Investor Presentation • May 28, 2020
Investor Presentation
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| ü Construction running at full capacity |
|
|---|---|
| Operational | ü As of 31 March €2.2bn of portfolio pre-sold, 90% of portfolio with completed or in process building right; |
| Highlights | ü 125 units sold YTD and 32 units since mid of March (pricing unaffected by Covid-19 pandemic) |
| ü Successfully concluded c.€30m corporate level financing in Q1 and Q2 |
| ü Adjusted revenues: €99.7m (+18.4%) |
|
|---|---|
| Q1- 2020 |
ü Adjusted gross profit margin: 29.8% |
| Results | ü Adjusted EBIT: €18.0m (+14.6%) |
| ü Volume of sales contracts: €69.4m (+10.5%) |
| ü 2020: Outlook suspended due to current uncertainty in context of Covid-19 crisis |
|
|---|---|
| ü 2021: Sales target of >€900m-€1,000m reiterated |
|
| Outlook | ü 2021: Net profit guidance of at least €90m introduced |
| ü Target payout-ratio: 30% of net profit (2021: DPS yield >4.0%) |
|
| Key topics | Instone position | |
|---|---|---|
| Sales | • Institutional: Discussions starting to resume • Retail: mixed picture – good demand for existing projects, lower sales for new products |
|
| Construction | • Construction progress according to plan • Expect decreasing capacity utilisation in construction industry to result in zero or negative CPI with potential benefit for margins of pre-sold INS projects |
|
| Liquidity | • Aggregate liquidity reserves of €500m provide substantial headroom • Expect new project acquisition activity to remain highly selective throughout 2020 • Expect to generate substantial positive 2020 cash flow |
|
| Employees | • Headquarter and branch offices: Employees start returning to the office; strict social distancing measures implemented • Construction sites: tight monitoring of social distancing rules and hygiene measures |
|
28.05.2020 Q1-2020 |
Recent data points/surveys show resi prices unaffected
"Others" include Wiesbaden, Mannheim, Hannover, Potsdam, Bamberg 1thereof 6.8% of delivered volume of the project portfolio
~€5,400 ASP / sqm
€2.5bn GDV pre-construction or under construction
No pressure for short term investments – full financial flexibility in place to execute attractive opportunities
ü INS remains disciplined and highly selective with new project acquisitions in 2020
(Projects remain in portfolio until final completion and hand-over to customers)
| €m | Q1-2020 | Q1-2019 | Delta |
|---|---|---|---|
| Revenues | 99.7 | 84.2 | 18.4% |
| Project cost |
-70.0 | -57.1 | 22.6% |
| Gross profit | 29.7 | 27.1 | 9.6% |
| Margin | 29.8% | 32.2% | |
| Platform cost |
-11.7 | -11.3 | 3.5% |
| EBIT | 18.0 | 15.7 | 14.6% |
| Margin | 18.1% | 18.6% | |
| Investment and other result |
-0.8 | -0.4 | -100.0% |
| Financial result |
-4.7 | -2.5 | -88.0% |
| EBT | 12.5 | 12.9 | -3.1% |
| Margin | 12.5% | 15.3% | |
| Taxes | -3.8 | -5.1 | -25.5% |
| Tax rate |
30.4% | 39.5% | |
| Net income | 8.7 | 9.1 | 13.0% |
| €m | Q1-2020 | 31/12/19 |
|---|---|---|
| Corporate debt |
211.4 | 180.8 |
| Project debt |
407.9 | 414.7 |
| Financial debt | 619.3 | 595.5 |
| - Cash and cash equivalents |
-118.0 | -117.1 |
| Net financial debt |
501.3 | 478.4 |
| Inventories + Contract assets |
979.9 | 951.1 |
| Loan-to-cost* | 0.5x | 0.5x |
| Adjusted EBIT |
131.1 | 128.9 |
| Adjusted EBITDA |
135.2 | 132.9 |
| Net financial debt / adjusted EBITDA |
3.7x | 3.6x |
