S t r i c t l y P r i v a t e & C o n f i d e n t i a l February 2008 J.W. CONSTRUCTION HOLDING S.A....

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February 2008

J.W. CONSTRUCTION HOLDING S.A.Largest Polish Residential Real Estate Developer

PRESENTATION

J.W. CONSTRUCTION HOLDING S.A.Largest Polish Residential Real Estate Developer

PRESENTATION

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Presentation Agenda

J.W. Construction Holding S.A. PRESENTATION – February 2008 2

Q4 2007 Results ………………………………………………………….…….… 3

Increase in Sales Value …………….…………………………………….…...… 5

Profits in Q1-Q4 2007 ………….………………….…………………….…..…… 6

Financial Forecasts vs. Performance in 2007..…………….………………… 7

Financial Results, 2004–2007 …………………………………………….…….. 8

Q4 2007 Highlights …………………………………………………..…………… 9

Land Bank Development in Q4 2007 …..……………………………………… 11

Important Developments After Q4 2007 ……. ……………….…….…..……. 12

Industry Development Prospects in the Company’s View ……….………. 13

Financial Forecasts for 2008 .…….………………….………………………… 15

Projected Profit to be Recognized in 2008 …..……………………….…..…. 16

Projected Share of Selected Projects in Total Revenue in 2008 …...….… 17

Strategy Implementation — Major Projects in 2008 …..…………………… 18

Projects in Progress ……………………………………………….…….……… 28

Projects in the Sales Stage ……………………………………………..………. 29

Planned Projects ……………………………………………………………….… 30

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Q4 2007 Results

Q4 2007 sales revenue - an increase by 84% (by PLN 194.3 million in absolute terms) compared to the same period of the previous year

2007 sales revenue - an increase by 7.8% compared to 2006

2007 gross margin - an increase by 1.5 percentage points compared to 2006

Sales revenue (PLN million)

782.7

425.2

726.3

230.9

0

100

200

300

400

500

600

700

800

900

Q4 2006 Q4 2007 2006 2007

Gross margin (% )

46.753.2

62.9

45.2

0

10

20

30

40

50

60

70

Q4 2006 Q4 2007 2006 2007


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Q4 2007 Results

Q4 2007 operating profit - an increase by 66.4% (by PLN 53.7 million in absolute terms) compared to the same period of the previous year 2007 operating profit - an increase by 11.8% compared to 2006

Net profit - an increase by 75.2% (by PLN 45.1 million in absolute terms) compared to Q4 2006

2007 net profit - an increase by 12.4% compared to 2006

Operating profit (PLN million)

201.4

134.6

80.9

180.1

0

50

100

150

200

250

Q4 2006 Q4 2007 2006 2007

Net profit (PLN million)

148.4

105.1

60.0

132.0

0

20

40

60

80

100

120

140

160

Q4 2006 Q4 2007 2006 2007


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Increase in Sales Value (PLN million)

The value of contracts signed with customers in 2007 was 10.2% higher than in the previous year

1,165.7

1,057.9

1000

1020

1040

1060

1080

1100

1120

1140

1160

1180

2006 2007


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Gross Sales Profit, Q1–Q4 2007

Górczewska Park, Warsaw, Górczewska/Olbrachta Streets

Osiedle Lazurowa, Warsaw, Lazurowa Street

Rezydencja na Skarpie, Warsaw, Bukowińska Street

Aleja Ludwinowska, Warsaw, Ludwinowska Street

Osiedle Leśne, Gdynia, Parkowa Street

Willa Konstancin, Konstancin, Bielawska/Paproci Streets

Osada Wiślana, Warsaw, Marcina z Wrocimowic Street

Osiedle Centrum, Łódź, Tymienieckiego Street

Victoria Park II, Kolomna, Russia


The total gross sales profit in the four quarters of 2007 came to PLN 249.3 million. The following projects contributed the most to this figure:

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The company performed as forecasted in 2007, in fact outperforming the forecast with respect to most parameters:

Sales revenue was 96% of the projected figure Gross sales profit was higher than projected by PLN 4.7 million Operating profit was higher than projected by PLN 1.9 million Net profit was higher than projected by PLN 1.9 million

Financial Forecasts vs. Performance in 2007 (PLN million)

146.5199.5

244.6

813.1

148.4201.4

249.3

782.7

0

100

200

300

400

500

600

700

800

900

Sales revenue Gross salesprofit

EBIT Net profit

2007 forecast

2007 performance(before audit)


