14 Oct 2020 07:30
14 October 2020
Etalon Group 3Q and 9M 2020 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 three months and nine months ended 30 September 2020, based on management accounts.
3Q 2020 operating highlights
· New contract sales increased by 10% year-on-year to 150,451 sqm and by 40% year-on-year to RUB 23,983 million
· The number of contracts grew by 5% year-on-year to 2,706
· Cash collections rose by 32% year-on-year to RUB 21,235 million
· Average price per sqm was RUB 159,405, up by 27% year-on-year
· Average price per sqm of apartments grew by 21% year-on-year to RUB 186,327
3Q 2020 operating results
| 3Q 2020 | 3Q 2019 | Change, % |
New sales, sqm | 150,451 | 136,658 | 10% |
New sales, mln RUB | 23,983 | 17,098 | 40% |
Number of contracts | 2,706 | 2,579 | 5% |
Cash collections, mln RUB | 21,235 | 16,114 | 32% |
Average price, RUB/sqm | 159,405 | 125,118 | 27% |
Average price (apartments), RUB/sqm | 186,327 | 153,394 | 21% |
Deliveries, sqm | 15,570 | 67,230 | (77%) |
Regional breakdown
3Q 2020 | 3Q 2019 | Change, % | |
Moscow metropolitan area | |||
New sales, sqm | 80,014 | 71,075 | 13% |
New sales, mln RUB | 15,542 | 10,051 | 55% |
Number of contracts | 1,461 | 1,235 | 18% |
Cash collections, mln RUB | 13,737 | 9,738 | 41% |
Average price, RUB/sqm | 194,241 | 141,407 | 37% |
Average price (apartments), RUB/sqm | 214,491 | 174,306 | 23% |
Deliveries, sqm | 15,570 | 4,304 | 262% |
St Petersburg | |||
New sales, sqm | 70,437 | 65,583 | 7% |
New sales, mln RUB | 8,441 | 7,048 | 20% |
Number of contracts | 1,245 | 1,344 | (7%) |
Cash collections, mln RUB | 7,498 | 6,376 | 18% |
Average price, RUB/sqm | 119,832 | 107,465 | 12% |
Average price (apartments), RUB/sqm | 149,189 | 131,208 | 14% |
Deliveries, sqm | - | 62,926 | - |
Quarterly operating performance
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | |
New sales, sqm | 150,451 | 94,984 | 125,971 | 171,530 | 136,658 |
New sales, mln RUB | 23,983 | 11,585 | 17,936 | 21,795 | 17,098 |
Number of contracts | 2,706 | 1,559 | 2,323 | 2,931 | 2,579 |
Cash collections, mln RUB | 21,235 | 13,942 | 17,604 | 18,791 | 16,114 |
Average price, RUB/sqm | 159,405 | 121,971 | 142,384 | 127,060 | 125,118 |
Average price (apartments), RUB/sqm | 186,327 | 159,063 | 165,481 | 156,271 | 153,394 |
Deliveries, sqm | 15,570 | 88,847 | 88,513 | 308,294 | 67,230 |
Mortgage contract developments
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | |
Share of mortgages (total) | 47% | 44% | 36% | 35% | 36% |
Share of mortgages (apartments) | 64% | 63% | 52% | 52% | 53% |
9M 2020 operating highlights
· New contract sales amounted to 371,406 sqm and RUB 53,504 million
· Cash collections reached RUB 52,782 million
· The number of contracts amounted to 6,588
· Average price per sqm grew by 18% year-on-year to RUB 144,059
· Average price per sqm of apartments was RUB 172,869, up by 18% year-on-year
9M 2020 operating results
9M 2020 | 9M 2019 | Change, % | |
New sales, sqm | 371,406 | 458,869 | (19%) |
New sales, mln RUB | 53,504 | 55,833 | (4%) |
Number of contracts | 6,588 | 9,109 | (28%) |
Cash collections, mln RUB | 52,782 | 58,923 | (10%) |
Deliveries, sqm | 192,929 | 313,573 | (38%) |
Regional breakdown
9M 2020 | 9M 2019 | Change, % | |
Moscow metropolitan area | |||
New sales, sqm | 185,952 | 232,475 | (20%) |
New sales, mln RUB | 31,429 | 32,529 | (3%) |
Number of contracts | 3,223 | 4,452 | (28%) |
Cash collections, mln RUB | 30,237 | 35,768 | (15%) |
Deliveries, sqm | 119,458 | 250,648 | (52%) |
St Petersburg | |||
New sales, sqm | 185,454 | 226,394 | (18%) |
New sales, mln RUB | 22,075 | 23,303 | (5%) |
Number of contracts | 3,365 | 4,657 | (28%) |
Cash collections, mln RUB | 22,545 | 23,154 | (3%) |
Deliveries, sqm | 73,472 | 62,926 | 17% |
Key terms for implementation of the ZIL-Yug project:
In 3Q 2020, Etalon Group reached agreements on the terms for further implementation of the Company's largest project in the Moscow metropolitan area: the integrated development of the territory of ZIL-Yug.
The Company has agreed the following terms for payment and acquisition of project rights:
· Etalon Group will take 100% ownership of the rights to the project in 2020.
· The total purchase price, including RUB 4 billion paid before Etalon Group became an owner of the project, will be RUB 36.2 billion, with the balance to be paid in instalments between 2021 and 2024.
