FY 2018 Financial Results March 2019 Disclaimer By attending the - - PowerPoint PPT Presentation

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FY 2018 Financial Results March 2019 Disclaimer By attending the - - PowerPoint PPT Presentation

FY 2018 Financial Results March 2019 Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to the bound by the following limitations: This presentation does not constitute or form


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SLIDE 1

FY 2018 Financial Results

March 2019

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SLIDE 2

Disclaimer

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By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to the bound by the following limitations: This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of PJSC LSR Group (“hereinafter – the Company”) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information in this document has been prepared by the Company solely for use at presentations. This document and its contents may not be distributed, published, reproduced (in whole or in part) by any medium or in any form. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. None of the Company nor any of its shareholders, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. The information communicated in this document contains certain statements that are or may be forward looking. These statements typically contain the words «anticipate», «believe», «intend», «estimate», «expect», «will» and words of similar meaning. By their nature forward looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking

  • statements. We assume no obligations to update amend or revise the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors

affecting these statements. Investment in the Company will also involve certain risks. There maybe additional material risks that are currently not considered to be material or of which the Company and its advisors or representatives are unaware. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control and we may not achieve or accomplish these expectations, beliefs or projections. In addition, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the achievement of the anticipated levels of revenues, profitability and growth, cost and synergy of our recent acquisitions and restructuring, the timely development and acceptance of new products, the impact of competition and competitive pricing, the ability to obtain necessary regulatory approvals and the ability to fund our future

  • perations and capital needs through borrowing or otherwise, the ability to successfully implement any of our business strategies, the ability to integrate our business and to realize

anticipated cost savings and operational benefits from such integration, our expectations about growth in demand for our products and services, the effects of inflation, interest rate and exchange rate fluctuations, and our success in identifying other risk to our business and managing the risk of the aforementioned factors, the condition of the economy and political stability in Russia and the other markets of operations and the impact of general business and global economic conditions.

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SLIDE 3

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FY 2018 Highlights

  • Operating cash flow

1 of RUB 30.3 bn, a nine-fold increase YoY

  • Cash balance increased by 88% year-on-year to RUB 55,798 bn
  • Net debt down 30% YoY to RUB 30.3 bn
  • Net debt/ adjusted EBITDA of 0.83
  • Revenue of RUB 146.4 bn, up 6% YoY
  • Adj. EBITDA

2 of RUB 36.4 bn with adj. EBITDA margin of 25%

  • Profit for the year of RUB 16.2 bn, up 2% YoY
  • EPS up 3% YoY to RUB 159.33
  • Land bank valued at RUB 186 bn
  • Assessed value per sqm at RUB 24 th. increased by 10% YoY
  • Top-4 projects by value: ZILART, LUCHI, MORSKOY FACADE

and ZIL YUG

  • A new contract sales high of 1,002 th. m² up, 44%

3 YoY

  • Total value of RUB 93

bn 4, up 38% YoY

  • Completions in 2018 totaled 1,009 th. m²

1Cash flow from operations before income taxes and interest paid. 2Hereinafter Adjusted EBITDA equals to Results from operating activities + Depreciation/amortization – (Increase in fair value of Investment property – Decrease in fair value of Investment property) – (Increase in results from operating activities due to write off of change in fair value of the disposed

asset – Decrease in results from operating activities due to write off of change in fair value of the disposed asset) + Impairment losses recognized during the reporting period + Capitalized interest recognized in cost of sales.