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Financial Results, 2004 - 2007

Sales revenue (PLN million)

782.7726.3

414.6413.9

0

100

200

300

400

500

600

700

800

900

2004 2005 2006 2007 beforeaudit

Gross sales profit (PLN million)

249.3226.0

72.463.5

0

50

100

150

200

250

300

2004 2005 2006 2007 beforeaudit

Operating profit (PLN million)

201.4180.1

33.517.1

0

50

100

150

200

250

2004 2005 2006 2007 beforeaudit

Net profit (PLN million)

148.4132.0

12.34.3

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 beforeaudit


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Q4 2007 Highlights Registration of the J.W. Construction S.A. construction company, which will engage in construction activities and accept commissions also from

customers other than J.W. Construction Holding S.A.

Registration of changes regarding Dremet-Projekt Sp. z o. o. - transfer of

design activities to this company

Establishment of a subsidiary in Bulgaria - engaging in development

activities in Bulgaria

Purchase of shares in Porta Transport Sp. z o. o. with registered office in

Szczecin - the company will engage in development activities

Purchase of shares in the “Ogonyok Leisure Resort” Russian limited liability company with registered office in Sochi, Russia. The company owns real estate and intends to build a residential compound with sports,

commercial and service facilities


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Signing of a letter of intent with Shanghai Construction General Company, which has immense experience and an impressive construction record. The collaboration will consist in project support through the supply of technological solutions and manpower

Land bank development - the purchase of land for new investment

projects in Warsaw and Szczecin

The company was awarded the “Pearl of the Polish Economy” title in the Large Pearl category and also won the Great Prize of the President of

the Construction Chamber

Q4 2007 Highlights


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Land Bank Development, Q4 2007

The company continues to purchase land. From January 2007 to December 31, 2007, the company spent over PLN 167 million on land purchases, of which more than PLN 123 million had been raised by issuing stock.

ProjectLand

purchase datePlot area Plot legal status

Number of apartments planned

Aluzyjna I Street Warsaw – Białołęka

November 2007 0.6 hectares Final contracts 46

Aluzyjna II Street Warsaw – Białołęka

November 2007 1.4 hectares Preliminary contracts 120

Odkryta Street Warsaw – Tarchomin

October 2007 0.9 hectares Preliminary contracts 150

Szczecin – Porta Transport plot

November 2007 20 hectares Final contracts 5,400

Sochi - Russia December 2007 4.8 hectares Final contracts 1,000


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Securing a valid construction permit for the Lewandów project - stage I

Establishment of JWCH Budownictwo Drogowe Sp. z o. o.

The “Company of the Year 2007” award granted by the Polish Business Club - January 2008

The “Forbes Diamond 2008” award granted by the editors of the Polish Forbes monthly - January 2008

Important Developments After Q4 2007


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Industry Development Prospects in the Company’s View

Supply in the residential market is still outstripped by demand - the shortfall amounts to over 1.5 million apartments (Central Statistical Office figures as of December 2007)

There is an active group of customers in the real estate market who were born during the 1980s baby boom

Increasing urbanization contributes to rising demand for real estate in large cities

Steady GDP growth, decreasing unemployment and rising salaries

The range of mortgage loans on offer remains broad and widely available despite forecasted interest rate increases

The upward trend in prices will be sustained until housing prices in Poland reach European levels (the only exception here are unattractive apartments whose prices may fall)


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The company estimates that average real estate prices will remain steady in the first months of 2008, and rise by around 5% at the end of the year. The exceptional increases from previous years will not return, but from 2009 onwards real estate prices will continue to rise

Stable pricing situation in the construction materials market

Sustained interest in real estate investment on the part of institutional investors

In the longer term, demand will be boosted again from 2010 onwards due to the Euro 2012 effect and Poland’s probable entry into the euro area

Still considerable potential for real estate price increases in certain conurbations, e.g. Katowice and Szczecin, where the company plans future projects

Industry Development Prospectsin the Company’s View


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The company has published 2008 forecasts, according to which the following figures will increase as follows compared to 2007:

sales revenue by 39% (PLN 1,085.4 million)gross sales profit by more than 38% (PLN 345.7 million)

operating profit by almost 47% net profit by 48%

Financial Forecasts for 2008 Sales revenue (PLN million)

1,085.4

726.3 782.7

0

200

400

600

800

1000

1200

2006 2007 before audit 2008 forecast

Gross sales profit (PLN milion)

