Metrovacesa S A : 27/07/2020 – 2Q 2020 Results Presentation (PDF)

Results 1H2020

July 28th, 2020

Majestic Heights (Manilva, Málaga)

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2.

Agenda

Table of Contents

1. Highlights of the Semester
2. Business Update
3. Financial Overview
4. Closing remarks Appendices

Today's Presenters

Jorge Perez de Leza CEO

Borja Tejada CFO

Juan Carlos Calvo IR

3.

Pórtico Simón Verde (Sevilla)

1. Highlights of thesemester

Highlights of the semester

Business activity impacted by Covid-19 in 1H

MVC's operational progress

Financial highlights

• Slowdown in housing demand, construction works and administrative licenses in this period
• Promising market dynamics in June-July
• Sector outlook remains highly dependant on the macro recovery
• Revenues up 15% YoY in 1H: delivery of 226 units and €49m in land sales
• Pre-salesof 492 units gross and total backlog of €619m
• Close monitoring of the project portfolio:
• • Fully prepared to address a changing environment
• Strong financial situation maintained: 5% LTV and €302m in cash
• P&L influenced by the appraisal value update
• Updated NAV of €17.07/sh provides considerable support to the stock price

A remarkable progress in a tough context

5.

Oceana Views, Le Mirage III y IV (Estepona, Málaga)

2. Business update

Key operational data as of June, 2020

Business

7,893 activeunits

€310k/unit

5,084 units and

Sales Backlog (2)

active

ASP (1)

86 developments under

2,195

€619m

133 developments

commercialization

Sold units

€282k/unit ASP (1)

3,463 units under

44 developments

construction

under construction

units delivered

492 / 290

€49m

226 in 1H

units sold in 1H (3)

Land Sales

6.0 million sqm

c.36,000

81.6%(5)

Buildable

buildable

Fully

area

units (4)

permitted

Financials

	€2.63Bn		€17.07 per share		5%
	GAV June 2020		NAV June 2020		LTV

Notes:

1. Average Selling Price, not including future HPA
2. Defined as cummulative pre-sales (reservations + contracts) minus deliveries
3. 492 gross units and 290 units net of cancellations in 1H,
4. Estimated number of units may vary in time depending on the type of projects and maximum buildability
5. Calculated on June 2020 appraisal values

7.

Covid update: MVC's view

Sector outlook:

still uncertain

• Demand recovery in June/July is very promising. Both for traditional home buyers and institutional demand. Looking forward to confirmation in coming months
• Still, the sector outlook remains uncertain and highly dependant on the shape of the economic recovery and health evolution
• Housing sector fundamentals suggest a resilient performance and a limited impact on new house prices.
• A cut in the sector's construction starts is likely, given banks' stricter financing criteria and developers' cautious approach

MVC's stance:

remains prudent for now

• Maintained focus on cash preservation policies
• Conservative approach on new launches or construction starts
• Cost containment: savings of >€5m in overheads in 2020
• Postponing €32m non-essential capex in land urbanisation

Close monitoring of MVC's project portfolio

• Client orderbook
• • Major advance in transforming client's reservations into contracts: 542 contracts signed during 1H20. An important step ahead of the planned construction starts for 2H
  • Cancellations: 200 units in 1H20, a higher rate than usual due to the Covid-19 situation
• Construction works
• • Works back to normal progress, after a period of slow production due to the Covid-19 restrictions: an impact of 1 to 3 months per project
  • Internal decision to stop works only in 2 projects (210 units)
• Projects under commercialisation
• • 86 projects in commercialisation with 5,084 units, 43% of them already sold
• Prepared to accelerate as soon as the visibility improves
• • 2,809 units already active in design phase, prior to commercialisation
  • Analysing a range of alternatives to boost activity volumes, and launch new units, depending on demand trends

Addressing the changing environment with flexibility

8.

