Slide 1: Investor Presentation Q2 & H1 2023 Financial Results
Classification: Confidential INVESTOR PRESENTATION Q2 & H1 2023 FINANCIAL RESULTS AUGUST 2023
Slide 2: Disclaimer
Classification: Confidential AUGUST 2023 DISCLAIMER The information contained herein has been prepared by TECOM Group PJSC (“TECOM”) or (the “Company”). The information contained in this presentation may not have been reviewed or reported on by the Company’s auditors. The company relies on informati
Slide 3: TECOM Group Management Presenting
Classification: Confidential AUGUST 2023 TECOM GROUP MANAGEMENT PRESENTING ABDULLA BELHOUL MICHAEL WUNDERBALDINGER CEO OF TECOM GROUP CFO OF TECOM GROUP 3
Slide 4: Content
Classification: Confidential AUGUST 2023 CONTENT MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS 5-8 TECOM GROUP’S VALUE PROPOSITION 9-13 Q2 & H1 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS 14-24 BUSINESS SEGMENTS PERFORMANCE 25-29 SUSTAINABILITY AND ESG 30-33 OUTLOOK 34-36
Slide 5: Macroeconomic and Real Estate Market Highlights
Classification: Confidential MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS
Slide 6: Macroeconomic Highlights
Classification: Confidential AUGUST 2023 MACROECONOMIC HIGHLIGHTS UAE GDP growth expected to sustain driven by domestic activity and strong FDI flows • UAE GDP is projected to grow at 3.6% with non-oil GDP expected to grow at 3.8% in 2023 supported by strong domestic activity, continued growth in to
Slide 7: Dubai's Commercial Real Estate Market Outpacing Other Major Global Cities
Classification: Confidential AUGUST 2023 DUBAI’S COMMERCIAL REAL ESTATE MARKET OUTPACING OTHER MAJOR GLOBAL CITIES Global Commercial Real Estate Market Trends Dubai and TECOM Group’s Trends • Based on historical demand levels, it would take 5-13 years for the global • We have already seen a full rec
Slide 8: Dubai Commercial Real Estate Market Highlights Q2 2023
Classification: Confidential AUGUST 2023 DUBAI – COMMERICAL REAL ESTATE MARKET HIGHLIGHTS Q2 2023 DUBAI OFFICES – AVERAGE SELLING PRICE Demand for office space continues to gather pace amid limited Sales and value of transaction surges with strong interest from international fresh supply investors a
Slide 9: TECOM Group's Value Proposition
Classification: Confidential TECOM GROUP’S VALUE PROPOSITION
Slide 10: A Compelling Investment Opportunity
Classification: Confidential AUGUST 2023 A COMPELLING INVESTMENT OPPORTUNITY Over 20 years 10,000+ Dividend payout 6 strategic sectors Of experience as Leading player long-term, loyal and Supported by robust and primed for sustainable in Dubai’s business hub diversified customer base attractive fina
Slide 11: 10 Business Districts Strategically Located
Classification: Confidential AUGUST 2023 Dubai’s strategic business enabler 10 BUSINESS DISTRICTS and creator of world’s class business districts STRATEGICALLY LOCATED 11 12
Slide 12: Delivering Value Through Our Business Segments
Classification: Confidential AUGUST 2023 DELIVERING VALUE THROUGH OUR 4 BUSINESS SEGMENTS COMMERCIAL INDUSTRIAL LAND SERVICES LEASING LEASING LEASING & OTHERS • Government services • Registration and licensing 9.5 11.5 • Corporate services 164 Incubation services Million sqft Million sqft Million sq
Slide 13: Clearly Defined Growth Strategy Anchored on Three Core Pillars
Classification: Confidential AUGUST 2023 CLEARLY DEFINED GROWTH STRATEGY ANCHORED ON THREE CORE PILLARS STRATEGIC PILLARS OPTIMISE CORE BUSINESS DEVELOP BUILD NEW SOURCES & PERFORMANCE DIFFERENTIATED OF GROWTH VALUE PROPOSITION - Retain and strengthen relationships with customers - Deliver a compell
