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The most significant events in Q1 2014 • Obtaining a final use permit for the investment ofOaza Piątkowo in Poznań. • Obtaining a final building permit for the investment of Osiedle Centrum III in Łódź. • The total repayment of a loan granted in the amount of PLN 20 million to refinance the cost of the construction of premises in Ożarow Mazowiecki. • Submission of applications for building permits for the following investments: Bliska Wola, stages B1 & B2 (964 units, Warsaw) – permits obtained in Q2 2014, stage B1 launched to sale. • Shares Issue Announcement and commencement of works on the prospectus preparation.
Factors influencing the Company's activity in Q1 2014 • Maintaining low interest rates of mortgages as a favourable factor to finance the flat purchase. • Polish housing market enters the growth phase of the business cycle - increase in the number of transactions and housing prices. • The introduction of the government program Mieszkanie dla Młodych (since early 2014) - the Company had at the beginning of the year 500 completed units available in this program. • Stable prices of materials and construction services. • Conduct of marketing and advertising activities aimed at intensifying sales of completed units. • Finalisation of processes associated with the preparation of key investments designed to run in the next quarter. POSITIVE
Factors influencing the Company's activity in Q1 2014 • Still restrictive policy of FSA in relation to mortgage credits - restrictions on loans in foreign currencies, Recommendation S • Act developer introducing trust accounts - the act inhibits quick proceeding in the scope of financing and enforces increase in financial expenses • Changes in government support projects in the housing market - the uncertainty in the market resulting in significant seasonality of demand • Long-lasting process of obtaining necessary administrative decisions in relation to the currently ongoing and future projects. NEGATIVE
The strategy for next years • To start the biggest number of new residential projects offering faster, current cash flow and return on investment from previously purchased plots. • Implementation of projects within SPVs to increase transparency and accelerate the flow of financing acquisition. • To intensify works related to the preparation of project documentation and obtaining building permits • To strengthen the leader position both among developers in Warsaw (on the basis of an owned extensive land bank), and across the country, due to its expansion into other areas of Poland– Tri-City market, Łódź, Katowice, Poznań • Reduction and postponement of commercial and hotel projects, acquisition of partners for implementing these projects is being considered • Selective acquisition of new locations and reducing the scale of construction land bank • Active actions toward non-performing assets • Continuing the reduction of fixed costs, including overhead costs, through an internal reorganization of the Company • The new issue of shares in order to speed up the launch of the new investments.
Sales of flats in Q1 2014 • J.W. Construction Holding S.A in Q1 2014 sold 248 units compared to 189 units y/y, an increase by 31.22% y/y. • An important factor influencing the sale of the first quarter is the government program MdM, stimulating demand from customers. * Data on sales include sales of "Oxygen" investment (25 premises in Q1 2014, 17 premises in Q1 2013)
Selected consolidated financial data for Q1 2014 • Decrease in revenues from sales in Q1 2014 by 24%, y/y. • Increase in net profit in Q1 2014 by 21% y/y
Gross margin on sales vs gross profit on sales • Gross margin on sales in the long term is maintained at a level of about 20%.
Implementation of the profit from sales from developer projects in Q1 2014 • The percentage of particular investments recognized in profit from sales within developer projects: • Units recognized in resultsin Q1 2013 vs Q1 2014
Overheads vs employment 361*** Number of people • Including employment in hotels: * 99 people ** 140 people *** 140 people
Premises (in units) in the offer to be recognized in the result in subsequent quarters 298 sold premies not transferred
Housing investments implemented in Q1 2014 • In Q1 2014, the Company implemened 4 residential investments with the total number of 362 units covering 19,000 square metres of UFS. • In addition to housing investments, the Company implemented a hotel venue in Q1 called Stara Dana in Szczecin with an estimated net total area of 5,077 m2.
