OJSC LSR Group

09/14/2021 | Press release | Distributed by Public on 09/14/2021 03:55

The top-management of LSR Group talked to the investment community

As part of the presentation of LSR Group's financial results for the first half of 2021, a conference call was organized for representatives of the investment community. During the event, a Q&A session was held, during which the company's executives highlighted the most pressing topics. For the convenience of interested parties, we provide a text version of the most interesting moments of the conversation.

NEW GUIDANCE FOR THE YEAR

- Why was there a correction in the guidance for 2021?

- The cancelling of the subsidized mortgage programme expectedly decreased the demand in Moscow and St. Petersburg, as our project in Moscow do not meet the new terms and in St.Petersburg only about 20% of all the sales meet those requirements. This decline cannot be compensated hence, the correction of the guidance.

- Should we expect new additions to the land bank?

- The company plans to acquire new land plots and projects in our major regions.

ABOUT THE BUSINESS EXPANSION

- Do you plan to expand your operations into other regions?

- We have already expanded to the Krasnodar Region, in particular, Sochi. There we will mainly focus on the development of our investment property segment.

- Has the company considered any alternative options for expanding its business, other than the investment property segment in Sochi, which will generate negative cash flow for several more years?

- During the reporting period, we completed successful acquisitions of land plots for the subsequent development - so, first of all, the expansion was in the main segment of our business. At the same time, we believe that the trend for domestic tourism is long-term, which is due to the pandemic and a number of other factors. Yes, the hotel business is less marginal, more conservative. But we believe that this kind of hedging is quite appropriate.

ABOUT THE DIVIDENDS

- How much altogether you paid during the first half of the year for all the acquisitions you refer to: several hotels and land plots

- In the first half of 2021, the payments for new land plots amounted to around 13 billion rubles.

- What can be the dividend expectations?

- Given the Group's significant acquisitions in the first half of the year, the dynamics of total and net debt, as well as further uncertainties due to the critical changes in the subsidised mortgage programme and issue of dividend payment for the first half of the year was not considered. The main focus of the company in the coming years will be on reducing debt burden and further business development. It can be said that the Company launched another investment cycle aimed at a long-term strategic development

ABOUT THE SHARE BUYBACK

- What is the reason for the announcement of the buyback of the company's ordinary shares from the market?

- In June, the Board decided to approve the delisting of LSR Group's Global Depository Receipts (GDRs) from the London Stock Exchange. At the same time in order to comply with the best corporate practices, it was decided to make a tender offer to GDR holders, who would be able to sell their receipts at USD 2.11 per one GDR. Other options were available to the shareholders, such as converting their receipts into local shares, as well as continued ownership of the receipts due to the retention of the depository programme after delisting. As a result of the tender, over 34.5 million GDRs were bought out for the amount of USD 72.9 million, which corresponds to 6.71% of the Company's share capital. Starting from the 2nd of August 2021, GDRs of LSR Group are no longer traded at the London Stock Exchange.

In July, the Board of LSR decided to grant holders of ordinary shares of the Group a similar right to sell their securities by announcing a tender offer. Investors may sell ordinary shares of LSR Group at a price of RUB 780 per share until the 20th of September. The amount of securities which the Company agrees to buy back is 10,303,021 shares or 10% of the share capital.