Slide 14: Q2 & H1 2023 Operational & Financial Performance Highlights
Classification: Confidential Q2 & H1 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS
Slide 15: Financial Highlights (H1 2023)
Classification: Confidential AUGUST 2023 FINANCIAL HIGHLIGHTS (H1 2023) OPERATING PERFORMANCE 87.0% Consolidated Occupancy vs 82% Jun 2022) (Excluding Land Leasing) 2.7 Years REVENUE EBITDA FFO1 Overall blended WALT* (Weighted of Commercial AED 1,049 MN AED 825 MN AED 678 MN [BTS & BTL] and Industri
Slide 16: Financial Highlights (Q2 2023)
Classification: Confidential AUGUST 2023 FINANCIAL HIGHLIGHTS (Q2 2023) REVENUE EBITDA EBITDA MARGIN AED 535 MN AED 426 MN 80% vs. Q2 2022 6% vs. Q2 2022 14% vs. Q2 2022 6% NET PROFIT ADJUSTED NET PROFIT1 AED 229 MN AED 283 MN vs. Q2 2022 (3%) vs. Q2 2022 19% 1. ADJUSTED NET PROFIT: *Excluding the o
Slide 17: Strong Cash Flow Generation & Increase in Free Cash Flow
Classification: Confidential AUGUST 2023 STRONG CASH FLOW GENERATION & INCREASE IN FREE CASH FLOW 1,198 1,249 1,065 1,009 o Improving business FUNDS FROM 627 678 conditions, quality of tenants, OPERATIONS (FFO)1 and better collection efforts 2020 2021 2022 LTM Q2-23 H1 22 H1 23 are driving sustainab
Slide 18: Balance Sheet
Classification: Confidential AUGUST 2023 BALANCE SHEET 30 JUN 31 DEC DESCRIPTION CHANGE % 2023 2022 PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 111 116 -5% INVESTMENT PROPERTY 11,826 11,874 0% DERIVATIVE FINANCIAL INSTRUMENTS 316 316 0% TRADE, UNBILLED AND FINANCE LEASE RECEIVABLES 781 743 5% NON-CURR
Slide 19: Income Statement
Classification: Confidential AUGUST 2023 INCOME STATEMENT H1 H1 YoY Q2 Q2 YoY DESCRIPTION 2023 2022 CHANGE % 2023 2022 CHANGE % REVENUE 1,049 989 6% 535 504 6% DIRECT COSTS (356) (356) 0% (185) (168) 10% GROSS PROFIT 693 633 9% 350 336 16% OTHER OPERATING INCOME 19 28 -32% 16 16 0% 712 661 8% 366 35
Slide 20: Sustaining Healthy Leverage Position to Support Growth Strategy
Classification: Confidential AUGUST 2023 SUSTAINING HEALTHY LEVERAGE POSITION TO SUPPORT GROWTH STRATEGY o Proactive and efficient debt BALANCE SHEET CAPITAL STRUCTURE management, further AED MN AMOUNT LTV1 LTM EBITDA DEBT 4,348 AED 7.6BN CORPORATE FACILITY 4,348 20% aligning financial needs to CASH
Slide 21: Portfolio Valuation
Classification: Confidential AUGUST 2023 PORTFOLIO VALUATION Robust growth in portfolio value due to improving economic conditions, completion of value accretive BTS projects and high-quality tenants contracted over the long term OUR PORTFOLIO 165MN 1,128 WAREHOUSES SQ. FT. LAND AREA 147 21.3BN COMM
Slide 22: EPRA KPIs
Classification: Confidential AUGUST 2023 EPRA KPIs KPI H1 2023 2022 H1 2022 2021 2020 2019 IFRS EARNINGS (AED Million) 485 726 428 569 579 634 EPRA EARNINGS (AED Million) 721 1,024 534 898 944 984 IFRS NET ASSETS (AED Million) 6,256 5,968 5,718 5,613 6,168 6,131 EPRA NET ASSET VALUE (NAV) (AED Milli
Slide 23: Analyst Coverage Report
Classification: Confidential AUGUST 2023 ANALYST COVERAGE REPORT 7TH AUG 2022 29TH OCT 2022 8TH AUG 2022 26TH OCT 2022 8TH AUG 2022 26TH OCT 2022 10TH JUL 2023 24TH FEB 2023 16TH MAY 2023 10TH FEB 2023 10TH FEB 2023 03RD MAY 2023 RATING BUY EQUAL-WEIGHT BUY EQUAL-WEIGHT ANALYST HARSH MEHTA NIDA IQBA
Slide 24: Dividend Policy
