INVESTO INVESTOR R PRE PRESENT SENTATIO TION
MOSCOW EXCHANGE FORUM April 2019
INVESTO INVESTOR R PRE PRESENT SENTATIO TION MOSCOW EXCHANGE - - PowerPoint PPT Presentation
INVESTO INVESTOR R PRE PRESENT SENTATIO TION MOSCOW EXCHANGE FORUM April 2019 DISCLAI DISCLAIMER MER By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to the bound by the following
MOSCOW EXCHANGE FORUM April 2019
2
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 an offer or the solicitation of an offer to subscribe for, 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, nor does it purport to give legal, tax or investment
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. The information in the presentation/this document does not purport to be comprehensive. 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
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. 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, the timely development and acceptance of new products, the impact of competition and competitive pricing, the effect of changes in applicable law, the ability to obtain necessary regulatory approvals and the ability to fund our future operations and capital needs through borrowing or
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
business and global economic conditions. The foregoing assumptions and qualifications apply in particular (but are in no way limited to) slides 19 and 20 of this presentation, which present forward-looking data with respect to (i) the real estate business (including with respect to projected contract sales, completions and new launches in 2018) and (ii) the building materials business (including with respect to projected sales of crushed granite, reinforced concrete, bricks, sand, ready-mix concrete and aerated concrete). Under no circumstances shall this document constitute an offer to sell or a solicitation to buy securities in any jurisdiction, including the United States of America, Australia, Canada, Japan, South Africa, and nothing in this document should be construed as a recommendation or advice to any person to purchase any securities. The distribution of this presentation in some jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions.
3
TRUE FEDERAL PLAYER BALANCED CUSTOMER EXPOSURE SCALABLE LAND BANK SHAREHOLDER VALUE CREATION
RUB 36 BILLION
Distributed in dividends
8 YEARS IN A ROW
Of dividend payments supported by well-invested cash generative building materials business
PAYOUT RATIO >80%
Average payout ratio since 2010
ONE OF THE ONLY RUSSIAN DEVELOPERS WITH SIGNIFICANT PRESENCE IN KEY REGIONS OVER 7.8 MLN SQM OF NET SELLABLE AREA WITH MARKET VALUE OF RUB 186 BN STRONG FOCUS ON SHAREHOLDER RETURNS THROUGH DIVIDENDS
LEADING POSITION
PRESENT IN MASS MARKET, BUSINESS AND ELITE SEGMENTS
Source: Company information; portfolio structure per segment as of 31.12.2018 Note: respective rankings on market position are based on m2 under construction as of 01.01.2019 for each city; ERZ 1 Calculated on the basis of Design and Concept stage of land bank (c. 51% of total NSA) and assuming construction of 888 th. sqm per annum (result for 2018)
DIVIDEND TRACK RECORD
PRESENT IN MASS MARKET, BUSINESS AND ELITE SEGMENTS
LARGE LAND BANK
Design & concept stage 51% Construction stage 47% Enough for 5 years of development1
By area
HIGH QUALITY PORTFOLIO
Operating offices 0.3% Completed 1% Moscow 42.6%
51.1% Other 2.1%
By value
Yekaterinburg 4.2% Elite 11.8% Business 39.1% Other 13.1% Mass market 36.0%
4
Supportive market backdrop
presence
Stabilised regulation
model
Product changes started paying off
