNUAL REPORT 2022 4
ProJEct PortFoLIo
PROJECTS
COMFORT
CLASS
54
11ANNUAL REPORT 2022ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Normandy
MoScow
9 tAInIn SKAYA St.
2017
2021
СONSTRUCTION TIMELINE
Normandy is a comfort-class residential complex in the north-
east of Moscow, located on Taininskaya Street. The property has
been delivered and consists of five buildings of 7 to 24 floors
with minimalist facades and bright architectural accents. For
the convenience of residents, the project offers easily acces-
sible pram storage rooms, spacious halls with finishings made
of eco-friendly materials, waiting areas for guests and a con-
cierge area, underground parking, landscaped grounds with
walking trails, elegant benches and areas for relaxation,
equipped playgrounds for children and sports grounds,
a security and video surveillance system, as well as shops,
bakeries and beauty salons on the ground floors.
The project is conveniently located in a picturesque green area
of Moscow, alongside Losiny Ostrov National Park. The Losino-
ostrovskiy district of Moscow’s North-Eastern Administrative
Division offers well-developed social amenities, with a wide
range of healthcare facilities and educational institutions, sports
stadiums and fitness clubs, and shopping and entertainment
infrastructure available in the area. In addition, the district is
home to several universities, including the Moscow Suvorov Military
School, the Academy of Economic Security of the Ministry of Inter-
nal Affairs of the Russian Federation, the Moscow Institute of the
Border Guard Service of the Federal Security Service and others.
Thanks to its parks and forests, including the famous Losiny Ostrov
National Park, the district is one of the most environmentally
friendly parts of the capital. Nearby parks and garden squares
are popular recreational areas for Muscovites: Babushkinskiy
Park, Torfyanka Park with its pondside recreation area, Dzhamga-
rovskiy Park, and the beautifully developed Yauza River valley
with its numerous playgrounds.
The project offers convenient transport accessibility thanks to
two nearby metro stations – Babushkinskaya and Medvedkovo –
two suburban train stations and surface public transport stops.
The Moscow Ring Road is less than a five-minute drive away,
which makes it easy for residents to travel anywhere
in the region.
Summer Garden
MoScow
107 dMItroVSKoYE SHoSSE
2016
2021
СONSTRUCTION TIMELINE
Summer Garden is a residential complex consisting
of 11 residential buildings that have already been constructed.
It is located in one of the most developed areas of Moscow,
near two metro stations: Seligerskaya is a 15-minute walk away,
while the Yakhromskaya station can be reached in 2 minutes
on foot (set to open in 2023).
Spacious lobbies flooded with sunshine through panoramic
windows are a continuation of the distinctive style of the
bright multicoloured facades. The enclosed structure of the
neighbourhood keeps the wind and urban noise at bay,
creating a calm, peaceful atmosphere. In addition to the
11
Residential
buildings
comfort-class residential buildings, amenities, a garden,
parking facilities and a three-storey shopping centre have
already been built on the grounds of the project.
The 38-hectare Angarskiye Prudy Park and an equestrian
centre are a 10-minute walk away. The project offers excellent
transport accessibility thanks to its own convenient exit
from Dmitrovskoye Shosse, which makes it possible to reach
anywhere in the city quickly and easily.
34 THS
SQM
Net sellable area1
55 MLN
RUB
Market value1
16 BLN
RUB
Income from sales1
146 THS
SQM
Net sellable area1
1.9 BLN
RUB
Market value1
34 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
55
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Etalon City
MoScow
13 StAroKrYMSKAYA St.
2013
2018
СONSTRUCTION TIMELINE
Etalon City is a high-rise comfort-class residential complex
located in the middle of one of the largest forest parks in
Moscow, in a pristine area with well-developed infrastructure
straddling North and South Butovo. All the buildings in the
complex have already been delivered. The project includes
nine comfort-class residential buildings, commercial space and
social amenities. The buildings are brick monolithic structures
with suspended ventilated facades.
The complex features a unique architectural concept, whereby
every building has its own look symbolising a particular city.
The first-phase facades reflect the skylines of New York,
9
Comfort-class
residential buildings
Chicago, Barcelona and Monaco. In addition to the facades,
the finishing in the common areas and the landscape design
of the surrounding grounds continue the theme.
The residential complex was designed in line with the latest
urban planning trends in the capital: the project includes
enclosed, vehicle-free courtyards with landscaped walking
areas, playgrounds for children and sports facilities. The
grounds of the complex include a preschool and school;
courts for volleyball, basketball and futsal; a fitness centre; and
underground parking.
The project provides convenient access onto the Moscow Ring
Road, Kaluzhskoye Shosse and Varshavskoye Shosse; the Ulitsa
Skobelevskaya metro station is a 15-minute walk away. Stops
on nine surface transport routes are within easy reach of the
complex, from where residents can travel to the Bulvar Dmitriya
Donskogo, Annino, Ulitsa Akademika Yangelya and Yasenevo
metro stations.
Schastye
na Semyonovskoy
MoScow
20 IZMAILoVSKoYE SHoSSE
2020
2022
СONSTRUCTION TIMELINE
1
13-storey
residential building
The Schastye na Semyonovskoy project, delivered in 2022,
consists of a 13-storey residential building with underground
parking and an aboveground parking lot for guests. The
complex features a variety of layouts, including highly glazed
apartments as well as apartments with closed or French
balconies.
The ground floor of the residential complex houses commercial
amenities with a separate entrance, as well as a spacious
lobby, a pram storage room and other public spaces for the
comfort of residents.
The Schastye na Semyonovskoy residential complex is located
in a developed green area of Moscow alongside two of the
capital’s largest parks: Sokolniki Park and Izmailovskiy Park.
The Semyonovskiy Park and Public Garden is 250 metres from
the complex. 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, ensures excellent transport
accessibility for residents.
298 THS
SQM
Net sellable area1
1.3 BLN
RUB
Market value1
29 BLN
RUB
Income from sales1
6 THS
SQM
Net sellable area2
0.5 BLN
RUB
Market value2
1.6 BLN
RUB
Income from sales2
1 According to the valuation by Nikoliers as of 31 December 2022.
2 Source: Colliers International estimate as of 31 December 2021.
56
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Emerald Hills
MoScow rEGIon
KrASnoGorSK, KoSMonAVtoV BLVd. - MErLouSHKInA St.
20
Residential buildings
2009
2023
СONSTRUCTION TIMELINE
Finskiy residential
complex
MoScow rEGIon
SHcHELKoVo, FrunZE St.
2017
2023
СONSTRUCTION TIMELINE
The Emerald Hills residential complex was the Company’s
first – and one of its largest – projects in the Moscow region.
It is located in one of the greenest parts of the region and
is surrounded by forest parkland – in Krasnogorsk, a pristine
suburb north-west of Moscow. The project is located just
8 km from the Moscow Ring Road and close to the Opalikha
Moscow Central Diameter station.
A large part of the grounds of the complex itself is reserved for
green space and the development of recreational areas, sports
facilities and playgrounds for children. The project also includes
an open-air space museum, Cosmonaut Alley, featuring life-
size models of spacecraft. A landscaped park with recreational
areas and dedicated paths for pedestrians and cyclists has
been laid out in the forest adjoining the complex.
Emerald Hills is a fully inhabited residential neighbourhood
with functioning infrastructure and amenities as well as three
working schools and preschools. The complex consists
of 20 residential buildings. The final phase in the construction
of the neighbourhood will be buildings 18, 19 and 20, known
as the “New Emeralds”.
The Finskiy residential complex is an Etalon Group project
located in the western part of the Shchelkovo district centre.
This pristine area with developed infrastructure and amenities,
within commuting distance of Moscow, will be a wonderful
place to live for both young families and older people.
The modern architecture of the complex and the layout of the
apartments have been thought through down to the smallest
detail in order to provide the most comfortable setting possible
for future residents. Residents can enjoy active recreation at
any time of year, given that every possible type of fun and
entertainment for young people and families with children is
available in the Shchelkovo residential area.
Alongside the Finskiy residential complex is a preschool and
a secondary school, and a short walk away can be found
24-hour pharmacies, polyclinics and supermarkets, a post office
and a bank. The project offers a variety of options for family
recreation: from visiting an amusement park or rope park to
walking around pleasant garden squares.
The Finskiy complex is located far away from polluting
industries and major highways; the picturesque Klyazma
River passes near the complex. The air is very clean thanks
to the wealth of forestland nearby. In addition, the materials
used in the construction of the Finskiy residential complex are
environmentally friendly.
431 THS
SQM
Net sellable area1
0 MLN
RUB
Market value1
60 BLN
RUB
Income from sales1
38 THS
SQM
Net sellable area1
0.5 BLN
RUB
Market value1
6 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
57
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Desyatka
MoScow rEGIon
rAMEnSKoYE, MoLodEZHnAYA St.
Domino
St PEtEr SBurG
28 BELooStroVSKAYA St.
2017
2024
СONSTRUCTION TIMELINE
The concept for the Desyatka residential complex calls for the
creation of a compact, environmentally friendly and pleasant
“city within a city”. Located in the peaceful Ramenskiy district,
the complex was designed for people who value peace
and comfort. Plans are in place to include not only zones for
townhouses with land plots but also cosy apartment buildings.
There are also opportunities for active outdoor recreation
that will enable residents to make the most of their free
time throughout the year. The homes are being built in
an area bordering forestland near Lake Plotina. In addition,
the Ramenskiy State Park of Culture and Recreation
is a 30-minute walk from the complex, and the Dergaevskoye
Reservoir is a 15-minute walk away.
The centre of the city of Ramenskoye can be reached in only
10 minutes on public transport, and it takes about an hour
by car or suburban train to reach the centre of Moscow.
The architectural design is marked by a contemporary
minimalist aesthetic and laconic solutions.
The range of available apartments feature a huge number
of functional planning solutions: from compact studios to
so-called transformer apartments. All the necessary amenities
can be found on the grounds of the residential neighbourhood:
a preschool, a school, sports facilities for people of different age
groups, shopping centres, shops and a building supplies market.
2020
2024
СONSTRUCTION TIMELINE
Domino is a comfort-class residential complex that includes
a 10-storey residential building with underground and
aboveground parking for 219 vehicles.
It is located in the historical part of the Primorskiy district,
within walking distance (600 m) from the Chyornaya Rechka
metro station. The complex is located alongside parks and
picturesque areas suitable for walking: Stroganovskiy Park, the
Saltykovskiy Garden, the Bolshaya Nevka River embankment,
as well as the parks and palaces of Kamenniy Island.
The combination of minimalist architectural lines,
state-of-the-art technologies, infrastructure and amenities,
landscaping and thoughtful apartment design guarantee
future residents a high level of comfort.
There are no studio apartments in the residential complex.
Various floor plans are available – from cosy one-room
apartments to spacious five-room apartments. There are
also several apartment options with open-plan kitchen–
living rooms. One of the project’s key features is that there
are four to six apartments on each floor. Every apartment
has a glazed sunroom, including some with oversized windows.
The apartments are equipped with Airbox micro-ventilation
valves in the windows, which ensure a flow of fresh air even
when the windows are closed.
The complex has a closed, vehicle-free courtyard as well
as guarded grounds with 24-hour video surveillance and
a dispatch service. The project includes landscaped and
outfitted recreation areas for adults and children, an
amphitheatre, as well as a bicycle path and sports grounds.
There are already developed infrastructure and amenities
in the area surrounding the complex, including theatres,
museums, shops, cafes, schools and preschools.
32 THS
SQM
Net sellable area1
1.9 BLN
RUB
Market value1
8.1 BLN
RUB
Income from sales1
40 THS
SQM
Net sellable area1
3.2 BLN
RUB
Market value1
10.6 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
58
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Monograph
St PEtEr SBurG
SHKoLnAYA St.
2022
2025
СONSTRUCTION TIMELINE
Monograph is a new comfort-class residential complex
from Etalon Group.
The complex is located in the town of Shushary, in the
Pushkinskiy district, near the suburbs of St Petersburg
and major city roads, 15 minutes to the Kupchino metro station.
Important social amenities, including a school, a preschool
and a polyclinic, are located within walking distance from the
Monograph residential complex. The complex was created with
Novoorlovskiy
St PEtEr SBurG
SuZdALSKoYE SHoSSE
the comfort and safety of residents in mind: the project includes
well-considered, ergonomic layouts, and state-of-the-art
technological solutions were used.
The project provides modern, safe recreation areas for children
and adults, a parking area for bicycles, pram storage rooms,
a 24-hour dispatch service, commercial premises and video
surveillance systems.
Social amenities can be found in the immediate vicinity of the
project. A school with places for 1,925 pupils is already being
built, and plans are in place to open a preschool with places
for 320 children.
2013
2024
СONSTRUCTION TIMELINE
Novoorlovskiy is a large-scale Etalon Group project in the
northern part of St Petersburg that combines residential
neighbourhoods separated by small streets. All of the
residential areas are built using the same architectural style –
neoclassical. They include modern buildings with light facades
and surrounded by a forest park. In total, the project foresees
the construction of six 25-storey towers and five 7–9-storey
apartment buildings. Two preschools and a secondary school
have already opened on the grounds of the project.
At the heart of the project is a pedestrian shopping street filled
with shops, pharmacies, beauty salons and other properties.
All the necessary social and commercial infrastructure and
amenities are readily available. The ground floor of the
residential complex will be for commercial purposes. Sports
facilities, playgrounds for children and recreation areas will
be developed alongside the residential buildings.
With convenient exits onto the Ring Road, the Western High-
Speed Diameter and the main highways in the northern part
of St Petersburg, the Novoorlovskiy residential complex offers
excellent transport connections to the city centre and the
suburbs of St Petersburg.
36 THS
SQM
Net sellable area1
1.7 BLN
RUB
Market value1
6.7 BLN
RUB
Income from sales1
49 THS
SQM
Net sellable area1
1.6 BLN
RUB
Market value1
9.6 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
59
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Rauta
EKAtErInB urG
ZHELEZnodoroZHnIY dIS trIct,
nAdEZHdIn SKoY-PEKHotIntSEV St.
Suomen Ranta
EKAtErInB urG
oKtYABr SKIY dIStrIct, LuGAnSKAYA - SAVVY BELYKH St.
2021
2027
СONSTRUCTION TIMELINE
This project includes nine residential buildings and several
aboveground multilevel parking garages. The ground floors
house space for offices, shops, cafes and hairdressers. The
landscaped grounds include recreational areas, playgrounds
for children and sports facilities, as well as pedestrian and
bicycle paths. The grounds of the residential area were
designed based on the safe home concept (a car-free
courtyard).
The Rauta residential complex is located in the
Zheleznodorozhniy district of Ekaterinburg. The district’s
distinctive features include developed commercial and
transport infrastructure as well as social amenities. Nearby
are a railway station and the northern bus station, an arena
for team sports, the Cosmos cinema and concert hall, the
Olympic Embankment along the Iset River, a park for walking
and relaxing, schools and preschools, supermarkets, shops
and cafes.
The Rauta residential complex took part in a pilot
project for certification according to the new GOST R green
standard (developed for apartment buildings by Dom.rf).
The project meets the transitional criteria of the green GOST
R standard for residential buildings: a high energy-efficiency
rating, landscaped grounds with green space, the use
of environmentally friendly materials and accessibility.
2022
2024
СONSTRUCTION TIMELINE
The Suomen Ranta residential complex was added to Etalon
Group’s portfolio in 2022 as part of the acquisition of YIT Russia.
The project includes five residential buildings, three of which
have already been delivered, as well as underground and
aboveground parking areas. The complex offers a wide range
of layouts, including open-plan apartments with kitchen–living
rooms, walk-in closets and utility rooms, as well as the possibility
of dividing apartments into common and private areas. Space
for seasonal storage is available in the underground part of the
buildings. The ground floors house commercial infrastructure,
including a supermarket and a marketplace pickup point.
All the buildings in the complex have the same type of facade;
the concept calls for a functional layout for the ground floor
with barrier-free access and a passageway into the courtyard.
The grounds include separate areas for games, sports and
general recreation as well as bicycle and pedestrian paths.
The complex is located in a developed area of Ekaterinburg,
on the banks of the Iset River, within easy reach of Mayakovskiy
Park, the largest park in the city. Within walking distance can
be found all the necessary commercial infrastructure and social
amenities as well as public transport stops and two metro
stations: Botanicheskaya and Chkalovskaya. A convenient
exit onto one of the city’s key roadways, the Novokoltsovskiy
Highway, a bypass road, ensures excellent accessibility for
motorists. The city centre, airport, train station and surrounding
districts can be reached in 10–15 minutes by car.
103 THS
SQM
Net sellable area1
2.7 BLN
RUB
Market value1
12.9 BLN
RUB
Income from sales1
34 THS
SQM
Net sellable area1
1.4 BLN
RUB
Market value1
5.0 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
60
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Solnechniy district
EKAtErInB urG
cHKALoVSKIY dIStrIct, ZoLotIStIY BLVd. - LucHIStAYA St.
2022
2034
СONSTRUCTION TIMELINE
The architecture of the Solnechniy residential district is notable
for its modern European style. The buildings are of varying
heights, thus ensuring that the apartments and courtyards
enjoy plenty of natural light. Another architectural feature is
the oversized windows in the residential buildings. The project
design calls for the installation of French and corner windows
as well as sunrooms with glass walls.
The project offers a new housing format that is unique for
the district: apartments on the ground floor have their own
separate entrance and terrace. Terraces around the project’s
perimeter will be surrounded by shrubbery, thus creating
a sense of seclusion from the bustle of the city. Places for
relaxation can also be set up on the outdoor balconies
or sunrooms that are planned for nearly every apartment
in the quarter.
State-of-the-art utility systems – meters, silent lifts and a ded-
icated furnace room capable of maintaining a microclimate
at any time of year by providing an uninterrupted supply of heat
and hot water – will help ensure the comfort of residents.
Play areas for children of various age groups, football fields,
sports grounds and space for relaxation will be built in the
closed courtyards. The customised landscape design calls
for the arrangement of lawns as well as the planting of shrubs
and trees.
Residents of the residential complex will enjoy a high level of
security thanks to an advanced video surveillance network,
monitoring centre, access control and the presence of alarm
buttons on the grounds. It should also be noted that parents
also have access to surveillance cameras that can monitor their
children remotely through a special app.
The Solnechniy project will be home to the IT-Kub centre
for digital education, a modern space where schoolchildren
can learn about trends in the world of IT. In addition, the Ice
Hockey Academy, which helps develop physical education
and promotes the values of a healthy lifestyle in the Sverdlovsk
region, is also located on the grounds of the project.
Essential social amenities can be found within walking distance
from the complex: the Governor’s Lyceum, a vocational school
for 1,200 students (under construction); an innovative preschool
with places for 300 children; and the Centre for Rhythmic
Gymnastics – the largest in the Urals and the No. 3
centre in the country in terms of size and available facilities.
Quantorium, a technology park for children that will help young-
sters choose a future profession at a very early age, will be hou-
sed in the Governor’s Lyceum building.
The district offers excellent transport accessibility thanks to
convenient exits onto the Ekaterinburg Ring Road and nearby
public transport routes. There will be convenient aboveground
parking alongside the residential buildings.
1,625 THS
SQM
Net sellable area1
22.2 BLN
RUB
Market value1
259 BLN
RUB
Income from sales1
1 According to the valuation by Nikoliers as of 31 December 2022.
61
11ANNUAL REPORT 2022
4
ProJEct PortFoLIo
Schastye v Kazani
Schastye v Tyumeni
KAZAn
noVo-SAVInoVSKIY dIStrIct, GAVrILoVA St.
2021
2026
СONSTRUCTION TIMELINE
In 2022, Etalon brought its umbrella Schastye brand to its new
regions of operations: Schastye v Kazani was the Company’s
first project as part of the its regional expansion of the brand.
The first phase of the project includes two buildings – of 19 and
20 floors – with built-in commercial and office space as well as
a two-level enclosed parking garage. According to the project
plans, the NSA of the first phase will be 20 ths sqm, including
19 ths sqm of residential and commercial real estate. The project
offers a diverse range of functional layouts. Apartments are
available with either a classic or open-plan layout: apartments
with spacious kitchen–living rooms and apartments with walk-
in closets, master bedrooms as well as saunas.
The landscaping concept for the grounds surrounding the
project was developed in collaboration with landscape desig-
ners and environmental experts. The Company plans to build
operational terraces and publicly accessible recreation areas
atop the project’s stylobate; the adjacent grounds will feature
recreation and sports facilities, playgrounds as well as an
extensive walking area.
The residential complex is located in a developed green area
with extensive social and commercial infrastructure: within
walking distance are schools, shops and cafes, several shopping
centres and sports facilities. The complex is located in close
proximity to the picturesque Savinovo recreation park, on the
banks of the Kazanka River.
The project offers convenient access onto Prospekt Yamasheva,
one of the most important thoroughfares in Kazan.
tYuMEn
tSEntrALnIY dIS trIct, ProFSoYuZnAYA St. -
oLoVYAnnIKoVA St. - SEVErnAYA-dAoudELnAYA St.
2022
2024
СONSTRUCTION TIMELINE
The Schastye v Tyumeni residential complex is the Company’s
fourth regional project brought to market since the beginning
of 2022. The project’s NSA is expected to be 38 ths sqm,
including 27 ths sqm of residential and commercial real estate.
Located in Tyumen, the new residential complex consists of
three buildings of 15 to 25 floors along with an aboveground
multilevel parking garage. The project offers a wide range
of apartments with open-plan layouts with a combined
kitchen–living room as well as a master bedroom. Some of
the apartments on the upper floors have terraces offering
panoramic views. The grounds of the complex will feature
playgrounds for children of different ages as well as small
islands for recreation. A gym with outdoor training equipment
will be located on the roof of the parking garage. The project
also plans to include a promenade that will run alongside
a gallery of shops and offices with display windows on the
ground floor.
The Schastye v Tyumeni residential complex is located in the
very centre of the city, at the intersection of Profsoyuznaya
Street and Olovyannikova Street. This convenient location
ensures that residents will have access to developed social
amenities and commercial infrastructure. Near the complex
can be found schools, preschools, universities, medical centres,
banks, shopping and business centres, sports facilities and
many small cafes and restaurants. Within walking distance
of the project are several parks and garden squares, including
the City Park of Culture and Recreation, and a well-equipped
promenade along the Tura River embankment. Transport
accessibility is provided by convenient access to the city’s major
thoroughfares: 50 let Oktyabrya Street, Profsoyuznaya Street
and Respubliki Street.
56 THS
SQM
Net sellable area1
3.1 BLN
RUB
Market value1
13.2 BLN
RUB
Income from sales1
38 THS
SQM
Net sellable area
889 MLN
RUB
Market value2
5.5 BLN
RUB
Income from sales2
1 According to the valuation by Nikoliers as of 31 December 2022.
2 According to the valuation by Nikoliers as of 31 December 2022. Schastye v Tyumeni is included in the valuation report as part of the City Zen project.
The presented market value and income from sales refer to City Zen.
62
11ANNUAL REPORT 2022
5
5
oPErAtInG rESuL tS
oPErAtInG rESuL tS
REPORT
2022
5 ANNUAL
OPERATING
RESULTS
63
63
ANNUAL REPORT 20221111ANNUAL REPORT 2022 5
5
oPErAtInG rESuL tS
oPErAtInG rESuL tS
Operating results
71.8 RUB
BLN 1
new
contract
sales
01
Continuing regional
expansion
Factors driving
sales on the
strategic horizon
02
Offering affordable
housing in regional
markets and the
suburbs of Moscow and
St Petersburg
03
Expanding offer by
increasing land bank and
maintaining it at a level of
at least 6 mln sqm of NSA
1
Including accumulated sales at YIT projects under development.
64
ANNUAL REPORT 20221111ANNUAL REPORT 2022 5
5
oPErAtInG rESuL tS
oPErAtInG rESuL tS
652 THS
SQM
new
launches
2.3× y-o-y
65
ANNUAL REPORT 20221111ANNUAL REPORT 2022 5
5
oPErAtInG rESuL tS
oPErAtInG rESuL tS
735 THS
SQM
record
delivery
volume
+74% y-o-y
75.0 RUB
BLN 1
cash
collections
1
Including funds accumulated from YIT Russia’s development
business as of the moment of Etalon Group’s takeover.
66
ANNUAL REPORT 20221111ANNUAL REPORT 2022 5
5
oPErAtInG rESuL tS
oPErAtInG rESuL tS
261.7 RUB
THS
Average
apartment
price per sqm
+10% y-o-y
67
ANNUAL REPORT 20221111ANNUAL REPORT 2022 5
oPErAtInG rESuL tS
Operating results at a glance
In 2022, Etalon Group concluded a lucrative
Deliveries, ths sqm
Deliveries by region, ths sqm
deal to acquire YIt russia. the successful
takeover enabled the company to come
close to achieving its strategic goals: its
portfolio expanded to over 6.4 mln sqm of
nSA in eight regions.
The considerable expansion of the Company’s
business was reflected in the amount of space
delivered, which increased by 74% in 2022, reaching
735 ths sqm. While the Moscow region and St
Petersburg remain Etalon Group’s key regions
in terms of housing deliveries, the Company
completed a number of buildings in regional
projects in 2022, delivering space at three
properties – in Ekaterinburg, the Sverdlovsk region
and Kazan. And in early 2023, the Company
received permits for the construction of the first
building at its first project in Novosibirsk.
The macroeconomic environment and geopolitical
factors had an impact on new contract sales
and cash collections in 2022. During the year, the
Company sold 292.4 ths sqm of NSA worth RUB 58.7
billion, not including YIT Russia’s sales as of the date
of its acquisition. Etalon Group’s cash collections
from new contract sales, taking into account
funds accumulated from YIT Russia’s development
business at the time of the takeover, amounted to
RUB 75.0 billion.
For more on the acquisition of YIT Russia and
the operational synergies achieved through the
integration, see About Etalon Group.
735
+74%
421
2021
2022
19
PROJECTS
Factors driving sales in 2022
Launch of new NSA in key regions and
in new regions
In total, the Company put 652 ths sqm
of NSA on sale in 2022, an increase of
131% year-on-year. The majority of the
new space was launched towards the
end of 2Q 2022 or later, driving a gradual
recovery in monthly sales dynamics in
the second half of the year.
Space put on sale, NSA,1 ths sqm
652
282
New contract sales, RUB bln
Moscow and the Moscow region
St Petersburg
Other regions
1 Net sellable area
2021
2022
84.4
71.8
13.1
58.7
–15%
Accumulated new
contract sales at
YIT Russia projects
under construction
2021
2022
Cash collections, RUB bln
84.1
75
14.6
60.4
–11%
Funds from
YIT Russia’s
development
business
Despite a slowdown in new contract sales, in both monetary and volume terms, stemming from a drop in
consumer confidence and a sharp increase in the key rate in early 2022, the Company was able to return
to a sales growth trajectory by the end of 2022 thanks to the launch of new and more affordable space in
connection with the extension of the state mortgage programme and recovery from ongoing shocks.
Cash collections, RUB bln
New contract sales, RUB bln
7.3
7.1
7.8
7.1
6.2
5.4
6.4
4.4
6.9
6.2
5.2
4.1
4.9
4.2
5.4
4.2
5.0
4.9
3.2
2.7
3.2
3.0
2.3
2.1
2021
2022
January
February
March
April
May
June
July
August
September
October
November
December
68
11ANNUAL REPORT 2022 5
oPErAtInG rESuL tS
Sales breakdown by region
During the year, the Company continued to launch
sales at new phases of popular projects, such
as Nagatino i-Land and Zil-Yug, in Moscow. The
considerable share of such projects supported price
trends and enabled the Company to offset, to a
certain extent, the temporary decline in demand for
real estate.
At the same time, the Company launched new
projects in 2022 in promising and less competitive
regional markets, where there is effective demand
for quality housing. In the last quarter of the
reporting year, less than a year after the active
launch of regional projects, they already accounted
for 34% of sales in terms of NSA and 21% in
monetary terms.
Share of contracts 1 in sqm in Moscow and the Moscow region
Share of contracts 1 in sqm in other regions
2022
14 %
7 %
6 %
3 %
2 %
2 %
1 %
Zil-Yug
Nagatino
i-Land
Silver Fountain
Wings
Normandy
Voxhall
Emerald Hills
11 %
6 %
7 %
8 %
6 %
7 %
Other projects
in MMA 2
9 %
5 %
1 %
42%
2021
53%
In regional markets, the Company sold apartments
at 15 comfort-class projects, where the average price of an
apartment in 4Q was RUB 123.6 ths per sqm, an increase of 13%
from 2Q 2022.
5 %
3 %
3 %
2 %
1 %
4 %
Other
regional
projects
Zil-Yug
Nagatino
i-Land
Silver Fountain
Wings
Normandy
Voxhall
Emerald Hills
Other projects
in MMA
Suomen
Ranta
Solnechniy
Green
River
Suita
Quarter
City
Life
Share of contracts 1 in sqm in St Petersburg
Regional breakdown
2022
15 %
41%
3 %
3 %
2 %
2 %
2 %
1 %
1 %
1 %
1 %
Galactica
Che
Quarter
Okhta
House
Etalon on
the Neva
Jubilee
Estate
Petrovskiy
Landmark
Swallow’s Nest
Domino
Tsar’s
Capital
Botanica
Other projects
in St Petersburg
2021
17 %
17 %
9 %
1 The total may not add up to 100% due to rounding.
2 MMA – Moscow Metropolitan Area.
47%
4 %
5 %
4 %
2 %
2 %
1 %
2 %
1 %
2 %
7 %
Galactica
Che
Quarter
Okhta
House
Etalon on
the Neva
Jubilee
Estate
Petrovskiy
Landmark
Swallow’s Nest
Domino
Tsar’s
Capital
Botanica
Other projects
in St Petersburg
Ekaterinburg
Omsk
Tyumen
Kazan
69
11ANNUAL REPORT 2022 5
oPErAtInG rESuL tS
Sales portfolio: average price trends
Affordable mortgages
Construction progress coupled with the
considerable percentage of projects in the upper
price segment in Moscow (Zil-Yug, Nagatino i-Land)
supported price trends.
The average price of an apartment increased by
33% year-on-year in St Petersburg and by 14% in
Moscow; however, the increase in the average
apartment price in the portfolio as a whole was
influenced by the launch of Etalon Group projects
in regional markets, with lower prices. Nevertheless,
prices rose in regional markets, which is an indicator
of growth in these promising markets.
Despite the fact that the key rate reached 20%
in March 2022, its subsequent reduction and the
continuation of preferential mortgage programmes
meant that Etalon Group customers were able to
get mortgages at comfortable rates.
Amid a growing supply in regional markets and
the expansion of state-subsidised mortgage
programmes, the share of sales with mortgage
financing increased by 9 p. p., reaching the same
level as in late 2021. At the same time, the increase
in mortgage-backed sales supported a high
average down payment, which recovered to 86%
following a period of macroeconomic uncertainty.
200.6 RUB
THS
average price per sqm
for all types of real
estate in 2022
79%
86%
percentage of
high average down
mortgage-backed sales
payment thanks to
in 4Q 2022
increased percentage of
mortgage-backed sales
Average price, RUB ths/sqm
Average apartment price, RUB ths/sqm
Share of new mortgage contracts, %
Average down payment, %
Average apartment price
Average price
Moscow
St Petersburg
Moscow region
Other regions
Apartments
All property types
Average down payment
290.1
294.1
217.6
181.7
261.1
192.5
250.3
199.0
383.6
366.2
380.3
+14 %
332.5
340.6
261.1
258.2
261.9
+33 %
229.3
-12%
195.3
+1 %
236.5
197.1
149.3
159.2
70
40
61
33
55
37
55
25
79
58
87
81
86
86
74
4Q 21
1Q 22
2Q 22
3Q 22
4Q 22
4Q 21
1Q 22
109.4
84.9
2Q 22
128.9
114.4
123.6
120.1
+13 %
-20 %
3Q 22
4Q 22
4Q 21
1Q 22
2Q 22
3Q 22
4Q 22
4Q 21
1Q 22
2Q 22
3Q 22
4Q 22
70
11ANNUAL REPORT 2022 5
oPErAtInG rESuL tS
256 partner
agencies
in 2022
~30 %
share of annual
sales attributed
to the regional
network
Regional sales network
Etalon Group’s regional marketing network, which
includes sales offices and partner agencies, enables the
Company’s customers to consult with specialists and
purchase an apartment in a convenient nearby region.
With the expansion of business beyond Moscow and
St Petersburg, the sales network has become one of
Etalon Group’s competitive advantages, enabling the
Company to analyse the market in terms of the potential
to enter a particular region and launch new projects there.
In addition, thanks to the Company’s many years of
experience selling property in St Petersburg and Moscow
through its regional network, customers from cities
throughout Russia are already familiar with the Etalon
brand and the quality of the Company’s product.
In 2022, the share of
regional customers
was 30.1%
Etalon Group’s regional sales1
REGION
PERCENTAGE OF ALL CONTRACTS
Leningrad region
Krasnoyarsk Krai
Krasnodar Krai
Yamalo-Nenets AD
Novosibirsk region
Khanty-Mansi AD
Republic of Bashkortostan
Omsk region
Republic of Tatarstan
Foreigners
Other Russian regions
TOTAL
3.0%
1.2%
1.1%
1.0%
0.8%
0.8%
0.8%
0.7%
0.7%
0.3%
19.6%
30.1%
Despite market volatility in 2022, Etalon Group
demonstrated its resilience and achieved excellent
results. The Company completed a lucrative deal to
acquire YIT Russia – and successfully integrated it by
the end of the year – expanded into five new regions
and put more than 650 ths sqm of NSA from its updated
portfolio on sale, twice as much as the year before. In
addition, the Company delivered 735 ths sqm last year,
setting a new record and bolstering its position among
the five largest developers in Russia.
Active portfolio expansion, improved product affordability
and the launch of new buildings helped Etalon Group
return to its trajectory of month-on-month sales growth
by the end of the year. Further work in this area will
enable the Company to support sustainable business
growth and achieve its strategic goals to 2024.
1 Data for 2022. The percentage of regional
customers who have concluded a contract
for the purchase of housing at Etalon Group
projects in Moscow and St Petersburg
71
ANNUAL REPORT 202211 6
FInAnc IAL rESuL tS
REPORT
2022
6 ANNUAL
FINANCIAL
RESULTS
72
72
11ANNUAL REPORT 2022 6
FInAnc IAL rESuL tS
Financial results
thanks to efforts to improve business efficiency and the acquisition of YIt russia on profitable terms,
in 2022 the company achieved a high level of gross profitability and record net profit.
Revenue, RUB bln
Pre-PPA gross profit, RUB bln
Net profit, RUB bln
Margin
Margin
84.3
78.7
87.1
80.6
72.3
38 %
36 %
31.0
30.5
33 %
25.8
27 %
24 %
22.7
17.1
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
,
80.6 ruB
BLn
Revenue outpaced operating
results on the back of record
delivery volumes
13.0 ruB
BLn
Thanks to the profit generated by the M&A
deal for the strategic acquisition of YIT Russia
+332 % y-o-y
4.3×
growth
16 %
13.0
3.5 %
3.5 %
3.0
2.0
0.2
-0.7
2018
2019
2020
2021
2022
Statement of profit or loss
Despite the challenging market environment
and lower consumer confidence, Etalon
Group’s revenue for 2022 was RUB 80.6 billion,
down just 7.6% year-on-year. A supporting
factor was record delivery volumes, which
unlocked funds held in escrow, resulting
in recognition of revenue for completed
properties.
In an increasingly competitive environment we
have been focusing on improving operational
efficiency and maintaining high profit
margins. As a result of our efforts, our gross
profit increased from RUB 27.8 billion to RUB
28.2 billion. Our pre-PPA gross profit margin
increased from 36% in 2021 to 38% in 2022,
exceeding the target level of 35% set in our
strategy to 2024.
In our core segment of residential property
development, pre-PPA profitability increased
from 38% to 40%. Projects implemented as
part of the regional business expansion
programme showed the highest profitability: in
the regional markets, the pre-PPA residential
development gross margin reached an
impressive 43%.
Gross profit at the consolidated level was
up 2% to RUB 28.2 billion, and profitability
grew by 3 p. p. to 35%, and in the residential
development segment to 37% (+3 p. p.).
EBITDA was RUB 16.5 billion, after adjusting
for purchase price allocation (PPA) of RUB 18.8
billion. Despite the costs associated with the
acquisition and integration of YIT Russia, our
EBITDA margin remained flat year-on-year,
at 20.5%.
Thanks to the deal with YIT on favourable
terms for Etalon Group, net profit for the year
more than quadrupled, reaching a record
RUB 13 billion.
Pre-PPA1 residential development gross profit, RUB mln
Pre-PPA gross profit
Pre-PPA gross margin
MOSCOW
ST PETERSBURG
OTHER REGIONS
16,065
13,377
12,883
12,761
Pre-PPA gross margin
Pre-PPA gross margin, main segment
Comfortable financial position
38 %
Above the 35% target
stated in the strategy
+2 p. p. y-o-y
40 %
0.8 ×
In the housing development segment, and an
impressive 43% in regional projects
Ratio of net corporate debt to pre-PPA EBITDA:
less than 1x, and well below the target of 2×-3×
+2 p. p. y-o-y
37 %
38 %
+ 1 p. p.
40 %
42 %
+ 2 p. p.
43 %
1,474
LAUNCH OF
REGIONAL
EXPANSION
PROGRAMME
2021
2022
2021
2022
2021
2022
1 Purchase price allocation.
73
11ANNUAL REPORT 2022 6
FInAnc IAL rESuL tS
Cash flows
Cash flows came under pressure due to the acquisition of
YIT Russia, higher payments on project acquisitions, and an
increase in the number of projects at the stage of construction
and design. But notably, since the end of 2021 the Company
has increased its portfolio to 6.4 mln sqm, the number of regions
has grown from 3 to 8, and over 650 ths sqm of NSA that can
generate future profits has been put on the market.
Balance sheet
In the reporting year, the Company maintained a strong
financial position. As of 31 December 2022, the total balance
of funds held in escrow had increased to RUB 60.4 billion,
enabling the Company to attract project financing at a lower
rate of 3% to 4%, even in the face of upward movement in the
Bank of Russia’s benchmark interest rate. Interest rates on our
loan portfolio also remained at a comfortable level during the
reporting period. The weighted average cost of servicing the
debt portfolio was 5.2%, compared to 6.5% in 2021.
Operating cash flow,1 RUB mln
Free cash flow,1 RUB mln
Net debt (cash), RUB bln
18,838
36,180
(17,342)
60.4
27,772
(45,552)
(17,780)
14,557
36,180
(21,623)
27,772
(51,458)
(23,686)
0.1 ×
0.8 ×
Net corporate debt
to LTM pre-PPA
EBITDA ratio
14.5
1.1 ×
(5.6)
Coverage ratio for
project finance debt 1
2.6
1.6 ×
(23.5)
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
2021
2022
2021
2022
31.12.2021
31.12.2022
Cash inflows into escrow accounts (net balance) and repayments of
project financing in 2022 offset against funds released from escrow
Cash inflows into escrow accounts (net balance) and repayments of
project financing in 2022 offset against funds released from escrow
Net corporate debt
Net project debt (cash)2
Operating cash flow (OCF) less interest paid
Free cash flow (FCF)2
Operating cash flow (OCF) adjusted for cash inflows into escrow
accounts and repayments of project financing in 2022 offset against
funds released from escrow
Free cash flow (FCF) adjusted for cash in escrow accounts and
repayments of project financing in 2022 offset against funds released
from escrow
The ratio of net corporate debt to pre-PPA EBITDA was 0.8х,
which was less than 1x, and well below our target of 2×-3×.
Our debt continues to be entirely in roubles, and thanks to
sufficient liquidity reserves and the terms of existing loan
agreements we are able to keep the average interest on our
loan portfolio at a comfortable level, even against a backdrop
of rising interest rates, thus ensuring that we can fulfill our
obligations to lenders, partners and customers. At the same
time, we are in a strong financial position to implement strategic
programmes in key areas, allowing us to follow through on
the planned expansion of the business in new regions where
we operate.
1
Incl. cash inflows into escrow accounts.
2 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.
1 Project debt used in calculating the coverage ratio includes escrow adjustments.
2 Project finance debt less cash in escrow accounts.
Source: IFRS financial statements, Company data; year-on-year change and net debt were calculated without rounding.
74
11ANNUAL REPORT 2022
7
SuStAInABILItY
REPORT
2022
7 ANNUAL
SUSTAINABILITY
Introduction 76
Stakeholder engagement 80
occupational health and safety 85
Environment 90
Employees 94
customers 101
Social responsibility 104
Innovations 114
data protection and cybersecurity 121
Business conduct 122
responsible supply chain 127
risk management framework 132
GrI Standards 141
7575
75
11ANNUAL REPORT 2022 7
SuStAInABILItY
Introduction
In today’s world, a business must adhere to high
standards in terms of environmental protection,
social responsibility and corporate governance (ESG).
In an effort to support long-term mutually beneficial collaboration
with customers, partners and local communities, Etalon Group uses
state-of-the-art technologies and the latest approaches
to the design of residential complexes to create comfortable
urban environments, develops infrastructure and amenities,
carries out public-interest projects, takes measures to reduce its
environmental impact, and is discerning in its choice of partners and
counterparties. The principles of sustainability are deeply integrated
into the Company’s daily operations and underpin Etalon Group’s
corporate values.
Reporting principles and framework
UN Sustainable Development Goals
This section of the report provides a brief overview
of the Company’s ESG performance in 2022 and
early 2023. More detailed information on Etalon
Group’s ESG activities in 2022 is included in a
separate sustainability report that the Company
is publishing for the first time in 2023. Etalon Group
previously disclosed its non-financial reporting
as part of its integrated annual report, which was
published in April 2022 and is available on the
Company’s website, etalongroup.com.
In preparing this report, the Company relied
on the principles and standards recommended
by the Global Reporting Initiative’s sustainability
reporting guidelines. In deciding on the content of
the report, the principles of materiality, stakeholder
coverage, and completeness were used. To ensure
the quality of disclosure, the principles of balance,
comparability, accuracy, timeliness, clarity and
verifiability were used.
The report discusses Etalon Group’s results for its
traditional regions (St Petersburg, Moscow and the
Moscow region) as well as its new regional markets:
Omsk, the Novosibirsk region, Ekaterinburg, Tyumen
and Kazan.
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 that submitted by its subcontractors. Unless
indicated otherwise, the reporting includes YIT
Russia’s results for the period since it was acquired
by Etalon Group.
Our assessments and forward-looking statements
are based mainly on our current expectations,
estimates of future events and trends that affect
Etalon Group’s operations or that may affect them
in the future. These forecasts are subjective in
nature and may not take into account certain risk
factors that could have a serious impact on the
implementation of Etalon Group’s strategy and
results.
For questions related to the report and the data
presented in it, please contact the Investor Relations
and ESG Department: ir@etalongroup.com.
Disclosure standards
When making disclosures, we were guided by
individual GRI standards that were part of GRI’s
updated reporting guidance published in 2021.
In addition to GRI standards, the report includes
a number of data sets in line with the requirements
of the SASB Real Estate and SASB Home Builders
standards.
For more information, references to disclosure
standards are provided in the index at the end
of the Sustainability section.
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 our business strategy is in line with the long-term
development trajectory in the regions where we operate and also with the
values of society. They also help us improve our business processes and
incorporate innovations for the sustainability of our business
and local communities.
Of the 17 UN Sustainable Development Goals, we continue
to adhere to five key goals that are in line with the specific
nature of our business and our ability to have a socially
significant impact in a given area:
� Good health and well-being
� Industry, innovation and infrastructure
� Sustainable cities and communities
� Responsible consumption and production
� Climate action
The goals where we focus our efforts may change as we refine our strategy
in the area of corporate and social responsibility and as specific measurable
targets are established. Our current sustainability goals and plans to expand
our ESG practices are listed in Etalon Group PLC’s ESG Policy, which was
approved in December 2021 and is available on our website.
Etalon Group’s key sustainable development
goals under its current strategy:
76
11ANNUAL REPORT 2022 7
SuStAInABILItY
Material topics covered in the report
In identifying material topics, we were guided by
Identification of material topics
the analyses of market conditions and the situation
in the industry that are conducted on a regular
basis by the Group’s divisions as part of their daily
activities.
These analyses identified bottlenecks and growth points
in today’s turbulent market landscape. Feedback from
stakeholders in the context of events held by the Company or
with its participation – such as question-and-answer sessions
for employees with the Company’s management, direct
engagement with investors, dialogue with existing and potential
suppliers, etc. – made it possible to identify the most important
issues for stakeholders and to rank them in order of importance.
1
2
3
4
Analysis of the external context as part of
regular monitoring of the industry
Identification of the main risks for the
Company and its stakeholders, as well
as the Company’s potential impact on
the external environment under current
conditions
Assessment of the significance of these risks
and their impact for stakeholders during
engagement with investors, employees,
partners and local communities
Identification of the most important topics
and their prioritisation
Мaterial topics
Stakeholder
engagement
Corporate
governance
standards
Innovation
Equal
opportunities
Concern for the
environment
Occupational
safety
Impact on
community
development
77
11ANNUAL REPORT 2022 7
SuStAInABILItY
Sustainability management
Etalon Group’s sustainability management system is based on
Some of Etalon Group’s standards and policies are publicly available
adherence to high standards of corporate governance, environmental
on the Company’s website.
protection and the prioritisation of the long-term development goals
of its business and society. The Company supports the UN Sustainable
Development Goals and adheres to the principles enshrined in the
Universal Declaration of Human Rights and to a policy aimed at
preventing any form of discrimination, fraud or violations of the rules
of fair competition.
The principles of sustainability management
are reflected in the following Company standards
and policies:
� Etalon Group PLC ESG Policy
� Etalon Group Code of Corporate Ethics
� Etalon Group Anti-corruption Policy
� Regulation on Conducting Tenders within Etalon Group,
including the Supplier’s Code
� 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
� Etalon Group PLC Management Policy
� Etalon Group PLC Disclosure Policy
� Regulation on the Corporate Secretary of Etalon Group PLC
Strategic issues related to sustainability come under the purview
of Etalon Group’s Board of Directors. The Investor Relations and
Information Disclosure Committee is responsible for ESG issues.
Operational management of the Company as a whole,
including in this area, is the responsibility of the CEO and his
deputies in the corresponding areas of business development.
At the level of ESG-related operational processes, the coordinating
body is the Corporate Investment and Strategy Division, which
includes the Investor Relations and ESG Department. The
implementation of policies and processes related to corporate
social responsibility within Etalon Group and individual subsidiaries –
including issues of monitoring compliance with anti-corruption
laws and internal policies, personnel management, procurement,
environmental issues, etc. – fall under the purview of the responsible
divisions and departments.
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.
78
11ANNUAL REPORT 2022 7
SuStAInABILItY
Sustainable Development Goals and accomplishments in 2022
COMPANY ACTIONS
� Maintaining high occupational health and safety
� Incorporating advanced digital technologies
� Building social amenities in the cities where the
� Carrying out a comprehensive environmental impact
standards
� Maintaining leadership in the use of BIM technology
Company operates
� Providing accident insurance and supplementary
and the full-scale implementation of digital solutions
� Taking part in charitable projects
health insurance
to create an even more efficient design system
� Collaborating with higher education institutions
� Harnessing environmental expertise and implementing
� Adapting and incorporating new industrial
to jointly develop training programmes,
assessment and taking environmental measures
at all stages of project implementation
� Recycling all construction waste capable of being
processed
measures to reduce the negative impact on the
technologies for housing construction
educational events and internships for students
� Selecting responsible suppliers and environmentally
environment throughout the project cycle
� Promoting best practices among contractors
� Using environmentally friendly materials
and other industry companies
and technologies
� Promoting a healthy lifestyle
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
RESULTS
� Safety standard for construction sites developed
� Using available prefabrication technologies
� In 2022, Etalon Group opened three preschools and
� The Company does not produce waste in hazard
and incorporated
and adapting them for use in combination with
delivered a secondary school, with a total capacity
classes 1–3 (hazardous waste); most of its waste
� Zero fatalities and an increase in the safety index from
traditional cast-in-place technology
of 1,095 pupils
87% to 89% during the year (with a target of 75%);
� Building our own modular production facility
� RUB 2.4 million was invested in the development
LTIFR of 0.36 (2021: 0.43)
and beginning the assembly of test modules
of local communities
� 3.9 thousand employees insured under the life
� Industry BIM Leader since 2014
� The Company participated in more than 40 charitable
insurance programme; 3.5 thousand employees
provided with private health insurance policies
� 133 employees completed occupational health
and safety training
� Introducing a standardised approach to design
for regional projects
� Developing seamless digital IT architecture
programmes/initiatives, providing RUB 154 million
in charitable assistance
� Signed an agreement to build and subsequently
operate the interuniversity student campus at the
was sent
for recycling (99%)
� Operating expenses associated with waste
management and the treatment of emissions
and discharges in 2022 amounted to RUB 5.1 million
� An Etalon Group project was one of the first to
undergo a pilot assessment in line with the green
GOST R standard for apartment buildings
world-class Eurasian Scientific and Educational
� Codes of conduct for suppliers
Centre, in Ufa
and contractors approved
� Signed a cooperation agreement with
St Petersburg State Agrarian University
REPORT SECTION
� Occupational health and safety
occupational health and safety
Employees
� Employees
� Strategy
Strategy
� Innovation
Innovation
� Social responsibility
Employees
� Employees
Social responsibility
� Environment
responsible supply chain
� Responsible supply chain
Environment
79
11ANNUAL REPORT 2022 7
SuStAInABILItY
Stakeholder engagement
Stakeholders
with the goal of becoming a leading nationwide player and being aware of its responsibility to those impacted
by its operations, Etalon Group engages in open and effective dialogue on a regular basis with all its stakeholders:
customers, partners and suppliers, employees, shareholders and investors, government agencies and local
communities. we create long-term value at each stage of property development by taking into account the
interests and expectations of various groups of stakeholders when formulating and implementing our strategy.
