warszawa, październik 2007r

PREZENTACJA PLANÓW ROZWOJU FIRMY I WYNIKÓW FINANSOWYCH ZA 2006 ROK 1Warszawa, październik 2007r.

J.W. Construction Holding – presentation

J.W. Construction Holding – presentation

Poland's largest residential developer

The investment in reliable

foundations

Warsaw, December 2008

Presentation agenda

The Company in the background of the market – structure and positioning

The characteristics of developer activity

The description of essential investments

The characteristics of housing activity

The characteristics of hotel services

The financial standing

Appendix – the analysis of housing market in Poland

2PRESENTATION of JW Construction Holding S.A. – December 2007

The Company in the background of the market– structure and positioning


Business structure of JWCH Group

DEVELOPER

Activity

HOUSING

Activity

HOTEL SERVICES

Activity

Expanded “land bank” – new building plots and increasing scale of Company activity

Wide and diversified offer – popular flats, apartment and houses

Leading position in Warsaw market in respect of the largest number of implemented projects

Implementation of projects in other Polish towns with high growth potential i.e. Łódź, Katowice, Gdynia, Szczecin, Łeba

Housing activity carried out to implement the projects in the scope of developer activity and hotel services in the framework of the Group

General Contractor in almost 100% of implemented projects

Expansion of own auxiliary facilities in the scope of construction and transportation machinery

Commencement of the separation of housing activity and its transfer to a subsidiary

HOTELE 500 – network consisting of 5 two – star and three – star hotels in attractive localization

Assets of significant market value

Extension and modernization of the hotel “CZARNY POTOK” in Krynica to upgrade to the category „Resort & SPA”


JWHC position in comparison with competitors

Significant advantage over the remaining competitors on the Warsaw market is on the side of leading developer (J.W. Construction Holding) and the next one in the ranking (DOM Development)

The largest developers in Warsaw housing sector in respect of the number of apartments handed

over and planned in multi – family houses in the period 2005 – 2006 (share in market %)

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%

Ebejot

Agroman

Edbud

PKO Inwestycje

Pirelli PEKAO RE

Dom Development

J .W. Construction

Source: Report on Housing Market in Warsaw 2005/ 2006 published by REAS KONSULTING


Competition on the housing market

The main competitors of JW Construction Holding in particular market segments:

Popular flats segment: Dom Development, Budimex Nieruchomości, Acciona

Nieruchomości, Dolcan (Warsaw market), Invest Comfort, Allcon Osiedla (3-City), BRE

Locum, Maxbud, Unibud (ŁÓdź), Profit Development, A.S.M Investycje, As Bau, Gant

Development (Wrocław)

Increased standard apartments segment: Dom Development, Echo Investment, ,

Marvipol, Pirelli Pekao Real Estate, Fadesa Prokom (Warsaw market), small entities

(all markets)

Single – family houses segment; GTC, Sedno (Warsaw market), large group of small

entities (all markets)


Competitive advantages

Own erection and assembling potential

Highly recognized brand

Assets owned by the Company enabling the conclusion of occasional contracts on sales of larger packages of flats with foreign institutional clients

Offer diversification – holiday apartments in Łeba

Complex credit service – flats purchase financing system favourable for the client – long term cooperation with the banks


Competitive advantages

The first Polish office selling the flats established in United Kingdom

Innovative sales systems 10/90 and 20/80

Effective costs control

Top standard of client service – short period between the first contact and transaction

finalization and professional Sales Department

Professional and stable team as well as wide experience and leading position in the

market

ISO systems and implemented SAP system


Strategic objectives

Extension of “land market” trough the purchase of new building lots on favourable

conditions – increase of the scale of activity and further dynamic development of the

Company

Consolidation of leader’s position – as the largest housing developer in Warsaw

market and vicinity

Expansion to the markets with high growth potential among others Łódź,

Katowice, Gdynia, Szczecin, Łeba and abroad (among others Russia and Bulgaria)

Consolidation in the scope of erection and assembling activity - commencement of

the process of its separation and transfer to a subsidiary in order to increase the

independence of external subcontractors


Characteristics of developer activity


Growth in the scope of developer activityIn course of recent months, the Company initiated several activities in order to extend

the scale of activity

Warsaw market and vicinity

Purchase of new building lots –the area exceeding 40ha in Ożarów Mazowiecki

Consolidation of sales network – opening of new offices selling the apartments

Wide commercial offer in various market segments – flats, apartments and houses

Entering into the markets out of Warsaw

Purchase of new building lots out of Warsaw – finalization of building lot purchase in Łeba

