Dear ladies and gentlemen, welcome to the Instone Q2 2021 Results Conference Call. At all customer requests, this conference call will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press star key, followed by zero on your telephone keypad for an operator to assist. May I now hand over to Mr. Burkhard Sawazki, who will start the meeting today. Sir, please go ahead. Thank you. Good morning, everyone, and thank you for joining our Instone Q2 earnings call. Our management team is represented by our CEO, Kruno Crepulja, and our CFO, Foruhar Madjlessi. They will walk you through our presentation and provide you an update on our business development and our outlook. As usual, this will be followed by a Q&A session. With this, I'd like to hand over to Kruno Crepulja. Good morning, everyone. I'm glad you could join us for our Q2 2021 earnings call. Our management team and I were pleased with the continued strong business performance in the Q2. With the typical seasonality of our business, we expect further significant growth acceleration in the second half of the fiscal year. Consequently, we see ourselves well on track to reach our fiscal year 2021 growth targets. Now let's start our presentation with the highlights on page five. Instone continues its dynamic growth path, which is reflected across all parts of our value chain. Most importantly, the demand for our product and our asset class remains very strong from both private as well as institutional investors. Demand from private investors is even ahead of our internal expectations. Especially the institutional business will be a major growth driver for business in the second half of this year. We are currently in advanced stages for several deals, providing additional comfort for our sales targets. As key value driver for our business, the positive price trend for German residential remains fully intact. To support the envisaged step change in growth, we are working very actively on acquisitions, and the further expansion of our project portfolio. We are making good progress. Acquisitions with a GDV of more than EUR 600 million have already been approved year to date. Moreover, we are currently in exclusive negotiations for several projects with a GDV of around EUR 1 billion. Therefore, we are confident that there's more to come in the months ahead. On the construction side, we are actively managing supply bottlenecks for certain building materials. While the majority of our sites progress according to plan, some of our sites are now affected by delays, albeit at this stage, the overall impact of construction delays is compensated by our stronger than expected sales. In summary, our revenues and profitability remain completely in line with budget and guidance. It cannot be ignored that there is some cost pressure in our industry due to the jump commodity prices and therefore rising material costs. However, increasing material costs have been compensated by house price inflation, and therefore, there is no meaningful impact on our overall business performance to date. This is also attributable to the fact that large parts of, or some 85% of construction works for this year will not be affected as costs for such projects have already been fixed. Important to note that Instone's procurement strategy of awarding orders at an early stage is clearly paying off. Let's now have a brief look at our financial KPIs for the first six months. Our adjusted revenues amounted to EUR 260.5 million. This reflects a strong growth of plus 45% year-on-year. As mentioned in the second half, you can expect further growth acceleration in absolute and also in relative terms. Our gross margin stayed at a very high level of 29.4%, also compared to other peers in our industry. This is clearly a reflection of the robust demand situation, and our good cost control. It is also attributable to a certain extent to a favorable sales mix. This means that we benefited from a higher sales contribution from particularly high margin projects in the first six months, an effect which is expected to ease in the remainder of the year. Finally, with support from lower interest expenses, our adjusted earnings after tax saw a strong increase of more than 70% year- on- year to EUR 23.4 million. Coming to our outlook. On the back of our H1 results and our current business performance, we can fully confirm our financial targets for this year. Hence, we are expecting adjusted revenues in the ballpark of EUR 820 million-EUR 900 million, and adjusted earnings after tax in the range of EUR 90 million-EUR 95 million. Also, our dividend policy remains unchanged with a target payout ratio of 30% of EAT. To provide some more insight into the current situation, on slide number six, you find the chart you have become quite familiar with, our retail sales ratio. This chart clearly demonstrates that the demand after the recovery from the first lockdown period in spring last year remained at a high level constantly above the long-term mean and also above our internal expectations. The spike in July is however influenced by a block trade and therefore this cannot be extrapolated, and this also explains the recent mean reversion. Apart from that, we are not only benefiting from volume effects. Are also able to exploit the favorable pricing environment. As another