Etalon Announces Operating Results for 1H, 2Q 2023

Etalon Group PLC

07 August 2023

 

7August 2023

Etalon Group Announces Twofold Increase in Sales in 2Q 2023 and Outstanding Results in July 2023

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 six months ended 30 June 2023, based on management accounts.

1H 2023 operating highlights:

·    New contract sales rose year-on-year by 28% to 184.3 ths sqm in terms of floor space and by 16% to RUB 34.0 billion in monetary terms

·    Cash collections amounted to RUB 28.2 billion

·    Owing to the increased share of regional projects in the sales portfolio, the average price per sqm was RUB 184.5 ths, a 10% decrease compared with 1H 2022

·    The average price per sqm of apartments amounted to RUB 221.9 ths

·    Deliveries amounted or 196 ths sqm

·    In July 2023, after the reporting period, new contract sales were 41.1 ths sqm (up 141% year-on-year) and RUB 8 billion (up 151% year-on-year); cash collections increased by 129% to RUB 6.8 billion

1H 2023 operating results:

	1H 2022	1H 2023	Change, %
New contract sales, sqm	143,475	184,268	28%
Moscow and the Moscow region	47%	38%
St Petersburg	50%	29%
Other regions	3%	33%
New contract sales, RUB mln	29,319	34,002	16%
Moscow and the Moscow region	60%	51%
St Petersburg	39%	28%
Other regions	1%	21%
Number of contracts	3,115	3,820	23%
Moscow and the Moscow region	47%	37%
St Petersburg	49%	29%
Other regions	4%	34%
Cash collections, RUB mln	32,637	28,210	(14%)
Moscow and the Moscow region	56%	48%
St Petersburg	43%	29%
Other regions	1%	23%
Average price, RUB/sqm	204,348	184,528	(10%)
Average price (apartments), RUB/sqm	291,332	221,857	(24%)

January-July 2023 sales trends

	Jan	Feb	Mar	Apr	May	Jun	Jul
New contract sales, sqm	18,589	21,855	33,189	39,389	32,959	38,288	41,149
Change, m-o-m		18%	52%	19%	(16%)	16%	7%
New contract sales, RUB mln	3,249	3,701	6,486	7,262	6,141	7,163	8,006
Change, m-o-m		14%	75%	12%	(15%)	17%	12%
Cash collections, RUB mln	4,133	3,275	4,593	5,216	5,768	5,232	6,797
Change, m-o-m		(21%)	40%	14%	11%	(9%)	30%

2Q 2023 operating highlights:

·    The Company concluded 2,265 new contracts with buyers

·    New contract sales increased year-on-year by 109% to 111 ths sqm and by 113% to RUB 20.6 billion

·    Cash collections rose by 42% year-on-year to RUB 16.2 billion

·    The average price per sqm was RUB 185.9 ths

·    The average price per sqm of apartments was RUB 223.4 ths

2Q 2023 operating results:

	2Q 2022	2Q 2023	Change, %
New contract sales, sqm	53,036	110,635	109%
New contract sales, RUB mln	9,638	20,566	113%
Number of contracts	1,216	2,265	86%
Cash collections, RUB mln	11,402	16,209	42%
Average price, RUB/sqm	181,732	185,892	2%
Average price (apartments), RUB/sqm	294,096	223,389	(24%)

Regional breakdown

	2Q 2022				2Q 2023				Change, %
Moscow and the Moscow region
New contract sales, sqm	25,114					40,980			63%
New contract sales, RUB mln	5,720					10,352			81%
Number of contracts		638				782			23%
Cash collections, RUB mln	6,800					7,857			16%
Average price, RUB/sqm	227,781					252,624			11%
Average price (apartments), RUB/sqm	369,908					326,397			(12%)
St Petersburg
New contract sales, sqm	23,413					34,151			46%
New contract sales, RUB mln	3,535					6,149			74%
Number of contracts	460					715			55%
Cash collections, RUB mln	4,303					4,853			13%
Average price, RUB/sqm	150,977					180,062			19%
Average price (apartments), RUB/sqm	261,111					246,034		(6%)
Other regions
New contract sales, sqm			4,509	35,504			687%
New contract sales, RUB mln			383	4,064			961%
Number of contracts			118	768			551%
Cash collections, RUB mln			299	3,498			1,070%
Average price, RUB/sqm			84,945	114,475			35%
Average price (apartments), RUB/sqm			109,448	118,816			9%

