Lsr · RUS:LSRG
Lsr — H1 2018 Earnings Presentation
35 slides from Lsr's earnings presentation, August 2018
Slide 1: 1H 2018 Financial Results
1H 2018 Financial Results August 2018
Slide 2: Disclaimer
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 part of and should not be construed as, an offer to sell or issue or the solicitation of an o
Slide 3: 1H 2018 Financial Results Highlights
1H 2018 FINANCIAL RESULTS HIGHLIGHTS • Revenues reached RUB 51.7bn, up 27% YoY, primarily driven by robust performance across all regions of presence (Saint- Revenue Petersburg, Moscow, Yekaterinburg) Adjusted EBITDA • Adjusted EBITDA surged by 28% YoY to RUB 9.5bn and margin • Adjusted EBITDA margi
Slide 4: Revenue and Adjusted EBITDA Breakdown
REVENUE AND ADJUSTED EBITDA BREAKDOWN • Revenue amounted to RUB 51.7bn, up 27% YoY, with adjusted EBITDA demonstrating robust growth of 28% YoY • Adjusted EBITDA margin stood at 18% while operating profit margin was 11% • Growth primarily driven by strong performance across all regions (Saint-Peters
Slide 5: Real Estate Development Segment Performance
REAL ESTATE DEVELOPMENT SEGMENT PERFORMANCE KEY DEVELOPMENTS REVENUE AND ADJUSTED EBITDA DYNAMICS (RUB M) Revenue Adjusted EBITDA • In 1H 2018 Real Estate segment revenue increased by 27% to RUB 37.9bn +27% +27% 9 308 • Real Estate adjusted EBITDA rose to RUB 9.3bn (27% YoY), with adjusted 37 889 7
Slide 6: Building Materials Segment Performance
BUILDING MATERIALS SEGMENT PERFORMANCE KEY DEVELOPMENTS • In 1H 2018 the sales revenue of building materials division increased by 9% to RUB 8,658m • Adjusted EBITDA increased by 16% to RUB 1,668m with margin up to 19% level • Crushed granite is driven by the increased sales to M-11 highway • Sand i
Slide 7: Maintaining Strong Balance Sheet
MAINTAINING STRONG BALANCE SHEET COMPANY DEBT SNAPSHOT COMPANY DEBT COMPOSITION (AS OF 30-JUN-2018) • Total debt up to RUB 77.5bn, as of 30 June 2018 Total: RUB72.8bn Bank debt: RUB 62.5bn • The average interest rate down to 8.59% as compared to 9.1% as of 1% December 2017 9% 19% • Net debt down to
Slide 8: Sustainable Dividend Policy
SUSTAINABLE DIVIDEND POLICY • Dividend policy of LSR Group is developed in accordance with the existing Russian legislation, the company’s charter and internal regulations of LSR Group DIVIDEND POLICY • Recommended amount of dividend payments is determined by the BoD based on the company’s annual fi
Slide 9: Market Update
MARKET UPDATE
Slide 10: Introduction of federal law 2018
Introduction of federal law 2018 FORMER REQUIREMENTS NEW REQUIREMENTS MARKET OUTLOOK TO PRE-SALES TO PRE-SALES Construction permit Benefitting LSR received before One bank account per 1 July 2018 construction permit 1 • Starting from 2H 2018, significant Receiving construction permit One constructio
Slide 11: Macro factors: Affordability and pricing
Macro factors: Affordability and pricing AFFORDABILITY AT MAXIMUM LEVELS • On the back of falling mortgage rates and real estate prices easing, the affordability of housing has reached its all-time high levels • Primary market prices have been relatively flat lately • Consumers are becoming more and
Slide 12: Macro factors: Mortgage lending and rates dynamics
Macro factors: Mortgage lending and rates dynamics KEY DEVELOPMENTS AVERAGE MORTGAGE RATE IN RUSSIA1 • 1H 2018 saw 663.4 thousand mortgage loans issued (up 57% YOY) 16,00% worth RUB 1.31 trillion (up 69% YOY) 15,00% • Mortgage rates continue to decrease and reach record low levels 14,00% which in it
Slide 13: Macro factors: Mortgage affordability outlook
