TECOM Group PJSC · DFM:TECOM
TECOM Group PJSC — Q2 & H1 2024 Earnings Presentation
48 slides from TECOM Group PJSC's earnings presentation, August 2024
Slide 1: Investor Presentation Q2 & H1 2024 Financial Results
Classification: Public INVESTOR PRESENTATION Q2 & H1 2024 FINANCIAL RESULTS AUGUST 2024
Slide 2: Disclaimer
Classification: Public AUGUST 2024 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 obt
Slide 3: TECOM Group Management Presenting
Classification: Public AUGUST 2024 TECOM GROUP MANAGEMENT PRESENTING ABDULLA BELHOUL MICHAEL WUNDERBALDINGER CEO OF TECOM GROUP CFO OF TECOM GROUP 3 03
Slide 4: Content
Classification: Public AUGUST 2024 CONTENT MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS 5-8 TECOM GROUP’S VALUE PROPOSITION 9-13 Q2 & H1 2024 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS 14-24 DEVELOPMENT AND INVESTMENT UPDATE 25-31 BUSINESS SEGMENTS PERFORMANCE 32-36 SUSTAINABILITY AND ESG 37-
Slide 5: Macroeconomic and Real Estate Market Highlights
Classification: Public MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS
Slide 6: Strong Economic Conditions in Dubai Drives Real Estate Demand
Classification: Public AUGUST 2024 STRONG ECONOMIC CONDITIONS IN DUBAI DRIVES REAL ESTATE DEMAND 2024 BUSINESS CONDITIONS REMAIN POSITIVE, BUCKING NUMBER OF NEW BUSINESS CONTUNUES TO GROW REGIONAL TREND • In H1 2024, the Dubai Chamber of Commerce issued a total of 372,000 • A June 2024 S&P Global UA
Slide 7: Commercial Property Demand Rides the Wave of 2023 Momentum
Classification: Public AUGUST 2024 COMMERCIAL PROPERTY DEMAND RIDES THE WAVE OF 2023 MOMENTUM DEMAND FOR COMMERCIAL REAL ESTATE REMAINS STRONG DUBAI OFFICE RENTS, YoY % CHANGE TO Q4 2023 • Given the current supportive market fundamentals, average occupancy levels continue to underpin growth in renta
Slide 8: Dubai Connectivity Will Drive the Industrial and Logistics Sector
Classification: Public AUGUST 2024 DUBAI CONNECTIVITY WILL DRIVE THE INDUSTRIAL AND LOGISTICS SECTOR DEMAND WILL ONLY KEEP GROWING IN THE LOGITICS SECTOR TECOM HOUSE VIEW AS POLICIES WNCOURAGE INTERNATIONAL GROWTH • The UAE logistics market size reached US$ 35.9 billion in 2023. • We saw remarkable
Slide 9: TECOM Group's Value Proposition
Classification: Public TECOM GROUP’S VALUE PROPOSITION
Slide 10: A Compelling Investment Opportunity
Classification: Public AUGUST 2024 A COMPELLING INVESTMENT OPPORTUNITY Over 20 years 11,000+ 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 financial
Slide 11: 10 Business Districts Strategically Located
Classification: Public AUGUST 2024 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: Public AUGUST 2024 DELIVERING VALUE THROUGH OUR 4 BUSINESS SEGMENTS COMMERCIAL INDUSTRIAL LAND SERVICES LEASING LEASING LEASING & OTHERS • Government services • Registration and licensing 11.5 • Corporate services 9.5 164 Incubation services Million sqft Million sqft Million sqft for
Slide 13: Unlocking Sustainable Growth Through Clearly Defined Objectives
Classification: Public AUGUST 2024 UNLOCKING SUSTAINABLE GROWTH THROUGH CLEARLY DEFINED OBJECTIVES STRATEGIC PILLARS OPTIMISE CORE BUSINESS DEVELOP BUILD NEW SOURCES & PERFORMANCE DIFFERENTIATED OF GROWTH VALUE PROPOSITION - Retain and strengthen relationships with customers - Deliver a compelling v