3 YoY % change is based on sales without parking 4 YoY % change is based on sales without parking

Source: Audited consolidated IFRS financial statements for the year ended 31 December 2018 and 2017; Company data

SOLID PERFORMANCE STRONG CASH POSITION RECORD HIGH NEW CONTRACT SALES RUB 186 BN GROUP PORTFOLIO

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SLIDE 4

Revenue and Adjusted EBITDA

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SOLID TOP LINE PERFORMANCE AND ADJUSTED EBITDA IN LINE WITH 2017

A slight YoY decrease in adjusted EBITDA margin largely reflects the

  • ne-off profit recognition in 2017, following a land plot sale

(Energetikov 9) in St. Petersburg , previously used as one of the Company’s Reinforced Concrete-NW production facilities A 6% YoY increase in revenue was primarily driven by strong sales across all regions

RUB m

Revenue Adjusted EBITDA

138 494 146,376

2017 2018 6%

RUB m

36 845 36 400

2017 2018

  • Adj. EBITDA margin

27% 25%

1%

Source: Company data

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SLIDE 5

154.51 159.33

2017 2018

15 871 16 230

2017 2018

Profit for the Year and EPS

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PROFIT FOR THE YEAR AND EPS REMAINED ON THE 2017 LEVEL

RUB m

Profit for the Year up 2% YoY

RUB

Profit for the Year EPS

Stable earnings per share in line with 2017

2% 3%

Source: Company data

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SLIDE 6

32 297 35 553

2017 2018

111 216 116 592

2017 2018

Real Estate Development

5%

RUB m

SUSTAINED INCREASE IN PROFITABILITY

RUB m

Revenue Adjusted EBITDA

10%

Increase in the segment’s revenue and Adjusted EBITDA was primarily driven by solid performance across all regions Adjusted EBITDA margin expanded to 30% reflecting a more profitable product mix

6

  • Adj. EBITDA margin

29% 30%

Source: Company data

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SLIDE 7

Real Estate Development: Breakdown by Region

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STRONG PERFORMANCE ACROSS ALL REGIONS

St Petersburg

Moscow Urals

RUB m RUB m RUB m

8 463 9 218 1 800 2 140

2017 2018

Revenue

  • Adj. EBITDA

71 559 68 639 22 374 20 771

2017 2018

Revenue

  • Adj. EBITDA

31 101 38 397 8 195 12 699

2017 2018

Revenue

  • Adj. EBITDA

Source: Company data

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SLIDE 8

17 362 19 144

2017 2018

Building Materials

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CONTINUED REVENUE GROWTH

Lower adjusted EBITDA reflects the one-off profit recognition in 2017, following a land plot sale (Energetikov 9) in St. Petersburg, previously used as one of the Company’s Reinforced Concrete-NW production facilities

RUB m RUB m

6 571 4 000

2017 2018

21%

Revenue Adjusted EBITDA

10% 39%

A 10% YoY revenue growth was primarily driven by strong sales

  • f crushed granite and sand, as well as higher shipment volumes
  • f ready-mix concrete
  • Adj. EBITDA margin

38%

Source: Company data

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SLIDE 9

8 910 9 392

2017 2018

5 671 7 211

2017 2018

Operating Expenses

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STRICT APPROACH TO COST CONTROL

Distribution expenses Administrative expenses

RUB m RUB m

Higher distribution expenses were attributable mainly to an increase in transportation costs due to rising sales volumes of crushed granite (+26% YoY) and sand (+41% YoY)

27% 5%

An increase in administrative expenses mainly resulted from higher charitable contributions

As % of revenue

6% 6%

As % of revenue

4% 5%

Source: Company data

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SLIDE 10

Bank and other loans 83% Bond issues 17% Finance lease liabilities 0,01%

Further Strengthened Balance Sheet

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SIGNIFICANT NET DEBT REDUCTION DRIVEN BY STRONG CASH FLOW GENERATION

  • Total debt of RUB 86,088 mln as of 31 Dec 2018
  • Significant decrease of net debt level, down 30% YoY, to RUB 30,290 mln

(2017: RUB 43,073 mln)

  • Average interest rates down to 8.8% vs 9.1% in 2017
  • Net debt/ Adjusted EBITDA at a comfortable level of 0.83 (2017: 1.17X)
  • Credit rating: Moody’s – B1, outlook stable; Fitch – B, outlook positive;

RAEX – ruA, outlook stable

Debt structure Strong liquidity position

RUB m

72 786 86 088 29 713 55 798 2017 2018 Total debt Cash and cash equivalents 11 336 29 910 38 305 6 350 187 2019 2020 2021 2022 2023+