Macro factors: Mortgage affordability outlook SENSITIVITY OF MONTHLY MORTGAGE BREAKDOWN OF EMPLOYED POPULATION INCREASING MORTGAGE AFFORDABILITY PAYMENT (RUB) OF RUSSIA BY MONTHLY SALARY1 Down payment • According to our estimates, at 9.68% (current RUBk 20% 25% 30% 35% average rate) only c.10% of Ru
Slide 14: Appendix
APPENDIX
Slide 15: Investment highlights
Investment highlights RIGHT INDUSTRY RIGHT BUSINESS MODEL • Supportive macroeconomic trends with falling interest rates • Truly federal level developer with leading positions across key and increasing housing affordability markets presented in all residential housing market segments • Positive regul
Slide 16: Strategy
Strategy • Customers tend to focus more on apartment location and quality of common areas • Gradual decreasing of average unit size as customers are now more focused on price per unit vs. price ADAPTING TO per sqm leading to higher demand for smaller apartments LATEST TRENDS - Average size of unit d
Slide 17: LSR Group: Adapting to new customer
LSR Group: Adapting to new customer INDICATIVE EVOLUTION OF APARTMENT PLAN INITIAL PROJECT AFTER ADJUSTMENTS KEY FACTS Three-room apartment Three-room apartment 101 m2 86 m2 Projects affected - Zilart, Tsvetnoy Gorod, Ruchi, Civilization, New Okhta and others Changes implemented - Complete redesign
Slide 18: Business Structure
Business Structure • We have 13 business units with a total staff of nearly 15 thousand employees • We do full cycle of design, production and construction of mass-market projects Real Estate and Construction Building Materials Real Estate Development Construction Aggregates Building Materials Busin
Slide 19: Company Factors: Real estate Market Positions
Company Factors: Real estate Market Positions Housing Under Construction Saint-Petersburg Moscow Urals Elite Business Mass-Market Business Mass-Market Mass-Market Real Estate Real Estate Real Estate* Real Estate Real Estate Real Estate №1 №2 №1 №3 №6 №3 9% 19% 7% 4% 9% 49% Housing Completions Saint-
Slide 20: Company Factors: Building Materials Market Positions
Company Factors: Building Materials Market Positions Saint-Petersburg Sand Crushed Granite Ready-Mix Concrete №1 №1 №1 20% 41% 51% Reinforced Concrete Bricks Aerated Concrete №1 №1 №1 24% 50% 64% Source: Company Note: Volume terms 20
Slide 21: Management Team
Management Team Maxim Sokolov CEO, Chairman of the Executive Committee Evgeny Yatsyshin Vasily Kostritsa Leonid Sorokko Dmitry Kutuzov Yuri Ilyin Galina Volchetskaya First Deputy CEO Deputy CEO Deputy CEO CFO Managing Director Executive Director Real Estate Building Materials Construction Developmen
Slide 22: Board of Directors
Board of Directors Executive directors Andrey Molchanov Dmitri Gontcharov Maxim Sokolov Deputy Chairman of BoD Chairman of BoD CEO, Chairman of the Managing Director Executive Committee LSR Europe GmbH Independent & non-executive directors Aleksey Makhnev Andrey Nesterenko Vitaly Podolsky Alexandr P
Slide 23: Project Pipeline 2018
Project Pipeline 2018 • New launches to the market in all three cities to total 890 thousand m2 in 2018 vs 800 thousand in 2017 • Saint-Petersburg accounts for almost 65% of new launches by volume Shuvalovsky (mass-market) Civilization (mass-market & business) Tsvetnoy gorod (mass-market) Ruchyi-7 (
Slide 24: Group Portfolio Amounts to RUB 185 Billion
GROUP PORTFOLIO AMOUNTS TO RUB 185 BILLION VALUE OF OUR LAND BANK INCREASED BY RUB 42 BILLION BREAKDOWN BY GEOGRAPHY X% - market value for assets in key cities1 as % of total 31 Dec 2016 31 Dec 2017 Operating Commercial Operating Russia Germany Commercial offices Majority of increase offices 5.6% 5.
