Etalon Reports Record 1Q 2014 Operating Results

14 April 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 ended 31 March 2014 based on management accounts.

 1Q 2014 Operating Highlights

  • Record first quarter, with new contract sales of 109,060 sqm and RUB 9,078 mln, up 48% and 53% year-on-year, respectively;
  • The number of new contracts increased 58% year-on-year to 2,300 in 1Q 2014;
  • Average prices increased 3% year-on-year to RUB 83 thousand per sqm in 1Q 2014; adjusted for the higher share of parking lots in the 1Q 2014 sales mix, average price per sqm increased 10% year-on-year;
  • Cash collections for 1Q 2014 came to RUB 9,088 million, up 74% year-on-year from RUB 5,237 million in 1Q 2013;
  • Average down payment was 76% (significantly above the average of 50% envisaged by Etalon Group’s business model);
  • The share of mortgage contracts was 17% for 1Q 2014;
  • The share of Moscow Metropolitan Area (MMA) contracts in 1Q 2014 new sales was 24%, compared to 21% in 1Q 2013.

 1Q 2014 Operating Results

 

1Q 2014

1Q 2013

Change, %

New sales, sqm

109,060

73,481

48%

New sales, mn RUB

9,078

5,923

53%

Number of contracts

2,300

1,454

58%

Average price, RUB/sqm

83,234

80,606

3%

Cash collections, mn RUB

9,088

5,237

74%

Mortgage Contract Developments

 

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Share of mortgages

17%

20%

21%

23%

18%

Quarterly Summary

 

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

New Sales, sqm

109,060

109,797

92,755

80,042

73,481

New Sales, mn RUR

9,078

9,406

8,152

6,746

5,923

Average Price, RUR/sqm

83,234

85,671

87,887

84,286

80,606

 Commenting on the 1Q 2014 operating results, Etalon Group President Viacheslav Zarenkov said:

 “I am extremely pleased to announce record first quarter performance.  Our new contract sales for the period increased 48% in sqm and 53% in RUB terms compared to 1Q 2013.  In fact, we achieved close to the same level of sales as the fourth quarter, which is normally when we see the highest annual sales levels due to the seasonality of our business.

 “This strong performance was driven by the launch of sales for Galant, Tsar’s Capital and Etalon City during 2013 – these three projects accounted for 21% of sales in 1Q 2014.  Our sales portfolio is significantly more diversified than it was at the beginning of 2013, and with three more projects due to come online this year, we expect to see further improvements in the sales mix. 

 “Our MMA developments continue to provide an increasingly meaningful contribution to performance, with MMA contracts up 70% year-on-year to 545 in the first quarter, accounting for 24% of total contracts.

 “With cash collections up 74% year-on-year to RUB 9,088 million and our stable financial standing, with net debt of just RUB 182 mln as of 31 December 2013, the Company is very well positioned to execute its growth programme and acquire new projects. We have also started returning cash to our shareholders: on 14 April we announced that the Board of Directors had recommended the first dividend payment in Etalon Group’s history.”

 Conference call and webcast

 Etalon Group will host a conference call for investors and analysts today at 14:00 London time (17:00 Moscow; 09:00 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 1Q 2014 operating results, followed by a question and answer session for participants.

 Webcast link:

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

Toll numbers:

+44 20 3037 9374 РLondon<br/> +7 499 272 4337 РMoscow ۬<br/> +1 646 843 4608 РNew 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

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

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 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 April 2014