Quarterly operating performance

	2Q 2022	3Q 2022	4Q 2022	1Q 2023	2Q 2023
New contract sales, sqm	53,036	66,986	81,934	73,633	90,439
New contract sales, RUB mln	9,638	13,329	16,004	13,436	19,681
Number of contracts	1,216	1,572	1,770	1,555	1,899
Cash collections, RUB mln	11,402	11,170	16,579	12,001	21,235
Average price, RUB/sqm	181,732	198,985	195,324	185,478	217,611
Average price (apartments), RUB/sqm	294,096	250,326	229,297	261,121	290,140

Mortgage contract developments

	2Q 2022	3Q 2022	4Q 2022	1Q 2023	2Q 2023
Share of mortgages (total)	25%	37%	58%	47%	50%
Share of mortgages (apartments)	55%	55%	79%	70%	71%

Commenting on the Company's operating results, Etalon Group CEO Gennadiy Shcherbina said:

"Our second-quarter results were strong, as expected. From April through June, we sold twice as much real estate as in the same period of 2022. 

"Our main internal sales driver was the expansion of our offer of affordable housing in regional markets. Since the launch of our regional expansion programme, we have put nearly 360 ths sqm on the market at our regional projects, increasing the share of regions beyond Moscow and St Petersburg in our sales portfolio to 33% as of the end of the first half of 2023.  

"The expansion of our line of more affordable and more popular products drove a return to double-digit growth rates and enabled us to scale up our business in line with our strategic goals to 2024. Notably, July has been our best month so far since 2022 for new contract sales, both in terms of floor space and in monetary terms - 41 ths sqm and RUB 8 billion, respectively.

"We plan to continue providing a sufficient supply in our traditional markets and to maintain a high rate of regional expansion. By the end of the year, we expect to put around an additional 150 ths sqm on sale in regions beyond Moscow and St Petersburg. We believe that expanding our presence in regional markets and the successful development of our product will help us ensure sustainable business growth in the future and strengthen our position as one of the leading nationwide developers in the country."

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

"Despite our rapid expansion into regional markets and the active development of new projects, the Company continues to demonstrate strong financial performance. The ratio of net corporate debt to pre-PPA EBITDA at the end of June 2023 was 0.8x, down from 1.0x in April. This is a comfortable level for the Company and enables us to implement both our current construction projects and key strategic initiatives in terms of expanding into new regions and developing advanced technologies."

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

Contact information

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About Etalon Group

Founded in 1987, Etalon Group is one of Russia's largest development and construction companies. 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 and has already launched new projects in Omsk, the Novosibirsk region, Ekaterinburg, Tyumen and Kazan. 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 8.6 mln 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 more than 5,800 people, and its nationwide sales network covers 35 regions of Russia.

Etalon Group's assets comprise 38 projects at the design and construction stages, unsold inventory at completed residential complexes and commercial properties, with total unsold NSA of 6.4 mln sqm, as well as a construction and maintenance division. According to Nikoliers, the value of Etalon Group assets as of 31 December 2022 was RUB 288 billion.

In 2022, Etalon Group's new contract sales totalled 292 ths sqm, or RUB 58.7 billion, not including accumulated new contract sales at YIT Russia as of its acquisition.

The Company's revenue in 2022 amounted to RUB 80.6 billion, with EBITDA of RUB 16.5 billion.

Etalon Group's GDRs have been listed on the Main Market of the London Stock Exchange since 20 April 2011 and in the Level 1 quotation list of Moscow Exchange since 31 January 2020 under the ticker ETLN. In July 2023, the Company completed the process of changing the basis for its listing on Moscow Exchange.

 

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