Financial reviewAll financial results are based on the audited consolidated financial statements of JSC INTECO and its subsidiaries for 2020 and 2021.

In 2021, the Company took full advantage of tailwinds in the market, significantly bolstering contract sales (+19% in value terms).

Revenue exceeded RUB 60.4 billion, an increase of more than 2.2x year-on-year. The robust performance was driven by growing average prices and contract sales, as well as by further physical progress of the Westerdam and West Garden housing estates, and buildings of Sadovye Kvartaly.

EBITDA exceeded RUB 21.7 billion, up 2.4x, and EBITDA margin stood at 36%, up 2 p.p. year-on-year. Nevertheless, leverage (net debt to EBITDA) increased by 0.62 points to 1.08x due to the growth of project financing.

INTECO’s key metrics, RUB million
Metric 2019 2020 2021 2021 vs 2020
change, %
Revenue 30,685 26,882 60,432 2.2x growth
Cost -2,232 -15,074 -34,564 2.3x growth
Gross profit 9,453 11,808 25,868 2.2x growth
Gain / loss from changes in fair value of investment property -44 22 -31 2.4x decrease
Selling expenses -528 -789 -1,461 85
General and administrative expenses -1,967 -2,131 -2,254 6
Reversal / charge of impairment of accounts receivable -113 35 77 2.2x growth
Other income 4,240 487 194 -60
Other expenses -158 -281 -580 2.1x growth
Total operating profit for the year 10,883 9,151 21,813 2.4x growth
Net finance expenses -4,660 -3,308 -5,649 6
Finance income 124 522 554 62
Finance expenses -4,784 -3,830 -6,203 71
Profit before tax 6,223 5,843 16,164 2.8x growth
Income tax -58 -1,264 -1,732 37
Total net profit for the year from continuing operations 6,165 4,579 14,432 3.2x growth
Profit after tax for the period from discontinued operations 3,699 57
Total net profit for the year 9,864 4,636 14,432 3.1x growth
Data for 2019 are adjusted for the spin-off of discontinued operations.

The Company managed to maintain a solid gross margin with a 2.2x increase in revenue.

Gross margin, %
Metric 2019 2020 2021 2021 vs 2020
change
Total gross margin 31 44 43 -1 p.p.
Data for 2019 are adjusted for the spin-off of discontinued operations.

EBITDA grew faster than revenue in 2021.

EBITDA based on IFRS data, RUB million
Metric 2019 2020 2021 2021 vs 2020
change, %
EBITDA 8,736 9,138 21,711 2.4x growth
Profit before tax 6,223 5,843 16,164 2.8x growth
Depreciation of fixed assets in costs 381
Depreciation of property, plant and equipment and amortization of intangible assets in general, administrative and selling expenses 63 68 100 47
Finance expenses 4,784 3,830 6,203 62
Finance income -124 -522 -554 6
Gain / loss from changes in fair value of investment property 44 22 -31 2.4x decrease
Reversal / charge of impairment of accounts receivable 113 35 77 2.2x growth
Income from disposal of a subsidiary -2,758
Revaluation of property, plant and equipment 10 24 156 6.5x growth

In August 2021, the Company also acquired 100% stakes in companies in the Rostov Region engaged in local construction or apartment building management. The entities were purchased from a company under common control of the shareholder.

