PRESENTATION FOR INVESTORS. September 2018

Transcription

1 PRESENTATION FOR INVESTORS 1 September

2 2 LC CORP GROUP SUMMARY 3Q 2018 Housing sector 1397 units sold 1653 units delivered 889 units in the offer Commercialisation sector Increase in the fair value of the Retro Office House property, impact on the gross financial result 29,050 kpln Decrease in the fair value of the Arkady Wrocławskie property, impact on the gross financial result 50,830 kpln Commercialisation of the Retro Office House office building at the level of 98.8% Commercialisation of the Wola Retro office building at the level of 37.4% Activation of the sales process of 4 office buildings for an agreed selling price 275 mln EUR LC Corp Group - results Adjusted consolidated net profit 147,6 mpln (3Q 2018) vs 135,8 mpln (3Q 2017) Consolidated net profit 144,4 mpln (3Q 2018) vs 100,6 mpln (3Q2017) Separate net profit of LC Corp S.A. 130,6 mpln (3Q 2018) vs 36,1 mpln (3Q 2017) Increase in the fair value of investment property in the amount of kpln Increase in the valuation of liabilities on account of loans in EUR in the amount of kpln The cumulative impact of the change in the EUR exchange rate and fair value of real estate on the Group's consolidated financial result in H amounted in total to 6,747 kpln and resulted in an increase in the consolidated gross profit

3 3 AGENDA Residential projects Commercial property Financials Attachments

4 Number of units Flat prices in PLN 4 HOUSING MARKET Flats for sale and sold yearly compared with the offer Average prices of flats for sale a trend Q'2017 2Q'2017 3Q'2017 4Q'2017 1Q'2018 2Q'2018 3Q'2018 Trójmiasto Kraków Łódź Poznań Warszawa Wrocław Flats for sale Flats for sold Offer at the end of quarter Source: REAS, aggregate for main biggest markets (Warsaw, Wrocław, Gdańsk, Sopot, Gdynia, Cracow, Poznań, Łódź) Source: NBP as at 31/12/2017 Source; Bankier.pl, as at 30/09/2018 Number of building permits granted, constructions started and flats delivered by developers on a quarterly basis Average cost of construction of m 2 of usable floor area of a residential building on selected markets (PLN/m 2 ) Construction started Flats delivered Building permits granted Q'2016 4Q'2016 1Q'2017 2Q'2017 3Q'2017 4Q'2017 1Q'2018 2Q'2018 3Q'2018 Source: GUS Warsaw Source: own calculations based on Sekocenbud. Poland

5 Number of quarrters 5 HOUSING MARKET Time of selling flats on offer a trend 5,5 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 2,4 I II III IV I II III IV I II III IV IV IV IV IV I II III Kraków Wrocław Warszawa Gdańsk Average Increase in payroll dynamics, estimated increase of even 10% y/y Increase in the prices of apartments on the primary market, caused mainly by a small supply of labour, rising personnel costs and an increase in the prices of construction materials Introduced regulatory changes special purpose investment act, planned amendment of the developer act - closed accounts Source: based on data of Emmerson Events on local housing market Housing availability index The current level of index IDM Index line cut off = 100 Change 3Q'2018 of 2Q'2018 Change 3Q'2018 of 3Q'2017 Sales -8,9% -18,9% Placed on the market for sale -3,7% -10,8% Sales in the previous four quarters -4,7% -6,6% Placed on the market in the previous four quarters -2,9% -9,5% Offer at the end of the quarter 3,8% -7,8% Including ready, but not sold -8,1% -31,1% An average price of flats placed on the market in the quarter [gross] -2,1% 4,7% An average price of flats sold in the quarter [gross] 2,3% 6,4% An average price of flats in offer [gross] 1,8% 9,9% Source: ZBP Source: REAS, aggregate for main biggest markets (Warsaw, Wrocław, Gdańsk, Sopot, Gdynia, Cracow, Poznań, Łódź)