positive demand indicator, we still have a strong backlog of reservations and authorization appointments, providing high visibility for strong sales development also in the weeks ahead. On the following slide number seven, we again collect some data points from recent market surveys. All market reports point into the same direction. There is a dynamic upward trend with maybe even some growth acceleration over the last quarter. Nevertheless, please bear in mind that also the pricing momentum has only a limited short-term impact on our fiscal year 2021 numbers due to our high pre-sales ratio. Financing markets remain highly supportive to our business. German 10-year mortgage rates, which even decreased further recently, are at ultra-low levels of below 1%, contributing to still high affordability for owner/occupiers. Simultaneously, the main demand drivers for institutional investors also remained fully intact. A pronounced scarcity of defensive asset classes, also due to structural headwinds in other real estate segments, and the still very attractive spread to bond market yields, also in the historical context, are pushing demand. Let's move to slide number eight. One major new development for our business since start of the year, as well as for many other industries, was the strong rise in commodity prices. This also resulted into a jump in cost for certain construction materials. Moreover, the availability of certain materials, i.e., the risk of potential delays, has increasingly become a risk factor we have to keep an eye on. Maybe the availability is actually even the more relevant short-term risk factor. Also due our strong management focus, construction activities are still running largely according to plan. From today's perspective, we only expect minor delays in construction progress in selected Instone projects. With regards to construction costs, we expect an CPI growth in 2021 slightly ahead of our initial budget. Rising construction costs can be compensated by the positive HPI growth trend. This is the key message. Material costs overall continued to rise over the last month, but the pace is currently clearly decelerating. We even saw a sharp drop in lumber prices recently. This confirms our view that the strong price increases for most materials are most likely only a temporary phenomenon. While material costs have increased substantially, labor, which makes about 50% of our construction costs, has increased moderately. Due to sluggish demand for commercial projects, our negotiation power vis-à-vis the construction companies has improved year to date. Despite the very robust residential demand, the overall German construction PMI is still in contraction mode. Generally, we are comparatively well-positioned due to our established network with long-lasting supplier relationships and our decision of awarding orders at an early stage is clearly paying off. Against this backdrop, we have already locked in the terms for some 85% of our expected construction costs for 2021. Moving to our portfolio section on slide number 10. As you know, we have committed to a step change in growth with a midterm annual revenue target of EUR 1.6 billion-EUR 1.7 billion. The launch of our Value Home product is supposed to be a key driver for this. Instone will therefore continue to expand its project portfolio significantly in 2021. Also in the coming fiscal year 2022, as of today, six transactions in total have been approved with a GDV in excess of EUR 600 million. Moreover, we have secured a promising deal pipeline on the basis of our strict margin criteria. We are in exclusive negotiations for several acquisitions with a total GDV of around EUR 1 billion. This also comprises a decent share of Value Home projects. Hence, we are confident that you can expect more positive news in this respect in the coming months. Until today, including the recent transaction, which have been approved after the reporting date, the GDV of our portfolio climbs to a level of around EUR 6.6 billion. Another significant increase year-to-date. Let me also add some remarks on our Value Home growth initiative. We are working intensively on all levels of the business. Over last month, we hired new employees. We just started the construction works of the first two projects, one in the suburb of Düsseldorf and one in Duisburg. Also important, the costs are absolutely in line with our budget, and we are currently in advanced stages for the sale of the Duisburg project. We see ourselves on track for the planned ramp-up of this exciting future business. Slide 11 illustrates a breakdown of our current project portfolio as of the Q2 reporting date, i.e., excluding the recent acquisitions. The portfolio is made up of 52 projects with more than 14,300 residential units. Some 90% of the GDV is distributed to the most attractive metropolitan areas of Germany, and the remaining part is very attractive B-cities. On the right-hand side, you can see the usual breakdown of the current development status of our portfolio. Of the nearly EUR 6.3 billion of GDV, which is shown here, around EUR 2.6 billion is already under construction or pre-construction, and thereof, EUR 2.4 billion or 92% has already been sold. This secures a high level of visibility for our expected sales and earning growth in the years to come. With