Back to positive cash flow
Solid landbank sufficient for further growth
Note: 1 Cash flows from operations before income taxes and interest paid
5
RUB186BN GROUP PORTFOLIO
Land bank valued at RUB186bn 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 1,0023 th. sqm up, 44%4 YoY Total value of RUB93bn3, up 38%4 YoY Completions in 2018 totaled 1,0093 th. sqm Operating cash flow
1 of RUB30bn,
9.0x increase YoY Net debt down 30% to RUB30.3bn Net Debt / adjusted EBITDA of 0.83x Revenue of RUB146.4bn, up 6% YoY
25%) Profit for the year of RUB16.2bn, up 2% YoY
SOLID PERFORMANCE STRONG CASH POSITION RECORD HIGH NEW CONTRACT SALES
¹ Cash flow from operations before income taxes and interest paid; 2 Hereinafter 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 With 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
7
Source: Company information
rates and increasing housing affordability
lead by a smaller number of professional and highly reputable homebuilders
and infrastructure
RIGHT GHT IND NDUST USTRY
markets presented in all residential housing market segments
proposition following latest market trends
housing package
perspective
RIG RIGHT HT BUS BUSINE NESS MODEL MODEL STRONG ONG LE LEADERSHI HIP RIGHT GHT POI OINT NT IN N CYCLE LE
capital structure
construction sector
governance system with majority share of INEDs
focused on strategic development
adjusting its product offering in all segments leading to more compelling value proposition to support long term growth
forward
business
8
19.1 24.3 28.0 32.0 34.0 38.7 40.4 Moscow Saint Petersburg Zagreb Paris Helsinki Zurich Rome 4.8% 1.2% 1.5% 0.4% 1.6% 1.1% 0.2% 1.5% 1.3%
10 15 20 25 30 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Moscow Saint Petersburg Other regions
GROWING POPULATION AND LOW UNEMPLOYMENT IN KEY CITIES LOW HOUSING STOCK PER CAPITA2 SIZABLE DEPOSIT BASE REGISTERED DEALS IN SAINT PETERSBURG AND MOSCOW (THS.)3
Household deposits (RUB & foreign currencies), RUB trillion Source: CBR SPB Moscow Russia Population growth (CAGR ‘06-’18)(1) Employed population growth (CAGR ‘06-’18) Unemployment rate (2018) Source: Rosstat Average w/o Russia: 34.6 sqm per capita 45% 30% Source: Rosstat, Eurostat Note: 1 Calculated via dividing total housing stock by population; 2 Average area of living accommodation for European countries (for 2017, Moscow and Saint Petersburg for 2018); 3 Includes DDU and buy-sell contracts Source: Rosreestr
1 1
Jan-19
35 42 37 47 34 45 43 57 46 56 58 77 27 35 30 36 27 35 39 44 36 44 41 47 61 77 68 83 61 79 81 101 82 100 98 123 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Moscow Saint-Petersburg +11% YoY +26% YoY
9
25% 35% 45% 55% 65% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 346 420 405 498 509 852 927 1,333 115 281 260 311 264 397 383 370 461 701 665 808 773 1,249 1,309 1,704 1H 2015 2H 2015 1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 Secondary market Primary market 6% 20% 38% 42% 46% 81% 9.66% 7.75% 5% 7% 9% 11% 13% 15% 17% 19% Jan-10 Jul-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18 Average mortgage rate Key rate Source: CBR, AIZhK, EMF Source: CBR
AVERAGE MONTHLY WAGE PER AVERAGE SQM PRICE SHARE OF MORTGAGE TRANSACTIONS IN LSR SALES2 AVERAGE MORTGAGE RATE IN RUSSIA1 MORTGAGE LOANS ISSUED, RUB bn
Source: Company information Note: 1 Weighted average interest rate on mortgage loans given to residents in Russia during the month for acquisition of apartments on the primary market; 2 By number of contracts; 3 Mortgages and residential loans for some countries; 4 Latest available data
(CBR data)
Mortgage3 as % of GDP4
