Presentation Q1 2020
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In Q1 2020, Dom Development S.A. reported a 12% year-over-year decrease in sales with 815 units sold and a corresponding revenue drop of 41% to PLN 314.1 million, influenced by the COVID-19 pandemic. Despite the challenges, the company maintained a strong balance sheet with PLN 640 million in cash and only 5% gearing, enabling continuation of construction projects and timely deliveries. The market showed initial demand strength in January and February, but faced slower sales in March due to pandemic-related restrictions.
Presentation Q1 2020
- 1. Q1 2020 RESULTS PRESENTATION 6 MAY 2020 DOM DEVELOPMENT S.A. CONSOLIDATED GROUP
- 2. CONTENTS 1. Q1 2020 SUMMARY 1. HIGHLIGHTS 3 2. FINANCIAL RESULTS SUMMARY 4 3. MARKET 5 2. OPERATIONAL PERFORMANCE 1. QUARTERLY NET SALES 6 2. SALES SEGMENTATION 7 3. OFFER 8 4. NEW CONSTRUCTION STARTS 9 5. UNITS UNDER CONSTRUCTION 10 6. LAND BANK – OWNED AND CONTROLLED 11 7. DELIVERIES 12 3. FINANCIAL RESULTS 1. PROFIT AND LOSS ACCOUNT 13 2. CUMULATIVE NET SALES TO BE RECOGNIZED IN P&L 14 3. BALANCE SHEET 15 4. DEBT MATURITY STRUCTURE 16 4. SUMMARY 17 5. APPENDICES 1. COMMENCEMENT OF HANDOVERS IN 2020 19 2. PROJECTS UNDER CONSTRUCTION AND IN PREPARATION: a) WARSAW 20 b) TRI-CITY 21 c) WROCLAW 22 d) SUMMARY 23
- 3. 3 1.1. Q1 2020 HIGHLIGHTS • Sales of 815 units (-12% YoY) • PLN 640m cash at bank and only 5% gearing – strong balance sheet and low debt • Swift reaction to COVID-19 epidemic outbreak in March: o online selling already operational from 13th March o construction sites are progressing normally o deliveries in line with annual budget o 80% of staff working remotely o some projects commencements delayed • Suspension of original dividend recommendation in order to benefit from delayed AGM date to end of August 2020 and finalise decision with better visibility on the impact of COVID-19.
- 4. 4 1.2. Q1 2020 FINANCIAL RESULTS SUMMARY (v. Q1 2019) DELIVERIES 549 UNITS -55% REVENUES PLN 314.1m -41% GROSS MARGIN 29.5% -0,8 pp NET PROFIT PLN 38.5m -55% GEARING at 31.03.2020 5% -4 pp Q1 2020 deliveries were on time and on budget. The YoY decrease is the effect of a high base – 2019 was record- breaking in terms of deliveries volume in Q1. Gearing of 5% is confirmation of the exceptional strength of the Group’s balance sheet.
- 5. 5 1.3. MARKET • January and February – strong demand and continuation of price increases supported by favourable macroeconomic factors • March – restrictions imposed due to the epidemic resulting in lower traffic in sales offices • High insecurity caused by the epidemic prolongs decision making when purchasing a flat • Sharp interest rate cuts to a record low level of 0.5% (in April) – positive signal for the housing market • Cash purchases continue to account for approx. 40% of the Group’s sales • Banks tightened requirements towards clients applying for mortgages • Dysfunctional administrative processes due to the epidemic are a challenge
- 6. 6 2.1. QUARTERLY NET SALES Net sales in units Q1 2020 Q1 2019 Change Q1 2020 Q4 2019 Change Warsaw 497 608 (18)% 497 593 (16)% Tri-City 220 227 (3)% 220 251 (12)% Wroclaw 98 91 +8% 98 118 (17)% Dom Development S.A. Group 815 926 (12)% 815 962 (15)% COVID-19 EPIDEMIC AND REDUCED OFFER WERE MAIN CAUSES OF LOWER SALES
- 7. 7 2.1. QUARTERLY NET SALES 926 836 937 962 815 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Warsaw Tri-City Wroclaw Net sales (units) Q1 2020 Q1 2019 Change Warsaw 497 608 (18)% Tri-City 220 227 (3)% Wroclaw 98 91 +8% Dom Development Group 815 926 (12)% OFFER LIMITATION AND COVID-19 EPIDEMIC CAUSED SALES DECREASE No. of units
- 8. 8 2.2. SALES SEGMENTATION IN Q1 2020 BALANCED SALES STRUCTURE, AVERAGE TRANSACTION VALUE INCREASE IN ALL GROUP MARKETS 15% 20% 20% 14% 30% 0 200 400 600 800 1 000 Dom Development S.A. Consolidated Group over PLN 650k PLN 550-650k PLN 450-550k PLN 350-450k up to PLN 350k Transaction value Warsaw Tri-City Wroclaw over PLN 650k 40% 17% 12% PLN 550-650k 21% 5% 5% PLN 450-550k 24% 12% 21% PLN 350-450k 14% 24% 37% up to PLN 350k 1% 42% 25% Average value (PLN k) 660 454 456 No. of units Group’s average transaction value in Q1 2020: PLN 578k Transaction value includes price of a flat with fit-out (if purchased), storage room (if purchased) and parking place (if purchased).