that, I would like to hand over to Foruhar Madjlessi for the financials. Thank you. Thank you, Kruno. Good morning everyone from my side. Kruno has provided a detailed view of the operating environment and key achievements over the six months to June 30th. I will take you through a more detailed review of our financial results and outlook. Let me start saying that we are very pleased with both our H1 results and current trading. On page 13, we have summarized our adjusted results of operations for the Q2 as well as for H1. Revenues for the six months to June 30th have picked up substantially versus the depressed prior year period as condo sales are back in full swing. This positive trend continues beyond the reporting date as we are launching new retail projects and demand remains at exceptional levels as evidenced by our retail sales ratio. Against the positive sales trend, we are experiencing minor delays in construction progress on selected construction sites as certain building materials are in short supply. This remains a clear focus, and we are actively managing the situation to minimize any negative impact. As you know, both our sales volume and construction progress are the key drivers of revenue recognition. It is important for us to stress that in aggregate, we remain completely on track for achieving our full-year revenue guidance. At 29.4%, our H1 gross margin remains well above our 25% midterm target as we benefit from price increases and tight construction cost management, as Kruno has explained earlier. Our year-end guidance remains at 26%-27% gross margin as a substantial amount of revenues are due to be recorded in H2, and the product mix can be expected to offer a somewhat lower margin compared to H1. Our platform costs have increased in line with expectations as we continue to invest to cope with the growth of our business. A major portion of incremental platform costs are staff related, with full-time employees now at 365 versus 323 a year ago. Finally, our earnings after tax and EPS are up more than 70% and 57% respectively versus the prior year period. Over the page. As you can see, we have a clear path to achieving our full-year targets for both customer sales contracts and revenues based on a set of identified projects. This is based on our current condo offering together with new retail sales starts, as well as a double-digit number of institutional sales projects expected to be forward sold by year-end. Both will contribute to our target sales for the year. In fact, regarding our institutional sales, negotiations are all on track as demand and competition remain strong, and our product pipeline matches investors' needs. As you know, retail and institutional sales contracts will drive revenue recognition. Assuming construction progress in line with our revised expectations, the right-hand chart follows from our expected sales progress as outlined on the left-hand side. In summary, again, we are entirely confident in achieving our 2021 financial targets. Turning to page 15, you'll find evidence for the strength of our balance sheet. First, we have a cash position of EUR 270 million. Second, our leverage remains at very low levels. Our loan-to-cost ratio has further improved from year-end and now stands at just 12.5%. It's important to stress once again that in calculating our LTC, our EUR 800 million inventories enter the calculation at historic cost, not fair value. Looking at our net debt to EBITDA ratio, we are at 1.3x. While our leverage can be expected to trend higher as we continue to invest in new projects and future growth, it will remain at overall moderate levels. Kruno has talked about our pipeline of potential new land acquisitions. I would just like to stress once again the competitive advantage we have based on the strength of our balance sheet. Over the page, you see a summary of our cash flow generation as well as our total available funds. Since the start of the year, we have generated EUR 146 million in operating cash flow and prior to new land investments, EUR 192 million. While we do not expect to achieve a positive operating cash flow for this year and next, the figure demonstrates the attractive cash flow generation potential inherent in our business model. As you all know, the focus for now remains firmly on laying the foundation for future growth to achieve our midterm revenue target of EUR 1.6 billion-1.7 billion. To reinforce my previous statement regarding the competitive edge that our balance sheet provides, our total secured corporate funding, including committed corporate lines, amount to almost EUR 400 million. In addition, we have undrawn committed project financing lines of EUR 133 million. These project financing lines essentially cover all of the future costs of our in-construction projects to the extent they are not funded by our institutional customers. On the next page, we've laid out our prospective NAV. Conceptually, the figure reflects the NAV per share we will achieve, assuming development to hold of our entire pipeline. The NAV as of the reporting date stands at €33.12 per share, slightly down from the year-end figure, reflecting both the EUR 0.26 per share dividend as well as platform and financing related payouts. We clearly see upside to our NAV for H2 as we continue to expand our