Slide 25: Portfolio Overview
PORTFOLIO OVERVIEW PORTFOLIO BREAKDOWN NSA MV by net sellable area by market value Region % of total % of total (‘000m2) (RUB mn) St. Petersburg and Yekaterinburg Germany Yekaterinburg Germany 5,832 67.8% 109,338 59.0% 3,4% BY REGION Leningrad region 10,0% 0,3% 1,0% Moscow and Moscow region 1,874 21
Slide 26: LSR real estate projects pipeline – St. Petersburg
LSR real estate projects pipeline – St. Petersburg Net unsold area, m² 2018 2019 2020 2021 2022+ Elite 1 Russkiy Dom Korolenko St., 5, 5A 15 595 2 Verona Morskoy Pr,, bld. 29, lit. A 4 152 3 Petrovskiy ostrov Bavaria Petrovskiy Pr. 9, 11 83 189 4 Petrovskiy ostrov REB Flota Remeslennaya St., 17 116
Slide 27: LSR real estate projects pipeline – Moscow and Yekaterinburg
LSR real estate projects pipeline – Moscow and Yekaterinburg Net unsold area, m² 2018 2019 2020 2021 2022+ Business Class (Moscow) 1 Leningradskoe shosse, 58 Leningradskoe Highway, 58 53 575 2 Zilart Avtozavodskaya St. 23 838 095 3 ZiL Yug Avtozavodskaya St. 23 485 301 Mass Market (Moscow) 4 Luchi (
Slide 28: 1H 2018 Operating Results Highlights
1H 2018 OPERATING RESULTS HIGHLIGHTS • In 1H 2018 we entered into new contracts for the sale of 358 th sqm (+40% YoY) with a total value of RUB 34 bn (+34% YoY) o Average price per sqm in 2Q was RUB 97 th o 261 th sqm launched during 1H o Completions amounted to 102 th. sqm o In 1H 2018 the share of
Slide 29: Operating Guidance 2018: Real Estate
OPERATING GUIDANCE 2018: REAL ESTATE NEW CONTRACT SALES (TH. SQM) NEW CONTRACT SALES (RUB BN) +31% +35% 840 88,0 640 65,3 2017 2018 2017 2018 NEW LAUNCHES (TH. SQM) COMPLETIONS (TH. SQM) +5% +13% 880 950 909 780 2017 2018 2017 2018 Source: company information 29
Slide 30: Operating Guidance 2018: Building Materials
OPERATING GUIDANCE 2018: BUILDING MATERIALS CRUSHED GRANITE (mn m3) REINFORCED CONCRETE (th. m3) BRICKS (mn units) +14% - +10% 6,8 320 234 234 6,0 290 2017 2018 2017 2018 2017 2018 SAND (mn m3) READY-MIX CONCRETE (th. m3) AERATED CONCRETE (th. m3) +27% -5% -11%1 1 052 1 000 9,6 1 509 7,6 1 350 2017
Slide 31: Building Materials: Financial Results by Product
BUILDING MATERIALS: FINANCIAL RESULTS BY PRODUCT CRUSHED GRANITE (RUB M) REINFORCED CONCRETE (RUB M) BRICKS (RUB M) Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA +27% +57% -45% -5% -17% 1 387 390 1 684 1 503 1 323 325 143 1 312 276 -94 826 176 1H 2017 1H 2018 1H 2017 1H 201
Slide 32: IFRS 15 – new revenue recognition standard
IFRS 15 – new revenue recognition standard in place starting 1 January 2017 REVENUE RECOGNITION Former IFRS IFRS 15 One-time recognition Revenue recognition occurs when the performance obligation is satisfied, i.e., when control over the relevant good or service is transferred to the customer Recogn
Slide 33: Key Operating Results
KEY OPERATING RESULTS REAL ESTATE1 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 1H 2017 1H 2018 Change, % New contract sales, th. sqm 140 117 167 216 160 198 257 358 40% Completed, th. sqm 81 100 38 690 14 88 182 102 (44%) St. Petersburg New contract sales, th. sqm 85 67 110 146 89 116 151 206 36
Slide 34: Key Financials
KEY FINANCIALS 2015 2016 2017 1H 2017 1H 2018 Change, % Revenue, RUB m 91,730 106,524 138,494 40,666 51,696 27% Adjusted EBITDA, RUB m 23,532 27,750 36,845 7,452 9,537 28% Adjusted EBITDA, % 25.7% 26.1% 26.6% 18% 18% - Operating profit, RUB m 13,763 14,031 22,444 3,142 5,573 77% Operating profit, %
Slide 35: Contacts
Contacts For more information please contact: Yuri Ilyin Managing Director Mob.: +7 921 958 23 63 Tel.: +7 (812) 320 56 53 [email protected] You can watch the construction progress of all our projects in a free mobile app: 35