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J.W. CONSTRUCTION HOLDING S.A. PRESENTATION
Q1 2008 RESULTS
J.W. CONSTRUCTION HOLDING S.A. PRESENTATION
Q1 2008 RESULTS
Press conference, 14 May 2008
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Presentation Agenda
J.W. Construction Holding S.A. PRESENTATION – May 2008 2
Q1 2008 Results 3
Gross Sales Profit in Q1 2008 5
Q1 2008 Highlights 6
Important Developments after Q1 2008 8
Projected Profit to be Recognized in 2008 11
Projected Share of Selected Projects in Total Revenue in 2008 12
Strategy Implementation — Major Projects in 2008 13
Projects in Progress 24
Projects in the Sales Stage 25
Planned Projects 26
Industry Development Prospects in the Company’s View 29
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Q1 2008 Results
Q1 2008 sales revenue - an increase by 12.5% (by PLN 13.3 million in absolute terms) compared to the same period of the previous year
Q1 2008 gross margin - an increase by 7.6 percentage points compared to the same period of the previous year
3
Sales revenue, PLN million:
119,6
106,3
95
100
105
110
115
120
125
Q1 2007 Q1 2008
Gross margin, %
32,8
25,2
0
5
10
15
20
25
30
35
Q1 2007 Q1 2008
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Q1 2008 Results
Q1 2008 operating profit — an increase by 54.2% (by PLN 9.7 million in absolute terms) compared to Q1 2007
Net profit — an increase by 70.5% (by PLN 7.9 million in absolute terms) compared to Q1 2007
4
Operating profit, PLN million:
27,6
17,9
0
5
10
15
20
25
30
Q1 2007 Q1 2008
Net profit, PLN million:
19,1
11,2
0
5
10
15
20
25
Q1 2007 Q1 2008
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Q1 2008 Gross Sales Profit
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Górczewska Park, Warsaw, Górczewska/Olbrachta Streets - 27%
Rezydencja Quatro, Warsaw, Łukowska Street - 25%
Osiedle Lazurowa, Warsaw, Lazurowa Street - 20%
Osiedle Leśne, Gdynia, Parkowa Street - 10%
Osada Wiślana, Warsaw, Marcina z Wrocimowic Street - 8%
Aleja Ludwinowska, Warsaw, Ludwinowska Street - 7%
The total gross sales profit in Q1 2008 came to PLN 39.2 million. The following
projects contributed the most to this figure:
Other projects also contributed to the profits, including:
Osiedle Centrum, Łódź, Tymienieckiego Street
Victoria Park II, Kolomna, Russia
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Q1 2008 Highlights
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Registration of the JWCH Budownictwo Drogowe Sp. z o. o. (limited liability company), which will engage in road construction activities
Registration of the JWCH Produkcja Budowlana Sp. z o. o. (limited liability company), which will manufacture prefabricated elements for construction purposes
Valid construction permit obtained for the Wiślana Aleja project at Odkryta Street in Warsaw
Construction permit for the Lewandów Park project - stage I became valid
Construction of the Lewandów Park project - stage I started
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Q1 2008 Highlights
“Company of the Year 2007” award for notable achievements in the field of residential construction and for the successful first listing on the Warsaw Stock Exchange - granted by the Polish Business Club
Inclusion in the “Forbes Diamond 2008” list of companies that increased their value most rapidly between 2004 and 2006, leveraging the favorable economic climate in the most effective way
JWCH ranked first in the “2008 Developer Ranking List” drawn up by the editors of the Gazeta Prawna Business Forum; the list includes the largest and most dynamic companies in the development industry
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Important Developments after Q1 2008
Valid construction permit obtained for the Lewandów Park project - stage II
Valid construction permit obtained for the project in Ożarów Mazowiecki - stage I
Construction permit obtained for the Osiedle Bursztynowe project, the permit is not valid yet
Further land bank development - the J.W. Construction Bulgaria EOOD subsidiary with its registered office in Sofia purchased real estate in the Golden Sands resort in Bulgaria; a holiday apartment complex will be constructed there