project pipeline and invest into attractive new projects. Finally, on page 19, we summarize our 2021 guidance as well as our midterm outlook. First, we are on track to meeting our 2021 target with revenues of EUR 820 million-900 million. Second, we continue to expect a gross profit margin between 26%-27%, owing to a slightly lower margin product mix in H2. Third, our earnings after tax guidance remains at EUR 90 million-95 million. Finally, all of this continues to be based on expected 2021 sales contracts exceeding EUR 900 million. Looking to our financial year 2022, let me reiterate our initial indications. We expect revenues at or slightly above EUR 1 billion. For now, we see our 2022 gross margin at around 25%, with risk skewed to the upside. Our 2021 platform costs will be approaching EUR 90 million. More granular guidance for our fiscal year 2022 targets will be provided with the publication of full year figures. Lastly, I'd like to reiterate our midterm revenue target of EUR 1.6 billion-EUR 1.7 billion. With that, I'd like to open the call for Q&A. Thanks. Thank you. Now we will begin our question and answer session. If you have a question for our speaker, please dial one on your telephone keypad. Now to enter the queue. Once your name has been announced, you can ask a question. If you found your question is answered before, it's your turn to speak. You can dial two to cancel your question. If you are using speaker equipment today, please leave your handset before making your selection. The first question is from Mr. Thomas Neuhold from Kepler Cheuvreux. Sir, please go ahead. Good morning, gentlemen. Thank you very much for the presentation. Thank you. My questions, I have three. I think it's best to take them one by one. Firstly, you mentioned the bottlenecks for certain materials. Can you elaborate which materials are concerned, and what is your strategy to tackle these issues? Hi, Thomas. Regarding materials, these are insulation, for example. Mostly insulation, for the facades. Here's the strategy of the supplier to advance, to organize the material, and to buy it, let's say in a very early stage. Our suppliers, there have been the one or the other delay in projects, which is compensated by changing, let's say, the procedure of the works on the site. As mentioned from my side, this couldn't be completely compensated everywhere. There are partly delays in the one or the other projects through mostly insulation problems delivery. Okay. Understood. The second question is on this EUR 1 billion acquisition pipeline. Can you provide more color in terms of is this Value Home product? A little bit on the regional breakdown of this pipeline and also on the potential margins this pipeline could deliver. The regional split is we have approximately 60% in North Rhine-Westphalia, 20% in the Rhine Main area. We have also one project in Hamburg and one in Nuremberg. You can say spread all over Germany. The margin is 25%+. There we have the 1 or the other huge project where we plan to initiate a master plan. You know that these projects are stronger from margin perspective. The breakdown of Value Home to the core business, approximately one-third of the EUR 1 billion is dedicated to Value Home. Thank you. My last question is on the NAV calculation, page 17. Can you remind us, please, what house price and cost inflation assumptions are included here? It's the same assumptions that we use for our budgeting. It's 1.5% house price inflation and 3.5% cost price inflation. Thank you very much. Welcome. Thank you, sir. Next question is from Mr. Philipp Kaiser from Warburg Research. Sir, please go ahead. Yeah, thanks for taking my question. Just a couple of follow-up questions from my side and maybe kicking off with the bottleneck of certain materials here. Just a small follow-up question. Are there any signals that this pressure will ease in the second half of the year, or is there the risk that this will maybe get increasingly worse on the bottleneck side for certain materials? What we hear from our suppliers is that it's still tough to organize insulation materials, for example. My personal view is that we will see some kind of easing here. Due to overall production catching up with demand step by step. We still have, let's say, for the next two or three months, we have to manage this scarcity of materials still. Okay. Concerning construction costs. 85% for 2021 are fixed. Could the ongoing rise of material costs may have an impact on the margin in 2022? Are there any visibility yet on that? If we assume the 5%-6% cost price inflation we see currently due to material cost inflation, this would lead to approximately 80 basis points impact on margin for 2022, which is completely compensated by the HPI growth we've seen up to date. You can assume that if the house price inflation is going further dynamically as we see it currently, there is some kind of upside potential, but clearly limited by the high pre-sale rate we have going forward also for 2022. The increase in the HPI should offset any further material cost rise also for 2022. Yes. I think in summary, you can rely on our 25% gross margin. As I said, I think that the risk is due to the upside here, subject to house price inflation continuing. Okay, perfect. one last question. On page 19, you mentioned that 88% of