20% 50% 23% 55% 0% 10% 20% 30% 40% 50% 60% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Moscow Saint Petersburg Source: Rosstat
government programmes
affordability of housing has reached its all- time high levels
reached 53% in 2018
10
15.2% 27.8% 19.1% 17.0% 12.1% 4.3% 4.0% 0.5% 5.8 - 13.8 13.8 - 25.0 25.0 - 35.0 35.0 - 50.0 50.0 - 75.0 75.0 - 100.0 100.0 - 250.0 Over 250.0
Source: Rosstat
SENSITIVITY OF MONTHLY MORTGAGE PAYMENT (RUB) BREAKDOWN OF EMPLOYED POPULATION OF RUSSIA BY MONTHLY SALARY1
Source: Company analysis
INCREASING MORTGAGE AFFORDABILITY REQUIRED SALARY FOR MORTGAGE APPROVAL (RUB) Down payment 20% 25% 30% 35% Mortgage rate 10.0% 34,387 32,238 30,089 27,940 9.0% 32,457 30,428 28,399 26,371 8.0% 30,581 28,670 26,758 24,847 7.0% 28,763 26,965 25,167 23,370 Down payment 20% 25% 30% 35% Mortgage rate 10.0% 68,775 64,476 60,178 55,879 9.0% 64,913 60,856 56,799 52,742 8.0% 61,162 57,339 53,517 49,694 7.0% 57,525 53,930 50,334 46,739
following: – Apartment price of RUB 4.0 m – Duration of mortgage of 15 years
afford mortgage at an interest rate of 9.7% (current average rate) for an average mass market apartment (Company estimates)
mortgage percentage point change
mortgage rate to 8% in the next coming years
base in the following way:
has monthly salary in the range of RUB 50.0-75.0 thousand
range of RUB 35.0-50.0 thousand
amounted to c.72m people2
mortgage payment by 2.0x
RUBk
Mortgage rate Upside to customer base Extra 5% of working population
Extra 8% of working population +50% to existing customer base +130% to existing customer base
Source: Company analysis Note: 1 Data as of April 2017; 2 Average for 2016
11
from new escrow system currently being discussed:
rate
as mandatory contributions to compensation fund, limitations with regards to construction permits, project costs, etc.) will no longer apply to those who operate within the escrow system
incoming funds from sales
to developers after project commissioning
credit lines at a 3%-6%1 interest rate backed by escrow accounts Ability to sell under “old” rules (DDU) Escrow accounts system After 1 July 2019 Before 1 July 2019 LSR READY FOR THE CHANGES Aligned operations with new legislative requirements LSR is in active negotiations and discussions with the banks around the new framework in view of the upcoming changes
Source: Company information, public sources Note: 1 Company information
Project financing via receipt of funds under DDU with customers
Present cost of borrowing
Expected interest rate under project financing
1
12
Source: Company information, Rosstat, valuation report as of 31.12.2018, erzrf.ru Note: Respective market positions of LSR Group are presented on completions basis for 2018 and on housing under construction basis as of 01.01.2019; 1 Rosstat data as of 2017. Respective position is calculated on the basis of ranking vs. all presented Russian regions and towns. Position for Yekaterinburg is presented for Sverdlovsk region; 2 Based on completions for 2018; 3 Company estimates
FEDERAL PLAYER PRESENT IN KEY REGIONS PRESENCE IN ALL MARKET SEGMENTS
Mass-ma marke rket
MSK | SPB | Yekat
RUB 67 67bn bn RUB 73bn bn RUB 22bn bn MV: MV:
WELL POSITIONED TO BENEFIT FROM MARKET CONSOLIDATION RECOGNITION AMONG PROFESSIONALS
RUB 85th.
per sqm3: RUB 182th. RUB 240th.
Yekaterinburg Moscow
Ci City LSR SR market position #2 by population #8 by disposable income1 #1 by completions #1 by housing under construction
TOP-10 players account for 16% market share2
share of TOP-10 real estate developers in Russia2