- 9. 9 2.3. OFFER LIMITATION OF NEW PROJECTS LAUNCHES DUE TO COVID-19 EPIDEMIC 2 644 3 166 2 661 2 255 1 890 31/03/2019 30/06/2019 30/09/2019 31/12/2019 31/03/2020 Warsaw Tri-City Wroclaw under construction 90% finished 10%Offer as of 31.03.2020 Group’s offer by location 31.03. 2020 31.03. 2019 Change Warsaw 1 163 1 929 (40)% Tri-City 468 357 31% Wroclaw 259 358 (28)% Dom Development Group 1 890 2 644 (29)% No. of units
- 10. 10 2.4. NEW CONSTRUCTION STARTS LOWER NUMBER OF COMMENCED PROJECTS DUE TO THE COVID-19 EPIDEMIC 1 036 1 019 570 409 506 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Warsaw Tri-City Wroclaw Project starts in Q1 2020: Warsaw: Wilno V phase I (326 units) Tri-City: Osiedle Locus phase 4 (91 units) Zielony Południk buildings 5-8 (89 units) No. of units
- 11. 11 5 074 5 372 5 401 4 718 4 884 31/03/2019 30/06/2019 30/09/2019 31/12/2019 31/03/2020 Warsaw Tri-City Wroclaw 2.5. UNITS UNDER CONSTRUCTION CONSTRUCTION SITES ARE PROGRESSING AS PLANNED 77% 23% Units under construction 31.03.2020 In-house general contractor (Dom Construction and Euro Styl Construction) External general contractors No. of units See p. 23 for detailed breakdown
- 12. 12 2.6. LAND BANK – OWNED AND CONTROLLED LAND BANK’S SIZE AND STRUCTURE ENSURE SAFETY AND FLEXIBILITY OF GROUP OPERATIONS Land bank 31.03.2020 31.03.2019 Change Total YoYNo. of units Owned Controlled Total Owned Controlled Total Warsaw 3 451 3 688 7 139 3 165 2 900 6 065 +18% Tri-City 3 598 2 292 5 890 3 586 1 660 5 246 +12% Wroclaw 1 100 325 1 425 1 015 250 1 265 +13% Dom Development Group 8 149 6 305 14 454 7 766 4 810 12 576 +15% *Land controlled without building conditions
- 13. 13 2.7. DELIVERIES AS PLANNED DUE TO TIMELY PROJECT COMPLETIONS 1 215 440 839 988 549 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Warsaw Tri-City Wroclaw Deliveries in units Q1 2020 Q1 2019 Change Warsaw 430 1 112 (61)% Tri-City 38 98 (61)% Wroclaw 81 5 1 520% Dom Development Group 549 1 215 (55)% No. of units
- 14. 14 3.1. PROFIT AND LOSS ACCOUNT HIGH MARGIN AND RECORD-HIGH AVERAGE VALUE OF DELIVERED FLAT: PLN 572K Profit and Loss Account Q1 2020 Q1 2019 Change Sales Revenues 314.1 528.2 (41)% Handovers (units) 549 1 215 (55)% Revenue per unit (PLN’000) 572 435 32% Gross Profit on Sales 92.7 145.0 (36)% Gross Profit Margin 29.5% 27.4% 2.1 pp Operating Profit 49.7 105.3 (53)% Operating Profit Margin 15.8% 19.9% (4.1) pp Profit Before Tax 48.1 104.7 (54)% Profit Before Tax Margin 15.3% 19.8% (4.5) pp Net Profit 38.5 84.3 (54)% Net Profit Margin 12.3% 16.0% (3.7) pp EPS (PLN) 1.54 3.37 (54)% IAS 15, PLN m
- 15. 15 3.2. CUMULATIVE NET SALES TO BE RECOGNIZED IN P&L (UNITS SOLD BUT NOT DELIVERED - PRESALES) SIGNIFICANT REVENUE POTENTIAL TO BE RECOGNIZED IN FORTHCOMING QUARTERS 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M 2013 2014 2015 2016 2017 2018 2019 2020 PLN m Units sold but not delivered (presales): Value: 31.03.2019 2 894 units PLN 1 417m 31.03.2020 3 627 units, including: PLN 1 948m • 379 finished units; • 3 248 units under construction, with 2 063 finishing in 2020