Slide 14: Q2 & H1 2024 Operational & Financial Performance Highlights
Classification: Public Q2 & H1 2024 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS
Slide 15: Financial Highlights (H1 2024)
AUGUST 2024 FINANCIAL HIGHLIGHTS (H1 2024) OPERATING PERFORMANCE 92% Consolidated Occupancy (Excluding Land Leasing) 2.4 Years REVENUE EBITDA FFO1 Overall blended WALT* (Weighted of Commercial AED 1,148 MN AED 896 MN AED 840 MN [BTS & BTL] and Industrial) vs. 2023 9% vs. 2023 9% vs. 2023 24% *WALT:
Slide 16: Financial Highlights (Q2 2024)
Classification: Public AUGUST 2023 FINANCIAL HIGHLIGHTS (Q2 2024) REVENUE EBITDA AED 584 MN AED 457 MN vs. Q2 2023 9% vs. Q2 2023 7% EBITDA MARGIN NET PROFIT 78% AED 311 MN vs. Q2 2023 (1.4%) vs. Q2 2023 35% 1. ADJUSTED NET PROFIT: *Excluding the one-off impact from fees associated with settlement o
Slide 17: Strong Cash Flow Generation & Increase in Growth Capex
Classification: Public AUGUST 2024 STRONG CASH FLOW GENERATION & INCREASE IN GROWTH CAPEX o Sustainable growth in FFO 1,8 00 1,6 00 1,4 00 1,608 1,447 and driven by improving 1,2 00 1,0 00 1,198 840 800 1,009 678 FUNDS FROM business conditions, quality 600 400 OPERATIONS (FFO)1 of customers, and bet
Slide 18: Balance Sheet
Classification: Public AUGUST 2024 BALANCE SHEET 30 JUN. 31 DEC. YoY DESCRIPTION 2024 2023 CHANGE % PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 108 114 -5% INVESTMENT PROPERTY 11,877 11,865 0% DERIVATIVE FINANCIAL INSTRUMENTS 222 222 0% TRADE, UNBILLED AND FINANCE LEASE RECEIVABLES 791 816 -3% NON-CUR
Slide 19: Income Statement
Classification: Public AUGUST 2023 INCOME STATEMENT H1 H1 YoY Q2 Q2 YoY DESCRIPTION 2024 2023 CHANGE % 2024 2023 CHANGE % REVENUE 1,148 1,049 9% 584 535 9% DIRECT COSTS (376) (356) 6% (191) (185) 3% GROSS PROFIT 771 692 11% 393 350 12% OTHER OPERATING INCOME 36 27 35% 23 17 37% 808 719 12% 416 367 1
Slide 20: Robust Financial Management Maintained Healthy Leverage Position
Classification: Public AUGUST 2024 ROBUST FINANCIAL MANGEMENT MAINTAINED HEALTHY LEVERAGE POSITION o Prudent management of capital BALANCE SHEET CAPITAL STRUCTURE NET DEBT / structure has led to positive AED MN AMOUNT LTV1 DEBT 4,608 LTM2 EBITDA increases in all key metrics, AED 7.6BN CORPORATE FACI
Slide 21: Portfolio Valuation
Classification: Public AUGUST 2024 PORTFOLIO VALUATION Strong appreciation in portfolio value driven by robust economic growth, increase in Dubai’s commercial property prices and rental income, high occupancy rates across our assets OUR PORTFOLIO 165MN 1,128 WAREHOUSES SQ. FT. LAND AREA 147 22.9BN C
Slide 22: EPRA KPIs
Classification: Public AUGUST 2024 EPRA KPIs KPI H1 2024 2023 H1 2023 2022 2021 2020 2019 IFRS EARNINGS (AED Million) 603 1,078 485 726 569 579 634 EPRA EARNINGS (AED Million) 799 1,502 721 1,024 898 944 984 IFRS NET ASSETS (AED Million) 6,535 6,329 6,256 5,968 5,613 6,168 6,131 EPRA NET ASSET VALUE
Slide 23: Analyst Coverage Report