| €m | Q1-2020 | Q1-2019 |
|---|---|---|
| EBITDA adj. | 19.0 | 16.8 |
| Other non-cash items | -3.1 | -6.2 |
| Taxes paid |
-4.0 | -2.5 |
| Change in working capital |
-26.8 | -28.8 |
| Operating cash flow |
-14.9 | -20.7 |
| Land plot acquisition payments (incl. RETT) |
48.3 | 42.4 |
| Operating cash flow excl. investments |
33.4 | 21.7 |
*Loan-to-Cost: Net financial debt/ (Inventories + Contract assets)
...leaves INS well protected with sufficient means to fund communicated growth plan
| €m | Total | t/o drawn | t/o available |
|---|---|---|---|
| Corporate debt |
|||
| Term loan | 125.0 | -75.0 | 50.0 |
| Promissory note |
106.0 | -106.0 | - |
| Revolving credit facilities |
116.5 | 30.0 | 86.5 |
| Total | 347.5 | -211.0 | 136.5 |
| Cash and cash equivalents |
118.0 | ||
| Total corporate funds available |
254.5 | ||
| Project debt | |||
| Project finance | 645.4* | -407.9 | 237.5 |
* net available project financing
(Revenue recognition under Instone Group's adjusted results of operations, which is the basis of the Company's forecast, will continue to reflect share deals and asset deals in the same way, i.e. equivalent to the requirements stipulated in IFRS 15 irrespective of an expected IFRS IC decision to exclude share deals from revenue recognition over time in accordance with IFRS 15)
| FY 2019 | €k |
|---|---|
| Cost of materials |
-98,031 |
| Changes in inventories |
+35,547 |
| Indirect sales cost |
-598 |
| Capitalized interest on changes in inventories |
-2,560 |
| Total project cost |
-70,006 |
| FY 2019 | €k |
|---|---|
| Personnel expenses |
-10,433 |
| Other operating income |
+5,943 |
| Other operating expenses |
-8,036 |
| Indirect sales cost |
+598 |
| Results of joint ventures | +255 |
| Total platform cost |
-11,672 |
Technical and business consulting Non-deductible input tax Rentals and leasing costs court costs, attorney's and notaries fees distribution and marketing costs travel and entertainment costs insurance costs year-end expenses operating costs
IT costs
warrenty provisions
depreciation costs
others
| In €m | Q1 2020 | Q1 2019 | |
|---|---|---|---|
| 1 | Total revenue | 94.5 | 82.7 |
| Changes in inventories | 35.0 | 22.2 | |
| 129.5 | 105.0 | ||
| Other operating income | 5.9 | 3.2 | |
| 2 | Cost of materials | -97.8 | -79.3 |
| 3 | Staff costs | -10.4 | -7.7 |
| Other operating expenses | -7.0 | -6.3 | |
| Depreciation and amortization | 1.0 | -1.0 | |
| Earnings from operative activities |
19.1 | 13.8 | |
| Income from associated affiliates | 0.3 | 0.0 | |
| Other net income from investments | -0.8 | -0.4 | |
| 4 | Finance income | 0.0 | 0.3 |
| Finance costs | -6.4 | -2.5 | |
| Changes of securities classified as financial assets | -0.9 | 0.2 | |
| EBT (reported) | 11.3 | 11.4 | ||
|---|---|---|---|---|
| 5 | Income taxes | -3.5 | -4.6 | 5 |
| Net income (reported) | 7.8 | 6.8 |
2
3
4
The good marketing success and the scheduled construction progress of the projects contributed to this revenue growth. Bulk of the revenues (€90.2m) were attributable to projects which have started in 2019.
Cost of materials including land price payments and corresponding ancillary costs of around €35.8 million for previously secured projects. Increase in staff costs reflects the increase in FTEs to 316.8 (Q1 19: 281.3).
The increase of finance costs is related to the increase in gross debt due to investments in new land acquisition.