Project of the erection of the highest building in Szczecin

Continuation of the investment in Łódź (commencement of 2nd phase of the project)

Commenced housing investment in Katowice

Presence on the market in Gdynia

Activity on foreign markets

Implementation of the project in Russia – continuation of the erection of Housing Estate in Kołomna

Establishing of sales office in United Kingdom – promotion and marketing activities

Establishing of cooperation with foreign partners (registration of a subsidiary in Bulgaria)


Growth in the scope of developer activity

JWC is the developer with the longest activity un Poland – up to the present time the Company

constructed 15 599 dwellings (as at the end of September 2007)

The Company significantly increased the scale of its activity

7 853 dwelling are actually under construction and sale

More than 15 000 dwellings are in course of preparation for the construction

Type of investment Total number of dwellings

Number of dwellings sold

Investments implemented 15 599 15 555

Investments being implemented (under

construction and sale)

7 853 6 621

TOTAL 23 452 22 176

Planned investments 15 294


Growth in the scope of developer activityThe land purchase process is continued by the Company – the new building lots have been purchased for attractive prices in Warsaw vicinity in recent months.

More than 150 million PLN including more than 106 million PLN obtained from bonds emission have been spent by the Company for land purchase from January 2007 up to 16th November 2007.

Investment Date of land purchase

Surface area of lot / lots

Legal status of lots Planned number of flats

Ożarów Mazowiecki II August 2007 7 ha 700 m2 Final agreement 700

Ożarów Mazowiecki III

September 2007

1 ha Final agreement 100

Ożarów Mazowiecki IV

September 2007

13 ha 9 976 m2 Final agreement 1300

Ul. Berensona (Warsaw Białołęka)

August - November 2007

3 ha 1 450 m2 Final agreement 170

ul Aluzyjna I (Warsaw Białołęka)

September - November 2007

0,6 ha Final agreement 46

ul Aluzyjna II (Warsaw Białołęka)

September - November 2007

1, 4 ha Preliminary agreements

120

ul. Odkryta (Warsaw Białołęka)

October 2007 0,9 ha Preliminary agreements

150

Szczecin – Porta Transport

November 2007 20 ha Final agreement 5 400


In case of revenue – the progress level must exceed 50% (the value of revenues

resulting from signed contracts/ the value of planned revenues)

In case of costs – the progress level must exceed 40% (the value of works

determined on the basis of works survey/ budget value)

Investment accounting method

Conservative method of investment accounting – ZERO METHOD

The valuation of projects established by the Company is based on the more conservative

“ZERO” method which equalizes the incurred costs with the revenue obtained in the

accounting period under consideration.

“ZERO” method is used by JW Construction in the first phase of the project being

implemented until the achievement of:


The investments under construction and sales – as at the end of October 2007

Investment Total number of dwellings

Number of dwelling sold

Scheduled date of

completion % to be

credited in

2007 Housing Estate „Górczewska” 1410 1410 XII 2007 99%

Housing Estate „Centrum” - Łódź

324 322 4th quarter 2007 90%

Housing Estate „Rezydencja na Skarpie IV”

261 256 4th quarter 2007 99%

Housing Estate „Willa Konstancin”

178 168 4th quarter 2007 99%

Housing Estate „Ludwinowska Aleja”

68 17 4th quarter 2007 45%

Housing Estate „Leśne” - Gdynia

202 136 4th quarter 2008 48%

Housing Estate „Lazurowa” 669 635I phase 2nd quarter

2008II phase 3rd quarter

2008III phase 4th quarter

2008IV and V phase – 1st

quarter 2009

54%

Housing Estate „Osada Wiślana”

404 361 I phase 2nd quarter 2008

II and III phase 2nd quarter 2009

16%

Housing Estate „Rezydencja Quatro”

243 243 I/II quarter 2009 0%

Housing Estate „Górczewska Park”

890 313 II/III quarter 2009 27%

Katowice 25 0 I quarter 2008 0%

Housing Estate „Victoria Park” II Russia building A1

158 70 IV quarter 2008 21%

Investments in progress


The investments under construction and sales – construction scheduled on the turn of 2007/2008

Investment Total number of dwellings

Number of dwelling

sold

Date of building permit obtainment

% to be credited

in 2007

Housing Estate „Zielona Dolina”*

594 527 IV quarter 2007 0%

Housing Estate „Wiślana Aleja”

200 115 IV quarter 2007 0%

Housing Estate „Lewandów Park” I and II

1905 1799 XI 2007 – Lewandów II partially Lewandów

I

0%

Housing Estate „Bursztynowe”