- 16. 16 3.3. BALANCE SHEET WE MAINTAIN STRONG BALANCE SHEET: HIGH CASH BALANCES AND LOW DEBT PLN m Consolidated Balance Sheet 31.03.2020 31.03.2019 Change Shareholders’ funds (equity) 1,128.0 1,134.5 (1)% Net debt/(net cash)* 53.6 94.0 (43)% Gearing (net debt/equity) 4.8% 8.3% (3.5) pp Net asset value per share (PLN) 44.73 45.26 (1.2)% Shares in issue (m) 25.2 25.1 1% ROE (12M) 18.5% 28.7% (10.2) pp ROCE (12M) 15.4% 23.1% (7.7) pp * Bank debt plus bonds in issue less cash at banks (including escrow accounts)
- 17. 17 3.4. DEBT MATURITY STRUCTURE WELL-SPREAD REPAYMENT DATES GIVE US FLEXIBILITY Cash (including escrow accounts) as of 31/03/2020 PLN 640m Bond debt as of 31/03/2020 PLN 360m Available credit lines as of 31/03/2020 PLN 52m 100 110 50 50 50 333 0 50 100 150 200 250 300 350 400 by 31.03.2021 by 31.03.2022 by 31.03.2023 by 31.03.2024 by 31.03.2025 Bonds Bank loans PLN m
- 18. 18 4. SUMMARY: Q1 2020 • Very good January and February, rapid change in market environment in March due to the COVID-19 epidemic • The Group quickly adapted to changed conditions and maintained continuity of operations in all areas • Some projects momentarily put on hold to control risk, but ready for launch • 815 units sold with high margin • 1 890 units available for sale • Construction of over 4 800 units in 54 projects on time and on budget • 549 units delivered as planned • Gross margin at 29.5% and PLN 38.5m net profit • PLN 640m cash at bank with PLN 54m net interest-bearing debt and gearing of 5%
- 20. 20 APPENDIX 1: COMMENCEMENT OF HANDOVERS IN 2020 PROJECT LOCATION NO. OF UNITS COMMENCEMENT OF HANDOVERS PROJECT LOCATION NO. OF UNITS COMMENCEMENT OF HANDOVERS Q2 APARTAMENTY POLANKI TRI-CITY 9 Apr'20 Q4 PORT ŻERAŃ PHASE 3 WARSAW 152 Oct'20 APARTAMENTY MARINA MOKOTÓW PH 1 WARSAW 222 May'20 BEAUFORTA BUILDING 12 TRI-CITY 27 Oct'20 SPEKTRUM BUILDING D TRI-CITY 157 May'20 BEAUFORTA BUILDING 13 TRI-CITY 21 Oct'20 WILNO III PHASE 4 WARSAW 116 May'20 IDEA BUILDING 10 TRI-CITY 50 Oct'20 WILNO III PHASE 5 WARSAW 46 May'20 OSIEDLE PRZY BŁONIACH BUILDING A TRI-CITY 28 Oct'20 LOCUS BUILDING 1 TRI-CITY 59 Jun'20 OSIEDLE PRZY BŁONIACH BUILDING B TRI-CITY 36 Oct'20 REZYDENCJA MARINA MOKOTÓW WARSAW 97 Jun'20 ZIELONY POŁUDNIK PHASE 10 TRI-CITY 23 Oct'20 IDEA BUILDING 9 TRI-CITY 58 Jun'20 ZIELONY POŁUDNIK PHASE 11 TRI-CITY 22 Oct'20 Q3 BEAUFORTA BUILDING 2 TRI-CITY 19 Jul'20 APARTAMENTY MARINA MOKOTÓW PHASE 2/1 WARSAW 222 Nov'20 BEAUFORTA BUILDING 3 TRI-CITY 19 Jul'20 APARTAMENTY MARINA MOKOTÓW PHASE 2 /2 WARSAW 225 Nov'20 MEZZO BUILDING 2 TRI-CITY 76 Jul'20 ŻOLIBORZ ARTYSTYCZNY PHASE 11 WARSAW 381 Nov'20 PIĘKNA 21 WROCLAW 200 Aug'20 ŻOLIBORZ ARTYSTYCZNY PHASE 12 WARSAW 106 Nov'20 MEZZO BUILDING 1 TRI-CITY 82 Sep'20 LOCUS BUILDING 2 TRI-CITY 50 Nov'20 ZIELONY POŁUDNIK PHASE 9 TRI-CITY 26 Sep'20 GRABISZYŃSKA WROCLAW 62 Nov'20 ZIELONY POŁUDNIK PHASE 12 TRI-CITY 26 Sep'20 KSIĘCIA WITOLDA WROCLAW 138 Nov'20 BEAUFORTA BUILDING 14 TRI-CITY 20 Dec'20 IDEA BUILDING 11 TRI-CITY 27 Dec'20 OSIEDLE PRZY BŁONIACH BUILDING C TRI-CITY 28 Dec'20 OSIEDLE PRZY BŁONIACH BUILDING D TRI-CITY 36 Dec'20