Real Estate market in Russia is considered fragmented with total number of developers exceeding 1,700 TOP-10 developers2 (with LSR being #2) account for less than 16% market share Key players including LSR are in strong position to benefit from the upcoming market consolidation supported by changes in legislation and rationalization of the market
Business
MSK | SPB
El Elite te
SPB
NEVA HAUS: BEST MID-RISE RESIDENTIAL COMPLEX 2018 Ci City LSR SR market position #1 by population #4 by disposable income1 #11 by completions #3 by housing under construction Ci City LSR SR market position #4 by population #17 by disposable income1 #1 by completions #1 by housing under construction LUCHI IS A WINNER OF RREF AWARDS 2018 VERONA AND NEVA HAUS: BEST PROJECTS 2018 LEADING CORPORATE GOVERNANCE 2018
RELIABLE CONSTRUCTOR 2018 RIVIERE NOIRE: BEST BUSINESS CLASS PROJECT 2018
13
implemented within a comprehensive development plan offers higher quality of living generating sales exceeding 210 units per month
infrastructure
residential complex in a well-developed neighborhood
Completion by 2024
Land plot – 59 ha Start of pre-sales – March 2016 Total NSA – 836 th m²
Completion by 2033
Land plot – 363 ha Start of pre-sales – June 2016 Total NSA – 2,392 th m²
month
business class multi-storey buildings
subway station and a quick car drive to the Moscow city centre
Completion by 2026
Land plot – 39 ha Start of pre-sales – February 2016 Total NSA – 542 th m²
Source: Company information Note: NSA stands for net sellable / leasable area excluding parking lots
CIVILIZATION (SAINT PETERSBURG) TSVETNOY GOROD (SAINT PETERSBURG) LUCHI (MOSCOW)
14
Source: Company information Note: 1 Net Debt / EBITDA for 2015 and 2016 was restated according to latest changes in accounting principles; 2 Actual dividend payments are usually exercised the following year
HIGH PAYOUT RATIO ON THE BACK OF LOW LEVERAGE OVER RUB 33 BILLION DISTRIBUTED IN DIVIDENDS SINCE 2010 STRONG AND CONSISTENT FOCUS ON SHAREHOLDERS RETURN
St Strong t track record Divi Dividend poli policy
reinvestment purpose
1 545 2 061 2 061 4 121 8 036 8 036 8 036 8 036 15 20 20 40 78 78 78 78 2010 2011 2012 2013 2014 2015 2016 2017
Dividends payed out, RUBmm Dividends per share, RUB
3,5x 3,3x 2,7x 2,4x 0,1x 0,5x 1,1x 1,2x 0,8x 89% 85% 42% 125% 87% 75% 88% 51% 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net Debt/EBITDA Payout ratio
without a single interruption even during investment peak years
improving leverage profile
2 1
15
KEY MANAGEMENT TEAM MEMBERS COMPOSITION OF BOARD OF DIRECTORS
Eugeny Yatsyshin
First Deputy CEO Head of real estate development
Vasily Kostritsa
Head of Building Materials
CORPORATE GOVERNANCE STRUCTURE
Dmi Dmitri Gontcharov Member of the Strategy and Investment Committee
And Andrey y Molchanov
Chairman
Maxim m So Sokolov CEO
GENERAL MEETING OF SHAREHOLDERS EXECUTIVE COMMITEE CEO MANAGE ANAGEMENT NT
BOARD OF DIR IRECTORS
Audit commitee HR and compensations committee Independent Auditors Strategy and Investment Committee
Al Alexander Pr Prysyazhnyuk Member of BoD commitees
Dmitry Kutuzov
Chief Financial Officer
Leonid Sorokko
Deputy CEO for Construction Head of Construction unit
Vi Vitaly Po Podolsky Chairman of HR and Compensation, member of Audit and Strategy committees
INED
An Andrey Nesterenko Chairman of the Strategy and Investment Committee
the construction industry
INED
Galina Volchetskaya
Executive Director
Maxim Sokolov
CEO
Al Alexey Makhnev Chairman of Audit, member of Audit and Strategy committees
INED INED
Source: Company information
16
ADAPTING TO LATEST TRENDS
possible additionally driving demand for fit-out apartments in economy class
