Etalon Group Reports 3Q 2017 Operating Results

15 October 2017

ETALON GROUP PLC (“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 and nine months ended 30 September 2017, based on management accounts.

3Q 2017 operating highlights

  • New contract sales in 3Q 2017 amounted to 114 ths sqm, up by 7% year-on-year
  • New contract sales in rouble terms reached RUB 11,970 million, a 13% year-on-year increase
  • Cash collections rose by 42% year-on-year and amounted to RUB 12,433 million
  • Average price per sqm was RUB 105,015, up by 6% year-on-year and by 13% quarter-on-quarter
  • Average down payment increased from 69% in 3Q 2016 to 82% in 3Q 2017 

3Q 2017 operating results

 3Q 20173Q 2016Change, %
New sales, sqm113,979 106,6617%
New sales, mln RUB11,97010,57513%
Number of contracts2,3312,06913%
Average price, RUB/sqm105,01599,1446%
Average price (apartments), RUB/sqm114,582110,4134%
Cash collections, mln RUB12,4338,74442%

Quarterly operating performance

 3Q 20172Q 20171Q 20174Q 20163Q 2016
New sales, sqm113,979122,427 113,646 153,745 106,661
New sales, mln RUB11,97011,34610,24813,72510,575
Number of contracts2,3312,3212,0823,0012,069
Average price, RUB/sqm105,01592,67690,17889,27299,144
Average price (apartments), RUB/sqm114,582109,390111,382105,928110,413
Cash collections, mln RUB12,4339,2839,71411,1238,744

Mortgage contract developments 

 3Q 20172Q 20171Q 20174Q 20163Q 2016
Share of mortgages35%33%22%23%22%

9M 2017 operating highlights

  •  The number of new contracts increased by 2% year-on-year to 6,734 for 9M 2017
  • New contract sales increased by 2% year-on-year to 350 ths sqm, and amounted to RUB 33,564 million
  • Cash collections grew by 10% year-on-year to RUB 31,430 million
  • Deliveries amounted to 128 ths sqm, up by 36% year-on-year

 9M 2017 operating results 

 9M 20179M 2016Change, %
New sales, sqm350,052342,2632%
New sales, mln RUB33,56433,7180%
Number of contracts6,7346,5892%
Cash collections, mln RUB31,43028,60110%

Commenting on the 3Q 2017 operating results, Etalon Group President Viacheslav Zarenkov said:

“Etalon Group has delivered a solid set of results for the third quarter of 2017: new contract sales amounted to RUB 12 billion and 114 ths sqm, outperforming 3Q 2016 results by 13% and 7%, respectively.

“Growth in overall sales and higher average down payments were the main factors driving Etalon Group’s strong cash collections performance: the average down payment in 3Q 2017 was 82%, compared to 69% in 3Q 2016 and 79% in 2Q 2017. This increase in down payments was, in turn, supported by the share of mortgage contracts rising to 35% on the back of falling mortgage interest rates.

“We have continued to sell down our existing portfolio of ready property: Etalon Group’s inventory of completed and available for sale apartments decreased to 165 ths sqm as of 30 September 2017, compared to 244 ths sqm as of 31 December 2016.

“As expected, new project launches have supported sales performance this year. Silver Fountain, our first business class project in Moscow, was launched in late August and brought 7% of new contract sales in rouble terms in the third quarter. We just recently launched Botanica, a business class project in St Petersburg, about two months after acquiring the project. Botanica and Silver Fountain reflect our strategic shift towards increasing the share of centrally-located, higher-end projects in Etalon Group’s portfolio, with a focus on minimising the time between acquisition of a project and launch of sales.

“Looking ahead, we plan to continue implementing our updated strategy, adding more attractive projects to further diversify our sales portfolio as the Russian market recovers and mortgage lending rates decrease to levels that make housing more accessible to a wider group of Russian consumers.”

Conference call and webcast 

Etalon Group will host a conference call for investors and analysts today at 15:00 London time (17:00 Moscow; 10:00 New York).

On the call, the Etalon Group management team will present the Company’s 3Q 2017 operating and 1H 2017 IFRS financial results, followed by a question and answer session for participants.

Webcast
https://edge.media-server.com/m6/p/mm76yaz3

Dial-in numbers:
+44 20 3427 1905 – London
+7 495 213 0978 – Moscow
+1 212 444 0896 – New York

Conference ID Code: 3379896

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
E: info@etalongroup.com

EM

Sam VanDerlip
T: +44 7554 993 032
T: +7 499 918 3134
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 Etalon LenSpetsSMU subsidiaries. With a 30-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 5.5 million sqm.

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 2016 was RUB 7.8 billion.

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 thousand people, and its nationwide sales and marketing network covers 52 Russian cities.

As of 31 December 2016, Etalon Group's portfolio comprised 35 projects, with a total of 2.82 million sqm of unsold net sellable area. JLL valued this portfolio at RUB 115,818 million.

For the year ended 31 December 2016, Etalon Group's new contract sales totalled 496 ths sqm, or RUB 47,443 million. Deliveries in 2016 amounted to 420 ths sqm.

The Company recorded revenue of RUB 49.0 billion and EBITDA of RUB 7.3 billion for the year ended 31 December 2016.

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

 


 

16 October 2017