St. Petersburg – Etalon Group Limited (LSE: ETLN), one of Russia’s largest and oldest residential real estate developers, today announces its audited consolidated IFRS financial statements for 2012. The Company generated strong cash flows and maintained quality cash reserves throughout this period, meaning it remains well positioned to finance further growth by implementing its revised construction schedule and acquiring attractive new projects in the Moscow and St. Petersburg Metropolitan Areas.
FY 2012 Financial Highlights:
- Revenue grew 18% year-on-year (y-o-y) to RUB 26,894 million;
- Residential development gross profit margin was 43% in 2012 vs. 47% in 2011, driven by mix of projects;
- Earnings before interest, taxes, depreciation and amortization (EBITDA) was RUB 6,931 million, down 15% from RUB 8,201 million in FY 2011 on the back of decreased transfers to customers ;
- EBITDA margin decreased to 26 % from 36% in FY 2011 driven by income from lower-margin construction services, which accounted for 18% of revenue in 2012 vs. 7% in 2011, as well as impairment effects; Net profit for the year was RUB 5,000 million, vs. RUB 7,440 million in 2011 ;
- Etalon Group fully completed its post-IPO acquisition programme in 2012 and retained a net cash and cash equivalents position of RUB 890* million as at 31 December 2012; gross debt amounted to RUB 16,636 million with maturities spread evenly between 2013 and 2017.
* includes bank deposits from short term investments (See Note 19 of 2012 audited IFRS financial statements)
FY 2012 Operating Highlights:
- Transfers to customers decreased by 12% y-o-y to 241 thousand sqm of NSA, primarily because 31% of 2012 deliveries were scheduled for 4Q 2012 and a significant portion of these are expected to be transferred in 1Q 2013.
- The post-IPO acquisition programme was completed in 2012 with the additional acquisition of c. 900 thousand sqm of NSA in the Moscow Metropolitan Area (MMA) and St. Petersburg.
- Deliveries increased by 11% y-o-y to 363 thousand sqm – fully in line with the Company’s revised construction programme, including further successful expansion in the MMA with 83 thousand sqm delivered at the Emerald Hills project in FY 2012.
- New contract sales in FY 2012 increased by 30% y-o-y to RUR 24 bln and by 17% to 316 thousand sqm, driven by a higher share of smaller apartments, generally in line with guidance.
- Total number of contracts in FY 2012 increased 38% y-o-y to 5,797; the number of MMA contracts was up 104% y-o-y to 1,082.
- Cash collections from residential operations for the year increased to USD 672 million.
- Launched 5 new projects: Swallow’s Nest, House on Tukhachevskogo street, Letniy, Rechnoy and Molodejny with total NSA of 620 ths sqm.
Commenting on the 2012 results, Etalon Group Chief Financial Officer Anton Evdokimov said:
“Our core residential business remained largely within the target EBITDA margin range of 30% in 2012. However, the increased share of construction services in consolidated revenues, combined with an impairment charge, had a dilutive impact on consolidated margins for the year.
“While we saw growth in new contract sales and deliveries in 2012, actual transfers to customers were slower for the year as most deliveries were scheduled towards the end of the year. In order to minimize this kind of cut-off impact in the future, we have adjusted delivery targets going forward with the aim to complete most deliveries before the end of October / November.”
Commenting on the 2012 results, Etalon Group President Viacheslav Zarenkov said:
“In 2012 we completed our post-IPO acquisition programme by acquiring two projects in the Moscow Metropolitan Area and two in St. Petersburg, with a total NSA of c. 900 thousand sqm. We also substantially expanded our presence in the MMA, growing our footprint to 5 sizable, high-quality projects.
“This has been another successful year for the Company with robust sales dynamics: in 2012, the average down payment was at a high level of 72% and the share of mortgage sales reached 18%. We achieved a 17% y-o-y increase in new sales by sqm, and new sales in rouble terms increased by 30% y-o-y.“
Commenting on the 2012 results, Etalon Group Head of Investments Dmitri Boulkhoukov said:
“In 2012 our cash collections from residential operations were exceptionally strong and amounted to USD 672 million (per management accounts).
“The balance sheet remains one of the strongest in the industry, which means Etalon Group is well positioned for new acquisitions.”
Conference Call and Webcast
Today 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 2012.
Etalon Group President Viacheslav Zarenkov, CFO Anton Evdokimov and Head of Investments Dmitri Boulkhoukov will present the 2012 IFRS financial results, followed by a question and answer session for conference call participants.
The dial-in and online viewing details are below:
+44 (0) 20 3003 2666 – London
+7 499 272 4337 – Moscow
+1 646 843 4608 – New York
Toll free numbers:
8 10 8002 4902044 – Russia (from Moscow only)
0808 109 0700 – UK
1 866 966 5335 – USA
Conference Call Password: Etalon Group
The FY 2012 IFRS consolidated financial statements are available on the Etalon Group website: www.etalongroup.com/investors/financial-and-operating-results-centre/
Etalon Group IR
T: +44 (0)20 8123 1328
T: +7 (916) 306 6112
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 especially throughout the last 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 primarily 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 2012, Etalon Group’s new contract sales totalled 316,466 sqm, or RUR 23,739 million. Deliveries in 2012 totalled 363 thousand sqm.
The Company recorded revenues of RUB 26.9 billion and EBITDA of RUB 6.9 billion, with an EBITDA margin of 26% for the year ended 31 December 2012, making it one of the most profitable players in the sector.
Etalon Group’s net cash position at 31 December 2012 was RUB 890 million, leaving it well positioned to fund continued dynamic growth.