345.7

226.0249.3

0

50

100

150

200

250

300

350

400


Operating profit (PLN milion)

295.5

180.1201.4

0

50

100

150

200

250

300

350


Net profit (PLN milion)

219.7

132.0148.4

0

50

100

150

200

250



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Projected Profit to be Recognized in 2008

Górczewska Park II, Warsaw, Górczewska/Olbrachta Streets

Osiedle Lazurowa, Warsaw, Lazurowa Street

Osiedle Lewandów II, Warsaw, Lewandów Street

Osada Wiślana, Warsaw, Marcina z Wrocimowic Street

Zielona Dolina I, Warsaw, Zdziarska/Ostródzka Streets

Osiedle Leśne, Gdynia, Parkowa Street

Rezydencja Quatro, Warsaw, Łukowska Street

Victoria Park II, Russia, Kolomna

Osiedle Bursztynowe, Warsaw, Korkowa Street

Wiślana Aleja, Warsaw, Odkryta Street

Ożarów Mazowiecki, Kaputy stage I (18 720 sq. m floor space)

Osiedle Kaskada, Łódź, Tymienieckiego Street


The projected 2008 sales profit level is PLN 345.8 million. The following projects will contribute the most to this figure:

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Projected Share of Selected Projectsin Total Revenue in 2008

Project Projected revenue to

be recognized in 2008 (PLN thousand)

Percentage of projected 2008

rewenue

Górczewska Park II, Warsaw, Górczewska/Olbrachta Streets

249,518 23%

Osiedle Lazurowa, Warsaw, Lazurowa Street 131,312 12%

Lewandów Park II, Warsaw, Lewandów Street 120,955 11%

Osada Wiślana, Warsaw, Marcina z Wrocimowic Street 74,110 7%

Zielona Dolina I, Warsaw, Zdziarska Street (27 700 sq. m floor space)

67,776 6%

Rezydencja Quatro, Warsaw, Łukowska Street 54,083 5%

Osiedle Bursztynowe, Warsaw, Korkowa Street 52,563 5%

Victoria Park II, Russia, Kolomna 49,776 4%

Osiedle Leśne, Gdynia, Parkowa Street 43,184 4%

Ożarów Maz. - Kaputy stage I (18 720 sq. m floor space)

41,820 4%

Wiślana Aleja, Warsaw, Odkryta Street 41,753 4%

Osiedle Kaskada, Łódź, Tymienieckiego Street 30,245 3%

Other 128,347 12%

TOTAL 1,085,442 100%


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Strategy Implementation - Major Projects in 2008

The company is developing projects that were announced in the issue prospectus. The most important projects which will have impact on financial results are:

in the Warsaw market - Osiedle Górczewska Park, Osiedle Lazurowa,Osiedle Osada Wiślana, Osiedle Lewandów II, Osiedle Zdziarska I,Rezydencja Quatro, Osiedle Bursztynowe

in the Łódź market - Osiedle Kaskada

in the Tri-City (Gdańsk, Gdynia, Sopot) market - Osiedle Leśne

in the Russian market - Victoria Park

The company uses the “zero” method [Polish Accounting Act, Article 34a, para. 4] when accounting for the first stage of projects in progress.


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Projects - Warsaw Market

Osiedle Lazurowa

Warsaw, Bemowo

Lazurowa Street

A housing estate at Lazurowa Street in

Warsaw, close to the projected

subway station. The project consists of

four stages, on completion it will

include 669 high-standard apartments.

ProjectFloor space

(sq. m)Revenue

Progress (average for all stages) in terms of cost and revenue - December 31, 2008

projection

Osiedle Lazurowa 33,727 245,276 Cost: 95%

Revenue: 100%


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Górczewska Park

(Górczewska II)

Warsaw - Wola,

Górczewska/Olbrachta Streets

The Górczewska Park project

includes 12 apartment buildings

situated at Górczewska/Olbrachta

Streets - 886 apartments and 4

commercial premises.

ProjectFloor space

(sq. m)Revenue

Progress in terms of cost and revenue - December 31,

2008 projection

Górczewska Park 44,929 427,357Cost: 90%

Revenue: 100%


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Osiedle Lewandów Park

Warsaw, Lewandów Street

- construction starts in 2008

A gated housing compound

consisting of over 1,900 apartments.

Construction in two stages -

Lewandów I and Lewandów II.

Attractive location, good connection

to the city center.