Residential pre-sales: June demand near pre-Covid levels

MVC's commercial activity data in recent months

Rebased to 100 = FY19 monthly average

180

160

140

120

100

80

60

40

20

0

ene-20			feb-20	mar-20	abr-20	may-20	jun-20
			Client visits				New contacts/leads
			New pre-sales (gross)			FY2019 monthly avg = 100

MVC's monthly gross pre-sales

Number of units

146

108					112
		61		47
			18
Jan	Feb	Mar	Apr	May	Jun
		2020	2019 (ex BtR)

Digital channels: growing importance to attract clients

% of leads from internet-based channels

78%

73%

62%

Year 2019

1Q20

2Q20

Gradual improvement in activity particularly visible in June:

• MVC's June gross pre-sales of 112 units is near Jun19's or FY19's monthly average (ex BtR)
• The number of client leads, visits and new contacts are all above 2019 monthly average
• With unchanged pricing policy and despite an almost closed market for foreign buyers
• Rising interest on dwellings with a terrace or a garden and in the periphery of large cities
• Higher penetration of online channels: now 78% of MVC´s new leads

Encouraging signs of demand recovery

9.

# units

Sales backlog in June 2020

Sales backlog:

2,195 units and €619m in future revenues

sales value in € m

€619m

		€597m		(202)	(226)
			492
	€271m					2,195
€135m		2,131
	909
541
Dec.17	Dec.18	Dec.19	Presales gross	Cancellations Deliveries	Jun.2020

	Barcelona
Rest	15%
31%

Sales backlog split by province		Madrid
	Seville	11%
	7%	Málaga
	Valencia
	27%
	8%

Increased visibility of the orderbook:

• Avg selling price of €282k per unit. Indicates a rising unit price in future deliveries
• Contracts represent 80% of the backlog now (vs 70% in Dec 2019), a stronger client commitment than reservations (20%)
• 43% of the total units in commercialisation are already pre- sold, compared to 40% in Dec 2019 or 24% in Dec 2018

Proportion of units presold

		40%	43%
24%
2,931		3,247	2,899
909		2,131	2,195
Dec.2018	Dec.2019	June 2020
Pre-sold units	Unsold units			% pre-sold

10.

Visibility of projects: units in construction and in commercialisation

Projects in commercialisation and in construction

# of units					5,378		5,084
	3,840				3,383	3,463
1,222			1,329
955
Dec.2017		Dec.2018	Dec.2019	June 2020
	Units in commercialisation	Units in construction
Active portfolio summary
						• To feed potential deliveries <24 months
						• €553m of works contracted with 29 companies;
					In	55% with large players
					construction	• 510 units started works in 1H20
					3,463	• Building licenses received: 751 units in 1H20;
	In				A further 2,207 units under way
	commerc.	• Average ASP of €304k; 43% already pre-sold
	5,084
		• 314 units started commercialisation in 1H20
Active
7,893
units	• Includes 2,809 units in design phase

• 344 new units launched during 1H20 and 147 were de-activated

Split by province: units in commercialisation

% of units

	Madrid
Rest-Tier 3	6%
14%	Barcelona
	17%
Rest-Tier 1&2
17%
	Málaga
Canary Is. 8%	25%

Seville 5%

Valencia

8%

Timing of construction projects

Units in construction, by # of months since start date

1,232

	795		855
581
			Avg construction
0 to 6	6 to 12	12 to 18	period 18 - 24 months
> 18

11.

Deliveries in 1H20

Delivered units in 1H		Delivered units in 1H
# of units				Split by province
	226			Rest
		13%
			Barcelona
			13%
32
1H 19	1H 20		Málaga
			36%

Madrid

38%

Cancelada (Estepona, Málaga)

• 226 units delivered during the first semester with revenues of €47.4m. This includes 80 units notarised in 2Q, despite the restrictions from the Covid-19 lockdown during part of the quarter
• No new occupantion license (LPO) was received in 2Q, therefore all the notarisations are related to projects that initiated the delivery process prior to the March lockdown
• The bulk of the deliveries took place in Madrid, Malaga and Barcelona: 87% of the total
• Gross margin of 16%, which is expected to improve gradually in the coming quarters

Mirador de Guadarrama (Madrid)

12.