leading to higher demand for smaller apartments (c. 15% decrease vs. initial floor plans)
service company (LSR has in-house service company in select projects)
1 ZILART – SOUND PLAYER IN MOSCOW BUSINESS SEGMENT
recently launched park zone “Tyfeleva Rosha” considered to be one of the best in Moscow
2 BALANCED DEVELOPMENT PIPELINE
mass-market segments while maintaining target construction volumes
depending on legislation and market environment
3 HIGH QUALITY BUILDING MATERIALS BUSINESS
positions in the regions in which we operate where there are substantial barriers to entry
maintenance capex requirements
4
Source: Company information Note: 1 As of 2018 according to Metrium agency
17
101 m2 86 m2
Source: Company information
Floor Floor area area adjustme stments ts Fit-out t apart rtme ments ts integ tegrati ration Quality ty public are reas In In-house se ma manageme ment se servi rvice
INITIAL PROJECT
Three-room apartment
AFTER ADJUSTMENTS
Three-room apartment Large common area Elongated rooms Squared rooms Reduced common area
Separated parking lots and pedestrian areas
1 2
Quality entrance zones
3
Proximity to parks and promenades Cleaning Infrastructure maintenance Decoration repair works Security
18
PROJECT OVERVIEW KEY FACTS
GENERAL PRE-SALES RESULTS
Apartments & other lots Area sold Project status
>2,500pcs >180th. sqm
Revenue up-to-date
>RUB 30bn
Total area
Net sellable area1
End of construction
Source: Company information, pre-sales results as of 31.12.2018 Note: 1 Including parking lots
Daily sales in Jan-Feb 2019 2.6 apartments
Gross area
Zilart is business class residential complex being constructed on the place of former car manufacturer plant ZiL It should become a perfect residential place for people valuing their comfort, proximity to office and cultural climate Strong support from Moscow government describing Zilart as “one
districts”
Moscow
19
SAINT PETERSBURG MOSCOW YEKATERINBURG
MORSKOY FACADE AEROPORT RZHEVKA NEVA ART
comprises of residential and commercials wings with NSA exceeding 500 th. sqm
with over 1mm sqm of NSA
commercial buildings with parking lots
Petrogradsky District, city center
underground parking and pre-school KRASNY MAYAK
variable number of floors (up to 23 floors) with a parking and commercial premises
sqm VIZ
residential development complex with over 1,200 parking lots
forest and lake
Business Mass-market Elite Business Mass-market
Source: Company information
20
SEGMENT STRUCTURE GENERAL OVERVIEW
Building Materials
Source: Company information Note: capacity data as of December 2018
LSR GROUP IS THE LARGEST BUILDING MATERIALS PRODUCER IN RUSSIA WITH FULL RANGE OF CONSTRUCTION SERVICES
Aggregates Building Materials
Total Building Materials, capacity Ready-mix concrete 1 563 th m³ Bricks 336 mn Aerated concrete 1 665 th m³ Reinforced concrete 114 th m³ Aggregates Reserves Sand 374 mn m³ Crushed granite 549 mn m³ Tower Cranes Tower Cranes 190 units Crushed Granite Sand Ready-mix Concrete Reinforced Concrete Bricks Aerated Concrete Tower Cranes
in ceramic bricks segment
in sand segment
in aerated concrete, ready-mix concrete, ceramic bricks, crushed granite and sand segments.
RUSSIA NORTH-WEST REGION
and high EBITDA margins of up to 25%
regions
pressure from foreign producers
22
Source: Company information Note: 1 RUB3.1bn one-off profit recognition in 2017, following a land plot sale (Energetikov 9) in St. Petersburg
Revenue
(Saint-Petersburg, Moscow, Yekaterinburg) Adjusted EBITDA1 and margin
Net profit
Debt and leverage
Real Estate portfolio
Operating cash flow
23
90% 10% 84% 16% 86% 14% 87% 13% 87% 13% 83% 17%