Key principles of stakeholder engagement:
Local
communities
Customers
Partners
Employees
Regulators
Investors
and
shareholders
01
02
03
Honest dialogue
Honest dialogue is the basis
of respectful and trust-based
Openness and information
transparency
Prioritising stakeholder
interests
We regularly disclose all necessary
A company committed to the
relations with stakeholders. We
information about the results
values of sustainability cannot
aim to understand and take
of our operations and our further
make important decisions alone.
into account the primary needs,
plans. This approach enables us
We are always guided by the
interests and expectations of our
to keep stakeholders informed
interests of our stakeholders
stakeholders in order to improve our
and to receive detailed feedback
and avoid activities that could
performance.
from them.
harm them.
Fundamental approach to stakeholder engagement
We familiarise
ourselves
with best
practices and
examine the
needs
of stakeholders
We develop
our staff and
communication
formats
We determine
the most effective
means of
communication
We follow our
established
approach
We analyse
feedback, plan
and incorporate
improvements
We specify the strategic
goals of engagement
CONSIDERING STRATEGY
04
05
Responsibility
Improvement
We are responsible for our
In order to raise awareness of our
commitments, and we aim to be
activities among stakeholders, we
both a low-risk partner for other
are constantly improving means
businesses and a reliable developer
of communication and investing in
for our customers, which helps
build long-term loyalty to the
Etalon brand.
organisational and digital solutions
that facilitate access to Etalon
Group information and services.
Our goal is to create long-
term value for stakeholders
at each stage of the project
life cycle.
RESOURCE
PREPARATION
ANALYSIS
AND PLANNING
IMPROVEMENT
IMPLEMENTATION
DEVELOPMENT
OF OUR APPROACH
80
11ANNUAL REPORT 2022 7
SuStAInABILItY
Customers
Business partners and suppliers
Key issues and goals of engagement
� Analysis of customer needs and development of a quality product
� Raising awareness of Etalon Group’s product
� Getting feedback from buyers
Active development of digital means
of communication
Profitbase Office
Key issues and goals of engagement
� Mutually beneficial cooperation
� Financial and operating results
service for convenient online sales covering the entire
� Responsible approach to conducting business
Supply chain reengineering
and digitalisation of procurement activities
Incorporation of BIM in the
e-procurement system
� Improving every stage of the customer journey
customer journey
� Focus on innovation
more effective joint planning, decreased workload for staff
� Expanding our customer base and increasing repeat purchases
thanks to brand loyalty
Сustomer Data Platform
Means and frequency of communication
Digitalisation of procurement
Means and frequency of communication
customer data management platform
CONTINUOUS:
together with Smartis, developed and incorporated our own
CONTINUOUS:
2 ×
� Streamlining our communication policy, developing precise
increase in initial qualified leads from potential customers thanks to
targeting tools and competencies in analysing the selection stage
intelligent targeting
of the customer journey
� Personalising communication channels and offers for customers
� Communicating with customers through the hotline and social
platforms, and providing prompt, effective responses to requests
� Leveraging advanced visualisation techniques, such as VR,
and developing mobile apps to facilitate the customer’s
access to services, as well as providing B2C services to foster
customer loyalty
CONTRUST
a single platform is being developed that will combine all of our
previous systems; it will also include improvements and additions
based on feedback from internal stakeholders and from customers
To find out more about Etalon’s customer profile, see the
Customers section of this report.
Etalon official accounts
on social platforms
Etalon Group
feedback form
Etalon Group personal accounts for the purchase of real estate:
from property choice to conclusion of the transaction
etalongroup.ru/msk/hotline
Personal account
Mobile App
� Implementation of new and improvement of existing policies,
publication of tender schedules
� Incorporation of digital solutions to create platforms for engaging
potential partners, as well as to increase operational synergies
� Applying and disseminating BIM-based technologies to find
solutions that are more efficient and ergonomic, as well as to
control quality and monitor deadlines throughout the entire project
life cycle
� Developing and incorporating advanced industrial technologies for
housing construction
� Sharing experiences and best practices, establishing partnerships
Internal
documents
� Code of Corporate Ethics
� Tender Regulation and Supplier Code
(approved in 2022)
� Anti-corruption and Antitrust Policy
verified responsible platforms and suppliers, increased transparency for
external contractors connected to the platforms
Development of our own partner database
direct deliveries with the ability to reduce the Company’s and
partners’ overhead costs, supply chain transparency
Strict selection of suppliers
� A methodology for assessing counterparties is being developed
with a score assigned according to two scales - > reduction of
financial risks, ability to meet deadlines and high-quality supplies
� Development of standards for supplier engagement (Supplier
Code) means involvement of partners in solving environmental,
social and management problems; assessment of partners’
responsibility in terms of sustainability issues
More detailed information on interaction with suppliers is
presented in the section Responsible supply chain.
Corporate
ethics
� Anti-corruption clause in contractual
documents with counterparties
Partner portal
Etalon Group hotline
8 800 300 81 03
2022
RESULTS
32 %
percentage of repeat
purchases in sales
vs 31% in 2021
0.76 %
lost call rate
vs 1.41 % in 2021
9.9/10
customer
satisfaction index
2022
RESULTS
1,751
counterparties
in the register of
accredited suppliers
+27 % y-o-y
373
new partnerships
+47% y-o-y
81.4 %
of applications for the supply
of materials are processed
through an automated
procurement system
8181
11ANNUAL REPORT 2022 7
SuStAInABILItY
Shareholders and investors, analysts
Employees
Key issues and goals of engagement
� Etalon Group’s investment case
� Company strategy
� Financial and operating results
� Dividend payments and respect for shareholder rights
� The Company’s activities in capital markets
Means and frequency of communication
CONTINUOUS:
publication of the Group’s key news, participation in conferences,
organisation of on-site presentations and visits to construction sites,
holding meetings and conference calls with investors and analysts
QUARTERLY:
publication of operating results
SEMI-ANNUALLY:
publication of the Group’s financial results
ONCE A YEAR:
publication of the Annual Report on the Company’s website
More detailed information on interaction with retail and
For more detailed information about staff treatment, see the
institutional investors and results is presented in the section
Employees section of this report.
"Interaction with shareholders and investors", on page XX
Key issues and goals of engagement
� A safe and healthy working environment
� Respect for human rights, equal opportunities and inclusion
� Recruiting, training and retaining competent professionals
� Ensuring that employees are aware of the Company’s strategy
and goals
� Fair remuneration
Means and frequency of communication
the company upholds the rights of
all shareholders – individuals and
legal entities, minority and majority
shareholders – in an equal manner
More detailed information on interaction with retail and
institutional investors and results is presented in the section
Shareholder interactions.
CONTINUOUS:
ANNUALLY:
� Implementing an anti-discrimination policy and protecting human
� Identifying needs and planning training
rights in accordance with Etalon Group’s Code of Corporate Ethics
� Employee satisfaction survey, performance feedback and career
and legal regulations
planning
� Disseminating important information via the corporate intranet
and e-mail
� Responding to questions from employees submitted using the
electronic form in the HR section of the internal portal
� “Dialogue with the President” project, which gives every employee
a chance to ask the Company’s top executives questions
Ir contacts for investors
and shareholders
Etalon Group
feedback form
website for shareholders in russian
and English with feedback form
+44 (0) 20 8123 1328
ir@etalongroup.com
etalongroup.com
2022
RESULTS
30
press releases
published
4
major webinars
conducted for
private investors
2
channels for private
investors created on
the Tinkoff Pulse and
BCS Profit platforms
2022
RESULTS
>2,000 SuBScrIBErS
an online space was launched for employees where
they can express gratitude, share their feelings,
conduct surveys and hold contests, and publish
attractive corporate offers
219
releases about Company news
on the corporate portal
>100
1.1 tHS
questions submitted in the
context of the “Dialogue with
the President” project
employees surveyed on
employee satisfaction and
engagement
78 %
employee
satisfaction rate
8282
11ANNUAL REPORT 2022 7
SuStAInABILItY
Government agencies
Key issues and goals of engagement
� Construction safety
� Minimising the Company’s negative environmental impact
� Compliance of the Company’s operations with legal regulations
� Technological development of the industry
� Tax receipts
� Facilitating the development of social amenities
Means and frequency of communication
CONTINUOUS:
� Providing government agencies with financial and operational
reports
� Communication on issues related to construction permits,
compliance with standards and urban planning regulations
� Participation in construction industry working groups, round tables
and commissions
For more detailed information see the Project portfolio section
of this report.
the joint work of the city
government and Etalon Group
in developing the grounds of the
Zil-Yug project testifies to the high
quality and impact of dialogue
between the city government
and stakeholders.
Through its dialogue with the city, the Company
consciously began revitalising the former industrial
zone and is also developing a master plan for the
project to strengthen existing and create new urban
connections and to improve the penetration, safety
and diversity of modes of transport.
Local communities
Key issues and goals of engagement
� Environmental protection issues
� Creating jobs and improving quality of life in regions of operations
� Tax payments to local budgets
� Building social amenities and developing human capital
Means and frequency of communication
CONTINUOUS:
� Investing in developing the cities where we operate: building
social amenities, restoring historical monuments, supporting
and organising cultural and sports events as well as charitable
programmes, collaborating with universities
� Developing formalised approaches and policies to ensure
sustainability and responsible business practices
� Publishing press releases and interviews
� Maintaining effective channels of communication with leading
media
� Visiting construction sites, giving presentations and arranging
events for journalists covering the Company’s operations
the company’s management
supports accessibility projects that
take into account the inclusive
needs of residents and participates
in initiatives regarding the voluntary
certification of projects.
we are shaping the buyer’s lifestyle;
we are developing the concept of the
15-minute city – residents can reach
all the necessary infrastructure and
amenities within 15 minutes of their
home on foot or by bicycle.
2022
RESULTS
5.6 ruB
BLn
tax payments
+57% y-o-y
133 tHS
SQ.M
total area of the innovative student campus of the Eurasian
Scientific and Educational Centre to be built in Ufa through
a public–private partnership between Etalon Group and the
Government of the Republic of Bashkortostan
2022
RESULTS
15 tHS
SQM
of social amenities
delivered
15,900
mentions
in the media
+22% y-o-y
953
mentions
of our ESG agenda
+41% y-o-y
20
events supported
by the Company
8383
11ANNUAL REPORT 2022 7
SuStAInABILItY
Main topics of engagement in 2022
Creating value for stakeholders at all stages of operations
TOPIC
CUSTOMERS
PARTNERS
EMPLOYEES
REGULATORS
INVESTORS AND
SHAREHOLDERS
LOCAL
COMMUNITIES
Improving the quality of products and
services
Fair and transparent commercial
policies
Business development strategy
Increased profitability and business
efficiency
Innovation and new technologies
Environmental impact management
Occupational health and safety
Equal opportunities and rights,
inclusion and working conditions
Sustainable supply chain
Engagement with local communities /
development programmes
Business transparency and
responsibility
the company’s engagement
with all stakeholder groups
contributes to the creation of
long-term benefits from mutual
cooperation.
01
02
03
Operational and financial
efficiency:
Digitalisation and
innovation:
Sustainability:
� We are formulating an ESG
� We maintain a high-quality
� We are incorporating end-to-end
strategy and policies
product while reducing costs
through standardisation, the
use of new housing construction
technologies and process
automation
� We are expanding into new
regions while maintaining the high
level of profitability of our projects
digital architecture and design
technologies
� We employ digital modelling in
the process of construction and
safety oversight in the workplace
� We are developing automated
systems for big data analysis for
acquisition planning, taking into
� We take a balanced approach to
account customer comments and
debt financing
building a marketing strategy
� We are creating partnerships
and synergies
� We are improving the quality of
our corporate governance
� We are developing social projects
and protecting human rights
� We are taking steps to protect
the health and safety of our
customers, employees and
society
� We are minimising our negative
impact on the environment
SUSTAINABILITY
OPENNESS
SAFETY
INTEGRITY
EFFICIENCY
DEVELOPMENT
QUALITY
COLLABORATION
84
11ANNUAL REPORT 2022 7
SuStAInABILItY
Occupational
health and safety
our top priority is the health and safety of our employees. we pay close attention to regular
monitoring of compliance with requirements on occupational health and safety (oHS) and
improve our security procedures to avoid accidents at our facilities.
Occupational health and safety policy
ETALON GROUP’S OCCUPATIONAL HEALTH AND
SAFETY POLICY IS BASED ON THE FOLLOWING:
� the unquestioned priority of protecting the life and
health of employees
� strict compliance with applicable laws specifying
the requirements for occupational health and safety,
and facilitating state oversight and monitoring of
compliance with OHS requirements
� targeted monitoring and assessment of working
conditions, including additional multistage monitoring
of workplace safety and the development of OHS
measures
� providing PPE for employees at construction sites;
� arranging OHS training and medical examinations
for employees working in hazardous and/or harmful
working conditions
� protecting the legitimate interests of employees
injured in accidents at work as well as the interests of
their family members
In its operations, Etalon Group is guided by
applicable laws and best practices, and also uses
digital technologies to monitor compliance with
workplace safety requirements.
When carrying out its operations, the Company is
committed to ensuring workplace safety in such a
way so as to minimise the risks of injury and protect
the health of both its personnel and the employees
of contractors.
ETALON GROUP IS GUIDED BY STANDARDS AND
POLICIES BASED ON COMPLIANCE WITH THE
REQUIREMENTS OF RUSSIAN OHS LAWS:
� Regulation on the Occupational Health and Safety
Management System at Etalon Group
� Methodology for Determining the Safety Index at
Etalon Group Construction Sites
� Methodology for Monitoring Fire Safety at Temporary
Construction Camps at Etalon Group Construction
Sites and for Determining the Fire Safety Index
� Procedure for the Authorisation and Monitoring of
Contractors for the Performance of Construction and
Installation works at Etalon Group Facilities
� Rules and Regulations for Providing the Company’s
Employees with Personal Protective Equipment (PPE)
and First-Aid Equipment
Occupational health and safety system
2
Organisation
Based on standards and regulations,
the Company takes actions
aimed at the creation, application
and functioning of the OHS
management system.
CONTINUOUS
IMPROVEMENT
1
Concept
The Company regularly develops
new approaches to OHS
management based on the leading
global and Russian standards.
3
Planning and application
In achieving every one of its goals,
the Company operates in strict
compliance with its OHS concept.
5
4
Steps for improvement
The Group constantly analyses
its OHS management results and
introduces changes to make the
system more effective.
Assessment (oversight)
Safe and efficient operations are impossible
without oversight of the processes involved
in ensuring occupational health and safety:
monitoring, measuring and analysing results,
as well as their compliance with OHS-related
laws, internal policies and approaches.
85
11ANNUAL REPORT 2022 7
SuStAInABILItY
Safe operations are an unwavering priority for Etalon Group.
We set ourselves a goal and do everything possible to protect
our workers from exposure to occupational hazards, to prevent
workplace accidents and occupational diseases, and to
improve our culture of safe operations and productivity.
Key elements of the OHS system:
� Managers at all levels are personally responsible for ensuring an
adequate level of occupational health and safety in the divisions
and companies they manage.
� The construction process takes place in strict compliance with OHS
requirements.
� Regular independent risk monitoring is carried out at Etalon Group
properties.
� Participants in the construction process are motivated to ensure
occupational safety and health.
Organisation of the OHS service
Etalon Group has established a functional oHS
hierarchy as a separate part of its oversight system,
which helps ensure that the system operates as
intended.
The functional hierarchy is headed by the CEO of Etalon
Group, who is responsible for monitoring OHS issues through
the HR Director. The functional hierarchy for occupational
health and safety includes the following Etalon Group divisions
and employees:
� Etalon Group HR Director
� Etalon Group’s Occupational Health and Safety Department
� Managers at all levels within Etalon Group companies
� Company employees undergo systematic OHS training.
� OHS departments and OHS specialists at the level of Etalon
Group companies
Main indicators of the effectiveness of the
OHS system:
� the level of security and of occupational health and safety at
construction sites, as expressed through the safety index and risk
assessments (for more about the safety index, see p. 89)
� the accident rate at construction sites
In the event of an accident or emergency, the Company
conducts an investigation to identify the causes of the incident
and prevents the recurrence of such events in the future. The
OHS service receives monthly reports on compliance with OHS
rules and regulations and on the situation regarding workplace
injuries from every Etalon Group company. This practice makes
it possible to identify and analyse OHS violations at the Group
level as well as to identify key areas where the OHS system can
be improved in order to minimise safety violations, prevent risks
and avoid serious and fatal injuries.
Contractors also operate at Etalon Group’s construction sites.
In accordance with OHS regulatory requirements, general
contractors are responsible for coordinating the operations of
other contractors.
The main duties of staff responsible for occupational health
and safety include managing activities in order to prevent
occupational injuries and diseases and to comply with OHS
requirements at construction sites; studying, incorporating
and disseminating OHS-related best practices; conducting
safety monitoring; and informing and advising employees on
OHS issues.
Construction and installation works are carried out in
accordance with project plans and process checklists that are
approved in accordance with established procedures.
our construction sites are extremely
safe thanks to the precautions we
take and the constant improvement
of our oHS system.
CEO fo Etalon Group
Etalon Group HR Director
Managers at all levels within Etalon Group companies
General contractors in
the Moscow region
General contractors in
the St Petersurg region
General contractors in
other regions
Occupational health and safety specialists
86
11ANNUAL REPORT 2022 7
SuStAInABILItY
OHS activities
Risk identification and assessment
Equipment safety protocol
In the event of any changes or innovations in work practices,
the selection of materials, work processes and equipment,
Etalon Group employees take steps to identify hazards and
assess risks.
All equipment used by Etalon Group is certified in accordance
with Russian legal requirements. The Company also conducts
internal equipment inspections to ensure that it is installed
properly and serviced on a regular basis.
The main risk groups are included in a unified register of the
main hazards, sources and causes. The safety index and fire
safety index are used to monitor these risks. Monitoring results
are posted on the bulletin board at each construction site.
Before starting work at a construction site, a list of preventive
and oversight measures is drawn up to ensure safe working
conditions. In addition to regular monitoring, an additional
mechanism for minimising risks is for employees to inform
managers or OHS specialists about existing risks as they are
discovered.
Employees’ job descriptions stipulate that they are obliged to
refuse to perform any work that poses a risk to their health or
their life. In such a case, the employee has to prepare a memo
addressed to their manager that indicates the reasons for
refusing to perform the work in question. There is no penalty for
refusing to perform work in such a case. The manager is obliged
to take measures to eliminate risk factors, and the employee in
question will continue their work only once corrective actions
have been taken.
Preventing workplace injuries
In order to prevent injuries and safety violations, the Company
implements a range of measures, such as incorporating safe
production systems, limiting the total time that employees are
in contact with harmful or hazardous production factors, and
conducting a preliminary risk analysis and subsequent regular
safety monitoring.
A dedicated assessment of working conditions is carried
out at all workplaces. Employees performing work duties at
construction sites are given protective clothing, footwear and
other personal protective equipment, and employees undergo
periodic medical examinations based on the results of an
assessment of their working conditions. Workplace injuries
are investigated in accordance with the laws of the Russian
Federation. Contracts concluded with healthcare providers
stipulate that a general practitioner will be available on-site for
all groups of employees once a month.
2020
-
3
0.11
0.56
-
-
2021
-
2
0.09
0.43
-
-
2022
-
2
0.07
0.36
-
-
In 2022, there were no fatal
work-related incidents involving
company employees.
Rate of workplace injuries
Number of fatal accidents
Number of employees of contractors (employed at Company
properties) injured as a result of work-related accidents
TRIR 1
LTIFR 2
Number of registered cases of occupational diseases
Number of registered deaths due to occupational diseases
Occupational injury rates
LTIFR
TRIR
0.56
0.43
0.36
0.11
0.09
0.07
2020
2021
2022
1 The total recordable incident rate (TRIR) is the overall number of accidents*200,000 / total number of working hours during the year.
2 The lost time injury frequency rate (LTIFR) is the number of lost-time injuries occurring in the workplace*1,000,000 / total number of hours worked by all employees.
87
11ANNUAL REPORT 2022 7
SuStAInABILItY
Monitoring
Etalon Group is committed to providing safe
working conditions at its construction sites and
requires the same on the part of contractors;
therefore, the Company carries out strict
oversight of compliance with OHS requirements
on the part of contractors performing work at
Etalon Group properties. For example, it conducts
OHS assessments when holding tenders to
select contractors and when deciding whether
to add a contractor to, or remove one from, its
register of accredited companies. Contractors
are granted access to sites based on the results
of an assessment of their readiness to begin
work, which includes, among other things, an
assessment of their compliance with OHS and
fire safety requirements. Once every two weeks,
construction sites are monitored pursuant to the
methodology for determining the safety index
and degree of risk. Monitoring results, including
photographic evidence of violations, are shared
on a special platform that can be accessed
by all managers of the companies concerned.
Based on the monitoring results, the necessary
measures are taken to correct any identified
violations.
To encourage compliance with the corporate
safety culture, the best construction site in terms
of occupational health and safety is chosen
twice a year; the winning site receives a flag that
identifies it as the winner as well as a gift from
Etalon Group.
Strict rules are in place regarding the
To monitor and maintain a high level
technical features, installation, use and
of construction safety, the Company
dismantling of enclosing structures,
developed and introduced a safety
Etalon Group uses a three-stage system for monitoring
compliance with OHS and fire safety requirements at its
scaffolding and walkways; observance
index — a workplace safety monitoring
construction sites:
Three-stage system for monitoring compliance with OHS
and fire safety requirements:
of hazardous-area boundaries; and the
system based on BIM technologies —
handling of flammable materials, garbage
that it continues to refine every year.
and waste that are mandatory for all
Independent safety index assessments
Etalon Group employees. At construction
of individual properties and of all Etalon
sites, all safety fencing is regularly
Group construction sites in general are
checked for strength and resistance to
conducted on a regular basis. The safety
variable force.
In order to prevent injuries, the degree of
risk – the quantitative degree of risk of
a workplace accident at the property in
question, as calculated in accordance
with the Fine–Kinney method – is used at
all construction sites. In accordance with
the established risk level, the Company
takes the necessary measures to
eliminate or minimise the risks.
index is also used to monitor the impact
of the OHS system and the functional
hierarchy for the management of OHS
processes. The heads of regional divisions
are responsible for arranging regular
independent monitoring of Company
properties based on the safety index.
Etalon Group companies also undergo
scheduled and spot inspections by
regulatory authorities
DAILY
WEEKLY
MONTHLY
A commission that includes
the construction manager, the
site manager and designated
representatives of contractors carries
out insprections. Following each
inspection, a report is drawn up that is
then sent to the OHS specialist at the
corresponding regional office.
Site supervisors in conjunction with
superintendents carry out inspections;
the result are logged, timelines are set
for addressing any deficiencies, and the
individuals responsible for doing so are
appointed.
Managers working for the project owner
have the right to monitor the general
contractor’s fulfilment of OHS rules and
regulations as well as on-site regulations
on occupational health and safety,
industrial safety and fire safety.
At each construction site, at least
two employees during every shift are
responsible for continuous monitoring of
the collective protection measures in use
as well as the fencing around hazardous
areas; they make sure there are no
uncovered process-oriented openings,
holes or open elevator shafts on every
floor of the property.
During workplace rounds throughout
the day, the superintendent monitors
compliance with OHS requirments. Any
violations discovered are immediately
rectified.
88
11ANNUAL REPORT 2022 7
SuStAInABILItY
Safety index
Since 2014, the Company has been using its safety index, a tool
developed in-house, to determine its degree of compliance
with OHS regulations at construction sites. The index is
calculated based on an objective assessment of compliance
with OHS standards; the same approach is taken to calculate
the safety index at all Etalon Group construction sites. The index
enables the Company to quickly identify hazards that require
immediate intervention.
The safety index at every Etalon Group property is updated at
least once every two weeks. The main criterion for assessing the
degree to which OHS standards are met is a construction site’s
compliance with national OHS standards and the Company’s
internal OHS regulations.
The managers of the general and other contractors that work
for Etalon Group are required to ensure that the safety index at
Group properties does not fall below the minimum permissible
score. Scores can range from 0% to 100%, but the target index
for Etalon Group is a minimum of 75%. If an accident results
in a serious injury or death, the safety index score for the
construction site where the accident occurred drops to 0%.
Safety index
Average safety index for the year
86%
87%
89%
2020
2021
2022
Etalon Group’s high safety index
score is an indicator of the
company’s compliance with
safety standards and regulations.
89 %
the average safety index score in
2022, 14 percentage points higher
than the target
Training
To ensure that employees have a high level of competence
in terms of OHS matters, the Company arranges systematic
training and testing.
The Company has approved a training programme on
occupational health and safety, and commissions verify
employees’ knowledge. Staff not only undergo training but
also take exams at specialised training centres operated by
Rostekhnadzor, Energonadzor and other organisations.
The head of every Etalon Group company whose job function
involves being at construction sites (including infrequent visits,
checks, inspections, etc.) must be OHS-certified in accordance
with the procedure established by the applicable laws.
Employees are informed about occupational health and
safety during OHS briefings. All new employees are required
to familiarise themselves with the results of a dedicated
assessment of their working conditions and with their job
description, including OHS-related duties.
OHS training in 2022
Moscow and the Moscow region
Management
Line employees
St Petersburg
Management
Line employees
Other regions
Management
Line employees
TOTAL
Employees who are required to undergo compulsory training do
so at specialised training centres. The results of the training are
subsequently monitored by Etalon Group’s commissions to verify
employees’ knowledge of OHS requirements.
Training sessions are conducted not only with Etalon Group staff
but also with employees of contractors. In 2022, OHS briefings
covered the following main topics:
� the requirement to take OHS issues into account when performing
construction and installation works
� the safety index and risk assessment training
The decrease in the number of OHS training hours per person was
due to an extension of existing accreditations. Nevertheless, the
Company regularly certifies employees based on their knowledge of
OHS standards.
1,749 hours
of OHS training was conducted in 2022 for
133 Etalon Group employees
NUMBER OF PEOPLE TRAINED
NUMBER OF HOURS
totAL
PEr PErSon
—
9
49
72
3
—
133
—
324
969
408
48
—
1,749
—
36
20
6
16
—
13
89
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Environment
Etalon Group is committed to minimising its
negative impact on the environment and aims
to optimise its business processes in accordance
with its Sustainability Policy.
The Company tracks its responsible use of resources,
protects biodiversity and the ambient air, and properly
disposes of waste during its operations. In addition
to strict compliance with Russian environmental laws,
the Company also takes additional steps to improve
measures aimed at environmental protection.
Etalon Group’s approach
to environmental management
Environmental
management system
The architectural and urban-planning concept for every one
of Etalon Group’s projects is based on a risk analysis and
efforts to minimise the Company’s negative impact on the
environment. The Company takes into account international
experience and trends in the construction industry in order to
present design solutions for environmental remediation and the
construction of sustainable infrastructure, especially at former
industrial sites.
At the design stage, Company specialists develop measures
to reduce the anthropogenic impact on the environment, such
as restoring land, averting the loss of natural resources, and
preventing harmful emissions into the soil and atmosphere.
During the construction phase, Etalon Group carefully monitors
compliance with its design and working documentation as well
as its adherence to construction deadlines, which enables the
Company to carry out measures to protect the environment
against any possible negative impact.
When implementing integrated development projects, the
Company restores natural areas near the construction site,
thus creating a pleasant environment.
Etalon Group specialists are guided by
environmental laws, including the following:
� 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
� The Land Code of the Russian Federation
� The Water Code of the Russian Federation
� The Forest Code of the Russian Federation
� Federal Law No. 96-FZ on the Protection of the Ambient Air
� SanPiN 2.2.1/2.1.1.1200-03 on Controlled-Access Zones
and Sanitary Classification of Enterprises, Structures
and Other Facilities
� Federal Law No.52-FZ on Sanitation and Epidemiological Safety
� Presidential Decree No. 666 on Reducing Greenhouse Gas Emissions
� Federal Law No. 296-FZ on Limiting Greenhouse Gas Emissions
Internal policies and job descriptions are also taken
into account.
Technical departments in every region
of operations are responsible for environmental
oversight. The following are within the remit of the
Company’s specialists and environmental engineers:
� Conducting expert reviews of design documentation
� Supporting project assessments
� Solving problems related to environmental protection
� Providing informational and technical support to
the Company’s business units
� Monitoring and analysing the construction process
In order to improve the quality of environmental oversight,
Etalon Group created a Quality Control Department, which
implements measures aimed at environmental protection and
conservation, among other things. The Department’s main
objective is to identify and register criteria for the safe conduct
of construction works.
Thanks to its environmental monitoring at every stage of project
implementation in all regions of operations, the Company is
able to minimise its negative impact on the environment, which
is confirmed by external inspections conducted by regulatory
authorities.
90
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Supply chain management
Environmental protection efforts
Etalon Group works with responsible suppliers and
is committed to using in its projects only environmentally
friendly materials and equipment that are not harmful
to the environment or residents.
During implementation of the Zil-Yug project, an expert
contractor was engaged to develop recommendations on the
use of environmentally friendly materials that are suitable for
Russia. All materials and equipment comply with both SanPiN
regulations (products have certificates of conformity, sanitary and
epidemiological inspection reports, quality certificates, fire safety
certificates, etc.) and project-specific requirements.
When selecting responsible suppliers of services and products,
Etalon Group uses its internal oversight systems and a formal
procedure for conducting tenders that has enabled it to establish
a pool of reliable partners involved in the implementation of its
projects. With its integrated management system in every region
of operations, the Company is able to take a unified approach
to the oversight of general contractors, which enables effective
monitoring of compliance on the part of those contractors with legal
standards and the requirements enshrined in project documentation
concerning natural resources, noise levels, protection of the ambient
air, etc.
More information on supplier selection is available
in the Responsible supply chain section.
1 Nature-based solutions are aimed at the sustainable management and careful use
of natural features in response to social and environmental challenges.
2 As a result of measures to improve the efficiency of its operations, Etalon Group
updated its organisational structure in the spring of 2021. Previous reporting periods
covered the companies that were liquidated in the process of establishing Etalon
Group’s new organisational model. The processes involved in managing investment
and construction projects and in collecting data also changed.
Protection of soils, vegetation and wildlife
The design and construction stages of all Company projects
involve strict compliance with a full slate of environmental
protection measures. Prior to the start of construction, Group
specialists conduct a number of studies and take a variety
of measures that include a preliminary assessment of the
environmental conditions; a study of the extent and nature of
impacts on biodiversity, plant and animal communities; the
development of possible alternatives with the aim of reducing
negative impacts; and forecasting changes in biodiversity
following construction.
Water resources2
Despite the fact that Etalon Group’s activities do not involve
exposed water intake from natural sources, the Company
attaches great importance to monitoring the use of water
resources and does so in full compliance with applicable laws.
Water is supplied to construction sites by third-party providers.
As a result of measures to reduce water intake at some Group
construction sites, water obtained from the drawdown of the
construction pit or during the drainage of foundation structures
is used, which enables the Company to reduce its water intake
To assess the impact of the construction of the Schastye v
Kazani residential complex on biodiversity and plant life in
the nearby floodplain of the Kazanka River, experts from
the Institute of Ecology and Environmental Management
at Kazan (Volga) Federal University presented research and
recommended environmental protection measures.
Also, for one of the Company’s largest redevelopment projects,
Zil-Yug, a concept was developed for the environmental
remediation of the former industrial site and to ensure a healthy
environment as part of the development of environmentally
friendly infrastructure on the grounds of the project.
In terms of environmental conservation, the Company is guided
in part by international experience, and it develops nature-
based solutions1 aimed at the sustainable management
and careful use of natural features in response to social and
environmental challenges.
Etalon Group does not conduct any activities other than
construction that could have a possible impact on biodiversity.
considerably. In addition to using this method of water intake
more extensively, the Company is developing new technological
solutions to decrease its water consumption.
Water consumption is metered and discharges monitored at all
Etalon Group construction sites and office buildings; before the
discharge, all wastewater undergoes preliminary treatment or
is transferred to specialised companies (operators of municipal
water utilities) for mechanical and biological treatment.
At the operational stage, all Etalon Group projects install
individual meters for residents that are integrated into
automated commercial metering systems for water, heat and
energy consumption. All apartments in projects managed by
the Group’s service companies are equipped with water meters.
As a result, our customers can take a responsible approach to
resource consumption, thus reducing the negative impact on
the environment.
Water usage in 2020–20223
Recycled and reused water3
INDICATOR
Total water sourced, ths m3
3 For 2020, data for the construction and maintenance division is in line with the
Total waste water discharged, ths m3
information disclosed in annual reports for previous periods.
4 The excess volume of water discharged in comparison with the volume of water
sourced in St Petersburg is due to the methodology established by Vodokanal Sankt
Peterburg, the state enterprise responsible for the collection and treatment of waste
water, for calculating storm water drainage based on the area of a site and with
allowances made for storm run-off.
2020
1,275
845
20214
874
1,148
20224
INDICATOR
667
783
Recycled and reused water, ths m3
Proportion of recycled and reused water, %
2020
2.5
0.22
2021
1.5
0.22
2022
1.7
0.26
91
11ANNUAL REPORT 2022 7
7
SuStAInABILItY
Environmental protection efforts
Waste management
Energy consumption and efficiency
Waste of various classes is generated during the course of
Etalon Group’s activities, including construction, the operation
of the Company’s office premises and the operation of
residential complexes managed by Etalon Group. The
Company assesses the risks involved in the handling of
construction waste at the construction stage and closely
monitors the activities of general contractors. All generated
waste is handed over to licensed companies for processing,
recycling or disposal in accordance with all applicable
requirements and regulations in every region where the Company
operates. At the same time, the Company does not produce
hazardous waste in classes 1–3 during the construction process.
Waste minimisation, sorting, reusability and recycling are of
increasing interest to the Company and are an area ripe for
innovation and technological development.
In 2022, 99% of the Company’s waste – 909 thousand tonnes –
was sent for recycling.
The Company is taking measures to reduce energy
consumption by improving the efficiency of its supply chains
and using electricity from municipal grids in the construction
process. These steps also reduce emissions of nitrogen oxide
and fine particles of soot into the atmosphere.
Etalon Group is committed to ensuring the energy efficiency
of functional building systems, including utility systems, and to
using durable, environmentally friendly materials with low thermal
conductivity and hygroscopic coefficients.
Waste management1
INDICATOR
Construction materials used, ths tonnes
Waste generated, ths tonnes
Hazardous waste (class 1–3)
Non-hazardous waste (class 4–5)
thanks to the company’s
strict oversight, there were no
significant spills of pollutants
during the reporting year.
2020
1,056
168
–
168
2021
1,664
709
–
709
2022
1,842
914
–
914
Energy purchased for consumption, by type
INDICATOR
Electricity
Heat energy in hot water and steam
UNITS
mln kW·h
Gcal
2020
23.3
41,902
2021
39.1
25,893
Energy-efficiency classes of properties as of the end of 2022
PROPERTIES BY ENERGY-EFFICIENCY CLASS, THS SQM
Completed
Under construction
А
317
454
В+
-
280
В
369
173
2022
42.8
19,918
С
191
112
1 For 2020, data for the construction and maintenance division for 2021, data for Etalon Group according to the updated organisational structure.
92
11ANNUAL REPORT 2022 7
7
SuStAInABILItY
Measures to reduce carbon footprint and environmental impact
Green projects
one of the main goals of the Paris Agreement1
in recent years has been a reduction in carbon footprint
and resilience to climate change. In implementing our
projects, we rely on these goals and are committed
to reducing our carbon footprint.
At the initial stages of project design at a number of our projects,
we apply three-dimensional computational fluid dynamics (CFD)
computerised modelling technology, which enables us to predict
the main parameters necessary to ensure the comfort of residents
inside our residential complexes and to create environmentally
friendly and energy-efficient rooms with the most comfortable
microclimate possible. We also use BIM technologies, which
we have been improving since 2012, at all project stages.
These technologies enable us to improve energy efficiency
as well as to optimise emissions, the use of raw materials and
performance in other areas, especially during the construction
and operation phases.
When landscaping the grounds of our projects, we make every
effort to use natural surfaces made of granular materials (sand,
wood chips, pebbles, shells) for playgrounds and sports venues.
These materials allow the soil to breathe, are beneficial to
humans and require the consumption of very little energy for
their procurement. In fire lanes and parking lots, projects use
hard surfaces on grass pavers, which allows the soil to breathe
and creates a green surface.
the company’s portfolio already includes three
properties that have received a Green Zoom
certificate: the Botanica residential complex,
in St Petersburg; and the Silver Fountain residential
complex and residence on Pokrovskiy Boulevard,
in Moscow.
In early 2023, the first building at the Company’s Rauta project,
in Ekaterinburg, successfully completed the pilot assessment for
compliance with the GOST R 70346-2022 national green standard
for apartment buildings at the project stage. The standard was
developed by Russia’s Ministry of Construction together with the
Dom.rf development institute and approved in September
2022. At the testing stage, Dom.rf carried out a preliminary
assessment of pilot projects’ compliance with the standard.
The Rauta residential complex meets all the standard’s key
criteria: it offers class A energy efficiency and a white box finish;
water- and energy-saving systems have been installed; the
temperature at the property is maintained at a comfortable
level; the complex is accessible and barrier-free; and the
project meets the requirements for responsible construction.
The project also meets a sufficient number of the standard’s
additional (optional) criteria for compliance purposes.
Types of atmospheric emissions
TYPES OF EMISSIONS, TONNES
NOx
SOx
Volatile organic compounds (VOCs)
Particulate matter (PM)
Other standard categories of atmospheric
emissions used in relevant regulations
2020
44.7
6.1
13.1
7.9
49.1
2021
30.5
2.6
8.3
5.0
13.1
2022
147.0
16.2
13.1
23.5
40.9
1 The Paris Agreement is an agreement under the United Nations Framework Convention on Climate Change that regulates measures to reduce the amount
of carbon dioxide in the atmosphere.
93
11ANNUAL REPORT 2022 7
7
SuStAInABILItY
Employees
Thanks to the Company’s regional expansion
programme and the acquisition of YIT Russia,
Etalon Group’s headcount increased by 23%
in 2022, as the Company added 1,114 highly qualified
personnel in a variety of specialisations. As of the
end of year, 8% of the Group’s employees were
working in regional markets, which is commensurate
with the volume of real estate delivered beyond
St Petersburg and Moscow.
As of the end of 2022, all of the Company’s salaried
employees were full-time; at the same time, 3%
of staff members (up from 1.4% in 2021) worked
remotely or according to a personalised schedule.
The Company did not have any employees with
zero-hour contracts – that is, contracts that do not
specify a minimum number of working hours.
Workforce and breakdown of employees by age
Number and percentage of employees by region2
2021
2022
2021
2022
Under 30
827 17%
Under 30
948 16%
St Petersburg
653 14%
St Petersburg
973 17%
30–50
3,062 64%
30–50
3,634 62%
Moscow and the Moscow region
723 15%
Moscow and the Moscow region
616 10%
Over 50
876 18%
Over 50
1,297 22%
Production unit
3,379 71%
Production unit
3,837 65%
Other regions
10 0.20%
Other regions
453 8%
Number and percentage of men and women
Number and percentage of employees by contract type in 20223
2021
2022
ST PETERSBURG
MOSCOW
OTHER
REGIONS
PRODUCTION
UNIT
COMPANY
TOTAL
Permanent
contract, total:
Men
Women
Fixed-term
contract, total:
Men
Women
967
17%
457
510
6
17%
5
1
609
10%
296
313
7
19%
6
1
446
8%
181
265
7
19%
7
-
3,821
65%
2,870
951
16
44%
16
-
5,843
3,804
2,039
36
34
2
4,765
Total Etalon Group
headcount in 2021 1
5,879
Total Etalon Group
headcount in 2022 1
+23 %
increase
in headcount
in 2022
Some 99.4% of employees had permanent
contracts; only 36 staff members worked
on a fixed-term contract.
Men
Women
1 As of 31 December of the year indicated.
2 The redistribution of percentages between regions is due to the centralisation of a number of functions within the management company in the context of improving the Company’s organisational structure
and completing the acquisition of YIT Russia. Production and service companies, whose employees work in several regions, are assigned to the production unit.
3 The total may not add up to 100% due to rounding.
94
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Approach to personnel management
Personnel management policy
Employees are Etalon Group’s key asset. In personnel management,
the company adheres to unchanging principles based on protecting the
health and safety of its employees, providing them with equal opportunities
for professional development, ensuring open dialogue
and offering fair remuneration.
Key personnel management principles
1
Protecting health and safety
2
Equal opportunities
and fair remuneration
3
4
Open and honest dialogue
Supporting engagement and
professional development
Etalon Group’s resources management system is led by the Company’s Personnel
Management Division, and Group subsidiaries have their own HR departments.
DEPARTMENT OF
ORGANISATIONAL
DEVELOPMENT
AND RECRUITMENT
DOCUMENTATION
SUPPORT
DEPARTMENT
PERSONNEL
MANAGEMENT
DIVISION
DEPARTMENT
OF LABOUR RELATIONS,
COMPENSATION
AND BENEFITS
ADMINISTRATIVE
SUPPORT
DEPARTMENT
Successful implementation of Etalon Group’s overall strategy is impossible
without recruiting, developing and retaining talented professionals. The
Company’s personnel management strategy covers the following aspects:
� maintaining an effective incentive system
� developing human resources
� promoting and developing the Company’s HR employer brand
Processes relating to personnel management, HR policy and automation are set by the
� maintaining a healthy corporate culture
management company; within individual subsidiaries, personnel management is supervised
by the heads of HR departments, who are responsible for the recruitment, onboarding and
training of personnel as well as compliance with the Group’s HR policies and procedures.
� 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
Etalon Group’s Personnel Management Division is responsible for implementing and
monitoring the HR policy for the entire Company.
The Company has documents in place that reflect the basic principles and mechanisms for
the implementation of its personnel and social policies.
Remuneration and non-financial incentives:
� Regulation on Remuneration, Bonuses and Benefits
� Regulation on Etalon Group Corporate Awards
Basic principles of working arrangements:
� Corporate Labour Policy
� Regulation on Material, Technical and Information Support
� Onboarding of new employees:
� Regulation on Employee Orientation
Recruitment and approach to professional training and development:
� Regulation on Recruitment
� Regulation on Staff Training and Development
In addition to the documents listed above, the Company has policies in place to avoid
conflicts of interest and to combat corruption and fraud, as reflected in Etalon Group’s Code
of Corporate Ethics and Anti-Corruption Policy, as well as in the Regulation on Etalon Group’s
Fraud, Corruption and Theft Prevention Hotline. These documents are described
in more detail in the Business conduct section.
10
ТОР
Etalon Group was included in HeadHunter’s
annual ranking of top employers
Gold in the Employees and Society and Corporate
Governance categories in Forbes ranking
the occupational health
and safety policy and system
are discussed in more detail
in the occupational health
and safety section.
95
11ANNUAL REPORT 2022 7
7
SuStAInABILItY
Staff development
In order to incentivise staff and reinforce their commitment
Since the Company encourages employee initiatives aimed at
to the Company, Etalon Group provides employees with a large
professional development and efficiency gains, it often covers some
variety of opportunities for professional and career development.
or all of the costs of training that employees themselves choose.
Staff training
The Company offers employees a competitive salary, performance-
based bonuses, as well as training through both professional and
personal development programmes.
Workshops and programmes on occupational health and safety
(OHS) are an important part of training. In 2022, 133 Etalon Group
employees took part in OHS programmes and workshops covering
Every year, the Company makes a list of training needs, assesses
a total 1,749 hours.
requests and monitors the progress of programme participants.
Following the completion of any course, feedback is collected in
order to improve the process.
Employees are able to undergo training not only through third-
party educational platforms but also thanks to investments in the
development of in-house training programmes.
In early 2022, recognising the effectiveness of distance education,
the Company launched its own training platform for employees
called Etalon4Upgrade, which provides access to beneficial
External training was conducted mainly
on the following topics:
� industrial and civil engineering and design
� accounting and taxation
� marketing and sales
� personnel management and document management
� data analysis
courses and materials in a variety of subject areas: courses to help
� courses on a variety of software
employees improve their Microsoft Office skills, materials related to
� occupational health and safety
construction technologies and sales techniques, a distance course
for new employees, as well as webinars on various topics and an
electronic library of business literature.
2021
2022
NUMBER OF
PEOPLE TRAINED
NUMBER OF
HOURS
NUMBER OF
HOURS PER
PERSON
NUMBER OF
PEOPLE TRAINED
NUMBER OF
HOURS
NUMBER OF
HOURS PER
PERSON
Employee category
Management
Line employees
Gender
Women
Men
Total
153
616
245
524
769
5,185
13,605
4,135
14,655
18,790
34
22
17
28
24
762
1,608
1,126
1,244
2,370
30,402
39,832
15,257
54,977
70,234
40
25
14
44
30
In 2022, nearly equal numbers of men and women participated
in training programmes; however, the number of hours of
training per person for women differed given that the Group’s
female staff are employed primarily in managerial and
administrative positions, where training programmes are
shorter than the specialised professional programmes for
the production unit, where most of the personnel are men.
The following factors had an impact on training metrics in 2022:
the increase in the Company’s headcount, the launch
of new programmes, the increasing popularity of a philoso-
phy of continuous professional development, as well as the
resumption of in-person programmes.
oHS training courses are
discussed in more detail
in the occupational health
and safety section.
30 TRAINING HOURS
PER PERSON
+25 %
YEAR-ON-YEAR
increase in the number
of hours of training per person
96
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Developing workforce capacity
In order to ensure that it is able to recruit and retain qualified
personnel, Etalon Group uses various platforms to search for
and hire employees, and it also develops programmes and
events for students in partnership with specialised universities.
At the initiative of Etalon Group and with the support of design,
construction and development companies, relevant government
agencies, the Government of St Petersburg, the professional
community and leading industry experts, the BIMSkills competition
Recruitment services are used for the placement of vacancies
and the selection of candidates.
Partnership with universities
Etalon Group cooperates with leading specialised universities,
including St Petersburg State University, Peter the Great
St Petersburg Polytechnic University, St Petersburg State University
of Architecture and Civil Engineering (GASU), the Higher School of
Economics National Research University, Moscow State University
of Civil Engineering, the Russian Presidential Academy of National
Economy and Public Administration, and the St Petersburg Stieglitz
State Academy of Art and Design. In 2022, Etalon Group and
for architectural and design works using information modelling
technologies was held for the second year in a row. In 2022, the
competition took place in every federal district of the Russian
Federation; more than 300 students from specialised higher
educational institutions as well as institutions of secondary
vocational education from 35 Russian cities applied to take part in
the competition. The winners were given an opportunity to complete
an internship with the possibility of subsequent employment at
leading Russian development and design companies that use
information modelling technologies in their work.
Team-building
St Petersburg State Agrarian University entered into an agreement
Etalon Group is committed to maintaining a highly skilled professional
on cooperation in the field of education.
workforce. For this purpose, the Company creates comfortable
The Company hosts guest lectures, job fairs and other events at
university campuses, and also provides students with an opportunity
to take part in Etalon Group internships.
working conditions and career opportunities for existing employees,
while also recruiting talented new professionals.