A general contracting agreement signed with the PRUMSTAV DEVELOP POLAND Spółka z o. o. (limited liability company) with its registered office in Kłodzko which concerns the construction of 14 residential buildings within the framework of the Lewandów Park project - stage II
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Important Developments after Q1 2008
The company was included in the list of “100 Most Valuable Companies” compiled by the Newsweek Polska weekly and A.T. Kearney
J.W. Construction was included in the “500 Largest Polish Companies” list compiled by the Polityka weekly
The company was included in the “List of 500” which lists top Polish companies, compiled by the editors of the Rzeczpospolita daily
The company was nominated for the “Construction Master” award granted by the editors of the Home&Market monthly in the Best Building Contractor category
A “European Medal” for the services provided by the Hotel 500 chain awarded by the Polish Business Club within the framework of the 16th “European Medal for Services” competition
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Important Developments after Q1 2008
On 1 April 2008, an Extraordinary General Meeting of J.W. Construction Holding S.A. took place, during which Shareholders agreed to the transfer of three organized parts of the company to subsidiaries in the form of separate branches
On 30 April 2008, three Extraordinary General Meetings took place at J.W. Construction Holding S.A. subsidiaries, as a result of which agreements concerning the transfer of organized parts of the company (branches) were concluded:
Further developments related to transformations within the J.W. Construction Holding S.A. Group
- to J.W. Construction S.A. - a branch under the name of J.W. Construction Holding S.A. “Budownictwo”
- to JW Projekt Sp. z o. o. — a branch under the name of J.W. Construction Holding S.A. „Pracownia Projektowa”
- to JWCH Produkcja Budowlana Sp. z o. o. — a branch under the name of J.W. Construction Holding S.A. „Zakład Prefabrykacji Budowlanej”
Since 1 May 2008, the Group has been operating within the new framework.
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projected Profit to be Recognized in 2008
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Górczewska Park II, Warsaw, Górczewska/Olbrachta Streets - 32%
Osiedle Lewandów II, Warsaw, Lewandów Street - 13%
Osiedle Lazurowa, Warsaw, Lazurowa Street - 10%
Osiedle Leśne, Gdynia, Parkowa Street - 8%
Osada Wiślana, Warsaw, Marcina z Wrocimowic Street - 7%
Rezydencja Quatro, Warsaw, Łukowska Street - 5%
The projected 2008 gross sales profit level is PLN 345.8 million. The following
projects will contribute the most to this figure (according to estimates):
The following projects, inter alia, will also contribute to sales profits:
Victoria Park II, Russia, Kolomna
Osiedle Bursztynowe, Warsaw, Korkowa Street
Wiślana Aleja, Warsaw, Odkryta Street
Ożarów Mazowiecki, Kaputy - stage I (17,902 sq. m usable apartment floor space)
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projected Share of Selected Projectsin Total Revenue in 2008
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Project Projected revenue to
be recognized in 2008, PLN thousand
Percentage of projected 2008
revenue
Górczewska Park II, Warsaw,
Górczewska/Olbrachta Streets 251,655 23%
Osiedle Lazurowa, Warsaw, Lazurowa Street 131,312 12%
Lewandów Park II, Warsaw, Lewandów Street 124,867 12%
Osada Wiślana, Warsaw, Marcina z Wrocimowic Street 74,110 7%
Rezydencja Quatro, Warsaw, Łukowska Street 55,668 5%
Osiedle Leśne, Gdynia, Parkowa Street 50,429 5%
Other 397,401 36%
TOTAL 1,085,442 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Strategy Implementation — Major Projects in 2008
The company is developing the projects that were announced in the prospectus. The most important projects which will have impact on financial results are:
in the Tri-City (Gdańsk, Gdynia, Sopot) market - Osiedle Leśne
in the Russian market - Victoria Park
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in the Warsaw market - Osiedle Górczewska Park, Osiedle Lazurowa, Osiedle Osada Wiślana, Osiedle Lewandów Park II, Osiedle Zielona Dolina I, Rezydencja Quatro, Osiedle Bursztynowe
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Osiedle Lazurowa
Warsaw, Bemowo District,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.
