Q F I N A N C I A L R E S U L T S

Transcription

1 Q F I N A N C I A L R E S U L T S

2 AGENDA 1 Q in brief 2 Destinations 3 Business segments 4 Recent acquisitions 5 Echo values 6 Financial highlights 7 Appendix 2

3 MANAGEMENT BOARD Maciej Drozd Piotr Gromniak Artur Langner CFO Deputy CEO Resi 4 Rent Deputy CEO - Construction Nicklas Lindberg CEO Marcin Materny Rafał Mazurczak Mikołaj Martynuska Waldemar Olbryk Board Member - Retail Board Member - Office Board Member - Acquisitions Board Member - Residential 3

4 1 Q IN BRIEF

5 STRONG FINANCIAL RESULTS [mln PLN] MAIN PROFIT DRIVERS IN Q Hand-over of 238 apartments Revaluation of commercial projects: Galeria Libero, Katowice Nobilis Business House, Wrocław West Link, Wrocław Sagittarius, Wrocław O3 Business Campus II, Kraków Symetris II, Łódź Other properties Q Q Q1-Q Q1-Q Operating revenue Operating profit Development earn out for Outlet Park III in Szczecin Increase in sale price of Q22 project in Warsaw Remuneration for management of Towarowa 22 project Dividend from EPP Gross profit Net profit

6 MAIN PROFIT DRIVERS [mln PLN] Fair value gain in Q1-Q ACTUAL Q1-Q Hand-over of 396 apartments GROSS PROFIT Q1-Q TARGETED Q Hand-over of c.a. 529 apartments 45% PLN mln 55% Final valuation and sale of: A4 Business Park III 12 Final valuation and sale of: O3 Business Campus II Symetris II, Łódź (after fulfillment of ROFO sale conditions) Pipeline project valuations (in particular): Galeria Libero, Katowice Nobilis Wrocław Sagittarius, Wrocław West Link, Wrocław Galeria Młociny O3 Business Campus II Symetris II, Łódź Q22, Warsaw Gain on EPPs shares* 109 Dividend from EPP 30 Development earn out for Szczecin Outlet Park III and IV * Revaluations + sale 225 Pipeline project valuations (in particular): Galeria Libero, Katowice Nobilis, Wrocław Sagittarius, Wrocław West Link, Wrocław O3 Business Campus III Galeria Młociny 36 Development earn for Szczecin Galaxy Fair value gain in Q % PLN 58.9 mln office 75% retail 6

7 2 DESTINATIONS

8 CREATING DESTINATIONS ECHO S UNIQUE STRATEGY Echo is the only Polish company that can seamlessly combine office, retail, leisure, residential and hotel functions within one project Our new projects are to become destinations: Creating urban destinations is a part of responsibility to grow the cities in a sustainable way Browary Warszawskie Towarowa 22 Beethovena in Warsaw It also gives the Company advantages of flexibility, risk diversification and optimal utilisation of own resources resulting in lower acquisition and development costs as well as shorter time to completion Rakowicka/Stwosza in Kraków Tymienieckiego in Łódź 8

9 BROWARY WARSZAWSKIE THE PLACE WHERE PEOPLE WANT TO LIVE 3 residential buildings under construction: A started in Q units, 100% sold B started in Oct units, 78% sold/reserved C started Nov units, 93% units reserved The first 3 buildings to be commissioned in 2018 and 2019 Q targeted start of building E construction (81 units) 9

10 WORK AND ENTERTAIN First office lease agreement signed with highly reputable global company for 40% of building J, high interest of other potential tenants The building to be completed in Q H targeted start of office buildings K and G-H 8,000 sqm of historical space to fill up with restaurants, shops and bars 10

11 WE CREATE NEW DESTINATIONS WARSAW, BEETHOVENA 36,000 sqm of office and service space (2 buildings) 13,000 sqm of residential 2017 start of construction works KRAKÓW, WITA STWOSZA 44,000 sqm of office and residential space Plot located close to historical city center ŁÓDŹ, TYMIENIECKIEGO 40,000 sqm of office function 40,000 sqm of resi space Plot located close to historical Księży Młyn industrial area 11

