Etalon Reports 1H 2014 Operating Results

14 July 2014

 

Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and longest established residential real estate developers, announces its unaudited operating results for the three months and half year ended 30 June 2014, based on management accounts.

1H 2014 highlights:

  • The number of new contracts increased by 44% year-on-year to 4,333
  • New contract sales amounted to 204 thousand sqm and RUB 17.17 billion, year-on-year increases of 33% and 36%, respectively
  • Cash collections in 1H 2014 amounted to RUB 14,835 million, an increase of 36% year-on-year
  • Deliveries increased 171% year-on-year to 76 ths sqm, precisely in line with the 2014 construction programme

 1H 2014 Operating results

 

1H 2014

1H 2013

Change, %

Number of contracts

4,333

3,002

44%

New sales, sqm

203,994

153,523

33%

New sales, mln RUB

17,173

12,669

36%

Cash collections, mln RUB

14,835

10,940

36%

Average price, RUB/sqm

84,184

82,522

2%

Share of mortgages, %

20%

21%

(1 p.p.)

 

 1H 2014 Deliveries

 

1H 2014

1H 2013

Change, %

Deliveries, NSA ths sqm

76

28

171%

 

1H 2014 Deliveries, by project

ths sqm

1H 2014

Emerald Hills

41.8

Galant

34.6

Total

76.4

 

1H 2014 Transfers to customers

 

1H 2014

1H 2013

Change, %

Transferred to customers, sqm

103,260

156,567

(34%)

 

 

2Q 2014 highlights

  • The number of new contracts in 2Q 2014 increased 31% year-on-year to 2,033
  • New contract sales amounted to 95 thousand sqm and RUB 8.1 billion, year-on-year increases of 19% and 20%, respectively
  • Average down payments remained at a high level of 74% in the second quarter
  • The increasing share of sales at prime-location projects continued to drive new contract sales and higher average prices per sqm for residential and commercial premises, with average prices for apartments and commercial premises increasing 8% year-on-year to RUB 96 thousand per sqm

 

2Q 2014 Operating results

 

2Q 2014

1Q 2014

4Q 2013

3Q 2013

2Q 2013

Number of contracts

2,033

2,300

2,122

1,752

1,548

New Sales, sqm

94,934

109,060

109,797

92,755

80,042

New Sales, mln RUB

8,095

9,078

9,406

8,152

6,746

Average Price, RUB/sqm

85,271

83,234

85,671

87,887

84,286

 

Mortgage contract developments

 

2Q 2014

1Q 2014

4Q 2013

3Q 2013

2Q 2013

Share of mortgages

23%

17%

20%

21%

23%

 

 

Etalon Group President Viacheslav Zarenkov said:

 “The first half of 2014 has demonstrated the strength of our business model, aimed at offering high-quality comfort class residential real estate in the Moscow and St. Petersburg Metropolitan Areas through multiple sales channels including a sales network that covers all of the Russia’s most affluent regions. In the second quarter the regional network contributed around 40% of the total sales.

 “Another key driver of our continued strong performance in the first six months of the year is a significantly improved product mix, which is not only more diversified but also has an increased share of prime-location projects.  Following the launch of the second phase of Tsar’s Capital in March 2014, for example, this project now accounts for 19% of new contract sales.  With the second phase of Etalon City and three new projects due to launch in 2H 2014, we expect to see further improvements.”

 Etalon Group CEO Anton Evdokimov said:

 “I am very pleased to report a successful first half of 2014, with all deliveries completed exactly on schedule.  After a record first quarter we have seen demand remain in line with our expectations for 2014, and we are on track to deliver the 580 ths sqm that our construction plan calls for this year.  Etalon Group’s financial position remains strong, with a net cash position of USD 7 million as of 30 June 2014*, meaning we are able to continue acquiring new projects in order to secure the Company’s long-term growth.”

 *according to unaudited management accounts

 Conference call and webcast

 Etalon Group will host a conference call for investors and analysts today at 13:00 London time (16:00 Moscow; 08:00 New York).

 On the call, Etalon Group President Viacheslav Zarenkov, CEO Anton Evdokimov, CFO Boris Svetlichny and Head of Corporate Investments and Investor Relations Kirill Bagachenko will present the 1H 2014 operating results, followed by a question and answer session for participants.

 Webcast

http://www.media-server.com/m/p/mrn6mfkt 

Toll numbers:

+44 20 3037 9374 - London<br/> +7 499 272 4337 - Moscow<br/> +1 646 843 4608 - New York

Toll free numbers:

8 10 8002 4902044 - Russia (from Moscow only)<br/> 0808 109 0700 - UK<br/> 1 866 966 5335 - USA

Conference Call Password: Etalon

Etalon Group IR Team

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

EM

Sam VanDerlip <br/>T: +44 7554 993 032<br/>T: +7 916 306 6112<br/> E: vanderlip@em-comms.com

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 more than 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 construction 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 2013, Etalon Group’s portfolio comprised 28 projects, with a total of 3.44 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. Jones Lang LaSalle valued this portfolio at USD 2,727 million, a 15% increase in the market value from YE 2012.

For the year ended 31 December 2013, Etalon Group's new contract sales totalled 356,075 sqm, or RUB 30,227 million. Deliveries in 2013 totalled 468 thousand sqm.

The Company recorded revenues of RUB 39.9 billion and EBITDA of RUB 9.4 billion, with an EBITDA margin of 24% for the year ended 31 December 2013, making it one of the most profitable players in the sector.

Etalon Group’s net debt position at 31 December 2013 was RUB 182 million, leaving it well positioned to fund continued dynamic growth.

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15 July 2014