6 DEVELOPER INDUSTRY 3Q 2018 vs 3Q 2017 number of premises sold by selected companies listed on the WSE and Catalyst 6 3Q Q 2017 year-to-year change year-to-year change Murapol (***) ,0% ,5% Dom Development ,3% ,3% Robyg (***) ,4% ,3% Atal ,9% ,4% LC Corp ,2% ,0% Archicom ,7% ,9% J.W. Construction (*) ,9% ,5% Budimex Nieruchomości ,6% ,8% Lokum Deweloper ,4% ,1% Polnord (**) ,2% ,8% Echo Investment ,2% ,3% Ronson ,9% ,7% Inpro ,0% ,5% Vantage Development ,7% ,3% Marvipol ,6% ,0% i2 Development ,0% ,0% Wikana ,0% ,0% Suma ,9% ,3% Source: PAP Biznes (as at 10/10/2018) (*) development agreements, preliminary sales agreements and non-refundable reservations in total (**) sales weighted by the Polnord s share in subsidiaries (***) company listed on the Catalyst

7 HOUSING UNITS SOLD IN 3Q 2018 housing sector as at 30/09/ ŁÓDŹ GDAŃSK ŁÓDŹ GDAŃSK KRAKÓW WROCŁAW WARSZAWA KRAKÓW WROCŁAW WARSZAWA CITY 1Q 2Q 3Q 4Q Q 2Q 3Q 4Q 2018 SALE WARSZAWA WROCŁAW KRAKÓW GDAŃSK ŁÓDŹ cumulatively in the year quarter cumulatively year to year +17% +4% -2% 2503 housing units sold and not delivered, including 61 finished housing units

8 SELECTED INVESTMENTS AVAILABLE FOR SALE housing sector as at 30/09/ Warsaw Osiedle na Woli sale in 3Q apartments Gdańsk Bastion Wałowa sale in 3Q apartments Cracow Centralna Park sale in 3Q apartments Wrocław Kamienna sale in 3Q apartments

9 HOUSING UNITS DELIVERED 3Q 2018 housing sector as at 30/09/ ŁÓDŹ GDAŃSK KRAKÓW WROCŁAW WARSZAWA ŁÓDŹ GDAŃSK KRAKÓW WROCŁAW WARSZAWA CITY 1Q 2Q 3Q 4Q Q 2Q 3Q 4Q 2018 DELIVERY WARSZAWA WROCŁAW KRAKÓW GDAŃSK ŁÓDŹ cumulatively in the year quarter cumulatively year to year +40% +55% +9%

10 HOUSING UNITS IN OFFER housing sector as at 30/09/ KATOWICE in offer as at added in to be added in to be added after 2018 ŁÓDŹ GDAŃSK KRAKÓW WROCŁAW WARSZAWA CITY in of f er as at added in 2018 to be added in 2018 to be added af ter 2018 OFFER WARSZAWA WROCŁAW KRAKÓW GDAŃSK ŁÓDŹ 4 KATOWICE 682

11 UNITS TO BE ADDED IN 2018 housing sector as at 30/09/ units to be delivered by the end of 2018 Gdańsk Gdańsk 254 units Warsaw Bastion Wałowa EIII units Bastion Wałowa EIV units Wrocław Warszawa 177 units Na Woli EVIII- 177 units Kamienna units Między Parkami EII units Wrocław 302 units Katowice Kraków 280 units added in 2018

12 CHANGING INVESTMENT PORTFOLIO IN 3Q 2018 as at 30/09/2018; (*) event after the balance sheet date Location acquired / tender won Housing unit usable floor area (sq.m.) Estimated number of units preliminary contract concluded Housing unit usable floor area (sq.m.) Estimated number of units TOTAL Housing unit usable floor area (sq.m.) GDAŃSK KRAKÓW KRAKÓW (*) WROCŁAW WARSZAWA TOTAL (*) event after the balance sheet date acquired / tender won (sq.mq) preliminary contract concluded (sq.mq) Warszawa Gdańsk Wrocław Wrocław Warszawa Kraków Kraków Gdańsk Wrocław Warszawa Monitoring of offers / Seeking new locations Activation of projects from the investment portfolio depending on a market situation Kraków Warszawa Wrocław Land in analysis - potential purchase Location Housing unit usable floor area (sq.m.) Estimated number of units GDAŃSK KRAKÓW WROCŁAW WARSZAWA TOTAL

