CORPORATE PRESENTATION - 15 DECEMBER 2017 - EcoWorld International
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CORPORATE PRESENTATION
15 DECEMBER 2017
1
FINANCIAL UPDATES
2
PROFIT & LOSS STATEMENT
AS AT 31 OCT 2017
RM’000 FY2017 FY2016 %Change Q4 FY2017
Revenue 488 683 -29% 27
Direct Expenses (5,813) (5,016) 16% (1,583)
Gross Loss (5,325) (4,333) 23% (1,556)
Other Operating Income 27,569 5,629 390% 8,798
Selling & Marketing expenses (5,610) (2,132) 163% (4,400)
Administrative expenses (69,983) (36,743) 90% (28,620)
Unrealised gain/(loss) on foreign exchange 34,527 (74,940) -146% (11,317)
Finance costs (31,920) (52,823) -40% -
Share of result in a JV (36,509) (53,927) -32% 1,394
Loss before tax (87,251) (219,269) -60% (35,701)
Taxation (223) 2,153 -110% 1,398
Net Loss (87,474) (217,116) -60% (34,303)
Basic Loss per Share (sen) (6) (99) -94% (1)
Lower loss after tax due mainly to interest income from IPO proceeds, unrealised foreign exchange gain
& lower share of loss from EW-Ballymore
3
SALES ACHIEVED
AS AT 31 OCT 2017
SALES VALUE (MILLION)
TOTAL CUMULATIVE
EWI
PROJECT GDV SALES
STAKE FY2015-
(MILLION) (MILLION) FY2017
FY2016
London City Island 75% £691 £488 £379 £108
Embassy Gardens 75% £933 £297 £192 £105
Wardian London 75% £566 £393 £306 £87
SUB-TOTAL UK £2,190 £1,178 £877 £301
Embassy Gardens was the
West Village 100% A$315 A$272 A$253 A$19 second highest contributor
to EcoWorld International’s
Yarra One 80% A$243 A$76 - A$76 FY2017 sales despite the
SUB-TOTAL
A$558 A$348 A$253 A$95 negative headlines about
AUSTRALIA
prime London market
• Cumulative sales as at 31 Oct 2017: RM7.71 billion
• Increase of RM2.42 billion in FY2017
4
PURCHASER PROFILE BY NATIONALITY
AS AT 31 OCT 2017
Singaporean
Hong Kong 1%
2% 15 other
50 other countries
Indonesian 6%
countries
5%
18%
Singaporean Australian
2% British 37%
39% Diversified market reach
Italian Malaysian
16%
with a global customer
2%
55 countries 21 countries base & worldwide sales
Malaysian
network
17%
Hong
Kong/ Chinese
Chinese 33%
22%
LONDON PROJECTS AUSTRALIA PROJECTS
5
PROJECT UPDATE
6
PROJECT UPDATE
LONDON PROJECTS (AS AT 31 OCT 2017)
LONDON CITY ISLAND EMBASSY GARDENS WARDIAN
• Block A&M: 81% complete • Block A04: 73% complete • East & West Tower: 42% complete
(Target handover in mid-2018) (Target handover in mid-2018) (Target handover in 2H 2020)
• Block B&C: 53% complete • Block A05: 37% complete
(Target handover in 2H 2019) (Target handover in mid-2019)
• Block D&E&F: 42% complete
(Target handover in 2H 2019)
7
PROJECT UPDATE
AUSTRALIAN PROJECTS
WEST VILLAGE
• New sales gallery in Parramatta opened in September 2017
• Construction works commenced in early Nov 2017
• Target handover in mid-2020
YARRA ONE
• Completed the acquisition of EW-Salcon in September 2017
• Apartments from level 20 to 25 are reconfigured to increase apartment
size to meet market demand. GDV is expected to remain at A$243 million
• Target to commence construction works by mid-2018
• Target handover in H2 2020
8
UK MARKET UPDATE
9
UK PROPERTY MARKET
ENCOURAGING SIGNS
UNIT SALES OF RESIDENTIAL
DEVELOPMENT SCHEME IN LONDON TAKE-UP OF OFFICE SPACE IN CENTRAL LONDON
30,000
25,000
20,000
15,000
10,000
5,000
-
*Annualised 9M17 sales