RUB m

Debt maturity profile

Source: Company data

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SLIDE 11

Shareholder Return

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Total dividends paid Dividend per share

LSR Group paid out a total of RUB 8.0 bn cash dividends (RUB 78.00 per ordinary share) for 2017

SUSTAINABLE DIVIDEND POLICY

1 500 2 000 2 000 4 100 8 000 8 000 8 000 8 000

2010 2011 2012 2013 2014 2015 2016 2017

15 20 20 40 78 78 78 78

2010 2011 2012 2013 2014 2015 2016 2017

RUB RUB m

Source: Company data

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SLIDE 12

Group Portfolio of RUB 186 bn

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10% YOY INCREASE IN ASSESSED VALUE PER SQM BREAKDOWN BY GEOGRAPHY

  • St. Petersburg

Yekaterinburg Moscow 43% Leipzig

TOTAL AREA OF LSR GROUP SITES COMPOSING CURRENT SALES PORTFOLIO YET TO BE SOLD AND LEASED IN OUR PROJECTS1 IN ALL MARKET SEGMENTS

RUSSIA

GERMANY

1,247

HA

49

PROJECTS

39

PROJECTS

7,815

  • TH. M2

Operating

  • ffices

Commercial Elite Mass Market Business class 36.0% 39.1% 11.8% 10.1% 3.0%

31 Dec 2018

RUB 186 BN

Mass Market 40.9% 37.8% 13.0% 5.6% 2.6% Operating

  • ffices

Commercial Elite Business class

31 Dec 2017

RUB 185 BN

market value for assets in key cities as % total

51% 4% 2%

1 The figure does not include parking

Source: Knight Frank report as of 31. December 2018

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SLIDE 13

Portfolio overview

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BY MARKET SEGMENT NSA (TH. M2) % OF TOTAL MARKET VALUE, RUB MLN % OF TOTAL

Mass market residential 5 413 69.3% 66 729 36.0% Elite class residential 210 2.7% 21 835 11.8% Business class residential 2 079 26.6% 72 620 39.1% Operating offices 25 0.3% 5 605 3.0% Commercial 88 1.1% 18 773 10.1% Total 7 815 100% 185 561 100%

BY STAGE NSA (TH. M2) % OF TOTAL MARKET VALUE, RUB MLN % OF TOTAL

Completed 92 1.2% 21 695 11.7% Design 966 12.4% 27 422 14.8% Concept development 3 027 38.7% 27 925 15.0% Construction 3 706 47.4% 102 914 55.5% Operating offices 25 0.3% 5 605 3.0% Total 7 815 100% 185 561 100%

BY REGION NSA (TH. M2) % OF TOTAL MARKET VALUE, RUB MLN % OF TOTAL

St Petersburg 5 212 66.7% 94 776 51.1% Moscow 1 875 24.0% 79 053 42.6% Yekaterinburg 699 8.9% 7 763 4.2% Germany 29 0.4% 3 969 2.1% Total 7 815 100% 185 561 100%

Source: Knight Frank report as of 31. December 2018

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SLIDE 14

Appendix

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Operating offices 0.3% Completed 1.2% Construction stage 47.4% Design and concept stage 51.1% Enough for 5 years of development1

LSR Group: leading Russia’s residential real estate for 25 years

15 LARGE LAND BANK A LEADING PLAYER IN KEY STRATEGIC MARKETS BALANCED CUSTOMER EXPOSURE SCALABLE LAND BANK SHAREHOLDER VALUE CREATION

#1 in St. Petersburg

RUB 36.3 BILLION

Distributed in dividends

  • ver the last 5 years

8 YEAR TRACK RECORD

Of dividend payments supported by well-invested cash generative building materials business

PAYOUT RATIO AROUND 80%

Average payout ratio since 2010

#3 in Moscow

ONE OF THE ONLY RUSSIAN DEVELOPERS WITH SIGNIFICANT PRESENCE IN KEY REGIONS 7.8 MILLION m2 OF NET SELLABLE AREA WITH MARKET VALUE OF RUB 186 BILLION STRONG FOCUS ON SHAREHOLDER RETURNS THROUGH DIVIDENDS

