Etalon Group 1H and 2Q 2019 Operating Results

17 July 2019

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 six months and three months ended 30 June 2019, based on management accounts.

1H 2019 operating highlights

 

  • New contract sales increased by 41% year-on-year to RUB 38,734 million and by 23% year-on-year to 322,212 sqm
  • The number of contracts grew by 28% year-on-year and amounted to 6,530
  • 1H 2019 cash collections rose by 56% year-on-year to RUB 42,809 million
  • Average price per sqm grew by 15% year-on-year to RUB 120,214
  • Average price per sqm of apartments was RUB 143,088, up by 22% year-on-year
  • Net debt stood at RUB 3,988 million as of 30 June 2019

1H 2019 operating results

 

 1H 20191H 2018Change, %
New sales, sqm322,212262,54323%
New sales, mln RUB38,73427,48741%
Number of contracts6,5305,10528%
Cash collections, mln RUB42,80927,47156%
Deliveries, sqm246,343- 

Regional breakdown

 1H 20191H 2018Change, %
Moscow metropolitan area
New sales, sqm161,400119,53435%
New sales, mln RUB22,47913,01373%
Number of contracts3,2172,38835%
Cash collections, mln RUB26,03012,884102%
Deliveries, sqm246,343- 
St Petersburg
New sales, sqm160,811143,01012%
New sales, mln RUB16,25614,47412%
Number of contracts3,3132,71722%
Cash collections, mln RUB16,77814,58715%
Deliveries, sqm-- 

2Q 2019 operating highlights

 

  • New contract sales amounted to RUB 18,782 million and 154,257 sqm, representing year-on-year growth of 35% and 20%, respectively
  • The number of new contracts increased by 21% year-on-year to 3,060
  • Cash collections rose by 31% year-on-year to RUB 19,177 million
  • Average price per sqm was RUB 121,759, up by 13% year-on-year
  • Average price per sqm of apartments grew by 22% year-on-year to RUB 146,524

2Q 2019 operating results

 

 2Q 20192Q 2018Change, %
New sales, sqm154,257128,46820%
New sales, mln RUB18,78213,88235%
Number of contracts3,0602,53221%
Cash collections, mln RUB19,17714,69431%
Average price, RUB/sqm121,759108,05513%
Average price (apartments), RUB/sqm146,524120,58922%
Deliveries, sqm211,805- 

Regional breakdown

 2Q 20192Q 2018Change, %
Moscow metropolitan area
New sales, sqm75,25260,06525%
New sales, mln RUB10,8776,67163%
Number of contracts1,4541,24617%
Cash collections, mln RUB11,7686,64177%
Average price, RUB/sqm144,541111,06630%
Average price (apartments), RUB/sqm161,939125,19729%
Deliveries, sqm211,805- 
St Petersburg
New sales, sqm79,00568,40315%
New sales, mln RUB7,9057,21010%
Number of contracts1,6061,28625%
Cash collections, mln RUB7,4098,053(8%)
Average price, RUB/sqm100,058105,411(5%)
Average price (apartments), RUB/sqm126,389116,7288%
Deliveries, sqm-- 

Etalon Group stand-alone 2Q 2019 operating results

 2Q 20192Q 2018Change, %
New sales, sqm132,413128,4683%
New sales, mln RUB14,97313,8828%
Number of contracts                       2,7132,5327%
Cash collections, mln RUB15,67114,6947%
Average price, RUB/sqm113,075108,0555%
Average price (apartments), RUB/sqm137,364120,58914%
Deliveries, sqm186,517- 

Leader-Invest stand-alone 2Q 2019 operating results

 2Q 20192Q 2018Change, %
New sales, sqm21,84517,19927%
New sales, mln RUB3,8102,85633%
Number of contracts3473441%
Cash collections, mln RUB3,5063,07014%
Average price, RUB/sqm174,393166,0535%
Average price (apartments), RUB/sqm204,945197,6464%
Deliveries, sqm25,288- 

Mortgage contract developments

 2Q 20191Q 20194Q 20183Q 20182Q 2018
Share of mortgages36%37%41%41%42%

Commenting on the 1H and 2Q 2019 operating results, Etalon Group Chief Executive Officer Gennadiy Shcherbina said:

“Etalon Group set another new contract sales record in 1H 2019. We signed 6,530 contracts during the period, which is 28% higher year-on-year. New sales in monetary and volume terms increased by 41% and 23% year-on-year, to RUB 38.7 billion and 322 ths sqm, respectively in 1H 2019. This means that we have already achieved 48% of our 2019 target in monetary terms and 46% in square metres. Furthermore, the strong sales performance and high average down payment of 85%, combined with active work on refinancing legacy instalment plans, have enabled Etalon Group to report cash collections of RUB 42.8 billion in 1H 2019, which represents 57% of our RUB 75 billion guidance for FY 2019.

“Etalon Group’s 2Q 2019 operating performance made a significant contribution to the first-half result. Real estate sales in monetary terms, including the contribution from Leader-Invest, increased by 35% year-on-year to RUB 18.8 billion. At the same time, sales in the Moscow metropolitan area amounted to RUB 10.9 billion, an increase of 63% year-on-year. The continued growth in the share of the greater Moscow area in our overall results confirms that we made the right choice in focusing on this geography as the most promising area to develop our business in the years ahead.

“In line with our expectations, the pace of sales at Leader-Invest projects accelerated significantly after they were integrated into our sales network. In 2Q 2019, new contract sales rose by 33% year-on-year to RUB 3.8 billion, and by 27% year-on-year to 21.8 ths sqm. The pace of deliveries at Leader-Invest projects has also supported its new contract sales performance, as has construction progress achieved by bringing in Etalon Group’s general contractors and subcontracting companies at Leader-Invest sites. We expect that the transition to the Etalon Group brand in the second half of 2019 will further strengthen the Company's position in Moscow and will provide more support for operational performance. On this basis, I am confident that Etalon Group will achieve the guidance we announced for 2019.”

Etalon Group Chief Financial Officer Kirill Bagachenko said:

“Significant positive free cash flow generation in 1H 2019 enabled Etalon Group to keep net debt at a comfortable level of less than RUB 4 billion as of 30 June 2019, despite the largest-ever increase in the Company’s project portfolio that we completed during the first half of the year. This started in February with the acquisition of a controlling stake in Leader-Invest and continued in June when we consolidated 100% of the ZIL-Yug project. At the same time, we have actively increased the pace of construction at all projects, which has made it possible to receive exemptions to new regulatory requirements that came into force on 1 July 2019 for the majority of our projects.”

The Company 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, the Etalon Group management team will present the Company’s 1H and 2Q 2019 operating results, followed by a question and answer session for participants.

Webcast

https://edge.media-server.com/mmc/p/5th5hz9k  

Dial-in numbers:

+44 2071 928000 – Standard International
+44 844 571 8892 – London
+7 495 249 9849 – Moscow
+1 631 510 7495 – New York

Conference ID Code: 7782598

This and other recent announcements are available on the Etalon Group website: https://www.etalongroup.com/investor-relations/investor-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, 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 its Etalon Invest and Etalon LenSpetsSMU subsidiaries. With a more than 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 6.3 million sqm.

Etalon Group's traditionally conservative approach managing its financial position, solid cash generation and strict working capital management have enabled the company to maintain a secure liquidity position: net cash as of 31 December 2018 was RUB 2.2 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 over 5,000 people, and its nationwide sales and marketing network covers 58 Russian cities.

In February 2019 Etalon Group acquired 51% of the shares of Leader-Invest, one of Moscow’s largest residential developers in terms of land bank and number of projects currently available for sale.

As of 31 December 2018, Etalon Group's assets comprised 76 projects, including 40 Leader-Invest projects and a construction and maintenance division, with a total of 3.4 million sqm of unsold net sellable area. Knight Frank valued the Company’s total assets under management at RUB 186,908 million.

For the year ended 31 December 2018, Etalon Group's new contract sales totalled 628 ths sqm, or RUB 68,731 million. Deliveries in 2018 amounted to 479 ths sqm.

The Company recorded revenue of RUB 72.3 billion and EBITDA of RUB 5.7 billion for the year ended 31 December 2018.

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