the revenue guidance is secured by project of building rights. Could you shed some light on the rest? Is this 1 large project or is there some smaller ones with missing building rights? I think the most important part here is to understand that in order for us to achieve our revenue target, we don't need 100% of building rights. In particular in our institutional sales, there is a number of examples where pre-completing the building right, we already enter into negotiations. I would also add that all of the building rights processes now, or the critical ones, have been completed, and the remaining ones are pretty much on track based on our budgets and revised expectations. We had some delays last year and earlier this year that we have communicated, but I think that is for now all been sorted out. Okay. Very limited risk on that side. Yeah. Okay, perfect. That's from my side. Thank you very much. Very helpful. Thank you, sir. Next question is from Mr. Michael Kuhn from Deutsche Bank. Sir, please go ahead. Hey, good morning. two follow-ups from my side. Sorry, once again, on the material situation, also keeping in mind, let's say, ongoing harbor closures and so on. How much worse would things have to go to put your project finishings and targets for next year at risk? That would be the first one. The second one, I remember, I think during Q1 call, you guided for a low to mid-20% gross margin. The final outcome was obviously a bit higher. Were there any changes in the sales mix versus your prior expectation? Thank you. Michael, hi. Michael, hi. Michael, I can maybe start with the second question. You're absolutely right. We had expected a project to be a part of the revenue mix that is now delayed. We've had a very low margin social housing project in this Q2. The other one that would have had another sort of detrimental impact on the margin has been delayed. We're also benefiting to a certain extent from price increases. Yeah, we are still for the full year on track with what we were looking to achieve. Margins for the second half of the year, as I said before, for that reason and because of general product mix reasons, will be a bit lower than for the first half. Those projects are still on track to be finalized or have been finalized. Yeah, absolutely. No, we are fully on track. It's just sometimes a bit difficult to be precise about whether it's Q2 or Q3, where the project revenue recognition falls into. All right. Understood. Your first question, I currently, let's say, don't see a realistic scenario that we will see, let's say, significant delays if the situation is worsening. Let's say we changed our strategy with our suppliers regarding when do we get the materials bought and also, so we let's say, increased the time period of material logistics. Therefore, we are absolutely confident that we don't see significant delays for 2022 here. Of course, there could be a scenario if you say we can't get any material, but I don't believe that this is a scenario which can come or which would come from our perspective. Understood. Thank you. Welcome. Thank you, sir. We have no other questions. Ladies and gentlemen, I would like to remind you that if you wish to ask one, you may press 01 on your telephone keypad. It's 01 on your telephone keypad. We have another question from Mr. Thomas Neuhold from Kepler Cheuvreux. Sir, please go ahead. Thank you very much. I have a follow-up question on construction costs. Do you have already fixed a portion of your construction costs for 2022? Generally speaking, give me your view on how raw material prices could develop in the next couple of quarters. Do you think it makes sense now to fix construction costs for next year already, or you rather wait and hope construction costs can again? What is your view here? We have for 2022, approximately 30% of the construction works are already fixed with contracts. My personal expectation is that, and we saw this already looking at wood prices, which dropped. I personally believe that we will see a similar development for steel, for example, going forward. An easing of prices also for insulation, where if the production is catching up. Currently, we see for insulation, also steel, a rise in prices, not with the same acceleration as it has been, but still a rising of prices. From my perspective, in two or three quarters, we should see an openness. That's my personal view. Looking at the strategy, so we stick to our strategy to negotiate the works in a very early stage with the company, so having a lot of time. For steel, for example, where we see that the companies are asking for high material price, we here agree to flexible terms, where we can, let's say, decide when to fix the prices for steel. This is a strategy we are using, and from my perspective, it makes a lot of sense because all the other costs, as labor, for example, are rising steadily, and therefore, it makes a lot of sense to be in a very early stage to talk to the construction companies. Understood. Thank you very much. You're welcome. Thank you, sir. We have no other questions. Okay. Thank you very much. Thank you for your participation. If you have further follow-up questions also after this call, please do not hesitate to contact the IR team. Thank you and goodbye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.