322 261 I quarter 2008 0%

Number of dwellings Number of dwelling sold Total dwellings under

construction and sales 7 853 6 634

Investments planned


The investments planned – data as at the end of December 2007

Investment Town/ quarter Market segment Number of dwellings / houses Approximate usable

and residential area in m2

Housing Estate „Lewandów Park” III

Warsaw / Białołęka Popular flats 465 25 575

Housing Estate „Zielona Dolina” (Zdziarska)

Warsaw/ Białołęka Popular flats 911 50 105

Światowida Warsaw / Białołęka Popular flats 223 12 265

Housing Estate „Centrum” II - Łódź

Łódź Popular flats 432 23 760

Pogonowskiego – Łódź Łódź Popular flats 109 5 995

Uroczysko – Katowice Katowice Popular flats 563 30 965

Szczecin, Wyzwolenia Avenue

Szczecin Apartments / commercial

400 32 000

Szczecin – Porta Transport Szczecin Popular flats 5 400 297 000

Ożarów Mazowiecki I Ożarów Mazowiecki Popular flats 1 973 108 515

Ożarów Mazowiecki II Ożarów Mazowiecki Popular flats 700 38 500

Ożarów Mazowiecki III Ożarów Mazowiecki Popular flats 100 5 500

Ożarów Mazowiecki IV Ożarów Mazowiecki Popular flats 1 300 71 500

Łeba Łeba Popular flats 400 22 000

Berensona Warsaw / Białołęka Popular flats 170 9 350

Housing Estate „Marymoncka” II

Warsaw / Bielany Flats in increased standard

23 1 265

Investments planned


The investments planned – data as at the end of December 2007

Investment Town/ quarter Market segment Number of dwellings / houses Approximate usable

and residential area in m2

Housing Estate „Aleja Ludwinowska” II

Warsaw Flats in increased standard

24 2 400

Housing Estate „Victoria Park” II

Kołomna/ Rosja Popular flats 782 43 010

Aluzyjna I Warsaw Popular flats 46 2 530

Aluzyjna II Warsaw Popular flats 120 6 600

Konstancin II Konstancin Popular flats 136 7 500

Sopot, Parkowa Street Sopot - 17 2 500

Badylarska - Office building Warsaw Commercial - 4 500

Pileckiego - Office building/hotel

Warsaw Commercial - 17 500

Głogoczów – Hotel Głogoczów Commercial - 3 000

Juszkowo I Gdańsk - - 7 000

Krynica – Czarny Potok Krynica Commercial - 10 000

Soczi Rosja Popular flats About 1000 82 000

TOTAL 15 294 922 835

Investments planned


Description of essential investments


Warsaw market

Housing Estate „Górczewska”

Secured residential object with service

areas and 1410 apartments and

parking places under the building. A

recreation area and housing estate

mall will be provided.

Investment Floorage of the

apartments Revenue Costs

Housing Estate „Górczewska” 74 729 319 372 204 617


Warsaw market

Housing Estate „Rezydencja na Skarpie”

The investment in Bukowińska Street

next to two projects implemented before

– Mokotów Plaza I and II. Total number

of high standard dwellings will amount

261



Housing Estate „Rezydencja na

Skarpie”16 530 116 876 66 301




Housing Estate „Lazurowa”

33 727 243 161 185 953

Housing Estate „Lazurowa”

Housing Estate in Lazurowa Street in

vicinity of planned underground station.

The project implemented in four phases.

Target number of increased standard

dwellings will amount 669.

Warsaw market




Housing Estate „Górczewska

Park”44 929 426 872 244 579

Housing Estate„Górczewska Park”

Warsaw market

“Górczewska Park” project consists of 12

multi – family house localized in

Górczewska / Olbrachta Street with 886

flats and 4 service shops.




Housing Estate „Ludwinowska

Aleja”7 877 59 118 28 350

Housing Estate „Ludwinowska Aleja”

Secured residential complex

consisting of 17 semi – detached

four – family houses in

Ludwinowska Street in Warsaw with

68 flats with garages and parking

places.

Warsaw market




Housing Estate „Leśne”

12 871 82 136 45 558

Housing Estate „Leśne”

The second project implemented in

Gdynia in Parkowa Street, surrounded by

the forests in Trójmiejski Landscape

Park. Secured housing estate consists of

9 four-storey building encompassing 202

residential dwellings

Investments ower the Warsaw




Housing Estate „Victoria Park” 58 196 443 967 254 628

Housing Estate „Victoria Park”

Secured housing estate

encompassing 6 multi-family projects

implemented in Kołomna Town in

vicinity of Moscow (Russia). The

project encompasses more than 1100

high standard apartments. The

completion of the whole project is

expected in 2012.

