STRATEGY PRESENTATION DECEMBER 2019
Publicly held since 2007 2000 3331 2 20+ ) ﻮﻤﺠﻣ ﻋ ﺔ ﻠﻃ ﺖﻌ ﻰﻔﻄﺼﻣ ا ﺎﻘﻟ ﺔﻀﺑ ش . م . م . .TMG Holding S.A.E [email protected] EGX: TMGH.CA / TMGH EY ٣٦/٣٤ ﺎﺷ ر ع قﺪﺼﻣ ، ا ﻟ ﺪ ﻲﻗ Mossadek St., Dokki 34/36 www.talaatmoustafa.com ،ةﺰﻴﺠﻟا ﺮﺼﻣ Giza, Egypt About TMG Holding
Talaat Moustafa Group Holding (TMG Holding) a leading conglomerate with special emphasis on developing integrated communities, including but not limited to mixed-use real estate and hospitality projects across Egypt’s key cities. It has an Market capitalization outstanding track-record in creation of large, vibrant and diverse communities, providing high-quality housing accompanied by superb amenities and embodying the company’s unmatched experience in planning, execution, management and EGP17.5bn maintenance of large-scale developments. Constant execution of the company’s bold and ambitious vision has been redefining and reshaping Egypt’s property landscape over the past two decades, dictating new trends and higher standards and substantially contributing to sustainable economic growth and improvement in quality of life for local communities. Annual turnover (FY2018)
TMG Holding is the developer of Al Rehab city in New Cairo, Al Rabwa in Sheikh Zayed city, Mayfair in Al Shorouk city and EGP10.9bn Madinaty, its flagship mega-development occupying a whopping 33.6mn sqm in East Cairo, in addition to “Celia” its recently launched project in the New Administrative Capital. TMG Holding also own three luxurious Four Seasons hotels in Sharm El Sheikh, Alexandria and Cairo, where it also owns the Kempinski Nile Hotel. The company owns 875 upscale hotel rooms in Backlog (9M2019) total and is currently expanding its portfolio by 443 additional rooms in two new upscale hotel properties in Sharm El Sheikh and Cairo. Another two upscale hotels are to be developed in Marsa Alam and Luxor. EGP47.7bn
TMG Holding is also an owner of over 127 thousand sqm of prime retail space located across its integrated communities and is an emerging dominant player on Cairo’s sporting club scene, with two operational integrated sporting clubs Total assets (9M2019) accommodating about c0.2 million members and additional two clubs under construction. EGP103bn The company is publicly held since 2007 and is the largest listed developer by market capitalization, at EGP17.5bn as of today. It has a total land of 53mn sqm, the largest accessed by a listed developer in Egypt. TMG Holding has the largest backlog among local developers, at EGP48bn and to be fully delivered within the coming four years.
Disclaimer Certain information disclosed in this presentation consists of forward looking statements reflecting the current view of the company with respect to future events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including worldwide account of trends, economic and political climate of Egypt, the Middle East, and changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described in such forward looking statements.
