TECOM Group PJSC · DFM:TECOM
TECOM Group PJSC — Q1 2023 Earnings Presentation
35 slides from TECOM Group PJSC's earnings presentation, May 2023
Slide 1: Investor Presentation Q1 2023 Financial Results
INVESTOR PRESENTATION Q1 2023 FINANCIAL RESULTS MAY 2023
Slide 2: Disclaimer
MAY 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 information obtained from sources believe
Slide 3: Agenda
MAY 2023 AGENDA MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS 5-7 TECOM GROUP’S VALUE PROPOSITION 8-12 Q1 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS 13-22 BUSINESS SEGMENTS PERFORMANCE 23-27 SUSTAINABILITY AND ESG 28-31 OUTLOOK 32-35
Slide 4: TECOM Group Management Presenting
MAY 2023 TECOM GROUP MANAGEMENT PRESENTING ABDULLA BELHOUL MICHAEL WUNDERBALDINGER CEO OF TECOM GROUP CFO OF TECOM GROUP 04
Slide 5: Macroeconomic and Real Estate Market Highlights
MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS
Slide 6: Macroeconomic Highlights
MAY 2023 MACROECONOMIC HIGHLIGHTS UAE GDP set to maintain strong growth with inflationary pressures abating • UAE Central Bank (CBUAE) has maintained its forecast of 3.9% GDP growth for 2023 and for economic growth to rise 4.3% in 2024 (Source: CBUAE) • S&P’s monthly PMI for March rose to 55.9, the
Slide 7: Dubai – Real Estate Market Highlights
MAY 2023 DUBAI – REAL ESTATE MARKET HIGHLIGHTS Robust demand for warehouse and industrial properties Dubai’s office market sustains strong growth continues to gather pace led by e-commerce boom and momentum Government-led initiatives • Dubai’s office market sustained the strong performance from 2022
Slide 8: TECOM Group's Value Proposition
TECOM GROUP’S VALUE PROPOSITION
Slide 9: A Compelling Investment Opportunity
MAY 2023 A COMPELLING INVESTMENT OPPORTUNITY Over 20 years 9,500+ 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 financial profile growth proposition
Slide 10: 10 Business Districts Strategically Located
MAY 2023 10 BUSINESS DISTRICTS Dubai’s strategic business enabler and creator of world’s class business districts STRATEGICALLY LOCATED 1010
Slide 11: Delivering Value Through Our Business Segments
MAY 2023 DELIVERING VALUE THROUGH OUR 4 BUSINESS SEGMENTS COMMERCIAL INDUSTRIAL LAND SERVICES LEASING LEASING LEASING & OTHERS • Government services • Registration and licensing 9.5 • Corporate services 11.5 164 Million sqft Million sqft Million sqft Incubation services for start-ups GLA (as of 31 M
Slide 12: Clearly Defined Growth Strategy Anchored on Three Core Pillars
Classification: Internal MAY 2023 CLEARLY DEFINED GROWTH STRATEGY ANCHORED ON THREE CORE PILLARS S TRATEGIC P ILLARS O P TIMIS E CO RE BUS INES S DEVELO P BUILD NEW S O URCES & P ERF O RMANCE DIF F ERENTIATED O F GRO W TH VALUE P RO P O S ITIO N - Retain and strengthen relationships with customers -
Slide 13: Q1 2023 Operational & Financial Performance Highlights
Q1 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS
Slide 14: Financial Highlights (Q1 2023)
