Etalon Group Announces 1H 2023 Financial Results

Etalon Group PLC

30 August 2023

 

30 August 2023

Etalon Group Announces 1H 2023 Financial Results

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 consolidated IFRS financial statements for the first half of the year ended 30 June 2023.

1H 2023 financial highlights:

• Consolidated revenue amounted to RUB 32.8 billion.
• Consolidated gross profit before purchase price allocation (PPA) for the period increased by 11% year-on-year to RUB 11.6 billion; consolidated gross profit was RUB 11.0 billion.
• Consolidated gross profit margin increased by 4 p.p. to 34%, and by 5 p.p. to 38% in the housing development segment.
• The pre-PPA consolidated gross profit margin was 36% (up 3 p.p. year-on-year) and 40% in the core segment of housing development (up 5 p.p.)
• Pre-PPA LTM EBITDA increased by 20% year-on-year to RUB 19.5 billion.
• LTM EBITDA was RUB 17.5 billion, a 27% year-on-year increase.
• Pre-PPA LTM net profit amounted to RUB 979 million.
• Net corporate debt[1] as of 30 June 2023 was RUB 14.5 billion, and the ratio of net corporate debt to pre-PPA LTM EBITDA was 0.74x.

Commenting on the Company's 1H 2023 financial results, Etalon Group CEO Gennadiy Shcherbina said:

"The Company continues to systematically implement a strategy aimed at expanding its presence in regional markets and improving performance. Since the middle of last year, we have put nearly 300 ths sqm on the market in regional projects, and we are once again enjoying steady sales growth. As a result, revenue for 1H 2023 amounted to RUB 33 billion despite the limited demand in 2022 and the first two months of 2023.

"Despite the challenging external environment and thanks to a balanced approach to development, we were able to once again enjoy high margins, surpassed only by our record high of 1H 2021 and exceeding our ambitious strategic goals. As a result of our efforts, our pre-PPA gross profit margin increased to 36% at the consolidated level and to 40% in the residential development segment. In our strategic regional markets, where we plan to put 380 ths sqm of real estate on sale this year, our gross profit margin reached 45% thanks to our work on product standardisation.

"The expansion of our offer in regional markets could become one of the key factors driving business growth, contributing to a steady increase in sales, profit and profit margin at the consolidated level. We expect our return to strong sales growth starting in 2Q 2023, coupled with expanding our regional presence and maintaining margins at high levels, to drive our financial performance in future periods and to help us achieve the goals set out in our strategy to 2024."

Commenting on the financial results for 1H 2023, Etalon Group's Chief Financial Officer, Ilya Kosolapov, added:

"Since the beginning of the year, net corporate debt and the ratio of net corporate debt to adjusted EBITDA have remained virtually unchanged, at RUB 14.5 billion and 0.7x. With funds in escrow providing a debt-service coverage ratio of 0.8x, we are able to receive project financing at a reduced rate. Our comfortable debt burden enables us to invest in current business and ambitious strategic projects aimed at further expansion and improved performance."

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

https://www.etalongroup.com/investor-relations/investor-news/.

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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 were listed on the Main Market of the London Stock Exchange on 20 April 2011 and were included in the Level 1 quotation list of Moscow Exchange on 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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[1] Net corporate debt does not include project financing or funds in escrow.

 

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