Etalon Group Reports 64% Increase in IFRS Net Profit for FY 2011

18 March 2012

 

St. Petersburg – Etalon Group Limited (LSE: ETLN), one of Russia’s largest and oldest residential real estate developers, today announces its audited IFRS consolidated financial statements for 2011. The Group’s strong financial results for the year reflect the continuing post-crisis market recovery that began in 2010; while operating results remain below pre-crisis levels, market conditions in 2011 and early 2012 underscore further strong performance for the Company going forward.

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FY 2011 Financial Highlights:

  • Revenue grew on accelerating sales, increasing 16% year-on-year (y-o-y) to USD 774 million from USD 669 million in FY 2010;
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) reached USD 279 million, up 23% from USD 227 million in FY 2010; EBITDA margin increased to 36% from 34% in FY 2010;
  • Net profit for the year increased 64% y-o-y to USD 253 million;
  • Cash and cash equivalents* increased by 281% and stood at USD 490*million at year-end. The increase was primarily due to financing from the IPO, and this trend is expected to reverse as the Company invests into new projects;
  • Etalon Group had a net cash and cash equivalents position of USD 167* million at 31 December 2011, and gross debt of USD 323 million with maturities spread evenly between 2012 and 2015.

<br/>* includes bank deposits from short term investments (See Note 19 of 2011 audited IFRS financial statements)

FY 2011 Operating Highlights:

  • Deliveries increased by 57% y-o-y, including successful expansion into Moscow with 98 thousand sqm of NSA from the first stage of the Emerald Hills project delivered on schedule, contributing to total deliveries for the year of 328 thousand sqm;
  • FY 2011 new contract sales, while still below pre-crisis levels, increased 27% y-o-y to 270 thousand sqm and 30% y-o-y to RUR 18,306 mln on the back of a continued recovery in consumer activity;
  • The average price for new contract sales in 4Q 2011 increased to RUR 71,718, up 9% compared to RUR 65,994 in 4Q 2010, and up 5% from RUR 68,030 in 3Q 2011;
  • Pre-sales launched for 11 new buildings in FY 2011, representing 442 thousand sqm of NSA and expected cash collections equivalent to c. USD 968 million.

Update on Key Projects:

 

  • Acquired three new projects in 2011, which represent a total of 536 thousand sqm of planned NSA: Dmitrovskoye highway in the Moscow Metropolitan Area (MMA), as well as Letniy and Rechnoy in St. Petersburg;
  • Strong pipeline of projects currently undergoing due diligence: 5 in the Moscow metropolitan area and 13 in the St. Petersburg metropolitan area;
ProjectStatus
Emerald Hills (MMA)Phase I (98 thousand sqm of NSA) delivered in December 2011, Phase II (108 thousand sqm of NSA at 13 floor) with a total NSA of 884 thousand sqm.
Jubilee Estate (SPMA)11 of 13 buildings delivered by the end of 2011, project on track for completion in 2012 with total NSA of 602 thousand sqm; new roads approved in 2012 will improve access to the development.
Orbit (SPMA)One of four buildings delivered (completed NSA: 72 thousand sqm), project on track for completion in 2012.
Talisman (SPMA)Project delivered in full in 2012 (four buildings with 15 thousand sqm of NSA), located in historic Vasileostrovsky district of St. Petersburg.

Etalon Group President Viacheslav Zarenkov said:

“In 2011 we achieved exceptional financial performance, with Revenue, EBITDA and Net Income increasing 16%, 23% and 64%, respectively - significantly ahead of expectations.

“Our EBITDA margin increased to 36% for 2011, which once again demonstrates our ability to extract value from our land bank. I believe this underscores the unique DNA of the Etalon Group offering - our robust vertically integrated platform, nationwide sales network and strong reputation.

“Two key milestones for 2011 were the delivery of our first 98 thousand sqm in the MMA, and the increased share of MMA projects in our total portfolio to 45%.

“In 1H 2008, pre-crisis, we contracted 218 thousand sqm in St. Petersburg alone (c. 440 thousand sqm on an annualized basis). In all of 2011 we contracted 270 thousand sqm in both SPMA and MMA, demonstrating 27% y-o-y growth, yet still well below pre-crisis levels in SPMA and with substantial headroom for further recovery and growth in MMA.

“2012 is off to a strong start and we believe that the recovery will develop further, supporting our cash collections and new contract sales. We have every reason to look towards 2012 and 2013 with confidence, as we plan to launch sales on a total of 10 of the unique projects that we have been fortunate to acquire in both Moscow and St. Petersburg.

“At this stage, we are close to further securing the expansion of our operations for 2016-2019 as we finalise the acquisition of a number of new projects in both Moscow and St. Petersburg. At the same time, our 2012-2014 construction programme remains unchanged and we are fully land bank sufficient through 2016.

“Overall, our balanced debt maturity profile, solid track record and USD 490 million of expansion capital will enable us to continue to acquire high quality projects and provide a perfect growth platform for the years to come.”

Conference Call and Webcast

On Tuesday 20 March 2012 at 14:00 London time (18:00 Moscow; 10:00 New York), Etalon Group will host a live audio webcast to discuss its IFRS financial results for the year ended 31 December 2011.

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 FY 2011 results and answer questions from webcast and conference call participants.

The dial-in and online viewing details are below:

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Webcast link:

http://www.media-server.com/m/p/m2ox9anw

Toll numbers:

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

Toll free numbers:

8 10 8002 1774011 – Russia (from Moscow only)<br/>0808 109 0700 – UK<br/>1 866 966 5335 – USA <br/>Conference Call Password: Horseshoe

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Financial statements

The FY 2011 IFRS consolidated financial statements are available on the Etalon Group website: www.etalongroup.com/investors/financial-and-operating-results-centre/<br/>

<br/>CONTACT DETAILS:

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Etalon Group IR

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

M:Communications

Sam VanDerlip<br/>T: +7 (916) 306 6112<br/>E: vanderlip@mcomgroup.com

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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 31 projects, as of 31December 2011, with a total of 3.25 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. For the year ended 31December 2011, 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%.

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

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19 March 2012