Note: Market capitalization as of December 2019, financial and operational KPIs as of end-2018 and end-9M2019. Investor presentation 2 Our footprint
Alexandria
Greater Cairo
Sharm El Sheikh
Marsa Alam Luxor Investor presentation 3 Recent milestones
■ Achieved strong sales of EGP14.5bn in 9M2019, the highest in the Egyptian market, of which EGP282mn represented stand-alone club membership sales. The result is 54% higher y-o-y if adjusted for Celia launch last year and 73% higher y-o-y if adjusted for school sales. ■ Key recurring income segments continued to deliver strong growth, with club segment revenue up by 119% y-o- y in 9M2018 and retail revenues up by 25% y-o-y, on increasing contribution from the Open Air mall. ■ Commenced sales of residential units in Four Seasons hotel in Madinaty. ■ Launched a new upscale neighborhood in Madinaty – Privado in May 2019, with 9,846 well-designed apartments, meeting a strong response from the market, with net sales of over EGP5.5bn achieved until end- September 2019. ■ Launched a mortgage finance JV with EFG Hermes and GB Capital, with a paid in capital of EGP150mn, expected to increase to EGP250mn. In the first 12 months of its operation, the JV plans to offer EGP450mn worth of mortgage funding and will almost exclusively focus on TMG-branded product, increasing the investment appeal of our primary market offering. ■ Implemented further upgrades to all existing facilities which significantly improved costumer satisfaction and reflected in stellar sales performance
Investor presentation 4 Key financial highlights of 9M2019
Revenue Gross profit Recurring
+9% y-o-y 2% 6,000 +7% y-o-y 2,000 7% 5,000 1,500 4,000 2% +38% y-o-y +29% y-o-y 10% 4% 3,000 1,000 8% Further improvement
EGPmn 2,000 EGPmn 500 in revenue mix with 1,000 4,748 2,064 5,092 2,668 1,708 715 1,863 984 strong growth in - - 16% 9M2018 9M2019 9M2018 9M2019 Revenue recurring income contribution 9M18 9M19 Development revenue Recurring revenue Development gross profit Recurring gross profit 15% achieved in 9M2019
70% Net income Recurring GP as % of total 66% 1,400 40% Development Hotels 1,200 35% 1,000 30% Services Clubs 25% 800 +5.1pp y-o-y +11% y-o-y 20% Retail 600 EGPmn 15% 400 10% 200 1,187 1,312 5% 29.5% 34.6% ■ Revenues of EGP7.76bn, up 13.9% y-o-y, of which a - 0% 9M2018 9M2019 9M2018 9M2019 significant 34% or EGP2.67bn was generated from hospitality and other recurring income lines, growing Total assets Debt to equity 29.3% y-o-y Gross profit of EGP1.86bn, up 19.8% y-o-y 120,000 20.0% ■ Net profit before minority interest of EGP1.37bn, up 9.9% 100,000 15.0% y-o-y 80,000 60,000 10.0% ■ Net profit after tax and minority interest of EGP1.31bn, up +6% y-o-y 0.8pp y-o-y EGPmn 40,000 10.5% y-o-y 5. 0% 20,000 96,274 102,980 16.9% 17.6% - 0. 0% FY2018 9M2019 FY2018 9M2019 Investor presentation 5 TMG at a glance [TMGH.CA/TMGH EY] as at end-9M2019
MENA’s leading developer(1)
875 operational hotel #1 Egyptian RE developer c100k+ units delivered over 90k / 3.1k units sold rooms by market cap (since inception, including ministry units) (since inception / 9M2019 only) Highest cumulative deliveries by a 443 rooms under 40+ years track record single MENA developer development(2)
New sales [EGPbn](3) Backlog [EGPbn] Remaining collections [EGPbn] 127.5k sqm GLA 18.3 47.7 14.5 38.3 (4) -21% 41.3 +16% 27.4 +24% portfolio y-o-y y-o-y y-o-y 44k sqm GLA leased and
9M2018 9M2019 9M2018 9M2019 1H2018 1H2019 operational