Land management: key milestones achieved recently

Land sales in 1H

• Land sales of €48.9m in 1H20, mostly from 1Q
• Sale price is in line with appraisal values (GAV)
• 98% of the value is related to the sale of one plot of land in Valdebebas (Madrid) for office use. The rest are for residential use, in Logroño and Cádiz, where MVC was not planning to develop a project

Significant recent milestones in key plots

Clesa	Seda Papelera
(Madrid)	(Barcelona)

Albacerrado

(Tarifa, Cádiz)

Land portfolio by permitting stage

% GAV

Non-Fully Permitted (NFP)

	18%		Fully Permitted (FP)
		82%
Organised	4k units		24k resi units
Developable	6k units
Non-urban 2k units
------------
12k units

Clesa

Hospital

Ramón y Cajal

4 Torres

Business Area

BP

• Provisional approval"of Modificationof General Plan

• To change the use from industrial to commercial and hospitality
• Located in Madrid city, in a consolidated area
• GAV: c.4% of group total
• Area: 88,792 sqm
• Status: Fully-permitted

Plaza Europa	Barcelona
7 min.
	City center
Seda -	Fira	20 min.
Barcelona
Papelera

7 min.

Train Station

Metro stop. 1 min.

• Initial approval of Modification of General Plan
• To change the use from industrial to residential (73%) & commercial (27%)
• Located in el Prat, close to Barcelona airport
• GAV: c.2% of group total
• Area: 171,101 sqm (1) / 1,597 units
• Status: NFP (developable) urbanization works expected to start in 2022

Albacerrado

N-340

Harbour

Playa de los

Lances

• Transformed from Non-urban to Developable
• Located in Tarifa (Cádiz), an established area for 2nd residence
• GAV: <1% of group total
• Area: 39,425 sqm (2), including hotel, commercial and residential uses (165 units)
• Status:NFP (developable) urbanization works expected to start in 2021

Notes	13.
(1) Residential buildability: 124,641 sqm / Office buildability: 19,200 sqm / Hotel buildability: 8,068 sqm / Commercial buildability: 19,200 sqm
(2) Hotel buildabiliy 23,829 sqm / Commercial buildability: 6,499 sqm / Residential buildability: 9,098 sqm

Residencial Hespérides (Sevilla)

3. Financial Overview

Financial accounts: 1H 2020 highlights

Profit & Loss

Total revenues: €96.3m (+15% YoY)

Residential			Land Sales:
deliveries:			€48.9m
€47.4m
• 226 units		•	98% commercial
• Gross margin: 16%		•	2% residential

EBITDA: €(8.0)m

Appraisal value impact:

€(58.3)m

Net Income: €(75.9)m

Amura (Valencia)

Financial situation

LTV ratio: 5%

Net debt: €141.1m

Cash: €301.5m

Appraisal values

GAV: €2,626m

-4.3% LfL vs Dec19

NAV: €17.07 / sh

-5% vs Dec19

15.

Net Debt in June 2020

Citrea (Málaga)

Residencial Imspira (Lleida)

	LTV ratio	Avg cost of debt	Total cash
5%	2.6%		€302m (1)
	Eur m	Dec. 2019	June 2020	Change
	Developer loans	48.8	110.9	62.1
	Corporate debt	103.6	247.3	143.7
	Gross Financial Debt	152.4	358.1	205.7
	Unrestricted cash & S/T investments 74.7	217.0	142.3
	Net Financial Debt	77.6	141.1	63.5
	Restricted cash	67.4	87.2
	% LTV	3%	5%

• No significant debt maturities in the near term: €7m in 2H20. The corporate loan expires in Dec. 2022
• €145m new loan facilities signed in 1H: €128m in new project loans and €17m in new corporate loans
• Total signed and available project loan facilities of €325m

MVC continues to have a very solid financial situation

Notes:	16.
(1) Including advances from clients (restricted cash), which is not used for the calculation of reported net debt

Free Cash Flow for shareholders

Cash Flow analysis

	Eur m	1H 2020
+ EBITDA	(8.0)
+ Book Value of land sold (1)	49.1
+	Book value of land in residential deliveries (2)	15.2
-	Net financial expenses paid	(3.7)
-	Corporate taxes paid	(0.0)
-	Contractual repayment of corporate debt (3)	(7.3)
-	Other working capital changes (4)	(20.1)
= Adj. Free Cash Flow to Equity	25.2
-	Capex in work in progress	(109.5)
-	Capex in land	(10.0)
- +/- Change in cash advances from clients	34.3
-	+/- Others	(3.5)
= Change in net debt: reduction / (increase)	(63.5)

