Etalon Group Receives Planning Permit for Tsar’s Capital

05 June 2012

 

St. Petersburg – Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and oldest residential real estate developers, is pleased to announce it has received a planning permit for Tsar’s Capital, one of the Company’s largest residential construction projects in St. Petersburg.

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Receipt of the planning permit is a key milestone for the Tsar’s Capital project, and Etalon Group now intends to fast track the construction permit and official launch sales. Tsar’s Capital will consist of 15 residential buildings of up to 11 storeys, containing c. 3,800 flats and housing an estimated 7,500 people.

Etalon Group President Viacheslav Zarenkov said: “Tsar’s Capital is one of the two largest projects in Etalon Group’s eight-step programme for 2012. This year we plan to launch sales and construction on eight new projects with a total NSA of 1.5 million sqm, which is fully in-line with our strategy and construction program. We intend to finish most of these projects in the next two or three years, and six of them should be driving delivery volumes in 2014. Together with Emerald Hills, this eight step program will drive 79% of our 2014 deliveries, and will have a significant positive impact on our new contract sales in 2012 and 2013.

“Tsar’s Capital is another large-scale comfort-class residential project, and it enjoys an excellent location near central St. Petersburg, just two kilometres from the Winter Palace. It is a landmark project for the city of St. Petersburg and for the Company.

“We are very pleased to have completed the 1.2 million sqm post-IPO acquisition programme in May with project Galactica. Galactica is another milestone project for Etalon Group, with 680 ths sqm of NSA just four kilometres away from the Winter Palace in St. Petersburg. We are also working on a number of acquisitions in Moscow and St. Petersburg that we hope to complete in the next several months.

“We expect the recent volatility of the rouble to have a positive effect on sales, as people seek to convert their cash holdings and bank deposits into hard assets to protect themselves from a potential devaluation.

“Our financial position also remains very strong with USD 505 million of expansion capital and USD 170 million of net cash on the balance sheet*.”

* per unaudited management accounts as of 1 May 2012

Recent Etalon Group highlights:

  1. 29 May 2012: Etalon in Largest St. Petersburg Acquisition to Date
  2. 21 May 2012: Etalon Announces New Acquisitions & 8-Step Program
  3. 16 April 2012: Etalon Reports 1Q 2012 Operating Results
  4. 29 March 2012: Etalon Reports 64% Increase in IFRS Net Profit
  5. 06 March 2012: Etalon Real Estate Portfolio Market Value Up 20%

These and other recent announcements are available on the Etalon Group website: www.etalongroup.com/investors/news/

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Etalon Group IR Team

T: +44 (0) 20 8123 1328

E: info@etalongroup.com

M: Communications

Sam VanDerlip

T: +7 495 363 2845

vanderlip@mcomgroup.com

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About Etalon Group

History and Overview

Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest residential real estate developers. With a 25-year history, the Company has one of the longest and most successful track records in the Russian real estate industry.

Today Etalon Group is a leading player in Russia’s “Golden Triangle” – St Petersburg, Moscow and the greater Moscow area, with a dominant position in the “comfort class” segment. The Company’s strong foothold in these markets is reinforced further by its unique nationwide sales network covering 9 of the 10 wealthiest regions of Russia, and spanning 30 cities in total. The sales network generates up to 30% of Etalon Group’s revenue, and has been an important source of stable demand even throughout the crisis.

Etalon Group is one of the only truly vertically integrated businesses in the Russian real estate sector. The Company does everything from acquiring land to sales and cash collections from its customers, which enables it to maximise margins throughout the value chain, and reduces exposure to cost inflation from external service providers. Etalon Group is a company of scale, with a total of 40 business units that employ over 4,000 people, two strong management companies, five general contractors, 16 subcontractors, a crane company, a brick factory and a nationwide sales network.

Etalon Group’s strong financial position is driven by its effective pre-sales business model. The Company aims to pre-sell 70-90% of all residential space before a building is delivered. It also targets an average down payment of 50%. This allows Etalon Group to finance the construction process using money from customers, as opposed to using the loans or funding from shareholders.

In addition to homebuilding, Etalon Group’s long history and superior quality offering has helped it to become a trusted industrial construction partner for clients like General Motors, Toyota, Ford Motors, Bosch, Siemens, Nissan, Suzuki and Gazprom in northwest Russia.

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

Operational and Financial Highlights

As of 31 December 2011, Etalon Group’s portfolio comprised 31 projects, with a total of 3.25 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. Jones Lang LaSalle valued this portfolio at USD 1,714 million, a 20% increase in the market value from YE 2010.

For the year ended 31 December 2011, Etalon Group’s new contract sales totalled 270,012 sqm, or RUR 18,306 million. Deliveries in 2011 totalled 328 thousand sqm.

The Company recorded revenues of RUB 22.7 billion (USD 774 million) and EBITDA of RUB 8.2 billion (USD 279 million), with an EBITDA margin of 36% for the year ended 31 December 2011, making it one of the most profitable players in the sector.

Etalon Group’s net cash position at 31 December 2011 was USD 167 million, leaving it well positioned to fund continued dynamic growth.

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6 June 2012