Etalon Reports 1Q 2015 Operating Results

13 April 2015

 

Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and longest-established development and construction companies, announces its unaudited operating results for the three months ended 31 March 2015 based on management accounts.

 1Q 2015 Operating Highlights

  • The number of new contracts was 1,028 in 1Q 2015
  • New contract sales of 46,990 sqm and RUB 3,804 mln
  • Average down payment was 84%, compared to 76% in 1Q 2014 and 83% in 4Q 2014
  • Average prices for apartments increased 14% to RUB 106,228 per sqm, while the blended average price decreased 3% to RUB 80,946 per sqm due to a higher share of parking spaces in the 1Q 2015 sales mix.
  • Cash collections for 1Q 2015 came to RUB 6,003 million
  • Transfers to customers increased 345% year-on-year to 84,997 sqm

 1Q 2015 Operating Results

 1Q 20154Q 20143Q 20142Q 20141Q 2014
Number of contracts1,0282,7521,9602,0332,300
New sales, sqm46,990 147,042 106,039 94,934 109,060
New sales, mln RUB 3,804 13,309 9,480 8,095 9,078
Average price (total), RUB/sqm 80,946 90,511 89,402 85,271 83,234
Average price (apartments), RUB/sqm 106,228 97,522 93,223 95,923 93,122

Mortgage Contract Development

 1Q 20154Q20143Q 20142Q 20141Q 2014
Share of mortgages11%23%28%23%17%

1Q 2015 year-on-year comparison

 1Q 20151Q 2014Change, %
New sales, sqm46,990109,060(57%)
New sales, mln RUB3,8049,078(58%)
Number of contracts1,0282,300(55%)
Average price (apartments), RUB/sqm106,22893,12214%
Cash collections, mln RUB6,0039,088(34%)
Transferred to customers, sqm84,99719,096345%

Commenting on the 1Q 2015 operating results, Etalon Group CEO Anton Evdokimov said:

“Etalon Group’s 1Q 2015 operating results are fully in line with our expectations, and we consider these to be satisfactory: to begin with, demand in the first quarter was affected by a cool-down period after the rush seen in 4Q 2014, when consumers accelerated buying decisions in order to “cement” rouble prices and lock in mortgages before the interest rate increase took effect; second, the first quarter of 2014 was also a record period for Etalon Group, creating a high base effect for year-on-year comparisons. At the same time transfers to customers in 1Q 2015 increased by 345% to 85 ths sqm, which gives us a strong basis for revenue and profit recognition – as well as dividends for 1H 2015.

“Towards the end of the first quarter and into April we saw sales accelerate, and we expect additional momentum from new launches due in 2Q-4Q of this year.  We consciously took the decision not to launch sales on any new project in the volatile environment that dominated the first quarter, but as the situation stabilised we approved our 2015 launch schedule, which envisages bringing over 800 ths sqm of new NSA onto the market.  This should create a good impulse for new sales going forward.

“Looking ahead to the rest of 2015, this means that while we expect to see new contract sales decline for the full year as a result of the market slowdown triggered by macro factors, we wouldn’t treat 1Q 2015 year-on-year performance as an indication of the potential FY 2015 new contract sales results. Our current operational plan is based on an assumption that new contract sales will decline by no more than 30% for the full year 2015. This would put new contract volumes at a level comparable with 2013 results (in 2013 new contract sales amounted to RUB 30.2 billion).  

“Etalon Group remains in a very strong financial position, with a net debt/EBITDA ratio of just 0.06x.  Our excellent reputation is key to our pre-sales model, and enables us to minimise dependence on external financing.  We continue to maintain a flexible stance with regards to market developments, and are ready to quickly ramp up our construction activity when we determine there is sufficient demand for the volumes we can deliver.”

Conference call and webcast

Etalon Group will host a conference call for investors and analysts today at 14:00 London time (16:00 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 2015 operating results, followed by a question and answer session for participants.

The results presentation is currently available online at: www.etalongroup.com/investors/presentations/

Webcast:<br/>http://edge.media-server.com/m/p/ubfqk6vf

Dial-in numbers:

London, United Kingdom:

+44 (0) 20 3364 5381

Moscow, Russia:

+7 495 213 0978

New York, United States of America:

+1 212 444 0895

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: +7 499 918 3134<br/>E: vanderlip@em-comms.com

About Etalon Group 

Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest development and construction corporations.  The Company focuses on middle class residential real estate in the Moscow and St. Petersburg metropolitan areas, where it operates through Etalon Invest and LenSpetsSMU subsidiaries. With a 27-year history, Etalon Group has one of the longest and most successful track records in the Russian real estate industry.

Since its inception, Etalon Group has commissioned 4.5 million sqm. Etalon Group's CAGR for deliveries in 2010-2014 was 29%.

Etalon Group's strong reputation among consumers supports its pre-sales business model, which helps the Company to minimise external financing needs for on-going projects while maintaining a secure liquidity position: net debt as of 31 December 2014 was RUB 636 million.

The Company is vertically integrated, which helps it to control costs, quality and timing, as well as to demonstrate best-in-class profitability. Etalon Group employs over 5,000 people, and its nationwide sales and marketing network covers 36 Russian cities.

As of 31 December 2014, Etalon Group's portfolio comprised 29 projects, with a total of 3.11 million sqm of unsold net sellable area. Jones Lang LaSalle valued this portfolio at RUB 104,286 million, a 17% increase in the market value from YE 2013.

For the year ended 31 December 2014, Etalon Group's new contract sales totalled 457 ths sqm, or RUB 39,961 million. Deliveries in 2014 totalled 580 ths sqm.

The Company recorded revenue of RUB 51.5 billion and EBITDA of RUB 10.6 billion, with an EBITDA margin of 21% for the year ended 31 December 2014.

Etalon Group Limited's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011.

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14 April 2015