New employees and staff turnover in 2022
Percentage of new hires relative
to the average annual headcount
Personnel turnover 1
Women
Percentage of new hires relative to
32%
the average annual headcount
Personnel turnover 1
12%
18–24
25–30
77%
38%
51%
28%
31–40
35%
19%
41–50
ABOVE 50
TOTAL
32%
17%
23%
12%
35%
19%
Men
36%
23%
Etalon Group’s key asset is its employees. The Company
is concerned not only with its employees’ professional
development but also with the establishment of an efficient,
close-knit team functioning in a healthy working environment.
The orientation programme for new employees helps them
quickly become part of their new team; acquire the skills they
need to do their jobs; learn about the Company’s operations,
standards and values; and also identify their strengths and
weaknesses in their new positions. Every new employee
is assigned a mentor who prepares a list of orientation
assignments, keeps track of their performance and provides
feedback. In 2022, the number of employees participating
in the orientation programme increased considerably, as
the successful integration of YIT Russia would not have been
possible without paying careful attention to the onboarding
of new staff.
Orientation programme for new employees
Number of employees taking part in the
orientation programme
2019
315
2020
344
2021
113
2022
821
As part of its team-building efforts, Etalon Group arranges
a variety of contests, events and sporting competitions for
employees. In 2022, Etalon Group employees participated in the
Builders Football Cup, which took place at the Nova Arena
in St Petersburg; the Race of Heroes, a patriotic sport-related
project in the Republic of Tatarstan; the Tsarskoye Selo Marathon,
in the town of Pushkin; the Fontanka SUP, an international
paddle board festival; and ZaBeg races across the country.
1 The percentage of the number of former employees relative to the average annual headcount in the corresponding category.
97
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Etalon Group social policy
Taking care of the health and safety of employees
In 2022, as in previous years, Etalon Group continued to offer
One of the priorities of Etalon Group’s HR strategy is the health
and safety of employees, which the Company protects, first and
foremost, by creating safe working conditions and preventing
workplace injuries.
employees life and health insurance programmes, which covered
nearly 4,000 people. Private health insurance programmes were
available to more than 3,500 employees regardless of the region.
Employee life and health insurance
Private health insurance programme
NUMBER OF EMPLOYEES
NUMBER OF EMPLOYEES
taking part in the life and health insurance programme
2019
2020
St Petersburg
Moscow and the Moscow region
Other regions
Production unit
TOTAL
506
683
-
1,500
2,689
483
602
-
1,500
2,585
2021
642
708
10
1,200
2,560
2022
973
616
305
2,042
3,936
Concern for employees’ quality of life
Etalon Group is committed not only to providing safe working
conditions for its employees in the workplace but also to
improving the quality of their life outside work. That is why
the Company has developed partnership programmes that
offer employees discounts on insurance services, medical
services, recreation, fitness club memberships and educational
programmes. In addition, Company employees are able to
purchase apartments at a discount, depending on the length
of their service time with Etalon Group.
The Company supports employees facing challenging life
circumstances and provides financial assistance to retirees
as well as to existing employees upon the birth of a child or
the loss of a close relative. In 2022, the Company provided
415 employees with financial support totalling RUB 12.9 million.
Thirty-eight individuals who had made a major contribution
to Etalon Group’s development and who had spent a long time
working for the Company were awarded a corporate pension
at the end of 2022.
taking part in private health insurance programme
2019
2020
St Petersburg
Moscow and the Moscow region
Other regions
Production unit
TOTAL
506
683
-
1,200
2,389
483
602
-
944
2021
642
708
10
842
2,029
2,202
2022
973
616
434
1,515
3,538
Financial assistance provided to employees in 2022
AMOUNT OF ASSISTANCE, RUB MLN
NUMBER OF EMPLOYEES RECEIVING ASSISTANCE
Total amount of financial assistance paid out:
for the death of a close relative
for the birth of a child
for other purposes
TOTAL
4.1
4.3
4.4
12.9
126
163
126
415
98
11ANNUAL REPORT 2022
7
7
SuStAInABILItY
Employee evaluation and remuneration policy
one of the company’s key personnel management
Etalon Group’s employee evaluation and remuneration policy ensures that the Company does the following:
1
2
3
4
Provides employees with fair, clearly
Applies a unified, systematic approach
Determines remuneration based on the
Сreates conditions for employees to set
specified remuneration that contributes to
to the remuneration of all employees
achievement of Etalon Group’s operational
ambitious goals and to take responsibility
the achievement of the Group’s goals
in all Etalon Group companies
and strategic goals and the specific results
for the achievement of those goals
of the work of each employee
principles is to offer decent, fair and non-discriminatory
remuneration based solely on each employee’s
professional value.
In addition to the base salary, Etalon Group employees’ remuneration
consists of bonuses, non-financial incentives and various other
benefits.
In 2022, the Company did not employ anyone whose salary was
below the minimum wage; the average salary last year was nearly
six times higher than the minimum wage. In order to retain sought-
after professionals and recruit talented employees, the personnel
service regularly studies salary scales and ensures that employees
are paid at market rates.
Open and honest dialogue with employees and feedback from
their immediate supervisor make it possible to properly assess the
quality of their work and potential opportunities for career growth.
The Company regularly conducts studies and surveys on employee
satisfaction and engagement: in 2022, 1,128 people took part in such
a survey.
It is clear that employees are unable to work effectively if they are
unaware of the main changes taking place within the Company.
The Company notifies employees at least eight weeks in advance
of changes that could affect them.
The Group uses the following channels to keep employees
up to date on Company news:
� the corporate intranet
� a portal created in 2022 to mark Etalon Group’s 35th anniversary that
is used for publishing news, holding discussions, hosting competitions,
conducting surveys and expressing gratitude to co-workers
� the corporate newsletter
� the Dialogue with the President project, which enables staff to ask
questions of Etalon Group’s President and get detailed answers
99
11ANNUAL REPORT 2022 7
7
SuStAInABILItY
Equal opportunities
All opportunities for career advancement and salary increases
Despite the specific nature of the industry, women accounted for 35%
are available equally to men and women regardless of their age,
of all Company employees as of the end of 2022, up 6 percentage
nationality, skin colour, religion or other factors. When making
points from 2021.
decisions about recruitment and personnel management, the
Company pays particular attention to an individual’s personal
and professional qualities.
Women also filled 36% of managerial positions in 2022. As of 24 April
2023, there were two women on Etalon Group’s eight-member Board
of Directors.
Etalon Group management1
Number of
managers at all levels
nuMBEr
PErcEntAGE
nuMBEr
PErcEntAGE
nuMBEr
PErcEntAGE
2020
2021
2022
Age
Under 30
30–50
Over 50
Gender
Women
Men
TOTAL
78
752
208
326
712
1,038
8%
72%
20%
31%
69%
89
823
223
454
681
1,135
8%
73%
20%
40%
60%
85
906
253
448
796
1,244
7%
73%
20%
36%
64%
36 %
58 %
of Etalon Group’s managerial
staff in 2022 were women
of the Company’s line
employees in 2022 were women
201 EMPLOYEES
(3%) worked remotely
or according to a personalised
schedule in 2022
1 Total amounts may not add up to 100% due to rounding.
Percentage of women among Etalon Group employees in 2022
Managers
Women
Men
Line employees
Women
Men
Blue-collar workers
Women
Men
ST PETERSBURG
MOSCOW
OTHER REGIONS
PRODUCTION UNIT
TOTAL
PERCENTAGE
289
127
44%
162
56%
638
377
59%
261
41%
46
7
15%
39
85%
185
78
42%
107
58%
424
236
56%
188
44%
7
-
-
7
100%
98
36
37%
62
63%
326
229
70%
97
30%
30
1
3%
29
97%
672
207
31%
465
69%
1,118
617
55%
501
45%
2,046
126
6%
1,920
94%
1,244
448
796
2,506
1,459
1,047
2,129
134
1,995
36%
64%
58%
42%
6%
94%
Work–life balance
Etalon Group takes into account the fact that, in addition
to their work duties, employees should be able to lead
a full life, with enough time for family matters, hobbies and
recreation or downtime. The Company fully respects and
supports employees’ right to personal time; it does so mainly
by offering standard working hours and time off. Employees
who are unable to work according to a standard schedule
may be offered a personalised schedule provided that such
an arrangement is not detrimental to operations.
In 2022, 201 Group employees – 100 women and 101 men –
worked remotely or according to a personalised schedule
(regardless of the epidemiological situation).
Company employees are free to exercise their right to parental
leave. In 2022, 98 employees, including two men, took parental
leave (compared with 75 employees, including four men, in
2021). In order to help parents financially in the first months after
the birth of their child, the Group provides additional support
payments beyond the benefits required by law. The Company
values the fact that the majority of employees return to their
jobs following parental leave. In 2022, 29 employees returned
from parental leave (compared with 28 employees, including
one man, in 2021).
100
11ANNUAL REPORT 2022
7
SuStAInABILItY
Customers
Most of our customers are middle-class individuals aged 35–45 who want to
improve their housing conditions for themselves and their family.
Customer profile 1
1/3
In 2022, the percentage of customers
aged 35–44 in St Petersburg increased
from the previous year, reaching 36%.
Most of our customers are line
personnel, while business owners and
civil servants have started making
repeat purchases more often.
In 2022, the number of customers
purchasing housing as an investment or
for their children increased.
Most of the people who bought an
apartment in St Petersburg were
registered in the city, but there was
also a high percentage – 42% – of
customers from other regions and from
abroad.
In terms of payment, customers in
St Petersburg predominantly chose to
pay in full up front, although mortgage
financing and instalment plans were
also popular.
14 MLN
RUB
Average budget
57 SQM
Average area of
purchased apartment
46 %
Percentage of repeat
purchases
St Petersburg
AGE
REASON FOR
BUYING A HOME
CUSTOMER
LOCATION
<25
4 %
For the buyer’s personal
residence / for the buyer’s family
65 %
St Petersburg and
the Leningrad region
58 %
29 %
For the buyer’s children
20 %
Other regions
37 %
36 %
As an investment
13 %
21 %
For the buyer’s
parents
2 %
Moscow and the
Moscow region
4 %
Foreign jurisdictions
0.5 %
25-34
35-44
45-54
55-64
8 %
>65
2 %
OCCUPATION
PERCENTAGE OF
REPEAT PURCHASES
METHOD OF
PAYMENT
Professional
36 %
Manager
21 %
24 %
19 %
Mortgage
31 %
Paid in full up front
41 %
Business owner
17 %
65 %
Instalments
28 %
1 According to customer surveys conducted by
Etalon Group in 2022.
Civil servant
5 %
Other
21 %
Totals may not add up due to rounding.
43 %
35 %
101
11ANNUAL REPORT 2022
7
SuStAInABILItY
Customer profile 1
2/3
2/3
Etalon Group’s main customers in
Moscow in 2022 were professionals,
managers or business owners aged
35–44. They acquired housing as their
personal residence.
Most of the people who purchased an
apartment in Moscow or the Moscow
region were Muscovites, but residents
of other regions were also active in
purchasing apartments in 2022.
Compared with 2021, the percentage
of customers in Moscow who paid
for their apartment in full up front
increased considerably, from 39%
to 52%.
23 MLN
RUB
Average budget
65 SQM
Average area of
purchased apartment
28 %
Percentage of repeat
purchases
Moscow
AGE
REASON FOR
BUYING A HOME
CUSTOMER
LOCATION
<25
4 %
For the buyer’s personal
residence / for the buyer’s family
71%
Moscow and the
Moscow region
61 %
22 %
For the buyer’s children
13 %
Other regions
36 %
40 %
As an investment
15 %
20 %
For the buyer’s
parents
1 %
St Petersburg and
the Leningrad region
2 %
Foreign jurisdictions
1 %
25-34
35-44
45-54
55-64
8 %
>65
6 %
OCCUPATION
PERCENTAGE OF
REPEAT PURCHASES
METHOD OF
PAYMENT
Professional
Manager
30 %
31 %
Business owner
25 %
Civil servant
4 %
11 %
15 %
15 %
8 %
Other
10%
30 %
Mortgage
32 %
Paid in full up front
52 %
Instalments
16 %
1 According to customer surveys conducted by
Etalon Group in 2022.
Totals may not add up due to rounding.
102
11ANNUAL REPORT 2022
7
SuStAInABILItY
Customer profile 1
3/3
A third of the apartments purchased at
Etalon Group projects are bought by
people 25–34 years of age.
Nearly 80% of customers used
mortgage programmes to purchase
housing.
Not many repeat purchases were
made in regional markets, as the
Company began its regional expansion
programme only in 2021, in contrast to
Etalon Group’s key markets of Moscow
and St Petersburg.
1 According to customer surveys conducted by
Etalon Group in 2022.
6 MLN
RUB
Average budget
48 SQM
Average area of
purchased apartment
1 %
Percentage of repeat
purchases
Regional markets
AGE
REASON FOR
BUYING A HOME
CUSTOMER
LOCATION
<25
6 %
For the buyer’s personal
residence / for the buyer’s family
65%
Omsk
36 %
32 %
For the buyer’s children
21%
Ekaterinburg
31 %
37 %
As an investment
12 %
Tyumen
7 %
17 %
For the buyer’s
parents
2 %
Tatarstan
4 %
Other
22%
25-34
35-44
45-54
55-64
5 %
>65
3 %
OCCUPATION
PERCENTAGE OF
REPEAT PURCHASES
METHOD OF
PAYMENT
Professional
49 %
Manager
18 %
Business owner
15 %
Civil servant
11 %
Other
7 %
Totals may not add up due to rounding.
3 %
9 %
1 %
4 %
26 %
Mortgage
78 %
Paid in full up front
20 %
Instalments
2 %
103
11ANNUAL REPORT 2022
7
SuStAInABILItY
Social responsibility
Social responsibility is an important aspect of the company’s
policy. For many years, Etalon Group has been supporting a
variety of educational, environmental, social and charitable
projects as well as projects related to historical education
and sports. In doing so, the company’s aims are to promote a
positive environment and a healthy society, to encourage socio-
economic development in the regions where it operates and to
establish a conducive business environment in those regions.
Development of social infrastructure
In 2022, Etalon Group opened three preschools and
delivered one general secondary school.
House on Blyukhera residential complex, St Petersburg
A state-of-the-art preschool for 160 pupils opened at the House on
Blyukhera residential complex.
Galactica Premium residential complex, St Petersburg
A preschool for 220 children and an advanced office for paediatrics,
a branch of the city’s paediatric polyclinic No. 35, opened on the
grounds of the Galactica Premium project. Once construction
is completed, the project will be home to nine preschools and
two schools.
Petrovskiy Landmark residential complex, St Petersburg
A three-storey preschool for 90 children, with a total area of about
3 ths sqm, opened at the Petrovskiy Landmark residential complex.
Etalon City residential complex, Moscow
A general secondary school for 625 pupils was delivered as part
of the Etalon City residential complex. In 2021, a preschool was
delivered as part of the project. The preschool’s proximity to the
school means that children will be able to continue their education
without having to leave the microdistrict, which will also help them
form strong social connections.
In the future, the Group plans to build preschools and
schools at other residential complexes as well.
For example, the Company plans to build six preschools, two schools
and a polyclinic at its Shagal residential project. The concept for
one of the preschools, developed in 2022, calls for the use of natural
materials, the landscaping of about 40% of the grounds and the
use of custom solutions to enable meaningful interaction between
teachers and parents regarding the upbringing and development
of their children.
The Company will pay particular attention to the establishment of
social amenities and infrastructure in its new regions of operations.
the educational institutions
delivered by Etalon Group in
2022 are designed to serve up to
785 pupils.
the new preschools opened in
2022 and the school built by the
company have a combined area
of c. 24 ths sqm.
104104
ANNUAL REPORT 202211 7
SuStAInABILItY
Development of social infrastructure
Preservation of cultural and historical heritage
one of the fundamental principles of Etalon Group’s
philosophy is to respect the history of the locations
where its projects are being developed.
Preservation of urban heritage
Etalon Group is building the Silver Fountain residential complex
and, at the same time, carrying out restoration work at the
site of the Alekseevskaya water-lifting station, which is part
of the capital’s cultural and historical heritage. The Company
preserved the historical buildings, which, after restoration, were
used to develop infrastructure for the residential complex, and
it also restored the legendary Wallace fountain, the only one
in Moscow.
Interuniversity student campus at the Eurasian
Scientific and Educational Centre
In 2022, Etalon Group and the Government of the Republic of
Bashkortostan signed a concession agreement for the construction
and subsequent operation of the interuniversity student campus at
the world-class Eurasian Scientific and Educational Centre in Ufa.
The innovative, state-of-the-art campus will include residential
buildings with room for 4,400 students, instructors and guests;
an IQ park; a building that houses an auditorium and laboratory
facilities; and a genome centre. The total area of all of the facilities
is expected to be at least 133 ths sqm; the final parameters will be
determined once the design documentation is completed.
105
11ANNUAL REPORT 2022 7
SuStAInABILItY
Participation in events commemorating Russian history
9 May – Victory Day
In the lead-up to Victory Day, Etalon Group took part
in commemorative events in St Petersburg, Moscow
and Omsk.
78th anniversary of the complete lifting of
the siege of Leningrad
In the lead-up to the 78th anniversary of the complete
lifting of the siege of Leningrad, Etalon Group took part
in the organisation of commemorative events: Company
employees together with students from school No. 690 –
whose new building was constructed by Etalon Group –
laid flowers at a monument to the heroic defenders of
Leningrad, a memorial established by Etalon Group in
2013 in Utkina Zavod, near the Swallow’s Nest residential
complex. In addition, representatives of the Company
visited the Moskovskiy district branch of the Russian Red
Cross in St Petersburg to greet veterans.
106
11ANNUAL REPORT 2022 7
SuStAInABILItY
Developing local communities
Creating comfortable surroundings
The needs of future residents are a constant priority when
designing new residential complexes. The Company is
changing the concept of the urban environment by developing
projects where every important facility for residents inside the
development can be reached within 15 minutes. This unique
integrated-development concept is the basis of the Zil-Yug
project, for example, which Etalon Group is building in the
south of Moscow: a variety of housing types and architectural
solutions, well-planned social amenities and transport
infrastructure are within walking distance from any point in the
development; the project ensures excellent visual permeability;
pedestrian and transport routes are separated; and there
is an abundance of landscaped green areas for recreation
and walks – all of these features are combined to ensure
comfortable conditions for future residents.
In addition, Etalon Group is committed to simplifying the
management of its services and making them more efficient
both for residents and for the operating company by applying
new smart solutions. At the Silver Fountain residential complex
in Moscow, for example, the Company is piloting a “digital
neighbourhood” project that links up the utilities infrastructure
of the residential buildings with the business processes of the
developer and the service company.
Besides, Etalon Group participates in social projects aimed at
creating a friendly urban community. At the very end of 2022,
17 Etalon Group sales offices in five regions of operations –
St Petersburg, Ekaterinburg, Omsk, Kazan and Tyumen – took
part in a kid-friendly social project to create a favourable urban
environment for children.
107
11ANNUAL REPORT 2022 7
SuStAInABILItY
Developing local communities
4th Atmofest Eurasian Festival of Landscape Art
Ekaterinburg hosted the fourth Atmofest Eurasian Festival of
Landscape Art, a major event for the city, where Etalon Group
presented a multifunctional platform featuring a children’s play
area, workshops and other activities.
Children’s Day in Omsk
Etalon Group helped arrange the celebration of Children’s
Day at the 30th Anniversary of the Komsomol Culture and
Entertainment Park.
Local festivals
Every year, Etalon Group hosts events at its finished
properties to celebrate the new Year, Knowledge day,
cosmonautics day, Victory day and Maslenitsa, and
the company also pays a great deal of attention to
regional holidays, which are especially important for
the local population.
Knowledge Day in the Emerald Hills microdistrict
On 1 September, Knowledge Day was celebrated at school
No. 18, located in the Emerald Hills microdistrict.
Builder’s Day in Ekaterinburg
Etalon Group took part in celebrations to mark Builder’s Day in
Ekaterinburg and organised an attention-grabbing photo zone
as well as workshops.
City anniversaries
To mark the anniversary of the founding of
Ekaterinburg’s Solnechniy district, which Etalon
Group continues to develop, local businesses as
well as youth performers and sports teams from the
district presented an entertainment programme and
conducted a variety of workshops.
On the 299th anniversary of Ekaterinburg’s founding,
the Company took part in Dance KB, a traditional
dance festival, and held a competition for the
best duo that featured the participation of the
Company’s mascot.
Festivities were also organised to celebrate the
founding of St Petersburg and Omsk.
108
11ANNUAL REPORT 2022 7
SuStAInABILItY
Education and awareness-raising
Etalon Group plays a role – as partner or organizer – in numerous educational projects aimed at informing residents
about the specific features of their place of residence. the company also works with schoolchildren and students to
encourage an interest in architecture and to create a pool of talented young professionals. Etalon Group is happy to
share its experience, and in return it gets a fresh new look at solutions to urban-planning issues.
Moscow through the eyes of an engineer
In late 2022, Etalon Group became a partner for the social and
educational project “Moscow through the Eyes of an Engineer”,
which discusses the architecture of the capital and monuments
to the art of engineering.
Builders of the future
As part of RBC’s Second Annual Forum on the Development
of Infrastructure Projects in Russia, a foresight session called
“Builders of the Future: Open Meeting of the Children’s Council
under the Public Council of the Russian Ministry of Construction,
Housing and Utilities” was held, where representatives of
Etalon Group discussed the Company’s projects with young
members of the Children’s Council. Following the session, Etalon
Group was invited to join the working group for the “I Am a
Builder of the Future!” project, to promote construction-related
professions and incorporate ground-breaking new ideas from
young people into its projects.
4th United Eurasian Congress “BIM Community
2022: People, Technologies, Strategy”
The fourth United Eurasian Congress “BIM Community 2022:
People, Technologies, Strategy” was held in Moscow, at the
House of Architects, with the support of Etalon Group. The
Congress was attended by representatives of industry-
related regional and federal government agencies, heads of
professional associations and non-governmental organisations,
universities, property developers and design bureaus, as well as
developers of information systems. Participants discussed issues
related to the digital transformation of the construction industry,
an issue that both the state and the Company are now paying
particular attention to.
BIMSkills-2022
BIMSkills-2022, the second nationwide competition for
architectural and design works using information modelling
technologies, was held in St Petersburg – one of the main
events related to digitalisation in Russia, which is traditionally
held at the initiative of and with support from Etalon Group.
The competition was held in every federal district of the Russian
Federation; more than 300 students from specialised higher
educational institutions as well as institutions of secondary
vocational education from 35 Russian cities applied to take
part. The winners were given an opportunity to complete an
internship with the possibility of subsequent employment at
leading Russian development and design companies that use
information modelling technologies in their work.
Open City educational project
Etalon Group, as an official partner of the Open City
educational project, conducted a tour for project participants
of the construction site of the Shagal residential district. The
most important goal of the project is to engage students
from architectural universities in real architectural processes in
collaboration with leading professionals from the architectural
and development community.
Sistema Fest
Etalon Group supported Sistema Fest, which was held in Omsk
23–25 September. The programme for the charity sociocultural
festival included career guidance workshops, featuring
speakers from Etalon Group, for students from schools and
colleges; an environmental event; and a nationwide campaign
focused on culture. During the festival, more than 2,000 spruce
trees were planted, and participants were offered a tour of the
construction site of the Green River residential complex.
109
11ANNUAL REPORT 2022 7
SuStAInABILItY
Education and awareness-raising
Educational Laboratory for the
Parametric Design of Objets d’Art
Etalon Group together with the Moscow Museum of Modern Art
launched the Educational Laboratory for the Parametric Design
of Objets d’Art for talented students in an effort to engage
young professionals in the processes of designing and improving
the urban environment.
Functional Diagram for the 300th Anniversary
of Omsk Park
Etalon Group arranged a competition for students from
construction-related educational institutions in Omsk to develop
functional diagrams for the 300th Anniversary of Omsk Park. The
finalists were offered a paid internship at the Company.
Cooperation with St Petersburg State
Agrarian University
Etalon Group and St Petersburg State Agrarian University signed
a cooperation agreement aimed at implementing educational
projects in the area of industrial and civil construction.
Tour of the Silver Fountain residential complex
Etalon Group conducted a tour, for students from the Russian
Presidential Academy of National Economy and Public
Administration and Moscow State University of Civil Engineering,
of the Silver Fountain residential complex, during which Etalon
Group specialists described the structure of the state-of-the-
art development project and explained how it is being built.
Tour of the construction site of the Moscow
Gates II residential complex
Etalon Group conducted a tour for students from Peter the
Great St. Petersburg Polytechnic University of the construction
site of the Moscow Gates II project. Etalon Group specialists told
students about the organisation of the construction process,
described the main technologies used in housing construction
as well as the materials used. In addition, they talked about
occupational health and safety and the Company’s success
using information modelling technologies.
110
11ANNUAL REPORT 2022 7
SuStAInABILItY
Sport and health
Etalon Group encourages the adoption of a healthy
lifestyle not only by sponsoring sporting events but also
by engaging its own employees in sports.
Partnership with the Novosibirsk
Region Athletics Federation
Etalon Group became the general partner of the Novosibirsk
Region Athletics Federation. In this context, the Company will
support the A. Raevich Siberian Running Festival (Novosibirsk
half-marathon), a major event.
Builders Football Cup
The Etalon Group team was one of the prize winners at the
Builders Football Cup, which took place at the Nova Arena in
St Petersburg.
Race of Heroes
Etalon Group took part in the Race of Heroes, in the Republic of
Tatarstan, a patriotic project that includes an extreme cross-
country race.
Tsarskoye Selo Marathon
The Etalon Group team participated in the Tsarskoye Selo
Marathon, held in the town of Pushkin.
ZaBeg races
Etalon Group employees competed in races across the country,
demonstrating their love for sports and their team spirit.
Fontanka SUP
The Group took part in the Fontanka SUP international paddle
board festival for the fourth time, having expanded its team to
over 100 employees.
111
11ANNUAL REPORT 2022 7
SuStAInABILItY
Environment
Healthy City project
In August 2022, an environmental drive was launched, with
Etalon Group’s support, in the Siberian capital of Novosibirsk, as
part of the Healthy City social project.
Using the +1Gorod interactive online service, participants
performed tasks related to responsible consumption and
environmental impact reduction, attended online educational
lectures given by experts, and also received interesting
assignments and prizes from the project’s strategic partner and
co-organiser, Etalon Group.
Tree-planting drive
Etalon Group supported a tree-planting drive in the Kalininskiy
district of St Petersburg. As part of the event, participants put
down lawns and flower beds, and they also planted trees and
shrubs at the House on Blyukhera project.
Omsk Garden City volunteer movement
Etalon Group participated in a campaign to create green
space along a river embankment in Omsk; the event was
organised by the Omsk Garden City volunteer movement.
The Company purchased more than 600 seedlings for the
campaign.
Planting maple trees
Etalon Group once again supported an environmental initiative
of Delovoi Peterburg, at Hero Cities Park (Pulkovo Park), where
maple trees were planted as part of the Business Alley project.
Zil Veterans Alley at the
Shagal residential project
An alley in honour of former employees of the Zil automobile
factory was established at the Shagal development project.
Company executives and employees together with former staff
of the Zil factory planted 15 five-metre-tall maple trees and
erected a commemorative plaque.
Community development programmes
Community development programmes
Number of events/programmes
Amount invested in the development of local communities, RUB ths
2020
2021
2022
17
3,821
19
2,500
20
2,390
Omsk Garden City volunteer movement
2.4 MLN
RUB
was invested by the Company
in the development of local
communities in 2022
112
11ANNUAL REPORT 2022
7
SuStAInABILItY
Charity
Every year, Etalon Group provides charitable
assistance to various social facilities, finances sports
and recreational events, and supports charitable
foundations.
New Year’s Miracle and Tree of Wishes
In late 2022, Etalon Group employees were involved in
supporting New Year’s Miracle, an online campaign to raise
funds to arrange individual tutoring for children in the child-
welfare system.
The New Year’s Miracle campaign was held for the second
time as part of a fundraising project. The project helps children
living in child-welfare institutions to prepare for their final exams
and post-secondary entrance exams in order to help them
learn a profession, which would give them a chance to find
employment and improve their lives.
During the campaign, about RUB 600 thousand was collected
in the form of private donations, which will be spent on nearly
a thousand hours of individual classes with teachers to help
the children fill in academic gaps and prepare for exams. In
addition, among the more than 20 companies that took part,
the largest total donation came from Etalon Group employees.
A winter garden in every home
Etalon Group was a partner for the Winter Garden in Every
Home charity event in St Petersburg.
As part of this campaign, Company employees and other
volunteers carefully prepared plants from the winter garden
of the former Leningrad Youth Centre and gave them to
St Petersburg–based organisations as well as interested
residents. Everyone involved was able to take the plants home
free of charge, and they also received keepsakes.
Wastepaper collection
The Company supported an initiative to collect wastepaper
as part of a charity project to support children’s education.
Etalon Group was the leader among participating companies.
Special event at Family Support Centre
On Knowledge Day, 1 September, Komsomolskaya Pravda v
Sankt-Peterburge together with its partners, including Etalon
Group, organised a special event at Family Support Centre
No. 2, on Vasilievskiy Island.
Charity
Number of charity events/programmes
14
28
48
Amount of charitable assistance provided, RUB ths
46,301
53,900
154,389
2020
2021
2022
113
11ANNUAL REPORT 2022
7
SuStAInABILItY
Innovations
Technology platform
In 2022, Etalon Group elevated the strategic
In 2022, Etalon Group’s It departments worked hard to develop a digital
importance of It innovations and of innovative
integration platform that will improve business efficiency considerably.
construction technologies as independent
the project is expected to be ready for commercial operation in 2Q 2023.
businesses in light of the emergence of demand for
domestic software and the expansion of innovative
programmes.
The Company began developing proprietary digital
products that are specially adapted to its business needs.
All digital products were integrated into a single technology
platform. The pivot towards the development of proprietary
solutions was a necessary response to challenges stemming
from the geopolitical situation and the departure of a
number of IT companies from the Russian market.
The platform will integrate all of our IT resources – about thirty digital products
altogether – and will enable them to be managed in a consistent and highly efficient
manner.
The platform supports the following:
1
2
the integration of all Group digital
the automation of business
products into a single management
processes and a considerable
environment
reduction in the amount of time
spent on manual labour
3
4
data analysis using machine
learning and artificial
intelligence (AI)
the creation of accurate forecasts
for planning and making strategic
management decisions
5
6
the creation of a single entry
point for interaction among all
participants in the Group’s business
processes, including for customers
a high level of security and data
protection
114
11ANNUAL REPORT 2022 7
SuStAInABILItY
End-to-end digital architecture saves time, money and materials
UNIFIED
DIGITAL PLATFORM
End-to-end data transfer
across the entire
value chain
PRE-DEVELOPMENT STAGE: LIMIT COSTS AND
REDUCE TIME REQUIRED BY UP TO 6 MONTHS
REAL-TIME MONITORING OF
COSTS AND TIMING
FEEDBACK ON
PRODUCT
PRICING AND PRODUCT
INPUT LIMITATIONS
GO / NO GO
DECISION
99% ACCURACY WITH
MASTER PLANNING STAGE
MARKET ANALYSIS
GIS
Big data system for real-
time and forecast data
analysis (price, demand,
supply and competition level
for any location)
Automated screening for
appropriate land plots
Land scanning with drones
and transfer to automated
master planning solutions
Deep integration with third-
party GIS services
MASTER PLANNING
AND CONCEPT
Express master plan
and budget
Automated data
transfer to BIM
DESIGN
Automated project
documentation
Online permitting process
Automated generation of
working documentation
Full integration with BIM
CONSTRUCTION
SERVICE
Build information model for
construction coordination
and control
Dashboard for real-time
cost control
Facility information model
for ongoing maintenance
and building repairs
PARTNERS
Joint ventures
Share participation
Long-term exclusive
agreements
Inputs for further product
improvement
Suppliers
Proposal request
Tendering best practice
Selection of best-
value solution
Supply of materials and
Collecting feedback
components at contracted price
from residents of Etalon
properties
Sales
115115
11ANNUAL REPORT 2022 7
SuStAInABILItY
BIM
CONTRUST
one of Etalon Group’s promising developments is
the multimodule web platform contruSt, which
several of the company’s development teams
from the technology Platform department are
working on at the same time. contruSt will
bring together all the main parties involved in the
implementation of investment and construction
projects, support seamless data transfer, and
digitalise and automate routine operations, both
in the office and at construction sites.
As the system’s modules are put into operation, the work
acceptance process at construction sites will become
simpler and more transparent, since the system can
automatically calculate the amount of work and volume
of construction materials at every stage of construction.
Providing digital tools for
managing the timing, cost
and quality of investment and
construction projects being
carried out
reduction in SG&A expenses
DESIGN
Digital technical specifications
CONSTRUCTION
Investment oversight
Construction oversight
As-built documentation
Occupational health
and safety
Fire safety
DigiLab
SERVICE
Takeover by
management company
Guarantee
Apartment handover
to owners
Management company BIM
Приоб ретени е
земл и
Noteworthy results in 2022:
1
Testing of the
“As-Built Documentation”
module got under way.
2
Development of the core
framework for the CONTRUST
platform began.
“As-Built Documentation” module
One of Etalon Group’s proprietary digital
products for the CONTRUST web platform is
a tool to facilitate the work of engineering
supervisors, whereby work that used to
be done on paper is transformed into a
construction project information model.
Testing of the “As-Built Documentation”
module began in 2022.
Automation of engineering
supervisor’s routine processes
Use of visual aids
Automated preparation
of package of as-built
documentation
General contractor’s
dashboard
Системати зация
задач
Наглядность
Реестр замеч ани й
Системати зация
задач
Каби нет
генер ального
под рядчика
Наглядность
Статусн ые
моде ли документов
Выгруз ки
Реестр замеч ани й
документо в
по стандартн ым
формам
Каби нет
генер ального
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Systematisation
of tasks
Системати зация
задач
Системати зация
задач
Наглядность
Наглядность
Реестр замеч ани й
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Каби нет
Статусн ые
генер ального
моде ли документов
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Прое ктировани е
Строите льство
Приоб ретени е
земл и
Продажи
Прое ктировани е
Эксплуа тация
недвиж имости
Строите льство
Продажи
Comments
register
Document
status models
Выгруз ки
документо в
по стандартн ым
формам
Эксплуа тация
недвиж имости
Uploading documents
according to
standard forms
Системати зация
задач
Наглядность
Реестр замеч ани й
Системати зация
задач
Наглядность
Каби нет
генер ального
под рядчика
Реестр замеч ани й
Статусн ые
моде ли документов
Приоб ретени е
земл и
Приоб ретени е
земл и
Прое ктировани е
Прое ктировани е
Строите льство
Выгруз ки
Каби нет
документо в
генер ального
по стандартн ым
под рядчика
формам
Строите льство
Продажи
Статусн ые
моде ли документов
Продажи
Эксплуа тация
недвиж имости
Выгруз ки
документо в
по стандартн ым
формам
Эксплуа тация
недвиж имости
116116
Приоб ретени е
земл и
Прое ктировани е
Приоб ретени е
Строите льство
Прое ктировани е
Продажи
земл и
Эксплуа тация
Строите льство
недвиж имости
Продажи
Эксплуа тация
недвиж имости
11ANNUAL REPORT 2022 7
SuStAInABILItY
BIM
Building information modelling (BIM)
within Etalon Group
this year marks 10 years since Etalon Group
began using BIM. the company has automated
many processes in recent years, such as its
analysis of target construction data, scheduling
and as-built documentation. In 2022, the
company independently developed cdE
(common data environment) software. At the
same time, Etalon Group completed the transfer
of sales-related data, such as apartment layouts
and their parameters, from the BIM model directly
to the crM. All these steps make it possible to
work with an enormous amount of data, to quickly
analyse information and to make decisions under
tight deadlines.
As a strategic priority, BIM is one of the key components
of Etalon Group’s entire technology platform (or digital
integration platform). The Group is aware of the need
to create uniform transparent technical standards
for exchanging information with various government
agencies, which makes it easier for businesses to
integrate their digital platforms. That is why the
Company takes into account current developments
and trends in the construction industry in the context
of digitalisation, key government objectives as well as
the challenges facing businesses in connection with
the processes involved in the transformation of the
construction industry.
BIM development in 2022
In 2022, Etalon Group developed and approved a
business process that expands the scope in which
information modelling technologies are used at all stages
of the life cycle of investment and construction projects.
The requirements for preparing BIM-compatible design
and working documentation for construction projects
were also standardised.
A
T
A
D
Design standardisation:
� architectural solutions
� construction solutions
� engineering equipment and
networks
� vendor list
Standard master plan
Сollections of
standard solutions
O M A T I O N
T
U
A
Digital technical design
specifications
Section automation
Architecture automation:
� generation of housing groups
and facades
Master plan automation
S S E S
E
C
O
R
P
Development of technical
design specifications:
� design
� site evaluation
� master plan preparation
� development of facade solutions
� cost assessment
Thanks to interconnected data, end-to-end business
processes and automation, the Company’s digital
products are able to optimise the design process
considerably; speed up the construction process; improve
quality control of work performance and oversight of
construction volumes, the enforcement of schedules, and
occupational health and safety; and, as a result, reduce
the cost of Etalon Group projects.
117117
11ANNUAL REPORT 2022 7
SuStAInABILItY
BIM
Consistent leadership in the industry
Digital Neighbourhood
� Fully developed on the basis of information modelling
� Etalon Group, together with the Moscow Department of
technologies, the design for a preschool at the House on
Blyukhera project, in St Petersburg, successfully passed
a state expert review in digital format for the first time in
Russian practice. In June 2022, Etalon Group received the
permits necessary to deliver the preschool. Thanks to the use
of BIM, this event took place ahead of schedule.
� Etalon Group’s Omsk projects won awards at the BIM Leaders
2021/22 competition:1 the Green River residential district
took first place in the category “Information Modelling for
Residential Buildings”; the sales office that opened in May
on Karl Liebknecht Street took second place in the category
“BIM Interiors”.
The Company used BIM technologies to design its office in
Omsk, which is located in the historical building that used
to house the Tver Textile Mill. Etalon Group experts created
a 3D model of the building that was then used to identify
protected areas and spaces that could be transformed. The
project enabled the creation of an office that combines history,
modernity and digital technologies.
Students from Peter the Great St Petersburg Polytechnic
University were also winners of the BIM Leaders 2021/22
competition. The students, supervised by Vladimir Sharmanov,
an Etalon Group process engineer, prepared a project entitled
“Application of BIM Technology for Modelling Safe Working
Conditions at Construction Sites”. Etalon Group and the
Polytechnic University have enjoyed fruitful cooperation for
many years in the areas of science and technology as well as
research methodology with the aim of retraining and upgrading
the skills of young specialists.
Urban Development Policy, the Moscow Foundation for the
Renovation of Residential Buildings, the City Development
research and design centre, JSC Vneshstroyimport and
NOTIM, is a member of a working group involved in the
implementation of a pilot project analysing the use of
information modelling technologies in construction. Etalon
Group’s role in this project is to act as a consultant on the
organisation of business processes when implementing
investment and construction projects using BIM.
� The BIMSkills competition (held at the initiative of Etalon
Group) is a unique Russia-wide project aimed at finding
the top current students and graduates of universities and
colleges in the Russian Federation specialising in digital
construction. The competition provides participants with a
unique opportunity to apply their knowledge in real projects
being implemented by the largest construction companies in
the country. The main prize for participants is an opportunity
to undertake a paid internship.
In 2022, the competition was held in every federal district of the
Russian Federation; more than 300 students from specialised
higher educational institutions as well as institutions of
secondary vocational education from 35 Russian cities applied
to take part in the competition. Based on the results, 10 finalists
who were developing information models and also performing
the tasks of BIM coordinators to support design were accepted
for internships. Etalon Project, an Etalon Group company,
hired four interns for its projects and has plans for long-term
collaboration with them.
An integral part of a large project to create a digital
integration platform was the unification of all digital
products used to manage the company’s digital
neighbourhood.
In 2022, Etalon Group switched to the independent
implementation of its Digital Neighbourhood hardware and
software project, which is aimed at the digitalisation of
residential complexes and the provision of digital services to the
residents of those complexes.
The purpose is to create a single digital ecosystem for
a residential complex that integrates the property’s
utility and technical infrastructure into the information
systems and business processes of the developer and the
management company.
The requirements for digitalisation are established during
the conceptualisation phase of the residential complex and
are included in the technical specifications for the design of
all facilities.
Digital technologies are being incorporated that make it easier
for residents to interact with the infrastructure of the residential
complex and the management company: an IP intercom, an
access control and management system, contactless access
to apartment areas, automobile access to the parking area,
automatic transfer of meter readings, creation of requests
for the provision of services by the management company, a
marketplace, etc. Work is ongoing to strengthen the mobile
communications signal in underground parking areas, common
areas, elevator shafts, staircases, spaces between apartments
and entrance lobbies.
In early 2022, elements of the Digital Neighbourhood system
were incorporated into the Silver Fountain project; were
designed for incorporation at the Shagal and Nagatino i-Land
residential complexes; and are being designed for use at the
Voxhall residential complex, in Moscow, and the Che Quarter
project, in St Petersburg. The Company is also working on
incorporating the system into its regional projects (Omsk,
Kazan, etc.).
The low-current systems and infrastructure at buildings in
the Silver Fountain project that have already been delivered
were upgraded to increase the comfort of residents. A pilot
project for the digitalisation of apartments at the Silver
Fountain residential complex was carried out. The following
functionalities were incorporated into the mobile app: an IP
intercom; lighting control, including dimming; socket control; air
conditioning control; leakage, lighting, presence and opening/
closing sensors.
During the reporting year, the IT company Udobnye Resheniya
(Convenient Solutions), the developer of the mobile application
for residents and Etalon Group housing and communal services
management companies (Our Home Etalon), became part of
Etalon Group.
1 The international competition BIM Leaders 2021/22 was held with the support of the Ministry of Construction Industry, Housing and Utilities Sector of the Russian
Federation. This year, more than 150 companies and organisations from nearly 30 Russian regions took part in the competition.
118
11ANNUAL REPORT 2022 7
SuStAInABILItY
BIM
Product standardisation
(integration with BIM)
Standardisation methods
Improving operating efficiency at every stage of
implementation by bringing together all process
participants in the BIM system
Product development and standardisation are among
Etalon Group’s strategic priorities. You can read more
about standardisation management, design automation
and digital technical specifications in the 2021 report.
IMPLEMENTED IN 2022:
� technical specifications for the development of an
information model
� a classification system for construction-related information
� a common data environment
� automation of architectural solutions and master plans
� scheduling
� investor oversight of construction and installation works
� management of design and working documentation
ADVANTAGES OF A STANDARDISED APPROACH:
class ratio
� shorter timeline for design, preparation of documentation
and construction
� reduced costs at all project stages
� increased product appeal thanks to improved quality and
affordability
Land acquisition
Rapid analysis and a more
competitive position
Системати зация
задач
Наглядность
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Системати зация
задач
Наглядность
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Design
Speed, product programming
and cost engineering
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Прое ктировани е
Приоб ретени е
земл и
Приоб ретени е
земл и
Прое ктировани е
Строите льство
Продажи
Эксплуа тация
недвиж имости
Системати зация
задач
Наглядность
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Construction
Speed, quality,
cost control
PRODUCT
DEVELOPMENT
STANDARD
Строите льство
Продажи
Эксплуа тация
недвиж имости
DESIGN STANDARD
COLLECTIONS
OF STANDARD
SOLUTIONS
STANDARDISED
PRODUCT BY CLASS
Системати зация
задач
Наглядность
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Sales
Exact match to product
segments > higher sales rates
Системати зация
задач
Наглядность
Реестр замеч ани й
Каби нет
генер ального
под рядчика
Статусн ые
моде ли документов
Выгруз ки
документо в
по стандартн ым
формам
Приоб ретени е
земл и
Прое ктировани е
Строите льство
Продажи
Эксплуа тация
недвиж имости
COMPUTER-AIDED
DESIGN
Property management
Прое ктировани е
Строите льство
Продажи
Приоб ретени е
земл и
Эксплуа тация
недвиж имости
Fewer flaws, easier maintenance and
management of facilities
Digital technical specifications
Automation of the process of creating
and editing technical specifications for
project design, and linking the technical
specifications with the library of construction
elements and materials through BIM.
Impact from incorporation
� Transparent system for the creation, approval
and amendment of technical specifications;
integration with existing tools and common
data environment
� Shortening of the construction cycle by at
least two weeks by reducing the time needed
to prepare the concept and so-called stage P
Noteworthy results in 2022
1
2
3
Database created
and populated with
parameters
Limited testing
performed
Version 1.0 developed;
pilot testing in progress
119119
� development of an optimal product line in terms of price-to-
Приоб ретени е
земл и
Прое ктировани е
Строите льство
Продажи
Эксплуа тация
недвиж имости
11ANNUAL REPORT 2022 7
SuStAInABILItY
BIM
Standardisation methods
STANDARD
ARCHITECTURAL
SOLUTION
ELEMENT
APARTMENTS
SECTION
MORPHOTYPE
STANDARD
MASTER PLAN
LANDSCAPING MODULES
SURFACES. PROFILES
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
GLOBAL GRID
Architectural solution gridlines +
Master plan gridlines
BuILdInG
ASSEMBLY
FunctIonAL
FAcAdE cELLS
BuILdInG
FAcAdE
System-wide solutions
Global bindings
� grid plan for architectural solutions
for sections = facade grid
Facade generation
� Placement of all architectural
elements in the assigned cells
Global system of spatial planning
architectural solutions (bindings,
connections, gridlines, etc.) in
accordance with the architectural
solutions standard
Design code
Building appearance
Set of rules for determining the visual
appearance of buildings in standard
and comfort class in accordance with
Etalon Group’s standard patterns
� the grid forms modular cells in
� Assignment of all finishing materials
steps specified by the architectural
along the facade planes
solution standard
� each cell has its own function
Library of elements
� Database of standard architectural
elements (windows, curtain walls,
balconies, entrance lobbies)
� Database of facade finishing
materials
Database of typical
patterns
� LEVEL 1. Pattern for the main
materials for facade finishing
� LEVEL 2. Pattern for the placement of
architectural elements
� LEVEL 3. Pattern for finishing cells
Assessment
Preliminary calculation of the cost per
sqm of the facade
120120
11ANNUAL REPORT 2022 7
SuStAInABILItY
AnnuAL rEPort 2022
Customers’ personal
data protection
Protection of the Company’s
information systems
As the construction industry becomes increasingly digitalised,
the risks associated with cybersecurity are growing. The storage
of large amounts of information about properties in electronic
form, including technical, financial, confidential and other
data, as well as the processing of the personal data of our
customers raises questions about the construction industry’s
potential increased vulnerability to hackers. That is why we
pay a great deal of attention to protecting our own data and
that of our customers by improving cybersecurity. Maintaining
data confidentiality and creating secure channels for data
transmission are of paramount importance to us.
Etalon Group’s Security Division is responsible for developing
policies and standards as well as for implementing them and
putting the necessary information infrastructure in place.
When collecting, processing and storing personal data, the
Company is guided by the laws of the Russian Federation
and its own by-laws. In order to ensure the confidentiality of
customer data, Etalon Group adheres to the following key
documents on information security:
� Information Security Policy
� Personal Data Processing Policy
� Information Security Standards
� Methodological Instructions and Requirements Relating to
Information Security
� Information Security Concept
THE BEST INDUSTRY SOLUTIONS AND STATE-OF-THE-
ART SOFTWARE ARE USED TO ENSURE THE PROTECTION
OF INFORMATION, INCLUDING PERSONAL DATA:
� Protection against unauthorised or unlawful access
� Centralised anti-virus protection
� Firewalling
� Data leak prevention system
� Data classification system
� Data backup and recovery system
In addition, software is being introduced to manage information
security events.
Etalon Group’s Security Division successfully countered
external cyber threats during the reporting year. The
information security department processed more than
1,000 negative events that could have posed a threat to
cybersecurity. No fewer than 10 of them were classified as
highly pernicious incidents, and the necessary response
measures were taken in a timely manner, enabling the
Company to avoid suspending any services.
In order to mitigate risks, the Company upgraded the
security measures it deploys to protect against attacks
on its information systems; these measures identified
327 and blocked 254 malicious e-mails, including links to
malware, and also blocked more than 25,000 phishing
messages.