Expected net cash flow from backlog Net cash position [EGPbn] 197k club membership and delivered units [EGPbn] 15mn sqm residual BuA (5) 14.3 +16% 3.10 +2% capacity 12.4 y-o-y c3.5mn BuA commercial 3.04 y-o-y BTS and BTL Sold c46k memberships, c151k 9M2018 9M2019 9M2018 9M2019 memberships yet to be sold
Egypt’s leading developer of premium master planned communities with sufficient land bank for 16 years and sizeable portfolio of Recurring Income Assets contributed 30% of GOP for 2018(6) and planned to increase to 40-45% Note (1): By number of units delivered. Note (2): Includes Four Seasons Sharm El Sheikh extension (under construction) and Four Seasons Madinaty (in design phase) Note (3): 9M2018 sales captured EGP1bn school transaction, in addition to EGP10.7bn contributed by Celia launch. If adjusted, like-for-like sales in legacy geographies were up by c73% up y-o-y Note (4): Includes Open Air mall (new units opening over 2019, Carrefour operating since October 2018, achieving the highest Carrefour sales per sqm in Egypt) Note (5): Substantial high-margin revenue stream with limited CapEx needs overlooked by the market, to deliver exponential growth mimicking accelerated population build-up. Capacity does not include Celia, Privado clubs which are under process of licensing. Note (6): Contributed 25% in 2017, 35% in 9M2019 Investor presentation 6 We continue to deliver on our key strategic priorities previously communicated to the market
New sales [EGPbn] Backlog [EGPbn] 18.3 47.7 14.5 Achieving robust growth in sales 41.3 FY2019e sales target: EGP24bn, up 13% y-o-y on FY2018a of EGP21.3bn
9M2018 9M2019 9M2018 9M2019 Hospitality EBITDA [EGPmn] The Group invested EGP1bn to increase its stake in ICON to 83.3% Continue building our recurring income portfolio – 38.9% 35.7% Signed JLL to manage and operate Open Air Mall in Madinaty - target 40-45% of gross profit by 2020, up from 30% in 2018 407 425 Signed Carrefour as anchor tenant in Rehab & Madinaty malls, opened in 9M2018* 9M2019 Open Air mall in October 2018
EGP1bn proceeds from the Executing the Group’s strategy of monetizing non-core assets transaction in 2018
Disciplined approach for land acquisitions while managing Strategic EGP13.5bn net financial risk land sales until end- 9M2019
Preserving capital appreciation while providing a dividend Mission: Provide exceptional services to all our stream clients and ensure great customer experience and No equity increases since IPO, moderate leverage, stable dividend payout since 6 years capitalize on such client base for new projects
Note (*): Comparative figures adjusted for one-offs Investor presentation 7 We are on track to achieve all-time high sales
Evolution of total sales accross all Evolution of non-residential sales accross all Evolution of residential sales across all projects projects projects 25.0 4.0 20.0 3.5 18.0 20.0 16.0 3.0 14.0 15.0 2.5 12.0 2.0 10.0 EGPbn 10.0 EGPbn 1.5 EGPbn 8.0 6.0 1.0 5.0 4.0 0.5 2.0 - - - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M2018 9M2019 9M2018 9M2019 9M2018 9M2019
■ Strong brand equity and development progress drive strong growth in residential and non-residential sales since 2017. ■ Achieved EGP14.5bn in total sales in 9M2019, compared to 18.3bn in 9M2018, which was boosted by EGP1bn school transaction and Celia launch (new destination) of EGP10.7bn, benefiting from pent-up demand for the New Administrative Capital product. ■ Achieved cEGP2bn in non-residential and club sales sales in 9M2019. This compares to EGP2.4bn in 9M2018, boosted by EGP1bn school transaction.