Comments

• Adj. Free Cashflow to Equity of €25.2m generated in the first semester
• €42m expected to be cashed-in from receivables over the next 12 months from sales accounted for in the past

Positive FCF generation of €25.2m in 1H20

Notes:	17.
(1) Cash recovered from land sales, not included in EBITDA; (2) Land component in the cost-of-goods-sold, which represents cash flow generation assuming no need to replenish the land bank; (3) Based on the corporate loan agreement, 15% of the land

revenues will be used to anticípate the repayment of this loan; (4) Includes deferred collection of some sales accounted for in the past

GAV and NAV: June 2020 appraisal update

Net Asset Value calculation

Eur m	Dec. 2019	June 2020	Change %
Shareholders' funds	2,340.8	2,264.8	-3%
+/- Capital gains gross	363.4	299.1
+/- Other adjustments	9.5	25.6
= NAV gross	2,713.6	2,589.4	-5%
+/- Taxes on capital gains	-90.8	-74.8
+/- Other adjustments	-9.5	-8.0
= NAV net	2,613.3	2,506.7	-4%
Number of shares (m)	151.7	151.7
NAV per share (€)	17.89	17.07	-5%
NNAV per share (€)	17.23	16.53	-4%

Gross Asset Value (GAV) evolution

€ m

133 (95)

2,706 (117)

GAV	LFL	Capex	Sales
Dec. 19	change

2,626

GAV

Jun. 20

Land value in €/sqm

537	480
	449
	289
		180
Residential	Residential Commercial MVC total	Implied with
FP	NFP	stock price (1)

GAV to GDV ratio (%)

23%

9%

MVC total Implied with stock price (1)

Like-for-like change

• LFL decline of -4.3% vs Dec.2019. By segments:
• • Residential: -5.1%
  • Commercial: -2.0%
• Covid-19effect: reflects lower visibility on demand, despite limited evidence on land transactions
• Impact on NAV is €124m. Part of it, also reflected in lower book values through the P&L: €58.3m

NAV of €17.07/sh: provides considerable support to the stock price

Notes:	18.
(1) MVC stock price as of 24/07/2020

Altum Lezkairu (Pamplona, Navarra)

4. Closing remarks

Closing remarks

Prepared to accelerate as

soon as the visibility

improves

Shareholder remuneration

focus maintained

An attractive land portfolio

Strong financial situation

Addressing multiple buyer profiles

and segments

Prudent management approach

Share buyback

• €50m buyback in progress
• To date: 642,082 shares acquired and €4.9m invested (1)

Cash dividends

• Decision to be re-addressed in 2H, depending on visibility

Notes:	20
(1) Update as of 27/07/2020

Residencial Cornes (Santiago de Compostela)

Appendices

Financial accounts 1H 2020

Other data

Profit and Loss Account

				Key considerations
	(€m)	1H 2019	1H 2020
A
Revenues	83.8	96.3
	Residential Development	7.4	47.4	A Total revenues of €93.6m, +15% YoY
	Land Sales	76.4	48.9
	COGS	(73.6)	(88.7)	• Residential revenues of €47.4m
	COGs Developments	(5.5)	(39.7)	• Land sales of €48.9m
	COGs Land Sales	(68.8)	(49.4)	B Gross margin of €7.6m
	Others	0.6	0.5
B				• 16% margin in residential development
Gross Profit	4.0	7.6

	% Gross Margin	12%	8%
	Commercial Cost	(4.3)	(4.7)
C	Wages & Salaries	(8.0)	(7.9)
C	Overheads	(3.5)	(3.0)
	EBITDA	(5.6)	(8.0)
D	(Impairment)/revaluation/ depreciation	15.6	(59.6)
	EBIT	10.0	(67.6)
	Net financial results	(3.0)	(5.4)
	Others	(0.1)	(0.2)
	EBT	7.0	(73.2)
	Income Tax	(0.8)	(2.7)
	Net Income	6.1	(75.9)