Etalon Group’s Security Division developed and
introduced a staff training system during the reporting
year aimed at raising awareness of various cyber
threats and forms of cyber fraud. To date, 1,500 Etalon
Group employees have successfully completed training
and testing.
78 %
of unsafe email messages blocked by the
Company’s security system
1,500
employees trained and tested on cyber
threats and cyber fraud
121
121
Data protection
and cybersecurity
11ANNUAL REPORT 2022 7
SuStAInABILItY
Business
conduct
At the core of Etalon Group’s corporate culture and
policies are high ethical standards; zero tolerance for
human rights violations, discrimination and corruption;
as well as the principles of fair competition.
The Company has documents in place that enshrine the
fundamental values and principles of corporate behaviour as
well as methods for monitoring the rules of corporate ethics:
� Etalon Group Code of Corporate Ethics
� Regulation on Conducting Tenders
� Anti-corruption Policy
The rules of corporate conduct apply both to relations
between co-workers and to relations with the Company’s
business partners.
The Company operates a hotline for confidential reports
of violations of business ethics and applicable laws as well
as corruption and abuse of power within the Company.
The main goals, objectives and principles of the hotline,
its operating procedures and the distribution of tasks and
responsibilities between Etalon Group divisions and its
subsidiaries are specified in the Regulation on the Hotline for
Countering Fraud, Corruption and Embezzlement.
As of 2022, 100% of employees
and counterparties were briefed
on the company’s requirements
and policies, including human
rights provisions.
Respect for human rights
Etalon Group supports and protects internationally proclaimed
human rights and complies with legal requirements in this area.
In line with high ethical standards, the Company strictly observes and carefully
monitors compliance on the part of its partners with fundamental human rights
enshrined at the Russian and international levels.
Concerning human rights,
the Company is guided
by the following key
external documents:
Laws of the
Russian Federation
The Universal
Declaration
of Human Rights
The principles
of the UN Global
Compact
KEY EXTERNAL
DOCUMENTS
International
covenants on
human rights
The UN Guiding
Principles on Business
and Human Rights
The International Labour
Organization’s Declaration
on Fundamental Principles
and Rights at Work
Etalon Group supports equal opportunities; creates a working
environment free of harassment and persecution; does not
discriminate on the basis of race, nationality, religious beliefs,
gender, origin, age or other grounds; and expects employees
and contractors to treat one another with respect and dignity,
and to integrate these principles into all processes in the value
chain.
The Company does not permit any form of child or forced
labour, and it makes every effort to create favourable working
conditions, to ensure equal pay for work of equal value, to
protect families and mothers, and to enable rest and leisure,
education, and participation in cultural and sporting life.
All employees and contractors are required to familiarise
themselves with the human rights provisions included in
Etalon Group’s main policies regarding corporate ethics and
anti-corruption.
In addition, when screening contractors and suppliers, the
Company’s Security Division conducts procedures to confirm
that they have an impeccable reputation and follow fair
business practices.
no human rights violations
were identified within Etalon
Group in 2022.
122122
11ANNUAL REPORT 2022 7
SuStAInABILItY
Respect for human rights
Etalon Group’s main impacts in the
area of human rights
1
2
3
As an employer, the Company:
As a developer, the Company:
As a contractor, the Company:
the main provisions and regulations reflecting
Etalon Group’s fundamental approach to
ethical and social values, including human
rights, are listed in the corresponding sections:
Code of Corporate Ethics
� ensures compliance with industrial safety requirements
Anti-corruption
� cares for the environment
� ensures decent working conditions
� is responsible for protecting the environment
� prohibits the use of child and forced labour
� ensures that work is performed in a safe manner
� prevents discrimination and harassment
� develops infrastructure, including social amenities, that respects
� ensures work–life balance
equal rights and opportunities
THESE PRINCIPLES ARE OBSERVED THANKS TO:
THESE PRINCIPLES ARE OBSERVED THANKS TO:
� strict compliance with the law, in particular the provisions of the
� compliance with environmental laws, including by conducting
Labour Code
� decent wages based solely on professionalism
� the development of human resources
� equal conditions for career growth and salary increases regardless
of gender, age, religion, skin colour or other factors
� support for employees in difficult life circumstances or upon the
birth of a child (flexible working hours, material assistance, social
benefits)
environmental impact assessments and taking measures to limit
the impact on the environment at all stages of a project
� use of resource-efficient equipment as well as environmentally
friendly materials and technologies
� collaboration with leading experts and local residents for optimal
project development (for example, the Generation ZIL platform,
which enables open discussions concerning the Zil-Yug project)
� construction of commercial infrastructure and social amenities,
including schools and preschools
� a wide range of convenient, high-quality services for tenants
THESE PRINCIPLES ARE OBSERVED THANKS TO:
� compliance with high standards of occupational health and
safety as well as environmental safety
� compliance with and continuous monitoring of the
sustainability of the supply chain (a high degree of
environmental, social and financial responsibility on the
part of partners as well as their compliance with legal
requirements), including through the competitive selection of
partners and a formalised screening system
CHANNELS OF COMMUNICATION ON
HUMAN RIGHTS VIOLATIONS:
CHANNELS OF COMMUNICATION ON
HUMAN RIGHTS VIOLATIONS:
� the Company’s specialised services: HR, security, etc.
� the Etalon Group hotline (anonymous reporting is possible)
� the Etalon Group hotline (anonymous reporting is possible)
� the service company’s call centre
� the Corporate Conduct Officer
CHANNELS OF COMMUNICATION ON
HUMAN RIGHTS VIOLATIONS:
� the Etalon Group hotline (anonymous reporting is possible)
Employees
Occupational health and safety
Environment
Social responsibility
Responsible supply chain
123
11ANNUAL REPORT 2022 7
SuStAInABILItY
Code of Corporate Ethics
compliance with the principles of business ethics
Parties involved in handling ethical issues
Monitoring
bolsters Etalon Group’s reputation today and supports
the company’s future sustainability.
Handling matters of corporate ethics
The Code of Corporate Ethics reflects the commitment of
Etalon Group and its management to high ethical standards of
business conduct (conducting business openly and fairly); these
standards were designed to improve the corporate culture, to
ensure adherence to best corporate governance practices and
to protect the business reputation of Etalon Group companies.
Issues related to the clarification and monitoring of compliance
with the Code of Corporate Ethics are the responsibility of
Etalon Group management and the Corporate Conduct Officer.
In 2022, no conflicts of
interest were identified within
the company.
Group ethics guidelines
1
Board of Directors and CEO
� Setting policies and standards
� Providing a personal example of high standards in terms
2
HR Management Division
� Informing all employees about the Code of Corporate
Ethics and other standards of corporate conduct
of the corporate management culture
� Conducting training and reviews on issues relating to
ethical behaviour
3
4
Security Division, Corporate Conduct Officer
Internal Audit Service
� Providing advice on corporate ethics and
� Monitoring compliance with by-laws
conflicts of interest
� Analysing violations and formulating conflict resolution
� Registering and responding to violations
measures
Trust
Professionalism
Openness
Impartiality and
objectivity
Respect for
people
Zero tolerance for
corruption and unfair
competition
In order to verify compliance on the part of employees with the
Company’s corporate ethics principles, Etalon Group conducts
ethics reviews. When undergoing a review, employees complete
a Declaration on Ethics and Conflicts of Interest in the form
of a questionnaire. The questionnaires are then analysed and
a report is generated with suggestions for conflict resolution
measures, which is sent for review to the CEO and the Chairman
of the Board of Directors.
Advice and whistle-blowing
For advice or to report violations of corporate ethics, Etalon
Group employees may contact their immediate supervisor,
the Corporate Conduct Officer or the hotline. The Company
guarantees confidentiality in respect of any person reporting a
violation of corporate ethics. Based on the reports received by
the Corporate Conduct Officer, a decision is made aimed at
preventing violations of corporate ethics, eliminating conflicts of
interest or explaining the procedure for applying the Code. The
Officer may convene a commission on corporate conduct to
address challenging situations.
In the event of a violation of internal regulations by a Company
employee, disciplinary measures are applied to the 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.
Hotline
Since 2020, the Company has been operating a hotline for
combating fraud, corruption and embezzlement. In 2022, the
hotline received 15 reports, including one from a Company
employee. All reports were carefully reviewed; six of them were
recognised as violations on the part of Company employees.
Following an official investigation in each case, precautionary
steps were taken, ranging from preventive measures
to dismissal.
124
11ANNUAL REPORT 2022 7
SuStAInABILItY
Anti-discrimination policy
Anti-corruption policy
In addition to russian laws, Etalon Group’s internal
the Group has a strict zero-tolerance policy for corruption in all its forms and manifestations in
policies, including the code of corporate Ethics and
its relations with all stakeholders: shareholders and investors, counterparties, representatives of
the regulation on conducting tenders, are aimed at
government agencies, subsidiaries, employees and others.
countering discrimination.
In all its activities, Etalon Group takes a zero-tolerance
approach to discrimination in all its forms, including on the
basis of age, race, ethnicity, gender or any other grounds. The
Company also prohibits any form of harassment, including
sexual harassment and coercion in verbal, written, visual,
physical or other form.
Employees’ career growth, as well as their salary, benefits and
bonuses, depends solely on their professional competencies.
The Company encourages so-called work dynasties, where
professional skills are passed down from one generation to the
next, but prohibits protectionism based on nepotism, limiting
cases of direct or indirect subordination involving relatives.
Cases of discrimination can be reported to the Corporate
Conduct Officer through official communication channels –
for example, by contacting the hotline. The Company
guarantees anonymity and that there will not be any negative
repercussions for the career of employees who contact the
Corporate Conduct Officer.
In 2022, no cases of
discrimination were identified
within the company.
Regulatory framework
Anti-corruption management system
Etalon Group’s anti-corruption policy is based on the following guidelines and regulations:
Management principles
Etalon Group and its management are committed to
improving corporate governance practices and the corporate
culture, thus maintaining its excellent business reputation. All
Company employees, regardless of their position, must comply
with the requirements of the Code of Corporate Ethics and the
Anti-corruption Policy.
Etalon Group welcomes and encourages compliance with
the requirements of its anti-corruption policy on the part of
counterparties and other third parties, and also strives to
advance a culture of anti-corruption within the Company and
in society in general. Notably, the Company conducts its anti-
corruption efforts in cooperation with state and regulatory
authorities as well as with local communities and associations,
partners and counterparties.
Criminal Code of the
Russian Federation
Code of Administrative Offences of
the Russian Federation
Federal Law on
Combating Corruption
Etalon Group Code of
Corporate Ethics
Etalon Group
Anti-corruption Policy
Etalon Group has established several anti-corruption
goals. First, the Company is committed to minimising the
risk of involving Etalon Group itself or members of its Board
of Directors, its CEO or its employees in corrupt activities,
including by:
� clarifying the provisions of anti-corruption laws and
Company by-laws
� enshrining official obligations to comply with them
� developing procedures to prevent corrupt practices
Second, in its relations with shareholders, the investment
community, counterparties, members of management bodies,
employees and other parties, Etalon Group is committed to
creating a company brand with zero tolerance for corruption in
all its form and manifestations.
In accordance with the Group’s Anti-corruption Policy, senior
executives demonstrate how to meet these standards by
setting an example through their own ethical behaviour.
The CEO of Etalon Group is responsible for orchestrating all
measures aimed at living up to the principles and requirements
of the anti-corruption policy, including the appointment of
individuals responsible for the development, implementation
and oversight of anti-corruption procedures. In addition to
communicating to employees the importance of avoiding
corrupt activities, Etalon Group conducts integrity due diligence
in relation to all counterparties.
Members of the Board of Directors and of Board committees as
well as all Etalon Group employees, regardless of their position,
are personally responsible for compliance with the principles
and requirements of the anti-corruption policy as well as for
actions or omissions on the part of their subordinates that
violate these principles and requirements.
125
11ANNUAL REPORT 2022 7
SuStAInABILItY
Anti-corruption policy
Monitoring and risk assessment
HR management
Effecting payments
Etalon Group regularly monitors compliance with anti-
corruption procedures, including through periodic audits by the
Internal Audit Service. To protect potentially vulnerable business
processes, the Company periodically updates its industry-
specific corruption risk factors, and develops and incorporates
suitable corruption prevention procedures to respond to
identified risks.
Working with counterparties
Etalon Group makes reasonable efforts and takes measures
to avoid entering into business relations with unreliable
counterparties and to avoid getting involved in corrupt
activities. To do this, the Company scrutinises each
counterparty’s business reputation, adds anti-corruption
clauses to contracts and finds out whether a counterparty has
its own policies regarding ethics and corruption.
When joining organisations and associations as well as joint
ventures, the Company strives to comply with anti-corruption
principles and requirements. Etalon Group advocates the
adoption of similar anti-corruption policies in joint ventures,
organisations and associations in order to prevent or uncover
violations so as to avoid the Group’s involvement in corrupt
activities.
According to the Code of Ethics, all suppliers and contractors
working with the Company must be familiar with Etalon Group’s
anti-corruption policy.
In addition to carrying out integrity due diligence in respect of
counterparties, the Company also considers the professional
reputation of applicants for vacant positions. When signing an
employment contract, employees are required to familiarise
themselves with the Code of Corporate Ethics and Anti-
corruption policy.
Participation in charitable activities
and sponsorship
Etalon Group does not finance charitable or sponsorship
projects in order to obtain commercial advantages in specific
Company projects.
Social and political activities
and dealings with government officials
Etalon Group does not participate in the activities of political or
religious organisations and does not finance their activities.
The Company does not make facilitation payments to
government authorities, public officials or others, and also
refrains from covering any expenses for or on behalf of
government officials or their close relatives or in order to obtain
commercial benefits for Etalon Group projects.
In combating corruption, Etalon Group cooperates with
state and regulatory bodies as well as with companies and
associations, partners and counterparties.
Informing contractors about the anti-corruption policy in 2022
NUMBER OF COUNTERPARTIES INFORMED ABOUT THE
COMPANY’S ANTI-CORRUPTION POLICY AND PROCEDURES
MOSCOW
ST PETERSBURG
OTHER REGIONS
Number of suppliers
Number of contractors
1,811
2,409
1,782
2,030
234
190
TOTAL
3,827
4,629
Etalon Group does not solicit its representatives or other
third parties to perform any actions that contravene its anti-
corruption policy or applicable anti-corruption laws, and it also
does not effect payments if there is reason to believe that all or
part of said payments will be used for corrupt purposes.
Information sharing and training
The Company is open about its stance against corruption;
welcomes compliance with the principles and requirements
of its anti-corruption policy on the part of all counterparties,
employees and other individuals and entities; and promotes
advancements in its anti-corruption culture through information
sharing and training. Introductory training is conducted for
new employees, and periodic information seminars are held
in person or remotely for existing employees. Ethics reviews
are conducted annually for senior executives and middle
management.
Any employee, customer, partner or person not related to
the Company who has information regarding employees or
counterparties of Etalon Group involved in corrupt behaviour,
violations of business ethics or of Etalon Group policies and
procedures, violations of applicable laws, or other violations
or abuses of office may report such violations through the
available channels, including Etalon Group’s hotline for
combating fraud, corruption and embezzlement.
In 2022, Etalon Group’s hotline received and resolved four
reports concerning abuse of power. That said, no cases of
corruption were identified.
Responsibility for compliance
with the anti-corruption policy
According to Etalon Group’s anti-corruption policy, an internal
investigation is initiated in response to any reasonably justified
suspicion or established fact of corruption. Employees found
guilty of violating anti-corruption laws or the Company’s anti-
corruption policy may be subject to disciplinary action as well
as other forms of liability in accordance with applicable law.
Audit, control and reporting
Etalon Group conducts internal and external audits on a
regular basis in order to verify that information concerning the
Company’s financial and operating position in its accounting
and other systems is complete and accurate and also in
compliance with Company by-laws and legal requirements.
Audits verify the implementation of key business processes,
confirm that payments have been made and review their
rationale and legality, and also check compliance with anti-
corruption requirements.
Compliance on the part of employees and contractors with
the principles and requirements of the anti-corruption policy is
subject to review by senior management.
no cases of
corruption were
identified in 2022.
126
11ANNUAL REPORT 2022 7
SuStAInABILItY
Responsible
supply chain
when procuring works, services, materials and
equipment, Etalon Group prefers to choose
counterparties through a competitive selection
procedure and arranges uninterrupted supplies
with due regard for cost-effectiveness and
production efficiency.
ETALON GROUP’S KEY PROCUREMENT PRINCIPLES AND
APPROACHES TO COMPLIANCE WITH THOSE PRINCIPLES:
� fair competition, by conducting procedures aimed
at creating a reasonable level of competition among
potential participants
� equal treatment of and a uniform approach to all
participants in the procurement process, by establishing
equal competitive opportunities and uniform rules for all
participants before the procedure begins
� economic feasibility, by assessing the need for
procurement at any stage of procurement activities
� transparency of the procurement procedure, by enabling
procurement oversight at any stage
Procurement management
Etalon Group has a central unit that is responsible for
issues related to its procurement activities: the Tender
and Procurement Department, which is part of the Cost
Control and Procurement Division. The department
includes regional tender services (Moscow, St Petersburg
and other regions) as well as the Department for Tender
Accreditation and Oversight.
The department develops and approves the
procurement methodology, initiates and conducts
procurement procedures in the Company’s various
business streams, and provides methodological support
to all Group subsidiaries and structural units. In order to
achieve operational efficiency, the Group’s subsidiaries
also have procurement units.
CENTRALISED GROUP
PROCUREMENT
LOCAL PROCUREMENT
WITHIN SUBSIDIARIES
Etalon Group Cost Control and
Procurement Division
Tender and
Procurement Department
Tender service —
Moscow
Tender service –
St Petersburg
Tender service –
regional markets
Department
for Tender
Accreditation and
Oversight
Subsidiaries’
procurement units
127127
11ANNUAL REPORT 2022 7
SuStAInABILItY
Regulatory framework and
approach to procurement
Approach to the selection of suppliers and contractors
and to procurement planning
Since ensuring the fair selection of contractors is the
core principle of Etalon Group’s procurement activities,
the Company selects suppliers and contractors on a
competitive basis. The applicable laws of the Russian
Federation provide the basic rules for relations with
counterparties in the procurement process.
The by-law regulating tenders is the Regulation on
Conducting Tenders within Etalon Group, the main purpose
of which is to avoid violations of antitrust law and unfair
competition, as well as to oversee the selection of suppliers
of materials, works and services. The Regulation contains
requirements for companies participating in procurement
procedures in order to ensure that all participants in the
process comply with the principles of due diligence.
The Tender Committee, an Etalon Group
standing committee, helps ensure open
competition between counterparties and helps
determine the Group’s optimal conditions for
collaboration. The Tender Committee appoints
experts on specific issues and determines the
winners of competitive tenders. The Committee
is also authorised to select a reserve winner
in case the company that wins the tender
decides not to sign a contract.
To keep a record of the Company’s
relations with each counterparty and
to assess its performance, Etalon Group
creates a dossier for every counterparty
in the Register of Accredited Contractors
and Suppliers.
Etalon Group prepares a quarterly
tender schedule for the purposes of
procurement planning. In 2022, the procedures
were updated to include an improved methodology
for determining the procurement plan for the entire
Group, and oversight of implementation of the
plan was bolstered in order to identify the reasons
for any potential deviations from the plan. Posting
the schedule in the public domain ensures that the
Group’s procurement procedures are transparent
and accessible to all market participants.
1
3
5
2
4
After undergoing standard vetting, all
candidates for participation in tender procedures –
if they meet all the requirements – are added to
Etalon Group’s Register of Accredited Contractors
and Suppliers.
Then, once a quarter, the Company conducts random
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 Etalon Group.
Based on a decision of Etalon Group’s Board of
Directors in 2022, measures were initiated to develop
a new regulation on the Group’s procurement
activities, for which a working group was formed
from specialised units for the purpose of improving
and developing the business processes involved in
procurement activities with due regard for the main
market development trends and challenges.
The new regulation will
contain more stringent
requirements for participants
in procurement procedures
and a methodology for
conducting procurement
through electronic trading
platforms. In addition, the
concept of categorised
procurement management
and sustainability and social
responsibility measures (ESG
principles) will be taken into
account for the first time
when selecting suppliers.
128128
11ANNUAL REPORT 2022 7
SuStAInABILItY
Procedure for screening suppliers and contractors
To ensure that procurement is competitive, Etalon Group establishes additional criteria for
assessing counterparties in terms of their technical and functional capabilities as well as financial
and economic requirements. In 2022, together with Etalon Group’s oversight units, new, more
stringent requirements were developed and incorporated in the form of qualifying benchmarks.
In 2022, the Group’s list of potential suppliers included more
than 7,000 counterparties, 1,751 of which were included in the
Register of Accredited Contractors and Suppliers and entitled
to participate in Group tenders worth RUB 3 million or more.
1
2
3
4
5
THE VERIFICATION AND SELECTION
OF COUNTERPARTIES ARE CARRIED
OUT IN SEVERAL STAGES:
An initial review of the supplier on
the basis of a questionnaire and
also on the basis of open and
accessible information about the
counterparty.
The standard review by the
Economic Security Department
is aimed at identifying risks and
confirming trustworthiness in the
context of counterparties’ financial
and economic activities, as well
as confirming that a counterparty
has the necessary experience,
permits and special-purpose
authorisations.
1,751
+27 %
The Register of Accredited
Contractors and Suppliers
includes 1,751 counterparties
year-on-year thanks to regional
expansion and diversification of
the supplier pool
The accreditation of
counterparties is aimed at
populating and updating Etalon
Group’s Register of Accredited
Contractors and Suppliers, and it
provides an accredited company
with an opportunity to participate
in Etalon Group tenders worth
RUB 3 million or more.
Decisions to add counterparties
to or remove them from the
register is taken by the standing
Accreditation Committee, which
includes the heads of Etalon Group
companies and specialised units.
Etalon Group’s Tender and
Procurement Department monitors
the fulfilment of obligations on the
part of counterparties selected
through procurement procedures.
Reviews of counterparties are
carried out according to the
key criteria, such as quality,
compliance with deadlines,
safety, fulfilment of contractual
obligations, and whether or
not they have any outstanding
accounts receivable owing to
Etalon Group companies.
The Department consolidates
information on each counterparty
and keeps a record of it in
company dossiers.
Companies from the Register
of Accredited Contractors and
Suppliers that have enjoyed
long-term, mutually beneficial
partnerships with the Group may
be considered for inclusion in
the Group’s Register of Strategic
Partners.
The decision to add a company
to or remove it from the Register
of Strategic Partners is made by
Etalon Group’s Board of Directors.
129129
11ANNUAL REPORT 2022 7
SuStAInABILItY
Minimisation of ESG risks
in the supply chain
Supply structure
Etalon Group pays close attention to compliance on the
part of its suppliers and contractors with established
requirements in the areas of fire and industrial safety,
occupational health and safety, waste and natural resources
management, and public health. The Company does a
lot of work to monitor compliance with these requirements
and purchases materials exclusively from environmentally
responsible suppliers that have been duly certified.
Progress in minimising ESG risks in the
supply chain in 2022:
� Codes of business ethics were developed and introduced
for suppliers and contractors, stipulating that the Group’s
partners must comply with sustainability principles.
Violators of these requirements are subject to the
penalties provided for in the corresponding contracts,
including possible removal from the Group’s Register of
Accredited Contractors and Suppliers.
� A safety standard for construction sites was developed
and incorporated; in accordance with the applicable
methodology, the standard determines the level of safety
at a particular property, and it also reinforces the basic
requirements of laws on safe working practices and
environmental protection.
Etalon Group carries out centralised procurement through its
Tender and Procurement Department, while local procurement
is carried out by the tender divisions of Etalon Group
companies. The Group’s procurement activities are conducted
through direct interaction with counterparties, without
intermediaries.
In 2022, the Group continued taking steps to centralise its
procurement. In this context, by-laws aimed at centralising
the procurement of construction materials, works and services
were developed and approved. As a result, up to 90% of the
Company’s core construction materials (depending on the
region and the project) are procured centrally through UPTK-
Etalon, a Group-wide trading company.
The development of centralised procurement and regional
expansion led to a 13% year-on-year increase in Etalon Group’s
procurement volume in 2022.
Supply chain
SUPPLIERS
Moscow
Number of local suppliers
Number of other suppliers
St Petersburg
Number of local suppliers
Number of other suppliers
Other regions
Number of local suppliers
Number of other suppliers
Group total
Local suppliers
Other suppliers
2020
2021
2022
495
26
537
67
-
-
1,032
93
644
41
637
56
-
-
1,281
97
745
65
710
75
128
28
1,583
168
90 %
of the Group’s core construction
materials are purchased centrally
through a Group-wide trading
company
90.6 %
of procurements made from SMEs
Procurement structure in 2022
71 %
Contract work
Procurement volume, RUB mln
31,836
38,204
43,335
Procurement volume
PROCUREMENT, RUB MLN
Procurement volume, RUB mln
Including the volume of procurement from small and medium-sized enterprises (SMEs),1 RUB mln
Number of SME suppliers
1 Companies with up to 100 employees.
2020
2021
2022
31,836
25,955
731
38,204
43,335
31,146
923
39,261
1,187
23 %
Materials
6%
Other procurements,
including services provided
by monopolies
130
11ANNUAL REPORT 2022
7
SuStAInABILItY
Procurement automation
Challenges in 2022
Relations with suppliers and contractors
one of the company’s strategic priorities is to
In March 2022, the construction industry entered
In order to improve the procurement process,
� The hotline on the Group’s website
automate and digitalise its procurement activities.
a challenging period, partly in connection with
establish beneficial collaboration and improve
In 2022, the automation of the centralised procurement of
materials continued:
� Thanks to the introduction of specialised software for
automated processing of applications to supply materials,
up to 95% of applications were transferred to the Company’s
digital ecosystem, which increased the speed of application
processing by 24% and reduced personnel costs by 9%.
� In conjunction with the Project Oversight and Analytics
Department, a project was launched to automate
procurement procedures using 1C software. In 2022, the
Company digitalised tender procedures for a number of stock
item groups as well as construction and installation works.
� In November 2022, following testing, providers of the largest
electronic trading platforms were approved for use for Etalon
Group’s procurement. Under the new Procurement Regulation,
up to 80% of the Group’s procurement will be carried out
through independent electronic trading platforms.
disruptions in logistics and the supply chain.
the quality of services provided by suppliers and
contractors, the company regularly collects
and analyses feedback from suppliers and
contractors, through two main communication
channels:
The Group’s core business units carried out systematic work
to establish new supply chain logistics for materials and
equipment:
� A working group was formed to coordinate and amend the
Group’s existing design solutions in order to take measures to
replace materials with others that were more accessible from
a logistics perspective (import substitution measures).
� Contracts were concluded with customs brokers and
arrangements were made for supplies of construction
materials and equipment from countries such as China and
Turkey.
� A large amount of experience was gained in terms of
successful supplies of materials from China and Turkey.
Thanks to the effective implementation of the above steps,
the Group currently has very little dependence on materials
supplied mainly from European countries.
� A checklist that contractors complete after fulfilling a contract.
The checklist gives contractors and suppliers space to add all their
comments and recommendations concerning their collaboration
with Group divisions and companies; that feedback is then taken
into account in order to create conditions for mutually beneficial
cooperation
2022
AUTOMATION
RESULTS
95 %
of material requisitions
are processed through
the Company’s digital
ecosystem
24 %
increase in the speed of
application processing
UP TO 80 %
of the Group’s
procurements will be
carried out through
independent electronic
trading platforms
To ensure the quality of services provided by contractors and the overall
development of professionalism in the industry, the Company regularly
conducts training activities:
1
2
3
The Group’s partners provide
training for contractors on the use
of new materials and equipment
when delivering supplies to
properties.
Etalon Group’s Quality Department
and Testing Laboratory arrange
training for contractors where
specialised departments
demonstrate the standard way to
perform certain types of work in
accordance with regulatory and
technical documentation.
Specialised training for staff
regarding equipment installation is
carried out by the manufacturer’s
technical experts.
131131
11ANNUAL REPORT 2022
7
SuStAInABILItY
Risk
management
In connection with the current geopolitical
situation and sanctions imposed on russia and
russian companies, a number of risks – mainly
macroeconomic as well as operational and
financial – were realised during the reporting
period. the fast-changing environment was the
driver behind the rapid transformation of the
company’s business and improvements to its risk
management system. Based on the realisation of
negative scenarios and market uncertainties, Etalon
Group developed additional measures to prevent
or reduce negative impacts, including approaches
to project financing, changes to supply chains and
efforts to reduce production costs, etc.
Approach to risk management
Integrated risk management system
Risk management methodology
Etalon Group’s risk management complies with the
generally accepted conceptual framework for risk
management.
Risk management is carried out as part of the core
function of all Etalon Group employees, which includes
the identification, analysis, assessment and prioritisation
of risks as well as the development and implementation
of a set of procedures for responding to risk events and
monitoring the effectiveness of the risk management
process.
Risk management is an integral part of Etalon Group’s
strategic management, operational management,
business planning and investment activities.
Risk management is aimed at providing a reasonable
guarantee that the Company will be able to achieve its
strategic goals and maintain its risk level within limits that
are acceptable to the Company’s management.
Development of the risk management system is one
of the factors involved in improving the quality of
strategic management decisions during a period of high
uncertainty, and making it possible to identify, monitor
and minimise the negative impact of critical risks on the
Company’s activities during periods of high volatility.
THE RISK MANAGEMENT SYSTEM
INCLUDES THE FOLLOWING:
� aligning the Company’s risk appetite with its strategy,
ensuring that management takes the Company’s risk
appetite into account when assessing options for
strategic development, setting goals accordingly and
developing mechanisms for managing the associated
risks
� improving risk management decisions, taking a
careful approach to ensure that the risk management
methodology chosen is suitable
� reducing the number of unforeseen events and
losses in business activities by improving the ability to
identify potential events and to establish methods for
managing them
� identifying and managing the full range of risks by
responding effectively to interdependent risks and
applying a uniform methodology to manage repeated
risks
� improving capital utilisation by obtaining reliable
information on risks in order to make an impactful
assessment of the total capital requirements and to
improve how capital is utilised
Etalon Group’s risk management principles
Integrated approach
Continuity
Feasibility
The Company takes a systematic approach to managing
all types of risks inherent in its business. Etalon Group
supports cross-functional interaction and coordination
of business units when managing risks outside their
specialisations, while also taking into account the interplay
of risks facing different units. A single channel is in place for
informing management about the entire spectrum of risks
in order to ensure that the information provided for each
decision-making level is complete, sound and comparable.
Implementing a set
of consistent risk
management procedures
on a regular basis.
Analysing the ratio of the
cost of reducing a risk to
the potential damage
from its realisation.
Etalon Group’s management is constantly improving the
methodology for the company’s risk management system.
Risk avoidance
Risk avoidance/aversion means refusing to perform certain actions or
forgoing high-risk assets. Risk avoidance is applied in exceptional cases
as a way to cover risks and where the cost of risk treatment is too high, or
where such treatment would not reduce the risk to an acceptable level,
and also where the risk cannot be passed on to a third party or when
doing so would not have the desired impact.
Risk reduction
Risk control and prevention are a means of risk management that implies
risk retention alongside active risk treatment on the part of the Company.
Measures are aimed at reducing the probability of the occurrence of a risk
event as a preventive measure and/or reducing the potential damage
from the occurrence of a risk event to an acceptable level that is in line
with Etalon Group’s risk appetite. Risk reduction is the risk management
priority by default.
Risk acceptance
Accepting a risk without treatment as a means of risk coverage is used in
cases where the risk is at an acceptable level or where treatment of the
impact is impossible or costly.
Risk transfer
Risk transfer is carried out in cases where treatment using Etalon Group’s
available resources is impossible or economically unjustified, and where
the level of risk exceeds the Company’s permissible level. Risk transfer can
be carried out through insurance, hedging, outsourcing, etc.
132132
11ANNUAL REPORT 2022 7
SuStAInABILItY
Compliance system
Etalon Group’s main objectives are to be highly
competitive in its target market segments, combining
economic success with social responsibility, which is
inextricably linked with the need to operate in line with
the compliance system for managing compliance risks.
The compliance system is a set of elements that are part
of Etalon Group’s corporate culture, values and ethics,
organisational structure, and rules and procedures regulated by
the Group’s corresponding by-laws, and its policy for managing
risk management and counteracting threats, all of which ensure
that Etalon Group’s employees adhere to the Company’s
compliance principles regardless of their position.
An integral part of the compliance system is the organisational
structure, ethical standards for conducting business in an open
and honest manner, adherence to best corporate governance
practices and maintaining Etalon Group’s business reputation at
the appropriate level.
THE COMPLIANCE
SYSTEM’S MAIN
OBJECTIVES ARE
AS FOLLOWS:
to ensure that Etalon Group’s
to manage compliance risks that
activities comply with the applicable
arise in the course of Etalon Group’s
legal requirements, internal
standards and other binding
documents
activities
Areas of
compliance:
Anti-corruption compliance
Tax compliance
Covers the risks of the commission
Covers tax risks and helps configure
of anti-corruption offences by
employees, the likelihood of
business processes to ensure that
they are in line with frequently
involving the Company (through its
changing regulatory documents
employees) in situations connected
from the Federal Tax Service and the
with a risk of legal violations or loss
Ministry of Finance.
of reputation.
Construction compliance
Data protection compliance
Procurement compliance
Aimed at creating mechanisms
for protection against failure to
Prevents information leaks, insider
Facilitates the creation of an open
trading and market manipulation,
and transparent procedure for
meet deadlines and substandard
protects against the actions of
selecting contractors on the most
workmanship, prevention of safety
unfair competitors, and ensures the
favourable terms for Etalon Group
violations, and non-compliance
protection of personal data.
and promotes competition.
with occupational health and safety
requirements.
Legal compliance
Antitrust compliance
Aimed at avoiding lost profit for
Covers the risks of negative
the Company. It is carried out by
repercussions associated with
analysing the compliance of the
antitrust violations (including when
Compliance in the area
of labour relations and
management of conflicts of
interest
Company’s activities with the
dealing with securities); is aimed
Facilitates oversight of compliance
applicable laws and identifying risks
at identifying violations by the
with labour law on the part of both
of failure to comply with contractual
Company, and not by the regulator;
staff and management; stipulates
obligations and of facing civil and/
helps to prevent or considerably
the procedure for identifying and
or administrative liability.
reduce the risks of prosecution
resolving conflicts of interest, with
and of the resulting costs for the
the Company’s interests taking
Company for the payment of fines
precedence over personal interests.
and legal fees.
133133
11ANNUAL REPORT 2022 7
SuStAInABILItY
Compliance system
In order to develop its compliance system,
Etalon Group took the following measures in 2022:
Etalon Group’s next steps to
improve its compliance system
1
2
3
IN THE AREA OF
TAX COMPLIANCE:
Developed a tax clause – a condition
requiring that the parties to a contract
comply with the requirements of tax laws
and stating the consequences of violations
of this obligation
A FOUNDATIONAL
DOCUMENT
WAS PREPARED
Draft Etalon Group
Compliance Policy
DATA
PROTECTION
COMPLIANCE
The Regulation on Personal Data Processing
within JSC Etalon Group was approved
(order No. 80 of 3 September 2021).
The Policy of Etalon Group JSC on Personal
Data Processing was approved (Order No.
80 of 3 September 2021).
Consent forms for the processing of
personal data were updated.
A new consent form for the processing
of website users’ personal data was
introduced.
The inclusion of a tax clause in contracts
with counterparties will provide
additional grounds for reimbursement
of losses incurred by Etalon Group
companies that could arise as a result of
the improper fulfilment of tax obligations
on the part of any of the counterparties
within a chain of transactions.
This document stipulates the main
principles and objectives of the
compliance system, which are aimed
at preventing the risk that Etalon
Group companies will be held liable on
account of non-compliance with legal
requirements.
As a result of the implementation of
these measures, all existing legislative
innovations and law enforcement trends
at the time of approval were taken into
account; the list of duties of the person
responsible for personal data processing
was expanded, and the person
responsible for personal data processing
was appointed.
developing regulatory
documents in the above-
mentioned and new areas of
compliance
Making additions to
training and informing Group
Analysing the results of the
employment contracts and
employees: familiarising
implementation of these
job responsibilities
employees with by-laws,
conducting training
and providing individual
consultations
by-laws
conducting regular
Building a system for
Implementing a compliance
monitoring, auditing activities
managing compliance risk
system at all Etalon Group
and analysing the results
companies
134
11ANNUAL REPORT 2022 7
SuStAInABILItY
Organisation
of risk management
In developing its risk management system,
Etalon Group takes into account the generally
accepted conceptual framework for risk
management:
� ISO 31000, Risk Management – Guidelines
� GOST R ISO 31000-2019, Risk Management – Principles
and Guidelines
� the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) document “Enterprise Risk
Management: Integrating with Strategy and Performance”
(2017)
� the COSO document (concept) “Internal Control –
Integrated Framework” (2013)
� the risk management standards developed by the
Federation of European Risk Management Associations
(FERMA) (2002), which take into account international
practices (including those on risk management related
to compliance with FATCA requirements) and have been
adapted to the business environment that Etalon Group
operates within with due regard for the specifics of the
Company’s activities and management structure
Division of powers concerning risk management
� developing proposals regarding the acceptable level of risk
(risk appetite) when preparing Etalon Group’s strategy, and
making management and investment decisions
� developing and monitoring the implementation of action
plans to prevent, manage or respond to realised risks
� taking part in the external audit process
Functional units implement the Risk Management Policy in their
respective area and ensure timely and robust submissions of
significant risks to management.
In 2022, by decision of Etalon Group’s Management
Board,1 a Risk Management Committee was
established that is responsible for the following:
� developing and coordinating organisational and
administrative documents for the risk management system
� developing a methodology and tools for identifying,
assessing and managing risks
� analysing and clarifying the role and responsibilities of the
Company’s employees and business units involved in risk
management (including the identification of risk owners),
and taking actions to improve their risk management
competencies
� organising the process of establishing and updating of the
list of risks, assessing them in accordance with the applicable
methodology, and preparing and maintaining a risk map
� arranging regular monitoring and the preparation of reports
in the area of risk management
The Board of Directors determines the general requirements
for the risk management system, approves key risk
management parameters (risk appetite), determines Etalon
Group’s strategy and approves the nature and parameters
of acceptable risks when making decisions in the process of
achieving the Group’s strategic goals.
The Board of Directors delegates to the Audit Committee
responsibility for oversight of the effectiveness of risk
management and for making proposals to improve the risk
management system.
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 approved policies.
Etalon Group management (the Management Board)
takes decisions within its remit with due regard for the
risk management parameters approved by the Board of
Directors; takes into account the current list of risks and risk
appetite when developing Etalon Group’s strategy, business
plans and budgets at all levels; determines the need for
resources necessary for managing risks and achieving
strategic and operational goals; and takes measures to
develop a risk management culture within Etalon Group.
1 The Audit, Finance and Risk Committee under the Board of Directors of Etalon Group JSC (the subsidiary that manages the Group’s Russia business).
135
11ANNUAL REPORT 2022 7
SuStAInABILItY
Risk reporting
Etalon Group prepares risk
reports on a regular basis
Internal corporate reporting:
� A risk report for Etalon Group JSC’s Risk Management
Committee: in accordance with the Committee’s meeting
schedule but at least once every six months.
� A risk report for the Audit, Finance and Risk Committee under
Etalon Group JSC’s Board of Directors: as required but at
least once every six months.
� A report for Etalon Group JSC’s Board of Directors: at the
recommendation of the Audit, Finance and Risk Committee,
at least once a year.
Reporting for external users:
� A section on risks for quarterly reports from companies
that are issuers of equity securities as well as during the
preparation of each securities prospectus. The information
in the prospectus / quarterly reports must be disclosed in
accordance with the laws of the Russian Federation on
securities.
� A section on risks for Etalon Group’s Annual Report: once a
year in accordance with the timing for the publication of the
Annual Report.
Risk reporting principles
To manage risks, Etalon Group has developed reporting forms
that meet the following requirements and criteria:
1
2
3
Completeness
� Reporting should cover all possible risk categories
in every area of the Company’s activities.
� The risk management reporting system should
also contain quantitative and qualitative risk
assessments.
Consistency across time and risk categories
� Adherence to a common reporting format and
updates to that format on an established regular
basis.
� The reporting system standards adopted ensure
consistency and adherence to the methodologies
used within Etalon Group and in individual
companies.
Regularity
� Reporting should be prepared in a timely manner,
as scheduled.
� Prepared reports should be provided to Etalon
Group’s management bodies in a timely manner
(according to the level of decision-making).
� The system for reporting on risk events should
be structured in such a way that appropriate
measures are taken in response if necessary.
4
Veracity
� The reporting system should reflect the existing
risk profile as accurately as possible.
Risks
Level of potential impact
Likelihood
EXCHANGE
RATE RISKS
CUSTOMERS’
CREDIT RISK
LIQUIDITY
RISK
NEGATIVE
MACROECONOMIC
TRENDS
INTEREST
RATES
REGIONAL
RISKS
HIGH
M EDIUM
LOW
CHANGING
CONSUMER
PREFERENCES /
MARKET TRENDS
NEW CHANGES
IN REGULATIONS
AVAILABILITY
OF LAND
DIFFICULTIES IN
ACCESSING CAPITAL
AVAILABILITY OF
CONSTRUCTION
MATERIALS
AN INABILITY TO
RECRUIT AND RETAIN
KEY PERSONNEL
ACCIDENTS AT
CONSTRUCTION
SITES
SUBCONTRACTORS
136136
11ANNUAL REPORT 2022 7
SuStAInABILItY
Risks
RISK
HOW IT AFFECTS THE COMPANY
MITIGATION/MINIMISATION OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF POTENTIAL IMPACT
Macroeconomic, industry risks
Negative macroeconomic trends
The deterioration of the financial situation of potential buyers,
� The Group’s highly diversified portfolio of projects in various locations in Moscow and Russian regional markets at various stages of
High likelihood / medium level of impact
a decrease in real disposable incomes, a decrease in consumer
completion.
confidence and a resulting drop in demand for housing; an increase in
the cost of land, materials and labour on the back of inflation.
� Developed sales channels, including a network of the Company’s own sales offices and extensive experience of collaborating with
agents in key regions of operations.
Risks realised
� An established excellent reputation among homebuyers, the perception of the Group as a reliable developer with a quality product
and a high degree of financial stability.
� State programmes to support the construction industry, including state mortgage subsidy programmes: in 2022, the preferential
mortgage programme was expanded and extended until 1 July 2024.
� A wide range of available payment terms (including discounts when paying in full up front, various types of instalment plans, joint
mortgage programmes with banks).
Regional risks
A deteriorated economic situation affecting all market participants in
� The Company conducts market research with due regard for current trends, assesses the growth potential and outlook of regional
High likelihood / medium level of impact
key markets could equally have a negative impact on the Company.
markets in terms of demand and the potential of investment and development activities.
� Maintaining regional diversification in terms of the project portfolio, reducing dependence on individual regions: in 2022, the Group
launched new projects in five high-potential regional markets and became one of the top three nationwide developers with a
Risks realised
presence in at least six regions of Russia.
Changing consumer preferences /
The Company’s ability to manage inventory is intrinsically linked to
� An analysis of development trends in the real estate market and its individual segments, a shift in the structure of the project portfolio
Medium likelihood / medium level of impact
market trends
current and forecast consumer demand. Unanticipated changes in
towards segments with the most stable level of effective demand: since the beginning of 2022, the Company has more than doubled
consumer preferences can have an adverse effect on the business,
its share of mass-market projects, from 29% to 74%.
particularly given long project life cycles in the industry.
� The Company is developing innovative construction technologies in order to implement its portfolio in the mass-market segment as
Risks realised
efficiently as possible.
� Monitoring the real estate market on a regular basis, and developing and periodically reviewing the pricing strategy for the
Company’s projects.
� Developing additional services and new business streams that provide stable revenue and cash collections during periods of
fluctuating demand for real estate.
Regulatory risks
New changes in regulations
The Company operates in a business that is highly regulated; any failure
� The Company monitors any regulatory changes that could affect its business in order to address them proactively and decrease
Medium likelihood / medium level of impact
to comply with regulations might negatively impact the Company’s
associated risks.
operating and financial performance.
Failure to receive timely approval of a project might lead to delays in the
� 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.
development process.
� A sustainable 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.
137
11ANNUAL REPORT 2022 7
SuStAInABILItY
Risks
RISK
HOW IT AFFECTS THE COMPANY
MITIGATION/MINIMISATION OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF POTENTIAL IMPACT
Operational risks
Reduced availability of land
A risk of increased competition among developers for land and a risk
� Confirmed experience and competence in the field of redevelopment, implementation of integrated development projects and
Medium likelihood / medium level of impact
of rising costs for the acquisition of land as well as decreased margins
large-scale investment projects in the area of residential and other construction, which creates greater possibilities for the Group to
in the Company’s main business stream. A reduction in the size of the
select land plots for inclusion in its portfolio.
Group’s land bank as a result of an increase in time spent and financial
costs to replenish the land bank could limit the Group’s ability to support
the launch of new projects and the volume of ongoing construction and
� Expansion of the land bank through inorganic growth thanks to the departure of foreign players and market consolidation on the
part of large companies (in 2022, the Company completed the acquisition of YIT Russia, which included a land bank in five regions,
a library of design solutions and Dispatcher 24, the largest private IT platform in Russia for servicing apartment buildings and service
sales, which would have a negative impact on the Company’s operating
companies).
and financial performance.
� Improving the efficiency of land bank management by improving process management and increasing the number of regions of
operations. In 2022, the Company’s geographic footprint increased to eight regions; gross margin (pre-PPA) reached 38% at the
consolidated level and 43% in the residential real estate development segment in regional markets – above the target level of 35%
envisaged by the business development strategy to 2024.
Risks associated with fluctuations
Increased prices for resources (equipment and materials) and/or services
� Cost controls for the services of contractors and purchases of materials and raw materials on the part of subsidiaries.
High likelihood / medium level of impact
in prices for the main types of raw
as well as for construction and installation works used by Etalon Group
� Reducing production and management costs through the introduction of new design technologies, the digitalisation of procurement,
materials, goods, works and services
companies in the construction process could drive up the production
and construction oversight and management.
used by the Company in its activities
cost of properties under construction and, as a result, diminish the
consolidated financial performance of the Company’s activities.
� Introducing product standards and developing new construction technologies in order to optimise production costs while maintaining
Risk realised
the target consumer features of properties under construction.
Any violation of delivery schedules and volumes could lead to delays
� Creating strategic partnerships with major suppliers of materials, equipment and services.
in the construction of projects, which, in turn, could damage the
Company’s reputation in the eyes of customers and lead to a loss of
homebuyers.
� Using domestic analogues of construction materials and equipment.
� Developing relations with suppliers and manufacturers of construction materials and equipment that continue to ship to the Russian
Federation.
� Selecting the most efficient contractors and equipment suppliers through tender procedures.
� When developing a strategy and conducting efficiency calculations, using conservative forecasts for stress tests and other measures
aimed at improving the Company’s financial stability.
Subcontractors
An inability to find qualified subcontractors and enter into
� The Company uses a tender procedure to identify and select the best suppliers, as well as to create a competitive environment.
Low likelihood / low level of impact
subcontracting arrangements on acceptable terms could lead to an
� The Company constantly monitors and evaluates its suppliers against various criteria.
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.
� 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 the timely delivery of projects.
� The Company conducts comprehensive inspections at the production sites of factories that supply concrete and mortar mixes; all
suppliers are inspected against a comprehensive list of criteria.
� Thanks to its vertically integrated structure, the Company can minimise its dependence on subcontractors in both construction and
service maintenance areas.
138
11ANNUAL REPORT 2022 7
SuStAInABILItY
Risks
RISK
HOW IT AFFECTS THE COMPANY
MITIGATION/MINIMISATION OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF POTENTIAL IMPACT
Accidents at construction sites
Etalon Group operates in the construction industry, where workplace
� The Company complies with relevant health and safety regulatory requirements.
Low likelihood / low level of impact
accidents relating to the Company’s operations could be costly in terms
� All employees attend workshops on occupational safety.
of potential liability and reputational damage.
� 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 improve safety at construction sites, having
developed its own safety index, a tool for monitoring and assessing safety at construction sites. The safety index score at the Group’s
construction sites was 89% in 2022.
� No workplace fatalities; LTIFR decreased steadily from 2020, from 0.56 to 0.36; and TRIR, from 0.11 to 0.07.
