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Market Cap £370.2m
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Etalon Group Limited - Etalon Reports 1H 2014 Operating Results

Tue 15th July, 2014 7:00am
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RNS Number : 2696M
Etalon Group Limited
15 July 2014 
 
15 July 2014 
 
Etalon Reports 1H 2014 Operating Results 
 
Etalon Group Limited ("Etalon Group" or the "Company"), one of Russia's
largest and longest established residential real estate developers, announces
its unaudited operating results for the three months and half year ended 30
June 2014, based on management accounts. 
 
1H 2014 highlights: 
 
·    The number of new contracts increased by 44% year-on-year to 4,333 
 
·    New contract sales amounted to 204 thousand sqm and RUB 17.17 billion,
year-on-year increases of 33% and 36%, respectively 
 
·    Cash collections in 1H 2014 amounted to RUB 14,835 million, an increase
of 36% year-on-year 
 
·    Deliveries increased 171% year-on-year to 76 ths sqm, precisely in line
with the 2014 construction programme 
 
1H 2014 Operating results 
 
                            1H 2014  1H 2013  Change, %  
 Number of contracts        4,333    3,002    44%        
 New sales, sqm             203,994  153,523  33%        
 New sales, mln RUB         17,173   12,669   36%        
 Cash collections, mln RUB  14,835   10,940   36%        
 Average price, RUB/sqm     84,184   82,522   2%         
 Share of mortgages, %      20%      21%      (1 p.p.)   
 
 
1H 2014 Deliveries 
 
                          1H 2014  1H 2013  Change, %  
 Deliveries, NSA ths sqm  76       28       171%       
 
 
1H 2014 Deliveries, by project 
 
 ths sqm        1H 2014  
 Emerald Hills  41.8     
 Galant         34.6     
 Total          76.4     
 
 
1H 2014 Transfers to customers 
 
                                1H 2014  1H 2013  Change, %  
 Transferred to customers, sqm  103,260  156,567  (34%)      
 
 
2Q 2014 highlights 
 
·    The number of new contracts in 2Q 2014 increased 31% year-on-year to
2,033 
 
·    New contract sales amounted to 95 thousand sqm and RUB 8.1 billion,
year-on-year increases of 19% and 20%, respectively 
 
·    Average down payments remained at a high level of 74% in the second
quarter 
 
·    The increasing share of sales at prime-location projects continued to
drive new contract sales and higher average prices per sqm for residential and
commercial premises, with average prices for apartments and commercial
premises increasing 8% year-on-year to RUB 96 thousand per sqm 
 
2Q 2014 Operating results 
 
                         2Q 2014  1Q 2014  4Q 2013  3Q 2013  2Q 2013  
 Number of contracts     2,033    2,300    2,122    1,752    1,548    
 New Sales, sqm          94,934   109,060  109,797  92,755   80,042   
 New Sales, mln RUB      8,095    9,078    9,406    8,152    6,746    
 Average Price, RUB/sqm  85,271   83,234   85,671   87,887   84,286   
 
 
Mortgage contract developments 
 
                     2Q 2014  1Q 2014  4Q 2013  3Q 2013  2Q 2013  
 Share of mortgages  23%      17%      20%      21%      23%      
 
 
Etalon Group President Viacheslav Zarenkov said: 
 
"The first half of 2014 has demonstrated the strength of our business model,
aimed at offering high-quality comfort class residential real estate in the
Moscow and St. Petersburg Metropolitan Areas through multiple sales channels
including a sales network that covers all of the Russia's most affluent
regions. In the second quarter the regional network contributed around 40% of
the total sales. 
 
"Another key driver of our continued strong performance in the first six
months of the year is a significantly improved product mix, which is not only
more diversified but also has an increased share of prime-location projects. 
Following the launch of the second phase of Tsar's Capital in March 2014, for
example, this project now accounts for 19% of new contract sales.  With the
second phase of Etalon City and three new projects due to launch in 2H 2014,
we expect to see further improvements." 
 
Etalon Group CEO Anton Evdokimov said: 
 
"I am very pleased to report a successful first half of 2014, with all
deliveries completed exactly on schedule.  After a record first quarter we
have seen demand remain in line with our expectations for 2014, and we are on
track to deliver the 580 ths sqm that our construction plan calls for this
year.  Etalon Group's financial position remains strong, with a net cash
position of USD 7 million as of 30 June 2014*, meaning we are able to continue
acquiring new projects in order to secure the Company's long-term growth." 
 
*according to unaudited management accounts 
 
Conference call and webcast 
 
Etalon Group will host a conference call for investors and analysts today at
13:00 London time (16:00 Moscow; 08:00 New York). 
 
On the call, Etalon Group President Viacheslav Zarenkov, CEO Anton Evdokimov,
CFO Boris Svetlichny and Head of Corporate Investments and Investor Relations
Kirill Bagachenko will present the 1H 2014 operating results, followed by a
question and answer session for participants. 
 
Webcast 
 
http://www.media-server.com/m/p/mrn6mfkt 
 
Toll numbers: 
 
+44 20 3037 9374 - London 
 
+7 499 272 4337 - Moscow 
 
+1 646 843 4608 - New York 
 
Toll free numbers: 
 
8 10 8002 4902044 - Russia (from Moscow only) 
 
0808 109 0700 - UK 
 
1 866 966 5335 - USA 
 
Conference Call Password: Etalon 
 
Etalon Group IR Team 
 
T: +44 20 8123 1328 
 
E: info@etalongroup.com 
 
EM 
 
Sam VanDerlip 
 
T: +44 7554 993 032 
 
T: +7 916 306 6112 
 
vanderlip@em-comms.com 
 
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 more than 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
construction 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 2013, Etalon Group's portfolio comprised 28 projects, with a
total of 3.44 million sqm of unsold net sellable area ("NSA") in the St.
Petersburg and Moscow Metropolitan Areas. Jones Lang LaSalle valued this
portfolio at USD 2,727 million, a 15% increase in the market value from YE
2012. 
 
For the year ended 31 December 2013, Etalon Group's new contract sales
totalled 356,075 sqm, or RUB 30,227 million. Deliveries in 2013 totalled 468
thousand sqm. 
 
The Company recorded revenues of RUB 39.9 billion and EBITDA of RUB 9.4
billion, with an EBITDA margin of 24% for the year ended 31 December 2013,
making it one of the most profitable players in the sector. 
 
Etalon Group's net debt position at 31 December 2013 was RUB 182 million,
leaving it well positioned to fund continued dynamic growth. 
 
This information is provided by RNS
The company news service from the London Stock Exchange
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