12 3 OUR BUSINESS SEGMENTS

13 RESIDENTIAL ACHIEVEMENTS AND GOALS Q Start of 2 residential projects with 320 units Commissioning 3 residential projects with 309 units Sale of 336 apartments 238 final sale agreements Q Start of 7 residential projects with 889 units Commissioning 5 residential projects with 656 units Sale of c.a. 413 apartments (148 units sold in Oct.) c.a. 529 final sale agreements (310 units achieved in Oct.) 2018 Start of 7 residential projects with almost 1,100 units Commissioning 8 residential projects with 900 units Sale of apartments final sale agreements 13

14 PROFITABLE GROWTH OF RESIDENTIAL SECTOR Profit on costs Q % 40% targeted dynamics YoY Preliminary sale agreements cumulatively [units] Final agreements cumulatively [units] 105% targeted dynamics YoY 925 Q1-Q % 706 Q1-Q % Q % Q1 Q1-Q2 Q1-Q3 Q1-Q Q1 Q1-Q2 Q1-Q3 Q1-Q

15 RESIDENTIAL OUR LONG-TERM APPROACH We operate in balanced and absorbent market with a stable price increase in all big cities in Poland, driven by natural internal demand People-based design with customer in the centre Launching of 'smart resi' program - new technologies to become part of the standard offer in our investments Focus on customer experience Customer service excellence implementing Enhancement of 'moments of truth' 15

16 OFFICE ACHIEVEMENTS AND GOALS Q Start of Beethoveena I in Warsaw (17,800 sqm GLA) Commissioning of O3 Business Campus II in Kraków (19,000 sqm GLA) Lease of 18,600 sqm of space Price increase on Q22 due to new leases Q Commissioning of Symetris II in Łódź (9,500 sqm GLA) Sale of O3 Business Campus II and Symetris II upon sales conditions fulfilment Concluding several lease agreements 2018 Start of 7 projects with 142,500 sqm GLA Commissioning of 4 buildings (73,000 sqm GLA) Sale of 4 buildings: O3 Business Campus III, Kraków, Nobilis Wrocław, Sagittarius Wrocław, West Link, Wrocław 16

17 Q22 PRICE INCREASE Q22 was sold in December 2016 to Invesco RE Part of the price was deferred, to be paid based on reduced vacancy Vacancy was reduced from 18% in December 2016 to 8% currently and continues to fall trigerring price increase payments Estimated remaining price increase amount related to vacancy of EUR 11 mln is expected to be paid in

18 RETAIL ACHIEVEMENTS AND GOALS Q Commissioning of Outlet Park III Szczecin (3,800 sqm GLA) Lease of 15,400 sqm of space Q Commissioning Galaxy extension in Szczecin (15,200 sqm GLA) Concluding several lease agreements to reach: - 85% - prelease of Libero - 70% - prelease of Galeria Młociny 2018 Commissioning of Libero in Katowice (45,100 sqm GLA) Filling up Libero and Galeria Młociny Zoning progress on Towarowa 22 project in Warsaw 18

19 100% OF RETAIL SUCCESSES GALAXY AND OUTLET PARK Outlet Park III in Szczecin (3,800 sqm GLA) opened in September Galaxy extension in Szczecin (15,200 sqm GLA) opened in November Both retail projects were developed for EPP with development earn out for Echo in Q3 and Q4 In Q over EUR 10 mln expected to be paid for Galaxy projects delivery 100% of space leased to reputable retailers Galaxy and Outlet Park are awarded and popular regional retail formats with very high footfall 19

20 4 RECENT ACQUISITIONS

21 Land/projects acquisitions by segments [sqm of usable space] BUILDING OUR FUTURE LAND BANK ACQUISITIONS ,000 OFFICE Łódź, Wrocław, Kraków, Gdańsk RESIDENTIAL Kraków, Łódź, Warsaw 238,000 PLN 807 per 1 sqm of potential GLA PLN 192 mn of invested equity 1,171 PLN per 1sqm of potential space PLN 143 mn of invested equity 82,000 Office Retail Residential RETAIL Warsaw UNDER NEGOTIATIONS Kraków, Warsaw, Wrocław, Katowice, Poznań 422,000 sqm of potential usable space including including 130,000 sqm for 'destination' projects 30% of Galeria Młociny of total 82,000 sqm GLA PLN 50 mn of invested equity Advantage of development fee 220,000 sqm of potential space 53% - office 47% - residential 21