C Overhead plus personnel expenses of €10.9m

• Decline of 5% reflecting cost containment

D Impairement impact of €58.3m

• Decline in appraisal values which is partly reflected in lower book values

1. Financial expenses of €5.4m
2. • Increase driven by the full wihdrawal of the corporate loan and the mark-to-market impact of the equity swap

22

Balance Sheet

	(€m)	Dec. 2019
A	Investment Property	334.1
	Other non-current assets	254.0
	Total non-current assets	588.1
A	Inventory	1,902.3
	Land	1,215.5
	WIP & finished product	686.8
B	Cash	139.7
	Other current assets	48.2
	Total current assets	2,090.2
	Total assets	2,678.4
	Provisions	10.1
C	Bank debt	95.0
	Other non-current liabilities	23.4
	Total non-current liabilities	128.4
	Provisions	19.0
C	Bank debt	53.5
	Other current liabilities	136.6
	Total current liabilities	209.1
D	Shareholders' funds	2,340.8
	Total equity + liabilities	2,678.4

	Key considerations
Jun. 2020
329.0
249.9	A Book value of land portfolio and work in progress
578.9
1,890.3	• Decline in 1H due to asset sales and lower appraisal
1,115.9	values
774.5	• Increased proportion of work-in-progress and finished
301.5	product related to the active projects

70.6

2,262.4	B Cash balance of €301.5m
• Includes €214.3 unrestricted and €87.2m of advances
2,841.3
from clients
10.2
223.3	C Financial debt
25.5
• Increase due to the full withdrawal of the corporate loan
259.0
as well as higher use of project loans
16.7
131.5	D Shareholder´s funds
169.2
• Decline related to the provisions on lower book value of
317.5
the assets
2,264.9
2,841.3

23

Geographical Exposure: Presence in the Most Dynamic Locations

Geographical presence by GAV and tiers (1)(2)

Tier 1

Tier 2

Tier 3

		GAV by use					GAV by land permitting (3)
											Under permitting process
Commercial												18%
22%
					Residential																		Fully-Permitted
			78%																				82%
	GAV by province							GAV by location tiers (2)
			Madrid									Tier 3
Rest									16%
20%
31%
																										Tier 1
																									60%
Balearics 4%		Barcelona					Tier 2
					24%
17%
Valencia 6%
	Seville 6%	Málaga
			16%
GAV in € m				Residential		Commercial			TOTAL
Fully permitted (3)				1,596			78%			548				94%			2,144				82%
Non fully-permitted				450				22%				32					6%					482					18%
TOTAL MVC				2,046		100%		580			100%		2,626			100%

Notes:	24
(1)	Map excludes provinces with a reduced presence, below €10m in GAV
(2)	MVC's internal classification by Tiers based on several economic, demographic and market metrics. In provinces with municipalities with different tiers, classification by province is weighted according to GAV
(3)	Fully permitted land defined as land with both urbanization and rezoning plans approved

Commercial portfolio: project summary

Progress in ongoing projects

Puerto de Somport office Project in Las Tablas, Madrid

• Phase I of 20,000 sqm already under construction, to be completed in 2H 2021 (MVC 24% stake)

Commercial land by location (% GAV)

Rest 5%

Canary Island 5%

Cádiz 3%	Madrid
43%
Balearics 9%

Monteburgos II turnkey project

• Building license already requested
• Turnkey project to be delivered in late 2022

Barcelona

35%

Top 5 comercial land plots: 70% of MVC'scomercial portfolio by GAV

	Project	Use		sqm
1	La City (Barcelona)	Office/Hotel	135,618
2	Clesa (Madrid)	Office/Mixed	88,702
3	Monteburgos 1 (Madrid)	Offices	42,310
4	Valdebebas (Madrid)	Offices	23,331
5	Loinsa (Barcelona)	Offices		32,819
	Top 5 Comm. plots		322,780

Puerto de Somport office development (Madrid)

Link to project website

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Marketing & ESG initiatives

BE SAFE

MVC Digital

Metrovacesa4u

insurance policy

Launch of	Agreement with
DE CONFIANZA	Google

• Insurance policy to cover the payments from clients who are affected by the current health crisis by an ERE and even by an ERTE
• The current circumstances caused by the health crisis and the travel restrictions have prompted MVC to work even closer to its customers than before