#1 in Yekaterinburg

LEADING POSITION

PRESENCE IN THE MASS MARKET, BUSINESS AND ELITE SEGMENTS

1 2 3 4

By area

STABLE DIVIDENDS FLOW HIGH QUALITY PORTFOLIO

By value Operating

  • ffices 3.0%

Commercial 10.1% Elite 11.8% Business Class 39.1% Mass market 36.0%

Note: respective rankings on market position are based on m2 under construction as of 31.12.2018.

1Assuming construction of 888 m2 per annum (2018 completions)

Source: Company data, ERZ, Knight Frank report as of 31. December 2018

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SLIDE 16

Selected projects: ZILART

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MOSCOW SEPTEMBER 2017 FEBRUARY 2019

1,010K m2

Total NSA

828K m2

Unsold NSA Open Market Value

RUB 34,928 M

Source: Knight Frank report as of 31. December 2018

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SLIDE 17

Selected projects: Luchi

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MOSCOW JANUARY 2017 FEBRUARY 2019

542K m2

Total NSA

236K m2

Unsold NSA Open Market Value

RUB 10,091 M

Source: Knight Frank report as of 31. December 2018

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SLIDE 18

Selected projects: Novaya Okhta

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  • ST. PETERSBURG

NOVEMBER 2017 FEBRUARY 2019

765K m2

Total NSA

117K m2

Unsold NSA Open Market Value

RUB 4,428M

Source: Knight Frank report as of 31. December 2018

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SLIDE 19

Selected projects: Tsvetnoy Gorod

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  • ST. PETERSBURG

NOVEMBER 2017 FEBRUARY 2019

1,037K m2

Total NSA

877K m2

Unsold NSA Open Market Value

RUB 9,114 M

Source: Knight Frank report as of 31. December 2018

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Selected projects: Michurinsky

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271K m2

Total NSA

88K m2

Unsold NSA Open Market Value YEKATERINBURG MARCH 2017 FEBRUARY 2019

RUB 1,526 M

Source: Knight Frank report as of 31. December 2018

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Key Operating Results

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REAL ESTATE1 4Q 2017 4Q 2018 Change % 4Q 2018

ADJUSTED

2017 2018 Change, % 2018

ADJUSTED

New contract sales, th. m2 216 300 39% 319 640 920 44% 1 002 Completed, th. m2 690 739 7% 818 909 888 (2%) 1 009 Real Estate - St. Petersburg New contract sales, th. m2 146 193 32% 200 407 562 38% 599 Completed, th. m2 466 550 18% 589 607 644 6% 715 Real Estate – Moscow New contract sales, th. m2 36 64 78% 73 122 199 63% 236 Completed, th. m2 182 114 (38%) 153 193 114 (41%) 153 Real Estate – Yekaterinburg New contract sales, th. m2 35 44 27% 46 110 159 45% 167 Completed, th. m2 42 76 79% 76 109 131 20% 140 BUILDING MATERIALS1 Product 4Q 2017 4Q 2018 Change % 2017 2018 Change, % Crushed granite, th. m3 1 445 1 760 22% 5 975 7 540 26% Sand, th. m3 1 992 2 665 34% 7 564 10 699 41% Ready-mix concrete, th. m3 243 274 13% 1 052 1 135 8% Bricks, million units 62 71 15% 290 300 4% Reinforced concrete, th. m3 60 27 (55%) 234 160 (32%) Aerated concrete, th. m3 310 313 1% 1 509 1 418 (6%)

1 Operating results in these tables are rounded to whole numbers, % change calculations are based on the full figures

*ADJUSTED figure including parking at a conversion rate of 30 m2 per parking lot Source: Company information

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SLIDE 22

Contacts

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For more information please contact: Igor Tsoy Director of Investor Relations and Sustainable Development E-mail: IR@lsrgroup.ru