Investments to be run (as at 31 March 2014) • During the next 2 years, the Company, on a basis of an owned land bank, plans to start the implementation of about 5,800 units: Investments in Warsaw and vicinity *Investments planned to be run in 2014
Investments planned to be run Investments beyond Warsaw *Investments planned to be run in 2014
The most important marketing- sale events in Q1 2014 • Concentration of promotional activities on the offer which is available in the program of "Mieszkanie dla Młodych" - in Warsaw, Łódź, Poznań and Katowice. • "Mieszkanie dla Młodych" Seminar Organization (in Hotel 500, Zegrze) - combination of educational functions with the promotion of Zielona Dolina development. • Completion of the sale of apartments in investments such as Lewandów Park and Bliska Wola (Stage I) • Construction completion of the Oaza Piątkowo investment - advertising campaign of apartments ready to settle • Introduction to the sale of energy-efficient houses in the Villa Campina investment
Marketing and sales policy in Q1 2014 • Conducting strategic marketing activities in all areas of communication with the Client • Individual approach to the Client – the flexibility in terms of possibility of negotiating the prices depending on the payment amount and schedule. • The organization of the "Saleout of Last Flats" from ready to settle investments • Organization of regular Open Days at Trade Offices and participation at Local Real Estate trade fairs • Effective cross marketing - the cooperation with Hotel 500 and Czarny Potok Resort & Spa chain in terms of cross-promotion.
Selected projects planned to be run in 2014: Warsaw, Kasprzaka Street - Bliska Wola, Stage II (B1+B2)
Selected projects planned to be run in 2014:Łódź, Tymienieckiego Street – Osiedle Centrum III
Selected projects planned to be run in 2014:Warsaw, Berensona Street
Selected projects planned to be run in 2014:Gdynia, Spokojna Street, Stage I
Selected projects planned to be run in 2014:Gdynia, Sochaczewska Street
Conditions for intensification of the investment program • The entrance of the housing market in the growth phase of the cycle resulting from the gradual improvement of the macroeconomic situation in Poland and the increasing availability of credit financing; • Reflection on the housing market confirmed by the increase in housing sales and increase transaction prices over the past 12 months; • The increase of quarterly ROS in the Group's offer in the second half of 2013 additionally confirms the favourable situation on the primary market activity; • The Group has a significant land bank acquired and prepared for development in times of market downturn; • The bank land includes plots in major Polish cities including prestigious locations in Warsaw and Gdynia; • The Group intends to develop its offer more than 2,300 units in 2014 and another 3,500 units in next two years; • Commencement of housing projects in the assumed scale and schedule will require obtaining approximately PLN 95 million of own funds to complement their own contribution in projects to 30%; • Given the recovery in demand into account , the launch of a significant number of new projects in various locations should result in an abrupt increase in the Group's sales in the near term; • The Group's goal is to achieve the sale rate at the level of about 2,000 units per annum in the medium term; • Inflows from the realization of the investment program will provide a major source of reducing financial leverage of the Group in the future.
Basic information on the issue of Series C Shares • From 3 to 40,554,960 shares of series C (up to 75% of the current share capital of the Company) Issuance rate • The subscription right of 3 shares per every 4 subscription rights, (0.75 shares for 1 subscription right) Number of shares per 1 subscription right • To be confirmed at a later stage, based on feedback from investors and the market price of the shares Assumed issue price • Dependent on the issue price Assumed net value of issue Issue targets • To complement the own contribution to 30% in parts of ongoing and planned developer projects (min. 68.6% of the inflows from the issue) • Conversion of part of the Group's interest-bearing liabilities (max. 31.4% of the inflows from the issue) The approach of the Majority Shareholder • The Majority Shareholder holding approximately 62.8% of the total number of shares, declared the execution of one's subscription rights and acquisition of new shares
Schedule of transactions - key dates • Adoption of a resolution by the Extraordinary General Meeting on the issue shares with subscription rights 9 April • Financial results release for Q1 2014 14 May • Publication of the issue price of series C shares and the number of issued shares 26 May • The last day of the shares quotation with subscription right 30 May • The day of subscription right 4 June • Other key dates for the issue will be derived from the date of approval of this Prospectus • Quotation of subscription rights will start after the approval of the Prospectus and will continue 8 working days • Subscriptions for shares will be completed three days after the end of quotation of subscription rights • Allotment of shares is expected to be approximately 7 working days after the end of the subscriptions • Within the issue it is expected to use the rights to the shares until the registration of a new issue
Projects to be run in 2014-2016 Source: Company
Thank you for your attention INVESTOR RELATIONS: Małgorzata Szwarc-Sroka Economy Division and Investor Relations Office HeadDirector of Economic and Director of Investor Relations of J.W. Construction Holding S.A. Member of Management Board of J.W. Construction Sp. z o.o. phone: 22 771 77 85e-mail.: email@example.com