The lower IFRS tax rate reflects the first-time recognition of tax loss carryforwards in the second half of the 2019 financial year.
| Q1 2020 | FY 2019 | ||
|---|---|---|---|
| Non-current assets | 20.9 | 20.4 | |
| 6 | Inventories | 767.1 | 732.1 |
| 7 | Contract assets | 212.8 | 219.0 |
| Other receivables | 32.1 | 34.7 | |
| Cash and cash equivalents | 118.0 | 117.1 | |
| Current assets | 1,130.0 | 1,102.9 | |
| Total assets | 1,151.0 | 1,123.4 | |
| Total equity | 318.2 | 310.2 | |
| 8 | Financial liabilities | 470.5 | 451.6 |
| Other provisions and liabilities | 26.2 | 26.6 | |
| Deferred tax liabilities | 12.4 | 12.0 | |
| Non-current liabilities | 509.0 | 490.2 | |
| Financial liabilities | 148.8 | 143.9 | |
| 9 | Trade payables | 75.8 | 87.6 |
| Other provisions and liabilities | 99.1 | 91.5 | |
| Current liabilities | 323.7 | 323.0 | |
| Total equity and liabilities | 1,151.0 | 1,123.4 |
9
8
6 As at 31 March 2020, inventories increased to €767.1m (Q4 19: €732.1m) due to construction progress as well as land acquisitions.
Receivables from customers for work-in-progress (contract assets) already sold and valued at the current completion level of development fell to €425.4m (Q4: €479.4m) due to the increased completions. Advance payments from customers amounted to €218.2m (Q4: €266.9m). The capitalized direct distribution costs decreased to €5.6m (Q4: €6.5m).
The increase in financial liabilities by a total of €23.7m resulted from the financing of new land acquisitions.
Trade payables decreased to €75.8m (Q4: €87.6m) and essentially comprise the services provided by contractors.
| Q1 2020 | Q1 2019 | ||
|---|---|---|---|
| Consolidated earnings | 7.8 | 6.8 | |
| Other non-cash income and expenses | 7.7 | -0.3 | |
| Change in deferred taxes |
0.3 | 4.1 | |
| Change in working capital |
-26.8 | -28.8 | |
| Income taxes paid | -4.0 | -2.5 | |
| 10 | Cash flow from operating activities | -14.9 | -20.7 |
| 11 | Cash flow from investing activities | -1.6 | -0.8 |
| Free cash flow |
-16.5 | -21.5 | |
| Cash proceeds from borrowings | 137.9 | 51.5 | |
| Cash repayments of borrowings | -116.7 | -47.9 | |
| Interest paid | -3.8 | -1.0 | |
| 12 | Cash flow from financing activities | 17.5 | 2.7 |
| Cash change | 0.9 | -18.8 | |
| Cash and cash equivalents at the beginning of the period |
117.1 | 88.0 | |
| Cash and cash equivalents at the end of the period |
118.0 | 69.1 |
11
12
The operating cash flow of €-14.9m in Q1 2020 (Q1-19: €-20.7m) was primarily driven by the outflows for land acquisitions (Q1-20: €48.3m vs. Q1-19: €42.4m) already secured in previous years. Excluding land payments operating cash flow adjusted amounted to €33.4m (Q1-19: €21.7m) 10
At €-1.6m (Q1-19: €0.8m) the cash flow from investing activities was mainly influenced by the scheduled purchase of further shares in an investment company of €1.1m.