ProjectFloor space

(sq. m)Revenue


2008 projection*

Lewandów Park 81,191 410,522Cost: 40%*

Revenue: 100%*

* For the Lewandów II stage


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Osiedle Zielona Dolina – stage I

Warsaw, Zdziarska/Ostródzka Streets


A modern housing estate in the

Białołęka district of Warsaw. Located

close to shopping malls and service

facilities, very good connection to the city

centre. Consists of 596 apartments.

ProjectFloor space

(sq. m)Revenue


2008 projection

Zielona Dolina 27,792 169,439Cost: 40%

Revenue: 100%


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Osiedle Bursztynowe

Warsaw, Korkowa Street


A small, cozy housing estate consisting

of four-story houses. Very good

connection to the city center. Gated

and guarded estate 322 apartments

are planned.

ProjectFloor space

(sq. m)Revenue


2008 projection

Osiedle Bursztynowe

17,402 116,807Cost: 60%

Rewenue: 100%


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Wiślana Aleja

Warsaw, Odkryta Street


A housing estate consisting of

modern six-story houses. The estate

includes 200 apartments with

underground garages. Fast and easy

access to schools, kindergartens and

shopping malls..

ProjectFloor space

(sq. m)Revenue


2008 projection

Wiślana Aleja 9,770 69,589Cost: 60%

Revenue: 100%


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Projects - Outside Warsaw

Osiedle LeśneGdynia, Parkowa Street

This is the second project developed

in Gdynia at Parkowa Street and

surrounded by the forests of the Tri-

City Landscape Park. The guarded

housing estate consists of nine four-

story houses with 202 apartments.

ProjectFloor space

(sq. m)Revenue


2008 projection

Osiedle Leśne 12,871 90,549Cost: 100 %

Revenue: 100 %


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Projects - Outside Warsaw

Osiedle KaskadaŁódź, Tymienieckiego Street


A compound consisting of nine

residential buildings with service

facilities and underground garages.

The project will include more than 400

apartments as well as commercial

premises on the first floors of the

buildings. Excellent location in

downtown Łódź.

ProjectFloor space

(sq. m)Revenue


2008 projection

Osiedle Kaskada 24,157 151,226Cost: 40%

Revenue: 50%


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Projects Abroad

Osiedle Victoria ParkKolomna, Russia

A guarded housing estate consisting of

six apartment blocks in the town of

Kolomna near Moscow. The project

includes over 1,100 apartments and

the planned completion date for the

entire estate is 2012.

ProjectFloor space (sq.

m, complete project)

Revenue (complete project)

Progress in terms of cost and revenue, A1 and A3

blocks - December 31, 2008 projection

Osiedle Victoria Park

58,196 443,967

Cost A1: 100%Revenue A1: 100%

Cost A3: 41%Revenue A3: 52%


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Projects in Progress

Project Total No. of apartments

No. of apartments sold

Planned project completion date

% included in 2007 results

Osiedle GórczewskaWarsaw, Górczewska Street

1,410 1,410 1st half 2008 99%

Osiedle Centrum Łódź, Tymienieckiego Street

324 322 1st half 2008 90%

Rezydencja na Skarpie IV Warsaw, Bukowińska Street

261 260 1st half 2008 99%

Willa Konstancin Konstancin, Bielawska/Paproci Streets

178 168 1st half 2008 90%

Aleja Ludwinowska Warsaw, Ludwinowska Street

68 68 1st half 2008 85%

Osiedle LeśneGdynia, Parkowa Street

202 163 Q4 2008 48%

Osiedle LazurowaWarsaw, Lazurowa Street 669 645

stage I – Q2 2008

stage II – Q3 2008

stage III – Q4 2008

stages IV and V – Q1 2009

47%

Osada WiślanaWarsaw, Marcina z Wrocimowic Street

404 353stage I – Q2 2008

stages II and III – Q2 200927%

Rezydencja QuatroWarsaw, Łukowska Street

243 243 Q1/Q2 2009 0%

Górczewska ParkWarsaw, Górczewska/Olbrachta Streets

890 706 Q2/Q3 2009 35%

Katowice, Bałtycka Street 25 0 1st half 2008 0%

Victoria Park II (Russia) A1 block 158 80 Q4 2008 21%

Projects under construction and in the sales stage (end December 2007 data)


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Projects in the Sales Stage, Projected Construction Start 1st half 2008

Project

Estimated revenue

(PLN thousand)

