Etalon Reports FY and 4Q 2021 Operating Results

24 January 2022

Etalon Group Reports FY and 4Q 2021 Operating Results

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 fourth quarter and twelve months ended 31 December 2021, based on management accounts.

FY 2021 operating highlights

· New contract sales in monetary terms increased by 6% year-on-year reaching an all-time high of RUB 84.4 billion

· Cash collections rose by 3% year-on-year to RUB 84.1 billion

· The average price per sqm was RUB 189 ths, up by 27% year-on-year

· The average price per sqm of apartments grew by 34% year-on-year to RUB 238.7 ths

FY 2021 operating results

Regional breakdown

4Q 2021 operating highlights

· New contract sales amounted to 129.1 ths sqm and RUB 24.9 billion

· Cash collections were at RUB 23.9 billion

· The average price per sqm rose by 22% year-on-year to RUB 192.5 ths 

· The average price per sqm of apartments grew by 36% year-on-year to RUB 261.1 ths

· The average down payment amounted to 87%

4Q 2021 operating results

Quarterly operating performance

Regional breakdown

Mortgage contract developments

Commenting on the FY 2021 operating results, Etalon Group CEO Gennadiy Shcherbina said:

"Despite a temporary decline in real estate available for sale, Etalon Group set a new record for sales in monetary terms in 2021 and came very close to achieving key operational targets. Most our FY 2021 sales - almost 30% of the record RUB 84.4 billion - took place in the fourth quarter. The average price for residential properties in Etalon's portfolio increased by 36% to RUB 261 ths per sqm by the end of the year, driven by the launch of attractive new projects in the higher price segment, as well as strong demand for our current projects in Moscow and St Petersburg. Strong pricing dynamics, coupled with ongoing cost-cutting efforts, will contribute to further margin growth: at the end of 1H 2021, our pre-PPA gross profit margin reached 38% and was the strongest in the industry.

"In an effort to significantly expand the business and secure sustainable double-digit growth rates in all regions where we operate, the Company launched a large-scale land bank replenishment programme in 2021. In the last 12 months alone, we increased our portfolio by almost two million sqm and doubled the geography of our operations by expanding into regional markets. In 2022, we intend to launch sales for three times as much space as the year before. The properties Etalon will bring to market will include space in new projects recently added to the portfolio and new buildings in existing projects. In addition, we will continue to actively increase the volume of acquisitions, expand our regional presence and plan to act as an industry consolidator, including through mergers and acquisitions.

"The significant progress we have made over the past year proves that Etalon Group is well on its way to achieving its strategic goals for 2024. I am confident that with our professional team and the successful implementation of our sound strategy, the Company will achieve a new level of development this year, offering current and potential shareholders an attractive return on their investment."

Ilya Kosolapov, Etalon Group's Chief Financial Officer, added:

"Record sales, systematic efficiency improvements and a balanced approach to debt management have enabled Etalon Group to significantly strengthen its financial position. We managed to reduce net corporate debt to RUB 5.1 billion, with the net corporate debt/pre-PPA EBITDA ratio at just 0.2x, while we consider 2x-3x to be a comfortable level. Etalon Group's net cash position at the project level is RUB 23.4 billion. Starting in 2022, an additional supporting factor will be the release of funds held on escrow accounts as we deliver properties built under the new financing rules.

"Reducing the debt burden and increasing cash flow opens up great opportunities for us to develop new projects and technologies, accelerate business growth and maintain our leading profitability position."

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 FY operating results, as well as an update on the Company's performance against strategic goals and new acquisitions programme. The presentation will be followed by a question-and-answer session for participants.

Webcast

https://edge.media-server.com/mmc/p/xi3k3bgw

Dial-in numbers:

+44 2071 928338 - Standard International

+44 844 4819 752 - London

+7 495 990 0832 - Moscow

+1 646 741 3167 - New York

Conference ID Code:

1746707 - to take part in Russian

5269253 - to take part in English

This and other recent announcements are available on the Etalon Group website: https://www.etalongroup.com/investor-relations/investor-news/ 

Contact Information

Etalon Group

IR Team

T: +44 (0) 20 8123 1328

E: [email protected]

EM

Sam VanDerlip

T.: +44 207 002 7859

E: [email protected]

About Etalon Group

Founded in 1987, Etalon Group is one of the largest development and construction companies in Russia. The Company focuses on middle class residential real estate in the Moscow and St Petersburg metropolitan areas. In 2021, the Company began a regional expansion programme with new projects in the Omsk and Novosibirsk regions. With a 35-year history, Etalon Group has one of the longest and most successful track records in the Russian real estate industry. Since its foundation, Etalon Group has delivered 7.9 million sqm of real estate.

Thanks to its integrated business model, Etalon Group is able to create added value for customers and shareholders at every stage of development, from land plot analysis and acquisition to the operation and maintenance of existing properties. Etalon Group employs over 4,600 people, and its nationwide sales and marketing network covers 59 Russian cities.

Etalon Group's total assets comprise 20 projects under development, unsold inventory at completed residential complexes and commercial properties, with total unsold NSA of 2.8 million sqm, as well as a construction and maintenance division. Colliers International valued the Company's total assets at RUB 204 billion as of 31 December 2020.

In 2021, Etalon Group's new contract sales totalled 446 ths sqm, or RUB 84.4 billion. The Company's revenue in 2020 amounted to RUB 78.7 billion, with EBITDA of RUB 12.6 billion.

Etalon Group's GDRs have traded on the Main Market of the London Stock Exchange since 20 April 2011 and on the Level 1 quotation list of Moscow Exchange since 31 January 2020 under the ticker ETLN.