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 twelve months ended 31 December 2018, based on management accounts.
4Q 2018 operating highlights
- The number of new contracts increased by 33% year-on-year to 4,245
- New contract sales amounted to 211,356 sqm and RUB 24,446 million, representing year-on-year growth of 30% and 47%, respectively
- Cash collections rose by 38% year-on-year to RUB 20,303 million
- Average price per sqm was RUB 115,660, up by 12% year-on-year
- Average price per sqm of apartments grew by 13% year-on-year to RUB 131,331
- Average down payment remained high and amounted to 81%
4Q 2018 operating results
|4Q 2018||4Q 2017||Change, %|
|New sales, sqm||211,356||162,109||30%|
|New sales, mln RUB||24,446||16,676||47%|
|Number of contracts||4,245||3,182||33%|
|Average price, RUB/sqm||115,660||102,869||12%|
|Average price (apartments), RUB/sqm||131,331||115,806||13%|
|Cash collections, mln RUB||20,303||14,717||38%|
Quarterly operating performance
|4Q 2018||3Q 2018||2Q 2018||1Q 2018||4Q 2017|
|New sales, sqm||211,356||154,097||128,468||134,075||162,109|
|New sales, mln RUB||24,446||16,799||13,882||13,605||16,676|
|Number of contracts||4,245||2,962||2,532||2,573||3,182|
|Average price, RUB/sqm||115,660||109,015||108,055||101,474||102,869|
|Average price (apartments), RUB/sqm||131,331||125,889||120,589||114,297||115,806|
|Cash collections, mln RUB||20,303||15,011||14,694||12,778||14,717|
Mortgage contract developments
|4Q 2018||3Q 2018||2Q 2018||1Q 2017||4Q 2017|
|Share of mortgages||41%||41%||42%||40%||41%|
FY 2018 operating highlights
- Deliveries were in line with the construction programme at 479 ths sqm of NSA
- The number of new contracts increased by 24% year-on-year to 12,312
- New contract sales increased by 23% year-on-year to 627,996 sqm and by 37% year-on-year to RUB 68,731 million
- Cash collections rose by 36% year-on-year to RUB 62,785 million
- Average price per sqm rose by 12% year-on-year to RUB 109,445
- Average price per sqm of apartments grew by 10% year-on-year to RUB 124,113
FY 2018 operating results
|New sales, sqm||627,996||512,161||23%|
|New sales, mln RUB||68,731||50,240||37%|
|Number of contracts||12,312||9,916||24%|
|Average price, RUB/sqm||109,445||98,094||12%|
|Average price (apartments), RUB/sqm||124,113||113,160||10%|
|Cash collections, mln RUB||62,785||46,147||36%|
FY 2018 sales guidance and actual performance
|2018 actual performance||2018 upgraded guidance||2018 initial guidance|
|New sales, sqm||627,996||565,000||550,000|
|New sales, mln RUB||68,731||60,200||57,000|
|Cash collections, mln RUB||62,785||57,500||53,000|
Commenting on the 4Q and FY 2018 operating results, Etalon Group Chairman of the Board of Directors Viacheslav Zarenkov said:
“I am pleased that Etalon Group has delivered new records across all of its key operating metrics for 2018. New contract sales amounted to 628 ths sqm and RUB 68.7 billion, increases of 23% and 37% year-on-year, respectively, thus outperforming both our initial sales guidance for the year and our upgraded outlook from the end of the third quarter. Etalon Group’s 12,312 contracts in 2018 represent a 24% year-on-year increase. At the same time, the Company enjoyed impressive growth in the average price per sqm, which increased by 12% year-on-year, significantly ahead of inflation and evidence of the strong demand for Etalon Group properties. The Company also delivered 479 ths sqm of net sellable area, which was fully in line with our construction plan for 2018.
“These impressive results give us full confidence that, in the current climate of changing industry regulation, Etalon Group will be able to further increase its market shares in the key regions where we operate, acting as a consolidator of Russia’s residential real estate market as smaller and less-successful players are forced to leave.”
Etalon Group CEO Gennadiy Shcherbina commented:
“Etalon Group's record sales in 4Q 2018 made a significant contribution to the Company’s full-year results, with year-on-year increases in volume and monetary terms of 30% and 47%, respectively, to 211 ths sqm and RUB 24.4 billion. The average price per sqm for all types of real estate increased by 12% year-on-year in the fourth quarter, while the average price per sqm for apartments rose by 13% year-on-year, reflecting healthy price growth across all of the Company's projects.
“The share of business-class projects increased to 15% of sales in monetary terms due to the launch of the Petrovskiy Landmark project in St Petersburg and the launch of sales for new buildings at the Silver Fountain project in Moscow. In 2018, the Company also began sales at House on Blyukhera, Okhta House and Etalon on the Neva, three new comfort-class projects in St Petersburg, as well as at a number of new buildings in the Galactica, Summer Garden and Normandy projects, which are in great demand.”
Etalon Group CFO Kirill Bagachenko commented:
“Cash collections in 2018 were supported by strong sales as well as the high level of down payments, which was over 80 percent. This, combined with strict control over working capital, enabled Etalon Group to generate record free cash flow for the year. As a result, Etalon Group had a net cash position of RUB 2.2 billion at the end of 2018, compared to net debt of RUB 9.7 billion at 31 December 2017. We achieved this impressive result even after paying out RUB 3.6 billion in dividends during 2018.
“This net cash position, combined with sustainable growth in sales, makes Etalon Group one of the best-positioned companies in the sector to take advantage of the current situation in the Russian residential real estate market. In light of the ongoing legislative changes that will put pressure on weak and less-capitalised players, we have a unique opportunity to expand our business while continuing to adhere to our dividend policy.”
Conference call and webcast
Etalon Group will host a conference call for investors and analysts today at 14:00 London time (17:00 Moscow; 09:00 New York).
On the call, the Etalon Group management team will present the 4Q and FY 2018 operating results, followed by a question and answer session for participants.
+ 44 (0) 844 571 8892-London
+ 7 495 249 9849-Moscow
+1 631-510-7495-New York
Conference ID Code: 3791995
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 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 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 2017 was RUB 9.7 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 30 June 2018, Etalon Group's assets comprised 39 projects and a construction and maintenance division, with a total of 2.73 million sqm of unsold net sellable area. Knight Frank valued the Company’s assets at RUB 132,487 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 70.6 billion and EBITDA of RUB 13.2 billion for the year ended 31 December 2017.
Etalon Group’s GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011.