Foreign investments


The characteristics of housing activity


Development of housing activity

High potential of own erection and assembling capabilities

JW Construction acts in the majority of projects being implemented as the

General Contractor

Permanent staff encompasses 333 skilled labourers

Long term cooperation with experienced contractors

The Company is in the possession of own construction machinery and plants

The Company spent 1,7 million EURO as the investment in the scope of modern

construction machinery and plants (concrete batching plants, tractors, dump

trucks, excavators – loaders and telescope loaders)

The works associated with launching of construction elements prefabrication


Separation of housing activity

JWC Holding is engaged into the group structure modification commencing the works associated with the separation of

housing and designing activity in order to enable further development

On 21st September 2007 two new divisions i.e. “BUDOWNICTWO” responsible for

erection and assembling activity and “Pracownia Architektoniczna” responsible for the

activity in the scope architecture and engineering were created in the framework of

the Company structure

On 26th September 2007 JW Construction SA has been established as 100%

subsidiary of JWC Holding – in future the company will continue the economic activity

in housing sector after the property transfer

the activity in the scope architecture and engineering concentrated in the division

“Pracownia Architektoniczna” has been relocated to the subsidiary Dremet

The purpose of the works associated with the separation of housing and designing activity inthe subsidiary is to increase the value of the Group


Advantages resulting from the separation of housing segment

Increased transparency of the Group

Possibility to achieve the valuation of the erection and assembling

segment and achievement higher financial transparency

Facilitating of the acquisition of the companies from building sector,

anticipated in future

Possibility to place the orders out of JWC Holding

Improvement of functioning efficiency of individual companies and

increase of their effectiveness by clear determination of

competences of individual entities

Separation of housing activity


The characteristics of hotel services


Actually JW Construction Group is in the possession of

5 (two – and three – star) hotels localized in Zegrze,

Stryków, Cieszyn, Tarnowo Podgórne and Święta Lipka

The offer in the scope of hotel services is addressed

mainly to the institutional clients – companies and

institutions (conferences, trainings, seminaries) and to

individual clients – tourists

In 2005, the Company purchased “Czarny Potok”

tourism center in Krynica. Actually its modernization and

extension is continued in order to upgrade the object to

Resort & SPA category.

The hotel in Strykowo close to Łódź is situated in direct

vicinity of highway and hotel in Tarnowo Podgórne in

vicinity of international communication route A2

Development of hotel services


Financial standing


The forecast of growth in 2007 in comparison with 2006:

revenue on sales by 12% (813.1 million PLN) gross profit on sales by more than 8% (244.6 million PLN) profit on operations EBIT (earning before income tax) by almost 11% net profit by 11%

Financial prognoses for 2007

Legend: 2006

Forecast 2007

gross profit on sales

revenue onsales

net profitEBIT


35

Financial results in 2003 – 2007 Revenue on sales

Profit on operations

Gross profit on sales

Net profit

forecast2007

forecast2007

forecast2007

forecast2007


Profitability

The profits of the Company increased

significantly in the period 2004-2006,

including EBIDTA from 28.1 million

PLN up to 190.8 million PLN

Gross margin on sales increased from

15.3% in 2004 up to 31.1% in 2006

The economies of scale have been

achieved in result of increased scale

of activity with maintained control over

costs increase.

Gross margin on sales

EBITDA margin

Net profit margin


Results after two quarters 2007Revenue on sales (million PLN) Gross margin on sales (%)

Profit on operations (million PLN) Net profit (million PLN)

first half-year 2006




first half-year 2007 first half-year 2007

first half-year 2007 first half-year 2007


Increase of sales value

The value of agreements signed in the first

half-year this year increased by 13% in

comparison with the same period in 2006

The value of agreements signed in the

period from January to July 2007 increased

by 25% in comparison with the same period

in 2006

The value of apartments sales in 2nd

quarter this year increased up to 351.1

million PLN i.e. by 4% in comparison with

the same period in 2006

After lower results achieved in 1st quarter, clearly visible acceleration hasbeen achieved in the next three months resulting in satisfactory growth on the end of the half-year.