The cash flow from financing activities in Q1-20 was €17.5m, up from €2.7m in the previous year. This figure includes payments received from new loans taken out amounting to €137.9m and repayments for terminated loans amounting to €116.7m.
| €m | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|
| Volume of sales contracts | 69.4 | 1,088.2 | 183.1 | 69.0 | 62.8 |
| Project Portfolio (as of) | 5,744.4 | 5,845.7 | 5,384.1 | 5,091.7 | 4,790.2 |
| thereof already sold (as of) | 2,189.0 | 2,174.0 | 1,261.1 | 1,128.7 | 1,061.1 |
| Units | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|
| Volume of sales contracts | 109 | 2,063 | 380 | 120 | 170 |
| Project Portfolio (as of) | 12,952 | 13,715 | 12,233 | 11,628 | 11,041 |
| thereof already sold (as of) | 4,799 | 4,814 | 2,944 | 2,684 | 2,564 |
(Unless otherwise stated, the figures are quarterly values)
| Project | City | Adj. Revenues (€m) |
|---|---|---|
| St. Marienkrankenhaus | Frankfurt a. M. | 16.1 |
| Schumanns Höhe | Bonn | 10.7 |
| Quartier Stallschreiber Straße - Luisenpark |
Berlin | 9.5 |
| west.side | Bonn | 7.0 |
| Schulterblatt "Amanda" | Hamburg | 5.8 |
| Westville | Frankfurt a. M. | 5.0 |
| Theresienstraße | München | 4.7 |
| Wohnturm Seetor, Ostendstraße | Nürnberg | 4.3 |
| Wiesbaden - Wohnen am Kurpark |
Wiesbaden | 4.3 |
| City-Prag - Wohnen im Theaterviertel |
Stuttgart | 3.6 |
| Others | 28.7 | |
Total 99.7
| Project | City | Units | €m |
|---|---|---|---|
| St. Marienkrankenhaus | Frankfurt a. M. | 12 | 13.6 |
| Schulterblatt "Amanda" | Hamburg | 14 | 10.7 |
| Schumanns Höhe | Bonn | 29 | 9.5 |
| Herrenberg, Schwarzwaldstraße | Herrenberg | 17 | 7.9 |
| Eschenbach Optik, Schopenhauerstraße | Nürnberg | 14 | 6.4 |
| Theresienstraße | München | 1 | 4.7 |
| Neckartalterassen | Rottenburg | 11 | 4.4 |
| Quartier Stallschreiber Straße - Luisenpark |
Berlin | 6 | 3.9 |
| Marina Bricks | Regensburg | 5 | 3.5 |
| Others | 0 | 4.9 | |
| Total | 109 | 69.4 |
| Project | City | Exp. Sales Volume (€m) |
Units |
|---|---|---|---|
| Schulterblatt "Amanda" | Hamburg | ~ 93 | ~ 165 |
| Total | ~ 93 | ~ 165 |
| Project | City | Sales volume (€m) |
Units | Already sold in % |
|---|---|---|---|---|
| St. Marienkrankenhaus | Frankfurt a. M. | 70.7 | 57 | 63% |
| Schulterblatt "Amanda" | Hamburg | 56.1 | 74 | 37% |
| Schwarzwaldstraße | Herrenberg | 17.6 | 38 | 63% |
| Quartier Stallschreiber Straße - Luisenpark |
Berlin | 14.4 | 13 | 89% |
| Marina Bricks | Regensburg | 13.9 | 20 | 53% |
| Others | 9.8 | 22 | ||
| Total | 182.4 | 224 |
| Project | Location | Sales volume (expected) |
Land plot acquired |
Building right obtained |
Sales started |
Construction started |
|---|---|---|---|---|---|---|
| Hamburg | ||||||
| Schulterblatt "Amanda" | Hamburg | 95 Mio. € | ||||
| Kösliner Weg | Norderstedt-Garstedt | 103 Mio. € | ||||
| Sportplatz Bult | Hannover | 120 Mio. € | ||||
| Rothenburgsort | Hamburg | 183 Mio. € | ||||
| Büntekamp | Hannover | 95 Mio. € | ||||
| Berlin | ||||||
| Quartier Stallschreiber Straße / Luisenpark | Berlin | 236 Mio. € | ||||
| Wendenschlossstr. | Berlin | 51 Mio. € | ||||
| Rote Kaserne West | Potsdam | 49 Mio. € | ||||
| NRW | ||||||
| Sebastiansraße / Schumanns Höhe | Bonn | 69 Mio. € | ||||
| Niederkasseler Lohweg | Düsseldorf | N/A | ||||
| Unterbach / Wohnen am Hochfeld | Düsseldorf | 172 Mio. € | ||||
| Literaturquartier | Essen | 68 Mio. € | ||||
| REME | Mönchengladbach | 105 Mio. € | ||||
| west.side | Bonn | 186 Mio. € | ||||
| Gartenstadtquartier | Dortmund | 100 Mio. € |
Semi-filled circle means that the milestone has yet been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building right the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.