Classification: Public AUGUST 2024 ANALYST COVERAGE REPORT DATE 11th JUN 2024 3rd MAY 2024 3rd MAY 2024 10th MAY 2024 1st FEB 2024 19th OCT 2023 31st JAN 2024 30th DEC 2023 31st JAN 2024 RATING BUY EQUAL-WEIGHT BUY OVER-WEIGHT BUY BUY BUY BUY BUY ANALYST HARSH MEHTA NIDA IQBAL CHARLES BOISSIER NIKHI
Slide 24: Dividend Policy
Classification: Public AUGUST 2024 DIVIDEND POLICY • In June 2022 we announced our dividend policy: • Semi-annual dividend pay-outs adding to AED 800 million FY 2023 FY 2024 H1 2025 per annum were committed. • AED 400 million dividend paid for second half of 2022 in two payments of AED 200 million e
Slide 25: Development and Investment Update
Classification: Public DEVELOPMENT AND INVESTMENT UPDATE
Slide 26: Growth Strategy Supported by New Development & Acquisition of Assets
Classification: Public AUGUST 2024 GROWTH STRATEGY SUPPORTED BY NEW DEVELOPMENT & ACQUISITION OF STRATEGICALLY LOCATED ASSETS 26
Slide 27: Development Update: Dubai Science Park
Classification: Public AUGUST 2024 DEVELOPMENT UPDATE DEVELOPMENT – DUBAI SCIENCE PARK (DSP) P RO J ECT RATIO NALE • Existing warehouses in DSP are operating at PROJECT KEY HIGHLIGHTS PROJECT LOCATION full occupancy over the last few years • DSP’s location is PLOT AREA GFA BUA Al Khail Road attracti
Slide 28: Asset Acquisitions Update
Classification: Public AUGUST 2024 ASSET ACQUISITIONS UPDATE P RO J ECT RATIO NALE OPERATING ASSETS – DUBAI INTERNET CITY • TECOM Investment FZ LLC, a TECOM Group ASSET 1: subsidiary, to acquire two DPG- HQ BUILDING Grade A office buildings (GLA approx. 334k) with a combined value of AED GLA 420 mil
Slide 29: Asset Acquisitions Update: Industrial Land Plots
Classification: Public AUGUST 2024 ASSET ACQUISITIONS UPDATE INDUSTRIAL LAND PLOTS FOR LEASING – DUBAI INDUSTRIAL CITY (DI) P RO J ECT RATIO NALE • Dubai Industrial City LLC, to acquire NUMBER OF PLOTS TOTAL AREA strategically located plots, allocated for industrial leasing, for a 73 13.9 combined v
Slide 30: Asset Acquisitions and Development Update: D3 Design Quarter (1/2)
Classification: Public AUGUST 2024 ASSET ACQUISITIONS AND DEVELOPMENT UPDATE D3 PHASE 2 COMMERCIAL – DUBAI DESIGN DISTRICT “DESIGN QUARTER” (1/2) P RO J ECT RATIO NALE • Phase 2 of Dubai Design District “d3” (Design DEVELOPMENT Quarter) was announced and it will consist of DETAILS residential and co
Slide 31: Asset Acquisitions and Development Update: D3 Design Quarter (2/2)
Classification: Public AUGUST 2024 ASSET ACQUISITIONS AND DEVELOPMENT UPDATE D3 PHASE 2 COMMERCIAL – DUBAI DESIGN DISTRICT “DESIGN QUARTER” (2/2) Commercial Residential TECOM Group Dubai Holding Real Estate 31
Slide 32: Business Segments Performance
Classification: Public BUSINESS SEGMENTS PERFORMANCE
Slide 33: Commercial Leasing Segment
Classification: Public AUGUST 2024 COMMERCIAL LEASING SEGMENT STABLE DEMAND AND INCREASING RENTAL RATES ARE DRIVING THE STRONG PERFORMANCE % CHANGE % CHANGE DESCRIPTION H1 2024 H1 2023 YOY Q2 2024 Q2 2023 YOY Revenue growth driven by: • Robust growth in both office and retail leasing. REVENUE 586 55
Slide 34: Industrial Leasing Segment
Classification: Public AUGUST 2024 INDUSTRIAL LEASING SEGMENT DRIVEN BY HIGH DEMAND FOR INDUSTRIAL LAND SPACE, 6% INCREASE IN OCCUPANCY COMPARED TO H1 2023 % CHANGE % CHANGE Segment revenues driven by: DESCRIPTION H1 2024 H1 2023 Q2 2024 Q2 2023 • Exemplary leasing performance of warehouses YOY YOY