22 5 ECHO VALUES

23 ECHO VALUE DRIVEN COMPANY Limiting the number of exemptions from WSE Best Practices 2 independent members of the Supervisory Board majority of Audit Committee members are independent members of SB GSM to be audio/video recorded and available on the Company website Continues working on being fully compliant with WSE Best Practices Implementation of Code of Conduct Launch of Whistleblowing procedure Mark Abramson NEW INDEPENDENT MEMBER OF THE SUPERVISORY BOARD Executive director at HIRES GmbH, a subsidiary of Heitman LLC since In the years senior executive director at Bear Stearns & Co. in New York and Sao Paulo, working on the public equity market. Graduate of the Johns Hopkins University (Political Economics) and American University in Washington (Theory of Monetary Economics). Ph.D degree (ABD) in International Public Policy at the University of Maryland, College Park. 23

24 HEALTH& SAFETY WE CARE FOR PEOPLE Focus on safety on construction sites Safety director from UK market and 2 full-time H&S managers in the organization to implement best practices National Labour Inspectorate (PIP) awards,,buduj bezpiecznie comes to our sites: O3 Business Park II in Kraków, Symetris II in Łódź, Dom pod Wilgą in Kraków. 24

25 6 FINANCIAL HIGHLIGHTS

26 FOCUS ON DEVELOPMENT ASSETS LIABILITIES Other EPP shares Assets for sale Cash Trade receivables + restricted cash Commercial and residential properties under construction PLN mn PLN mn PLN mn PLN mn Other Dividend liabilities Debt Provisions Equity +68% growth of commercial and resi property under construction +35% growth of debt Increased debt reflects growing business needs and has longer maturity 32% - current net debt / total assets less cash ratio, while 30-40% is our target PLN 200 mln of public bonds was issued in Q3-Q4 for 5 years, while previous issues had maximum 4- years maturity Amount of debt maturing per year is not higher than previously 26

27 PRE-DEFINED EXIT ROUTE FOR PROJECTS UNDER CONSTRUCTION Galaxy extension run for development fee [15,200 sqm] 30/70 JV s with EPP (retail) + development agreements [82,000 sqm x 30%] 24% 4% 5% 7% GPRE forward sale (office) [14,200 sqm] Sagittarius pre-sold to Warburg HIH [24,900 sqm x 75%] 8% EPP forward purchase (office) [47,300 sqm x 75%] EPP ROFO agreement (retail) [45,100 sqm x 75%] 13% 347,100 sqm under construction GPRE ROFO agreements (office) [32,800 sqm x 75%] 9% 30% Residential buildings under construction [104,400 sqm] over 60% pre-sold 27

28 ASSETS STRUCTURE FOCUS ON LIQUIDITY [mln PLN] Others Deferred income tax Cash Trade receivables: Q22 price increase, remaining price of EPPs shares sold in 2016 JVs Towarowa 22 and Galeria Młociny Commercial properties under construction: O3 Business Campus II and III, Symetris II, Sagittarius, West Link, Galeria Libero PLN mln Restricted cash EPP s shares Investment properties: Nobilis Babka Tower Plots for sale: Brasov (Romania), Słupsk, Koszalin 793 Residential projects under construction and finished apartments 28

29 DEBT MATURITY [mln PLN] Cash (incl. restricted)/ available overdraft limits PLN 200 mln of retail bonds proceeds already received in Q PLN 310 mln of bonds maturing in 2018 to be refinanced: PLN 150 mln in Q (process nearing completion) PLN 160 mln in Q Another retail bond program expected to be launched in 2018 Q Q cash available overdraft limits project finance bonds overdraft retail bonds 29

30 Completion of the 2nd Public Bond Issue Programme Q3/Q issue of 2 tranches of retail bonds amounting to PLN 200 mln total with 5-years maturity and 2.9% of margin Echo bonds are one on the most liquid assets listed on Catalyst market SUCCESSFUL PLACEMENT OF PLN 300 MLN RETAIL BONDS Flexibility and high demand encourage the Company to use this source of financing in the future New public bond programme to be launched in

31 DIVIDEND POLICY up to 70% of annual profit to be paid as dividend for 2018 and later GROWTH base remaining amount of annual profit reinvested PLN 0.50 per share amount of dividend for

32 DIVERSIFICATION OF SHAREHOLDERS BASE 0,04% 21,45% 0,11% New international financial institutions in the shareholder structure 10% 56% PIMCO-Oaktree-Griffin continue to be Echo s major shareholder holding 56% of the capital 12% Bigger free float increased liquidity of shares and diversified shareholder base. In long-term perspective it reduces capital cost and extends its availability for the Company, as well as stabilises its market valuation PIMCO-Oaktree-Griffin Nationale-Nederlanden OFE Aviva OFE BZ WBK Nicklas Lindberg Maciej Drozd Others Creating international interests in Echo via roadshow and meetings with over 300 professionals from the equity market Education of the international capital market to be continued 32

