Etalon Group Reports 34% Year-On-Year Increase in New Contract Sales for 9M 2011

30 October 2011

 

St. Petersburg – Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and oldest residential real estate developers, announces its unaudited operating results for the three months ended 30 September 2011 based on management accounts.

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Q3 2011 Highlights:

  • New contract sales increased 22% year-on-year (y-o-y) to 63,737 sqm and 25% y-o-y to 4,336 mn RUB in 3Q 2011, on the back of a continued recovery in consumer activity
  • For 9M 2011 new contract sales increased 34% year-on-year (y-o-y) to 185,919 sqm and 33% year-on-year (y-o-y) to 12,275 mn RUB
  • The average price for new contract sales increased by 12.4% in 3Q 2011 compared to the previous quarter
  • August and September of 2011 saw the highest levels of new sales contracts in the last three years (excl. December 2010), reaching 23,330 sqm and 28,366 sqm, respectively; November and December, traditionally the busiest months of the year, remain to be booked
  • With the acquisition of another 105 ths sqm of residential NSA in the Rechnoy project in St. Petersburg, new acquisitions post-IPO now equal 518 ths sqm, or 40% of the amount envisaged at IPO
  • Pre-sales launched for stage two of Emerald Hills in MMA and Building 3 of Orbit in St. Petersburg
  • First stage of Emerald Hills on track for delivery in 2011

Q3 Operating Results

 Q3 2011Q3 2010Change, %9M 20119M 2010Change, %
New sales, sqm63,73752,35722%185,919138,75534%
New sales, mn RUB4,3363,47825%12,2759,25433%

Quarterly Summary

 Q3 2010Q4 2010Q1 2011Q2 2011Q3 2011
New sales, sqm52,35773,52259,63862,54463,737
New sales, mn RUR3,4784,8524,1583,7814,336
Average price, RUB/sqm66,42965,99469,72160,45368,030

Commenting on the results, Etalon Group President Viacheslav Zarenkov said:

“Our dominant position in the comfort class in Russia, nationwide sales network and flexible instalment plan system (carefully tailored to Russia’s household incomes) have enabled us to achieve solid growth in new sales contracts in 3Q 2011. We are especially encouraged by our performance in August and September, which, with the exception of December 2010, saw the highest monthly sales we have achieved in the last three years.

“In 3Q 2011 sales increased by 22% y-o-y and our 9M2011 sales increased by 34% y-o-y, which reflects the fact that 2H2010 was considerably stronger than 1H 2010. As we did not witness any critical decline in sales during the crisis, this year-on-year growth comes from a solid base.

“This year we have consistently outperformed our budget targets both in terms of new contract sales and cash collections. We expect to achieve key 2011 annual budget targets in November, with December traditionally being the strongest month of the year.

“I would again underscore that Etalon’s sales growth was driven by a general market recovery and, particularly in our case, by a change in consumer preference towards low-risk, reputable developers. We believe only a small portion of current sales are due to investment purchases: instead, pent up demand is driving sales as many households are not willing to postpone apartment purchases for another two years. We see on a micro level that both households and companies are in much better shape than during the crisis of 2008.

“With USD c.602 million in cash and cash equivalents (USD c.2.04 per share) and USD c.331 million of mid- to long-term debt, we believe Etalon is well positioned to benefit from the change in consumer preferences and to acquire more high-quality projects in order to create additional value for our shareholders.”

Conference call and webcast

Today, 31 October 2011, at 13:00 London time (17:00 Moscow; 09:00 New York), Etalon will host a live conference call and audio webcast to discuss its Q3 2011 operating results.

Etalon Group President Viacheslav Zarenkov, CFO Anton Evdokimov, Head of Investments Dmitri Boulkhoukov and Head of Strategy and Business Development Alexander Shkuratov will present the Q3 2011 operating results and answer questions from webcast and conference call participants. The webcast and conference call details are provided below:

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Webcast: http://www.media-server.com/m/p/2drxs26p

Conference call dial-ins:

Toll numbers:

London: +44 (0) 20 3003 2666 <br/>Moscow: +7 499 272 4337 <br/>New York: +1 646 843 4608

Toll free numbers:

Russia: 8 10 8002 1774011 <br/>UK: 0808 109 0700 <br/>USA: 1 866 966 5335

Conference Call Password: Etalon

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About Etalon Group

Founded in 1987, Etalon Group is one of Russia’s largest residential real estate developers. The Company operates in both the St. Petersburg and Moscow Metropolitan Areas.

Etalon Group has a strong portfolio focused on large-scale residential complexes, with a dominant position in the “comfort class” (lower middle class and upper economy class) price segment, providing high quality living at affordable prices. The Company’s portfolio comprised 28 projects, as of 31 December 2010, with a total of 3.13 million sqm of unsold net sellable area (“NSA”) in the St. Petersburg and Moscow Metropolitan Areas. For the year ended December 31 2010, the Company recorded revenues of RUB 20.3 billion (USD 669 million) and EBITDA of RUB 6.9 billion (USD 227 million), with an EBITDA margin of 34%.

Since 20 April 2011, Etalon Group Limited has had its GDRs traded on the Main Market of the London Stock Exchange.

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Etalon Group IR Team

T: +44 (0) 20 8123 1328 <br/>E: info@etalongroup.com 

PR/IR Advisor:

M: Communications <br/>Sam VanDerlip <br/>T: +7 495 663 8005 <br/>vanderlip@mcomgroup.com 

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31 October 2011