Lsr · RUS:LSRG
Lsr — Investor Presentation (January 2018)
34 slides from Lsr's investor presentation, January 2018
Slide 1: Investor Presentation January 2018
INVESTOR PRESENTATION January 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: LSR Group – Leading Player in Russian Residential Real Estate
LSR GROUP – LEADING PLAYER IN RUSSIAN RESIDENTIAL REAL ESTATE TRUE FEDERAL BALANCED CUSTOMER SCALABLE LAND SHAREHOLDER PLAYER EXPOSURE BANK VALUE CREATION 1 ONE OF THE 2 PRESENT IN 3 OVER 8.8 MLN 4 STRONG ONLY RUSSIAN MASS MARKET, SQM OF NET FOCUS ON DEVELOPERS WITH BUSINESS AND SELLABLE AREA SHAREH
Slide 4: LSR Group Investment Highlights
LSR GROUP 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 • Posi
Slide 5: Corporate Developments
CORPORATE DEVELOPMENTS
Slide 6: LSR Group Transformation: Ready for a New Cycle
LSR GROUP TRANSFORMATION: READY FOR A NEW CYCLE 1 • 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 apartmen
Slide 7: LSR Group: Adapting to New Customer
1 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 redesig
Slide 8: Zilart Status Update
2 ZILART STATUS UPDATE PROJECT OVERVIEW KEY FACTS • Zilart is an art-class residential complex being constructed on GENERAL PRE-SALES RESULTS the place of former car manufacturer plant ZiL Apartments • Being located only 5 km away from Kremlin, it should become a perfect residential place for people
Slide 9: Development Pipeline: Key Current Projects
3 DEVELOPMENT PIPELINE: KEY CURRENT PROJECTS CIVILIZATION (SAINT PETERSBURG) • The only large-scale project in St. Petersburg overlooking Neva river • Unique combination of mass-market offering with business class units overlooking Neva river Land plot – Total NSA – Start of pre-sales • A rare case
Slide 10: Development Pipeline: Key Upcoming Projects in 2018
3 DEVELOPMENT PIPELINE: KEY UPCOMING PROJECTS IN 2018 SAINT PETERSBURG RUCHI-7 Mass-market DOM MOD 2020 Business NEVA HAUS 2021-2022 Elite • Mass-market project with net sellable • Upscale project with 550+ apartments • Unique 56 th. sqm project located at area of 211 th. sqm comprised of 10+ compri
Slide 11: Building Materials Business – Strong Cash Flow Generation
4 BULDING MATERIALS BUSINESS – STRONG CASH FLOW GENERATION SEGMENT STRUCTURE GENERAL OVERVIEW Building Materials • Well-invested modern assets generating predictable revenue inflows and high EBITDA margins of up to 35% • Free cash flow positive • CAPEX is limited to maintenance levels • Market leade
Slide 12: Introduction of Federal Law 218: Key Takeaways
INTRODUCTION OF FEDERAL LAW 218: KEY TAKEAWAYS CURRENT REQUIREMENTS NEW REQUIREMENTS TO PRE-SALES MARKET OUTLOOK TO PRE-SALES Benefitting LSR Debt-free balance sheet Receiving One construction permit per legal 1 • Starting from 2H 2018, significant construction permit entity and per land plot At lea
Slide 13: Operating Results
OPERATING RESULTS
Slide 14: 2017 Results Highlights
2017 RESULTS HIGHLIGHTS • In 2017 we entered into new contracts for the sale of 640 th. sqm (-6% YoY) with a total value of RUB 65.3 bn (-7% YoY) o Average price per sqm was up 14% QoQ and 7% YoY in Q4 2017 o 780 th. sqm launched during the year o In 2017 we completed 909 th. sqm (up 15% YoY) • In 2
Slide 15: Real Estate Development: Quarterly Dynamics
REAL ESTATE DEVELOPMENT: QUARTERLY DYNAMICS • Improvement in the product mix driving solid sales growth in RUB terms vs. sqm o New contract sales amounted to 216 th. sqm (up 29% QoQ and up 26% YoY) o Value of the contracts was RUB 23.6 bn (up 46% QoQ and up 35% YoY) • Most of the completions took pl
Slide 16: New Contract Sales
NEW CONTRACT SALES • During the year new contract sales were improving on the back of market revival and enhancement of our offering in different market segments • As a result, in 4Q 2017 we demonstrated significant QoQ growth in new contract sales across all our regions SAINT PETERSBURG MOSCOW URAL
Slide 17: Real Estate Development: Saint Petersburg
REAL ESTATE DEVELOPMENT: SAINT PETERSBURG • Mass market segment was the main driver with new contracts in 4Q 2017 amounting to 119 th. sqm (+42% YoY) • Average price per sqm was up 17% YoY in Q4 2017 and amounted to 114 RUBk per sqm • Mortgage sales accounted for 47% in 4Q 347 322 348 Mass market 14