These agreements will enable Etalon Group to begin construction and launch sales in late 2020 or early 2021, while the delivery of the last stage of the project is planned for December 2030.
According to the Colliers International valuation report as of 31.12.2019, total net sellable area of the project amounts to 1.2 million sqm. Expected income from sales equals RUB 264.6 billion, according to the report.
Commenting on the 3Q and 9M 2020 operating results, Etalon Group Chief Executive Officer Gennadiy Shcherbina said:
"Etalon Group delivered an impressive performance in 3Q 2020, achieving some of the best metrics in the Company's history. New contract sales in monetary terms rose by 40% year-on-year in 3Q 2020, and cash collections increased by 32% year-on-year. Our diversified and high-quality offering, combined with new approaches to pricing, drove up the average price per square metre to a record RUB 159 ths, an increase of 27% year-on-year, while the average price per square metre for apartments grew by 21% year-on-year to an all-time high of RUB 186 ths. In addition to traditionally strong demand for Etalon Group real estate, the revival of the subsidised mortgage programme provided significant support to sales. Mortgages accounted for a record 64% of residential sales volumes during the quarter, while the average down payment reached 92%, the highest level in the Company's history.
"This strong quarterly performance significantly offset the negative impact of the decrease in consumer demand in 1H 2020 as a consequence of the COVID-19 restrictions. As a result, new contract sales in monetary terms in 9M 2020 reached RUB 53.5 billion, while cash collections amounted to RUB 52.8 billion, approaching the records set last year. These results lay a solid foundation for Etalon Group to deliver on its FY 2020 goals, as we have achieved 73%-75% of the best-case scenario targets that we previously disclosed. We have no doubt that the Company will accomplish its 2020 guidance, supported by the Central Bank's key rate remaining at record low levels, growing investment demand for real estate, as well as our diversified project portfolio. Moreover, our shift to focus on sales in monetary terms instead of volume, combined with strict overhead costs control, will enable us to further increase profitability for FY 2020.
"In addition to outstanding operational results, we are also pleased to announce that at the end of 3Q 2020, we signed final agreements with the city of Moscow on the terms for implementation of our flagship project in Moscow: the integrated development of ZIL-Yug. Thanks to these agreements, we will consolidate 100% ownership in 2020, and will therefore be able to begin raising project financing, while the payment schedule we have agreed will make it possible, among other things, to balance instalment payments for the acquisition with the release of funds held on escrow accounts for the first stages of the project. To make ZIL-Yug more attractive and engage in dialogue about the project concept with future residents, an urban planning laboratory and media platform called Generation ZIL have been created that is the only one of its kind in Russia. Our own design bureau will work alongside leading international architects KCAP, who have been engaged to develop a master plan for the ZIL-Yug site. We will focus in particular on creating a multifunctional environment that provides high living standards for future residents. We have high expectations for this large-scale development, especially given the excellent sales performance of the neighbouring Nagatino i-Land project, where half of the space available for sale was sold in less than a year, and the average price per sqm for apartments reached RUB 216 ths. Once launched, ZIL-Yug will without a doubt be our flagship project in terms of sales for years to come, taking Etalon Group to qualitatively new levels both in terms of our product offering and operational efficiency."
Conference call and webcast
The Company will host a conference call for investors and analysts today at 15:00 London time (17:00 Moscow; 10:00 New York).
On the call, the Etalon Group management team will present the Company's 3Q and 9M 2020 operating and 1H 2020 IFRS financial results, followed by a question and answer session for participants.
Webcast
https://edge.media-server.com/mmc/p/v87ijm8a
Dial-in numbers:
+44 (0) 2071 928338 - Standard International
+44 (0) 844 4819 752 - London
+7 495 249 9851 - Moscow
+1646 741 3167 - New York
Conference ID Code: 5483888
This and other recent announcements are available on the Etalon Group website: https://www.etalongroup.com/investor-relations/investor-news/
EM Sam VanDerlipT: +44 207 002 7859E: vanderlip@em-comms.com
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. With a more than 30-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 commissioned 7 million sqm of real estate.
The Company is vertically integrated, which helps it to control costs, quality and timing, as well as maintain best-in-class profitability. Etalon Group employs over 5,000 people, and its nationwide sales and marketing network covers 57 Russian cities.
In 2019, Etalon Group acquired and consolidated 100% in Leader-Invest, one of Moscow's largest residential developers by size of land bank and number of projects currently available for sale.
Etalon Group's total assets comprise 33 projects under development, unsold inventory at completed residential complexes and commercial properties, with total unsold NSA of 3.3 million sqm, as well as a construction and maintenance division. Colliers International valued the Company's total assets at RUB 188 billion as of 31 December 2019.
For the year ended 31 December 2019, Etalon Group's new contract sales totalled 630 ths sqm, or RUB 77.6 billion. Deliveries in 2019 amounted to 622 ths sqm.
The Company recorded a record revenue of RUB 84.3 billion and EBITDA of RUB 8.9 billion for the year ended 31 December 2019.
Etalon Group's GDRs have been traded on the Main Market of the London Stock Exchange since 20 April 2011 and on the Level 1 List of Moscow Exchange since 31 January 2020 under the ticker ETLN.