Investor presentation 8 Strategic vision allowed for early foothold in rapidly urbanizing East Cairo
Population: 30k Population: 1.5mn
Population: 4.5mn Expected population: 10mn
Investor presentation 9 Madinaty – a full-fledged booming international city in the heart of East Cairo
■ Madinaty is TMG’s flagship mixed-use city in East Cairo spanning over a massive area of 33.6 km2, launched in 2006 and to be fully completed by Land area 117k residential Over 4mn sqm of 2035 33.6 km2 units non-residential BuA ■ Designed to be self-sufficient international city for quality life-style and world-class commerce, leveraging on 40+ years of experience of TMG teaming up with renowned international master planners and architects
Prime location Well diversified unit mix Gaining critical mass Offering superb amenities ■ Well-connected to the 5th supporting a sustainable ■ Delivered some 50 thousand ■ Vast, high-quality sustainable Settlement and inner Cairo community residential units to date since landscaping (25 sqm of greenery inception per inhabitant) ■ Well-connected to the New ■ 107.5 thousand finished Administrative Capital and Suez apartments of various sizes ■ Quality ready-made finishing and ■ Internal road network with service zone amenities encourage a vibrant lanes, biking tracks and ■ 9.3 thousand stand-alone units rental market, boosting pedestrian lanes, dedicated water ■ In close proximity to Cairo with private gardens occupancies and commercial and electricity infrastructure International Airport and the New activity Capital airport ■ 3.8mn sqm of regional services, ■ High-quality schools with diverse including malls, office space, Residential BuA international and local curricula, ■ Well-connected to other project’s hotels, clinics etc., in addition to nurseries of TMG, such as Rehab and Celia 0.33mn sqm of district and sector centers ■ Sporting club of 200 feddans 49% 51% ■ Hosting one of the largest ■ World-class medical centers and downtown centers of trade and pharmacies commerce in Egypt and the region (the Spine) Unsold BuA Sold BuA ■ Dedicated transportation services ■ Mosques and churches
Investor presentation 10 Madinaty master plan – incorporating a solid long-term vision ahead of its time
World-class planning and vision ■ Designed by renowned international architects, such as Sasaki, SWA, HHCB, Dar, F+A, HR&A, among others ■ Provides for tranquility of residential quarters and immediate accessibility to commercial centers ■ Well-connected to surrounding neighborhoods, capturing footfall of East Cairo and the New Administrative Capital
Investor presentation 11 Privado – further diversifying the product of Madinaty
A value proposal leveraging on quality services Centrally located… of Madinaty paired with tranquility of a gated 276 feddans 1.1mn sqm ■ Privado will grant its residents Privado land area Total residential area compound… an easy access to top-notch facilities of the compound as ■ Privado is our newest apartment neighborhood in the East of well as the services and Madinaty, spanning over 1.2mn and neighboring the amenities of Madinaty EGP5.5bn 1,421 units (c14%) downtown area Total net sales since sold until ■ It is centrally located within prelaunch until end-9M2019 end-9M2019 ■ Total residential BuA of c1.1mn sqm walking distance from Madinaty downtown areas and the Central ■ In addition to 7.3k sqm of service space, with a dedicated Town Square spanning over 12.1k sqm, containing: Park, with direct access to Cairo- Suez road 9,846 units ■ Retail, market, storage, nursery, courtyard, stage, Total residential units for sale administrative offices ■ Footprint of 16% only, leaving 84% for open areas and green spaces dotted with lakes and other water features, including a central park spanning over 630,000 sqm ■ Entertainment zone with 4 movie theatres and 250 retail outlets ■ Adventure Park with car racing, retro arcade, kids indoor climbing, BMX and skating park
Investor presentation 12 Privado perspectives
Investor presentation 13 Case in point: successful launch and sales of Celia – a testament to the strength of TMG brand
Unmatched brand equity of TMG in the Egyptian Sales status as at end-9M2019 100% market 500 feddans 1.07mn sqm 80% Celia land area Total residential area ■ Celia is a new mixed-use development located on 500 3,462 610 feddans in the New Administrative Capital (NAC) – largest 60% land plot launched in NAC to date 40% ■ Total residential BuA of c1.07mn sqm, in addition to c190k cEGP13.5bn 3,489 units (c47%) sqm of non-residential space 20% 3,034 455 Total net sales since launch sold until until end-9M2019 end-9M2019 ■ Launched in June 2018, to be completed within the next 4 – 6 0% years Apartments Villas ■ Very good market reception as a testimony to brand Units sold Units unsold 7,561 units equity Total residential units for sale ■ Significant pent-up demand in location despite earlier launches by smaller companies before the launch of Celia BuA breakdown by type Units breakdown by type ■ Good outlook on demand dynamics following launch ■ More than 15% of clients are returning clients 13% 14% 22% ■ Well-diversified offering portfolio: ■ Four types of multitenant buildings, 8 floors each ■ Five types of stand-alone units ranging from 213 to 373 sqm per unit 65% 86% ■ Master plan accommodates for a sporting club and basic services ■ Land purchased in 2017 for EGP2,100/sqm, payable over 9 Villas Apartments Services Villas Apartments years (10% down payment, 2 years grace period + 7 years installments, interest of 10% only)
Investor presentation 14 Continue investing in hotel portfolio – significant improvement across all KPIs
Hospitality segment performance ■ Freed liquidity from monetizing non-core assets and invested EGP1.0bn in ICON in a value accretive 1,800 60% transaction, increasing stake in TMG’s yielding hospitality 1,600 segment to 83.3% 50% 1,400 ■ Appointed Hotel Chief Operating Officer in 2019 to 1,200 40% oversee existing portfolio and its expansion 1,000 30% Title 800 ■ 443 new keys under development: 600 20% ■ 346 keys in FS Madinaty + 191 residential units, 400 construction breaking ground in 2019, to be 10% 200 completed in 2023 608 322 261 356 95 68 421 145 113 378 105 79 551 221 182 702 308 266 748 320 382 1,123 509 428 1,625 816 695 1,046 479 407 1,191 531 425 0 0% ■ 97 keys in FS Sharm El Sheikh ext. + 69 residential units; under construction, to be completed in 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M19 9M18* ■ Ongoing phased renovation of FS Nile Plaza Revenue GOP EBITDA GOP margin (RHS) EBITDA margin (RHS)
Four Seasons Sharm El Sheikh Four Seasons Nile Plaza, Cairo Four Seasons San Stafano, Alexandria Kempinski Nile Hotel, Cairo [200 keys, opened 2001] [366 keys, opened 2004] [118 keys, opened 2007] [191 keys, opened 2010]
Note (*): Adjusted for one-offs Investor presentation 15 Continue building our recurring income portfolio – target 40-45% of consolidated gross profit
Revenue and occupancy rate Hotel rooms evolution
1,318 1,400 70% 346 1,200 97 1,000 875 800 600 65% EGPmn 400 200 1,046 1,191 0 9M18* 9M19 2018 Sep-2020 FS Sharm El Sheikh Jun-2023 Four Seasons 2023 target Ext. Madinaty (construction to start in Revenue Occupancy 2019) EBITDA and EBITDA margin* Short-term initiatives - ongoing
39% 450 36% 400 350 300 250 200 EGPmn 150 Four Seasons Sharm El Shaikh Four Seasons Nile Plaza Four Seasons Madinaty 100 § 97 hotel keys § Renovation plan ongoing § 346 Hotel Keys 50 407 425 0 § 69 residential Units § Execution started in 2018 § 191 residential units (111 villas and 80 apartments) 9M18* 9M19 § Licenses/permits Issued § Self-funded from existing EBITDA EBITDA margin cash resources § Design ongoing Note (*): 9M2018 KPIs adjusted for one-offs. Slight EBITDA margin compression attributable to strengthening of EGP over 9M2019 and further cuts to energy subsidies Investor presentation 16 Significant improvement across hotel KPIs
Four Seasons Nile Plaza KPIs* Kempinski Nile Hotel KPIs
ARR Occupancy (RHS) Revenue ARR Occupancy (RHS) Revenue