13 13 AGENDA Residential projects Commercial property Financials Attachments

14 INVESTMENT MARKET Total volume of investment transactions in Q EUR 3,24 billion (the best result for the first half of the year in the history of the Polish market) Total volume of investment transactions in EUR 5.1 billion (the highest ever) Sale of 26 office buildings on regional markets in 2017, 75% of capital invested outside the capital city The length of lease agreements determines the prices of the best assets The best rates of return on the Warsaw office market are approx. 5.2% (the city centre) and approx % outside the city centre. In the main regional cities (Cracow, Wrocław, Tricity, Łódź, Katowice) below 6.0%. Best rates of return on the retail market at the level of approx. 5 % for modern, dominant shopping centres Main investment indicators 2017 Volume of transactions EUR 5.1 billion Rates of return on the best properties Office Warsaw approx. 5.2% Office regional cities approx. 6.0% Commercial buildings approx. 5.0% Warehouses approx. 6.5% 2018 forecasts Seeing Poland as a recognised real estate market with a focus on the status of a core market Forecasted maintenance of market dynamics through GDP growth based on consumption and strong macroeconomic outlook Expected continuation of the trend from 2017 extended by increased interest in less popular cities Value of investment transactions in particular sectors Rates of return on the best properties in particular sectors EUR billion ,5% 8,0% 7,5% 7,0% 6,5% 6,0% 5,5% 5,0% Commercial buildings Offices Warehouses Other 4,5% Biura Offices (Warszawa) (Warsaw) Biura Offices (rynki (regional regionalne) markets) Obiekty Commercial handlowe buildings Source: Colliers International. Source: Colliers International and Knight Frank. 14

15 INVESTMENT PORTFOLIO as at 30/09/2018 PLN 1.92 billion of carrying amount PLN 1.22 billion NAV PLN 72,3 million NOI for Q completed projects 201,000 sq.m. Usable Flor Area Warsaw PU[sq.m.]: Occupancy: 37.4 % PU[sq.m.]: Occupancy: 96.8 % Wrocław PU[sq.m.]: Occupancy: 98.8 % PU[sq.m.]: Occupancy: 84,0 % PU[sq.m.]: Occupancy: 96.8 % Katowice PU[sq.m] EI and EII: Occupancy : 96.4% Focusing strategy in the commercial real estate sector on construction, commercialisation and sales Reduction in the number of properties having own land and mortgage registers with a smaller portfolio and retained scale of operations for new facilities Change in the structure of cash flow sales revenue instead of lease revenue 15

16 INVESTMENT PORTFOLIO as at 30/09/ CITY PROJECT STATUS Yield [%] GAV [mpln] NAV [mpln] NOI [mpln] Usable Floor Area [sq.m.] Office Usable Floor Area [sq.m.] Retail Usable Floor Area [sq.m.] WROCŁAW center ARKADY WROCŁAWSKIE COMPLETED WROCŁAW office building SKY TOWER COMPLETED potential sale possible services: 6,8 offices: 6,8 services: 6,5 offices B1 & B3: 6,75 offices B2: 7,25 341,7 243,3 15, ,9 314,2 19, (*) in reconstruction 863,6 557,5 34, WARSAW office building WOLA CENTER COMPLETED 5,9 445,9 237,0 23, WARSAW office building WOLA RETRO UNDER CONSTRUCTION - 96,0 96, WROCŁAW office building RETRO OFFICE HOUSE COMPLETED - 238,8 157,4 1, KATOWICE office building SILESIA STAR - Etap I COMPLETED 6,75 147,0 103,9 7, KATOWICE office building SILESIA STAR - Etap II COMPLETED 6,75 124,5 71,1 5, ,3 665,4 37, Retro Office House in Wrocław handed over for operation Commercialisation at a level of 98,8 per cent Retro Office House in Wrocław handed over for operation Commercialisation at a level of 98,8 per cent Progress of works for Wola Retro in Warsaw according to schedule The alteration of Sky Tower 12,400 sq m under alteration, the final date of conversion into office space: 4Q of 2020, projected Usable Floor Area: 33,732 sq m Office Usable Floor Area, 20,495 sq m Retail Usable Floor Area, which means an increase in the area rented by 2,094 sq m The selling price was agreed for selected properties from the investment portfolio TOTAL 1 915, ,9 72,

17 17 AGENDA Residential projects Commercial property Financials Attachments

18 18 MARKET POSITION Sales of apartments in Poland (by number of apartments) Gross margin on sales 32% 30% 27% 27% 31% 28% 25% 16% 17% 14% Source: PAP Biznes (as at 10/10/2018) (*) development agreements, preliminary sales agreements and non-refundable reservations in total (**) company listed on the Catalyst LC Corp Dom Development Ronson Atal Marvipol Cost effectiveness ((selling costs + administrative expenses) / revenue)) Focused on project effectiveness for years Since 2009, no project budget has been exceeded. Since 2009, all projects have been successfully completed, generating higher-than-expected margins. Since 2009, all purchased land has been developed, with the projects yielding higher-than-budgeted revenues. Long-established presence in the key markets (Warsaw, Wrocław, Gdańsk, Kraków) experience in project development and sales.