Slide 18: Real Estate Development: Moscow and Urals
REAL ESTATE DEVELOPMENT: MOSCOW AND URALS • New contract sales in 4Q up 24% QoQ to 36 th. sqm in Moscow and up 30% QoQ to 35 th. sqm in Urals • Average pre-sales ratio of ZILART 1st stage stands at 88%1 • c.34 th. sqm launched in ZILART in 4Q • Mortgage sales accounted for 50% and 51% in Moscow and
Slide 19: 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 19
Slide 20: 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 21: Market Overview
MARKET OVERVIEW
Slide 22: Regulatory and Market Trends
REGULATORY AND MARKET TRENDS • Minimum 10% of estimated project cost must be held in LSR’s robust financial position and strong balance cash in designated banks before being able to raise funds sheet enable the Company to easily comply with all CAPITALIZATION through equity participation agreement
Slide 23: Fundamentally Solid Outlook
FUNDAMENTALLY SOLID OUTLOOK GROWING POPULATION AND LOW UNEMPLOYMENT LOW HOUSING STOCK PER CAPITA2 Population growth Employed population growth Unemployment rate 45.0 (CAGR ‘05-’17)(1) (CAGR ‘05-’16) (2016) 37.2 Average w/o Russia: 35.9 sqm per capita 33.5 SPb 1.2% 1.4% 1.6% 32% 47% 28.0 24.3 19.1 Mo
Slide 24: Affordability and Pricing
AFFORDABILITY AND PRICING AFFORDABILITY AT MAXIMUM LEVELS AVERAGE MONTHLY WAGE PER AVERAGE SQM PRICE 60% • On the back of falling mortgage rates and real estate prices easing, 53% the affordability of housing has reached its all-time high levels 50% 47% • Primary market prices have been relatively f
Slide 25: Mortgage Lending and Rates Dynamics
MORTGAGE LENDING AND RATES DYNAMICS KEY DEVELOPMENTS AVERAGE MORTGAGE RATE IN RUSSIA1 • During first 11 months of 2017 over 935k mortgages (+24% yoy) were 19% issued, with a total amounting to ca. RUB 1.7 trillion (+34% yoy) 17% • Mortgage rates continue to decrease and reach record low levels 15% w
Slide 26: Mortgage Affordability Outlook
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 9.8% (current RUBk 20% 25% 30% 35% average rate) only c.10% of Russian working 17
Slide 27: Appendix
APPENDIX
Slide 28: Portfolio Overview
PORTFOLIO OVERVIEW PORTFOLIO BREAKDOWN NSA MV by net sellable area by market value Region % of total % of total (‘000m2) (RUB mn) Yekaterinburg Yekaterinburg St. Petersburg and Leningrad 4.3% 5,618 64.1% 85,151 59.2% BY REGION region 10.1% Moscow and Moscow region 2,266 25.8% 52,400 36.4% Moscow Mos
Slide 29: IFRS 15 – The New Revenue Recognition Standard
IFRS 15 – THE NEW REVENUE RECOGNITION STANDARD IN PLACE STARTING 1 JANUARY 2018 REVENUE RECOGNITION Current 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 R
Slide 30: Sustainable Business Development and Social Responsibility
SUSTAINABLE BUSINESS DEVELOPMENT AND SOCIAL RESPONSIBILITY 1 • One of the most significant and effective charitable projects carried out by LSR Group is its long-term cooperation with the Parents’ Bridge Foundation which helps children without parental care to find new families CHILDREN AND • In 201
Slide 31: Dedicated Board of Directors
DEDICATED BOARD OF DIRECTORS Andrey Molchanov Dmitri Gontcharov Eugeny Yatsyshin Founding Shareholder CEO, Chairman of the Board of Directors, First Deputy CEO, Chairman of the Strategy and Member of the Strategy and Investment Member of Strategy and Investment Committee Committee Investment Committ
Slide 32: Experienced Executive Committee
EXPERIENCED EXECUTIVE COMMITTEE Andrey Molchanov • Born in 1971 with a degree in State and Municipal Administration • Founded LSR Group in 1993 Experience: CEO, • Doctor of Economics • In 1993, Andrey Molchanov founded LSR Group and headed the Chairman of the Strategy and • Honorary builder of Russi
Slide 33: Key Operating Results
KEY OPERATING RESULTS REAL ESTATE1 3Q 2017 4Q 2017 Change QoQ, % 4Q 2016 Change YoY, % 2016 2017 Change, % New contract sales, th. sqm 167 216 29% 172 26% 681 640 (6%) Completed, th. sqm 38 690 1,716% 514 34% 788 909 15% Real Estate - St. Petersburg New contract sales, th. sqm 110 146 33% 97 50% 386
Slide 34: Contacts
Contacts For more information please contact: Yuri Ilyin Managing Director Mob.: +7 921 958 23 63 Tel.: +7 (812) 320 56 53 ilyin@lsrgroup.ru You can watch the construction progress of all our projects in a free mobile app: 34