Etalon Reports FY 2013 IFRS Results

19 March 2014

 

Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and longest-established residential real estate developers, announces its audited consolidated IFRS financial statements for the full year ended 31 December 2013.

 FY 2013 financial highlights:

  • Consolidated revenue increased 48% year-on-year (y-o-y) to RUB 39,921 million for FY 2013 from 26,894 million in FY 2012;
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 36% y-o-y to RUB 9,430 million in FY 2013 from RUB 6,931 million in FY 2012;
  • Profit for the period grew 33% y-o-y to RUB 6,664 million, compared to RUB 5,000 million in FY 2012;
  • Etalon Group’s net debt as of 31 December 2013 was just RUB 182 million.

Other 2013 highlights 

Operating performance remained strong:

  • Deliveries in line with management guidance at 468 thousand sqm;
  • New contract sales up 13% and 27% year-on-year to 356 thousand sqm and RUB 30 billion, respectively;
  • Average price per sqm up 13% year-on-year to RUB 85 thousand per sqm on better portfolio diversification.

Board of Directors adopted new dividend policy effective from 2H 2013, aimed at paying out 15% to 30% of IFRS net profit. 

 

Commenting on the FY 2013 financial results, Etalon Group President Viacheslav Zarenkov said:

“I am very pleased to announce a strong set of financial results for 2013, with net profit up 33% to RUB 6.7 billion. Our robust operating performance throughout the year was the main driver of our solid financial results. Sustainable demand for our comfort class residential offering, combined with further improvements in portfolio mix, helped us to increase price per square metre while also selling more flats during the year.

“At the end of 2013 our portfolio of projects was valued at USD 2,727 mln by Jones Lang LaSalle and we have a landbank of 3.44 million sqm, which is sufficient to implement our construction plan until 2018.

“We have seen good demand for our product so far in 2014, fuelled by sales from new projects launched in 2013. This year we have already launched sales for Phase II of Tsar’s Capital, with more projects to come.”

Commenting on the FY 2013 financial results, Etalon Group CEO Anton Evdokimov said:

“I very happy with the solid operating and financial performance demonstrated in 2013. Looking ahead to the rest of 2014, we remain on track to deliver 584 thousand sqm of NSA in 2014, up 25% year-on-year from 2013.

“We maintained tight control over costs throughout 2013, with general, administrative and selling expenses as a percentage of revenue decreased from 12.2% in 2012 to 10.5% for 2013.

“Our financial position remains very strong with net debt of just RUB 182 million and significant cash reserves available for future acquisitions aimed at securing our land bank beyond 2018.”

Conference call and webcast

Etalon Group will host a conference call for investors and analysts today at 13:00 London time (17:00 Moscow; 09:00 New York). The presentation will be available via the webcast, and will be published on Company's website (www.etalongroup.com) prior to the conference call.

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 FY 2013 financial results, followed by a question and answer session for participants.

The dial-in and online viewing details are below:

Webcast-Link:

http://www.media-server.com/m/p/o423m4j8

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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20 March 2014