Etalon Group Reports 2H 2016 Financial Results

04 April 2017

 

Etalon Group Limited ("Etalon Group" or the "Company"), one of Russia's largest and longest-established development and construction companies, announces its audited consolidated financial results for the six months and full year ended 31 December 2016.

2H 2016 financial highlights:

  • Revenue rose by 21% year-on-year to RUB 29,280 million, compared to RUB 24,256 million in 2H 2015
  • Gross profit, adjusted for interest in cost of sales, increased by 10% year-on-year to RUB 8,885 million
  • Residential segment gross profit, adjusted for interest in cost of sales, grew by 9% year-on-year to RUB 8,475 million, with a margin of 39%
  • EBITDA for 2H 2016 was RUB 5,586 million, up 24% year-on-year, with an EBITDA margin of 19%
  • Profit for the period amounted to RUB 3,594 million, up by 11% year-on-year
  • The Board of Directors is due to consider dividends for 2H 2016 at its meeting on 28 April 2017

FY 2016 financial highlights:

  • Revenue for the full year rose by 16% year-on-year to RUB 49,022 million
  • Gross profit, adjusted for interest in cost of sales, declined by 3% year-on-year to RUB 13,450 million
  • EBITDA for FY 2016 was RUB 7,301 million
  • Profit for the period amounted to RUB 4,902 million
  • Operating cash flow less interest paid was positive in FY 2016, and amounted to RUB 4,040 million
  • Net debt was almost unchanged during the year and stood at RUB 7,848 million as of 31 December 2016

Other 2016 highlights:

  • New contract sales significantly outperformed guidance, growing by 29% and 35% year-on-year to 496 ths sqm and RUB 47.4 billion, which creates a strong basis for revenue and profit recognition in coming reporting periods
  • Deliveries of 420 ths sqm, exactly in line with the construction plan
  • Eight new projects with 682 ths sqm of NSA acquired during the year

Commenting on the 2H and FY 2016 financial results, Etalon Group President and CEO Viacheslav Zarenkov said:

“We saw significant improvement in our performance in the second half of 2016, with revenue up 21% year-on-year, residential gross margin returning to its normal level of 39% and an EBITDA margin of 19%. I believe that this is yet another sign of Etalon Group’s ability to maintain a strong and profitable business, even as the market is still showing only the first signs of recovery.

“Despite the challenging macroeconomic situation we have dealt with in recent years, Etalon Group has increased its revenue across all segments both in the second half and for the full year. This is a good sign of the trust we have earned not only among buyers of our residential real estate, but also among businesses who choose Etalon for major industrial construction projects.

“In line with our forecasts during the 1H 2016 financial results announcement, adjusted gross profit margin for residential construction returning to its normal level in the second half of the year. This, combined with tight costs discipline, helped bring EBITDA margin up to 19% during the second half, which is the highest level seen in several years.

“Etalon Group had positive operating cash flow of RUB 4,040 million for FY 2016, despite eight acquisitions totalling 682 ths sqm of NSA and the launch of two flagship projects, in Moscow and St Petersburg, during the year. Combined with our low debt levels and strong profitability for the second half of the year, the Company is in a good position to pay dividends in line with its upgraded dividend policy.”

Conference call and webcast

Etalon Group’s management team will discuss 2H 2016 financial results together with 1Q 2017 operating performance during a conference call and webcast for investors and analysts scheduled for 13 April 2017. Dial in and webcast details will be provided prior to the call.

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 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 5.4 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 5,000 people, and its nationwide sales and marketing network covers 49 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 Limited's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011. 

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5 April 2017