SALES OF PRIVATE RESIDENTIAL UNITS IN LONDON IN 9M2017 ROSE 14% YEAR-ON-YEAR
WHILE TAKE-UP FOR OFFICE SPACE IN CENTRAL LONDON JUMPED 18% IN THE SAME PERIOD
Source: Savills, Molior
10UK PROPERTY MARKET
STRONG UNDERLYING DEMAND IN LONDON MAINSTREAM MARKET
AVERAGE ANNUAL DEMAND AND SUPPLY OF HOUSING
IN LONDON IN 2017-2021
• SUPPLY SHORTFALL
Projected shortfall in supply of residential
Demand 14,500 vs Supply 13,250 properties relative to occupier demand in the
lower- and mid-mainstream segments
between 2017 & 2021
• BENEFICIARY OF HELP-TO-BUY SCHEME
Demand for properties in the lower-
& mid-mainstream segments benefit from the
government’s Help-to-buy scheme
• BENEFICIARY OF STAMP DUTY
EXEMPTION
Stamp duty exempted on the first £300,000 of
a purchase price up to £500,000
Source: Savills, Molior, Oxford Economics
11UK AUTUMN STATEMENT
A BOOST FOR THE HOUSING MARKET
STAMP DUTY SCRAPPED FOR FIRST-TIME BUYERS OF
HOMES BELOW £300,000
In London and other property hotspots, stamp duty would be axed on
the first £300,000 of a purchase price up to £500,000
£10BIL MADE AVAILABLE FOR THOSE USING THE
HELP-TO-BUY EQUITY LOAN SCHEME
The scheme is expected to assist homebuyers until 2021.
135,000 homebuyers have benefited from the scheme since 2013
12HELP-TO-BUY SCHEME
EQUITY LOAN, SHARED OWNERSHIP, INDIVIDUAL SAVINGS ACCOUNT
EXAMPLE OF HELP-TO-BUY: EQUITY LOAN SCHEME EQUITY LOAN
The government lends up to 40% of new
home’s sales value (capped at £600,000)
Buyer’s deposit 5%
and entitled to the capital gain of the
Government’s 40% loan property on pro-rata basis
£30k
OTHER SCHEMES
£240k
•SHARED OWNERSHIP
Buy a share of home (between 25% and 75%
of the home’s value) and pay rent on the
£330k remaining share
55% mortgage from
£600k
commercial lender
•INDIVIDUAL SAVINGS ACCOUNT (ISA)
Top-up of savings by 25% by the
government. Capped at £3,000
13AUSTRALIAN MARKET UPDATE
14AUSTRALIAN PROPERTY MARKET
RESILIENT ECONOMIC PERFORMANCE AND DEMAND FOR HOUSING
3% GDP GROWTH STRONG POPULATION GROWTH Population in Sydney and
Melbourne
RBA forecasts that Australia GDP Sydney's population rose by 1mil in
growth to pick up and to average just 16 years while population in 6.8
around 3 % over the next few years. Melbourne grew 1.8% p.a. over the Sydney 6.7 million
past decade and adding 91,600 million
Melbourne
people in 2016
5.0
million
4.6
VACANCY RATES OF C.2% IN RENTAL RATES CONTINUED 3.7 million
SYDNEY AND MELBOURNE TO GROW million
3.2
Vacancy rate in Sydney was 1.8% as Average rent of a 2-bed apartment million
at June 2017 while that in Melbourne rose 6% in Sydney and 5% in
was 2.0% as at May 2017 (Source: Melbourne as at June 2017
JLL) (Source: JLL)
1991 2016 2036*
Source: The Australian
15AUSTRALIAN PROPERTY MARKET
STAMP DUTY CHANGES
PRE-1ST JULY 2017 POST-1ST JULY 2017
VICTORIA
• Entitled to off-the-plan stamp • No longer entitled to off-the- • EXEMPTION OR LOWER
duty concession plan stamp duty concession STAMP DUTIES FOR FIRST
Investors
• 7% additional stamp duty • 7% additional stamp duty HOME BUYERS (FHBs) IN
surcharge (for foreign investors) surcharge (for foreign investors)
NSW & VICTORIA
• Stamp duty for property valued
• Entitled to 50% discount on below A$600,000 abolished
First home