Inability to recruit and retain key
Etalon Group’s future success depends on its ability to find qualified
� The Company maintains an extensive talent pool to attract qualified staff for strategically important positions. The pool is developed
Low likelihood / low level of impact
personnel
personnel in various business areas. An inability to motivate key
through direct searches on job sites and cooperation with verified recruitment agencies. The Company looks for sector specialists at
personnel could also have a negative impact on operations.
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.
� Headhunter and Forbes included the Company in their rankings of top employers.
Financial risks
Limited access to financing
Real estate development is a capital-intensive industry, and the
� Long-term reputation as a reliable borrower.
Medium likelihood / high level of impact
Company should always have access to capital to finance its projects.
� The fact that Etalon Group’s controlling entity is considered a strategically important company, which enables it to receive state
support (including subsidies to reimburse the Group for certain categories of costs, tax deferrals, state guarantees) during periods
of economic crises. In the context of economic instability and increased state regulation of the economy, maintaining the status of
Increased risks
a strategically important company lowers the risk of diminished financial stability and enhances the Company’s reputation among
homebuyers, suppliers and creditors.
� A stable financial position, monitoring indicators of financial stability and providing liquidity buffers when planning operations and
taking investment decisions.
� Developing relations with the largest lenders in terms of project financing, and developing comprehensive cooperation programmes
with banks.
� Using a wide range of debt instruments for financing activities (public debt, corporate general-purpose loans, bridge loans, project
debt) along with an optimal financing structure while taking into account the economic parameters and limitations of individual
projects and business streams.
� Considerable balances in escrow accounts, which are the main means of repaying project financing, planning project
implementation with due regard for balancing funds in escrow accounts against project debt.
Liquidity risk
The Company’s failure to meet its financial obligations could result in
� The Company adheres to a conservative financing policy and strives to maintain low debt levels, with a target net corporate debt /
Medium likelihood / high level of impact
operational delays, damage to its reputation, increased credit rates in
pre-PPA LTM EBITDA ratio significantly below the target of 2x. The FY 2022 net corporate debt / pre-PPA EBITDA ratio amounted to 0.8x.
the short term and bankruptcy in the long term.
Increased risks
139
11ANNUAL REPORT 2022 7
SuStAInABILItY
Risks
RISK
HOW IT AFFECTS THE COMPANY
MITIGATION/MINIMISATION OF THE CONSEQUENCES
LIKELIHOOD / LEVEL OF POTENTIAL IMPACT
Customers’ credit risk
The Company could suffer financial losses if customers fail to meet their
� Receivables from customers are secured against sold apartments.
Medium likelihood / low level of impact
contractual obligation on financial instruments used for the purchase of
real estate.
Increased risks
Exchange rate risks
Appreciation of foreign currencies against the rouble could lead to an
� The Company does not have any debt instruments in foreign currencies. Its current debt structure includes bonds denominated in
High likelihood / low level of impact
increased burden for those companies that issued debt instruments in
roubles issued by its subsidiaries LenSpetsSMU and Etalon Finance (formerly Leader-Invest).
foreign currencies. Furthermore, this could lead to a price increase for
� Imported goods make up only a small part of the Company’s business costs.
imported construction materials.
Risk realised
Interest rates
An increase in mortgage rates might limit customers’ ability to finance
� If mortgage interest rates increase or the number of available mortgages decreases, the Company could offer its customers more
High likelihood / medium level of impact
the purchase of new apartments, thus decreasing new sales volume.
instalment payment options.
On the other hand, an increase in the rates on the Company’s
outstanding debt obligations will cause unexpected growth in
expenditures.
� 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.
Risk realised
� The subsidised mortgage programme for families with children, which is available until 1 July 2024, will support mortgage sales amid
double-digit standard mortgage rates.
140
11ANNUAL REPORT 2022 7
SuStAInABILItY
GRI Standards
GRI STANDARD
GENERAL DISCLOSURE
Organisation’s profile
2-1
organisational details
Name of the organisation
Location of headquarters
REPORT SECTION/COMMENTARY
DISCLOSURE
GRI STANDARD
Governance
2-9
Governance structure and composition
REPORT SECTION/COMMENTARY
DISCLOSURE
ETALON GROUP PLC
Parent company ETALON GROUP PLC (Cyprus),
main operating company JSC Etalon Group
(St Petersburg)
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
As of February 2023, Etalon Group was
operating in the following regions of Russia:
Moscow, Moscow region, St Petersburg, Omsk,
Ekaterinburg, Tyumen, Kazan and Novosibirsk
Fully disclosed
Fully disclosed
Fully disclosed
2-13
2-11
2-12
2-19
Governance structure; committees responsible for
economic, environmental and social topics
Composition of the highest governance body and
its committees
Section: Corporate Governance, p. 153
Fully disclosed
Section: Corporate Governance, p. 147
Fully disclosed
Delegation of responsibility for managing impacts
Section: Sustainability – Introduction, p. 76
Fully disclosed
Chair of the highest governance body
Section: Corporate Governance, p. 148
Fully disclosed
Role of the highest governance body in overseeing
the management of impacts
Section: Corporate Governance, p. 145
Fully disclosed
Remuneration policies
Section: Corporate Governance, p. 151
Partially disclosed
Ownership and legal form
Section: Shareholder Interactions, p. 156
Fully disclosed
Stakeholder engagement
2-6
Activities, value chain
and other business relationships
Activities, brands, products and services
Section: About Etalon Group, p. 5
Section: Project Portfolio, p. 33
Markets served, including geographical locations
where products and services are offered, sectors
served, types of consumers and beneficiaries
Section: About Etalon Group, p. 5
Section: Project Portfolio, p. 33
Section: Customers, p. 101
Scale of organisation
Section: About Etalon Group, p. 5
Section: Employees, p. 94
Section: Operating Results, p. 64
Section: Financial Results, p. 73
Fully disclosed
Fully disclosed
Fully disclosed
Supply chain
Employees
Section: Responsible Supply Chain, p. 127
Fully disclosed
Section: Employees, p. 94
Fully disclosed
Statement on sustainable development strategy
Section: Chairman’s Statement, p. 17
Fully disclosed
2-7
Strategy
2-22
Ethics and integrity
2-23
2-26
Policy commitments
Section: Business Conduct, p. 122
Mechanisms for seeking advice and raising concerns
Section: Business Conduct, p. 123
Fully disclosed
Fully disclosed
2-29
Approach to stakeholder engagement
List of stakeholder groups engaged by the
organisation
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.
Section: Stakeholder Engagement, p. 80
Fully disclosed
Section: Stakeholder Engagement, p. 80
Fully disclosed
Reporting practice
2-2
3-1
3-2
2-3
Entities included in the organisation’s sustainability
reporting
Financial Statements, p. 160
Fully disclosed
Process to determine material topics
Section: Sustainability – Introduction, p. 77
Fully disclosed
List of material topics
Section: Sustainability – Introduction, p. 77
Fully disclosed
reporting period, frequency and contact point
Reporting period
Section: About This Report, p. 4
Section: Sustainability – Introduction, p. 76
Reporting cycle (annual or biennial, etc.)
Annual
Fully disclosed
Fully disclosed
Contact point for questions regarding the report
Section: Sustainability – Introduction, p. 76
Fully disclosed
2-5
External assurance
Section: About This Report, p. 4
Fully disclosed
141
11ANNUAL REPORT 2022 7
SuStAInABILItY
GRI STANDARD
Management approach
3-3
Management of material topics
REPORT SECTION/COMMENTARY
DISCLOSURE
GRI STANDARD
REPORT SECTION/COMMENTARY
DISCLOSURE
Explanation of the material topic and its boundary
Section: Sustainability, p. 76
The management approach and its components
Section: Stakeholder Engagement, p. 80
Section: Environment, p. 90
Section: Employees, p. 94
Section: Social Responsibility, p. 104
Section: Business Conduct, p. 122
Section: Responsible Supply Chain, p. 127
Fully disclosed
Fully disclosed
PROCUREMENT PRACTICES
204-1
Percentage of local suppliers
Section: Responsible Supply Chain, p. 130
Fully disclosed
ANTI-CORRUPTION
Operations assessed for risks related to corruption
Section: Business Conduct – Anti-corruption
Policy, p. 125
Partially disclosed
Communication and training about anti-corruption
policies and procedures
Section: Business Conduct - Anti-corruption
Policy, p. 126
Confirmed incidents of corruption and actions taken
Section: Business Conduct – Anti-corruption
Policy, p. 126
ENVIRONMENTAL TOPICS
Materials used by weight or volume
Section: Environment, p. 92
Energy consumption within the organisation
Section: Environment, p. 92
Interactions with water as a shared resource
Section: Environment, p. 91
Water withdrawal
Water discharge
Emissions
Section: Environment, p. 91
Section: Environment, p. 91
Section: Environment, p. 93
Management of significant waste-related impacts
Section: Environment, p. 92
Occupational health and safety
403-1
403-2
403-4
403-5
403-8
403-9
Occupational health and safety management
system
Hazard identification, risk assessment and incident
investigation
Worker participation, consultation and
communication on occupational health and safety
Section: Occupational Health and Safety, p. 85
Fully disclosed
Section: Occupational Health and Safety, p. 87
Fully disclosed
Section: Occupational Health and Safety, p. 88
Partially disclosed
Worker training on occupational health and safety
Section: Occupational Health and Safety, p. 89
Fully disclosed
Workers covered by an occupational health and
safety management system
Section: Occupational Health and Safety, p. 86
Fully disclosed
Work-related injuries
Section: Occupational Health and Safety, p. 87
Partially disclosed
Training and education
404-1
404-2
Average hours of training per year per employee
Section: Employees, p. 96
Programmes for upgrading employees’ skills and
transition assistance programmes
Section: Employees, p. 96
Partially disclosed
Partially disclosed
Diversity and equal opportunities
405-1
Diversity of governance bodies and employees
Section: Employees, p. 100
Fully disclosed
Non-discrimination
406-1
Child labour
408-1
Incidents of discrimination and corrective actions
taken
Section: Business Conduct – Anti-discrimination
Policy, p. 125
Fully disclosed
Operations and suppliers at significant risk of
incidents of child labour
Section: Business Conduct – Respect for Human
Rights, p. 122
Fully disclosed
Forced or compulsory labour
409-1
Operations and suppliers at significant risk of
incidents of forced or compulsory labour
Section: Business Conduct – Respect for Human
Rights, p. 122
Fully disclosed
Fully disclosed
Fully disclosed
Fully disclosed
Partially disclosed
Partially disclosed
Partially disclosed
Partially disclosed
Partially disclosed
Partially disclosed
Waste generated
Section: Environment, p. 92
Fully disclosed
Human rights
Waste diverted from disposal
Section: Environment, p. 92
Partially disclosed
412-1
Operations that have been subject to human rights
reviews or impact assessments
Section: Business Conduct – Respect for Human
Rights, p. 122
Fully disclosed
New employee hires and employee turnover
Section: Employees, p. 97
Benefits provided to full-time employees that are
not provided to temporary or part-time employees
Section: Employees, p. 96, 98, 99
Fully disclosed
Fully disclosed
Parental leave
Section: Employees, p. 100
Partially disclosed
Local communities
413-1
Operations with local community engagement,
impact assessments and development programmes
Section: Social Responsibility, p. 104
Fully disclosed
Labour–management relations
402-1
Minimum notice periods regarding operational
changes
Section: Employees, p. 99
Fully disclosed
142
205-1
205-2
205-3
301-1
302-1
303-1
303-3
303-4
305-7
306-2
306-3
306-4
SOCIAL TOPICS
Employment
401-1
401-2
401-3
11ANNUAL REPORT 2022 7
SuStAInABILItY
SASB
Standards
SASB STANDARD
HOME BUILDERS
Land Use and Ecological Impacts
IF-HB-160a.1
Redevelopment sites
IF-HB-160a.4
Integration of environmental considerations
into site selection, site design, and site
development and construction
Workforce Health and Safety
IF-HB-320a.1
Total recordable incident rate (TRIR)
Design for Resource Efficiency
IF-HB-410a.3
Number of homes delivered certified to a
third-party multi-attribute green building
standard
Community Impacts of New Developments
REPORT SECTION/COMMENTARY
SASB STANDARD
REPORT SECTION/COMMENTARY
Section: Project Portfolio,
p. 38
Section: Environment, p. 90
Section: Occupational Health
and Safety, p. 87
Section: Environment, p. 93
REAL ESTATE
Energy Management
IF-RE-130a.2
IF-RE-130a.4
Water Management
Total energy consumed
Section: Environment, p. 92
Portfolio energy rating
Section: Environment, p. 92
IF-RE-140a.2
Total water withdrawn
Section: Environment, p. 91
Management of
Tenant Sustainability
Impacts
IF-RE-410a.2
Metered grid electricity consumption and
water withdrawals
Section: Environment, p. 91
IF-HB-410b.2
IF-HB-410b.3
Development on infill sites
Section: Portfolio, p. 33
Compact developments (cluster
development, mixed-use development and/
or traditional neighbourhood development)
Section: Portfolio, p. 33
143
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
REPORT
2022
8 ANNUAL
CORPORATE
GOVERNANCE
corporate governance 145
Board committees 152
144
11ANNUAL REPORT 2022ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Corporate
Corporate
governance
governance
Etalon Group considers business ethics to be of the utmost
importance, in particular internationally recognised principles
concerning sustainability and corporate social responsibility.
The Company actively encourages its employees to comply
with the Code of Ethics, which formulates and enshrines
the core principles for the type of collective and individual
behaviour that is required in the workplace. The Company
prides itself on strictly adhering to these high standards in its
relations with shareholders, investors, government agencies,
business partners and employees, as well as when applying
these standards during the implementation of projects in every
area in which Etalon operates.
Management of the Company’s operations at various levels
is carried out by the General Meeting of Shareholders as well
as the Board of Directors and its committees. The committees,
for their part, act in strict accordance with the Company’s
statutory documents, decisions adopted by the General
Meeting of Shareholders as well as applicable legislation.
Etalon Group implements a system of corporate
governance that successfully combines elements
of management and cooperation. this approach
provides a solid foundation for effective decision-
making. the company continues to adhere
to high standards of corporate governance that
are based on the following principles:
Еqual treatment of all shareholders and strict
Тimely disclosure of reliable and accurate
protection of their legitimate interests and rights.
information about the Company’s activities.
Qualified and reliable maintenance
Open dialogue with all stakeholders and
Accountability of the Board of Directors to
of the shareholder register.
recognition of their rights and legitimate
shareholders, and accountability of executive
interests.
bodies to the General Meeting of Shareholders
and the Board of Directors.
145
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
General Meeting
of Shareholders
the Annual General Meeting of Shareholders (AGM) was held
on 21 december 2022, with the owners of 35.37% of voting shares taking
part. the AGM considered and adopted the following decisions
by the required majority of votes:
1.
2.
3.
To consider and approve the
Company’s consolidated financial
statements and Etalon Group PLC’s
individual financial statements for
the 12 months ended 31 December
2021, together with the reports
of directors and the report of the
auditor on the above-mentioned
statements, and to ratify the steps
taken by the Secretary to present
the financial statements to the
Registrar of Companies of the
Republic of Cyprus.
To authorise the directors
to determine the auditor’s
remuneration.
To appoint NSP Sagehill Partners
Ltd as the Company’s auditor
to perform its duties from the
conclusion of this meeting until
the next Annual General Meeting
of Shareholders, where the
Company’s financial statements will
be presented.
Board
of Directors
the Board of directors’ primary objective is to ensure the company’s long-term sustainability and success, leading
to stable, lucrative returns for shareholders. Setting and overseeing the fulfilment of strategic goals as well as ensuring
effective management of the company’s financial and human resources are important elements of the Board’s remit.
the Board also analyses the effectiveness of existing management practices and determines the company’s appetite
for possible risks that could arise in the future. thus, the Board of directors leads by example in establishing a high-
performance management culture.
The Board of Directors’ advisory functions are an important
part of its activities: the Board complements and supports
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 oversight 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 necessary to the Company’s success.
The Board of Directors includes 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 assessing the performance of the risk management
and internal control systems. The Company highly values
the contribution of independent directors in enhancing the
effectiveness of the Board of Directors.
8 DIRECTORS
ON THE BOARD
The Board of Directors consists of eight
members, including one executive director
and seven non-executive directors,
five of whom are independent.
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 the management team
in achieving stated 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 qualifications, experience, knowledge
and independent judgement to undertake their roles effectively.
In order to judge the performance of the Board of Directors
and its committees as well as the compliance of their work
with the Group’s development needs and to identify areas
where the work of the Board of Directors and its committees
could be improved, the Board of Directors conducts an annual
self-assessment concerning its performance and that of its
committees.
In March 2022, following the recommendations of the British
Institute of Directors, Martin Cocker resigned from the Board
of Directors. On 4 April 2022, Vitaly Pyltsov joined the Board
of Directors as an independent non-executive director. Later, in
February 2023 and April 2023, the Board of Directors accepted
the resignations of Maxim Berlovich, Oleg Mubarakshin and
Charalampos Avgousti.
146
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Corporate governance structure
As of 24 April 2023, the Board of directors
and its committees were structured as follows.
SHAREHOLDERS
BOARD OF DIRECTORS
(leadership, strategy, risks, governance, values and standards)
Audit Committee
Remuneration and Nomination
Committee
Strategy Committee
Investor Relations and Information
Disclosure Committee
•
•
•
Vitaly Pyltsov, Chairman1
Boris Svetlichny
Ganna Khomenko
•
•
Sergey Egorov, Chairman
Ganna Khomenko
•
•
•
•
•
•
Gennadiy Shcherbina, Chairman2
Sergey Egorov
Artyom Zasursky
Marina Ogloblina
Denis Vinokourov
Petr Kryuchkov
•
•
•
Petr Kryuchkov, Chairman
Denis Vinokourov
Boris Svetlichny
Following the reporting date, on 16 February 2023 and later on
21 April 2023, the Board of Directors accepted the resignations
of executive director Maxim Berlovich, non-executive director
Oleg Mubarakshin and independent non-executive director
Chalampos Avgousti, who decided to step down from the
Board of Directors and its committees.
1 Since 4 April 2022. Martin Cocker held this position until 4 March 2022. On 11 March 2022, after the end of the reporting period, Martin Cocker resigned from the Board of Directors and its committees.
2 Since 16 February 2023.
147
EXECUTIVE MANAGEMENT
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Board of Directors1 1/2
SERGEY EGOROV
chairman of the Board of directors,
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 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 other
companies, including Sberbank Capital, United
Capital Partners and Ernst & Young.
1 As of 24 April 2023.
GENNADIY SHCHERBINA
chief Executive officer
DENIS VINOKOUROV
non-executive director
ALEXANDER VOLOSHIN
Independent non-executive director
BORIS SVETLICHNY
Independent non-executive director
Gennadiy Shcherbina was born in 1955. Having started
his career in 2003, he has around 20 years of experience
in the construction industry. He has been the Head
of Etalon Group’s St Petersburg operations since 2007.
Gennadiy has a candidate of sciences degree in
economics, and he graduated from the Marshal
A. A. Grechko Naval Academy and St Petersburg
State University of Architecture and Civil Engineering.
Denis Vinokourov was born in 1969. He graduated from
Alexander Voloshin was born in 1956. He graduated
Boris Svetlichny was born in 1961. He graduated from
the Moscow State Institute of International Relations in
from the Moscow Institute of Transport Engineers
the University of Massachusetts in 1985 with a degree
1993 with a degree in law with highest honours, Central
in 1978 and then from the All-Union Academy of Foreign
in accounting and from Carnegie Mellon University
European University with a Master of Laws degree, New
Trade. He has over 30 years of experience in economics,
in 1992 with an MBA degree.
York University with a Master of Laws degree and the
investment and asset management.
Stern Business School with an MBA degree.
He has spearheaded a number of investment funds
of international financial and senior management
He brings to the Company more than 30 years
He has held senior investment roles at Vi Holding
and brokerage companies; in 1997–1998, he was
experience. He has held senior finance positions
Development and East Capital. He started his career as
a member of the Exchange Council of Moscow
at Orange Business Services in Russia, VimpelCom
a corporate lawyer at White & Case.
Exchange. He later held senior positions in the Russian
and Golden Telecom. From March 2014 to August 2016,
Presidential Administration: aide (1997–1998), Deputy
he served as Etalon Group’s CFO.
Chief of Staff to the Russian President (1998–1999)
and Chief of Staff to the Russian President (1999–2003).
Alexander has served as the Chairman of the Board of
Directors of RAO UES, Norilsk Nickel, Uralkali and Freight
One. He is currently a partner and co-owner of the
venture capital fund Genome Ventures.
148
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Board of Directors1 2/2
MARINA OGLOBLINA
Independent non-executive director
GANNA KHOMENKO
Independent non-executive director
VITALY PYLTSOV
Independent non-executive director
Marina Ogloblina was born in 1957. She graduated from
Ganna Khomenko was born in 1977. She graduated
Vitaly Pyltsov has 30 years of experience in finance, audit
the Moscow Finance University in 1980 with a degree in
from Keele University in 1999 with a degree in law
and management, including strategy development at
finance. Until recently, she served as Minister for Construc-
and international politics. She also completed
Russian and international companies. For more than
tion and the Residential and Utility Sector of the Moscow
a Legal Practice Course at the College of Law in Chester,
20 years, Vitaly worked at Russian and international offices
region, before being appointed as an advisor for construc-
in the United Kingdom. She currently acts as a consultant
of Ernst & Young in a number of positions, including COO
tion (with ministerial rank) to the regional governor. Prior
providing services in trust and corporate administration,
for the CIS region and Audit Partner. From 2013 to 2015,
to that, she worked for 20 years in economic planning
accounting and financial management, and international
he was COO of the Russian Direct Investment Fund (RDIF)
roles in the Moscow city administration. She was later
tax planning, and she also sits on the boards of Ros
and Co-COO of the Russia–China Investment Fund,
appointed Minister and Head of the Department of Econo-
Agro and Interpipe. Ganna previously held a number
a company created by the RDIF and the China
mic Policy and Development, and she also headed the
of senior management positions, including dealing
Investment Corporation. In 2021–2022, he served as an
city’s Office of the Comptroller-General. Marina began
with legal issues.
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 Depar-
tment of Finance, Accounting and Audit at the Moscow
government’s Moscow State University of Administration.
1 As of 24 April 2023.
independent director and head of the Audit Committee
at Renaissance Insurance Group. Vitaly graduated with
distinction from the Moscow Institute of Finance (now
the Financial University Under the Government of the
Russian Federation) in international economic relations,
including studies at Humboldt University in Berlin.
149
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
The following table provides the name, age, year of appointment
and position on the Board of Directors of each director:
Board attendance during the year
NAME
1
Sergey Egorov
2
3
Gennadiy Shcherbina
Marina Ogloblina
4
Ganna Khomenko
5
6
7
Boris Svetlichny
Denis Vinokourov
Alexander Voloshin
8
Vitaly Pyltsov
AGE
(AS OF THE DATE
OF PUBLICATION)
POSITION
40
68
65
45
61
53
67
55
Chairman of the Board of Directors, Non-executive Director
Chief Executive Officer
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
FIRST YEAR
APPOINTED
2019
2021
2019
2019
2013
2018
2021
2022
NAME
1
Sergey Egorov
2
3
Gennadiy Shcherbina
Marina Ogloblina
4
Ganna Khomenko
5
6
7
Boris Svetlichny
Denis Vinokourov
Alexander Voloshin
8
Vitaly Pyltsov (from 4 April 2022)
ATTENDANCE AT IN-PERSON BOARD MEETINGS
(A TOTAL OF 6 MEETINGS IN 2022)
ATTENDANCE AT BOARD MEETINGS
IN ABSENTIA (WRITTEN RESOLUTIONS)
(A TOTAL OF 13 MEETINGS IN 2022)
6
6
6
6
6
6
6
5
12
13
12
13
11
11
13
9
In 2022, the Board of directors
held 6 in-person meetings
and an additional 13 meetings
in absentia.
6 IN-PERSON
MEETINGS IN 2022
13 MEETINGS
IN ABSENTIA IN 2022
150
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Matters specifically
reserved for the Board
Board focus during the year
Board composition
Remuneration
� approval of the Company’s long-term objectives and
In 2022, the Board of Directors addressed a wide variety
corporate strategy
of issues, including but not limited to:
Board gender diversity1
Board members by age1
� 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 financial statements, including the corporate
governance statement, the dividend policy and any
� business strategy
� budgets and long-term plans for the Company
� the Company’s dividend policy and sustainability policy
� review of estimates of future cash flows, financing
arrangements and fundraising
declaration of interim dividends and the recommendation
� development of the Company’s corporate governance
of final dividends
� approval, following a recommendation from the
Remuneration and Nomination Committee, of any
appointments to the Board and other key senior
management posts
� review, following a recommendation from the Audit
Committee, of the effectiveness of the internal control and
risk management systems
� approval of the Company’s corporate governance policies
and procedures
� overall Group performance and future capital expenditures
� financial statements and disclosures
� review of Board committee reports
� shareholder feedback and reports from brokers
and analysts
� risk management and risk oversight
Men
Women
over 50
30–50
Nationality of Board members1
Russia
Cyprus
USA
1 As of 24 April 2023.
The principles, grounds, conditions and procedure
for payment of remuneration to members of the Board
of Directors are set out in the Policy on Remuneration
and Compensation Payable to Members of the Board
of Directors, approved by the Board of Directors
on 17 July 2020. According to this policy, remuneration
for participation in the work of the Board of Directors
is paid only to independent directors and consists of the
following elements (all amounts are before tax):
1
Basic remuneration for participation
in the work of the Board
of Directors: EUR 56,190
2
Additional remuneration for participation
in the work of one of the Board committees:
EUR 9,365
3
Additional remuneration for chairing
one of the Board committees:
EUR 18,730
4
Reimbursement of expenses
Remuneration is paid in cash on a quarterly basis,
in equal instalments at the end of the corresponding
quarter but not later than 10 working days after the
end of the quarter.
151
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Board committees
the Board has delegated specific responsibilities to four committees: the Audit committee, the remuneration
� reviewing the results of the tender for auditing consolidated and
Internal control and risk management systems
and nomination committee, the Strategy committee, and the Investor relations and Information disclosure committee.
individual financial statements
� reviewing the performance and independence of the external
All committees act within their remit, report to the Board on their activities and take decisions or make
auditor
The Audit Committee and the Board as a whole continue to ensure
that effective risk management systems are adopted to make
certain that key risks faced by Etalon Group are identified and
recommendations to the Board concerning issues within their remit.
Audit Committee
Responsibilities
As of 24 April 2023, the members of the Audit Committee
were as follows:
Vitaly Pyltsov
Committee Chairman and Independent Non-executive Director
Boris Svetlichny
Independent Non-executive Director
Ganna Khomenko
Independent Non-executive Director
� 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”)
� recommendations to the Board of Directors on the appointment
evaluated. Appropriate limits and controls are set, maintained and
of an external auditor and the fee for audit services
monitored to ensure compliance. In particular, the risk management
� 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
framework identifies risks that might, if not properly managed,
materially affect the Group’s ability to achieve its objectives or that
could 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
� reviewing the accounting policy adopted by the Group
and comprehensive, taking into account any variations in market
and approving any changes to this policy on the recommendation
conditions and the Group’s activities. Reviews also consider whether
of management or the external auditor
identified risks are being managed effectively. The Audit Committee
� making recommendations to the Board, for shareholders’ approval
External audit
at a general meeting, concerning the appointment of the
The Audit Committee is satisfied with Deloitte’s performance.
external auditor and approval of the remuneration and terms
The Audit Committee also reviewed and approved the non-audit
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.
of engagement of the external auditor
services that Deloitte provided for the Group and confirmed that the
While progress is being made in this area, the Audit Committee
� 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 a 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 an external audit firm
The Audit Committee held a number of meetings
in 2022, where the key matters for consideration
were the following:
� the year-end financial results, together with the corresponding
report of the external auditor
� the half-year interim results, together with the corresponding
report of the external auditor
provision of such services did not affect the auditor’s independence.
continues to monitor the Group’s risk management processes
The Audit Committee regularly meets with the external auditor
and to ensure that they are supported and adjusted.
without management present.
Although only members of the Audit Committee are entitled to
Due to the current geopolitical situation, however, Deloitte informed
attend meetings, the lead partner of the external auditor, the head
the Company that it could no longer act as the Company’s auditor,
of Internal Audit and other members of senior management are
so the Annual General Meeting of Shareholders appointed NSP
invited to attend meetings as necessary and appropriate.
Sagehill Partners Ltd as the Company’s new auditor.
Internal audit
The Group’s Internal Audit function provides independent, objective
assurance and advisory oversight of the Company’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.
� matters raised by the external auditor as part of the audit process
The Audit Committee regularly meets with the head of Internal
and requiring the attention of management as well as the actions
Audit without management present.
taken by management to address those matters
152
11ANNUAL REPORT 2022 8
corPorAtE Go VErnAnc E
Remuneration
and Nomination Committee
Strategy
Committee
Investor Relations and Information
Disclosure Committee
Chief
Executive Officer
As of 24 April 2023, the members of the Remuneration
As of 24 April 2023, the members
As of 24 April 2023, the members of the Investor Relations
Etalon Group’s Chief Executive Officer is Gennadiy Shcherbina,
and Nomination Committee were as follows:
of the Strategy Committee were as follows:
and Disclosure Committee were as follows:
whose key responsibilities are as follows:
Sergey Egorov
Committee Chairman, Chairman of the Board of Directors,
Non-executive Director
Gennadiy Shcherbina1
Committee Chairman,
Chief Executive Officer
Petr Kryuchkov
Deputy CEO for Corporate Investments
and Strategy at Etalon Group
implementation of strategic and business decisions as approved by
the Board of Directors
Ganna Khomenko
Independent Non-executive Director
Sergey Egorov
Non-executive Director
Denis Vinokourov
Non-executive Director
Marina Ogloblina
Denis Vinokourov
Non-executive Director
Boris Svetlichny
management of day-to-day operations
Independent Non-executive Director
representation of Etalon Group’s interests in negotiations pertaining
to any transactions made by Etalon Group companies
Responsibilities
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
Petr Kryuchkov1
for all senior appointments.
Deputy CEO for Corporate Investments and Strategy at Etalon Group
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
Artyom Zasursky
basis. In undertaking this role, the Committee considers the skills,
PJSFC Sistema, Vice President for Strategy
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 Etalon Group’s Information Disclosure Policy
on a regular basis and makes recommendations to the Board regarding
any changes.
knowledge and experience required at a given stage of Etalon
Group’s 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 2022 where
it considered changes in the membership of the Board
of Directors and its committees.
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 recommendations and expertise so that
strategic options may be explored fully before being tabled at Board
meetings for deliberation and approval.
1 Since 16 February 2023.
153
11ANNUAL REPORT 2022 9
SHArEHoLdEr IntErA ctIon S
REPORT
2022
9 ANNUAL
SHAREHOLDER
INTERACTIONS
Shareholder interactions 155
Share value 156
ownership structure 156
dividend policy 157
Investor relations 157
Analyst coverage 158
Investor calendar 158
Bonds and credit ratings 159
154
154
11ANNUAL REPORT 2022 9
SHArEHoLdEr IntErA ctIon S
Shareholder
interactions
Etalon Group has been a successful player in
capital markets since its listing on the London Stock
Exchange more than 10 years ago. the focus of the
company’s current Ir strategy is to expand dialogue
with retail investors and eliminate restrictions on
the enjoyment of rights by all shareholder groups
while also taking further active measures to support
its share price and increase the liquidity of the
company’s securities.
Although Etalon Group’s global depositary receipts (GDRs)
have been listed on the London Stock Exchange since April
2011, trading in the Company’s GDRs has been temporarily
suspended since March 2022.
In 2020, the Company successfully completed the process
for listing its GDRs on Moscow Exchange. Etalon Group’s
securities are included in Moscow Exchange’s Level 1
quotation list, and its GDRs are included in the calculation
base for the Broad Market Index as well as the SMID Index
and the Construction Index (Moscow Exchange and RTS).
LSE
AS OF 30 DECEMBER 2022
MoEX
AS OF 30 DECEMBER 2022
Code
Market
ETLN:LI
MAIN MARKET
FTSE Sector
Real Estate Investments & Services
FTSE Subsector
Real Estate Ownership & Development
MIFID Status
SEDOL
ISIN NUMBER
Regulated Market
B5TWX80
US29760G1031
Code
Full name
Short name
ETLN: ME
Global depositary receipts
for ETALON GROUP PLC ordinary shares
ETLN-gdr
Type of security
Depositary receipts for shares of a foreign issuer
Listing level
ISIN NUMBER
Level 1
US29760G1031
78 MLN
USD
market capitalisation
5.42 MLN
USD
trading volume in 2022
18 BLN
RUB
market capitalisation
6.44 BLN
RUB
trading volume in 2022
GDR
PRICE
1.31 USD
52-week maximum price
0.20 USD
closing price
0.20 USD
52-week minimum price
GDR
PRICE
46.36 RUB
closing price
96.66 RUB
52-week maximum price
41.78 RUB
52-week minimum price
155
11ANNUAL REPORT 2022
9
SHArEHoLdEr IntErA ctIon S
Share value
Etalon Group GDR performance in 2022
Market volatility and ongoing sanctions had a negative impact on the
company’s share price and liquidity in 2022.
ETLN traded value, RUB mln (RHS)
ETLN GDR share performance, MOEX (LHS)
IMOEX (LHS)
20%
10%
0
-10%
-20%
-30%
-40%
-50%
-60%
Ownership
structure
As of the end of 2021, following an additional issue, the
Company had 383,445,362 ordinary shares outstanding in
addition to 20,000 redeemable preferred shares with neither
voting rights nor the right to receive dividends. The Company
did not issue additional GDRs or conduct any GDR buyback
programmes in 2022.
Over 50% of Etalon Group’s share capital include the GDRs held
by major institutional investors, such as Mubadala, Kopernik and
Prosperity Capital, and also the free float.
200
150
100
50
0
January 2022
February 2022
March 2022
April 2022
May 2022
June 2022
July 2022
August 2022
September 2022
October 2022
November 2022
December 2022
156
11ANNUAL REPORT 2022 9
SHArEHoLdEr IntErA ctIon S
Dividend policy
Investor relations
Etalon Group’s dividend policy is based on balancing
the Company’s interests with those of its shareholders.
Beginning in 2013, Etalon Group systematically raised the
target level for its dividend payments from 15%–30% to
40%–70% of net profit under IFRS, as approved in May 2017.
In January 2020, Etalon Group established a minimum
annual payment as a temporary measure aimed at
reducing the negative impact on shareholders of reduced
profitability and of the specifics of accounting for the
acquisition of Leader-Invest in 2019. In 2021, however,
the Board of Directors decided to return to calculating
dividends as a percentage of net profit in order to
ensure a proportional increase in dividend payments as
the business grows. To make dividend payments more
predictable, the basis for distribution was adjusted and is
now based on pre-PPA net profit; in addition, the dates for
recommending and paying out dividends are fixed.
In 2022, the complex geopolitical situation, sanctions and
mutual restrictions, including concerning the payment
of funds through international payment and clearing
systems, had a significant impact on the Company’s
ability to pay out dividends in line with the current
dividend policy to all groups of Company shareholders.
Based on the principles of the equality of interests of all
groups of shareholders, the Board of Directors decided to
postpone consideration of the issue of dividend payments
for 2021 until the restrictions currently in place are lifted.
In order to ensure that securities market participants are fully
aware of our activities, we maintain a continuous dialogue with
a wide range of investors and are developing our shareholder
relations practices.
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
� all of the Company’s results for the reporting year in our
Annual Report
In accordance with best practices in terms of relations with
investors and other stakeholders, we also published additional
relevant information about our business:
� news about important stages of project implementation,
including acquisitions, 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
Despite changes in the way some issuers disclose information
due to sanctions risks and market volatility, Etalon Group
continues to make full disclosures.
Work with institutional investors
In the context of trade restrictions caused by geopolitical
instability, institutional investors have reduced their positions in
Russian companies. Throughout 2022, however, Etalon Group’s
IR team and management used every available opportunity
to maintain contact with the investment community: they
answered questions that arose by means of correspondence
and private calls, published detailed information about the
Company’s operations and results, and held calls and meetings
with investment funds.
Work with retail investors
The structure of the stock market has changed
considerably since early 2022: according to Moscow
Exchange, retail investors account for 80% of traded value.
In the context of these structural changes, Etalon Group’s
IR team and management are adapting their strategy and
information disclosure by paying a great deal of attention
to working with private investors.
Russian-language website
Participation in events for
retail investors
In order to provide equal, convenient and fast
access to key information about the Company’s
activities for all groups of investors, the Company
maintains two versions – English and Russian – of
its IR website: www.etalongroup.com. All the latest
presentations are also available in Russian.
Communication with retail investors
through social networks
Since 2018, the Company has maintained its own
Twitter account.
In 2022, the Company launched accounts on
Tinkoff Pulse and BCS Profit – social media
platforms for investors.
In 2022, the Company participated in a number
of conferences, events and webinars for private
investors (Aton, Smart-lab, BCS).
Dealing with requests
We regularly deal with requests from private
investors through official communication
channels: the feedback form on the Company’s
website and the Company’s IR email address
ir@etalongroup.com.
In the future, the Company plans to adapt its
information materials and website to meet the
needs of retail investors.
157
11ANNUAL REPORT 2022 9
SHArEHoLdEr IntErA ctIon S
Analyst coverage
Analysts from five Russian brokerage firms regularly cover Etalon
Group’s activities and publish analytical reviews of Russian
companies in the residential real estate development sector.
Regular meetings and calls are held with analysts to help
them gain a comprehensive understanding of the Company’s
strategy, performance, assets and management.
In the current environment, the following brokerages prepare
reports and analytical notes on Etalon Group’s activities: BCS,
Sberbank CIB, Gazprombank, Aton and Sinara.
Analyst recommendations
the calendar indicates the preliminary dates for publication of the company’s results.
Investor calendar
Buy
Hold
Neutral
January 2023
March 2023
4Q and FY 2022 operating results
Results of the appraisal of the
Company’s project portfolio
FY 2022 IFRS financial results
July 2023
May 2023
1H 2023 operating results
1Q 2023 operating results
Analytical coverage and recommendations1
BANK
BCS
Sberbank CIB
Gazprombank
Aton
Sinara
ANALYST
REPORT DATE
RECOMMENDATION
Elena Tsareva
Georgy Ivanin
28 March 2023
30 March 2023
Marat Ibragimov
17 October 2022
Mikhail Ganelin
Irina Fomkina
22 March 2022
24 January 2023
Buy
Buy
Buy
Neutral
Hold
93-107 RUB
average target price
54-77 %
growth potential2
September 2023
October 2023
1H 2023 IFRS financial results
9M 2023 operating results
1 As of 7 April 2023.
2 The growth potential of the Company’s GDRs is calculated relative to the price at the close of trading on 6 April 2023: RUB 60.48 per GDR.
158
11ANNUAL REPORT 2022 9
SHArEHoLdEr IntErA ctIon S
Bonds and credit ratings
the Group’s loan portfolio covers bank loans, including project financing, public debt and
other borrowings. As of 31 december 2022, two issues of rouble-denominated exchange-
traded bonds from Etalon-Finance JSc for a total of ruB 15 billion were in circulation. All
bond issues are included in Moscow Exchange’s Level 2 quotation list.
INSTRUMENT
ISIN
AMOUNT ISSUED
DATE OF ISSUE
MATURITY DATE
COUPON RATE
PAYMENT FREQUENCY
No. 4B02-02-55338-H-001P of 6 December 2017
RU000A0ZYU39
RUB 5 billion
21 February 2018
15 February 2023
11.70% for coupon payments 1–6
Twice a year
7.95% for coupon payments 7–10
No. 4B02-03-55338-H-001P of 13 September 2021
RU000A103QH9
RUB 10 billion
21 September 2021
15 September 2026
9.10%
Four times a year
INSTRUMENT
ISIN
AMOUNT ISSUED
DATE OF ISSUE
MATURITY DATE
PUT OPTION
COUPON RATE
PAYMENT FREQUENCY
4B02-01-55338-H-002P of 17 February 2023
RU000A105VU7
RUB 8 billion
22 February 2023
3 February 2038
in 3 years
13.70%
Four times a year
Credit ratings
The Expert RA rating agency affirmed the credit rating for
issue No. 4B02-03-55338-H-001P of 13 September 2021 and
assigned a credit rating of ruA- to issue No. 4B02-01-55338-
H-002P of 17 February 2023.
Instrument No. 4B02-02-17644-J-001P (RU000A0ZYA66), issued
by Etalon LenSpetsSMU JSC on 6 September 2017, matured on
9 September 2022.
In February 2023, after the reporting period, Etalon-Finance
JSC (part of Etalon Group) issued exchange-traded bonds
with a total par value of RUB 8 billion. The placement attracted
strong interest from investors: the total demand exceeded
the initial par value by 50%, thus increasing the value of the
bond issue from the initially announced RUB 5 billion up to
RUB 8 billion.
On 15 February 2023, after the reporting period, instrument
No. 4B02-02-55338-H-001P (RU000A0ZYU39), issued by Etalon-
Finance JSC on 6 December 2017, matured.
Contact information
ETALON GROUP IR TEAM
Petr Kryuchkov
Deputy CEO for Corporate Investments and Strategy
petr.kryuchkov@etalongroup.com
Maria Bevzyuk
Head of Investor Relations and ESG
mariya.bevzyuk@etalongroup.com
Alexandr Ugryumov
Head of Capital Markets
alexandr.ugryumov@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
159
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
REPORT
2022
10 ANNUAL
FINANCIAL
STATEMENTS
consolidated financial statements 161
Parent company financial statements 210
160
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Consolidated
Financial Statements
for the year ended 31 december 2022
Board of Directors
and Other Officers
Contents
СHAPTER
Board of Directors and Other Officers
Consolidated Management Report
Responsibility Statement of the Members of the Board of Directors
and Management of the Company
Independent Auditor’s Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Supplementary Information — non-IFRS Measures (Unaudited)
РАGE
NAME
Board of Directors
161
162
165
166
169
170
171
172
173
208
Gennadii Shcherbina
Alexander Voloshin
Sergey Egorov
Marina Ogloblina
Ganna Khomenko
Denis Vinokurov
Vitaly Pyltsov
Boris Svetlichny
Charalampos Avgousti
Martin Robert Cocker
Oleg Mubarakshin
Maksim Berlovich
DATE
appointed on 30 April 2021
appointed on 30 April 2021
appointed on 19 February 2019
appointed on 19 February 2019
appointed on 19 February 2019
appointed on 9 November 2018
appointed on 4 April 2022
appointed on 15 April 2013
appointed on 10 November 2016
appointed on 12 November 2010 and resigned on 4 March 2022
appointed on 19 February 2019 and resigned on 16 February 2023
appointed on 27 April 2018 and resigned on 16 February 2023
Secretary
Registered Office
Independent auditors
G.T. Globaltrust Services Limited
Themistokli Dervi, 15
Margarita House, 5th floor,
flat/office 502
1066 Nicosia
Cyprus
2-4 Arch. Makariou III Avenue
Capital Center, 9th floor
1065 Nicosia
Cyprus
AO BST, Saint Petersburg Branch
Lit. K, bld. 1, 38 Sredniy Prospect
199004, Saint Petersburg
Russia
161
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Consolidated Management Report
the Board of directors of Etalon Group PLc
Review of the development and performance of the Group’s business and its position
(the “company”) presents 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 2022. 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.
The results of the Group for the year ended
31 December 2022 are set out on page 18 of the
consolidated financial statements.
stand-alone commercial premises transferred over
time by RUB 206 million or 29% and an increase in
rental revenue by RUB 8 million or 1%.
(a) Revenue
(b) Gross profit
The Group’s total revenue for the year ended
31 December 2022 amounted to RUB 80,556
million compared to RUB 87,138 million for the year
ended 31 December 2021, a decrease of RUB 6,582
million or 8%.
Revenue of the reportable segment “Residential
development” decreased by RUB 6,161 million or
8%, due to a decrease in the revenues recognised
from the sales of flats by RUB 5,548 million or 8%,
decrease in the revenues recognised from the sales
of parking places by RUB 541 million or 13%, and
a decrease in the revenues recognised from the sale
of built-in commercial premises by RUB 72 million
or 2%.
External revenues of the reportable segment
“Construction services” decreased by RUB 263
million or 11% mainly due to completion of long-
term construction contracts entered into in previous
periods and not entering into new ones, aiming to
reduce the Group’s presence in the segment.
External revenues of the reportable segment
“Other” decreased by RUB 158 million or 2% due to
a decrease in other revenue transferred at a point
in time by RUB 2,184 million, a decrease in the sales
of construction materials by RUB 545 million or 16%,
a decrease in the sales of stand-alone commercial
premises transferred at a point in time by RUB 252
million or 70%, partially offset by an increase in
other revenue related to servicing of premises by
RUB 2,609 million or 118%, an increase in the sales of
Gross profit for the year ended 31 December 2022
amounted to RUB 28,203 million compared to RUB
27,782 million for the year ended 31 December 2021,
an increase of RUB 421 million or 2%, which was
mainly driven by the increase in gross profit of the
reportable segment “Other” by RUB 497 million
or 23%.
(c) Results from operating activities
Profit from operating activities during the year
ended 31 December 2022 amounted to RUB 25,055
million compared to RUB 13,246 million for the year
ended 31 December 2021, an increase of RUB 11,809
million or 89%, which was mainly driven by the gain
from bargain purchase of Russian business of YIT
Corporation (“YIT Russia”) of RUB 12,038 million.
During the year ended 31 December 2022, general
and administrative expenses increased by RUB 1,475
million or 26%, selling expenses increased by RUB 362
million or 8%, other income decreased by RUB 380
million or 53%, while other expenses decreased by
RUB 2,310 million or 50%, as compared to the year
ended 31 December 2021.
(d) General and administrative expenses
The increase in general and administrative expenses
was mainly caused by the increase in payroll
and related taxes by RUB 1,205 million or 34%. YIT
Russia contributed RUB 470 million to general and
administrative expenses.
(e) Other income and other expenses
(g) Income tax expense
Income tax expense for the year ended
31 December 2022 amounted to RUB 2,886 million
compared to an income tax expense of RUB 2,842
million for the year ended 31 December 2021, an
increase of RUB 44 million or 2%, despite the growth
of profit before income tax in 2022 by RUB 10,038
million or 172%, which was mainly caused by non-
taxable gain from bargain purchase YIT Russia.
(h) Profit for the year
The profit for the year ended 31 December 2022
amounted to RUB 13,001 million, compared to
a profit of RUB 3,007 million for the year ended
31 December 2021.
(i) Adjusted net debt/adjusted EBITDA and
net corporate debt/adjusted EBITDA ratios
As described in note 24 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 Etalon Finance (JSC Leader-Invest prior to
2022) require the Group to maintain adjusted net
debt/adjusted EBITDA ratio below 4. The Group’s
adjusted net debt is negative (specified assets
exceed borrowings), which results in adjusted net
debt/adjusted EBITDA ratio being minus 2.21 — well
below the required minimal ratio.
During the year ended 31 December 2022, other
income decreased by RUB 380 million or 53% due to
a decrease in the gain on disposal of property, plant
and equipment and investment property by RUB
390 million.
Other expenses decreased by RUB 2,310 million or
50% mainly due to a decrease in the impairment
loss on inventories by RUB 1,060 million or 52% and
a decrease in the cost of social infrastructure for
completed projects by RUB 346 million or 62%.
(f) Net finance costs
Net finance costs for the year ended 31 December
2022 increased by RUB 1,750 million or 24% as
compared to the year ended 31 December 2021.
Finance income increased by RUB 1,461 million or
58% mainly due to an increase in interest income on
cash and cash equivalents and bank deposits by
RUB 1,458 million or 81%.
Finance costs increased by RUB 3,211 million or 32%
due to an increase in borrowing costs by RUB 2,919
million or 48% due to the transition from the scheme
of customer financing to the bank project financing
scheme, an increase in interest expense on leases
by RUB 234 million or 47%, an increase in the effect
of the unwinding of the discount on other payables
by RUB 709 million or 29%, which was mainly
caused by unwinding of the discount on long-
term accounts payable for the acquisition of land
plot (88% share in LLC “Specialized Developer “ZIL-
YUG”) and unwinding of the discount on payables
for construction of objects of social infrastructure,
partially offset by a decrease in financing
component under IFRS 15 by RUB 297 million or 80%
and a decrease in net foreign exchange loss by RUB
247 million or 83%.