91 155 159 2016 2017 2018 9,163 15,871 16,230 2016 2017 2018 27,750 36,845 36,400 2016 2017 2018 106,524 138,494 146,376 2016 2017 2018
Real Estate & Construction Building Materials
NET PROFIT DYNAMICS (RUB M) REVENUE DYNAMICS (RUB M) ADJUSTED EBITDA DYNAMICS (RUB M)
Source: Company information Note: 1 Breakdown before intergroup eliminations, unallocated income and expenses, other operations; 2 RUB3.1bn one-off profit recognition in 2017, following a land plot sale (Energetikov 9) in St. Petersburg
1
+6% +30% 25% 27% 26%
margin, %
11% 11% 9%
margin, %
Revenue Breakdown 1 Adjusted EBITDA Breakdown EPS Dynamics (RUB)
3,070 2
24
1,356 1,800 2,140 2016 2017 2018 5,889 8,463 9,218 2016 2017 2018 3,151 8,195 12,699 2016 2017 2018 23,283 31,101 38,397 2016 2017 2018 20,061 22,374 20,771 2016 2017 2018 47,985 71,559 68,639 2016 2017 2018 24,410 32,297 35,553 2016 2017 2018 77,262 111,216 116,592 2016 2017 2018
URALS MOSCOW SAINT PETERSBURG KEY DEVELOPMENTS
RUB116.6bn
adjusted EBITDA margin standing at 30%
Moscow revenue up 23% YoY, Urals – 9% YoY with slight decrease Saint-Petersburg of 4% YoY due to change in product mix
Revenue (RUB M) Adjusted EBITDA (RUB M) Revenue (RUB M) Adjusted EBITDA (RUB M) Revenue (RUB M) Adjusted EBITDA (RUB M) Revenue Adjusted EBITDA
REVENUE AND ADJUSTED EBITDA DYNAMICS (RUB M)
Source: Company information Note: 1 Includes LSR-Europe revenue of RUB220m; 2 Includes LSR-Europe EBITDA of RUB(79)m
1 2
32%
margin, %
29% 30% 42%
margin, %
31% 30% 14%
margin, %
26% 33% 23%
margin, %
21% 23%
25
2,569 5,002 2,758 2016 2017 2018 4,328 6,571 4,000 2016 2017 2018 17,177 17,362 19,144 2016 2017 2018
OPERATING PROFIT (RUB M) REVENUE DYNAMICS (RUB M)
in 2017, following a land plot sale (Energetikov 9) in St. Petersburg
ADJUSTED EBITDA DYNAMICS (RUB M)
Source: Company information Note: 1 RUB3.1bn one-off profit recognition in 2017, following a land plot sale (Energetikov 9) in St. Petersburg ; 2 Adj. EBITDA margin excl. one-off effect
KEY DEVELOPMENTS
+10% +1% 21% 38% 25%
margin, %
14% 29% 15%
margin, % 3,070 1
20%2 11%2
3,070 1
26
83% 17% 0.01%
5,333 5,803 29,910 38,305 6,350 187 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2020 2021 2022 2023+
COMPANY DEBT SNAPSHOT
Total: RUB86.1bn
Source: Company information
COMPANY DEBT COMPOSITION (AS OF 31-DEC-2018)
9.1% in 2017
positive; RAEX – ruA, outlook stable
DEBT MATURITY PROFILE (RUB M)
Bank and other loans Bond issues Finance lease liability
RUB11,336m
28
Source: Company information, Knight Frank as of 31.12.2018 Note: 1 LSR Group also has operations in Germany which are spread over Leipzig, Landshut and Munich yet MV of assets represents c.2% of total; 2 Unsold area excludes parking; 3 For projects located in Russia
RUB 185bn 31 Dec 2017
MV MV UNSOLD AREA2
Zilart rt
Moscow | Business
RUB UB 35bn 35bn 848 th. m2 RUB UB 12bn 12bn 532 th. m2
Mors Morskoy fac facade
SPB | Business
ha
TOTAL AREA OF LSR GROUP SITES YET TO BE SOLD AND LEASED IN OUR PROJECTS
th. RUB
VALUE PER SQM FOR UNSOLD NSA
projects
IN ALL MARKET SEGMENTS3
th. sqm
Business class 37.8% Mass- market 40.9% Elite 13.0% Commercial 5.6% Operating
2.6%
Yekaterinburg Moscow
51% 42% 4%
Russia
RUB UB 14bn 14bn 2,232 th. m2
Tsv svetn tnoy Gorod
SPB | Mass-market
VALUE OF OUR LAND BANK REMAINED BROADLY FLAT BREAKDOWN BY GEOGRAPHY TOP-4 PROJECTS BY VALUE KEY FACTS RUB 186bn 31 Dec 2018
Commercial 10.1% Mass- market 36.0% Elite 11.8% Business class 39.1% Operating offices 3.0%
RUB UB 9bn 9bn 116 th. m2
Neva va Art rt
SPB | Elite
New
29
PORTFOLIO BREAKDOWN
Mass-market 69,3% Elite 2,7% Business class 26,6% Commercial 0,3% Operating
1,1%