stamp duty for property priced • Stamp duty for property valued
buyers
below A$600,000 between A$600,000 to • GRANTS FOR FIRST HOME
A$750,000 entitled to discount BUYER
NEW SOUTH WALES NSW & Victoria state
Foreign • 4% additional stamp duty • 8% additional stamp duty governments provide A$$10,000
investors • 0.75% land tax • 2% land tax grant to FHBs for purchase of
• Exemption of stamp duty for • Exemption of stamp duty for home up to A$600,000 (NSW) &
property valued up to property valued up to A$750,000 (Victoria)
First home A$550,000 A$650,000
buyers • Discount on stamp duty for • Discount on stamp duty for
property valued up to property valued up to
A$650,000 A$850,000
16NEW ACQUISITION
17EXPANDING PRESENCE IN SYDNEY
LACHLAN AVENUE, MACQUARIE PARK
• CALL & PUT OPTION AGREEMENT SIGNED ON
24 NOV 2017 TO ACQUIRE 25 APARTMENT
UNITS (83% OF TOTAL UNITS). TARGET
COMPLETION OF ACQUISITION BY 4Q2018
Under the relevant legislation, owners of ≥75% of the
entitlements in a strata scheme can agree to end their
scheme for the site to be sold or redeveloped
• LOCATED 12KM NORTHWEST OF SYDNEY CBD
5- to 10-minute walk to Macquarie Innovation Park
District, Macquarie University Train Station and
Macquarie Shopping Centre
• A$139 MILLION OF ESTIMATED GDV; 125 UNITS
OF RESIDENTIAL APARTMENTS WITH A SMALL
COMPONENT OF RETAIL
LOCATION OF PROJECT SITE
18PARTNERSHIP WITH
WILLMOTT DIXON GROUP
19EXPANDING IN GREATER LONDON & SOUTH EAST OF ENGLAND
PARTNERSHIP WITH WILLMOTT DIXON GROUP
TWO-STAGE ACQUISITIONS
• 7 sites at various stages of planning consents
• 5 sites without planning consent
ACQUISITION OF WILLMOTT DIXON’S
DEVELOPMENT MANAGEMENT PLATFORM
• 110 staff in Be Living, Willmott Dixon Group’s
property development arm
EXPANDING PRESENCE IN THE
LOWER- & MIDDLE-MAINSTREAM MARKET
• Average prices of c.£500-800 psf
PARTNERSHIP FOR GROWTH MODEL
20DEAL STRUCTURE
CONTRACTS INVOLVED
CONTRACT PARTIES DESCRIPTION
To acquire 70% stake in Be EW Holdings
Share Purchase Agreements EcoWorld International* & Be Living
(Assetco), Be EW Devt Mgmt Co (DMco), & 6
(“Stage 1 SPAs”) Holdings
sites, nearly all with planning consents
Conditional Sale & To acquire entities that hold 6 development sites,
Purchase Agreements Assetco & Be Living Holdings** subject to planning consents meeting pre-agreed
(“Stage 2 SPAs”) minimum criteria
Development Management 1. DMco & Assetco
1. Development management of Stage 1 Sites
Agreements 2. DMco & Be Living’s SPVs
2. Development management of Stage 2 Sites
(DMAs)
To govern the terms on which Assetco & DMco
Shareholders’ Agreements EcoWorld International*, Be Living will be managed as well as shareholder funding
(SHAs) Holdings, Assetco, DMco commitments in respect of the acquisition of
Stage 1 and Stage 2 Sites
*via wholly-owned subsidiary EW Be Co
**via Be Living’s SPVs
21DEAL STRUCTURE
PARTNERSHIP FOR GROWTH MODEL
BE LIVING
HOLDINGS
• EcoWorld International to acquire 70%
70%
30%
stake in Stage 1 Sites (at various stage of
obtaining planning consent, via Assetco)
& Be Living’s development management
BE EW
INVESTMENT CO platform (via DMco)
100% • EcoWorld International (via Assetco) to
enter into conditional SPAs to acquire
DMAs DMAs Stage 2 Sites (mostly unconsented)
BE EW HOLDINGS BE EW DEVT.