162
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
the Group also monitors the ratio of net
Principal risks and uncertainties
Dividends
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
The principal risks and uncertainties faced by the
Group are disclosed in the notes 1(b), 2(d) and 27 of
the Consolidated Financial Statements.
transition to settlements with customers
Future developments of the Group
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, well below the market
rates. As of 31 december 2022, the ratio
amounted to 0.78 which is in line with the
Group’s target for the ratio being less than
2-3x.
The Board of Directors acknowledges that the
current geopolitical situation and the resulting
economic developments in Russia may have an
adverse impact on operations and financial results
of the Group in the future. Still, the Group continues
to adhere to its strategy, including regional
expansion, and to sustain the scale of its operations,
and overall will be able to continue its business for
the foreseeable future.
The challenging geopolitical circumstances, certain
sanctional provisions and mutual restrictions,
including on distribution of funds through
international payment and clearing systems, have
a significant impact on the Company’s ability to
pay out dividends to all groups of its shareholders.
Based on the principle of equitable treatment
of all shareholders, the Board of Directors of the
Company resolved to postpone consideration of
the matter of dividend payments until constraints
currently in force are removed. The Annual General
Meeting of shareholders that took place on 22
December 2022 neither considered nor approved
any dividend payments for the financial year ended
31 December 2021.
Activities related to research
and development
Changes in the Company’s
share capital
The Group has not undertaken any material
activities in the field of research and development
during the year ended 31 December 2022.
There were no changes in the Company’s share
capital during 2022.
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 of Directors during 2022
and until the date these consolidated financial
statements have been authorised for issue, are
disclosed in the Board of Directors and other
Officers section of these consolidated financial
statements.
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 2022. 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 27 of the consolidated
financial statements.
Nonrecurring or unusual activities
and other significant events
The Ukrainian crisis
Since the outbreak of the conflict in Ukraine on 24
February 2022, the US, UK, EU and other countries
announced an extension of sanctions on certain
Russian officials, businessmen and companies.
These developments resulted in reduced access of
Russian businesses to international capital, import
and export markets, reduction in consumer demand
and other negative economic consequences.
Acquisition of YIT Russia
On 30 May 2022, the Company acquired from YIT
Corporation a certain number of Finnish and Russian
legal entities representing the Russian business of
YIT Corporation (“YIT Russia”) for the consideration
of RUB 1,923 million.
YIT Russia focused on mid-market residential real
estate with a portfolio of 19 projects in five Russian
regions, including the Moscow metropolitan area,
Saint Petersburg, the Ekaterinburg region, Kazan
and Tyumen with a total unsold net sellable area
(NSA) of 0.6 million sqm. It also operated several
housing servicing companies.
Independent Auditors
The Company appointed AO BST, Saint Petersburg
Branch as the auditor of the Group’s consolidated
financial statements for the year ended
31 December 2022.
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 assessing
the Group’s and the Company’s ability to continue
as a going concern, considering 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.
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.
163
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Company’s internal control and
risk management in relation to the
preparation of the financial statements
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 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
FCA’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)
The authorised and issued share capital of the
Company is GBP 39,172 divided into 383,445,362
Ordinary Shares of GBP 0.00005 each and 20,000
redeemable preference shares of GBP 1 each.
294,251,042 ordinary shares (76.7%) 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 at the
reporting date have been listed and traded on the
Main Market of the London Stock Exchange (LSE).
Since the beginning of March 2022, LSE suspended
trading in Etalon’s GDRs.
The Company’s GDRs are traded on the Moscow
Stock Exchange Starting from 3 February 2020.
As at 31 December 2022, the Company was aware
of the following interests in its share capital:
SHAREHOLDERS
Free float
PJSC AFK Sistema
Mubadala Investment Company
Kopernik Global Investors
Prosperity Capital
Management of the Company
Total
%
35.2%
48.8%
6.3%
5.0%
4.1%
0.6%
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
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.
(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
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
(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.
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.
By order of the Board of Directors,
Charalampos Avgousti
Director
Sergey Egorov
Director
Nicosia, 28 March 2023
164
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Responsibility
Statement
of the directors and management
of the company in accordance
with the transparency Law
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 2022:
(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
SERGEY EGOROV
Chairman of the Board of Directors
MARINA OGLOBLINA
Member of the Board of Directors
GANNA KHOMENKO
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
ALEXANDER VOLOSHIN
Member of the Board of Directors
VITALY PYLTSOV
Member of the Board of Directors
GENNADII SHCHERBINA
Chief Executive Officer
ILYA KOSOLAPOV
Chief Financial Officer
(b) The management report provides a fair overview
on information required as per Section 9(6)(a) of
the Transparency Law.
28 March 2023
165
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Independent
Auditors’ Report
on Consolidated
Financial
Statements
AO BST
5 Lesnaya Street
Moscow, 125047,
Russia
Tel: +7 (495) 787 06 00
Fax: +7 (495) 787 06 01
delret.ru
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Etalon Group PLC
Opinion
We have audited the consolidated financial statements of Etalon Group PLC and its
subsidiaries (the “Group”), which comprise the consolidated statement of financial position
as at 31 December 2022, and the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated
statement of 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 present fairly, in all
material respects, the consolidated financial position of the Group as at 31 December 2022,
and its consolidated financial performance and its consolidated cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the
European Union (EU) (“IFRSs”).
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 are independent of the Group in accordance with the Auditor’s Independence Rules and
the Auditor’s Professional Ethics Code, that are relevant to our audit of the consolidated
financial statements in the Russian Federation together with the ethical requirements of
the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (the “IESBA Code”), 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
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
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 under
share participation agreements giving rise
to over-time revenue recognition.
The accounting policies on revenue under
share participation agreements are
disclosed in Note 3(i). For other
disclosures on revenue refer to Note 6.
Our audit procedures included amongst others:
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 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.
We challenged the per-unit budgets and their structure
and dynamics by benchmarking them across the Group's
portfolio and versus market trends, and by assessing
their effect on gross margins of individual projects.
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 by performing the following:
on a sample basis, we traced input data in the
calculations to the respective share participation
agreements;
we checked the arithmetical accuracy of the
Group’s calculations.
We reviewed the disclosures in the consolidated
financial statements for compliance with the
requirements of IFRS 15.
11
12
166
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Independent Auditors’ Report
on Consolidated Financial Statements
Accounting for business combination
As disclosed in Note 28 during the year-ended
31 December 2022 the Group acquired 100% of
the Russian business of YIT Corporation.
We consider accounting for this transaction to be a
key audit matter because it requires a significant
degree of judgment and involves estimations which
are uncertain in nature in relation to:
adjustments made to align accounting policies;
future expected cash flows for construction
projects and the discount rate used to arrive
to their present value.
The key sources of estimation uncertainty and
accounting policies are disclosed in Note 3(a) and
Note 28.
Our audit procedures included amongst others:
We challenged assumptions and management’s
judgements applied in respect of the acquisitions
of interests in YIT Corporation entities and
performed the following:
inquiries of the Group’s management and
analysis of the supporting documentation to
obtain understanding of the key details of
transactions;
obtaining an understanding of the Group’s
processes, procedures and controls for
developing assumptions used;
assessing experience, professional
qualifications and objectivity of the
independent valuation specialists;
assessing the appropriateness of the discount
rate used;
evaluating and critically assessing the
reasonableness of the assumptions used in
calculation of fair values of the net
identifiable assets:
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;
analyzing adjustments made to align the
accounting policies of the acquired business
with the accounting policies adopted by the
Group. We also assessed whether the
disclosure in the consolidated financial
statements in respect of this acquisition is in
compliance with IFRS requirement.
Net realizable value of inventories
The Group has significant inventory balance (refer
to Note 18 in the consolidated financial
statements), which comprises 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 sale;
the level of overhead expenses as a
percentage of revenue;
the discount rate used to arrive to the present
value of the future expected cash flows.
The key sources of estimation uncertainty and
accounting policies 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:
obtaining an understanding of 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.
Other Information
The Board of Directors is responsible for the other information. The other information
comprises the information that is included in the Consolidated Management Report
and the Responsibility Statement of the Directors and management of the Group and will be
included in the supplementary information to be Group’s Annual Report for 2022 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.
Other matter – Supplementary Financial Information
Management is responsible for the preparation of information accompanying the
consolidated financial statements, which is presented as supplementary financial
information on pages 89-91. This information is provided for the purposes of additional
analysis and is not a required part of the consolidated financial statements for year ended
31 December 2022 prepared in accordance with IFRS.
Such information has not been subjected to the audit procedures applied in our audit of the
consolidated financial statements for the year ended 31 December 2022 and, accordingly,
we do not express opinion on it.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with International Financial Reporting Standards as
adopted by the European Union (EU) (“IFRSs”), and for such internal control as management
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, management 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 management either
intends to liquidate the Group or to cease operations, or has no realistic alternative but
to do so.
13
14
15
167
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Independent Auditors’ Report
on Consolidated Financial Statements
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. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Turushev Sergey
(ORNZ № 21906101428),
Engagement partner,
Acting based on the power of attorney issued by the General Director on 24.08.2022
authorizing to sign off the audit report on behalf of AO “Business Solutions and
Technologies” (ORNZ № 12006020384)
28 March 2023
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:
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 management.
Conclude on the appropriateness of management’s 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 fair presentation.
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.
16
17
168
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Consolidated
Statement of
Profit or Loss
and Other
Comprehensive
Income
for the year ended
31 december 2022
MLN RUB
Revenue
Cost of sales
Gross profit
6
7
80,556
87,138
Profit attributable to:
(52,353)
(59,356)
• Owners of the Company
28,203
27,782
• Non-controlling interest
Profit for the year
NOTE
2022
2021
MLN RUB
NOTE
2022
2021
General and administrative expenses
8
(7,259)
(5,784)
Selling expenses
(5,001)
(4,639)
total comprehensive income attributable to:
Impairment loss on trade and other receivables
27 (b)(ii)
(912)
(169)
• Owners of the Company
Gain from bargain purchase
28
12,038
−
711
• Non-controlling interest
Total comprehensive income for the year
331
Other income
Other expenses, net
Results from operating activities
Finance income — interest revenue
Finance income — other
Finance costs
Net finance costs
Share of loss of equity accounted investees
Profit before income tax
9
9
11
11
11
(2,345)
(4,655)
25,055
13,246
Earnings per share
Basic and diluted earnings per share (RUB)
23
33.77
8.59
3,914
2,392
75
136
(13,120)
(9,909)
(9,131)
(7,381)
(37)
(16)
15,887
5,849
12,948
3,007
53
−
13,001
3,007
12,948
3,007
53
−
13,001
3,007
Income tax expense
Profit for the year
Total comprehensive income for the year
12
(2,886)
(2,842)
13,001
3,007
13,001
3,007
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 173 to 207.
169
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Consolidated
Statement
of Financial
Position
as at 31 december 2022
MLN RUB
ASSETS
non-current assets
• Property, plant and equipment
• Intangible assets
• Investment property
• Other long-term investments
• Trade and other receivables
• Deferred tax assets
Total non-current assets
current assets
• Inventories under construction and development
• Inventories — finished goods
• Other inventories
• Advances paid to suppliers
• Costs to obtain contracts
• Contract assets
• Trade receivables
• Other receivables
• Income tax receivable
• Short-term investments
• Cash and cash equivalents
Total current assets
Total assets
NOTE
2022
2021
MLN RUB
NOTE
2022
2021
13
14
15
16
19
17
18
18
18
19
19
19
19
20
21
4,531
4,050
2,652
396
583
−
416
1,489
1,569
3,345
11,373
7,347
21,104
16,647
119,600
95,431
16,872
13,023
6,047
1,699
12,469
10,857
1,197
892
28,733
25,332
6,638
6,308
9,945
6,243
1,607
22
953
126
23,811
44,587
226,941
205,451
248,045
222,098
EQUITY AND LIABILITIES
Equity
• Share capital
• Share premium
• Reserve for own shares
• Retained earnings
Total equity attributable to equity holders
of the Company
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
• Income tax payable
• Provisions
Total current liabilities
Total equity and liabilities
22
22
22
24
26
25
17
24
26
26
25
2
2
26,367
26,367
(1)
(1)
47,821
34,992
74,189
61,360
74,189
61,360
73,970
67,132
22,978
31,230
406
117
7,513
7,428
104,867
105,907
19,118
16,306
36,946
23,692
12,045
14,157
241
639
158
518
68,989
54,831
248,045
222,098
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 173 to 207.
These Consolidated Financial Statements were approved by the Board of Directors
on 28 March 2023 and were signed on its behalf by:
Charalampos Avgousti
Director
Sergey Egorov
Director
170
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Consolidated
Statement
of Changes
in Equity
for the year ended
31 december 2022
MLN RUB
Balance as at 1 January 2021
total comprehensive income for the year
Profit for the year
Total comprehensive income for the year
transactions with owners, recorded directly in equity
Shares issued
Transaction costs directly attributable to the issue
Dividends to equity holders
Total transactions with owners
Balance as at 31 December 2021
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
SHARE
CAPITAL
SHARE
PREMIUM
RESERVE FOR
OWN SHARES
RETAINED
EARNINGS
TOTAL
NON-CONTROLLING
INTEREST
15,486
(1)
35,586
51,073
2
−
−
−
−
−
−
2
−
−
11,120
(239)
−
10,881
26,367
−
−
−
−
−
−
3,007
3,007
3,007
3,007
−
−
(3,601)
(3,601)
11,120
(239)
(3,601)
7,280
61,360
(1)
34,992
TOTAL
EQUITY
51,073
3,007
3,007
11,120
(239)
(3,601)
7,280
61,360
−
−
−
−
−
−
−
−
MLN RUB
Balance as at 1 January 2022
total comprehensive income for the year
Profit for the year
Total comprehensive income for the year
transactions with owners, recorded directly in equity
Acquisition of subsidiaies with NCI, note 28
Result of acquisition and disposal of NCI in subsidiaries with NCI,
note 22(e)
Total transactions with owners
Balance as at 31 December 2022
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
SHARE
CAPITAL
SHARE
PREMIUM
RESERVE FOR
OWN SHARES
RETAINED
EARNINGS
TOTAL
NON-CONTROLLING
INTEREST
TOTAL
EQUITY
2
−
−
−
−
−
2
26,367
(1)
34,992
61,360
−
61,360
−
−
−
−
−
26,367
−
−
−
−
−
(1)
12,948
12,948
12,948
12,948
53
53
13,001
13,001
−
(119)
(119)
47,821
−
(119)
(119)
74,189
195
(248)
(53)
−
195
(367)
(172)
74,189
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 173 to 207.
171
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Consolidated
Statement of
Cash Flows
for the year ended
31 december 2022
MLN RUB
NOTE
2022
2021
MLN RUB
NOTE
2022
2021
OPERATING ACTIVITIES:
Profit for the year
Adjustments for:
• Depreciation, including right-of-use assets
13, 14
• Loss/(gain) on disposal of property, plant and
equipment
• Loss/(gain) on disposal of investment property
• (Gain)/loss on disposal of inventories under
construction and development
• Impairment loss on inventories
9
9
9
18
• Impairment loss on trade and other receivables,
27 (b)(ii)
advances paid to suppliers and investments
• Share of loss of equity accounted investees
• Loss on disposal of subsidiary
• Gain on disposal of associate
• Gain from bargain purchase
13,001
3,007
541
90
521
(162)
3
(279)
(51)
205
994
898
37
2
(135)
9
9
28
(12,038)
2,054
327
16
7
−
−
• Significant financing component from contracts
with customers recognised in revenue
(324)
(3,003)
• Savings on escrow-backed loans recognised
(2,715)
(1,197)
in revenue
• Finance costs, net
• Income tax expense
Cash from operating activities before changes
in working capital and provisions
11
12
9,131
7,381
2,886
2,842
12,135
11,719
INVESTING ACTIVITIES:
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of investment property
Interest received
Acquisition of property, plant and equipment
and intangible assets
Loans given
Loans repaid
Proceeds from disposal of subsidiaries,
net of cash disposed of
Acquisition of investment in associates
and joint ventures
Acquisition of subsidiary, net of cash acquired
Acquisition of other investments
Disposal of other investments
Net cash from investing activities
FINANCING ACTIVITIES:
Proceeds from borrowings
Repayments of borrowings1
Payments for lease liabilities, excluding interest
Proceeds from issue of share capital, net
Dividends paid
10
12
266
474
1,211
1,763
(1,201)
(560)
(13)
64
−
(823)
7
32
(247)
(389)
536
(1)
45
416
−
(4)
149
915
28
16, 20
16, 20
24
24
24
43,009
49,071
(11,166)
(14,635)
(2,144)
(1,775)
−
−
10,881
(3,613)
Net cash from financing activities
29,699
39,929
Change in inventories
Change in accounts receivable
Change in accounts payable
Change in provisions
Change in contract assets
Change in contract liabilities
Cash used in operating activities
Income tax paid
Interest paid
Net cash used in operating activities1
25
19
26
18
18
1 Repayments of borrowings during the year ended 31 December 2022 do not
include repayment of project financing of RUB 27 162 million that was made
by means of offset against funds released from escrow accounts. Similarly,
the offset is also reflected within operating activities as part of changes in
contract assets.
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 173 to 207.
(24,897)
3,211
(2,212)
(2,386)
2,609
5,937
(28)
108
(24,029)
(18,194)
(3,577)
(14,194)
Net (decrease)/increase in cash
and cash equivalents
Cash and cash equivalents at the beginning
of the year
(20,700)
19,041
44,587
25,830
(76)
(284)
(39,999)
(13,799)
Effect of exchange rate fluctuations
(5,553)
(3,543)
(5,263)
(4,461)
(50,815)
(21,803)
Cash and cash equivalents at the end of the year
21
23,811
44,587
172
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Notes to the
Consolidated
Financial
Statements
for the year ended
31 december 2022
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. Since 2022, the Group started residential
development in other regions of 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. The Company’s GDRs are traded on the Moscow
Stock Exchange starting from 3 February 2020. Since the
beginning of March 2022, as a result of sanctions imposed in
connection with the Ukrainian crisis, LSE suspended trading in
Group’s GDRs.
Starting from 4 May 2022, as a result of acquisition of an
additional 19% stake in the Company, PJSC AFK Sistema
became the controlling shareholder of the Group with
ownership share of 48.8% as of 31 December 2022. Prior to 4
May 2022, PJSC AFK Sistema had significant influence over the
Group with ownership share of 29.8%.
As of 31 December 2022, Vladimir Petrovich Yevtushenkov owns
a 49.2% stake in PJSC AFK Sistema (as of 31 December 2021 —
59.2%). In 2022, Vladimir Petrovich Yevtushenkov transferred his
10% stake, thereby ceasing to be the holder of the majority of
shares. 50.8% of the shares belong to a significant number of
shareholders (as of 31 December 2021 — 40.8%). The shares of
PJSC AFK Sistema are traded on the London Stock Exchange
in the form of global depositary receipts («GDRs») and on the
Moscow and Saint Petersburg Exchanges.
b) Business environment
Emerging markets such as Russia are subject to different
risks than more developed markets, including economic,
political and social, and legal and legislative risks. Laws and
regulations affecting businesses in Russia continue to change
rapidly, tax and regulatory frameworks are subject to varying
interpretations. The future economic direction of Russia is
heavily influenced by the fiscal and monetary policies adopted
by the government, together with developments in the legal,
regulatory, and political environment. Because Russia 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.
Starting from 2014, sanctions have been imposed in several
packages by the US, UK, EU and others on certain Russian
officials, businessmen and companies. On 21 February 2022,
the President of the Russian Federation signed executive
orders on the recognition of the Donetsk People’s Republic
and the Lugansk People’s Republic. On 30 September 2022,
Donetsk People’s Republic, Lugansk People’s Republic, as
well as Zaporozhye and Kherson regions were recognised as
the regions of the Russian Federation in the Constitution of
the Russian Federation. Since the outbreak of the conflict
on 24 February 2022, the US, UK, EU and other countries
announced an extension of sanctions on certain Russian
officials, businessmen and companies. These developments
have resulted in reduced access of Russian businesses to
international capital and export markets, reduction in consumer
demand, increase in inflation rates, decline in capitals markets
and other negative economic consequences.
The impact of these and further developments on future
operations and financial position of the Group at this stage is
difficult to determine. For the assessment of the Group’s ability
to continue as a going concern please refer to note 2(b).
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.
173
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
2. Basis of preparation
a) Statement of compliance
These consolidated financial statements have been
prepared in accordance with International Financial
Reporting Standards (“IFRSs”).
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.
In assessing its going concern status, the Group has
taken account of its principal risks and uncertainties
including inflation risks for construction materials
and labour costs, sharp reduction of the Company’s
market capitalisation and suspension of trading
in the Company’s GDRs on the London Stock
Exchange, available undrawn credit facilities as at
the date of analysis, and its forecast compliance
with covenants on project financing and corporate
borrowings, anticipated future continuity in demand,
and major instalments in relation to acquisition of
land plots.
When assessing the Group’s ability to continue
as a going concern over the next 12 months, the
management considered all available information
about the future, including events described below,
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.
During the reporting period and following the
commencement of the Ukrainian crisis, the US,
UK, EU and some other countries imposed severe
sanctions against the Russian government, major
financial institutions and certain other entities and
individuals in the Russian Federation. In response to
the sanctions, the Russian government introduced
certain currency control measures and the Central
Bank of the Russian Federation increased the key
rate to 20% in March 2022 which was reduced to 17%
starting from 11 April 2022 and subsequently reduced
to 7.5% during May — December 2022. All the above
led to significant market volatility, disruption in the
supply chains and significantly increased the level of
economic uncertainty.
The Group developed a cash flow projection for
the year 2023 considering possible impact on the
current operating environment on the Group’s
demand and supply chain, including continuity in
demand, availability and prices for construction
materials and supplies, and eventually on cash flows
and liquidity position, including the consideration of
debt covenants.
The Group considered the following factors when
assessing the impact on the current operating
environment.
Continuity in demand
The demand for real estate is largely dependent on
the availability of mortgage loans and the level of
mortgage rates. Effective from 20 June 2022, the
Government of the Russian Federation introduced
special mortgage rates of 7% (8% starting from 1
January 2023) for newly constructed real estate
and increased the price limit up to RUB 12 million
per apartment in Moscow and Saint Petersburg
(RUB 6 million in other Russian cities). At the same
time, special mortgage programs including a family
mortgage program of 6% continued to be in place.
Availability and cost of finance
As reported in the note 27(d)(ii), loans with a carrying
amount of RUB 31,196 million or 34% of the total
outstanding loans as at 31 December 2022 are
linked to the key rate of the Central Bank of the
Russian Federation (are variable rate instruments).
The Group’s loan contracts either include limitation
on the maximum interest rate or bear preferential
interest rates to debt covered by escrow account
balances. These factors will limit the effect of any
potential increase in the Central Bank’s key rate on
the cost of borrowings.
The Group does not have any borrowings
denominated in foreign currencies.
The Group has secured project financing for all
construction project in place that will enable it to
continue financing its construction projects. For the
new projects the Group aims to balance the ratio
of borrowed funds to cash collected on escrow
accounts to reduce borrowing costs.
The Group has sufficient liquidity to repay
borrowings and does not expect any breaches of
financial covenants during 2022.
Despite the fact that the Group’s parent company is
registered in Cyprus, the Group’s place of operation
is the Russian Federation, and the Group is not
subject to any restrictions on receipt from customers
of any proceeds from sale of real estate which
have been introduced by the Russian Government
with respect to foreign construction companies
operating in Russia.
Availability and cost
of construction materials
The Group mainly uses domestically produced
construction materials and equipment and expects
to be able to replace any shortages or breakages
in its supply chain caused by foreign sanctions
with supplies from other jurisdictions. The prices
for construction materials are not linked to foreign
currencies and the Group does not expect that the
high volatility of foreign currency exchange rates
will result in a significant increase in its production
costs during 2022. Although constructions costs
will continue to increase in line with higher inflation
rates the Group expects that it will be able to pass
increased constructions costs on to its customers.
Considering the above and given the Group’s
history of profitable operations and ready access to
financial resources, the Group reached a conclusion
that the going concern basis of accounting
is appropriate for the preparation of these
consolidated financial statements.
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.
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 are the critical accounting judgements
(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.
Classification of assets and liabilities as current or
non-current:
� Inventories under construction and development
and finished goods, contract assets and contract
liabilities arisen from the sale of real estate, being
part of the working capital used in the Group’s
normal operating cycle are classified as current,
even if they are due to be settled more than
twelve months after the reporting period;
� Financial assets and financial liabilities are
classified as current or non-current based on their
contractual maturities.
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 14 — intangible assets: expected pattern of
consumption of the expected future economic
benefits embodied in the future savings on
connection to networks;
� Note 18 — 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, impairment;
� Note 28 — acquisition of subsidiary: fair value of
the assets acquired and liabilities assumed.
174
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
2. Basis of preparation
3. Significant accounting policies
e) Changes in accounting policies
a) Basis of consolidation
(II) SUBSIDIARIES
The Group has consistently applied the accounting
policies to all periods presented in these
consolidated financial statements.
i) New Standards and Interpretations
The following amendments to the standards and
interpretations are effective for annual periods
beginning on or after 1 January 2023.
� IFRS 17 Insurance Contracts, including
Amendments, insurance contracts;
� Amendments to IFRS 10 Consolidated Financial
Statements and IAS 28 Investments in Associates
and Joint Ventures, sale or contribution of assets
between an investor and its associate or joint
venture;
� Amendments to IAS 1 Presentation of Financial
Statements, classification of liabilities as current or
non-current; non-current liabilities with covenants;
� Amendments to IAS 12 Income Taxes, deferred tax
related to assets and liabilities arising from a single
transaction;
� Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2,
disclosure of accounting policies;
� Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors,
definition of accounting estimates.
� Amendments to IFRS 16 Leases, lease liability in
a sale and leaseback.
The Group does not expect any significant impact
on the Group’s financial position or performance
from the application of these amendments to the
standards and interpretations.
(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 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.
Subsidiaries are entities controlled by the Group.
The Group controls another 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 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 33.
(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.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities are added to the fair value of
the financial assets and deducted from financial
liabilities on initial recognition
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.
(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 —
fair value through profit or loss.
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
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 assesses 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;
c) Financial instruments
� its contractual terms give rise on specified dates
� the risks that affect the performance of the
(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.
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.
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.
175
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
3. Significant accounting policies
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:
� contingent events that would change the amount
or timing of cash flows;
� terms that may adjust the contractual coupon
rate, including variable-rate features;
� prepayment and extension features; and
� terms that limit the Group’s claim to cash flows
from specified assets (e.g. non-recourse features).
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 has 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.
and combined effect of qualitative and quantitative
factors. The Group concludes that the modification
is substantial as a result of the following qualitative
factors:
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 of
IFRS 9. 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
� change in the currency of the financial liability;
� change in collateral or other credit enhancement;
� inclusion of conversion option;
� change in the subordination of the financial
liability.
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.
176
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
3. Significant accounting policies
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.
(V) OFFSETTING
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 expected
credit losses (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.
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).
Presentation of allowance for ECL in the
statement of financial position
Loss allowances for financial assets and contract
assets measured at amortised cost are deducted
from the gross carrying amount of the assets.
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
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.
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.
Evidence that a financial asset is credit-impaired
includes the following observable data:
d) Advances paid and contract
liabilities
� 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.
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. Bank balances kept in escrow
accounts, which represent funds received by
authorized banks from escrow-account holders —
participants of share participation agreements for
construction of real estate, are not included in the
balance of cash and cash equivalents. The funds, in
the excess of the amounts borrowed from the banks,
will be transferred to the Group’s bank accounts
upon completion of construction of respective real
estate and on such time will be recognised within
cash and cash equivalents.
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.
177
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
3. Significant accounting policies
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.
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 during the year
ended 31 December 2022.
(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 owned by the Group is
not depreciated.
The estimated useful lives for the current and
comparative periods are as follows:
� Buildings and constructions
7-30 years;
� Machinery and equipment
5-15 years;
� Vehicles
� Other assets
5-10 years;
3-7 years.
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, while rental earnings are
not significant compared to the sales price of the
property. 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.
Control of an asset refers to the ability to direct the
use of, and obtain substantially all of the remaining
benefits from, the asset. 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 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
starts recognising revenue after state registration of
respective share participation agreements.
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.
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.
178
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
3. Significant accounting policies
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), while specific
formula is used to calculate interest rates when
balances on escrow accounts are lower than
balances of project loan. The range of interest
rates for the Group’s project financing portfolio is
disclosed in note 24 as nominal interest rates for
each loan, where the lower rate is preferential rate
and the higher is base rate.
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:
� Contracts for provision of construction services;
� 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 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 3i)(i).
The Group presents lease liabilities in “Trade and
other payables” (note 26) 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 fixed 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.
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.
179
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
3. Significant accounting policies
4. Determination of fair values
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.
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 the certain types of the
Group’s activities whose tax profits or losses cannot
be offset against profits or losses related to other
activities.
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.
a) Non-derivative financial assets
b) Non-derivative financial liabilities
The fair value of trade and other receivables and
other financial assets measured at amortised cost
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.
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. For finance leases, the market rate
of interest is determined by reference to similar lease
agreements.
5. Operating segments
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
commercial premises and parking places.
� Construction services. Includes construction
services for third parties and for internal purpose.
� Other operations. Include selling of construction
materials, construction and sale of stand-alone
commercial premises, sale of land plots 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
2022 and 2021.
The transition from the scheme of customer
financing to 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 focuses
on the measures of profit or loss of each reportable
segment. The information about reportable
segments’ assets and liabilities is not disclosed.
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.
The performance of the reportable segment
“Residential development” is additionally assessed
on the basis of gross profit adjusted for purchase
price allocation from the acquisition of JSC “Etalon-
Finance” (JSC “Leader-Invest” before 4 April 2022).
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.
180
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
5. Operating segments
a) Information about reportable segments
b) Geographical information
MLN RUB
External revenues
Including:
• St. Petersburg metropolitan area
• Moscow metropolitan area
• Other regions
• Inter-segment revenue
Total segment revenue
RESIDENTIAL DEVELOPMENT
CONSTRUCTION SERVICES
OTHER
TOTAL
2022
2021
2022
2021
2022
2021
2022
2021
69,108
75,269
2,138
2,401
9,310
9,468
80,556
87,138
30,552
31,946
35,088
43,323
3,468
−
−
−
26,493
18,573
614
595
27,107
19,168
69,108
75,269
28,631
20,974
9,924
10,063
107,663
106,306
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
2022
2021
2022
2021
REVENUES
NON-CURRENT ASSETS
St. Petersburg metropolitan area
Moscow metropolitan area
Other regions
36,852
40,076
37,744
47,062
5,960
−
80,556
87,138
3,343
1,293
2,943
7,579
3,094
1,372
−
4,466
Gross profit adjusted for purchase price allocation
from acquisition of Etalon Finance (Leader-Invest
prior to 2022)
27,612
28,948
(43)
(60)
2,945
2,153
30,514
31,041
Gross profit adjusted for purchase price allocation, %
40%
38%
Gross profit
Including:
• St. Petersburg metropolitan area
• Moscow metropolitan area
• Other regions
Gross profit, %
Including:
• St. Petersburg metropolitan area
• Moscow metropolitan area
• Other regions
25,596
25,689
(43)
(60)
2,650
2,153
28,203
27,782
12,761
11,361
1,474
37%
42%
32%
43%
12,883
12,806
−
34%
40%
30%
−
181
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
5. Operating segments
6. Revenue
c) Reconciliations of reportable segment revenues and gross profit
MLN RUB
2022
2021
Contract balances
12,131
13,351
49,448
53,776
The following table provides information about
receivables, contract assets and contract liabilities
from contracts with customers
Total revenue — segment Residential development (note 5 (a))
69,108
75,269
MLN RUB
reconciliation of revenue
Total revenue for reportable segments
Elimination of inter-segment revenue
Consolidated revenue
2022
2021
Sale of flats — transferred at a point in time
Sale of flats — transferred over time
107,663
106,306
(27,107)
(19,168)
80,556
87,138
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
Reconciliation of gross profit adjusted for purchase price allocation from acquisition
of Etalon Finance (Leader-Invest prior to 2022) to profit before tax
MLN RUB
Total gross profit for reportable segments adjusted for purchase price allocation
from acquisition of Etalon Finance
Long term construction contracts — transferred over time
Short term construction services — transferred at a point in time
2022
2021
Total revenue — segment Construction services (note 5 (a))
30,514
31,041
Sale of construction materials — transferred at a point in time
Purchase price allocation from acquisition of Etalon Finance included in cost of sales
(2,311)
(3,259)
Sale of stand-alone commercial premises — transferred over time
Sale of stand-alone commercial premises — transferred at a point in time
Consolidated gross profit
28,203
27,782
Other revenue — transferred over time
unallocated amounts
General and administrative expenses
Selling expenses
Impairment loss on trade and other receivables
Other income
Other expenses
Gain from bargain purchase
Finance income and interest revenue
Finance costs
Share of loss of equity accounted investees
Consolidated profit before income tax
Other revenue — transferred at a point in time
Total other revenue (note 5 (a))
Total revenues from contracts with customers
Rental revenue (note 5 (a))
Total revenues
(7,259)
(5,001)
(912)
331
(5,784)
(4,639)
(169)
711
(2,345)
(4,655)
Other revenue is mainly represented by the revenue of housing servicing companies.
12,038
3,989
−
2,528
(13,120)
(9,909)
(37)
(16)
15,887
5,849
1,580
2,265
2,231
1,453
1,487
2,430
2,006
2,219
1,194
944
2,138
2,867
914
107
4,812
−
8,700
1,459
942
2,401
3,412
708
359
2,203
2,184
8,866
79,946
86,536
610
602
80,556
87,138
MLN RUB
2022
2021
Trade receivables
8,174
9,429
Contract assets
28,733
25,332
Contract liabilities
(12,045)
(14,157)
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 payment in arrears
of 2 to 5 years after the date of completion of
construction for specific projects.
Contract liabilities include advance consideration
received from customers.
182
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
6. Revenue
The explanation of significant changes in contract asset and contract liability balances during
the reporting period is presented in the table below.
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.
MLN RUB
Balance at 1 January
Revenue recognised in the reporting period that
was included in the contract liability balance at the
beginning of the period
Other revenue — transferred at a point in time
Increases due to cash received, excluding amounts
recognized as revenue during the period
2022
2021
31 DECEMBER 2022, MLN RUB
2023
2024
2025
2026
TOTAL
CONTRACT
ASSETS
CONTRACT
LIABILITIES
CONTRACT
ASSETS
CONTRACT
LIABILITIES
Residential development
43,701
15,337
1,043
Construction services
1
−
−
25,332
(14,157)
7,138
(28,351)
−
10,451
−
24,150
Total
43,702
15,337
1,043
163
−
163
60,244
1
60,245
−
−
(6,799)
−
−
−
2,184
31 DECEMBER 2021, MLN RUB
2022
2023
2024
2025
TOTAL
(11,768)
Residential development
35,475
10,355
1,720
Construction services
Construction of stand-alone
commercial premises
58
3,665
−
74
−
51
Total
39,198
10,429
1,771
−
−
−
78
−
−
78
47,628
58
3,790
51,476
Acquisition through business combination
6,534
(1,465)
Transfers from contract assets recognised at the
beginning of the period to receivables
Increase as a result of changes in the measure of
progress
(22,422)
18,937
−
−
(1,568)
19,474
Financing component under IFRS 15
352
(75)
288
(372)
Balance at 31 december
Change during the period
28,733
(12,045)
25,332
(14,157)
3,401
2,112
18,194
14,194
As at 31 December 2022, capitalised costs to obtain
contracts with customers of RUB 604 million will be
recognised within selling expenses after more than
12 months from the reporting date (31 December
2021: RUB 259 million).
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.
During the year ended 31 December 2022,
the Group revised construction budgets for
development projects due to the significant
increase in prices of construction materials. The
effect of revision of budgets on contract asset as of
31 December 2022 is RUB 2,815 million.
183
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
7. Cost of sales
8. General and administrative expenses
9. Other income and other expenses
MLN RUB
2022
2021
MLN RUB
2022
2021
MLN RUB
2022
2021
32,329
33,204
Payroll and related taxes
4,779
3,574
OTHER INCOME
Cost of design and construction works and engineering
infrastructure
Cost of land plots
Cost of construction of social infrastructure
Other costs
6,825
2,470
1,888
11,425
2,511
2,440
Total cost of sales — segment Residential development
43,512
49,580
Cost of sales for segment Construction services
Cost of sales for segment Other
Total cost of sales
2,181
6,660
2,461
7,315
52,353
59,356
Cost of design and construction works and engineering infrastructure, among other,
includes costs of raw materials and consumables used in construction, production
employees’ benefits expenses, and depreciation expense of construction machinery
and equipment.
Services
Depreciation
Audit and consulting services
Bank fees and commissions
Materials
Repair and maintenance
Other taxes
Other
Total
686
384
276
102
119
102
73
738
716
292
242
117
130
81
61
571
Fees and penalties received
Gain on disposal of associate
Gain on disposal of inventories under construction and development
Other income
Gain on disposal of property, plant and equipment
Gain on disposal of investment property
Other income
7,259
5,784
OTHER EXPENSES
Remuneration of the statutory audit firm for the year ended 31 December 2022
amounted to RUB 3.8 million for audit services (2021: RUB 7.5 million) and RUB 0.2 million
for other assurance services (2021: RUB 7.2 million). Remuneration of another audit firm
for the year ended 31 December 2022 amounted to RUB 13.2 million for audit services
(2021: RUB 5 million) and RUB 1.5 million for other assurance services (2021: RUB 17.6
million).
Impairment loss on inventories (note 18)
Fees and penalties incurred
Other taxes
Cost of social infrastructure for completed projects
Charity
Loss on disposal of property, plant and equipment
Loss on disposal of subsidiary
Other expenses
Loss on disposal of inventories under construction and development
145
135
51
−
−
−
331
(994)
(245)
(277)
(209)
(152)
(93)
(2)
(373)
−
142
−
−
128
162
279
711
(2,054)
(323)
(382)
(555)
(60)
−
(7)
(1,069)
(205)
Other expenses
(2,345)
(4,655)
Other expenses, net
(2,014)
(3,944)
184
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
10. Personnel costs
11. Finance income and finance costs
2022
2021
MLN RUB
2022
2021
MLN RUB
Wages and salaries
Social security contributions
9,427
2,175
11,602
7,371
1,765
9,136
Remuneration to employees in respect of services rendered during the reporting period
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 2022, personnel costs and related taxes included
in cost of production amounted to RUB 6,009 million (year ended 31 December 2021:
RUB 4,631 million). The remaining part of personnel expenses was subsumed within
general and administrative expenses and selling expenses in the total amount of RUB
5,593 million (year ended 31 December 2021: RUB 4,505 million).
The average number of staff employed by the Group during the year ended
31 December 2022 was 5,486 employees (year ended 31 December 2021: 4,479
employees).
RECOGNISED IN PROFIT OR LOSS
Finance income
Interest income under the effective interest method on:
• Bank deposits — at amortised cost
• Cash and cash equivalents (except bank deposits)
• Interest income — financing component under IFRS 15
• Unwinding of discount on trade receivables
Total interest income arising from financial assets
measured at amortised cost
Reversal of impairment on investments and advances paid to suppliers
Gain on write-off of accounts payable
Finance income — other
FINANCE COSTS
Financial liabilities measured at amortised cost:
• Interest expenses — borrowing costs, including:
• Cost of corporate debt
• Cost of project debt — at preferential rate
• Cost of project debt — adjustment to arrive at base rate
• Unwinding of discount on other payables
• Interest expense on leases
• Interest expenses- financing component under IFRS 15
Net foreign exchange loss
Impairment loss on advances paid to suppliers and financial investments
Other finance costs
Finance costs
Net finance costs recognised in profit or loss
2,426
827
352
309
1,271
524
288
309
3,914
2,392
14
61
75
−
136
136
(8,997)
(4,474)
(803)
(3,720)
(3,133)
(732)
(75)
(50)
−
(133)
(6,078)
(3,513)
(1,175)
(1,390)
(2,424)
(498)
(372)
(297)
(158)
(82)
(13,120)
(9,909)
(9,131)
(7,381)
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
Borrowing costs and significant financing component
capitalised during the year
2022
16
2021
239
Weighted average capitalisation rate
10.63%
12.69%
185
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
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 2021: 20%).
Reconciliation between tax expense and the product of accounting profit multiplied
by the applicable tax rate 20%:
MLN RUB
2022
2021
The Group prepares reconciliation using the tax rate of 20% that is applicable in the
Russian Federation and not the domestic tax rate of the Cyprus parent Company
(12.5%) since substantially all taxable profit is generated in the Russian Federation.
MLN RUB
CURRENT TAX EXPENSE
Current year
(Over-provided)/under-provided in prior year
DEFERRED TAX EXPENSE
Origination and reversal of temporary differences
Income tax expense
2022
2021
Profit before income tax
Theoretical income tax at statutory rate of 20%
4,013
Adjustments due to:
(Over-provided)/under-provided in prior year
Tax losses for which no deferred tax asset was recognised
Expenses not deductible and income not taxable
for tax purposes, net, including:
5,294
17
5,311
(2,425)
2,886
(14)
3,999
(1,157)
2,842
15,887
3,177
17
32
(340)
5,849
1,170
(14)
74
1,612
• Gain from bargain purchase arising from acquisition
(2,407)
−
of YIT Russia
• Interest on loans used to finance the acquision of JSC
566
549
“Etalon-Finance”
• Unwinding of discount on payables for acquisition of 88% of share
capital of LLC “Specialized Developer “ZIL-YUG”
• Other not deductible expenses
Income tax expense
309
1,192
398
665
2,886
2,842
186
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
13. Property, plant and equipment
During the year ended 31 December 2022,
depreciation expense of RUB 341 million (year
ended 31 December 2021: RUB 249 million) was
charged to cost of sales, RUB 85 million (year
ended 31 December 2021: RUB 14 million) to cost
of real estate properties under construction and
development, RUB 10 million to other expenses, net
(year ended 31 December 2021: RUB 11 million) and
RUB 180 million (year ended 31 December 2021: RUB
242 million) to general and administrative expenses.
MLN RUB
COST
Balance at 1 January 2021
Additions
Reclassification to inventories
Disposals
Transfers
Balance at 31 December 2021
Balance at 1 January 2022
Additions
Reclassification to inventories
Acquisition through business combination
Disposals
Transfers
Balance at 31 December 2022
ACCUMULATED DEPRECIATION
Balance at 1 January 2021
Depreciation for the year
Disposals
Balance at 31 December 2021
Balance at 1 January 2022
Depreciation for the year
Disposals
Balance at 31 December 2022
CARRYING AMOUNTS
Balance at 1 January 2021
Balance at 31 December 2021
Balance at 1 January 2022
Balance at 31 December 2022
BUILDINGS AND
CONSTRUCTIONS
MACHINERY AND
EQUIPMENT
VEHICLES
OTHER
LAND
CONSTRUCTION
IN PROGRESS
2,927
812
(147)
(311)
40
3,321
3,321
531
−
292
(178)
28
3,994
(610)
(256)
284
(582)
(581)
(325)
93
(813)
2,317
2,739
2,740
3,181
2,459
169
−
(371)
6
2,263
2,263
147
(11)
54
(150)
5
2,308
(1,892)
(161)
329
(1,724)
(1,724)
(184)
94
(1,814)
567
539
539
494
111
11
−
(14)
−
108
108
34
(2)
−
(36)
−
104
(79)
(16)
13
(82)
(82)
(14)
24
(72)
32
26
26
32
448
112
−
(200)
4
364
364
97
−
2
(106)
16
373
(246)
(83)
135
(194)
(194)
(92)
66
(220)
202
170
170
153
117
−
−
(4)
−
113
113
52
−
23
(22)
−
166
−
−
−
−
(1)
(1)
−
(2)
117
113
112
164
273
240
−
−
(50)
463
463
93
−
−
−
(49)
507
−
−
−
−
−
−
−
−
273
463
463
507
TOTAL
6,335
1,344
(147)
(900)
−
6,632
6,632
954
(13)
371
(492)
−
7,452
(2,827)
(516)
761
(2,582)
(2,582)
(616)
277
(2,921)
3,508
4,050
4,050
4,531
187
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
14. Intangible assets
The explanation of significant changes in contract asset and contract liability balances during
the reporting period is presented in the table below.
FUTURE
SAVINGS ON
CONNECTION
TO NETWORKS
COMPUTER
SOFTWARE
CUSTOMER
RELATIONSHIPS
COST
Balance at 1 January 2022
Additions
Acquisition through business combination
Disposals
Reclassification to inventories
Balance at 1 January 2022
ACCUMULATED AMORTISATION
Balance at 1 January 2022
Amortisation for the year
Balance at 1 January 2022
CARRYING AMOUNTS
Balance at 1 January 2022
Balance at 1 January 2022
−
2,600
−
−
(53)
2,547
−
−
−
−
2,547
−
21
49
−
−
70
−
(5)
(5)
−
65
−
−
143
(100)
−
43
−
(3)
(3)
−
40
15. Investment property
acquired concentrated in a single identifiable
intangible asset — future savings on connection to
networks, which will be consumed over the whole
course of construction of residential complex, note
2(d). Basing on the results of the assessment, the
Group determined that acquired assets did not
constitute a business and the whole transaction was
accounted for as an intangible asset acquisition.
The primary reason for the acquisition was to secure
timing and lowering the costs of connection to the
resource supply networks of residential complex
undergoing construction.
Amortisation of future savings on connection to
networks is recognised within cost of sales on the
same basis as the cost of acquisition of land plots,
see note 3i)(i). Future savings are reclassified to
inventories in proportion to the progress towards
satisfaction of performance obligation for
construction of residential complex and the share
of uncontracted net sellable are in that residential
complex.
Customer relationships
MLN RUB
COST
Balance at 1 January
Additions
Reclassification to
inventories
Disposals
Balance at
31 December
ACCUMULATED
DEPRECIATION AND
IMPAIRMENT LOSSES
Balance at 1 January
Depreciation for the
year
Disposals
Balance at
31 December
Customer relationships represent present value of
net cashflows of housing servicing companies over
the 25 years since the date of acquisition of YIT.
Respectively, customer relationships are amortised
over the period of 25 years on a straight-line basis.
Carrying amount
at 1 January
Carrying amount
at 31 December
TOTAL
−
2,621
192
(100)
(53)
2,660
−
(8)
(8)
−
2,652
2022
2021
688
5
−
(16)
677
(272)
(10)
1
(281)
416
396
1,017
6
(67)
(268)
688
(326)
(19)
73
(272)
691
416
Future savings on connection to networks
On 22 July 2022, the Group acquired 100% of the
share capital of five limited liabilities companies
owning infrastructure facilities that will enable
to connect new “Lyceum Quarter” residential
complex that the Group develops in the Solnechny
neighborhood of Yekaterinburg to centralised
heating, electricity, water supply and sewerage
networks.
The Group performed an assessment of acquired
set of activities and assets and concluded that
substantially all of the fair value of the gross assets
Computer software
Computer software represents Dispatcher 24
software. The estimated useful life of computer
software is 6 years.
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 2022, the fair value of investment
property amounted to RUB 637 million (31 December
2021: RUB 659 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, as defined in note 27. The Group
did not identify any indicators of impairment as at
31 December 2022 and 2021, and did not recognise
any impairment losses for investment property
during the years ended 31 December 2022 and 2021.
188
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
16. Other long-term investments
17. Deferred tax assets and liabilities
MLN RUB
Loans — at amortised cost
Investments in associates
Investments in joint ventures
Bank promissory notes — at amortised cost
Loss allowance for loans given
2022
2021
a) Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
ASSETS
LIABILITIES
NET
b) Unrecognised deferred tax liability
At 31 December 2022, a deferred tax liability arising
on temporary differences of RUB 92,208 million
(31 December 2021: RUB 81,287 million) related to
investments in subsidiaries was not recognized
because the Company controls the timing of
reversal of the temporary differences and is satisfied
that those differences will not be reversed in the
foreseeable future.
2021
223
2022
(310)
2021
(388)
68
(72)
(20)
12,056
(2,199)
(2,307)
2022
233
27
9,069
2021
(165)
48
9,749
1,635
(6,508)
(7,722)
(2,700)
(6,087)
c) Unused tax losses
277
118
210
−
1,106
500
−
3
605
1,609
(22)
583
(120)
1,489
As at 31 December 2021, bank promissory note of
RUB 3 million was pledged as security for a secured
bank loan, see note 24.
As at 31 December 2021, investment in associate
of RUB 380 million represented a 40.7% stake in QB
Technology Ltd. The investment was sold during
2022 to an unrelated party for the consideration
equivalent to RUB 480 million and recognised gain
on disposal of RUB 135 million, note 9.