Classification: Confidential AUGUST 2023 DIVIDEND POLICY • In June 2022 we announced our dividend policy: FY 2023 FY 2024 H1 2025 • Semi-annual dividend pay-outs adding to AED 800 million per annum were committed. • AED 200 million interim dividend paid in November 2022, H2 2022 and AED 200 million
Slide 25: Business Segments Performance
Classification: Confidential BUSINESS SEGMENTS PERFORMANCE
Slide 26: Commercial Leasing Segment
Classification: Confidential AUGUST 2023 COMMERCIAL LEASING SEGMENT SUSTAINED GROWTH MOMENTUM ON ROBUST DEMAND ESPECIALLY FOR GRADE A, CBD OFFICES FROM NEW AND EXISTING CUSTOMERS AND OWED TO BALANCE BETWEEN BUILT-TO-SUIT AND BUILT-TO-LEASE PROPERTIES % CHANGE % CHANGE DESCRIPTION H1 2023 H1 2022 Q2
Slide 27: Industrial Leasing Segment
Classification: Confidential AUGUST 2023 INDUSTRIAL LEASING SEGMENT OUR UNIQUE VALUE PROPOSITION WITHIN THE INDUSTRIAL SEGMENT SUPPORTS TOP-LINE GROWTH, UNDERPINNED BY AN EXPANSIONARY BUSINESS CLIMATE DESCRIPTION H1 2023 H1 2022 % CHANGE Q2 2023 Q2 2022 % CHANGE Revenue growth driven by: YOY YOY • I
Slide 28: Land Leasing Segment
Classification: Confidential AUGUST 2023 LAND LEASING SEGMENT STRONG CONTRIBUTION FROM LAND LEASE SEGMENT DURING THE PERIOD ON IMPROVING REVENUE QUALITY AND NEW LEASE AGREEMENTS % CHANGE % CHANGE DESCRIPTION H1 2023 H1 2022 Q2 2023 Q2 2022 YOY YOY Revenue growth driven by: REVENUE 237 219 8% 125 107
Slide 29: Services & Others Segment
Classification: Confidential AUGUST 2023 SERVICES & OTHERS SEGMENT ENCOURAGING DEMAND FROM FREELANCERS FOR CO-WORKING SPACES OFFSET WEAKNESS IN OTHER SERVICES % CHANGE % CHANGE DESCRIPTION H1 2023 H1 2022 YOY Q2 2023 Q2 2022 YOY Q2 2023 Performance: • EBITDA expansion and improving EBITDA margins dr
Slide 30: Sustainability and ESG
Classification: Confidential SUSTAINABILITY AND ESG
Slide 31: Environment & Sustainability Goals
Classification: Confidential AUGUST 2023 ENVIRONMENT & SUSTAINABILITY GOALS National/International OUR CORE PILLARS Mandates • Ethical business policies & practices Governance and • Robust governance UAE Centennial 2071 Stabilise core Risk • Prudent risk management business • Responsible sourcing an
Slide 32: Key ESG Highlights and Achievements
Classification: Confidential AUGUST 2023 Key ESG Highlights and Achievements of H1 2022 Economy 89% AED 485MN 366 Customer satisfaction rate, Net profit for H1 2023 Active Start-ups 1.5% increase from Dec (+13% increase from 2022) (6% up from Dec 2022 2022) Community AED 271,000 Year-Round Donated i
Slide 33: Key ESG Highlights and Achievements - Cont'd
Classification: Confidential AUGUST 2023 Key ESG Highlights and Achievements of H1 2022 - Cont’d People 23% 1/3 503 hrs. 0 Work-related injuries or Emiratisation Rate of our employees of training delivered to our fatalities since 2019 are female employees Environment 6.4GWh 22 179 Clean Energy Gener
Slide 34: Outlook
Classification: Confidential OUTLOOK
Slide 35: Priorities for 2023 & Beyond
Classification: Confidential AUGUST 2023 PRIORITIES FOR 2023 & BEYOND OPTIMISE CORE BUSINESS DEVELOP DIFFERENTIATED BUILD NEW SOURCES & PERFORMANCE VALUE PROPOSITION OF GROWTH Identify customer priorities and Enhance and integrate customer Identify novel, differentiated retention initiatives journey
Slide 36: Growth Drivers
Classification: Confidential AUGUST 2023 GROWTH DRIVERS 01. 02. 03. 04. 05. Occupancy Rental Completed Growth Complementary Rates Rates Projects Projects Services Occupancy rates Rental rates growth Delivery of high- Future organic Growth driven by growth driven by as Dubai office rental quality bui
Slide 37: Thank You
Classification: Confidential THANK YOU