MAY 2023 FINANCIAL HIGHLIGHTS (Q1 2023) OPERATING PERFORMANCE 87% Consolidated Occupancy (Excluding Land Leasing) REVENUE EBITDA FFO1 2.7 Years Overall blended WALT* AED 514 MN AED 399 MN AED 359 MN (Weighted of Commercial [BTS & BTL] and Industrial) vs. 2022 6% vs. 2022 14% vs. 2022 44% *WALT: Weig
Slide 15: Strong Cash Flow Generation & Increase in Growth Capex
Classification: Internal MAY 2023 STRONG CASH FLOW GENERATION & INCREASE IN GROWTH CAPEX o Strong growth in FFO and RCFC, driven by improving 1,4 00 1,308 1,2 00 1,198 1,065 business conditions, quality 1,0 00 800 1,009 of tenants 600 249 359 FUNDS FROM 400 200 OPERATIONS (FFO)1 0 2020 2021 2022 LTM
Slide 16: Robust Balance Sheet
MAY 2023 ROBUST BALANCE SHEET 31 MAR 31 DEC YoY DESCRIPTION 2023 2022 CHANGE % PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 114 116 -2% INVESTMENT PROPERTY 11,856 11,874 0% DERIVATIVE FINANCIAL INSTRUMENTS 274 316 -13% TRADE, UNBILLED AND FINANCE LEASE RECEIVABLES 766 743 3% NON-CURRENT ASSETS 13,009 1
Slide 17: Income Statement
Classification: Internal MAY 2023 INCOME STATEMENT 31 MAR 31 MAR YoY DESCRIPTION 2023 2022 CHANGE % REVENUE 514 485 6% DIRECT COSTS (171) (188) -9% GROSS PROFIT 343 297 15% OTHER OPERATING INCOME 3 12 -75% 346 309 12% GENERAL AND ADMINISTRATIVE (38) (54) -29% MARKETING AND SELLING (7) (7) -27% TOTAL
Slide 18: Healthy Leverage Position Supporting Growth Agenda
MAY 2023 HEALTHY LEVERAGE POSITION SUPPORTING GROWTH AGENDA o Well-balanced capital structure and BALANCE SHEET CAPITAL STRUCTURE ample liquidity supporting growth agenda AED MN AMOUNT LTV1 LTMEBITDA DEBT 4,345 AED 7.6BN CORPORATE FACILITY 4,345 20% CASH 1,367 TOTAL FINANCIAL DEBT 4,345 20% 3.1x (1,
Slide 19: Portfolio Valuation
MAY 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 21.1MN SQ. FT. SQ. FT. LAND AREA LEASABLE AREA 21.3BN 1,128 147 81 VALUATION* WARE
Slide 20: EPRA KPIs
Classification: Internal MAY 2023 EPRA KPIs KPI Q1 2023 2022 Q1 2022 2021 2020 2019 IFRS EARNINGS (AED Million) 255 726 190 569 579 634 EPRA EARNINGS (AED Million) 348 1,024 225 898 944 984 IFRS NET ASSETS (AED Million) 5,981 5,968 6,264 5,613 6,168 6,131 EPRA NET ASSET VALUE (NAV) (AED 15,126 15,05
Slide 21: Analyst Coverage Report
MAY 2023 ANALYST COVERAGE REPORT 7TH AUG 2022 29TH OCT 2022 8TH AUG 2022 26TH OCT 2022 8TH AUG 2022 26TH OCT 2022 24TH FEB 2023 10TH FEB 2023 10TH FEB 2023 RATING BUY EQUAL-WEIGHT BUY ANALYST HARSH MEHTA NIDA IQBAL CHARLES BOISSIER Harsh.Mehta@gs.com Nida.Iqbal.Siddiqi@morganstanley.com Charles.Bois
Slide 22: Dividend Policy
Classification: Internal MAY 2023 DIVIDEND POLICY • In June 2022 we announced our dividend policy: FY 2024 H1 2025 • Semi-annual dividend pay-outs adding to AED 800 FY 2023 million per annum were committed. • AED 200 million interim dividend paid in November 2022, and AED 200 million paid in April 2
Slide 23: Business Segments Performance
BUSINESS SEGMENTS PERFORMANCE
Slide 24: Commercial Leasing Segment
MAY 2023 COMMERCIAL LEASING SEGMENT REMARKABLE PERFORMANCE UNDERPINNED BY STRONG DEMAND DYNAMICS IN OFFICE PROPERTIES AND AN EXPANSIONARY DUBAI ECONOMY DESCRIPTION Q1 2023 Q1 2022 % CHANGE Revenue growth driven by: YOY • Increase in occupancy levels across the portfolio REVENUE 275 253 9% • 217k sq.
