19 Feb 2019 16:00
19 February 2019
Sistema Becomes Shareholder of Etalon Group
ETALON GROUP PLC ("Etalon Group" or the "Company"), one of Russia's largest and longest-established development and construction companies, announces changes in its shareholder structure related to Sistema PJSFC ("Sistema") (LSE: SSA, MOEX: AFKS), a publicly-traded diversified holding company, becoming a shareholder.
Sistema has acquired 25% of the share capital of Etalon Group from the family of Company's founder, Viacheslav Zarenkov, at the price of 3.07 USD per GDR. Following completion of the transaction, the family of Viacheslav Zarenkov will retain a minority stake equal to 5.7%.
Etalon Group's strategy will remain unchanged for the foreseeable future following these changes in the shareholder structure. The Company plans to continue to independently develop its business in its core regions, in line with the previously approved strategy. Commitment to the principles of openness, equal access to information for all investors and shareholders, as well as compliance with all obligations under previously adopted policies, including the dividend policy as updated in May 2017, remain key priorities for Etalon Group.
In connection with the change in the shareholder structure, the Board of Directors of Etalon Group on 19 February 2019, held a meeting in Limassol, Cyprus. Following the sale of a significant stake, representatives of the Zarenkov family have stepped down from the Board of Directors. The Board of Directors accepted the resignation of Viacheslav Zarenkov from the post of Chairman of the Board of Directors of Etalon Group. The Board of Directors also accepted the resignations of Dmitry Zarenkov, Olga Shevchuk and Anton Shatov from their positions on the Board of Directors. Sistema, following its signing of this transaction, nominated two representatives to the Board - Oleg Mubarakshin and Sergey Egorov - with the Board approving both candidates. The number of independent directors has been increased to six. In this connection, Marina Ogloblina and Anna Homenko were elected to the Board as independent non-executive directors. With Viacheslav Zarenkov stepping down, the Board unanimously appointed Oleg Mubarakshin as Chairman of the Board of Directors. In addition, the Board of Directors approved relevant changes in the compositions of its committees. The new Board of Directors and its committees are presented below:
Board of Directors:
• Oleg Mubarakshin, Chairman of the Board of Directors of Etalon Group, non-executive director
• Sergey Egorov, non-executive director
• Alexey Kalinin, non-executive director
• Kirill Bagachenko, Chief Financial Officer of Etalon Group, executive director
• Maxim Berlovich, executive director
• Marina Ogloblina, independent non-executive director
• Anna Homenko, independent non-executive director
• Martin Cocker, independent non-executive director
• Boris Svetlichny, independent non-executive director
• Dennis Vinokourov, independent non-executive director
• Charalampos Avgousti, independent non-executive director
Remuneration and Nomination Committee:
• Oleg Mubarakshin, Chairman of the Board of Directors of Etalon Group, non-executive director
• Sergey Egorov, non-executive director
• Alexey Kalinin, non-executive director
• Anna Homenko, independent non-executive director
• Martin Cocker, independent non-executive director
• Charalampos Avgousti, independent non-executive director
Strategy Committee:
• Oleg Mubarakshin, Chairman of the Board of Directors of Etalon Group, non-executive director
• Sergey Egorov, non-executive director
• Alexey Kalinin, non-executive director
• Gennadii Shcherbina, Chief Executive Officer of Etalon Group
• Kirill Bagachenko, Chief Financial Officer of Etalon Group, executive director
• Maxim Berlovich, executive director
• Marina Ogloblina, independent non-executive director
• Dennis Vinokourov, independent non-executive director
Audit Committee:
• Martin Cocker, Committee Chairman, independent non-executive director
• Boris Svetlichny, independent non-executive director
• Anna Homenko, independent non-executive director
Information Disclosure Committee:
• Kirill Bagachenko, Committee Chairman, Chief Financial Officer of Etalon Group, executive director
• Ksenia Savchuk, Head of PR
Etalon Group founder Viacheslav Zarenkov said:
"I founded Etalon Group more than 30 years ago, and we have managed to become one of the leaders of the development and construction market in Russia since then, having delivered over 6.3 million square meters of residential real estate in St Petersburg and Moscow, as well as a number of landmark projects such as the St Petersburg Stock Exchange building, the ExpoForum congress and exhibition centre and other industrial and public buildings. Throughout our history we have not only met all of our obligations to our customers, but also sought to create a company with high standards of corporate governance, a reputation as a reliable partner for all of its stakeholders, and a unique corporate culture based on professionalism and a focus on achieving strategic goals not only by leadership, but also by each of its employees.
"The sale of my stake to Sistema is the final step in a series of transformations that we launched several years ago in order for Etalon Group to continue moving towards achieving even more ambitious goals, in line with its strategy. It was therefore especially important for me to find a buyer who shares the same views on the future development of the Company, while possessing sufficient energy, expertise and experience to complement the competencies of Etalon Group and help in the implementation of its strategic goals.
"I am pleased to welcome Sistema as the new largest shareholder of Etalon Group. I am confident that Sistema will preserve the principles and values that were established by the founders of the Company and at the same time will give a new impetus to the development of Etalon Group as a reliable partner.