Slide 35: Land Leasing Segment
Classification: Public AUGUST 2024 LAND LEASING SEGMENT DEMAND FOR LAND REMAINS VERY STRONG AS DUBAI’s INDUSTRIAL SECTOR CONTINUES TO ATTRACT INVESTORS DESCRIPTION H1 2024 H1 2023 % CHANGE Q2 2024 Q2 2023 % CHANGE Revenue growth driven by: YOY YOY • Increased revenues form DI and DIAC, mainly REVENU
Slide 36: Services & Others Segment
Classification: Public AUGUST 2024 SERVICES & OTHERS SEGMENT DUBAI CONTINUES TO ATTRACT TALENT AS IT BECOMES A GLOBAL BUSINESS AND TECHNOLOGY HUB % CHANGE % CHANGE DESCRIPTION H1 2024 H1 2023 Q2 2024 Q2 2023 YOY YOY Revenue growth driven by: REVENUE 130 111 17% 71 54 32% • High AXS revenues with inc
Slide 37: Sustainability and ESG
Classification: Public SUSTAINABILITY AND ESG
Slide 38: Environment & Sustainability Goals
Classification: Public AUGUST 2024 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 proc
Slide 39: Key ESG Highlights: Economy
Classification: Public AUGUST 2024 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF H1 2024 ECONOMY 87.4% Customer Experience (CX) Index, adopted in 2023. Previously we measured Customer Satisfaction only. In CX, we incorporated additional “Likelihood to Recommend” metric in our transactional surveys and the
Slide 40: Key ESG Highlights: Community
Classification: Public AUGUST 2024 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF H1 2024 COMMUNITY The Good Store In partnership with the Emirates Red Crescent, we reintroduced The Good Store, a philanthropic initiative to provide a seamless donation platform during Ramadan and Eid al-Fitr, for the second
Slide 41: Key ESG Highlights: People
Classification: Public AUGUST 2024 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF H1 2024 PEOPLE 25% Emiratisation Rate 34% of our employees are female 0 Work-related injuries or fatalities since 2019 41
Slide 42: Key ESG Highlights: Environment
Classification: Public AUGUST 2024 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF H1 2024 ENVIRONMENT 6 41 LEED PLATINUM certified (+4 in H1 2024) LEED certified buildings 29 LEED GOLD certified 11 (+7 in H1 2024) 6 Buildings in H1 2024 LEED SILVER certified ‘Exemplary Retrofit Project 2024’ 9.7% 122 13 Ele
Slide 43: Achievements & Outlook
Classification: Public ACHIEVEMENTS & OUTLOOK
Slide 44: Achievements FY2023
Classification: Public AUGUST 2024 ACHIEVEMENTS FY2023 REVENUE EBITDA EBITDA NET PROFIT FFO OCCUPANCY MARGIN End of Period ~85% COMMERCIAL LEASING TARGETS AED 1,900 MN AED 1,266 MN 66% AED 558 MN AED 969 MN (IPO FINANCIAL GUIDANCE) ~80% INDUSTRIAL LEASING 89% COMMERCIAL LEASING AED 2,169 MN AED 1,65
Slide 45: Priorities for 2024 & Beyond
Classification: Public AUGUST 2024 PRIORITIES FOR 2024 & 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 journeys thro
Slide 46: Growth Drivers
Classification: Public AUGUST 2024 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 built-to-
Slide 47: Contact Us
Classification: Public FEBRUARY 2024 CONTACT US
Slide 48: Thank You
Classification: Public THANK YOU
TECOM Group PJSC — Q2 & H1 2024 Earnings Presentation on 6ix