Etalon Group Reports FY 2014 IFRS Results

23 March 2015

 

Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and longest-established development and construction companies, announces its audited consolidated IFRS financial statements for the full year ended 31 December 2014.

2H 2014 financial highlights:

  • Consolidated revenue increased 59% year-on-year (“y-o-y”) to RUB 36,942 million for 2H 2014 vs. RUB 23,286 million in 2H 2013
  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was 71% higher y-o-y at RUB 8,928 million in 2H 2014 vs. RUB 5,232 million in 2H 2013
  • Profit for the six-month period grew 109% y-o-y to RUB 7,442 million, compared to RUB 3,566 million in 2H 2013

FY 2014 financial highlights: 

  • Consolidated revenue increased 29% year-on-year (y-o-y) to RUB 51,481 million for FY 2014 from RUB 39,921 million in FY 2013
  • EBITDA grew 13% y-o-y to RUB 10,611 million in FY 2014 from RUB 9,430 million in FY 2013
  • Profit for the year was 26% higher y-o-y at RUB 8,369 million, compared to RUB 6,664 million in FY 2013
  • Earnings per share in 2014 of RUB 28.57, compared to RUB 22.70 for 2013
  • Etalon Group’s net debt as of 31 December 2014 was RUB 636 million
  • Net debt to EBITDA as of 31 December 2014 was just 0.06x 

Other 2014 highlights:

Operating performance set new records and outperformed Company guidance:

  • Deliveries of 580 ths sqm, a new record for Etalon Group in the Company’s more than 27-year history
  • The number of new contracts increased by 30% year-on-year to 9,045
  • New contract sales outperformed guidance, reaching 457 thousand sqm and RUB 39.96 billion, year-on-year increases of 28% and 32%, respectively
  • Cash collections in FY 2014 amounted to RUB 35,335 million, an increase of 36% year-on-year

Commenting on the FY 2014 financial results, Etalon Group President Viacheslav Zarenkov said:

“We posted another record set of financial results for 2014, with revenue, EBITDA and net profit at the highest levels ever seen in Etalon Group’s 27-year history.  Consolidated revenue reached RUB 51.5 billion on the back of very strong operating performance and robust sales throughout 2014. 

“Our project portfolio value increased 17% year-on-year to RUB 104 billion based on a valuation by JLL and we have a landbank of 3.11 million sqm, which is sufficient to implement our construction plan through 2018.

“In the current complex macro environment, we believe Etalon Group benefits from its focus on Moscow and St. Petersburg, which are Russia’s largest population centres with the highest levels of economic activity.  Our strong reputation and long history are also increasingly important factors for consumers considering purchasing a new flat.  I believe that Etalon Group’s well-diversified portfolio of attractive projects in the two capitals and regional sales network covering Russia’s most affluent regions will likewise contribute to our sustainable performance over the long term.

“While the current economic situation will create considerable challenges for some companies, I believe that Etalon Group is well positioned to take advantage of opportunities that may arise in a way that should create value for shareholders over the long term.”

Commenting on the FY 2014 financial results, Etalon Group CEO Anton Evdokimov said:

“We are pleased with Etalon Group’s robust operating performance in 2014, which was reflected in our strong financial results.  We maintained healthy profitability levels, with net profit for the year increasing 26% to RUB 8.4 billion.

“Looking ahead we are prepared for 2015 to be a potentially more complicated year for the industry.  Our flexible business model, sufficient cash reserves and solid inventory give us confidence, however, that we have built a stable platform that ensures we will benefit from future growth.

“At the same time, we will implement a number of measures in response to the current environment, including an optimisation of our construction plan.  In particular, we now plan to deliver 500 ths sqm of NSA in 2015. We may also revise our construction plans for the years 2016-2017 depending on the volume of demand going forward. At the same time I would highlight that we have high quality projects in our land bank at very advanced stages of design readiness and we may increase our product offering to the market and ramp up delivery volumes very quickly when we consider there to be sufficient demand.”

Commenting on the FY 2014 financial results, Etalon Group CFO Boris Svetlichny said:

“Etalon Group entered 2015 in a very strong financial position.  Our net debt was just RUB 636 million at the end of last year, and the net debt to EBITDA ratio was a very low 0.06x.  We also have a comfortable level of foreign currency-denominated debt: just 8% of our total gross debt is in euros, and this is easily covered by our fx cash deposits – Etalon Group’s fx-denominated cash to debt ratio was 3.5 as of 31 December 2014, an increase over 31 December 2013 where the ratio was 1.0.”

Conference call and webcast

Etalon Group will host a conference call for investors and analysts today at 14:00 London time (17:00 Moscow; 10:00 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 2014 financial results, followed by a question and answer session for participants.

The dial-in and online viewing details are below:

Webcast-Link:

http://edge.media-server.com/m/p/dtzx4o54

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

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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24 March 2015