33 7 APPENDIX

34 1 Office projects in operation Project GLA [sqm] Leasing [%] NOI [EUR mln] Comments Wrocław, Nobilis Business House 16,9 73% 2,9 ROFO agreement with EPP, in negotiations with third party Warsaw, Babka Tower 6,2 74% 1,2 Kraków, O3 Business Campus II 19,0 70% 3,3 preliminary sale agreement with EPP Total 42,1 7,4 2 Office projects under construction Project GLA [sqm] Leasing [%] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Łódź, Symetris Business Park II % 1,6 67,4 67% II Q 2016 IV Q 2017 Wrocław, Sagittarius % 4,5 176,9 44% II Q 2016 I Q 2018 Kraków, O3 Business Campus III ,3 120,1 32% IV Q 2016 I Q 2018 Start Targeted commissioning Comments ROFO agreement and preliminary sale agreement with EPP ROFO agreement with EPP, preliminary agreement with Warburg HIH ROFO agreement and preliminary sale agreement with EPP Wrocław, West Link % 2,5 91,0 44% III Q 2016 I Q 2018 preliminary sale agreement with Griffin Premium RE Warsaw, Browary Warszawskie J ,2 135,6 26% II Q 2017 IV Q 2018 ROFO agreement with Griffin Premium RE Warsaw, Beethovena I ,0 132,5 25% III Q 2017 III Q 2019 ROFO agreement with Griffin Premium RE Total ,1 723,5 3 Office projects in preparation Project GLA [sqm] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Targeted start Targeted commissioning Comments Katowice, Grundmanna I ,4 142,0 17% I Q 2018 IV Q 2019 Warszawa, Browary Warszawskie K ,2 129,9 25% I Q 2018 I Q 2020 Warszawa, Browary Warszawskie G i H ,0 225,2 22% II Q 2018 I Q 2020 Warszawa, Beethovena II ,9 117,2 24% I Q 2018 IV Q 2019 ROFO agreement with Griffin Premium RE Łódź, Piłsudskiego-Kilińskiego ,3 87,2 12% II Q 2018 III Q 2019 Gdańsk, Solidarności/Nowomiejska I ,3 95,0 9% I Q 2018 III Q 2019 Wrocław, Powstańców Śląskich ,7 275,7 18% III Q 2018 II Q 2020 Katowice, Grundmanna II ,5 185,8 11% II Q 2019 I Q 2021 Gdańsk, Solidarności/Nowomiejska II ,6 101,1 9% I Q 2019 III Q 2020 Kraków, Wita Stwosza ,7 74,6 21% I Q 2019 III Q 2020 Total , ,7 34

35 1 Retail projects under construction Project GLA [sqm] Leasing [%] NOI [EUR mln] Targeted budget [PLN mln]* Expenditure incurred [%]* Start Targeted commissioning Comments Szczecin, Galaxy (rozbudowa) % 3,6 - - I Q 2016 IV Q 2017 Project run for EPP Katowice, Galeria Libero % 8,8 346,6 23% III Q 2016 I Q 2018 ROFO agreement with EPP Warsaw, Galeria Młociny % 20, ,6 44% IV 2016 II Q 2019 JV with EPP: share split 30:70% Total , ,2 Galaxy is run for EPP with development fee and it is not consolidated in Echo Investment Group. 3 2 Retail project in preparation Project GLA [sqm] NOI [EUR mln] Targeted budget [PLN mln]* Expenditure incurred [%]* Start Targeted commissioning Comments Warsaw, Towarowa 22 (2 phases) , ,4 20% I Q 2019* IV Q 2021* JV with EPP: targeted share split 30:70% 35

