St. Petersburg – Etalon Group Limited (“Etalon Group” or the “Company”), one of Russia’s largest and oldest residential real estate developers, announces that it has obtained a construction permit for its recently acquired comfort class residential development project on ulitsa Marshala Tukhachevskogo in St. Petersburg. The project, with a planned 30 ths sqm of NSA, is located on a 1.1 hectare land plot in the Krasnogvardeiskiy district of St. Petersburg, just 15 minutes by car from the city centre.
Construction is expected to start in 2H 2012 with delivery planned in 2014. This is already the third project in Etalon Group’s eight-step programme for 2012, under which the Company plans to launch sales and construction of eight new projects.
Etalon Group also announces today that it has opened a new sales office in Yakutsk, the capital of the Sakha Republic (Yakutia), expanding further the Company’s extensive nation-wide sales network. The new office should increase Etalon’s sales in Yakutia, one of the richest and fastest-growing regions in Russia and among the top 10 Russian regions for disposable income.
Etalon Group President Viacheslav Zarenkov said: “We continue to deliver fully on our strategy, and are making quick progress in implementing our eight-step programme for 2012. We remain well on track to increase our deliveries to up to 800 ths sqm per annum by 2014, with projects that are already underway expected to account for about 80% the planned volumes.
“The opening of a sales office in Yakutia is important. Regional sales have been a stable source of demand for us, including throughout the crisis, and represented a strong 34% of total sales in Q1 2012. Most of our regional customers are skilled engineers, mid and top managers employed in oil & gas and metals and mining sector companies. Their consumption patterns are less sensitive to the turbulence in capital markets as they work on long-term contracts up to 15 years. We have seen continued demand for apartments in the Moscow and St. Petersburg Metropolitan Areas coming from Yakutia, one of the wealthiest regions in Russia. Having our own sales office should significantly increase our sales from the region, and at an opportune time as we start to launch sales on a number of attractive new projects.
“With the recent acquisition of project Galactica we have fulfilled our post-IPO acquisition program of 1.2 million sqm of NSA, while still preserving most of the expansion capital on our balance sheet. Together with the Tsar’s Capital planning permit announced last week, this will have a significant positive impact on our cash recycling process, and significantly improve the scalability of our business model.
“Our financial position remains very strong with USD 505 million of expansion capital and USD 170 million of net cash on the balance sheet*, and we plan to put this to work to build shareholder value. We are already working on a number of acquisitions in Moscow and St. Petersburg that we hope to complete in the next several months.”
* per unaudited management accounts as of 1 May 2012
Recent Etalon Group highlights:
- 6 June 2012: Etalon Group Receives Planning Permit for Tsar’s Capital
- 29 May 2012: Etalon in Largest St. Petersburg Acquisition to Date
- 21 May 2012: Etalon Announces New Acquisitions & 8-Step Program
- 16 April 2012: Etalon Reports 1Q 2012 Operating Results
- 29 March 2012: Etalon Reports 64% Increase in IFRS Net Profit
- 06 March 2012: Etalon Real Estate Portfolio Market Value Up 20%
Etalon Group IR Team
T: +44 (0) 20 8123 1328
T: +7 495 363 2845
T: +7 495 363 2841
About Etalon Group
History and Overview
Founded in 1987 by Viacheslav Zarenkov, Etalon Group has become one of Russia's largest residential real estate developers. With a 25-year history, the Company has one of the longest and most successful track records in the Russian real estate industry.
Today Etalon Group is a leading player in Russia’s “Golden Triangle” – St Petersburg, Moscow and the greater Moscow area, with a dominant position in the “comfort class” segment. The Company’s strong foothold in these markets is reinforced further by its unique nationwide sales network covering 9 of the 10 wealthiest regions of Russia, and spanning 30 cities in total. The sales network generates up to 30% of Etalon Group’s revenue, and has been an important source of stable demand even throughout the crisis.
Etalon Group is one of the only truly vertically integrated businesses in the Russian real estate sector. The Company does everything from acquiring land to sales and cash collections from its customers, which enables it to maximise margins throughout the value chain, and reduces exposure to cost inflation from external service providers. Etalon Group is a company of scale, with a total of 40 business units that employ over 4,000 people, two strong management companies, five general contractors, 16 subcontractors, a crane company, a brick factory and a nationwide sales network.
Etalon Group’s strong financial position is driven by its effective pre-sales business model. The Company aims to pre-sell 70-90% of all residential space before a building is delivered. It also targets an average down payment of 50%. This allows Etalon Group to finance the construction process using money from customers, as opposed to using the loans or funding from shareholders.
In addition to homebuilding, Etalon Group’s long history and superior quality offering has helped it to become a trusted industrial construction partner for clients like General Motors, Toyota, Ford Motors, Bosch, Siemens, Nissan, Suzuki and Gazprom in northwest Russia.
Since 20 April 2011, Etalon Group Limited has had its GDRs traded on the Main Market of the London Stock Exchange.
Operational and Financial Highlights
As of 31 December 2011, Etalon Group’s portfolio comprised 31 projects, with a total of 3.25 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. Jones Lang LaSalle valued this portfolio at USD 1,714 million, a 20% increase in the market value from YE 2010.
For the year ended 31 December 2011, Etalon Group’s new contract sales totalled 270,012 sqm, or RUR 18,306 million. Deliveries in 2011 totalled 328 thousand sqm.
The Company recorded revenues of RUB 22.7 billion (USD 774 million) and EBITDA of RUB 8.2 billion (USD 279 million), with an EBITDA margin of 36% for the year ended 31 December 2011, making it one of the most profitable players in the sector.
Etalon Group’s net cash position at 31 December 2011 was USD 167 million, leaving it well positioned to fund continued dynamic growth.