2018-2022 Business Plan update

Quabit maintains its goal of reaching its cruise speed in year 2022 with the delivery of 2,700 home units on an annual basis, and exceeding Euro 600 million of annual turnover and Euro 70 million of annual EBITDA

The Company’s plans include reaching recurring positive operational results from the last quarter of this year. The 2020 financial year should be the first one with operational profits.

The growth plan for the Company continues to advance in a scenario marked by the positive balance of the basic macro-economic variables. A time in which the strength and growth of the Real Estate sector favours compliance with Quabit’s objectives and forecasts the achievement of operational results.

In this sense, the Company’s plans include reaching recurring positive operational results from the last quarter of this year. The 2020 financial year should be the first one with operational profits.

Notwisthstanding the above, fundamentally due to the delays in the construction works and, to a lesser extent, in the obtaining of licenses, issues that are both common to the majority of the development companies, the delivery objectives of the Business Plan experience a deviation of approximately 4 months, which entails moving about 350 home units from 2019 to 2020, and about 550 from 2020 to 2021.

As a consequence, the delivery of 7,200–7,600 home units is estimated for the 2018–2022 period. The reduction of 6% in the delivery objectives, due fundamentally to the extension of the construction terms (3–4 months vs previous estimates) and a greater sale of land (sales of land corresponding to about 650 housing units of the previous Plan are estimated in the 2019–2022 period).

ACQUISITION OF RAYET CONSTRUCCIÓN. Precisely in order to solve the issues with the execution of construction works, in terms of cost and compliance with schedules, Quabit has decided to integrate the constructive process and with this aim has agreed the acquisition of the majoritiy or, should it be the case, all of the share capital of Rayet Construcción, S.A., for a price of Euro 13.1 Million. The purchase price has been agreed to be delivered in two tranches: 30% in cash at the closing of the transaction; 70% in shares of Quabit at a reference price of Euro 2.00 per share (from treasury stock and the purchase of shares in the market).

DEVELOPMENT OF LAND IN PLANNING. In parallel, the Company is working towards positioning itself in the development of land in planning, acting as Urban Agent of land owned by third parties. The objective is twofold: on the one hand, sourcing itself with ready to build land in better conditions (Quabit shall develop more than 25% of its land portfolio needs from 2022 onwards); and, on the other hand, maintaining a recurring activity of sales of ready to build land.

Forecasted turnover for the 2018–2022 period: Euro 1,700–1,800 Million. Quabit currently has more than 1,800 home units in delivery or construction phases with an estimated turnover of Euro  409 Million (>25% of the 2018–2022 Plan). The current total number of active Real Estate developments is 59, with 4,172 home units and an estimated turnover of Euro 956 Million (>60%  of the 2018–2022 Plan).

In the 2018–2022 period, the total sales of land will amount to more than Euro 100 Million, with a margin of 20%.

Strong growth of the comercial activity. The pre-sales levels are optimal in order to comply with the delivery plans and capture price increases. The evolution of the commercialisation rates is compliant with the Business Plan with 1,237 home units pre–sold up to March 31, 2019 (up 104.1% on a year ago, for a total amount of turnover of Euro 246 Million).

In total, since the time the Company started its growth plan in 2017, it has invested Euro 186 Million in residential land in order to develop almost 4,800 home units. After all these transactions, Quabit has a consolidated and diversified land bank in high potential areas with almost 810,000 buildable square metres. Approximately 75% is ready to build land and 25% is undergoing urban planning.

Additionally, the Company has tax loss carry-forwards recognized for a value of Euro 194 Million, of which only Euro 55 Million have been activated.

The shares are currently trading at a discount in excess of 40% of their NNAV (Euro 2.30).

DIVIDEND POLICY. 40% Pay-Out, with the first dividend payable at the end of 2020 as an interim dividend of the 2020 financial year results.