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 nine months ended 30 September 2016 based on management accounts and its consolidated IFRS financial statements for the six months ended 30 June 2016.
9M 2016 Operating Highlights
- The number of new contracts increased by 50% year-on-year to 6,589 for 9M 2016
- New contract sales increased by 63% year-on-year to 342 ths sqm, and by 75% year-on-year to RUB 33,718 million
- Cash collections grew by 76% year-on-year to RUB 28,601 million for 9M 2016
- Average price per sqm rose by 7% year-on-year to RUB 98,515
9M 2016 Operating Results
|9M 2016||9M 2015||Change, %|
|Number of contracts||6,589||4,384||50%|
|New sales, sqm||342,263||210,485||63%|
|New sales, mln RUB||33,718||19,306||75%|
|Cash collections, mln RUB||28,601||16,213||76%|
|Average price, RUB/sqm||98,515||91,721||7%|
|Average price (apartments), RUB/sqm||108,747||103,726||5%|
3Q 2016 Operating Highlights
- New contract sales in 3Q 2016 amounted to 107 ths sqm, vs. 101 ths sqm in 2Q 2016
- The number of new contracts in the third quarter amounted to 2,069, compared to 1,886 in 2Q 2016
- Cash collections amounted to RUB 8,744 million in 3Q 2016
- Average price per sqm of apartments in 3Q 2016 was RUB 110,413, overall stable compared to RUB 111,966 in the second quarter
|3Q 2016||2Q 2016||1Q 2016||4Q 2015||3Q 2015|
|Number of contracts||2,069||1,886||2,634||3,457||2,525|
|New sales, sqm||106,661||100,599||135,003||174,767||121,522|
|New sales, mln RUB||10,575||10,284||12,860||15,774||11,392|
|Cash collections, mln RUB||8,744||9,286||10,571||9,632||5,798|
|Average price, RUB/sqm||99,144||102,223||95,254||90,258||93,746|
|Average price (apartments), RUB/sqm||110,413||111,966||105,040||100,502||102,417|
Mortgage contract developments
|3Q 2016||2Q 2016||1Q 2013||4Q 2015||3Q 2015|
|Share of mortgages||22%||21%||20%||15%||15%|
6M 2016 Financial Highlights:
- 6M 2016 results reflect the seasonality of Etalon Group’s results, where the majority of revenue from the development segment is normally recognised in the second half of the year (in line with delivery and transfer schedule), while many components of costs are recognised roughly evenly across the periods
- Consolidated revenue for the first half of 2016 was RUB 19.7 billion
- Gross profit in 6M 2016, adjusted for interest in cost of sales, was RUB 4.6 billion in 6M 2016
- Gross profit from residential development in 6M 2016, adjusted for interest in cost of sales, was RUB 4.2 billion, representing an adjusted gross profit margin for residential development of 36%
- Etalon Group’s net profit for 6M 2016 was RUB 1.3 billion
- Operating cash flow less interest paid for 6M 2016 amounted to RUB 4.1 billion
- Net debt declined to RUB 5.3 billion as of 30 June 2016 from RUB 7.4 billion as of 31 December 2015
- The Board of Directors will consider the payment of interim dividends for 1H 2016 at its meeting scheduled for mid-November 2016
Commenting on the 9M 2016 operating results and 6M 2016 financial results, Etalon Group CEO Viacheslav Zarenkov said: “Etalon Group’s operating performance in 9M 2016 shows we are well on track to deliver record results for the full year. New contract sales of RUB 33.7 billion for the period represent 96% of the full year result in 2015, and with the fourth quarter traditionally our strongest every year, I expect to achieve significant year-on-year growth.
“After the market began to stabilise in 3Q 2015, Etalon Group has delivered solid results, and our q-o-q performance in the third quarter of this year shows we continue to achieve historically strong results in absolute terms.
“Looking at our 6M 2016 financial results, we generated strong operating cash flow of RUB 4.1 billion, which contributed to a decrease in our net debt to just RUB 5.3 billion. This means that Etalon Group remains on solid financial footing, and that we are well-positioned to take advantage of the interesting opportunities that are arising in the current market environment, with the possibility to expand and diversify Etalon Group’s landbank for long-term development.
“Looking ahead at the more immediate future, we see good momentum on our new contract sales, with new project launches, especially Galactica in St. Petersburg, expected to provide further impulse to our sales in 4Q and beyond.”
Conference call and webcast
Etalon Group will host a conference call for investors and analysts on 12 October 2016 at 14:00 London time (16:00 Moscow; 09:00 New York). On the call, Etalon Group’s management team will present the 9M 2016 operating results and the 6M 2016 IFRS financial results, followed by a question and answer session for participants.
+44 20 3427 1903 – London
+7 495 213 0979 – Moscow
+1 212 444 0895 – New York
Toll free numbers:
0800 279 5004 – UK
8 800 500 9311 – Russia
1 877 280 2296 – USA
Conference ID Code: 7987888
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
T: +44 7554 993 032
T: +7 499 918 3134
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 29-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 5 million sqm. Etalon Group's CAGR for deliveries in 2010-2015 was 19%.
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 2015 was RUB 7,397 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 5,000 people, and its nationwide sales and marketing network covers 37 Russian cities.
As of 31 December 2015, Etalon Group's portfolio comprised 28 projects, with a total of 2.72 million sqm of unsold net sellable area. JLL valued this portfolio at RUB 104,384 million.
For the year ended 31 December 2015, Etalon Group's new contract sales totalled 385 ths sqm, or RUB 35,080 million. Deliveries in 2015 totalled 502 ths sqm.
The Company recorded revenue of RUB 42.4 billion and EBITDA of RUB 7.7 billion for the year ended 31 December 2015.
Etalon Group Limited's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011.