Investment in joint venture represents a 50% stake
in LLC Strana-Etalon acquired in 2022. LLC Strana-
Etalon is involved in real estate development
projects in Tyumen.
Investments in associates and joint ventures are
accounted for using the equity method.
As at 31 December 2021, loan at amortised cost
of RUB 850 million represented a loan issued to an
entity owning a land plot in the Saint Petersburg
metropolitan area. The entity has been acquired
by the Group during the year ended 31 December
2022 and the loan was offset against consideration
payable for acquisition. The acquisition was
accounted for as an acquisition of asset (land plot).
The Group’s exposure to credit, currency and interest
rate risks related to other investments is disclosed in
note 27.
18
492
137
−
(569)
(388)
(7)
(135)
(168)
6,363
6,019
(12,477)
(11,393)
3,709
196
1,626
125
−
−
(484)
(340)
13
112
(201)
(6,114)
3,709
(288)
3,860
−
Tax assets/(liabilities)
26,867
22,399
(23,007)
(22,480)
(15,494)
(15,052)
15,494
15,052
11,373
7,347
(7,513)
(7,428)
3,860
2022
543
99
11,268
3,808
13
681
187
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
Set off of tax
Net tax assets/
(liabilities)
A deferred tax asset of RUB 954 million (31 December
2021: RUB 923 million) was not recognised for the
carry forward of unused tax losses to the extent that
it is not probable that future taxable profit will be
available against which these unused tax losses can
be utilised.
11
357
(31)
(5,374)
1,626
(215)
(81)
−
(81)
189
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
17. Deferred tax assets and liabilities
18. Inventories
d) 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
2022
RECOGNISED
IN PROFIT
OR LOSS
ACQUISITION
THROUGH
BUSINESS
COMBINATION
31 DECEMBER
2022
(165)
48
9,749
(6,087)
11
357
(31)
162
(499)
(3,168)
2,295
2
484
(96)
236
478
2,488
1,092
-
(729)
(74)
(5,374)
1,869
(2,577)
1,626
(215)
(81)
1,678
(302)
2,425
373
229
1,516
233
27
9,069
(2,700)
13
112
(201)
(6,082)
3,677
(288)
3,860
1 JANUARY
2022
RECOGNISED
IN PROFIT
OR LOSS
31 DECEMBER
2022
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
Less: Allowance for inventories under construction and development
Total inventories under construction and development
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
Stand-alone commercial premises under construction and development
Land in industrial park
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
(77)
141
5,747
(2,284)
19
(78)
46
(5,861)
1,295
(186)
(1,238)
(88)
(93)
4,002
(3,803)
(8)
435
(77)
487
331
(29)
1,157
(165)
48
9,749
(6,087)
Other
11
357
(31)
(5,374)
1,626
(215)
(81)
Less: Allowance for other inventories
Total other inventories
Total
As at 31 December 2022, inventories under
construction and development of RUB 80,862
million relate to construction projects that will be
completed after more than 12 months from the
reporting date (31 December 2021: RUB 92,204
million).
In the course of implementation of several
development projects the Group has to construct
and transfer certain social infrastructure to сity
authorities. As at 31 December 2022, the cost of
such social infrastructure amounts to RUB 1,566
million and is included into the balance of finished
goods and inventories under construction and
development (31 December 2021: RUB 1,086 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.
2022
2021
100,230
80,000
13,304
9,988
11,023
8,243
123,522
99,266
(3,922)
(3,835)
119,600
95,431
6,470
5,619
8,437
4,423
5,641
6,480
20,526
16,544
(3,654)
(3,521)
16,872
13,023
2,079
3,226
706
39
6,050
1,423
−
−
278
1,701
(3)
(2)
6,047
1,699
142,519
110,153
190
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
18. Inventories
a) Barter transactions
Project 3, year ended 31 December 2019
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.
Project 1, year ended 31 December 2015
The fair value of the investment rights acquired
equal to RUB 4,522 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 — 4.5%-6.4% per annum;
� Discount rate — 23% per annum.
Project 2, year ended 31 December 2017
The fair value of the investment 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.
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 investment 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:
� Cash flows were projected based on the business
plans for construction of residential property;
� Inflation rates — 0.9%-1% per annum;
� Discount rate — 12.78% per annum.
At 31 December 2022, the cost of land plots (Project
1) 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
2022 in the amount of RUB 4,126 million (year ended
31 December 2021: RUB 8,660 million), while the
remaining balance of RUB 396 million is included in
finished goods (31 December 2021: RUB 274 million
in finished goods and RUB 90 million in inventories
under construction and development).
At 31 December 2022, 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
2022 in the amount of RUB 4,282 million (year ended
31 December 2021: RUB 4,014 million), while the
remaining balance of RUB 41 million is included in
finished goods (31 December 2021: RUB 435 million)
and RUB 72 million in inventories under construction
and development (31 December 2021: RUB 73 million
in inventories under construction and development).
As at 31 December 2022, the allowance of RUB 5,967
million related to parking places (31 December 2021:
RUB 4,686 million).
At 31 December 2022, the cost of land plots
(Project 3) 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 2022 in the amount
of RUB 1,112 million (year ended 31 December 2021:
4,258 million), while the remaining balance of RUB
81 million is included in finished goods (31 December
2021: RUB 65 million in finished goods and RUB
72 million in inventories under construction and
development).
b) Allowance for impairment of
inventories
The following is movement in the allowance for
impairment of inventories:
As at 31 December 2022, the balance of parking
places is equal to RUB 18,425 million (31 December
2021: RUB 14,723 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 – 9,35% per annum (weighted
average mortgage rate on the secondary real
estate market);
� Inflation rates – 4,00 – 5,00% per annum;
MLN RUB
2022
2021
Growth of discount rate
31 DECEMBER 2022
Balance at 1 January
Write down to net
realisable value of
inventories
Reversal of write down
of inventories
Balance at
31 December
7,357
3,495
4,532
4,896
(3,273)
(2,071)
7,579
7,357
As at 31 December 2022, the net realizable value
testing resulted in an amount which was less
than the carrying amount by RUB 7,579 million (31
December 2021: RUB 7,357 million) and the respective
allowance was recognised in other expenses, see
note 9, and in cost of sales for segment Other, note 7.
Growth of inflation rates
Reduction of turnover of finished goods, years
Reduction of revenue from uncontracted parking
places
31 DECEMBER 2021
Growth of discount rate
Growth of inflation rates
Reduction of turnover of finished goods, years
Reduction of revenue from uncontracted parking
places
� In case there was no historical information on sales
of certain parking places, the Group considered
historical information in relation to similar 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 significant impact on the impairment allowance
amount.
The following table demonstrates changes in key
inputs and sensitivity of measurement of allowance
for impairment:
CHANGE OF
PARAMETER
IMPACT ON
ALLOWANCE FOR
IMPAIRMENT
IN MONETARY
TERMS (MLN RUB)
2%
2%
1
2%
7%
-10%
4%
3%
263
(403)
143
139
CHANGE OF
PARAMETER
IMPACT ON
ALLOWANCE FOR
IMPAIRMENT
IN MONETARY
TERMS (MLN RUB)
2%
2%
1
2%
10%
-6%
6%
2%
409
(245)
246
94
191
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
18. Inventories
19. Contract assets, trade and other receivables
20. Short-term investments
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 2022, the total
carrying value of these items of property was RUB 2
million (31 December 2021: RUB 378 million).
d) Pledges
As at 31 December 2022, inventories with a carrying
amount of RUB 113,259 million (31 December 2021:
RUB 55,147 million) are pledged as security for
borrowings, see note 24.
MLN RUB
2022
2021
LONG-TERM TRADE AND OTHER RECEIVABLES
Trade receivables
Less: loss allowance for expected credit losses on trade accounts receivable
Long-term trade receivables less allowance
Other receivables
Less: loss allowance for expected credit losses on other accounts receivable
Long-term other receivables less allowance
Advances paid to suppliers
1,544
(8)
1,536
36
(3)
33
−
3,131
(10)
3,121
255
(31)
224
−
Total long-term trade and other receivables
1,569
3,345
e) Cost of acquisition of construction
projects (land plots)
Contract assets
Trade receivables
SHORT-TERM TRADE AND OTHER RECEIVABLES
The following table summarises cash spent on
acquisition of construction projects (land plots) and
related costs incurred during the reporting period.
Less: loss allowance for expected credit losses on trade accounts receivable
Contract assets and short-term trade receivables less allowance
Advances paid to suppliers
Less: loss allowance for expected credit losses on advances paid to suppliers
MLN RUB
2022
2021
Short-term advances paid to suppliers less allowance
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
19,585
9,961
VAT recoverable
Financial asset arising from preferential rate on escrow-backed loans
2,335
2,022
Other taxes receivable
Other receivables due from related parties
Other receivables
849
790
Total
20,434
10,751
Less: loss allowance for expected credit losses on other accounts receivable
Short-term other receivables less allowance
Total short-term trade and other receivables
Total
28,733
25,332
7,447
(809)
6,837
(529)
35,371
31,640
12,613
(144)
11,015
(158)
12,469
10,857
7,343
336
152
142
3,243
11,216
(1,271)
9,945
4,915
496
35
91
1,509
7,046
(803)
6,243
57,785
48,740
59,354
52,085
MLN RUB
Loans — at amortised
cost
Bank deposits
(over 3 months)
2022
139
−
139
2021
172
42
214
Loss allowance for
loans given
(117)
(88)
Total
22
126
The Group’s exposure to credit, currency and interest
rate risks related to other investments is disclosed in
note 27.
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.
As at 31 December 2022, contract assets of RUB
8,594 million relate to construction projects that
will be completed after more than 12 months from
the reporting date (31 December 2021: RUB 10,560
million).
As at 31 December 2022, non-financial assets
recognised within advances paid to suppliers, VAT
and other taxes receivable amounted to RUB 19,938
million (31 December 2021: RUB 15,812 million).
The explanation of significant changes in contract
asset balance during the reporting period is
presented in note 6.
The Group’s exposure to credit and currency risks
and impairment losses related to trade and other
receivables are disclosed in note 27.
192
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
21. Cash and cash equivalents
22. Capital and reserves
MLN RUB
Cash in banks, in RUB
Cash in banks, in EUR
Cash in banks, in USD
Petty cash
Cash in banks, in CHF
Cash in banks, in GBP
Short-term deposits
(less than 3 months)
2022
1,162
270
17
1
1
−
2021
7,740
5
85
1
1
2
22,360
36,753
Total
23,811
44,587
The Group keeps significant bank balances in major
Russian banks with credit ratings assigned
by Russian rating agencies of ruAAА, ruAA+, ruAA,
ruAA-, ruA+, ruA, ruA-.
At 31 December 2022, the most significant amount
of cash and cash equivalents held with one bank
totalled RUB 9,456 million (31 December 2021: RUB
19,018 million). At 31 December 2022, the Group had
outstanding loans and borrowings with the same
bank that held the most significant amount of
cash and cash equivalents of RUB 66,304 million
(31 December 2021: RUB 59,733 million).
At 31 December 2022, short-term deposits bore
interest rates ranging from 4.9% to 8.1% per annum
(31 December 2021: 6.1% to 9.43% per annum).
The Group’s exposure to interest rate risk and
a sensitivity analysis for financial assets and
liabilities are disclosed in note 27.
Bank balances on escrow accounts —
supplementary disclosure
MLN RUB
Сash is held in
a Russian bank
2022
9,456
2021
19,018
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
2022
2021
59,752
28,400
12,130
(39,920)
23,572
36,180
−
−
Balance at 1 January
Receipts of funds on
escrow accounts
Acquired through
business combination
Release of funds from
escrow accounts
Balance at
31 December
a) Share capital
The table below summarizes the information about the issued share capital of the Company.
2022
2021
NUMBER OF SHARES UNLESS OTHERWISE STATED
ORDINARY
SHARES
PREFERENCE
SHARES
ORDINARY
SHARES
PREFERENCE
SHARES
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.
Issued shares
Par value
0.00005 GBP
1 GBP
0.00005 GBP
1 GBP
d) Dividends
On issue at the beginning of the year
383,445,362
20,000
294,957,971
20,000
New shares issued during the year
−
−
88,487,391
−
On issue at the end of the year, fully paid
383,445,362
20,000
383,445,362
20,000
At 1 January 2021, the number of authorised and
issued shares was 294,957,971. On 28 March 2021,
the General Meeting of the Shareholders of the
Company approved the increase of the authorised
share capital of the Company by the creation of
88,487,391 ordinary shares of nominal value of GBP
0,00005 each. On 14 May 2021, the Company
announced an offering of rights to subscribe for
newly issued Ordinary Shares to the existing holders
of the Company’s equity securities. Eligible holders
of GDRs subscribed for 23,339,732 new ordinary
shares and 281,975 new GDRs in total. a rump
offering was also completed on 14 May 2021 in
which a total of 64,865,684 GDRs was purchased by
investors.
Preference shares bear neither voting rights nor
rights to receive dividends.
b) Share premium
The Company’s share premium account originated
from issuance of 117,647 ordinary £0,01 shares for
a consideration of USD 82,352,900 in March 2008,
from the initial public offering of 71,428,571 ordinary
shares at a value USD 7 each in form of global
depository receipts (GDRs) on the London Stock
Exchange on 4 April 2011 and from a supplementary
public offering of 88,487,391 ordinary shares at
a value USD 1.7 in form of shares and global
depository receipts on 14 May 2021.
c) Reserve for own shares
During 2011-2017, the Company acquired 8,216,378
GDRs for own shares under GDR repurchase
programmes.
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 2022
and 31 December 2021, the total number of own
shares acquired by the Group amounted to 3,946
shares or 0.001% of issued share capital.
60,362
59,752
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.
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.
The current challenging geopolitical circumstances,
certain sanctional provisions and mutual restrictions,
including on distribution of funds through
international payment and clearing systems, have
a significant impact on the Company’s ability to
pay out dividends to all groups of its shareholders.
Based on the principle of equitable treatment
of all shareholders, the Board of Directors of the
Company resolved to postpone consideration of
the matter of dividend payments until constraints
currently in force are removed. The Annual General
Meeting of shareholders that took place on 22
December 2022 neither considered nor approved
any dividend payments for the financial year ended
31 December 2021.
During the year ended 31 December 2021, the
Company paid dividends in the amount of RUB 3,613
million.
193
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
22. Capital and reserves
23. Earnings per share
24. Loans and borrowings
e) Non-controlling interest
In the course of acquisition of YIT Russia, the Group
acquired nine subsidiaries (housing servicing
companies) with a non-controlling interest. In
October 2022, the Group disposed its share in
five of these subsidiaries in exchange for the non-
controlling interest in the three other subsidiaries.
The transaction was recorded directly in equity
as a deduction from retained earnings and non-
controlling interest.
As of the date of disposal, the total assets of the
disposed subsidiaries amounted to RUB 572 million
and the total liabilities amounted to RUB 205 million.
From the date of acquisition to the date of disposal
these subsidiaries contributed revenues of RUB 330
million and a profit of RUB 74 million.
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 reporting
period, as shown below. The Company has no dilutive potential ordinary shares.
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 27.
NUMBER OF SHARES UNLESS OTHERWISE STATED
2022
2021
NUMBER OF SHARES UNLESS OTHERWISE STATED
2022
2021
Issued shares at 1 January
Effect of shares issued in May 2021
383,441,416
294,954,025
NON-CURRENT LIABILITIES
−
55,031,884
Secured bank loans
Weighted average number of shares for the year ended 31 December
383,441,416
349,985,909
Secured project financing
Profit attributable to the owners of the Company, mln RUB
Basic and diluted earnings per share (RUB)
12,948
33.77
3,007
8.59
Unsecured bank and other loans
Unsecured bond issues
CURRENT LIABILITIES
Current portion of secured bank loans
Current portion of secured project financing
Current portion of unsecured bank and other loans
Current portion of unsecured bond issues
Weighted average number of shares for the year ended 31 December
12,423
51,273
306
9,968
73,970
7,751
3,489
2,705
5,173
19,118
20,676
28,923
2,602
14,931
67,132
5,345
7,305
1,777
1,879
16,306
The Group has credit line facilities used 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.
The reconciliation of movements of liabilities to cash flows arising from financing activities during the reporting
period is presented in the table below.
194
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
24. Loans and borrowings
MLN RUB
Balance at 1 January 2022
Proceeds from loans and borrowing
Repayment of loans and borrowing
Payment of lease liabilities
Total changes from financing cash flows
OTHER CHANGES
Interest expense on loans and borrowings
Interest expense on lease liabilities
Additions/terminations to lease liabilities
Assumed through business combination
Interest paid on loans and borrowings
Interest paid on lease liabilities
Offset of funds released from escrow accounts
against loans payable
Discounting of loans
Total liability-related other changes
Balance at 31 December 2022
LOANS AND
BORROWINGS
LEASE
LIABILITIES
TOTAL
MLN RUB
LOANS AND
BORROWINGS
LEASE
LIABILITIES
RETAINED
EARNINGS
SHARE
PREMIUM
TOTAL
50,505
1,862
35,586
15,486
103,439
83,438
43,008
(11,166)
-
31,842
8,997
-
-
3,951
(4,531)
-
(27,162)
(3,447)
(22,192)
93,088
9,370
-
-
(2,144)
(2,144)
-
732
289
296
-
(732)
-
-
585
7,811
92,808
43,008
(11,166)
(2,144)
29,698
Balance at 1 January 2021
CHANGES FROM FINANCING CASH FLOWS
Proceeds from loans and borrowing
Repayment of loans and borrowing
Payment of lease liabilities
Payment of dividends
Proceeds from issue of share capital
49,071
(14,635)
-
-
-
-
-
(1,775)
-
-
8,997
Total changes from financing cash flows
34,436
(1,775)
732
289
4,247
(4,531)
(732)
(27,162)
(3,447)
(21,607)
100,899
OTHER CHANGES
Interest expense on loans and borrowings
Foreign exchange loss
Interest expense on lease liabilities
Additions/terminations to lease liabilities
Modifications of lease contracts
Interest paid on loans and borrowings
Interest paid on lease liabilities
Discounting of loans
Total liability-related other changes
Total equity-related other changes
Balance at 31 December 2021
6,078
-
-
-
-
(3,963)
-
(3,618)
(1,503)
-
83,438
-
-
498
9,346
(63)
-
(498)
-
9,283
-
9,370
-
-
-
(3,613)
-
(3,613)
-
12
-
-
-
-
−
-
12
3,007
34,992
-
-
-
-
10,881
10,881
-
-
-
-
-
-
-
-
-
-
26,367
49,071
(14,635)
(1,775)
(3,613)
10,881
39,929
6,078
12
498
9,346
(63)
(3,963)
(498)
(3,618)
7,792
3,007
154,167
195
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
24. Loans and borrowings
Terms and debt repayment schedule
The table below shows the terms and conditions of
outstanding loans.
MLN RUB
As at 31 December 2022, the weighted average
interest rate on current credit portfolio amounted to
6.52% p.a. (31 December 2021: 5.22% p.a.).
Bank loans are secured by:
� inventories with a carrying amount of RUB 113,259
million (31 December 2021: RUB 55,174 million), see
note 18;
� pledge of 68% of shares in subsidiary company
JSC “Zatonskoe” which represents RUB 2,873 million
in its net assets* (31 December 2021: 68% of shares
represents RUB 3,921 million in net assets);
� pledge of 100% shares of JSC “Etalon-Finance”
and 100% of other subsidiary companies of JSC
“Etalon-Finance” which collectively represent RUB
36,620 million in net assets* (31 December 2021:
RUB 42,151 million in net assets);
� pledge of 100% shares of JSC “Etalon
LenSpetsSMU”, LLC “Specialized “Developer Etalon
Pushkin”, LLC “Zolotaya Zvezda”, JSC “Specialized
Developer “Komplekt”, LLC “EtalonStroy” and
LCC “Specialized Developer “Etalon” which
collectively represent RUB 39,035 million in net
assets1 (31 December 2021: RUB 46,344 million in
net assets);
� pledge of 99.99% shares of LLC “Specialized
Developer “Serebryaniy Fontan” which represents
RUB 10,086 million in its net assets (31 December
2021: RUB 3,667 million in net assets).
1 Net assets are based on individual IFRS accounts of the relevant
companies.
SECURED BANK LOANS
Secured project financing
Secured bank loan
Secured project financing
Secured project financing
Secured bank loan
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Secured project financing
Total secured bank loans
CURRENCY
NOMINAL INTEREST RATE
AS OF 31 DECEMBER
YEAR OF
MATURITY
FACE VALUE
CARRYING AMOUNT
FACE VALUE
CARRYING AMOUNT
2022
2021
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
0.01% — 8.00%
CBR's key rate + 3%
0.01% — 15%
0.01% — 7.6%
CBR's key rate + 2.35%
0.01% — CBR's key rate + 3.05%
0.01% — 8.85%
0.01% — CBR's key rate + 3%
0.01% — 15%
0.01% — 10.0%
0.01% — CBR's key rate + 2.70%
0.01% — 10.75%
0.01% — CBR's key rate + 2.65%
0.01% — 8.75%
0.01% — 8.5%
0.01% — 13.75%
0.01% — CBR's key rate + 3%
0.01% — 10.05%
0.01% — CBR's key rate + 4%
0.01% — 11.58%
0.01% — CBR's key rate + 4%
0.01% — 11.01%
0.01% — 7.1%
0.01% — 8.5%
0.01% — 7.15%
0.01% — 9%
2024
2027
2025
2024
2024
2027
2025
2026
2025
2023
2027
2023
2026
2023
2023
2025
2026
2024
2027
2025
2026
2023
2024
2023
2024
2022
14,463
12,449
12,308
7,922
7,835
5,478
3,876
3,814
2,171
1,242
1,298
1,019
1,016
680
442
349
329
235
197
135
162
107
−
−
−
−
13,793
12,354
12,131
7,922
7,820
4,970
3,667
3,315
2,066
1,242
1,189
1,029
1,000
680
431
318
253
235
168
135
111
107
−
−
−
−
7,329
13,918
4,402
3,169
12,188
2,831
1,526
−
2,799
−
−
−
−
−
−
6,614
13,872
3,965
2,935
12,149
2,516
1,317
−
2,482
−
−
−
−
−
−
6,145
5,622
−
−
−
−
−
−
4,098
769
5,154
916
−
−
−
−
−
−
3,979
770
5,133
895
77,527
74,936
65,244
62,249
196
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
24. Loans and borrowings
As at 31 December 2022, the amount of undrawn
borrowing facilities that may be available for
future operating activities and to settle capital
commitments amount to RUB 154,964 million
(31 December 2021: RUB 64,696 million).
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
reporting period, the Group breached operating
covenants on several loans. The Group obtained
waivers from the banks before the reporting date,
and the obligations were not transferred to current
liabilities.
As at the reporting date, considering waivers
obtained from the banks before the reporting date,
the Group was in compliance with loans’ operating
covenants.
MLN RUB
UNSECURED BANK AND OTHER LOANS
Unsecured bank and other loans
Unsecured bank and other loans
Unsecured bank and other loans
Unsecured bank and other loans
Unsecured bank and other loans
Unsecured bank and other loans
Total unsecured bank and other loans
Secured project financing
Total secured bank loans
UNSECURED BOND ISSUES
Unsecured bonds
Unsecured bonds
Unsecured bonds
Total unsecured bond issues
Total outstanding loans
CURRENCY
NOMINAL INTEREST RATE
AS OF 31 DECEMBER
YEAR OF
MATURITY
FACE VALUE
CARRYING AMOUNT
FACE VALUE
CARRYING AMOUNT
2022
2021
RUB
RUB
RUB
RUB
RUB
RUB
−
83,438
RUB
RUB
RUB
7.15%
0.001%
9.31%
9.25%
8.700%
0.002%
−
9,370
9.10%
7.95%
8.95%
2023
2023
2021
2022
2022
2022
12
34,992
2026
2023
2022
2,911
100
−
−
−
−
3,011
−
26,367
10,027
5,148
−
15,175
95,713
2,911
100
−
−
−
−
3,011
12
34,992
9,995
5,146
−
15,141
93,088
3,004
3,004
−
355
819
160
40
4,378
−
26,367
10,025
5,147
1,709
16,881
86,503
−
355
819
160
40
4,378
12
154,167
9,976
5,128
1,707
16,811
83,438
197
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
25. Provisions
a) Warranties
The provision for warranties relates mainly to the
residential units sold during the reporting period.
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.
MLN RUB
Balance at 1 January 2021
Provisions made during the year
Provisions used during the year
Provision reversed during the year
Balance at 31 December 2021
Balance at 1 January 2022
Provisions made during the year
Assumed through business
combination
Provisions used during the year
Provision reversed during the year
c) Provision for litigations and claims
Balance at 31 December 2022
The Group records provision for litigations and
claims when it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation.
Non-current
Current
WARRANTY
PROVISION
PROVISION
FOR
DEFERRED
WORKS
PROVISION
FOR
ONEROUS
CONTRACTS
PROVISION
FOR
LITIGATIONS
AND CLAIMS
129
18
(25)
(5)
117
117
151
285
(65)
(82)
406
406
−
406
369
1,669
(1,586)
(121)
331
331
2,779
137
(2,835)
26
438
−
438
438
25
57
−
(14)
68
68
−
−
−
(67)
1
−
1
1
4
149
(32)
(2)
119
124
169
16
(64)
(45)
200
−
200
200
26. Contract liabilities, trade and other payables
MLN RUB
2022
2021
LONG-TERM
Trade payables
Lease liabilities
Other payables
SHORT-TERM
16,933
24,257
4,596
1,449
6,859
114
22,978
31,230
Contract liabilities
12,045
14,157
TOTAL
527
1,893
(1,643)
(142)
635
640
3,099
438
Trade payables
VAT payable
(2,964)
Payroll liabilities
Other taxes payable
Lease liabilities
Other payables
(168)
1,045
406
639
11,977
5,531
1,450
360
3,215
5,000
4,234
1,164
362
2,511
14,413
10,421
36,946
23,692
1,045
Total
71,969
69,079
Long-term trade payables mainly consist of an
obligation equal to RUB 16,340 million (31 December
2021: RUB 23,168 million) 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 2024. In addition, the
current part of the obligation of RUB 6,828 million (31
December 2021: RUB 2,108 million) 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 to reflect the time value of money.
Short-term other payables mainly consist of an
obligation, including accrued interest, to construct
social infrastructure objects of RUB 8,419 million (31
December 2021: RUB 8,042 million) and a liability of
RUB 627 million (31 December 2021: RUB 622 million)
to the City authorities for change of intended use of
land plot recognised as part of inventories.
Contract liabilities include advance consideration
received from customers.
As at 31 December 2022, non-financial liabilities
recognised within contract liabilities, VAT, other
taxes payable and short-term other payables
amounted to RUB 26,355 million (31 December 2021:
RUB 19,312 million).
The explanation of significant changes in contract
liability balance during the reporting period is
presented in note 6.
The Group’s exposure to currency and liquidity risk
related to trade and other payables is disclosed in
note 27.
198
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
27. 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.
MLN RUB
CARRYING AMOUNT
FAIR VALUE
MLN RUB
CARRYING AMOUNT
FAIR VALUE
31 DECEMBER 2022
AT AMORTISED
COST
TOTAL
LEVEL 1
LEVEL 2
TOTAL
31 DECEMBER 2021
AT AMORTISED
COST
TOTAL
LEVEL 1
LEVEL 2
TOTAL
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
Trade receivables
Other receivables (excluding taxes
receivable and advances paid to
suppliers)
Loans given
Cash and cash equivalents
8,174
2,147
8,174
2,147
277
277
23,811
23,811
34,409
34,409
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
Secured bank loans
Secured project financing
Unsecured bank loans
Unsecured bond issues
(20,174)
(20,174)
(54,762)
(54,762)
(3,011)
(15,141)
(3,011)
−
−
−
23,811
23,811
−
−
8,014
2,138
139
−
8,014
2,138
Trade receivables
Other receivables (excluding taxes
receivable and advances paid to
suppliers)
139
Loans given
23,811
Bank deposits (over 3 months)
10,291
34,102
Bank promissory notes
9,429
1,022
9,429
1,022
1,070
1,070
42
3
42
3
−
−
−
−
−
Cash and cash equivalents
44,587
44,587
44,587
9,220
979
9,220
979
647
42
2
−
647
42
2
44,587
56,153
56,153
44,587
10,890
55,477
(19,859)
(19,859)
(44,529)
(44,529)
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
(2,946)
(2,946)
Secured bank loans
(26,020)
(26,020)
−
(27,368)
(27,368)
Trade and other payables
(45,615)
(45,615)
−
(42,392)
(42,392)
Unsecured bank loans
(138,703)
(138,703)
(14,129)
(109,726)
(123,855)
Unsecured bond issues
(4,378)
(16,811)
(4,378)
(16,811)
(15,141)
(14,129)
−
(14,129)
Secured project financing
(36,228)
(36,228)
(31,191)
(4,197)
(31,191)
(4,197)
−
(16,169)
−
(16,169)
Trade and other payables
(50,327)
(50,327)
−
(44,257)
(44,257)
(133,764)
(133,764)
(16,169)
(107,013)
(123,182)
199
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
27. Financial instruments and risk management
The fair value of financial asset arising from preferential rate on escrow-backed loans approximates its
carrying amount.
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 rates:
Receivables (excluding taxes
receivable and advances paid to
suppliers)
Loans given,
Unsecured loans and bond issued,
and trade and other payables
DISCOUNTING FACTOR
Weighted average rate on mortgages
issued during the year
2022
9.35%
2021
7.81%
Weighted average interest rates on
bonds of Etalon-Finance
12.63%
8.57%
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
(II) EXPOSURE TO 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 21.
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 2022, receivables
from one customer equalled to RUB 481 million or
4% of the Group`s consolidated trade and other
receivables (31 December 2021: RUB 158 million or 1%).
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
Loans given
Receivables (excluding taxes receivable and advances paid to suppliers)1,
including contract assets
Bank promissory notes
Bank deposits (over 3 months)
Cash and cash equivalents
CARRYING AMOUNT
2022
277
33,698
−
−
23,811
57,786
2021
1,070
28,995
3
42
44,587
74,697
1 Presented net of receivables and contract assets arising from the sale of real estate that is secured by a pledge
of the sold real estate (see 3(c)(vi)).
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 Saint 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”.
200
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
27. Financial instruments and risk management
Maturity analysis and impairment
The ageing of trade receivables and contract assets at the reporting date was as follows. Contract assets are
not past due and not impaired.
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
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:
2022
2021
GROSS
IMPAIRMENT
GROSS
IMPAIRMENT
34,922
(20)
32,819
157
188
85
2,372
37,724
−
(2)
−
(795)
(817)
302
254
58
1,867
35,300
(4)
−
(1)
(1)
(533)
(539)
MLN RUB
Balance at 1 January
Amounts written off
Net remeasurement of
loss allowance
Balance at
31 December
2022
539
(46)
324
2021
662
(84)
(39)
817
539
The Group’s current credit risk grading framework for loans given at the reporting date comprises
the following categories:
MLN RUB
12 — month ECL
Lifetime ECL — credit-impaired
2022
2021
GROSS
IMPAIRMENT
GROSS
IMPAIRMENT
281
135
416
(22)
(117)
(139)
1,146
132
1,278
(120)
(88)
(208)
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.
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 ended 31 December 2021.
Allowance for impairment
in respect of other receivables
Expected credit loss allowance for other receivables
is measured as an allowance equal to 12-month ECL
for stage 1 assets. The movement in the allowance
for impairment in respect of other receivables during
the reporting period was as follows:
In assessing collective impairment, the Group used
publicly available historical information 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 those used in publicly available historical
information. Speculative ratings (speculative-grade)
MLN RUB
Balance at 1 January
Reversal of loss
allowance
Increase in loss
allowance
Balance at
31 December
2022
834
(126)
2021
964
(359)
566
229
1,274
834
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
Net remeasurement of
loss allowance
Balance at
31 December
2022
208
(69)
2021
112
96
139
208
As at 31 December 2022 and 31 December 2021, the
credit risk on financial investments has not increased
significantly since initial recognition, and the Group
measures the loss allowance for those financial
instruments at an amount equal to 12-month
expected credit losses.
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.
201
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
27. Financial instruments and risk management
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
2022
158
(69)
55
2021
247
(151)
62
144
158
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.
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.
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.
Contractual maturities of financial liabilities were as follows:
MLN RUB, 31 DECEMBER 2022
NON-DERIVATIVE
FINANCIAL LIABILITIES
Loans and borrowings
Trade and other payables (excluding
taxes payable and contract liabilities)
Lease liabilities
MLN RUB, 31 DECEMBER 2021
NON-DERIVATIVE
FINANCIAL LIABILITIES
Loans and borrowings
Trade and other payables (excluding
taxes payable and contract liabilities)
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
0-12 MTHS
1-2 YRS
2-3 YRS
3-4 YRS
4-5 YRS
OVER 5 YRS
93,089
37,804
101,182
39,100
7,811
9,301
138,704
149,583
22,049
20,238
2,869
45,156
40,631
18,419
2,881
61,931
23,335
64
9,123
-
1,743
946
25,142
10,069
6,044
377
174
6,595
-
2
688
690
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
0-12 MTHS
1-2 YRS
2-3 YRS
3-4 YRS
4-5 YRS
OVER 5 YRS
83,437
40,957
97,766
40,959
19,980
11,783
23,317
8,695
Lease liabilities
9,370
11,297
2,387
2,341
133,764
150,022
34,150
34,353
30,754
18,466
4,959
54,179
19,645
1,433
3,298
580
142
142
21,220
4,020
772
2
1,326
2,100
202
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
27. Financial instruments and risk management
(I) CURRENCY RISK
Cash flow sensitivity analysis for variable rate instruments
The Group’s exposure to foreign currency risk is limited. As at 31 December 2022 and 31 December 2021 the
Group’s net positions in foreign currency were as follows:
2022
2021
MLN RUB
PROFIT OR LOSS
EQUITY
200 BP
INCREASE
100 BP
DECREASE
200 BP
INCREASE
100 BP
DECREASE
MLN RUB
USD
GBP
Cash and cash equivalents
(see note 21)
Net exposure
17
17
−
−
EUR
270
USD
85
270
85
The following significant exchange rates applied during the reporting period:
GBP
EUR
31 DECEMBER 2022
2
2
5
5
Variable rate instruments
Cash flow sensitivity (net)
31 DECEMBER 2021
Variable rate instruments
Cash flow sensitivity (net)
MLN RUB
USD 1
EUR 1
(II) INTEREST RATE RISK
AVERAGE RATE
REPORTING DATE SPOT RATE
2022
68.35
72.15
2021
31 DECEMBER 2022
31 DECEMBER 2021
73.67
87.09
70.34
75.66
74.29
84.07
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
2022
2021
24,203
(69,719)
(45,516)
(31,180)
(31,180)
41,119
(64,271)
(23,152)
(28,537)
(28,537)
The sensitivity analysis below has been determined
based on the exposure to interest rates for financial
instruments at the reporting date. The analysis
shows how profit or loss and equity would have
been affected by a 2% increase or 1% decrease
in the variable interest rates and represents
management’s assessment of the change in the
interest rates that were reasonably possible at the
reporting date.
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.
(624)
(624)
(571)
(571)
312
312
285
285
(624)
(624)
(571)
(571)
312
312
285
285
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 22).
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:
Loans and borrowings,
note 24
Less: cash and cash
equivalents, note 21
Less: bank deposits over 3
months, note 20
2022
2021
93,088
83,438
(23,811)
(44,587)
−
(42)
Net debt
69,277
38,809
Total equity
74,189
61,360
Debt to capital ratio at
end of year
0.93
0.63
At 31 December 2022, lease liabilities of RUB 7,811
million (31 December 2021: RUB 9,370 million) are
included in trade and other payables (see notes 26
and 29) and are not included in the total amount of
borrowings.
203
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
28. Acquisition of subsidiary
On 30 May 2022, the Company acquired from
YIT Corporation 100% of voting equity interests
in a certain number of Finnish and Russian legal
entities representing the Russian business of YIT
Corporation (“YIT Russia”) for the cash consideration
of RUB 1,923 million.
YIT Russia focuses on mid-market residential real
estate with a portfolio of 19 projects in five Russian
regions, including the Moscow metropolitan area,
Saint Petersburg, the Ekaterinburg region, Kazan
and Tyumen with a total unsold net sellable area
(NSA) of 0.6 million sqm. It also operates several
housing servicing companies.
The primary reasons for the acquisition are to
increase supply in the Group’s primary markets of
Moscow and Saint Petersburg and to speed up the
Group’s regional expansion, as well as to get access
to the YIT Russia’s software and technological
know-how, including Dispatcher 24 software for
managing apartment buildings and residential
areas.
Consideration transferred
The acquisition-date fair value of the total
consideration transferred amounted to RUB 1,923
million. The consideration was settled in cash.
Acquisition-related costs
The Group incurred acquisition-related costs of RUB
0.4 million related to registration fees, 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
MLN RUB
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
CURRENT ASSETS
Inventories
The following table summarises the recognised
amounts of assets acquired and liabilities assumed
at the acquisition date.
Trade and other receivables
Income tax receivable
Non-controlling interest in the acquiree recognised
at the acquisition date of RUB 195 million was
measured at the non-controlling interest’s
proportionate share of the acquiree’s identifiable
net assets at the date of acquisition.
Trade and other receivables (excluding contract
assets) comprised gross contractual amounts due of
RUB 1,997 million, of which none was expected to be
uncollectable at the date of acquisition.
Recognised amounts of intangible assets include
computer software of RUB 49 million (Dispatcher 24
software) and customer base of housing servicing
companies of RUB 143 million.
Contract assets
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
Provisions
CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
Provisions
Total identifiable net assets
Non-controlling interest
Consideration transferred
Gain from bargain purchase
MLN RUB
Cash consideration transferred
Сash acquired
Net cash inflow from acquisition
of subsidiary
Measurement of fair values
(1,920)
2,456
The valuation techniques used for measuring the fair
value of material assets acquired were as follows.
536
Inventories
The acquiree’s inventories are mainly represented
by real estate development projects at different
stages of development and by housing servicing
companies.
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.
NOTE
RECOGNISED FAIR VALUES
ON ACQUISITION
The following key assumptions were used by the
appraiser:
13
17
17
25
25
371
192
1,619
8,314
1,666
332
6,534
1,367
28
2,456
553
(2,034)
(190)
(103)
(285)
(1,917)
(4,594)
(153)
14,156
(195)
(1,923)
12,038
� Cash flows were projected based on the business
plans for construction and sale of real estate as
well as estimated cash flows of housing servicing
companies;
� Inflation rates — in the range 4%-11.1% per annum;
� Discount rates — 18.8% — 22.8% per annum,
depending on the class of the project, stage
of development of a particular project and the
availability of construction permits. For housing
servicing companies — 23.4% per annum.
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
12,038 million as a gain from bargain purchase in
its consolidated statement of profit or loss and
other comprehensive income. The main reason for
recognising a bargain purchase gain was the fast
track sale of the business by the seller that resulted
in a lower transaction price.
From the date of acquisition to 31 December 2022
YIT Russia contributed revenues of RUB 7,137 million
and a profit of RUB 1,106 million.
If the acquisition of the business had occurred
on 1 January 2022, management estimates that
consolidated revenue would have been RUB
87,066 million (unaudited), and consolidated
profit for the year would have been RUB 14,233
million (unaudited). 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 2022.
204
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
29. 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.
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 694 million (31 December 2021: RUB
1,294 million).
Lease payments associated with short-term leases
and leases of low-value assets and recognised
as an expense in the statement of profit or loss
amounted to RUB 994 million for the year ended
31 December 2022 (year ended 31 December 2021:
RUB 901 million).
MLN RUB
RIGHT-OF-USE ASSETS
Balance at 1 January 2022
Additions to right-of-use assets
Acquired through business combination
Termination of lease contracts
Depreciation charge
Balance at 31 December 2022
LEASE LIABILITIES
Balance at 1 January 2022
Settlement of lease liabilities, including interest
Interest expense on lease liabilities
Additions to lease liabilities
Assumed through business combination
Termination of lease contracts
Balance at 31 December 2022
RIGHT-OF-USE ASSETS
Balance at 1 January 2021
Additions to right-of-use assets
Modifications of lease contracts
Depreciation charge
Balance at 31 December 2021
LEASE LIABILITIES
Balance at 1 January 2021
Settlement of lease liabilities, including interest
Interest expense on lease liabilities
Additions to lease liabilities
Modifications of lease contracts
Balance at 31 December 2021
INVENTORIES UNDER
CONSTRUCTION
PROPERTY, PLANT
AND EQUIPMENT
10,708
55
77
(134)
(668)
10,038
8,456
(2,568)
619
55
37
(52)
6,547
2,395
8,573
(38)
(221)
10,709
1,587
(2,121)
456
8,573
(38)
8,457
870
320
242
(81)
(184)
1,167
914
(308)
113
320
259
(34)
1,264
312
784
(25)
(200)
871
275
(153)
43
773
(25)
913
TOTAL
11,578
375
319
(215)
(852)
11,205
9,370
(2,876)
732
375
296
(86)
7,811
2,707
9,357
(63)
(421)
11,580
1,862
(2,274)
499
9,346
(63)
9,370
30. Capital commitments
31. Contingencies
As at 31 December 2022, the Group had no capital
commitments (31 December 2021: nil).
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 2022 and
2021, the Group was involved in a number of court
proceedings (both as a plaintiff and a defendant)
arising in the ordinary course of business.
In the opinion of management, there are no
current legal proceedings or 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.
205
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
32. Related party transactions
a) Transactions with management
b) Transactions with related parties under control of PJSC AFK Sistema
(IV) OTHER TRANSACTIONS
(I) MANAGEMENT REMUNERATION
Key management received the following
remuneration during the year ended 31 December
2022, which is included in personnel costs
(see note 10):
MLN RUB
Short-term employee
benefits — salaries and
bonuses
2022
704
2021
652
704
652
During the year ended 31 December 2022 and 2021,
the Group did not grant any loans and pensions to
its key management personnel.
During the year ended 31 December 2022, the
remuneration of the members of the Board of
Directors of the Company amounted to RUB 31
million (2021: RUB 33 million).
The Group’s transactions with other related parties are disclosed below.
TRANSACTION VALUE
OUTSTANDING BALANCE
MLN RUB
2022
2021
Сash and cash equivalents in
banks-related parties
Proceeds from investments in
associates and other
Acquisition of land plot
Interest on deposits
Interest payable
35,978
102,256
−
(360)
619
(249)
40
−
201
(395)
35,988
102,102
2022
261
(19)
(205)
−
(34)
3
2021
9,312
(25)
−
−
(21)
9,266
(I) REVENUE
MLN RUB
Other related parties
TRANSACTION VALUE
OUTSTANDING BALANCE
2022
715
715
2021
882
882
2022
280
280
2021
408
408
All outstanding balances with related parties are to be settled in cash. None of the balances are secured.
(II) EXPENSES (RENT OF PREMISES AND RELATED EXPENSES)
MLN RUB
Other related parties
TRANSACTION VALUE
OUTSTANDING BALANCE
2022
(706)
(706)
2021
(680)
(680)
2022
1,255
1,255
2021
2,376
2,376
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 / REPAID
OUTSTANDING BALANCE
2022
70
(2,438)
(2,368)
2021
−
(4,362)
(4,362)
2022
73
(2,911)
(2,838)
2021
2
(5,349)
(5,347)
All outstanding balances with related parties are to be settled in cash. None of the balances are secured.
206
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
33. Group entities
Significant subsidiaries
SUBSIDIARY
“Etalon Group company” AO
JSC “Etalon-Finance”
(JSC “Leader-Invest” before 4 April 2022)
JSC “Etalon LenSpetsSMU”
LLC “EtalonAktiv”
JSC “Novator”
JSC “LenSpetsSMU-Reconstruktsiya”
LLC “SPM-Zhilstroy”
LLC “Etalon-Invest”
JSC “Zatonskoe”
COUNTRY OF
INCORPORATION
31 DECEMBER
2022
31 DECEMBER
2021
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.97%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.97%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
−
−
−
LLC “Specialized Developer “Serebryaniy Fontan”
Russian Federation
LLC “Specialized Developer “Etalon Galaktika”
Russian Federation
LLC “Specialized Developer “Etalon Development”
Russian Federation
LLC “Razvitiye”
Russian Federation
LLC “Specialized Developer “ZIL-YUG”
Russian Federation
LLC “Specialized Developer “MBI”
JSC “Lobachevskogo 120”
JSC “YIT Saint Petersburg”
Russian Federation
Russian Federation
Russian Federation
LLC “Specialized Developer “YIT Novoorlovskiy”
Russian Federation
LLC “Specialized Developer “YIT Finskiy”
Russian Federation
34. Events subsequent to the reporting date
As at 31 December 2022, the Group controlled
132 legal entities (31 December 2021: 105). Their
assets, liabilities, revenues and expenses have
been included in these consolidated financial
statements. The above is a list of the most
significant subsidiaries. Their principle activities are
construction and development of residential and
commercial properties.
The acquisition of YIT Russia disclosed in note 28
was the only change in the composition of the
Group during the reporting period.
Financing events
Subsequent to the reporting date, the Group has
repaid loans and borrowings outstanding as at 31
December 2022 for the total amount of RUB 8,328
million and unsecured bonds for the total amount of
RUB 5,000 million.
Subsequent to the reporting date, the Group has
obtained additional tranches of loans for the total
amount of RUB 10,829 million with nominal interest
rates of 0.01%-11.5% and repayable by 2025.
Subsequent to the reporting date, the Group placed
unsecured bonds for the total amount of RUB 8,000
million with nominal interest rate of 13.7% per annum
and repayable by 2026.
207
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Supplementary
Information:
non-IFRS
Measures
(Unaudited)
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. This information
should be considered and read in addition to, but not as a substitute for, the information
contained in the consolidated financial statements.
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 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.
Less: Selling expenses
Adjusted operating profit
The result is the equivalent of profit (loss) for the period before income tax expense, net
finance costs, 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.
Adjusted net debt/Adjusted EBITDA ratio
MLN RUB
Loans and borrowings
Less: cash and cash equivalents
Less: bank deposits over 3 months, note 20
Add: contract liabilities, reportable segment Residential
development
2022
2021
93,088
(23,811)
−
8,944
83,438
(44,587)
(42)
10,528
Less: Inventories under construction, note 18
(119,600)
(95,431)
Adjusted net debt
(41,379)
(46,094)
Gross profit
Less: General and administrative expenses
Add: Depreciation and amortisation
EBITDA
28,203
(7,259)
(5,001)
15,943
541
16,484
27,782
(5,784)
(4,639)
17,359
521
17,880
Add: Purchase price allocation from acquisition of Etalon
Finance (Leader-Invest prior to 2022) included in cost of
sales
Adjusted EBITDA
Adjusted net debt/Adjusted EBITDA
2,311
3,259
18,795
(2.20)
21,139
(2.18)
208
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Supplementary
Information:
non-IFRS
Measures
(Unaudited)
Net corporate debt/Adjusted EBITDA
Net corporate debt represents net debt as defined in the note 27(e) adjusted for the amount
of project financing (borrowings backed by balances on escrow accounts).
Profit for the period adjusted for the effect of purchase price allocation (PPA)
from the acquisition of JSC “Etalon-Finance” (JSC “Leader-Invest” before
4 April 2022) and gain from bargain purchase of YIT Russia
MLN RUB
Loans and borrowings
Less: secured project financing
Total corporate borrowings
Less: cash and cash equivalents
Less: bank deposits over 3 months, notes 16 and 20
Net corporate debt
Net corporate debt/Adjusted EBITDA
2022
2021
MLN RUB
Profit for the year
93,088
(54,762)
38,326
(23,811)
−
14,515
0.77
83,438
(36,228)
47,210
Add: PPA included in Cost of sales
Add: Reversal of impairment loss on inventory recognised
in revenue upon termination of contract
(44,587)
Add: PPA included in Other expenses, net
(42)
2,581
0.12
Less: tax effect of PPA
Less: Gain from bargain purchase
Profit for the year before PPA
2022
13,001
2,520
(209)
(24)
(457)
(12,038)
2,793
2021
3,007
3,259
−
1,152
(882)
−
6,536
The movement of the purchase price allocation (PPA) from the acquisition of
JSC “Etalon-Finance” (JSC “Leader-Invest” before 4 April 2022), recognised
within Property, plant and equipment, Investment property, Inventories
PPA is a significant non-operational factor that significantly affects the Group’s financial
results and will continue to do so in the next few years. The disclosure increases the
transparency of the reporting and enables financial statements’ users to correctly assess
the effect of PPA on the financial results.