| Project | Location | Sales volume (expected) |
Land plot acquired |
Building right obtained |
Sales started |
Construction started |
|---|---|---|---|---|---|---|
| Rhine-Main | ||||||
| Wiesbaden-Delkenheim, Lange Seegewann | Wiesbaden | 111 Mio. € | ||||
| Siemens-Areal | Frankfurt | 554 Mio. € | ||||
| St. Marienkrankenhaus | Frankfurt am Main | 211 Mio. € | ||||
| Friedberger Landstraße | Frankfurt am Main | 324 Mio. € | ||||
| Elisabethenareal Frankfurt | Frankfurt am Main | 58 Mio. € | ||||
| Steinbacher Hohl | Frankfurt am Main | 55 Mio. € | ||||
| Gallus | Frankfurt am Main | 41 Mio. € | ||||
| Wohnen am Kurpark / Wilhelm IX | Wiesbaden | 104 Mio. € | ||||
| Westville | Frankfurt am Main | N/A | ||||
| Aukamm | Wiesbaden | 149 Mio. € | ||||
| Leipzig | ||||||
| Heeresbäckerei | Leipzig | 121 Mio. € | ||||
| Semmelweisstraße | Leipzig | 73 Mio. € | ||||
| Parkresidenz | Leipzig | 250 Mio. € | ||||
| Rosa-Luxemburg-Straße | Leipzig | 114 Mio. € | ||||
Semi-filled circle means that the milestone has yet been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building right the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.
| Project | Location | Sales volume (expected) |
Land plot acquired |
Building right obtained |
Sales started |
Construction started |
|---|---|---|---|---|---|---|
| Baden-Wurttemberg | ||||||
| City-Prag - Wohnen im Theaterviertel | Stuttgart | 126 Mio. € | ||||
| Franklin | Mannheim | 69 Mio. € | ||||
| Schwarzwaldstraße | Herrenberg | 48 Mio. € | ||||
| S`LEDERER | Schorndorf | N/A | ||||
| Neckartalterrassen | Rottenburg | 147 Mio. € | ||||
| Schäferlinde | Herrenberg | 56 Mio. € | ||||
| Bavaria South | ||||||
| Ottobrunner Straße | München | 83 Mio. € | ||||
| Beethovenpark | Augsburg | 58 Mio. € | ||||
| Römerhügel | Augsburg | 51 Mio. € | ||||
| Bavaria North | ||||||
| Schopenhauerstraße | Nürnberg | 67 Mio. € | ||||
| Stephanstraße | Nürnberg | 65 Mio. € | ||||
| Seetor | Nürnberg | 112 Mio. € | ||||
| Eslarner Straße | Nürnberg | 50 Mio. € | ||||
| Lagarde | Bamberg | 73 Mio. € |
Semi-filled circle means that the milestone has yet been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building right the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.
| May 28 | Publication of quarterly results as of 31 March 2020 |
|---|---|
| June 9 | Annual General Meeting (virtual) |
| 25 June | Capital Markets Day (virtual) |
| August 27 | Publication of group interim report as of 30 June 2020 |
| Nov 26 | Publication of quarterly results as of 30 September 2020 |
Burkhard Sawazki (Head of Business Development & Communication)
Instone Real Estate Group AG
Grugaplatz 2-4, 45131 Essen
T +49 201 45355-137 M +49 173 2606034
[email protected] / [email protected] instone.de/en
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