SPVs
(Assetco) MGMT CO (DMco)
• DMco to manage the development of
CONDITIONAL
STAGE 2 SPAs Stage 1 sites held by Assetco, & Stage 2
STAGE 1: STAGE 2:
6 SITES 6 SITES sites held by Be Living’s SPVs
>£1,112MN GDV*
*Estimated GDV based on approved and preliminary development plans
22POST-ACQUISITION CORPORATE STRUCTURE
NEW RESIDENTIAL DEVELOPMENT BUSINESS HELD VIA 70%-OWNED ASSETCO
100%
EW BE CO
75%
FORTUNE QUEST EW MGMT & ADVISORY
EW INVESTMENT CO
GROUP SERVICES (UK) 70%** 70%
BE EW HOLDINGS BE EW DEVT MGMT CO
(ASSETCO) (DMCO)
MACQUARIE EW INTERNATIONAL
EW ACE CO
PARK MARKETING
Immediate development: c. 110 staff, including
75% 6 sites to be injected: senior management from
Australian Projects* i) Woking Be Living Group will be
EW-BALLYMORE ii) Kensal Rise & Maida Hill transferred to
HOLDINGS COMPANY iii) Millbrook Park Be EW Devt Mgmt Co
iv) Barking Abbey Retail Park
v) Barking Site
vi) Lampton (Nantly House)
+
Future Stage 2 sites to be
injected
Existing UK Projects*
*Developed through separate development companies
**Effective stake is 70%. Held through Be EW Investment Co
23TRANSFORMATIVE ACQUISITION
SIGNIFICANT GAIN OF MAINSTREAM MARKET
>£1,400 psf
>£1,400 psf 12%
29%
£500 - £800 £801 -
psf £1,400 psf
59% 29%
£801 -
£1,400 psf
71%
BREAKDOWN OF EWI’S EXISTING DEVT UNITS BREAKDOWN OF DEVT UNITS IN UK BY PRICE POINTS*
IN UK BY PRICE POINTS* PRE-ACQUISITION POST-COMPLETION OF STAGE 1 & 2 ACQUISITIONS
*Based on average selling prices of the projects
24LOCATION MAP
GREATER LONDON & SOUTH EAST OF ENGLAND
CURRENT PROJECTS
Zone 1 Embassy Gardens
Zone 2 Wardian London, London City Island
STAGE 1 PROJECTS
1
1 2 1
1 Zone 2 Kensal Rise & Maida Hill
1 2 2
2 Zone 4 Millbrook Park, Barking Sites, Lampton
2 South East Woking
2
STAGE 2 PROJECTS – 6 sites in Zone 2, 3, 4
1
With Planning Consent Without Planning Consent M25 Motorway
*Number in circle indicates the stage of which the site will be acquired
25CONCLUSION
POWERING AHEAD
• Significant gain of mainstream market in Greater London and South East of
England
• Acquisition of a multidisciplinary development management team in the UK
• Expanding presence of ECOWORLD brand in the UK and Australia by catering
to demand from domestic home buyers
• Strong near-term earnings visibility supported by effective unbilled sales of
RM 5.85 RM5.85 billion
• Acquisition of 70% stake in Willmott Dixon’s residential development business
BILLION stretches earnings visibility well beyond 2021
• Strong fundamentals in the London, Sydney & Melbourne property markets
• London property market shows encouraging signs of higher private residential
unit sales & strong demand for office space
26CONCLUSION
ECOWORLD GROUP IN 2018
FY2018 SALES TARGET: FY2018 SALES TARGET:
RM2.0 BILLION RM3.5 BILLION
(excluding sales from JV with Be Living) (excluding sales from EcoWorld International)
ECOWORLD GROUP SALES TARGET: RM5.5 BILLION
27APPENDIX
28LAND BANK & PROJECT DETAILS
AS AT 31 OCTOBER 2017
LAND SIZE CUMULATIVE SALES EFFECTIVE UNBILLED
PROJECT OWNERSHIP GDV (MILLION)
( ACRE) (MILLION) SALES (MILLION)
United Kingdom
London City Island 75% 6.0 £691 £488 £360
Embassy Gardens 75% 5.7 £933 £297 £205
Wardian London 75% 1.4 £566 £393 £293
UK Sub-total 13.0 £2,190 £1,178 £858
Australia
West Village 100% 1.2 A$315 A$272 A$268
Yarra One 80% 0.5 A$243 A$76 A$58
Australia Sub-total 1.7 A$558 A$348 A$326
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