Project Usable apartment floor space (sq. m)
Revenue (PLN thousand)
Progress (average for all stages) in terms of cost and revenue - 31 December 2008
projection
Osiedle Lazurowa 33,727 253,827 Cost: 95%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Górczewska Park(Górczewska II)
Warsaw, Wola District,
Górczewska/Olbrachta Streets
The Górczewska Park project includes 12 apartment buildings situated at Górczewska/Olbrachta Streets - 886 apartments and 4 commercial premises.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Osiedle
Górczewska Park44,929 434,107
Cost: 90%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Osiedle Lewandów Park
Warsaw, Lewandów Street
- construction starts in April 2008
A gated housing compound consisting of over 1,900 apartments. Construction in two stages - Lewandów Park I and Lewandów Park II. Attractive location, good connection to the city center.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Osiedle
Lewandów Park81,191 429,097
Stage I cost: 29%
Stage II cost: 40%
Revenue, stages I and II: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Osiedle Zielona Dolina - stage I
Warsaw, Zdziarska/Ostródzka Streets
- construction starts in 2008
A modern housing estate in the Białołęka district of Warsaw. Located close to shopping malls and service facilities, very good connection to the city center. Consists of 596 apartments.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Zielona Dolina 27,792 198,562 Cost: 40%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Osiedle Bursztynowe
Warsaw, Korkowa Street
- construction starts in 2008
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.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Osiedle Bursztynowe 17,402 119,823 Cost: 40%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Warsaw Market
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Wiślana Aleja
Warsaw, Odkryta Street
- construction starts in 2008
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.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Wiślana Aleja 9,770 71,917 Cost: 40%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Outside Warsaw
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Osiedle Leśne
Gdynia, 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.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Osiedle Leśne 12,871 90,928 Cost: 100%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects - Outside Warsaw
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Osiedle Ożarów I - stage I
Kręczki-Kaputy, Ożarów Mazowiecki municipality
- construction starts in 2008
A compound consisting of 11 residential buildings with underground garages. The project will include 376 apartments. Service facilities as well as a school and kindergarten are also planned. On completion of all stages, the project should include around 4,000 apartments.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue - 31 December
2008 projection
Osiedle Ożarów I
Stage I 17,902 104,550
Cost: 40%
Revenue: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects Abroad
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Victoria Park
Kolomna, 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.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue, A1 block –
31 December 2008 projection
Victoria Park 58,196 443,967 Cost A1: 100%
Revenue A1: 100%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects Abroad
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Osiedle Jakornaja Szczel
Sochi (Russia) - construction
starts in Q4 2008
A housing estate consisting of seven 16-story apartment blocks (1,200 apartments in total), complete with a swimming pool, fitness center, tennis courts, cafés and shopping facilities.
Project Usable
apartment floor space (sq. m)
Revenue (PLN thousand)
Progress in terms of cost and revenue -
31 December 2008 projection Sochi 62,000 350,900
Cost: 5%
Revenue: 0%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects in ProgressProjects under construction and in the sales stage (end March 2008 data)
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ProjectTotal No. of apartments
No. of apartments sold
Planned project completion date
% included in 2008 results
Osiedle GórczewskaWarsaw, Górczewska Street
1,410 1,409 1st half 2008 100%
Osiedle CentrumŁódź, Tymienieckiego Street
324 316 1st half 2008 100%
Rezydencja na Skarpie IVWarsaw, Bukowińska Street
261 261 1st half 2008 100%
Willa KonstancinKonstancin, Bielawska/Paproci
Streets177 167 1st half 2008 100%
Aleja LudwinowskaWarsaw, Ludwinowska Street
68 68 1st half 2008 100%
Osiedle LeśneGdynia, Parkowa Street
202 163 Q4 2008 100%
Osiedle LazurowaWarsaw, Lazurowa Street
669 643
stage I – Q2/Q3 2008stage II – Q3 2008stage III – Q4 2008
