Capital Markets Day 2016
Agenda 14:00 Registration 15:00 Leadership Andrey Molchanov , CEO Investment Case Andrey Nikitin , CFO Real Estate Development & Eugeny Yatsyshin , First Deputy CEO Construction Building Materials Sergey Begoulev , Managing Director of LSR.Wall Materials Centralized Sales & Procurement Yuri Ilyin , CCO Human Resources & Tatyana Chernysheva , Deputy CEO for HR and Organizational Development Organizational Development 16:15 Q&A 17:00 ZILART site visit 18:30 Boat trip on Moscow river 2
LEADERSHIP Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 3 Construction
Leadership • We are Russia’s largest home builder by volume with 2,2mn m² under construction • We have built 500 houses in 23 years of operations Real Estate • Since IPO, we sold 4,2 mn m 2 of new housing • We built 500 th m 2 of elite housing in St. Petersburg and occupy a 44% market share in this segment* Development • We were the first in St. Petersburg to introduce seamless façade technology and construct 25 -story homes • Our flagship project in Moscow, ZIL, is the largest redevelopment project under construction in Europe • We have nearly 1mn m² of modern, prefab housing capacity located in three cities of operation • We operate 3 fully modernized construction facilities Construction • We have the largest and most modern crane fleet in the North-West region, totaling 220 units • We are absolute leader in building materials’ markets of the North -West region with a 72% market share in bricks and a 42% share in aerated concrete • We export our bricks to the EU and the CIS Building • We have the largest resource base in our home region: our sand and crushed granite reserves are enough to last Materials 25 years and 80 years, respectively • We have the best and most diversified transport infrastructure in our home region *by completions Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 4 Construction
Who We Are • Leading Russian real estate developer, construction company and building materials producer • Builder of mass-market, business-class & elite housing with 23-year history and strong brand awareness • Operating in Russia’s three largest cities: Moscow, St. Petersburg and Ekaterinburg • Possessing a land bank exceeding 9 mn m² valued at RUB 136 bn by Knight Frank as at 31 December 2015 • Owner-managed company focused on shareholder returns • Public since 2007 and paying steady dividends since 2011. One of the highest dividend yielding stocks in Russia Shareholder structure Revenue, EBITDA and Dividends since IPO, RUB bn 100 92 Andrey Molchanov, CEO 87 100% 90 32% Management 80 80% 61% Treasury shares for management 70 2% 61 60 Free float 60 5% 52 51 60% 50 50 50 40 36 40% 2015 EBITDA Breakdown by Segment 30 26% 29% 22% 23% 21% 22% 20% 19% 17% 20 20% 17% Real Estate Development & 8 8 Construction 10 4 2 2 1,5 Building Materials 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 83% Revenue Dividend EBITDA margin, % Source: Company, August 2016 Source: Company, August 2016 Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 5 Construction
Business Structure • We have 13 business units with a total staff of 15,500 employees • We operate in 3 countries, including Russia, Ukraine (aerated concrete) and Germany (real estate development) • 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 Business- Project Prefab Tower Crushed Ready-mix Reinforced Aerated Elite Mass-Market Sand Bricks Class Management Construction Cranes Granite Concrete Concrete Concrete St. Petersburg Moscow Ukraine Region Home construction capacity (m²) Building Materials, capacity St. Petersburg and Leningrad region 500 000 Ready-mix concrete 1 947 000 m³ Moscow and Moscow region 250 000 Bricks 380 mn 70 mn Yekaterinburg 200 000 Aerated concrete 380 000 m³ 970 000 m³ 950 000 Reinforced concrete 570 000 m³ Total Aggregates Reserves Capacity Sand 223 mn m³ 22 mn m³ Crushed granite 583 mn m³ 8.1 mn m³ Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 6 Construction
INVESTMENT CASE Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 7 Construction
Investment Case • LSR Group’s investment case is founded on a solid foundation of macro, industry and company specific drivers • The Russian economy has bottomed, inflation is falling and savings are at an all time high, supporting housing demand • Tougher lending conditions and stricter legislation are favoring big, public real estate developers with long track records • New management team is shifting focus to higher-return projects and shedding non-core assets to support dividend New Management Company factors Moscow Expansion High Dividend Yield New Market Environment Favors Big Developers High Obsolete Housing Stock Industry factors Low Per-Capita Housing Stock Government-Supported Housing Programs Saint Petersburg & Moscow Population Growth Macro factors Record-High Bank Savings Falling Interest Rates Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 8 Construction
Investment Strategy • The new investment strategy focuses on forecastable, continuous growth of earnings and free cash flow • One of the key priorities is achieving alignment of motivation between management and shareholders Net income Priorities: 1. Quasi-fixed returns: • Bi-annual dividend payouts • Bonds • Preferred shares • Rental assets + 10% + 10% + 10% + 10% 2. Forecastability : • + 10% Budget quality and discipline + 10% + 10% • Aligned management motivation Additional return + 10% • Financial guidance + 10% + 10% Core business 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 9 Construction
Business Alignment with Financial Strategy Finance will be driving business renewal through: • Enhanced corporate/business efficiency • Portfolio rebalancing • Non-core asset sale Quasi fixed income story with a growth profile Smoothed schedule of completions Strategic landbank expansion Constant product upgrade Shorter working capital cycle Centralized nationwide Financial efficiency Steady growth sales & procurement & forecastability Portfolio rebalancing & leaner business Advanced motivation system structure Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 10 Construction
Working Capital Strategy ROIC is expected to be continuously increased through comprehensive system of working capital management: • Synchronization of construction, transfers and cash inflows • Smoothed schedule of completions • Acceleration of the turnover of advances paid Sales of Sales of completed completed Preparation Sales & construction projects Preparation Sales & construction projects t-2 t-1 t+1 t+2 t+3… t-2 t-1 t+1 t+2 t+3… FCFE Construction Construction completed completed FCFE - Receivables - Payables Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 11 Construction
Strategic Development of Finance Function • Integral part of management team focused on value/wealth creation • Focused on decision • Identifies opportunities and support provides critical information and • Provides sound financial analysis to make superior analysis for making • Focused on operating and strategic decisions • Dominated by financial and operating processes and risk reporting and decisions minimization compliance functions Transactional Controlling the Planning and Integrated functional Stage 1 2 3 4 management business analysis excellence Role « Bean counter » « Process managers » « Business-partners » « Value managers » • Management • Superior decision support for • Performance reporting • Financial Key wise investments • Tax management • Business development capabilities accounting • Audit • Analysis • Enterprise risk-management • Treasury Number of Consistent process Talent and insight into Leadership and performance Challenge transactions excellence value drivers management Real Estate & Leadership Investment Case Building Materials Sales & Procurement HR & OD 12 Construction
Recommend
More recommend