MLN RUB
Balance at 1 January
Included in Cost of sales
Reversal of impairment loss on inventory recognised in
revenue upon termination of contract
Included in Other expenses, net
Balance at 31 December
2022
2021
16,485
(2,520)
209
24
14,198
20,896
(3,259)
−
(1,152)
16,485
209
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Parent Company
Financial Statements
for the year ended 31 december 2022
Contents
СHAPTER
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 Auditor’s 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
РАGE
210
211
213
214
216
217
218
219
220
Board of Directors
and Other Officers
Board of Directors
NAME
Sergey Egorov
Marina Ogloblina
Boris Svetlichny
Denis Vinokurov
Alexander Voloshin
Gennadii Shcherbina
Vitaly Pyltsov
Andreas Kryftis
Martin Robert Cocker
Oleg Mubarakshin
Maksim Berlovich
Ganna Khomenko
Charalampos Avgousti
DATE
appointed on 19 February 2019
appointed on 19 February 2019
appointed on 15 April 2013
appointed on 9 November 2018
appointed on 30 April 2021
appointed on 30 April 2021
appointed on 4 April 2022
appointed on 26 April 2023
appointed on 12 November 2010 and resigned on 4 March 2022
appointed on 19 February 2019 and resigned on 16 February 2023
appointed on 27 April 2018 and resigned on 16 February 2023
appointed on 19 February 2019 2019 and resigned on 25 April 2023
appointed on 10 November 2016 and resigned on 21 April 2023
Secretary
Registered Office
Independent auditors
G.T. Globaltrust Services Limited
Themistokli Dervi, 15
Margarita House, 5th floor,
flat/office 502
1066 Nicosia
Cyprus
2-4 Arch. Makariou III Avenue
Capital Center, 9th floor
1065 Nicosia
Cyprus
NSP Sagehill Partners Ltd
50 Agias Zonis Street,
Arianthi Court, 2nd Floor,
3090 Limassol
Cyprus
210
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
Management Report
the Board of directors presents its report
Changes in group structure
Research and development activities
Future developments of the Company
Independent Auditors
together with the audited financial
statements of Etalon Group PLc
(the “company”) for the year ended
31 december 2022.
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. Since the
beginning of March 2022, LSE suspended trading in
Etalon’s GDRs.
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.
On 30 May 2022, the Company acquired from YIT
Corporation a certain number of Finnish and Russian
legal entities representing the Russian business
of YIT Corporation (“YIT Russia”) for the cash
consideration of RUB 1,923 million.
YIT Russia focuses on mid-market residential real
estate with a portfolio of 19 projects in five Russian
regions, including the Moscow metropolitan area,
St. Petersburg, the Ekaterinburg region, Kazan and
Tyumen with a total unsold net sellable area (NSA)
of 0.6 million sqm. It also operates several housing-
service companies.
Review of developments, position and
performance of the Company’s business
The loss of the Company for the year ended 31
December 2022 was RUB’000 16,228,699 (2021: profit
of RUB’000 31,413,344). The main source of loss for
the year is the change in fair value of investments
in subsidiaries in the amount of RUB’000 15,212,568
(2021: the change in fair value of investments of
RUB’000 29,974,688).
On 31 December 2022, the total assets of the
Company were RUB’000 98,308,924 (31 December
2021: RUB’000 111,771,758) and the net assets
were RUB’000 95,523,519 (31 December 2021:
RUB’000 111,752,218). Investment in subsidiaries
was RUB’000 87,787,059 (31 December 2021:
RUB’000 98,441,246).
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 216 and 217
(statement of financial position and statement of
profit or loss and other comprehensive income).
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 price 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.
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 other then
as further described below.
Share capital
During the year ended 31 December 2022, there
were no changes to the share capital of the
Company.
Acquisition of own shares
During 2022, the Company did not acquire own
shares. As of 31 December 2022, the total number
of own shares acquired by the Company in prior
periods amounted to 3,946 or 0.001% of issued share
capital.
Board of Directors
The members of the Board of Directors of the
Company at 31 December 2022 and at the date of
this report are shown on page 210. The details of
all appointment and resignations of Directors are
shown on page 210.
The Ukrainian crisis
Since the outbreak of the conflict in Ukraine on 24
February 2022, the US, UK, EU and other countries
announced an extension of sanctions on certain
Russian officials, businessmen and companies.
These developments resulted in reduced access of
Russian businesses to international capital, import
and export markets, reduction in consumer demand
and other negative economic consequences.
On 22 December 2022, the Annual General Meeting
of shareholders of the Company appointed NSP
Sagehill Partners Ltd as auditor of the Company’s
statutory financial statements to hold office until the
conclusion of the next annual general meeting and
authorised the Board of Directors to fix the auditor’s
remuneration.
Branches
The Company did not operate through any
branches during the year ended 31 December 2022.
Dividends
The challenging geopolitical circumstances, certain
sanctional provisions and mutual restrictions,
including on distribution of funds through
international payment and clearing systems, have
a significant impact on the Company’s ability to
pay out dividends to all groups of its shareholders.
Based on the principle of equitable treatment
of all shareholders, the Board of Directors of the
Company resolved to postpone consideration of
the matter of dividend payments until constraints
currently in force are removed. The Annual General
Meeting of shareholders that took place on 22
December 2022 neither considered nor approved
any dividend payments for the financial year ended
31 December 2021.
211
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Corporate Governance Report
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
FCA’s Disclosure and Transparency Rules as a listed
company and with the requirements of Cyprus
Companies Law, Cap. 113.
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 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 uncertainties related to events or
conditions that may cast significant doubt upon the
Company’s ability to continue as a going concern.
Significant direct or indirect
shareholdings
The rules regarding the appointment
and replacement of board members
(b) he is prohibited from acting as director in
accordance with section 180 of the Law; or
As at 31 December 2022, the Company is aware of
the following interests in its share capital:
SHAREHOLDERS
Free float
PJSC AFK Sistema
Mubadala Investment Company
Kopernik Global Investors
Prosperity Capital
Management of the Company
Total
%
35.2%
48.8%
6.3%
5.0%
4.1%
0.6%
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 thsd 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 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.
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
(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 him from his position in
accordance with section 178 of the 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.
By order of the Board of Directors,
Andreas Kryftis
Director
Nicosia, 27 April 2023
212
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Responsibility
Statement
of the directors and management
of the company in accordance
with the transparency Law
SERGEY EGOROV
Chairman of the Board of Directors
ANDREAS KRYFTIS
Member of the Board of Directors
MARINA OGLOBLINA
Member of the Board of Directors
BORIS SVETLICHNY
Member of the Board of Directors
DENIS VINOKUROV
Member of the Board of Directors
ALEXANDER VOLOSHIN
Member of the Board of Directors
VITALY PYLTSOV
Member of the Board of Directors
GENNADII SHCHERBINA
Chief Executive Officer
ILYA KOSOLAPOV
Chief Financial Officer
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:
(a) The annual financial statements for year ended
31 December 2022:
(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 included in the consolidated financial
account, and
(b) The Management Report includes a 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
213
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Independent Auditors’ Report
to the Members
SAGEHILL
-p A R
T
N
E
R S-
SAG EH ILL
-p A R
T
N
E
R S-
SAGEHILL
-p A R
T
N
E
R S-
Independent Auditor's Report
To the Members of Etalon Group PLC
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying parent company financial statements of Etalon Group PLC (the
"Company"), which are presented in pages 210 to 235 and comprise the statement of financial position
as at 31 December 2022 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 2022, 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.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the
information that is included in the Management Report and Corporate Governance report, but does not
include the parent company financial statements and our auditor's report thereon.
Our opinion on the parent company 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 parent company 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.
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.
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 (continued)
Why the matter was determined to
be a key audit matter
Fair value of investments in subsidiaries
How the matter was addressed in the audit
is
RUB
As at 31 December 2022, the carrying
value of the Company's investments in
subsidiaries
87,787,059
thousands which represented 89% of the
total assets of the Company. The fair
value hierarchy of
in
subsidiaries belongs to Level 3 as a fair
value measurement uses unobservable
significant
inputs
adjustment.
investments
require
that
Our audit procedures included amongst others:
• 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
appropriateness of
the
reasonableness of
assumptions
underlying the estimation of fair value of investments
in subsidiaries as at 31 December 2022;
the methodology and
the
valuation
The Company's accounting policy for
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.
•
of
fair
value
of
Determination
investments in subsidiaries is a key audit
matter given the significance of the
balance and the significant degree of
judgement
involving
estimations
value
fair
the
associated with
assessment.
• we assessed
the competence, capabilities and
objectivity of management's third party valuer, as well
as independence;
evaluating the appropriateness of management's
business assumptions used in calculating the fair value
of investments in subsidiaries including:
•
•
assessing the appropriateness of the discount
rate used;
reviewing, recalculating and critically assessing
the
the assumptions
including:
reasonableness of
• historical turnover and prices of sales
in these and/or similar projects;
• budgeted costs to complete
construction;
• budgeted general,
administrative and selling
expenses;
before
• total area available for
sale and actual sales
occurring
31
December 2022;
• 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
for
investments
significant accounting judgements and estimates are in
compliance with IFRS requirements;
in subsidiaries and disclosures
All the above procedures were completed
satisfactory manner.
in a
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 ( continued)
Why the matter was determined to
be a key audit matter
Recoverability of loans receivable
At 31 December 2022, the Company had
loans receivable from related parties
amounting to RUB 9,915,246 thousands
which represented 10% 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 estimations associated with the
ECLs assessment.
How the matter was addressed in the audit
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;
• testing that the process to identify and measure
individually assessed provisions is appropriate based
on DCF for the underlying projects;
• 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
satisfactory manner.
in a
214
214
214
214
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Independent Auditors’ Report
to the Members
SAGEHILL
-p A R
T
N
E
R s-
SAGEHILL
-p A R
T
N
E
R S-
SAGEHILL
-p A R
T
N
E
R S-
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 scepticism throughout the audit. We also:
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;
•
•
•
•
•
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 Financial Statements {continued)
•
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the 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 financial statements of the current period, and are therefore
the key audit matters.
Report on 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.
Other Matters
This report, including the opinion, has been prepared for and only for the Company's members as a body
in accordance with 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.
Comparative figures
The financial statements of the Company for the year ended 31 December 2021 were audited by another
auditor who expressed an unqualified opinion those financial statements on 28 April 2022.
ge ent partner on the audit resulting in this independent auditor's report is Stelios Spiliotis.
S elios Spiliotis
Certified Public Accountant and Registered Auditor
for and on behalf of
NSP Sagehill Partners Limited
Certified Public Accountants and Registered Auditors
Arianthi Court, 2nd Floor
50 Agias Zonis Street
3090 Limassol
Cyprus
Limassol, 27 April 2023
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors;
We also have reported separately on the consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2022.
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;
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;
215
215
215
13
215
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Statement
of Financial
Position
as at 31 december 2022
RUB’000
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
NOTE
31 DECEMBER 2022
31 DECEMBER 2021
RUB’000
NOTE
31 DECEMBER 2022
31 DECEMBER 2021
EQUITY
• Share capital
8
9
9
10
11
87,787,059
98,441,246
• Share premium
6,062,472
12,849,279
• Reserve for own shares
93,849,531
111,290,525
• Capital contribution
• Retained earnings
3,852,774
158,672
447,947
4,459,393
−
Total equity
160,077
321,156
481,233
current liabilities
• Other payables and accruals
• Borrowings
98,308,924
111,771,758
Total current liabilities
12
12
12
12
13
14
2,723
2,723
26,367,865
26,367,865
(694)
(694)
16,584,198
16,584,198
52,569,427
68,798,126
95,523,519
111,752,218
21,871
2,763,534
2,785,405
19,540
−
19,540
Total equity and liabilities
98,308,924
111,771,758
The notes on pages 220 to 235 are an integral part of these financial statements.
On 27 April 2023, the Board of Directors of Etalon Group PLC authorized
these financial statements for issue.
Andreas Kryftis
Director
Sergey Egorov
Director
216
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Statement of
Profit or Loss
and other
Comprehensive
Income
for the year ended
31 december 2022
RUB’000
Change in fair value of investments in
subsidiaries
Interest income
Interest expenses
(Impairment)/reversal of impairment on
trade, other receivables and loans
Administrative expenses
Other expenses
Other income
Operating (loss)/profit before net
finance expenses
Finance income
Finance expenses
Net finance expenses
NOTE
8
15(v)
3
5
6
2022
2021
RUB’000
NOTE
2022
2021
(15,212,568)
29,974,688
(Loss)/profit before tax
(16,216,149)
31,413,344
Income tax expense
(Loss)/profit for the year
7
(12,550)
−
(16,228,699)
31,413,344
Other comprehensive income
for the year
−
−
Total comprehensive (expenses)/
income for the year
(16,228,699)
31,413,344
498,217
(128,173)
(866,161)
(181,276)
(77,525)
988
562,654
(14,333)
1,355,089
(239,717)
(22,337)
11,000
(15,966,498)
31,627,045
6,383
86,008
(256,034)
(249,651)
(299,708)
(213,700)
The notes on pages 220 to 235 are an integral part of these financial statements.
217
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Statement
of Changes
in Equity
for the year ended
31 december 2022
RUB’000
Balance at 1 January 2021
Profit for the year
Profit for the year
Total comprehensive income
for the year
transactions with owners
Share issued
Transaction costs directly attributable to the issue
Dividends paid (Note 12(iii))
Total transactions with owners
Balance at 31 December 2021
RUB’000
Balance at 1 January 2022
Loss for the year
Loss for the year
Total comprehensive expenses
for the year
SHARE
CAPITAL
SHARE
PREMIUM
CAPITAL
CONTRIBUTION
RESERVE FOR
OWN SHARES
RETAINED
EARNINGS
TOTAL
2,266
15,486,109
16,584,198
(694)
40,985,334
73,057,213
−
−
457
−
−
457
2,723
−
−
11,120,638
(238,882)
−
10,881,756
−
−
−
−
−
−
−
−
−
−
−
−
31,413,344
31,413,344
31,413,344
31,413,344
−
−
11,121,095
(238,882)
(3,600,552)
(3,600,552)
(3,600,552)
7,281,661
26,367,865
16,584,198
(694)
68,798,126
111,752,218
SHARE
CAPITAL
SHARE
PREMIUM
CAPITAL
CONTRIBUTION
RESERVE FOR
OWN SHARES
RETAINED
EARNINGS
TOTAL
2,723
26,367,865
16,584,198
(694)
68,798,126
111,752,218
−
−
−
−
−
−
−
−
(16,228,699)
(16,228,699)
(16,228,699)
(16,228,699)
Balance at 31 December 2022
2,723
26,367,865
16,584,198
(694)
52,569,427
95,523,519
The notes on pages 220 to 235 are an integral part of these financial statements.
218
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Statement
of Cash Flows
for the year ended
31 december 2022
RUB’000
NOTE
2022
2021
RUB’000
NOTE
2022
2021
CASH FLOWS FROM
OPERATING ACTIVITIES
CASH FLOWS FROM
INVESTING ACTIVITIES
(Loss)/profit for the year before tax
(16,216,149)
31,413,344
Repayment of loans by subsidiaries
8
3
15(iii)
15(v)
15(iii)
7
Adjustments for:
• Change in fair value of investments
in subsidiaries
• Impairment/(reversal of impairment)
on trade, other receivables and loans
• Interest income on bank deposits
• Interest income on loans issued
• Interest expenses
• Foreign exchange losses, net
• Finance expenses
• Tax withheld out of interest on loans
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 operating activities
15,212,568
(29,974,688)
866,161
(1,355,089)
(19,718)
(478,499)
128,173
240,162
9,060
12,550
(120,119)
(442,535)
14,333
212,826
−
−
(245,692)
(251,928)
57,276
(108,198)
8,411
(180,005)
(8,874)
(369,001)
Repayment of interest on loans by
subsidiaries
Proseeds from issue of share capital
Loans issued during the year to
subsidiaries
15(iii)
15(iii)
2,416,336
72,270
−
2,908
−
10,882,213
15(iii)
(114,320)
(6,937,050)
Interest on bank deposits received
19,718
Purchases of subsidiary company
8
(1,995,954)
120,119
−
Net cash from investing activities
398,050
4,068,190
CASH FLOWS USED
IN 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
Cash and cash equivalents
at end of the year
−
−
(3,600,552)
(3,600,552)
218,045
98,637
321,156
492,618
(91,254)
(270,099)
11
447,947
321,156
The notes on pages 220 to 235 are an integral part of these financial statements.
219
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
Notes to the Financial Statements
for the year ended 31 december 2022
1. General information
2. Summary of significant accounting policies
with ownership share of 48.8% as of 31 December
2022. Prior to 4 May 2022, PJSC AFK Sistema had
significant influence over the Group with ownership
share of 29.8%.
As of 31 December 2022, Vladimir Petrovich
Yevtushenkov owns a 49.2% stake in PJSC AFK
Sistema (as of 31 December 2021 – 59.2%). In 2022,
Vladimir Petrovich Yevtushenkov transferred his
10% stake, thereby ceasing to be the holder of
the majority of shares. 50.8% of the shares belong
to a significant number of shareholders (as of
31 December 2021 – 40.8%). The shares of PJSC
AFK Sistema are traded on the London Stock
Exchange in the form of global depositary receipts
“GDRs”) and on the Moscow and Saint Petersburg
Exchanges.
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
(a) 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 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 2022 in order to obtain a proper
understanding of the financial position, the financial
performance and the cash flows of the Company
and the Group.
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.
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.
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. The
Company’s GDRs are traded on the Moscow Stock
Exchange starting from 3 February 2020. Since the
beginning of March 2022, as a result of sanctions
imposed in connection with the Ukrainian crisis, LSE
suspended trading in Group’s GDRs.
Starting from 4 May 2022, as a result of acquisition
of an additional 19% stake in the Company, PJSC
AFK Sistema became the controlling shareholder
of the Company and its subsidiaries (the “Group”)
(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.
When assessing the Company’s ability to continue
as a going concern over the next 12 months, the
management considered 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 Company’s
ability to continue as a going concern.
During the reporting period and following the
commencement of the Ukrainian crisis, the US,
UK, EU and some other countries imposed severe
sanctions against the Russian government, major
financial institutions and certain other entities and
individuals in the Russian Federation. All the above
led to significant market volatility, disruption in the
supply chains and significantly increased the level of
economic uncertainty.
The Company continues to operate and fulfil
its obligations to its customers, partners and
employees, although the Company can provide no
assurance that the current geopolitical situation
and the resulting economic developments in Russia
will not adversely affect operations and financial
results in the future.
The Company and its subsidiaries (together referred
to as the “Group”) developed a stress scenario
of the possible impact on the current operating
environment on the Group’s demand and supply
chain, including continuity in demand, availability
and prices for construction materials and supplies,
and eventually on cash flows and liquidity position,
including the consideration of debt covenants.
Considering the above and given the Group’s
history of profitable operations and ready access
to financial resources, the Company reached
a conclusion that the going concern basis of
accounting is appropriate for the preparation of
these 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.
220
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
2. Summary of significant accounting policies
(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.
Application of new standards,
interpretations and amendments of
existing standards
(a) Standards and amendments to existing
standards early adopted
The Company has not early adopted any standards
for the year ended 31 December 2022.
(b) Amendments to existing standards effective
on or after 1 January 2022 adopted by the
Company
The Company adopted all the new and revised
International Financial Reporting Standards (IFRS)
when they became effective in the EU for reporting
period beginning on 1 January 2022:
� Annual Improvements to IFRSs: 2018-2020 Cycle
� Amendments to: IFRS 3 Business Combinations -
Reference to the Conceptual Framework
� IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use
� IAS 37 Provisions, Contingent Liabilities and
Contingent Assets - Onerous contracts - Cost of
Fulfilling a Contract
The adoption of these amendments had no effect
on the financial statements of the Company.
(c) Standards and amendments in issue not yet
adopted
On the date of approval of these financial statements, the following standards and amendments have been
issued by the International Accounting Standards Board but were not yet effective:
� Standards and amendments that are not effective for the year ended 31 December 2022 and have been
endorsed by the European Union.
Amendments to IFRS 17 Insurance
contracts:
Initial Application of IFRS 17 and
IFRS 9 – Comparative Information
Effective for annual periods beginning
on or after 1 January 2023
IAS 12 (amendments)
IAS 1 (amendments) and IFRS
Practice Statement 2
IAS 8 (amendments) Accounting
policies, Changes in Accounting
Estimates and Errors:
Income Taxes: Deferred Tax
related to Assets and Liabilities
arising from a Single Transaction
Disclosure of Accounting policies
Definition of Accounting Estimates
IFRS 17 including amendments
Insurance Contracts
Effective for annual periods beginning
on or after 1 January 2023
Effective for annual periods beginning
on or after 1 January 2023
Effective for annual periods beginning
on or after 1 January 2023
Effective for annual periods beginning
on or after 1 January 2023
The Directors do not expect that the adoption of the standards listed above will have a material impact on
the financial statements of the Company in future periods.
(d) Standards and amendments that have not been endorsed by the European Union
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
Classification of Liabilities as
Current or Non-current
Effective for annual periods beginning on
or after 1 January 2024
� those to be measured at amortised cost
IAS 1 (amendments and deferral
of effective date) Presentation of
Financial Statements:
IFRS 16 (amendments)
Lease liability in a Sale and
Leaseback
Effective for annual periods beginning on
or after 1 January 2024
IFRS 14
Regulatory Deferral Accounts
The European Commission has decided
not to launch the endorsement process
of this interim standard and to wait for
the final standard)
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.
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
221
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
2. Summary of significant accounting policies
(I) FINANCIAL ASSETS (CONTINUED)
Measurement of Expected credit losses
Loans and receivables
(II) FINANCIAL LIABILITIES
Tax
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.
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.
Investments in subsidiary companies are classified
as investments at fair value through profit or loss
and are measured at fair value. The Company’s
financial statements are publicly available and can
be used by investors for their economic decisions,
and the management believes that measurement
of investments in subsidiaries at fair value provides
more reliable and more relevant information
about the Company’s financial position than the
measurement of investments at cost.
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.
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.
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.
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 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.
222
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
2. Summary of significant accounting policies
3. Financial risk management and tax risk
Share capital
Interest expenses
Financial risk factors
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 12).
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.
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 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.
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 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
DESCRIPTION
BASIS FOR RECOGNISING
EXPECTED CREDIT LOSSES
Performing
Doubtful
In default
Write-off
The counterparty has a low risk of default and does
not have any past-due amounts
12-month ECL
Amount is >30 days past due or there has been
a significant increase in credit risk since initial
recognition
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.
223
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
3. Financial risk management and tax risk
Financial risk factors (continued)
Allowance for impairment in respect of other receivables
Market price risk
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:
The movement in the allowance for impairment in respect of other receivables
during the reporting period was as follows:
31.12.2022
Loans receivable
Other receivables
Cash and cash equivalents
31.12.2021
Loans receivable
Other receivables
Cash and cash equivalents
NOTE
12-MONTH/
LIFETIME ECL
GROSS
CARRYING
AMOUNT
LOSS
ALLOWANCE
NET CARRYING
AMOUNT
RUB’000
Balance at 1 January
9
10
11
Lifetime ECL
14,812,761
(4,897,515)
9,915,246
Change of impairment for the period (Note 15(iv))
Lifetime ECL
12-month
159,287
447,947
(3,214)
−
156,073
447,947
Balance at 31 December
2022
(380)
(2,834)
(3,214)
2021
(1,387)
1,007
(380)
NOTE
12-MONTH/
LIFETIME ECL
GROSS
CARRYING
AMOUNT
LOSS
ALLOWANCE
NET CARRYING
AMOUNT
9
10
11
Lifetime ECL
17,246,344
(4,397,065)
12,849,279
Lifetime ECL
12-month
160,457
321,156
(380)
−
160,077
321,156
Liquidity risk
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.
The following are the contractual maturities of
financial liabilities, including estimated interest
payments:
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:
RUB’000
Balance at 1 January
2022
2021
(4,397,065)
(6,006,247)
Change of impairment for the period (Note 15(iii))
(863,172)
1,634,495
31.12.2022
CARRYING
AMOUNTS,
RUB’000
CONTRACTUAL
CASH FLOWS,
RUB’000
BETWEEN 0-12
MONTHS,
RUB’000
BETWEEN 2-3
YEARS,
RUB’000
FOREX
Balance at 31 December
362,722
(25,313)
Borrowings
2,763,534
3,265,734
−
3,265,734
(4,897,515)
(4,397,065)
Other payables and accruals
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.
(Impairment)/reversal of impairment on trade, other receivables and loans
RUB’000
Change for loans given (Note 15(iii))
Change for other receivables (Note 15(iv))
Write-off of other receivables and loans given
2022
2021
31.12.2021
(863,172)
1,634,495
Borrowings
(2,834)
(155)
1,007
Other payables and accruals
(280,413)
(866,161)
1,355,089
21,871
21,871
2,785,405
3,287,605
21,871
21,871
−
3,265,734
CARRYING
AMOUNTS,
RUB’000
CONTRACTUAL
CASH FLOWS,
RUB’000
BETWEEN 0-12
MONTHS,
RUB’000
BETWEEN 2-3
YEARS,
RUB’000
−
19,540
19,540
−
19,540
19,540
−
19,540
19,540
−
−
−
224
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
3. Financial risk management and tax risk
Financial risk factors (continued)
Currency risk
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$) and Euro (EUR). The
Company’s management monitors the exchange
rate fluctuations on a continuous basis and acts
accordingly.
The following significant exchange rates applied during the year:
Capital management
IN RUB
USD 1
EUR 1
AVERAGE RATE
REPORTING DATE SPOT RATE
2022
2021
31 DECEMBER 2022
31 DECEMBER 2021
68.55
72.53
73.65
87.19
70.34
75.66
74.29
84.07
RUB’000
ASSETS
uS dollar
Cash and cash equivalents
Loans receivable
Other receivables and prepayments
Total
Euro
Cash and cash equivalents
Other receivables and prepayments
Total
LIABILITIES
Euro
Other payables and accruals
Total
NET POSITION
US Dollar
Euro
31 DECEMBER 2022
31 DECEMBER 2021
Sensitivity analysis
A 10% strengthening of the US$ against the RUB at
31 December 2022 and 31 December 2021 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.
A 10% strengthening of the Euro against the RUB
at 31 December 2022 and 31 December 2021 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.
RUB’000
US Dollar
RUB’000
US Dollar
EQUITY
2022
PROFIT OR
LOSS 2022
RUB’000
535,911
535,911
Euro
EQUITY
2021
PROFIT OR
LOSS 2021
RUB’000
608,247
608,247
Euro
EQUITY
2022
PROFIT OR
LOSS 2022
40,621
40,621
EQUITY
2021
PROFIT OR
LOSS 2021
13,707
13,707
213
5,347,168
11,729
5,359,110
264,294
143,927
408,221
75,644
5,989,259
17,563
6,082,466
4,055
147,747
151,802
(2,008)
(2,008)
(14,732)
(14,732)
5,359,110
406,213
6,082,466
137,070
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 Company 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 Company 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.
225
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
4. Critical accounting estimates and judgements
5. Administrative expenses
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.
Income taxes
Significant judgment is required in determining the
provision for income taxes. There are transactions
and calculations for which the ultimate tax
determination is uncertain. The Company
recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes
will be due. Where the final tax outcome of these
matters is different from the amounts that were
initially recorded, such differences will impact the
current income tax assets and liabilities in the period
in which such determination is made.
RUB’000
Management services
Legal, consulting and other professional services
Directors’ remuneration (Note 15(i))
Auditors’ remuneration
Payroll tax
Accounting and administration expenses
Social insurance contribution
Secretarial fees
Insurance expenses
Other expenses
Total
2022
71,229
33,755
24,180
23,881
7,004
6,105
2,110
1,904
−
11,108
181,276
2021
−
41,694
33,893
18,501
8,998
8,810
1,830
4,729
103,799
17,463
239,717
Remuneration of the statutory audit firm for the year ended 31 December 2022 amounted to RUB 3.8 million for
audit services (2021: RUB 7.5 million) and RUB 0.2 million for other assurance services (2021: RUB 7.2 million).
Starting from April 2022, the insurance contracts are concluded with a subsidiary company JSC GK Etalon, all
payments are made by JSC GK Etalon.
Management services provided by the subsidiary of the Company, JSC GK Etalon. The amounts of accrued
expenses and payments are disclosed in Note 15(vii).
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.
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 8.
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.
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.
226
11ANNUAL REPORT 2022 2022
6,383
6,383
2021
Corporation tax
86,008
86,008
The corporation tax rate is 12.5%.
Special contribution to defense
RUB’000
Profit before tax
2022
2021
(16,216,149)
31,413,344
10
FInAnc IAL StAtEMEnt S
6. Net finance expenses
7. Income tax expense
RUB’000
Foreign exchange gains
Finance income
Foreign exchange losses
Loan assignment to third party (Note 15(iii))
Bank charges
Finance expenses
(246,545)
(299,245)
(9,060)
(429)
−
(463)
(256,034)
(299,708)
Under certain conditions interest income may
be subject to defense contribution at the rate
of 30%. In such cases this interest will be exempt
from corporation tax. In certain cases, dividends
received from abroad may be subject to defense
contribution at the rate of 17%.
Net finance expenses
(249,651)
(213,700)
Tax losses
Under current legislation, tax losses may be carried
forward and be set off against taxable income of
the five succeeding years.
Tax for the period
The tax on the Company’s profit before tax differs
from the theoretical amount that would arise using
the applicable tax rate as follows:
Tax calculated at the applicable tax rate of 12,5% (2021: tax rate of 12,5%)
(2,027,019)
3,926,668
Tax effect of expenses not deductible and income not taxable for income tax
purposes, net
2,067,062
(3,865,366)
Tax withheld in Russian Federation out of interest on loans
Tax effect of losses carried forward
Notional Interest Deduction (NID)
Application of group relief
Tax for the year
12,550
4,947
(44,990)
-
12,550
-
-
(54,218)
(7,084)
-
Russia and Cyprus have agreed to raise the tax rate on capital withdrawal. The basic tax rate on dividends
and interest increases to 15%, the changes take effect from January 1, 2021.
227
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
8. Investments in subsidiaries
RUB’000
At the beginning of the year
Contributions to share capital of subsidiaries
Acquisition of subsidiary at cost
Change in fair value of investments in subsidiaries
At end of the year
2022
2021
Dividends
98,441,246
64,769,755
−
3,696,803
4,558,381
−
(15,212,568)
29,974,688
87,787,059
98,441,246
The Company’s main subsidiaries, which are unlisted, are as follows:
NAME
PRINCIPAL
ACTIVITY
COUNTRY OF
INCORPORATION
31 DECEMBER
2022
31 DECEMBER
2021
AO Zatonskoe
Holding of investments
Russia
Tinctoria Holdings Limited
Provision of financing
services
Cyprus
Vandelo Limited
Holding of investments
Cyprus
Elzinga Holdings Limited
Holding of investments
Cyprus
Fagestrom Limited
Provision of financing
services
Cyprus
JSC GK Etalon
Holding of investments
Russia
YIT Salym Development
Holding of investments
Russia
Living Services Russia Oy
Holding of investments
Russia
YIT Invest Export Oy
Holding of investments
Russia
YIT Russia Oy
Holding of investments
Russia
32%1
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
32%
100%
100%
100%
100%
99.9%
−
−
−
−
1 The remaining 68% of shares are owned indirectly by the Group (through other subsidiary of the Company).
The current challenging geopolitical circumstances,
certain sanctional provisions and mutual restrictions,
including on distribution of funds through
international payment and clearing systems, have
a significant impact on the ability of the Company’s
subsidiaries to pay out dividends to the Company.
Pledges and guarantees
As at 31 December 2022, 68% of shares in subsidiary
company JSC Zatonskoe which represents RUB
2,873 million in its net assets (31 December 2021: 68%
of shares represents RUB 3,921 million in net assets)
was pledged as security for a secured bank loan
received by the subsidiary of the Company (net
assets are based on individual IFRS accounts of the
relevant companies).
During 2021, a restructuring and merger plan of the
Cyprus companies of the Group was implemented.
As a result, a number of companies were absorbed
by other group companies and dissolved, therefore
the number of subsidiaries of the Group was
reduced.
On 31 March 2022, the Boards of Directors of the
Company and of YIT Corporation agreed on the
sale of YIT Russia for a consideration of RUB 4,558
million. The completion of the acquisition of YIT
Russia took place in May 2022. Payments under the
transaction were made partly in cash amounted
to RUB 1,923 million (total payment with transfer tax
is amounted to RUB 1,996), and an agreement on
assignment of the loan obligation was also signed
(Note 15(v)).
Fair value
Key transactions
The investments are measured at fair value.
On 30 June 2021, the Company’s subsidiary,
Etalon Group Limited, approved a transfer to the
Company of 1,300,245 shares in JSC GK Etalon with
nominal value of RUB 1,200 as result of reduction of
share premium. As a result of the transaction, the
Company increased its share of ownership in JSC
GK Etalon to 99.9%.
The fair value of investments in subsidiaries at
31 December 2022 and 31 December 2021 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.
During December 2021, investments in subsidiaries
held by Etalon Group Limited were sold to the
Company for nominal amount of share capital.
On 28 December 2021, the Company entered into a
Share Purchase Agreement with a third party, under
which the Company sold its entire shareholding of
its subsidiary Etalon Group Limited to the third party
for a total consideration of US$13,199.
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 9 has therefore resulted in a corresponding
increase in the fair value of investments in
subsidiaries.
The key assumptions used in the estimation of the
fair value of subsidiaries are set out below.
31 DECEMBER
2022
31 DECEMBER
2021
20,36 —
25,46%
15,19 —
20,41%
Discount rates,
depending on the
stage of development
and status of
construction project
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 recognised a decrease in the fair value
of investments in subsidiaries in the amount
of RUB’000 15,212,568 for the year ended
31 December 2022 (31 December 2021: increase of
RUB’000 29,974,688).
228
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
8. Investments in subsidiaries
9. Loans receivable
Sensitivity analysis
The following tables demonstrate changes in key inputs and sensitivity of fair value measurement:
RUB’000
LIABILITIES
31 DECEMBER 2022
31 DECEMBER 2021
31 DECEMBER 2022
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 2021
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
CHANGE OF
PARAMETER
IMPACT ON FAIR
VALUE
IN MONETARY
TERMS, RUB'000
Loans to related parties
Total non-current loans receivable
6,062,472
6,062,472
12,849,279
12,849,279
1%
5%
(5%)
5%
(2.29%)
(15.61%)
(19.57%)
(3.63%)
(2,010,198)
(13,702,769)
CURRENT
(17,183,551)
Loans to related parties
(3,188,042)
Total current loans receivable
3,852,774
3,852,774
−
−
CHANGE OF
PARAMETER
IMPACT ON FAIR
VALUE
IN MONETARY
TERMS, RUB'000
1%
5%
(5%)
5%
(2.26%)
(10.36%)
(14.95%)
(2.93%)
(2,210,997)
(10,199,018)
(14,716,163)
(2,882,751)
Total loans receivable (Note 15(iii))
9,915,246
12,849,279
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 4,818,001 was
recognised as at 31 December 2022 (31 December
2021: RUB’000 4,312,708).
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. The amount of expected
credit losses on loans receivable of RUB’000 79,514
was recognised as at 31 December 2022 (31
December 2021: RUB’000 84,357).
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 2022, the loss allowance on loans
and receivables would have been RUB’000 28,065
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 fair values
of loans receivable approximate their carrying
amounts. The fair value hierarchy of loans receivable
belongs to Level 3.
229
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
10. Other receivables and prepayments
11. Cash and cash equivalents
RUB’000
31 DECEMBER 2022
31 DECEMBER 2021
RUB’000
31 DECEMBER 2022
31 DECEMBER 2021
Receivable from related parties (Note 15(iv))
Prepayments
156,073
2,599
158,672
160,077
Cash in banks
−
Short-term deposit (less than 3 months)
160,077
271,777
176,170
447,947
120,845
200,311
321,156
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.
The Company keeps significant bank balances
in banks in the UK, Cyprus and Russia with credit
ratings assigned by international and Russian rating
agencies of A+, BB- and ruA.
At 31 December 2022, the most significant amount
of cash and cash equivalents held with one
bank totalled RUB’000 259,333 (31 December
2021: RUB’000 120,751). At 31 December 2022, the
Company had no outstanding loans and borrowings
with the same bank that held the most significant
amount of cash and cash equivalents (31 December
2021: no outstanding loans and borrowings).
At 31 December 2022, short-term deposit bore
interest rate 6.25% per annum (31 December 2021:
7.60% per annum).
230
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
12. Share capital and share premium
NUMBER OF
ORDINARY SHARES
NUMBER OF
REDEEMABLE
PREFERENCE SHARES
SHARE
CAPITAL,
RUB’000
RESERVE FOR
OWN SHARES,
RUB’000
SHARE
PREMIUM,
RUB’000
TOTAL,
RUB’000
At 1 January 2021
294,954,025
20,000
New share issue at the beginning
of the period
At 31 December 2021 /
At 31 December 2022
88,487,391
−
383,441,416
20,000
2,266
457
2,723
(694)
−
15,486,109
15,487,681
10,881,756
10,882,213
(694)
26,367,865
26,369,894
At 1 January 2021, the number of authorised and
issued shares was 294,954,025. On 28 March 2021,
the General Meeting of the Shareholders of the
Company approved the increase of the authorised
share capital of the Company by the creation of
88,487,391 ordinary shares of nominal value of GBP
0.00005 each. On 14 May 2021, the Company
announced an offering of rights to subscribe for
newly issued Ordinary Shares to the existing holders
of the Company’s equity securities. Eligible holders
of GDRs subscribed for 23,339,732 new ordinary
shares and 281,975 new GDRs in total. A rump
offering was also completed on 14 May 2021 in
which a total of 64,865,684 GDRs was purchased by
investors.
(I) RESERVE FOR OWN SHARES
GDR buyback programme
During 2011-2017, the Company acquired 8,216,378
GDRs for own shares under GDR repurchase
programmes.
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.
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. The
term of the programme expired on 14 April 2021 and
no GDRs were purchased thereunder.
As of 31 December 2022 and 31 December 2021,
the total number of own shares acquired by the
Company 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.
(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 and from a
supplementary public offering of 88,487,391 ordinary
shares at a value USD 1.7 each in form of global
depository receipts on 14 May 2021.
(III) 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.
The current challenging geopolitical circumstances,
certain sanctional provisions and mutual restrictions,
including on distribution of funds through
international payment and clearing systems, have
a significant impact on the Company’s ability to
pay out dividends to all groups of its shareholders.
Based on the principle of equitable treatment
of all shareholders, the Board of Directors of the
Company resolved to postpone consideration of
the matter of dividend payments until constraints
currently in force are removed. The Annual General
Meeting of shareholders that took place on 22
December 2022 neither considered nor approved
any dividend payments for the financial year ended
31 December 2021.
As at 31 December 2022, the retained earnings
were RUB’000 52,569,427 (31 December 2021:
RUB’000 68,798,126). During the year ended 31
December 2022, the Company did not declare or
pay any dividends (31 December 2021: the AGM
of shareholders approved Board of Directors’
recommendation for dividends in the amount
RUB’000 3,600,552).
(IV) 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.
231
11ANNUAL REPORT 2022
10
FInAnc IAL StAtEMEnt S
13. Other payables and accruals
14. Borrowings
15. Related party transactions
31 DECEMBER 2022
31 DECEMBER 2021
RUB’000
31 DECEMBER 2022
31 DECEMBER 2021
The following transactions were carried out with related parties:
RUB’000
Accrued audit fees
Remuneration payable to Board of Directors with payroll and
social tax (Note 15(i))
Payables for management services (Note 15(vii))
Accrued accounting and administration expenses
Payables to related party
Other payables and accruals
7,932
7,794
5,370
675
100
−
16,025
1,758
−
1,034
−
723
21,871
19,540
CURRENT
Borrowings from subsidiary (Note 15(v))
Total current borrowings
2,763,534
2,763,534
−
−
In May 2022, the Company assumed a loan as part of the purchase of YIT Russia
under to agreement of assignment of a loan liability in amount RUB 2,635 million
(Note 15(v)). The loan is denominated in Russian rubles, with an interest rate of
6.65 % per annum and a maturity date of 31 December 2025.
The fair value of other payables and accruals which are due within one year approximates their
carrying amount at the reporting date.
(I) DIRECTORS’ REMUNERATION
RUB’000
2022
2021
Directors’ remuneration (Note 5)
Payroll and social tax (Note 5)
24,180
9,114
33,294
33,893
10,828
44,721
As at 31 December 2022, outstanding balances of remuneration payable to the
Board of Directors was RUB’000 7,794 (Note 13) (31 December 2021: outstanding
balances of payroll and social tax was RUB’000 1,758).
232
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
15. Related party transactions
(II) YEAR-END BALANCES
RUB’000
Receivables from subsidiary companies (Note 10)
Borrowings from subsidiary company (Note 14)
Loans due from subsidiary companies (Note 9)
Сash and cash equivalents in banks — other related parties
Management services provided by the subsidiary company
(Note 13)
31 DECEMBER 2022
31 DECEMBER 2021
RUB’000
31 DECEMBER 2022
31 DECEMBER 2021
(III) LOANS DUE FROM SUBSIDIARY COMPANIES
156,073
(2,763,534)
9,915,246
183,441
5,370
160,077
On 1 January
−
Loans repaid during the year
12,849,279
Repayment of interest on loans, net of tax
200,311
−
Tax withheld from Russian Federation out interest on loans
(Note 7)
Interest charged
Offset of loans under the merger plan ((Note 15(v))
Contribution of loans to share capital of subsidiaries (Note 8)
Loan assignment to third party
Loans issued during the year to subsidiaries
(Impairment)/reversal of impairment for loans receivable
Write-off of loans receivable
Foreign exchange (losses)/gains
On 31 December (Note 9)
12,849,279
(2,416,336)
(72,270)
(12,550)
478,499
−
−
(9,060)
114,320
(863,172)
(155)
(153,309)
9,915,246
8,134,746
−
(2,908)
−
442,535
(679,326)
(3,696,803)
−
6,937,050
1,634,495
−
79,490
12,849,279
As at 31 December 2022, the loans amounted
to RUB’000 9,915,246 (31 December 2021:
RUB’000 12,849,279). The loans were denominated
in US Dollars and Russian rubles, bear interest 3.14-
4.13 % per annum and have the repayment dates
from 31 December 2023 to 30 June 2026.
In current challenging geopolitical circumstances,
in accordance with the legislation of the Russian
Federation, there are some restrictions on
settlements of loans receivable with non-residents
of the Russian Federation from certain countries.
Such transactions are possible upon receipt
of individual permission from the Government
Commission for control over foreign investments
in the Russian Federation, and the Group plans to
obtain such approval to make necessary payments.
Modification of loans maturity dates had no
material impact on the fair value of the loans.
233
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
15. Related party transactions
(IV) RECEIVABLES FROM SUBSIDIARY COMPANIES
(VI) СASH AND CASH EQUIVALENTS IN BANKS – OTHER RELATED PARTIES
2022
160,077
13,276
−
(2,834)
110
(14,556)
156,073
2021
RUB’000
349,435
On 1 January
108,197
Receipt to the deposit account
−
4,850,000
(280,413)
Transfer to the cash account from the deposit
1,007
Interest income on deposits
−
Withdrawal of funds from the deposit
(18,149)
160,077
Payments from the cash account
Other expenses
On 31 December
41,000
19,535
(41,000)
(33,729)
(2,676)
183,441
2022
200,311
2021
−
(VII) MANAGEMENT SERVICES PROVIDED
BY THE SUBSIDIARY COMPANY
Management services provided by the subsidiary of
the Company, JSC GK Etalon:
RUB’000
On 1 January
Transfers of funds under reimbursement agreements
Write-off of receivables
(Impairment)/reversal of impairment for receivables
Gain from the sale of investments
Foreign exchange losses
On 31 December (Note 10)
(V) BORROWINGS FROM SUBSIDIARY COMPANY
RUB’000
On 1 January
Borrowings received upon purchase of subsidiary
Interest accrued
Offset of loans under the merger plan (Note 15 (iii))
Foreign exchange gains
On 31 December (Note 14)
31 DECEMBER 2022
31 DECEMBER 2021
−
2,635,361
128,173
−
−
2,763,534
671,915
−
14,333
(679,326)
(6,922)
−
−
120,119
(4,747,496)
−
(22,312)
RUB’000
On 1 January
Management services -
accrued expenses (Note 5)
2022
2021
−
71,229
Management services -
payments to related parties
(65,859)
200,311
On 31 December (Note 13)
5,370
−
−
−
−
234
11ANNUAL REPORT 2022 10
FInAnc IAL StAtEMEnt S
16. Capital commitments
17. Contingents
18. Events subsequent to the reporting date
As at 31 December 2022, the Company had no
capital commitments (31 December 2021: nil).
Litigation
Guarantees
Financing events
During the year ended 31 December 2022 and 2021,
the Company was not involved in court proceedings
(both as a plaintiff and a defendant) arising in the
ordinary course of business.
As at 31 December 2022, the Company provided no
financial guarantees to the related parties (as at
31 December 2021: no financial guarantees). As at
31 December 2022 no provision for guaranties was
recognized (as at 31 December 2021: no provision
was recognized).
Subsequent to the reporting date, the Group placed
unsecured bonds for the total amount of RUB 8 000
million with nominal interest rate of 13,7% per annum
and repayable by 2026.
There were no other material events after the
reporting period, which have a bearing on the
understanding of the financial statements for the
year ended 31 December 2022.
235
11ANNUAL REPORT 2022 11
Alternative
performance
measures used
in the 2022
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.
Financial metrics
• Pre-PPA gross profit: gross profit
• EBITDA: gross profit minus general
• Pre-PPA EBITDA1 : gross profit
less purchase price allocation (PPA)
and administrative expenses, minus
minus general and administrative
from the acquisition of Leader-Invest
selling expenses, plus depreciation
expenses, minus selling expenses,
included in the costs of sales.
and amortisation.
plus depreciation and amortisation,
plus purchase price allocation from
the acquisition of Leader-Invest
included in the cost of sales.
• Pre-PPA gross profit margin:
• Pre-PPA EBITDA margin:
Pre-PPA gross profit as defined above
Pre-PPA EBITDA as defined
divided by revenue.
above divided by revenue.
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.
• Net corporate debt: loans and
borrowings minus cash and cash
• Net corporate debt to pre-PPA
EBITDA: ratio calculated by dividing
equivalents, minus bank deposits with
net corporate debt by pre-PPA
terms over 3 months, minus secured
EBITDA (each as defined above).
project financing.
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.
• Operating cash flow adjusted
for cash collections held in escrow
accounts: net cash (used in) / from
operating activities plus interest
• Free cash flow: profit for the
year adjusted for depreciation,
impairments, interest, taxation,
change in working capital, and
paid, plus receipt of funds on escrow
change in invested capital.
accounts.
• 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.
1 Pre-PPA EBITDA is the Company’s disclosure is defined as adjusted EBITDA in the supplementary information to the IFRS statements.
236
11ALTERNATIVE PERFORMANCE MEASURES USED IN THE 2022 ANNUAL REPORTANNUAL REPORT 2022
11
Alternative
performance
measures used
in the 2022
Annual Report
Operating metrics
• New contract sales (pcs): number
• New contract sales (sqm):
• New contract sales (RUB): monetary
of sales contracts that have
net sellable area of flats, commercial
value of sales contracts for flats,
been entered into with customers
premises and parking places for which
commercial premises and parking
(regardless of whether contracts were
sales contracts have been entered
subsequently terminated).
into with customers (regardless of
places for which contracts have
been concluded with customers
whether contracts were subsequently
(regardless of whether contracts
terminated).
were subsequently terminated).
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.
• Cash collections (RUB): actual
• Deliveries (sqm):
amount of money received by the
total net sellable area of the project
Company for concluded contracts
that was commissioned. Includes
during the reported period, including
built-in commercial premises, as
cash collection to escrow accounts.
well as parking places and social
infrastructure that are part of the
project.
237
11ALTERNATIVE PERFORMANCE MEASURES USED IN THE 2022 ANNUAL REPORTANNUAL REPORT 2022 IR contacts for investors
and shareholders:
Etalon official accounts on
social platforms:
Etalon Group
feedback form:
+44 (0) 20-8123-1328
etalongroup.com
ir@etalongroup.com
designed by