66,7% Moscow 24,0% Yekaterinburg 8,9% Other 0,4% Concept development 38,7% Design 12,4% Construction 47,4% Completed 1,2% Operating
0,3% Mass-market 36,0% Elite 11,8% Business class 39,1% Commercial 10,1% Operating
3,0%
Region NSA (‘000m2) % of total MV (RUB mn) % of total
Leningrad region 5,212 66.7% 94,776 51.1% Moscow and Moscow region 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% Property Sector NSA (‘000m2) % of total MV (RUB mn) % of total Mass-market 5,413 69.3% 66,729 36.0% Elite 210 2.7% 21,835 11.8% Business class 2,079 26.6% 72,620 39.1% Commercial 25 0.% 5,605 3.0% Operating offices 88 1.1% 18,773 10.1% Total 7,815 100% 185,561 100% Property Sector NSA (‘000m2) % of total MV (RUB mn) % of total Concept Development 3,027 38.7% 27,925 15.0% Designing 966 12.4% 27,422 14.8% Construction 3,706 47.4% 102,914 55.5% Completed 92 1.2% 21,695 11.7% Operating offices 25 0.3% 5,605 3.0% Total 7,815 100% 185,561 100%
BY REGION BY SEGMENT BY STAGE
51,1% Moscow 42,6% Yekaterinburg 4,2% Other 2,1% by net sellable area Operating
Source: Knight Frank, Company information as of 31.12.2018 Note: NSA – Net unsold sellable / leasable area without parking lots, MV – Market Value. NSA and MV include project Zil-South with NSA of 485 th. m2 and MV of RUB 9.8bn by market value by net sellable area by market value by net sellable area by market value Concept development 15,0% Design 14,8% Construction 55,5% Completed 11,7%
30
EVOLUTION OF LSR LAND BANK PORTFOLIO MARKET VALUE
103 777 124 364 119 921 117 218 135 151 136 038 143 764 185 466 185 561 2010 2011 2012 2013 2014 2015 2016 2017 2018
EVOLUTION OF VALUE PER SQUARE METER1
RUBmm
+20% (4%) +15% +1% +6% +29% (2%)
Source: Knight Frank, Company information as of 31.12.2018 Note: 1 Calculated as Market Value divided by Unsold NSA in the related segment
+0.1%
El Elit ite
74,0 103,9 104,1 2016 2017 2018
RUB ‘000
28,9 35,3 34,9 2016 2017 2018 12,3 12,1 12,3 2016 2017 2018
Bu Busi siness ss Mass ss-mar market
SPB SPB | MSK SPB | MSK | Yekat
32
909 888 2017 2018 65 90 2017 2018 640 920 2017 2018 97 103 96 109 94 98 100 99 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 4Q2018
AVERAGE PRICE (RUBk / SQM) COMPLETIONS (TH. SQM) NEW CONTRACT SALES (RUB BN) NEW CONTRACT SALES (TH. SQM)
regions of our
entered into new contracts for the sale of 920 th. sqm (+44% to 2017)
the contracts for the sale of apartments and
2018 was ca. RUB 90bn (up 38% to 2017)
completed 888 th. sqm of net sellable area
+44% +38% (2%)
Source: Company information Note: HoH and QoQ calculations are based on the rounded numbers (YoY calculations are based on the full figures); 1 Adjusted figure including parking at a conversion rate of 30 m2 per parking lot 1,0021 931 1,0091
33
851 1,080 748 2016 2017 2018 3,099 3,523 3,539 2016 2017 2018 102 155 517 2016 2017 2018 2,921 3,374 4,119 2016 2017 2018 768 692 1,333 2016 2017 2018 2,266 1,922 2,533 2016 2017 2018 1,061 878 365 2016 2017 2018 3,167 2,870 2,861 2016 2017 2018 730 3,132 (6) 2016 2017 2018 3,343 3,144 1,459 2016 2017 2018 817 631 577 2016 2017 2018 3,208 3,064 3,723 2016 2017 2018
CRUSHED GRANITE (RUB M) REINFORCED CONCRETE (RUB M) BRICKS (RUB M) AERATED CONCRETE (RUB M) SAND (RUB M) READY-MIX CONCRETE (RUB M)
Source: Company information Note: 1 RUB3.1bn one-off profit recognition in 2017, following a land plot sale (Energetikov 9) in St. Petersburg
Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA
15%
margin, %
n/a
margin, %
13%
margin, %
53%
margin, %
13%
margin, %
21%
margin, % 3,070 1
34
Andrey Molchanov Chairman of the Board of Directors
Education:
University