Slide 25: Industrial Leasing Segment
MAY 2023 INDUSTRIAL LEASING SEGMENT CONTINUED STRONG GROWTH MOMENTUM AS SEGMENT BENEFITS FROM STRUCTURAL LONG-TERM TAILWINDS IN THE INDUSTRIAL, CONSTRUCTION AND LOGISTICS AND E-COMMERCE SECTOR DESCRIPTION Q1 2023 Q1 2022 % CHANGE YOY Revenue growth driven by: • Increase in occupancy levels across th
Slide 26: Land Leasing Segment
MAY 2023 LAND LEASING SEGMENT STABILITY IN THE LAND LEASE SEGMENT WITH HIGHER OCCUPANCY RATES AND STABLE EBITDA MARGINS LAND BANK DESCRIPTION Q1 2023 Q1 2022 % CHANGE YOY LEASED VACANT DEVELOPMENT REVENUE 112 112 0% 1M, 1% 24M, 15% EBITDA 106 93 13% EBIDTA MARGIN 94% 83% 11% GLA RENTAL RATE 139M, 84
Slide 27: Services & Others Segment
MAY 2023 SERVICES & OTHERS SEGMENT CONTINUED GROWTH MOMENTUM SUPPORTED BY AN INCREASE IN THE NUMBER OF CUSTOMERS AND GROWING NUMBER OF EMPLOYEES RETURNING TO WORK FROM OFFICE DESCRIPTION Q1 2023 Q1 2022 % CHANGE YOY REVENUE 57 57 -1% EBITDA 42 42 0% EBIDTA MARGIN 75% 74% 1% • Strong increase in reve
Slide 28: Sustainability and ESG
SUSTAINABILITY AND ESG
Slide 29: Environment & Sustainability Goals
MAY 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 and procurement 2030 Dubai Integra
Slide 30: Key ESG Highlights and Achievements of 2022
Classification: Internal MAY 2023 Key ESG Highlights and Achievements of 2022 Economy 88% AED 726MN 346 Customer satisfaction rate, Net profit for year 2022 Active Start-ups 5% increase from 2021 (+28% increase from 2021) (16% up from 2021) Community AED 883,000 Donated in 2022 12,000 AED 703,000 If
Slide 31: Key ESG Highlights and Achievements of 2022 - Cont'd
Classification: Internal MAY 2023 Key ESG Highlights and Achievements of 2022 - Cont’d People 23% 1/3 2,658 hrs. 0 Emiratisation Rate of our employees of training delivered to our Work-related injuries or are female employees fatalities since 2019 Environment 11.14GWh 22 25% Clean Energy Generation
Slide 32: Outlook
actiew goin azo THE LEADING LOGisTics ilo MANUFACTURING HUB ais % . ¥ *
Slide 33: Priorities for 2023 & Beyond
Classification: Internal MAY 2023 PRIORITIES FOR 2023 & BEYOND O P TIMIS E CO RE BUS INES S DEVELO P DIF F ERENTIATED BUILD NEW S O URCES & P ERF O RMANCE VALUE P RO P O S ITIO N O F GRO W TH Identify customer priorities and Enhance and integrate customer Identify novel, differentiated retention ini
Slide 34: Growth Drivers
Classification: Internal MAY 2023 GROWTH DRIVERS 0 1. 0 2 . 0 3 . 0 4 . 0 5 . 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 b
Slide 35: Thank You
TECOM GROUP Bad 3 i : sien } THANK YOU