No. of apartments

No. of apartments

sold

Construction permit to be obtained in

% included in 2007 results

Zielona DolinaWarsaw, Zdziarska/Ostródzka Streets

432,326 594 * 498 1st half 2008 0%

Wiślana AlejaWarsaw, Odkryta Street

69,589 200 157 Q1 2008 0%

Lewandów Park I i II Warsaw, Lewandów Street

410,522 1,905 1,681Q1 2008 -

Lewandów I and Lewandów II

0%

Osiedle BursztynoweWarsaw, Korkowa Street

116,807 322 255 1st half 2008 0%

* Apartments available for sale

No. of apartments No. of apartments sold

Apartments under construction and in the sales stage, total

7,853 7,009


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Planned Projects (as of end December 2007)

Project City/district Market segmentNo. of

apartments / houses

Estimated floor space, sq. m

Lewandów Park III, Lewandów Street Warsaw / Białołęka Standard apartments 787 33,179

Zielona Dolina, Zdziarska/Ostródzka Streets Warsaw / Białołęka Standard apartments 911 45,000

Światowida Warsaw / Białołęka Standard apartments 237 13,035

Osiedle Centrum II Łódź Standard apartments 432 23,760

Pogonowskiego Łódź Standard apartments 109 5,995

Uroczysko Katowice Standard apartments 563 24,616

Szczecin, Wyzwolenia Avenue SzczecinLuxury apartments / service

facilities400 32,000

Szczecin - Porta Transport plot Szczecin Standard apartments 5,400 297,000

Ożarów Mazowiecki I Ożarów Mazowiecki Standard apartments 1,973 96,000

Ożarów Mazowiecki II Ożarów Mazowiecki Standard apartments 816 40,000

Ożarów Mazowiecki III Ożarów Mazowiecki Standard apartments 1,300 71,500

Łeba Łeba Standard apartments 490 29,055

Berensona Warsaw / Białołęka Standard apartments 170 9,350

Marymoncka II Warsaw / Bielany High-standard apartments 23 1,265


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Planned Projects (as of end December 2007)

Project City/district Market segmentNo. of

apartments / houses

Estimated floor space, sq. m

Aleja Ludwinowska II Warsaw / Ursynów High-standard apartments 24 2,400

Victoria Park II Kolomna/ Russia Standard apartments 782 43,010

Aluzyjna I Warsaw / Tarchomin Standard apartments 46 2,530

Aluzyjna II Warsaw / Tarchomin Standard apartments 120 7,000

Konstancin II Konstancin Standard apartments 136 8,800

Sopot, Parkowa Street Sopot Arrangements pending 17 2,500

Badylarska – Office Building Warsaw Services - 4,500

Pileckiego – Offices/Hotel Warsaw Services/hotel services - 17,500

Głogoczów – Hotel Głogoczów Hotel Services - 3,000

Juszkowo I Gdańsk Arrangements pending - 7,000

Krynica – Czarny Potok Krynica Hotelservices - 20,882

Sochi Russia Standard apartments ca. 1,000 82,000

TOTAL 15,736 922,877


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31 grudnia 2007 r.

31 grudnia 2006 r.

Projected revenue from projects in progress 4,874.5 3,567.8

Projected cost of projects in progress 3,334.0 2,337.0

Projected margin for projects in progress 1,540.5 1,230.8

Accumulated revenue recognized in profit and loss 695.8 665.6

Accumulated cost recognized in profit and loss 455.5 454.0

Accumulated margin recognized in profit and loss 240.2 211.6

Deferred margin 1,300.2 1,019.2

Projected margin for projects in progress 31.1% 35.1%

Percentage of deferred margin 84.4% 82.8%

Projects in Progress Will Yield over PLN 1 Billion in Margins

Projects in progress will yield over PLN 1 billion in margins, which will be recognized in future financial results.


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INVESTOR RELATIONS OFFICE:

Małgorzata Szwarc-Sroka

Head of Financial Liquidity Management

and Head of the Investor Relations Office

Phone: +48 022 771 77 85 / +48 0 22 771 78 10or +48 022 771 75 10

e-mail: [email protected]

S t r i c t l y P r i v a t e & C o n f i d e n t i a l February 2008 J.W. CONSTRUCTION HOLDING S.A....

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Transcript of S t r i c t l y P r i v a t e & C o n f i d e n t i a l February 2008 J.W. CONSTRUCTION HOLDING S.A....