"I am a strong believer in Etalon Group's growth outlook. I will continue to hold a minority stake in the Company as a sign of my support both for Etalon Group's strategy and for the team that will continue to execute our strategy and develop the business. In this respect I have no plans to sell down my shares for at least the next year."
Sistema President and CEO Andrei Dubovskov said:
"Etalon Group holds strong positions in the St Petersburg and Moscow development and construction markets, while its regional sales network, in-house construction capacities and design systems that utilise advanced IT solutions such as BIM, are unique to this market. The purchase of this major stake in Etalon Group will significantly strengthen Sistema's presence in the construction and development segment and will contribute to the future successful development of both companies.
"The current management team of Etalon Group, with its vast experience and track record of delivering outstanding operational results, will continue day-to-day management of the business, with access to all resources available to Sistema. We are fully aligned with the Etalon Group strategy and we will, as the largest shareholder, contribute to its implementation, seeking to maximise value for the Company in the interests of all shareholders.
Biographies of new directors:
Oleg Mubarakshin
Oleg Mubarakshin has more than 20 years of experience in corporate law and investment management. Since 2013 he has worked at Sistema, currently as a Managing Partner and before that as Senior Vice President and Head of the Legal Function. Before joining Sistema he was head of legal at EastOne Investment and Consulting Group, and before that spent more than a decade at InBev FMCG Group, ending up as Vice President for Legal Affairs for Western Europe. He holds a degree in law from Moscow State Academy of Law and a degree in finance from the Finance Academy under the Government of the Russian Federation.
Sergey Egorov
Sergey Egorov is a highly experienced professional in private equity, corporate finance, leveraged finance and debt restructuring. Since June 2015, he has held the role of Director of Special Projects at PJSFC Sistema, where he is responsible for seeking out new investment opportunities, structuring and execution, and for developing and executing assets strategy. Sergey also sits on the boards of directors of Sistema's portfolio companies. Before joining Sistema, Sergey was Vice President of Intellect Telecom and has significant experience at companies including Sberbank Capital, United Capital Partners and EY, among others. Sergey holds a Diploma in Finance from Kyrgyz State National University.
Marina Ogloblina
Marina Ogloblina has many years of experience in the administrations of the city and region of Moscow. Most recently, she has served as Minister for Construction and Residential and Utility Sector of Moscow Region, before being appointed advisor for construction (with ministerial rank) to regional governor. Previously she worked for 20 years in economic planning roles in the Moscow city administration, eventually becoming Minister and Head of the Economic Planning and Development Department, and also heading the city's Main Supervision Department. Marina began her career at the State Bank of the USSR before being appointed senior auditor for two districts of Moscow at the Russian SFSR Finance Ministry's Audit Directorate. She holds a degree from Moscow Finance University, and served as professor and head of the Department of Finance, Accounting and Audit at the Moscow government's Moscow State University of Administration.
Anna Homenko
Anna Homenko has nearly 20 years of experience in management, consultancy and strategy positions in the legal and finance fields. She currently acts as a consultant providing services in trust and corporate administration, accounting and financial management, and international tax planning, and also sits on the boards of Ros Agro and Interpipe. Anna previously held a number of senior legal and management positions. She holds a degree in law and international politics from Keele University, and also completed a Legal Practice Course at the College of Law in Chester, UK.
About Sistema:
Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children's goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality. The company was founded in 1993. Its revenue in 2017 was RUB 704.6 billion; its total assets equalled RUB 1.1 trillion as of 31 December 2017. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on Moscow Exchange.
This and other recent announcements are available on the Etalon Group website: http://www.etalongroup.com/investors/news/
Etalon Group IR Team
T: +44 20 8123 1328
E: info@etalongroup.com
EM
Sam VanDerlip
T: +44 7554 993 032
T: +7 499 918 3134
E: vanderlip@em-comms.com
About Etalon Group
Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest development and construction corporations. The Company focuses on middle class residential real estate in the Moscow and St Petersburg metropolitan areas, where it operates through Etalon Invest and Etalon LenSpetsSMU subsidiaries. With a more than 30-year history, Etalon Group has one of the longest and most successful track records in the Russian real estate industry - since its inception, Etalon Group has commissioned 6.3 million sqm.
Etalon Group's strong reputation among consumers supports its pre-sales business model, which helps the Company to minimise external financing needs for on-going projects while maintaining a secure liquidity position: net debt as of 31 December 2017 was RUB 9.7 billion.
The Company is vertically integrated, which helps it to control costs, quality and timing, as well as to demonstrate best-in-class profitability. Etalon Group employs 5 thousand people, and its nationwide sales and marketing network covers 58 Russian cities.
As of 30 June 2018, Etalon Group's assets comprised 39 projects and a construction and maintenance division, with a total of 2.73 million sqm of unsold net sellable area. Knight Frank valued the Company's assets at RUB 132,487 million.
For the year ended 31 December 2018, Etalon Group's new contract sales totalled 628 ths sqm, or RUB 68,731 million. Deliveries in 2018 amounted to 479 ths sqm.
The Company recorded revenue of RUB 70.6 billion and EBITDA of RUB 13.2 billion for the year ended 31 December 2017.
Etalon Group's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011.