Consolidated cash flow statement, RUB million
Metric 2019 2020 2021 2021 vs 2020
change
Cash flows from operating activities -1,962 -12,244 1,524 9x growth
Cash used in operating activities 17,414 15,044 28,864 92
Proceeds from sale of real estate 15,305 13,825 27,735 2x growth
Other proceeds 2,109 1,219 1,129 -7
Cash flows from operating activities -19,376 -27,288 -27,340 0
Payments to suppliers (contractors) for raw and other materials,works and services -12,490 -22,302 -21,264 -5
Payments related to general employee compensation -2,879 -2,594 -2,487 -4
Payments of selling expenses -773 -853 -1,051 23
Payments of general and administrative expenses -1,663 -711 -908 28
VAT paid to budget -949 -597 -931 56
Other payments -622 -231 -699 3x growth
Interest paid -2,106 -990 -2,249 2.3x growth
Income tax payments -671 -96 -383 4x growth
Net cash flows used in operating activities -4,739 -13,330 -1,108 -92
Net cash flows from investing activities 2,168 358 -25,452 72x decrease
Сash used in investing activities -2,189 -2,145 -26,006 12.1x growth
Loans issued -2,140 -2
Investments in property, plant and equipment -48 -155 -281 81
Acquisition of subsidiaries less cash acquired 2,041
Acquisition of land plots for construction -28,311
Net cash inflow / outflow from disposal of subsidiaries -1 -1,985 703 3.8x growth
Additional contributions in associates -158
Payments on other investing activities -3
Cash from investing activities 4,357 2,503 554 -78
Repayment of loans issued 2,500 2,135 2 -100
Interest received 1,388 91 220 2.4x growth
Proceeds from other investment activities 469 277 332 20
Net cash flows from financing activities 3,315 13,897 31,490 2.3x growth
Cash used in financing activities -10,601 -10,273 -22,889 2.2x growth
Repayment of loans and borrowings -10,601 -10,273 -22,889 2.2x growth
Cash flows from financing activities 13,916 24,170 54,379 2.2x growth
Proceeds from loans and borrowings 13,916 24,170 54,379 2.2x growth
Cash and cash equivalents at the beginning of the year 2,196 2,940 3,865 31
Cash and cash equivalents at the end of the year 2,940 3,865 8,795 2.3x growth
Net increase in cash and cash equivalents 744 925 4,930 5.3x growth

Leverage

In 2021, the Company’s loans and borrowings increased 2.4x to RUB 72.4 billion. This growth ensued from new financing provided by partner banks, with whom we cooperate strictly on an arm’s length basis.

Project financing totalled RUB 31.2 billion in 2021. Money in escrow accounts cover the amount of funds raised by as much as 1.3x.

INTECO is raising new debt on comfortable terms: as at the end of 2021, the weighted average interest rate was 4.93%. The loan portfolio’s low interest rate mostly results from substantial cash accumulated in escrow accounts, which translates into lower interest rates on project financing.

Loans with floating interest rates accounted for 39% of INTECO’s total loan portfolio (RUB 28.5 billion) as at 31 December 2021. To mitigate the risks associated with rate growth following key rate hikes by the Bank of Russia, the Company plans to sign addenda for certain loans to fix the interest rate.

For project-related loans, the following interest rate reduction measures may be taken.

  • Launching sales for ONEST and Ilyinka and accumulating more funds in escrow accounts, which will bring about a significant rate reduction for the portion covered by escrow accounts.
  • Using the government programme of subsidised loans for developersIn accordance with the Russian Government’s Decree No. 534 dated 31 March 2022. On Amending the Russian Government’s Decree No. 629 dated 30 April 2020..
  • Repaying a portion of loans using INTECO’s funds, including the money released from escrow accounts.
INTECO’s loans and borrowings, RUB million
Category As at 31 December 2019 As at 31 December 2020 As at 31 December 2021 2021 vs 2020
change, %
Long-term
Promissory notes 400 35
Unsecured bank loans and other loans received 1,986 1,235 7,929 6.4x growth
Project financing 3,185 13,481 18,462 37
Secured bank loans 13,805 23,259 68
Total 5,571 28,556 49,650 74
Short-term
Promissory notes 634 35
Unsecured bank loans and other loans received 2,690 1,756 430 -76
Project financing 2,839 56 12,745 227.6x growth
Secured bank loans 15,867 211 9,550 45.3x growth
Total 22,030 2,023 22,760 11.3x growth
Total loans and borrowings 27,601 30,579 72,410 2.4x growth

INTECO’s net debt (adjusted for escrow accounts) increased 5.6x to RUB 23.5 billion in 2021 due to a larger loan portfolio. Net debt / EBITDA grew to 1.08x in 2021 from 0.46x in 2020.

INTECO’s net debt, RUB million
Metric 2019 2020 2021 2021 vs 2020
change, %
Net debt (adjusted for escrow accounts) -18,027 -4,173 -23,490 5.6x growth
Cash and cash equivalents 2,940 3,865 8,795 2.3x growth
Escrow accounts 6,634 22,541 40,125 78
Long-term borrowings -5,571 -28,556 -49,650 74
Short-term borrowings -22,030 -2,023 -22,760 11.3x growth
Net debt metrics