- 21. 21 APPENDIX 2A: PROJECTS UNDER CONSTRUCTION AND IN PREPARATION: WARSAW NO. OF UNITS, AS OF 31/03/2020 11 3 9 1 2 5 4 8 10 6 NO. PROJECT UNDER CONSTRUCTION IN PREPARATION 8 PORT ŻERAŃ (KOWALCZYKA) 152 --- 9 WILNO 751 724 10 STACJA GROCHÓW (SIENNICKA) --- 390 11 PALLADIUM (AKACJE) --- 566 12 GŁĘBOCKA (NEW) --- 271 13 ST. AUGUSTA --- 125 TOTAL RIGHT BANK 903 2 076 7 NO. PROJECT UNDER CONSTRUCTION IN PREPARATION 1 ŻOLIBORZ ARTYSTYCZNY 487 493 2 LUDWIKI --- 429 3 APARTAMENTY OGRODOWA 160 --- 4 APARTAMENTY WŁODARZEWSKA 70 102 --- 5 MARINA MOKOTÓW 766 --- 6 METRO ZACHÓD (SZELIGOWSKA) (+253) 134 253 7 PORY --- 200 TOTAL LEFT BANK 1 649 1 375 PROJECT IN PREPARATION PROJECT UNDER CONSTRUCTION 12 13
- 22. 22 APPENDIX 2B: PROJECTS UNDER CONSTRUCTION AND IN PREPARATION: TRI-CITY NO. OF UNITS, AS OF 31/03/2020 1 2 3 7 5 8 6 9 10 11 4 12 13 14 7 15 NO. PROJECT UNDER CONSTRUCTION IN PREPARATION 1 IDEA 135 --- 2 SPEKTRUM 157 --- 3 OSIEDLE BEAUFORTA 280 191 4 PERSPEKTYWA --- 651 5 MEZZO 158 --- 6 ZIELONY POŁUDNIK 186 431 7 DOLNE MIASTO --- 371 8 LOCUS 271 --- 9 OSIEDLE CIS 148 --- 10 OSIEDLE PRZY BŁONIACH 128 180 11 DAWNA POCZTA 106 --- 12 ATRIUM --- 1 200 13 NIEPOŁOMICKA --- 124 14 CZŁUCHOWSKA --- 334 15 JASTARNIA --- 116 TOTAL 1 569 3 598 TRI-CITY PROJECT IN PREPARATION PROJECT UNDER CONSTRUCTION
- 23. 23 NO. PROJECT UNDER CONSTRUCTION IN PREPARATION 1 IDYLLA (STABŁOWICKA) 144 --- 2 KSIĘCIA WITOLDA 138 --- 3 PIĘKNA 21 200 --- 4 KURKOWA 118 --- 5 KOMEDY (BUFOROWA) 101 454 6 GRABISZYŃSKA 62 --- 7 KUSTRONIA --- 145 8 NOWY DWÓR --- 198 9 PSIE POLE (+144) --- 303 TOTAL WROCLAW 763 1 100 POJECT IN PREPARATION PROJECT UNDER CONSTRUCTION APPENDIX 2C: PROJECTS UNDER CONSTRUCTION AND IN PREPARATION: WROCLAW NO. OF UNITS, AS OF 31/03/2020 1 3 2 4 5 6 7 8 9
- 24. 24 LOCATION NO. OF PROJECTS / PHASES UNDER CONSTRUCTION NO. OF UNITS UNDER CONSTRUCTION NO. OF UNITS IN PREPARATION TOTAL (NO. OF UNITS) WARSAW 13 2 552 3 451 6 003 TRI-CITY 35 1 569 3 598 5 167 WROCLAW 6 763 1 100 1 863 DOM DEVELOPMENT CONSOLIDATED GROUP 54 4 884 8 149 13 033 APPENDIX 2D: PROJECTS UNDER CONSTRUCTION AND IN PREPARATION: SUMMARY NO. OF UNITS, AS OF 31/03/2020
- 25. For further information please contact: Magdalena Cumanis Investor Relations tel. +48 22 351 68 49 e-mail: magdalena.cumanis@domd.pl www.inwestor.domd.pl Dom Development S.A. endeavours to ensure that the information in the presentation is complete. up-to-date and accurate. However. we do not make any guarantees in this respect. Dom Development S.A. connot accept responsibilty for the consequences of using such information. and in particular any loss caused by reliance thereon for the purpose of investment decisions. The material contained in the presentation originates from reliable public sources and to the best knowledge of Dom Development S.A. may be considered reliable.