with a degree in State and Municipal Administration Experience:
Company till 2007
Federation Council of Russia’s Federal Assembly
Andrey Nesterenko INED, Chairman of the Strategy and Investment Committee Experience:
Education:
Dmitri Gontcharov Deputy Chairman of the Board of Directors, Member of the Strategy and Investment Committee Experience:
Education:
(Munich) Maxim Sokolov CEO, Chairman of the Executive Committee Experience:
Education:
Alexander Prysyazhnyuk INED, Member of Strategy and Investment Committee, Audit Committee of BoD, Member of Human Resources and Compensation Experience:
Committee of M.video PJSC Education:
Aleksey Makhnev INED, Chairman of Audit Committee
Resources and Compensation Committee Experience:
Investment Department of VTB Capital Education:
Vitaly Podolsky INED, Chairman of Human Resources and Compensation Committee, Member of Audit Committee of BoD Experience:
PJSC, Skoltech, ARMADA PJSC, FMF Capital Education:
School of Business
– Independent Director
Source: Company information Note: 1 Title granted by President of Russia 4 INEDs out of 7 Directors
35
Maxim Sokolov CEO, Chairman of the Executive Committee
Education:
Experience:
Strategic Projects of the Government of St Petersburg
Infrastructure of the Government of the Russian Federation
Committee of the Board of Directors of LSR Group
Member of the Board of Directors of LSR Group
Eugeny Yatsyshin Member of the Executive Committee, First Deputy
three regions Experience:
Petersburg Government in 2003-2005 Education:
Management Institute Galina Volchetskaya Member of the Executive Committee, Executive Director. Supervises directorates for legal affairs, information technologies, economic security and office management Experience:
Federation Education:
Leonid Sorokko Member of the Executive Committee, Deputy CEO for Construction. In charge of LSR Construction business units in three regions Experience:
ranging from specialist to CEO
Russia's Defense Ministry and Advisor to the Minister of Defense Education:
Source: Company information Note: 1 Title granted by President of Russia
Vasily Kostritsa Member of the Executive Committee, Deputy CEO for Building Materials Experience
member of the Commission for Construction, Transport, Communication and Roads Education:
Dmitry Kutuzov Member of the Executive Committee, Chief Financial Officer Experience:
Petersburg Education:
Petersburg International Management Institute (IMISP)
36
Source: Company information Note: 1 Operating results in these tables are rounded to whole numbers, calculations are based on the full figures; 2 Adjusted figure includes parking at a conversion rate of 30 m2 per parking lot
REAL ESTATE1 4Q 2017 4Q 2018 Change % 4Q 2018
ADJUSTED2
2017 2018 Change, % 2018
ADJUSTED2
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%)
37
2016 2017 2018 Change, %
Revenue, RUB m 106,524 138,494 146,376 6% Adjusted EBITDA, RUB m 27,750 36,845 36,400 (1%) Adjusted EBITDA, % 26.1% 26.6% 24.9% (6%) Operating profit, RUB m 14,031 22,444 24,798 10% Operating profit, % 13.2% 16.2% 16.9% 4% Profit for the year, RUB m 9,163 15,871 16,230 2% Operating cash flow, RUB m 2,338 3,358 30,248 801% 31.12.16 31.12.17 31.12.2018 Change, % Total debt, RUB m 55,695 72,786 86,088 18% Net debt, RUB m 30,065 43,073 30,290 (30%) Net debt/ adjusted EBITDA 1.08x 1.17x 0.83x (29%)
Source: Company information
38
38
For more information please contact: Igor Tsoy Director of Investor Relations and Sustainable Development Tel.: +7 495 537 8008 (ext. 45882) E-mail: IR@lsrgroup.ru You can watch the construction progress of all our projects in a free mobile app: