Tecom Group Pjsc · DFM:TECOM
Tecom Group Pjsc — Q3 2023 Earnings Presentation
40 slides from Tecom Group Pjsc's earnings presentation, November 2023
Slide 1: Investor Presentation Q3 & Nine Months 2023 Financial Results
Classification: Confidential INVESTOR PRESENTATION Q3 & NINE MONTHS 2023 FINANCIAL RESULTS NOVEMBER 2023
Slide 2: Disclaimer
Classification: Confidential NOVEMBER 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 informa
Slide 3: TECOM Group Management Presenting
Classification: Confidential NOVEMBER 2023 TECOM GROUP MANAGEMENT PRESENTING ABDULLA BELHOUL MICHAEL WUNDERBALDINGER CEO OF TECOM GROUP CFO OF TECOM GROUP 3 03
Slide 4: Content
Classification: Confidential NOVEMBER 2023 CONTENT MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS 5-8 TECOM GROUP’S VALUE PROPOSITION 9-13 Q3 AND 9 MONTHS 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS 14-24 NEW DEVELOPMENT UPDATE 25-26 BUSINESS SEGMENTS PERFORMANCE 27-31 SUSTAINABILITY AND ES
Slide 5: Macroeconomic and Real Estate Market Highlights
Classification: Confidential MACROECONOMIC AND REAL ESTATE MARKET HIGHLIGHTS
Slide 6: Dubai's Economy Continues Unabated Growth
Classification: Confidential NOVEMBER 2023 DUBAI’S ECONOMY CONTINUES UNABATED GROWTH… DUBAI’S ECONOMY CONTINUES TO GROW AT HEALTHY 42.8 PACE • Dubai’s economy registered a 3.2% YoY growth in H1 2023 reaching AED 224 billion and a strong 3.6% YoY growth in Q2 2023 (Source: Dubai’s Department of Econo
Slide 7: Supporting Robust Demand for All Types of Commercial Real Estate
Classification: Confidential NOVEMBER 2023 SUPPORTING ROBUST DEMAND FOR ALL TYPES OF COMMERCIAL REAL ESTATE DEMAND FOR COMMERCIAL REAL ESTATE CONTINUES TO GATHER PACE… • In Q3 2023 (up to 25 September) commercial real estate prices soared 20% YoY and are only 7% below previous peak (2014). Rents are
Slide 8: Dubai Commercial Real Estate Market Highlights Q3 2023
Classification: Confidential NOVEMBER 2023 DUBAI – COMMERICAL REAL ESTATE MARKET HIGHLIGHTS Q3 2023 DEMAND FOR WAREHOUSES IS SURGING WHILE SUPPLY TECOM HOUSE VIEW REMAINS CONSTRAINED • According to CRC report, the number of buyer leads for warehouses • We continue to see strong demand for storage an
Slide 9: TECOM Group's Value Proposition
Classification: Confidential TECOM GROUP’S VALUE PROPOSITION
Slide 10: A Compelling Investment Opportunity
Classification: Confidential NOVEMBER 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 fi
Slide 11: 10 Business Districts Strategically Located
Classification: Confidential NOVEMBER 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 NOVEMBER 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
Slide 13: Clearly Defined Growth Strategy Anchored on Three Core Pillars
Classification: Confidential NOVEMBER 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 compe
Slide 14: Q3 & 9 Months 2023 Operational & Financial Performance Highlights
Classification: Confidential Q3 & 9 MONTHS 2023 OPERATIONAL & FINANCIAL PERFORMANCE HIGHLIGHTS
Slide 15: Financial Highlights (9 Months 2023)
Classification: Confidential NOVEMBER 2023 FINANCIAL HIGHLIGHTS (9 MONTHS 2023) OPERATING PERFORMANCE 88% Consolidated Occupancy (Excluding Land Leasing) 2.4 Years REVENUE EBITDA FFO1 Overall blended WALT* (Weighted of Commercial AED 1,590 MN AED 1,234 MN AED 1,053 MN [BTS & BTL] and Industrial) vs.
Slide 16: Financial Highlights (Q3 2023)
Classification: Confidential NOVEMBER 2023 FINANCIAL HIGHLIGHTS (Q3 2023) REVENUE EBITDA AED 541 MN AED 410 MN vs. 2022 10% vs. 2022 13% NET PROFIT EBITDA MARGIN AED 283 MN 76% vs. 2022 34% vs. 2022 1% 1. FREE CASH: Excludes Restricted Cash AED 197 MN (Visa Deposit & EOSB) 16 Figures in AED 'Million
Slide 17: Strong Cash Flow Generation & Increase in Free Cash Flow
Classification: Confidential NOVEMBER 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 customer OPERATIONS (FFO)1 base and proactive 2020 2021 2022 LTM Q2-23 H1 22 H1 23 collections efforts supported 998
Slide 18: Balance Sheet
Classification: Confidential NOVEMBER 2023 BALANCE SHEET 30 SEP 31 DEC YoY DESCRIPTION 2023 2022 CHANGE % PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 115 116 -1% INVESTMENT PROPERTY 11,824 11,874 0% DERIVATIVE FINANCIAL INSTRUMENTS 318 316 1% TRADE, UNBILLED AND FINANCE LEASE RECEIVABLES 810 743 9% NO
Slide 19: Income Statement
Classification: Confidential NOVEMBER 2023 INCOME STATEMENT 9M 9M YoY Q3 Q3 YoY DESCRIPTION 2023 2022 CHANGE % 2023 2022 CHANGE % REVENUE 1,590 1,480 7% 541 490 10% DIRECT COSTS (556) (549) 1% (200) (192) 4% GROSS PROFIT 1,033 931 11% 341 298 14% OTHER OPERATING INCOME 19 40 -53% - 12 -100% 1,052 97
Slide 20: Growth Strategy Supported by Healthy Leverage Position
Classification: Confidential NOVEMBER 2023 GROWTH STRATEGY SUPPORTED BY HEALTHY LEVERAGE POSITION BALANCE SHEET CAPITAL STRUCTURE AED MN AMOUNT LTV1 LTM EBITDA o Robust financial position DEBT 4,350 AED 7.6BN CORPORATE FACILITY 4,350 20% CASH 1,334 TOTAL FINANCIAL DEBT 4,350 20% 2.9x with AED 3.2 bi
Slide 21: Portfolio Valuation
Classification: Confidential NOVEMBER 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 CO
Slide 22: EPRA KPIs
Classification: Confidential NOVEMBER 2023 EPRA KPIs KPI Q3 2023 2022 Q3 2022 2021 2020 2019 IFRS EARNINGS (AED Million) 768 726 639 569 579 634 EPRA EARNINGS (AED Million) 1,096 1,024 832 898 944 984 IFRS NET ASSETS (AED Million) 6,141 5,968 6,070 5,613 6,168 6,131 EPRA NET ASSET VALUE (NAV) (AED M
Slide 23: Analyst Coverage Report
Classification: Confidential NOVEMBER 2023 ANALYST COVERAGE REPORT 4TH AUG 2023 2ND AUG 2023 2ND AUG 2023 10TH JUL 2023 25TH SEP 2023 19TH OCT 2023 RATING BUY EQUAL-WEIGHT BUY EQUAL-WEIGHT BUY BUY ANALYST HARSH MEHTA NIDA IQBAL CHARLES BOISSIER NIKHIL MIRSHA INDARPREET SINGH ADITYA PUGALIA Harsh.Meh
Slide 24: Dividend Policy
Classification: Confidential NOVEMBER 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 millio
Slide 25: New Development Update
Classification: Confidential NEW DEVELOPMENT UPDATE
Slide 26: New Development Update
Classification: Confidential NOVEMBER 2023 NEW DEVELOPMENT UPDATE P RO J ECT RATIO NALE DEVELOPMENT – DUBAI SCIENCE PARK (DSP) • Existing warehouses in DSP are operating at PROJECT KEY HIGHLIGHTS PROJECT LOCATION full occupancy (100% as of Jun 2023) over the last few years • DSP’s location is PLOT A
Slide 27: Business Segments Performance
Classification: Confidential BUSINESS SEGMENTS PERFORMANCE
Slide 28: Commercial Leasing Segment
Classification: Confidential NOVEMBER 2023 COMMERCIAL LEASING SEGMENT SUSTAINED GROWTH MOMENTUM ON ROBUST DEMAND ESPECIALLY FOR GRADE A, CBD OFFICES FROM NEW AND EXISTING CUSTOMERS DESCRIPTION 9 MONTHS % CHANGE Q3 % CHANGE Revenue growth driven by: 2023 2022 YOY 2023 2022 YOY • Increase in occupancy
Slide 29: Industrial Leasing Segment
Classification: Confidential NOVEMBER 2023 INDUSTRIAL LEASING SEGMENT REMARKABLE GROWTH IN WAREHOUSING SPACES SUPPORTED EXCEPTIONAL PERFORMANCE OF INDUSTRIAL SEGMENT 9 MONTHS % CHANGE Q3 % CHANGE Revenue growth driven by: DESCRIPTION 2023 2022 YOY 2023 2022 YOY • Increase in occupancy levels across
Slide 30: Land Leasing Segment
Classification: Confidential NOVEMBER 2023 LAND LEASING SEGMENT STABILITY IN THE LAND LEASE SEGMENT WITH HIGHER OCCUPANCY RATES AND STABLE EBITDA MARGINS 9 MONTHS % CHANGE Q3 % CHANGE DESCRIPTION 2023 2022 YOY 2023 2022 YOY Revenue growth driven by: REVENUE 359 331 9% 123 111 10% • New lease of 10.4
Slide 31: Services & Others Segment
Classification: Confidential NOVEMBER 2023 SERVICES & OTHERS SEGMENT ENCOURAGING DEMAND FROM FREELANCERS FOR CO-WORKING SPACES OFFSET WEAKNESS IN OTHER SERVICES 9 MONTHS % CHANGE Q3 % CHANGE DESCRIPTION 2023 2022 YOY 2023 2022 YOY • Higher revenue owed predominately to strong growth in REVENUE 173 1
Slide 32: Sustainability and ESG
Classification: Confidential SUSTAINABILITY AND ESG
Slide 33: Environment & Sustainability Goals
Classification: Confidential NOVEMBER 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
Slide 34: Key ESG Highlights and Achievements of Q3 2023
Classification: Confidential NOVEMBER 2023 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF Q3 2023 Economy 364 89% AED 768MN Active Start-ups (6% up from Dec 2022) Customer satisfaction rate, Net profit for 9 Months 2023 (+20% increase compared to same Including: 1.5% increase from Dec 2022 period 2022) 36 S
Slide 35: Key ESG Highlights and Achievements of Q3 2023 - Cont'd
Classification: Confidential NOVEMBER 2023 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF Q3 2023 - CONT’D People 23% 1/3 760 hrs. 0 Work-related injuries or Emiratisation Rate of our employees of training delivered to our fatalities since 2019 are female employees Environment 25 9.87GWh 31 LEED GOLD certif
Slide 36: Key ESG Highlights and Achievements of Q3 2023 - Cont'd
Classification: Confidential NOVEMBER 2023 KEY ESG HIGHLIGHTS AND ACHIEVEMENTS OF Q3 2023 - CONT’D We look forward to COP28 which will be taking place at Dubai Expo City in November – December 2023. This will be the first time that COP will be hosted within the UAE. COP28 To support climate change a
Slide 37: Outlook
Classification: Confidential OUTLOOK
Slide 38: Priorities for 2023 & Beyond
Classification: Confidential NOVEMBER 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 journ
Slide 39: Growth Drivers
Classification: Confidential NOVEMBER 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 b
Slide 40: Thank You
Classification: Confidential THANK YOU