Etalon Group Reports FY 2017 IFRS Results

08 April 2018

Etalon Group PLC (“Etalon Group” or the “Company”), one of Russia’s largest and longest-established development and construction companies, announces the publication of its audited consolidated IFRS financial statements for the full year ended 31 December 2017.

FY 2017 Financial Highlights:

  • Consolidated revenue increased by 44% year-on-year to RUB 70,645 million, from RUB 49,022 million in 2016
  • Gross profit grew by 47% year-on-year to RUB 18,001 million
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2017 amounted to RUB 13,199 million, up by 81% year-on-year, with an EBITDA margin of 19%
  • Profit for the period was RUB 7,893 million, up by 61% year-on-year
  • The net debt to EBITDA ratio decreased to 0.7x as of 31 December 2017 from 1.1x as of 31 December 2016

2H 2017 Financial Highlights:

  • Operating cash flow less interest paid was positive in 2H 2017, and amounted to RUB 3,789 million
  • Profit for the period amounted to RUB 6,679 million, up by 86% year-on-year
  • The Board of Directors is due to consider a dividend recommendation at a meeting on 27 April 2018

Other 2017 Highlights:

  • The Company achieved record new sales in FY 2017 in both volume and monetary terms: 512 ths sqm and RUB 50 billion
  • Four new projects with 271 ths sqm of NSA were acquired during the year, including two business-class projects in St Petersburg and one in Moscow

Commenting on the 2H and FY 2017 financial results, Etalon Group CEO Viacheslav Zarenkov said:

“Etalon Group achieved outstanding results in 2017, with revenue increasing by 44% year-on-year and setting a new record for the Company. Profit growth was even more impressive, with EBITDA and net income up by 81% and 61% year-on-year, respectively.

“Management’s cohesive teamwork helped us to supplement strong growth with healthy operating cash flow generation for the second consecutive year in 2017, despite the significant cash payments required for the acquisition of four new projects in St Petersburg and Moscow, three of which are in the high-end business class segment. I want to thank the management team headed by COO Dmitry Kashinskiy for their efficient and professional work, which has delivered great results. Etalon Group’s already strong financial position saw further improvement, with our net debt/EBITDA ratio declining to just 0.7x.

“I believe that today Etalon Group is well positioned to reward our shareholders with attractive dividends. The record net profit of RUB 6,679 million for 2H 2017 will serve as the basis for a dividend recommendation under the Company’s dividend policy, which aims to pay out between 40% and 70% of net profit.”

Etalon Group COO Dmitry Kashinskiy said:

“We completed a number of organisational and staffing changes in 2017 with the aim of increasing efficiency. These changes had a positive impact on our sales performance in 2H 2017. I would like to highlight the contributions of Gennadiy Shcherbina and Ivan Bogatov, the heads of Etalon Group’s St Petersburg and Moscow operations. Their fast and effective work enabled us to introduce important strategic changes into our day-to-day operations. We expect to continue growing sales in 2018, and are confident that we will at a minimum be able to achieve the targets that we presented to the public at the beginning of the year.

“In 2017 we were also successful at converting new sales contracts into cash collections, with the average down payment exceeding 80% within the year. While the effect of our organisational changes was felt quickly, we kept overhead expenses largely stable year-on-year, and SG&A as a share of revenue declined in 2017 compared to 2016.”

Etalon Group Vice-President Kirill Bagachenko said:

“Implementation of the new IFRS 15 standard has enabled us to recognise revenue and income for 2017 based not only on finished properties, but also for the contracted and completed portions of projects currently under construction, thus reflecting the current performance of the business in a more timely way. This has resulted in a significant recovery in profitability across all lines, including the EBITDA margin, which increased by 4 p.p. and amounted to 19%.

“The results we achieved in 2017 give us full confidence that we have chosen the right strategy to deliver sustainable growth for Etalon Group.”

Etalon Group’s management team will discuss the Company’s FY 2017 financial results together with its 1Q 2018 operating performance during a conference call and webcast for investors and analysts scheduled for mid-April.

This and other recent announcements are available on the Etalon Group website:

Etalon Group IR Team

T: +44 20 8123 1328


Sam VanDerlip
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 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 5.8 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 31 December 2017, Etalon Group's assets comprised 38 projects, with a total of 2.82 million sqm of unsold net sellable area, and a construction and maintenance division. Knight Frank valued the Company’s assets at RUB 135,197 million.

For the year ended 31 December 2017, Etalon Group's new contract sales totalled 512 ths sqm, or RUB 50,240 million. Deliveries in 2017 amounted to 423 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.