19 19 FINANCIAL PERFORMANCES 3Q 2018 Income from sales (mpln) Gross margin on sales (mpln) 449,9 547,0 145,1 706,2 143,5 581,5 107,5 10% 637,50 107,2 12% 131,6 318,3 402,0 562,7 474,0 530, Q Q 2018 Property development Acitivity lease EBITDA 1 (mpln) Net profit and adjusted net profit 2 (mpln) 23% 9% 31% 1 EBITDA adjusted for: (i) result of property revaluation, (ii) write-downs of inventories 2 Net profit adjusted for: (i) result of the revaluation of property and foreign currency loan, (ii) write-downs of inventories, (ii) others

20 20 HIGH-VALUE AND HIGH-YIELD ASSETS Investment property (mpln NOI of investment property (mpln) 87,2 105,6 100,4 76,2 72, Q Q 2018 Inventory value (mpln) - inventories include land, projects under construction and ready housing units, but not sold yet

21 21 SELECTED FINANCIAL DATA (mpln) Q Q Q 2018/ 3Q 2017 Revenues 449,9 547,0 706,2 581,5 637,5 + 9,6% EBITDA 155,2 204,7 90,3 125,7 215,1 + 71,2% Net profit 108,9 113,1 80,2 100,6 144,4 + 43,6% Adjusted net profit 90,3 118,0 145,5 135,8 147,6 + 8,7% Assets 2 890, , , , ,1 + 6,5% Equity 1 364, , , , ,4 + 1,1% Interest-bearing debt 840,6 850,1 814,1 800,7 785,1-2,0% ROA 3,8% 3,5% 2,4% 3,1% 4,1% + 34,7% ROE 8,0% 8,1% 5,5% 6,9% 9,7% + 41,9% ND/E ratio 61,6% 60,9% 56,2% 54,6% 52,9% - 3,1%

22 22 FINANCIAL SITUATION Debt ratios decrease , , , ,4 0, ,3 0,51 0, , ,7 934,7 0,48 479,9 354,9 344,2 242,1 Net financial debt divided into sectors (mpln) LTV 2 : 21% 614,6 809,2 194,7 LTV 1 : 32% Q2018 Equity Financial liabilities Cash Net debt/equity Commercialisation sector Property development sector 1 Financial liabilities do not include the liabilities connected with the purchase of Sky Tower 1 ( loan and bond debts attributable to the sector cash of the sector)/balance sheet value of investment property 2 ( loan and bond debts attributable to the sector cash of the sector)/balance sheet value of inventories Liabilities connected with the purchase of Sky Tower (mpln) 80,8 Interest-free liabilities. 2 instalments still to be paid off, payable at the end of each year: 2018, In the basic scenario, the Company assumes maintenance of open accounts supplemented by a bank or insurance guarantee, which is in line with the currently proposed amendment

23 23 FINANCIAL SITUATION Maturity structure of bonds and loans (excluding the commercial sector) (million PLN) 200 Total bonds 400 mpln Q Q Q Q Q Q Q 2022 Bonds Loans Bank loans (mln PLN) No Project Balans Total repayment date 1 Arkady Wrocławskie 98, Wola Center 204, Sky Tower 207, Silesia Star etap I 42, Silesia Star etap II 53, Retro Office House - investment loan 80, Retro Office House - k. VAT 0, Investment loan 50, Investment loan 38, TOTAL 776,5

24 24 AGENDA Residential projects Commercial property Financials Attachments

25 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME LC CORP GROUP 25 PLN'000 3Q Q 2018 Sales revenue Revenue from sales of services Revenue from sales of goods and products Cost of sales ( ) ( ) Gross profit on sales Gain/(loss) on disposal of non-financial fixed assets (1) 61 Revaluation of investment property (61 104) Write-downs of inventories - (1 153) Selling and distribution cost (11 354) (13 594) General administrative expenses (17 948) (24 466) Other operating income (expenses) (957) (612) Operating profit Financial income Financial expenses (24 112) (43 099) Gross profit Income tax (tax burden) (23 357) (31 431) Net profit