• Offers the possibility of

purchasing the home telematically, from the first visit and choice of furniture, to the signing of the reservation

• 360º visits and free walk
• Customers will be able to know in depth all the details-technical
  information, plans, quality specifications, furniture, location and surroundings- as if they were visiting a physical point of sale

• Digital platform designed exclusively for the agent network, so that they can access detailed information on
  each project in commercialization.
• Agents will also be entitled to incentives, privileges and incentive prizes

• Clients can rapidly have access to all the information of a project by scanning a QR with their cell phone
• In collaboration with Alastria, through Blockchain technology, the information of each project is verified by third parties: the financial institution, construction company, licenses granted…
• Companies like Sacyr, Avintia, FCC and Ferrovial have joined

• Goal: search offer focused on the preferences of each client
• Metrovacesa will be able to optimize through machine learning the different real estate options in which the user is interested
• Strengthens the company´s commitment to innovation, firmly betting on an open model of collaboration with both startups and leading companies

Awarded by the Ministry of Equality and managed by the Women´s Institute

This "seal" recognizes the equality plan "We build Equality" promoted since 2018 in order to develop practices and policies that integrate equal treatment and opportunities between men and women

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Some project examples

Jardins de Llevant (Mallorca)		Villas de la Vega (Madrid)		Jardins de Can Gambús (Sabadell)		Mozart (Sagunto, Valencia)

• In Palma, 7 min walk from the Paseo Marítimo
• 114 units from 1 to 4 bedrooms
• Panoramic-viewswimming pool in the rooftop, as well as common garden areas

Link to Jardins de Levant website

Link to location in Google maps

•	Located in the town of Villaviciosa de Odón,	•	In the new expansion area of Sabadell, these	•	Located in Puerto de Sagunto, 15 min walk from
	29km from Madrid city center		60 units are spread in 2 multi-familiar blocks		the beach and 30km from Valencia city
•	39 individual units with private gardens and 2	•	29km from Barcelona city center	•	22 dettached units with 4 rooms and private
	terraces in the upper floor, some of them with	•	Parking, storage rooms and common green		gardens
	private swimming pool		areas and swimming pool	•	Common green areas and swimming pool

• 3 parking spots for each unit

Link to Villas de Vega website	Link to Can Gambús website	Link to Mozart website
Link to location in Google maps	Link to location in Google maps	Link to location in Google maps

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Data series: evolution of key operating data

# Units	FY 2017	FY 2018	FY 2019	1Q18	2Q18	3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20
Pre-sales in the period	512	888	1,511	88	157	238	405	417	424	263	407	263	177 / 27*
Backlog of presales (units)	541	909	2,131	593	675	931	909	1,312	1,718	1,882	2,131	2,248	2,195
Backlog of presales (€ m)	135	271	597	149	178	250	271	377	487	533	597	630	619
Active projects (# projects)	48	102	136	62	86	92	102	105	121	121	136	134	133
Active units total	2,141	5,565	7,962	2,959	4,546	4,912	5,565	5,834	7,436	7,340	7,962	8,054	7,893
Units in commercialisation	1,222	3,840	5,378	1,422	2,314	3,137	3,840	4,625	4,899	5,168	5,378	5,501	5,084
Units in construction	955	1,329	3,383	1,003	1,192	1,200	1,329	1,902	2,803	3,388	3,383	3,747	3,463
Units launched in the period	2,141	3,944	2,686	855	1,662	438	989	283	1,620	3	780	238	-81
Deliveries in the period	110	520	289	36	75	73	336	14	18	99	158	146	80

Note / Definitions: Pre-sales: number of reservations plus contracts signed in a period of time, net of cancellations; Sales backlog:balance of accumulated pre-sales minus deliveries

at a certain date; Units under commercialisation: total number of units in projects under commercialisation, including sold and unsold units; Active units:units in projects launched internally, including projects already under commercialisation and projects in design phase (prior to commercialisation)

* 117 gross units, before cancellations, and 27 net units, after cancellations

28

Residencial Ópera (Sagunto, Valencia)

Q&A