36 1 Residential projects under construction Project Sales area [sqm] Number of units Targeted revenues [PLN mln] Targeted budget* [PLN mln] Expenditure incurred* [%] Start Targeted commissioning Kraków, Apartamenty GO ,9 40,6 66% IV Q 2016 II Q 2018 Kraków, Dom pod Wilgą II ,9 45,8 72% III Q 2016 III Q 2018 Kraków, Dom pod Wilgą III ,1 27,1 33% II Q 2017 II Q 2019 Kraków, Kościuszki Apartments ,8 42,0 97% IV Q 2015 IV Q 2017 Łódź, Osiedle Jarzębinowe IV ,0 16,0 51% IV Q 2016 III Q 2018 Łódź, Nowa Dzielnica ,9 22,1 18% III Q 2017 VI Q 2018 Poznań, Jackowskiego ,0 37,9 69% III Q 2015 IV Q 2017 Poznań, Osiedle Jaśminowe III ,9 15,7 45% IV Q 2016 III Q 2018 Poznań, Osiedle Perspektywa I ,9 35,2 17% IV Q 2016 IV Q 2018 Poznań, Park Sowińskiego IV ,2 26,3 47% IV Q 2016 III Q 2018 Warsaw, Browary Warszawskie A ,4 37,6 47% IV Q 2016 VI Q 2018 Warsaw, Nowy Mokotów III ,3 85,2 97% III Q 2015 IV Q 2017 Warsaw, Nowy Mokotów IV ,1 18,2 93% II Q 2016 IV Q 2017 Wrocław, Zebra ,6 55,6 18% III Q 2017 II Q 2019 Wrocław, Grota-Roweckiego II ,9 32,2 100% IV Q 2015 IV Q 2017 Total ,8 537,5 2 Residential projects in preparation Project Sales area [sqm] Number of units Targeted revenues [PLN mln] Targeted budget* [PLN mln] Expenditure incurred* [%] Targeted start Targeted commissioning Łódź, Osiedle Jarzębinowe V ,7 33,6 14% IV Q 2017 III Q 2019 Kraków, Rydla ,3 35,6 25% I Q 2018 III Q 2019 Kraków, Wita Stwosza I ,9 66,0 42% III Q 2018 IV Q 2020 Kraków, Wita Stwosza II ,0 52,2 42% III Q 2019 III Q 2021 Poznań, Garbary ,6 59,9 23% II Q 2018 II Q 2020 Poznań, Osiedle Jaśminowe IV ,7 20,3 13% I Q 2018 IV Q 2019 Poznań, Osiedle Perspektywa II ,4 20,5 6% IV Q 2017 II Q 2019 Poznań, Osiedle Perspektywa III ,4 25,1 5% IV Q 2017 II Q 2019 Warsaw, Beethovena ,2 75,7 26% III Q 2018 III Q 2020 Warsaw, Browary Warszawskie B ,3 76,8 28% IV Q 2017 III Q 2019 Warsaw, Browary Warszawskie C ,4 50,8 26% IV Q 2017 III Q 2019 Warsaw, Browary Warszawskie E ,1 57,5 17% III Q 2018 II Q 2020 Warsaw, Widoki Mokotów ,0 46,4 23% IV Q 2017 II Q 2020 Warsaw, Taśmowa I ,7 49,6 30% IV Q 2017 III Q 2019 Warsaw, Taśmowa II ,8 80,8 27% I Q 2019 I Q 2021 Wrocław, Gdańska ,1 25,3 22% II Q 2018 I Q 2020 Total ,5 776,0 36

37 3 Residential projects for external rental platform Project Sales area [sqm] Number of units Targeted start Targeted commissioning Wrocław, Rychtalska I III Q 2017 IV Q 2019 Warsaw, Browary Warszawskie D i F IV Q 2017 I Q 2020 Łódź, Wodna II IV Q 2017 IV Q 2019 Wrocław, Kępa Mieszczańska I Q 2018 IV Q 2019 Total Early stage projects Project Plot area [sqm] Potential of GLA/residential space [sqm] Comments Łódź, Tymienieckiego Plot for office and residential functions Wrocław, Na Ostatnim Groszu Plot for office function Warsaw, Ordona Plot for residential function Warsaw, Chłodna/Wronia Plot for residential function Łódź, Kilińskiego Plot for office function Total

38 DEFINITIONS GLA NOI ROFO gross leasing area net operating income with the assumption of full rental and the average market rent rates right of first offer The estimated budget includes: the value of land, profit share on ROFO projects, cost of design, interest costs or activated financial costs, construction and external supervision; marketing and total personnel costs it does not include the costs of related to the project hedging the revenue against rent-free periods, 38

39 For more information please contact: Emil Górecki Echo Investment s Investor Relations manager emil.gorecki@echo.com.pl al. Solidarności 36 Kielce, Poland