26 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS LC CORP GROUP 26 PLN'000 3Q Q 2018 A. Fixed assets Intangible assets Property, plant and equipment Tangible assets Tangible assets under construction Non-current receivables Land classified as fixed asset Investment property Long-term prepayments Deferred tax assets B. Current assets Inventory Trade and other receivables Income tax receivable Short-term financial assets Cash and other cash equivalents Short-term prepayments C. Fixed assets held for sale - - Total assets

27 CONSOLIDATED STATEMENT OF FINANCIAL POSITION LIABILITIES LC CORP GROUP 27 PLN'000 3Q Q 2018 A. Equity I. Equity attributable to shareholders of the parent Share capital Other capital Net profits / losses II. Minority interest - - B. Non-current liabilities Non-current financial liabilities Non-current liabilities on account of the acquisition of a subsidiary Provisions Deferred income tax reserve C. Current liabilities Current financial liabilities Current liabilities on account of the acquisition of a subsidiary Current trade and other payables Income tax liabilities Provisions Accrued expenses and revenue Total liabilities

28 CONSOLIDATED STATEMENT OF FINANCIAL POSITION LIABILITIES LC CORP SA 28 PLN'000 3Q Q 2018 Operating income Revenue from sale of services, products and goods Revenue from interest and discounts Revenue from dividend Other financial income Other operating income Operating expenses (52 215) (82 971) Operating expenses value of goods sold (30 815) (57 804) Costs of interest and discounts (17 488) (20 233) Other financial expenses (3 910) (3 100) Other operating expenses (2) (1 835) Gross profit Income tax Net profit / (loss)

29 STATEMENT OF FINANCIAL POSITION ASSETS LC CORP S.A. 29 PLN'000 3Q Q 2018 A. Fixed assets Intangible assets Property, plant and equipment Tangible assets Tangible assets under construction Non-current investments Non-current loans and receivables Long-term prepayments Deferred tax assets B. Current assets Inventory Trade and other receivables Income tax receivable Short-term financial assets Cash and other cash equivalents Short-term prepayments C. Fixed assets held for sale - - Total assets

30 STATEMENT OF FINANCIAL POSITION LIABILITIES LC CORP S.A. 30 PLN'000 3Q Q 2018 A. Equity Share capital Balance of called-up share capital not paid Reserve funds Other reserve funds Other capital Retained profit/(loss carried forward) B. Non-current liabilities Non-current financial liabilities Non-current liabilities on account of the acquisition of a subsidiary Provisions Deferred income tax reserve 0 0 C. Current liabilities Current financial liabilities Current liabilities on account of the acquisition of a subsidiary Current trade and other payables Income tax liabilities Provisions Accrued expenses and revenue Total liabilities

31 31 SHAREHOLDERS 18,22% 46,51% 17,25% 6,38% 11,65% SHARES COUNT NAME % QTY. Nationale-Nederlanden Otwarty Fundusz Emerytalny 18, OFE PZU Złota Jesień 17, Aviva OFE AVIVA BZ WBK 11, Aegon Otwarty Fundusz Emerytalny 6, Remaining shareholders 46, , Shareholders of LC Corp S.A. having more than 5% of shares. The information dated 16th of October 2018.

32 32 DISCLAIMER By taking part in a meeting during which this Presentation will be displayed and by reading slides presented you undertake to comply with the below restrictions. The foregoing applies to the Presentation, information contained herein presented orally by the Company or any person acting on behalf of the Company and any answers to questions relating both to the Presentation and information presented orally. The Presentation does not constitute, or form part of or be treated as proposing to any person, inducing or inviting any person to subscribe for, ensuring or otherwise purchasing any securities of the Company or any of its subsidiaries belonging to its group ( the Group ). 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Due to the fact that the aforementioned market-related information has been partially prepared on the basis of estimates, assessments, adjustments and opinions which are based on the Company's experience or third party sources, as well as on their knowledge of the sector of economy in which the Company is engaged, and that such estimates, assessments, adjustments and opinions have not been verified by an independent third party, this market-related information is to a certain extent subjective in its nature. 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33 THANK YOU 33