stages IV and V – Q1 2009
95%
Osada WiślanaWarsaw, Marcina z Wrocimowic
Street404 365
stage I– Q3/Q4 2008stages II and III – Q2/Q3 2009
86%
Rezydencja QuatroWarsaw, Łukowska Street
243 242 1st half 2009 75%
Górczewska ParkWarsaw, Górczewska/Olbrachta
Streets890 737 Q2/Q3 2009 90%
Osiedle Uroczysko, Katowice, Bałtycka Street
25 0 1st half 2008 100%
Victoria Park II (Russia) A1 block 158 80 Q4 2008 100%
Lewandów Park I and IIWarsaw, Lewandów Street
1,905 1,578 1st half 2010Lewandów I — 29%Lewandów II — 40%
Wiślana AlejaWarsaw, Odkryta Street
200 171 Q1 2010 40%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects in the Sales Stage, Projected Construction Start 1st Half 2008
*Apartments available for sale
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ProjectEstimated
revenue, PLN thousand
No. of apartments
No. of apartments sold
Construction permit to be obtained in
% included in 2008 results
Zielona DolinaWarsaw, Zdziarska/Ostródzka
Streets455,085 594* 401 1st half 2008
Zdziarska I - 40%
Zdziarska II - 0%
Osiedle BursztynoweWarsaw, Korkowa Street
120,648 322 256 1st half 2008 40%
No. of apartments No. of apartments sold
Apartments under construction and in the sales stage, total
7,852 6,876
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Planned Projects (as of end April 2008)
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Project City / district Market segmentNo. of apartments /
houses
Estimated usable apartment floor
space, sq. m
Lewandów Park III, Lewandów Street
Warsaw / Białołęka District
Standard apartments 787 33,179
Zielona Dolina, Zdziarska/Ostródzka
Streets
Warsaw / Białołęka District
Standard apartments 911 45,000
ŚwiatowidaWarsaw / Białołęka
DistrictStandard 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 IOżarów
MazowieckiStandard apartments 1,973 96,000
Ożarów Mazowiecki IIOżarów
MazowieckiStandard apartments 816 40,000
Ożarów Mazowiecki IIIOżarów
MazowieckiStandard apartments 1,300 71,500
Łeba Łeba Standard apartments 490 29,055
BerensonaWarsaw / Białołęka
DistrictStandard apartments 170 9,350
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Planned Projects (as of end April 2008)
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Project City / district Market segmentNo. of apartments
/ houses
Estimated usable apartment floor space,
sq. m
Aleja Ludwinowska IIWarsaw / Ursynów
DistrictHigh-standard
apartments24 2,400
Victoria Park II Kolomna / Russia Standard apartments 782 43,010
Aluzyjna IWarsaw / Tarchomin
DistrictStandard apartments 46 2,530
Aluzyjna IIWarsaw / Tarchomin
DistrictStandard apartments 120 7,000
Konstancin II Konstancin Standard apartments 136 8,800
Sopot, ul. Parkowa 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 Hotel services - 20,882
Sochi Russia Standard apartments ca. 1,200 82,000
Złote Piaski Bulgaria Holiday apartments 180 17,700
TOTAL 16,093 939,312
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Projects in Progress Will Yieldover PLN 1 Billion in Margins
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Projects in progress will yield over PLN 1 billion in margins, which will be recognized in future financial results.
31 December 2007 31 March 2008
Projected revenue from projects in progress
4,874.5 4,265.3
Projected cost of projects in progress 3,334.0 2,929.5
Projected margin for projects in progress 1,540.5 1,335.8
Accumulated revenue recognized in profit and loss
695.8 93.1
Accumulated cost recognized in profit and loss
455.5 57.5
Accumulated margin recognized in profit and loss
240.2 35.6
Deferred margin 1,300.2 1,300.3
Projected margin for projects in progress 31.1% 31.2%
J.W. Construction Holding S.A. PRESENTATION – May 2008
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Industry Development Prospects in the Company’s View
Regardless of the stagnation in the housing market, which has been felt for several months now, supply 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 and whose housing needs still have not been met
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 the banks’ announcements concerning the tightening of lending criteria
29J.W. Construction Holding S.A. PRESENTATION – May 2008
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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, and from 2009 onwards real estate prices will start to rise slowly
Stable pricing situation in the construction materials market
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
30
Industry Development Prospects in the Company’s View
J.W. Construction Holding S.A. PRESENTATION – May 2008
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INVESTOR RELATIONS OFFICE:
Małgorzata Szwarc-Sroka
Head of Financial Liquidity Managementand 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]