Value of signed agreements withclients (million PLN)

1st quarter 2nd quarter first half-year

Legend:


30th June 2007 31st December 2006

30th June 2006

Planned revenues on current projects 3 494,5 3 567,8 3 567,8

Planned costs of current projects 2 376,5 2 337,0 2 337,0

Planned margin on projects being implemented 1 118,0 1 230,8 1 230,8

Accumulated revenues recognized in loss and gain account 191,5 665,6 347,2

Accumulated costs recognized in loss and gain account 132,9 454,0 245,6

Accumulated margin recognized in loss and gain account 58,5 211,6 101,5

Deferred margin 1 059,5 1 019,2 1 129,2

Planned margin on projects being implemented 32,1% 35,1% 35,1%

Percentage of deferred margin 94,8% 82,8% 91,7%

More than 1 billion margin will be obtained on the projects being implemented, which will be reflected in future financial results

Dynamics of financial indices


Financing structure

Achievement of optimal financing structure

Obtainment of gross revenues over 240 million PLN on new bonds

emission for land purchase

Withdrawal from the financing form used before – credit of up to 80% of

land purchase price

As a rule, the percentage of projects implemented using the bank

credits is not higher than 40% of the whole costs

Possibility of complete use of the bonds emission program in amount of

250 million PLN


APPENDIXThe analysis of housing market in Poland


42

Source: Report on Housing Market in Warsaw 2005/ 2006, 2006/2007 published by REAS KONSULTING. www.tabelaofert.pl GUS

The largest developers (in respect of the number of apartments handed over and planned in the period 2005 – 2006)

The largest developers (in respect of the number of apartments handed over and planned in the period 2005 – 2006)

3455 3526 3540 3742

4879

7354 75008000

2500

3500

4500

5500

6500

7500

8500

2001 2002 2003 2004 2005 2006 I 2007 VI 2007

Demand vs. supply in the period 2000 – 2010Demand vs. supply in the period 2000 – 2010Average price of residential dwelling in Warsaw (PLN/m2)

Average price of residential dwelling in Warsaw (PLN/m2)

Number of apartments constructed for sales 2000 - 2006


Warsaw

Warsaw

Supply

Demand

tho

usan

ds o

f un

its


Source: Report on Housing Market in Warsaw, 2006/2007 published by REAS KONSULTING. www.tabelaofert.pl GUS

The largest developers (projects completed or planned for construction in the period 2006 – 2007)


2365 2366 2367 24392773 2900

44364900

6100

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006 I.2007 VI.2007

Demand vs. supply in the period 2000 – 2010Demand vs. supply in the period 2000 – 2010Average price of residential dwelling in ŁÓDŹ (PLN/m2)Average price of residential dwelling in ŁÓDŹ (PLN/m2)



Łódź

Supply

Demand

tho

usan

ds o

f un

its


44

Source: Report on Housing Market in Warsaw, 2006/2007 published by REAS KONSULTING. www.tabelaofert.pl GUS





2437 2561 2628 2536 2702

3477

5851 5900

7700

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 I.2007 VI.2007

Demand vs. supply in the period 1994 – 2010Demand vs. supply in the period 1994 – 2010Average price of residential dwelling in 3-CITY (PLN/m2)

Average price of residential dwelling in 3-CITY (PLN/m2)

3-City

Supply Demand

3-Cityth

ou

sand

s of u

nits


Source: Polish Banks Association

The value of housing credits granted in Poland (billion PLN)

Increasing market of housing credits

Significant growth in the scope of granted housing credits

Relatively low interest rates

Favourable and available credits offer proposed by the banks

Significant growth of global value of housing credits supporting the demand on housing market

Population debt ratio in the scope of housing credits in relation to GNP increased up to about 6% in Poland but is still very low in comparison with 49% achieved in fifteen EU countries

According to forecasts of Polish Banks Association, total debts in the scope of housing credits will achieve 134 billion PLN as the end of 2007.


Source: Report published by European Mortgage Federation, 2005

Debts in the scope of housing credits in relation to GNP in selected EU countries (%, 2005)

Debts in the scope of housing credits in relation to GNP in selected EU countries (%, 2005)

Increasing market of housing credits

Ho

llan

d

Un

ited

K

ing

do

m

Irel

and

Ger

man

y

Sp

ain

Bel

giu

m

Fra

nce

Gre

ece

Est

on

ia

Au

stri

a

Ital

y

Hu

ng

ary

Cze

ch

Rep

ub

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Po

lan

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Slo

ven

ia


INVESTOR RELATION OFFICE - CONTACT DATA:

Małgorzata Szwarc-Sroka

Liquidity Management Director andInvestor Relations Office Director

ph.: 0 22 771 77 85

ph.: 0 22 771 75 10

e-mail: [email protected]


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