6,000 100% 1,200 2,500 81% 80% 85% 100% 200 76% 78% 73% 5,000 71% 1,000 65% 80% 2,000 63% 80% 150 4,000 54% 800 60% 1,500 60% 3,000 600 100 EGP 40% EGP 1,000 40% EGP 2,000 EGPmn 400 20% 500 20% 50 1,000 200 420 620 956 561 650 81 140 176 127 138 3,082 4,039 5,510 4,193 4,332 1,341 2,074 2,379 2,343 2,279 0 0% 0 0 0% 0 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 9M2018 9M2019 9M2018 9M2019 9M2018 9M2019 9M2018 9M2019
Four Seasons Sharm El Sheikh KPIs Four Seasons San Stefano KPIs
ARR Occupancy (RHS) Revenue ARR Occupancy (RHS) Revenue
6,000 42% 50% 300 5,000 100% 250 41% 39% 71% 71% 5,000 40% 250 4,000 64% 68% 80% 200 29% 61% 4,000 25% 200 30% 3,000 60% 150 3,000 150 EGP 20% EGP 2,000 40% 100 2,000 EGPmn 100 EGPmn 10% 1,000 20% 50 1,000 50 104 174 261 186 197 143 189 232 173 207 2,726 4,269 4,864 4,951 4,704 2,499 3,653 3,961 3,968 4,355 0 0% 0 0 0% 0 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018 9M2018 9M2019 9M2018 9M2019 9M2018 9M2019 9M2018 9M2019
Note (*): 9M18 KPIs adjusted for one-offs Investor presentation 17 Continue building our recurring income portfolio – target 40-45% of consolidated gross profit
Retail GLA Retail revenue grows in significance
140 200
120 180 160 100 140 84 80 120 +25% y-o-y 127.5 k sqm k 60 100
40 EGPmn 80 60 20 44 40 0 20 Leased GLA Open Air mall opening To tal GLA 143 180 (start operations over - 2019) 9M2018 9M2019
Remaining CAPEX EGP1.3bn ■ Retail revenues benefit from continuous population build-up in TMG Holding projects
Target 2020e revenue cEGP0.5bn ■ Over 46k sqm of GLA in Open Air mall already signed or under negotiation as of December
Target EBITDA margin c85-90% ■ Carrefour hypermarket, opened in October 2018, achieves the highest sales per sqm in Egypt
Target 2020e EBITDA EGP0.45bn
Investor presentation 18 Catchment of Madinaty City Center
40km 10km ■ Madinaty City Center primary catchment area covers the populations of Al Shoruk and Al Badr Cities, New Administrative Capital, El Mostakbal City and many smaller gated compounds ■ Secondary catchment area extends to Nasr City and Heliopolis neighborhoods and further extends to Central Cairo and Nile Delta
Investor presentation 19 About Open Air Mall
■ A new regional mall in Madinaty built on 406k sqm of land on Northern edges, immediately surrounded by residential communities within the project and with easy access from the outside ■ GLA of 92k sqm + some 6,000 parking spots ■ Modular designed consisting of 8 buildings connected by alleys and a tram network ■ All GLA fully owned by TMG ■ Inaugurated in 2018 with opening of Carrefour hypermarket, to be fully completed over 2019 ■ The highest selling Carrefour outlet per sqm in all of Egypt ■ Footfall bound to increase exponentially with new residential deliveries in Madinaty and neighboring projects by other developers, bring total population in the area to over 10mn individual in the coming 10 years, from current estimate of 4.5mn FROM ■ Catchment: at least 3.5mn people, of which 1.9mn within primary catchment area SAN FRANCISCO ■ Driving times: TO MADINATY ■ El Shourok City: ~10 min ■ New Cairo: ~20-30 min
For the first time in Egypt, the mall will introduce the unique tram ■ Cairo Intl. Airport: ~30 min concept with the same model of the famous San Francisco tram to add an exceptional facility to the complex and serve our valuable ■ New Admin. Capital: ~ 35 min guests. 65
Investor presentation 20 Continue building our recurring income portfolio – target 40-45% of consolidated gross profit
Club revenue grows in significance Club memberships – sold and remaining
600 250
500 200
400 150
300 151 EGPmn +119% y-o-y 100 197
200 memberships k
50 100 46 243 531 - 0 9M2018 9M2019 Sold memberships Memberships to be sold Total memberships Remaining CAPEX cEGP0.8bn for extension, main club is already ■ Emerging player on Cairo sporting club scene – revenue up +193 completed and operational y-o-y to EGP531mn in 9M2019, unrecognized revenue backlog of cEGP1bn as at 9M2019 Avg. membership EGP130-200k ■ One time life membership sold for cEGP120-250k, below market rates as memberships are not yet availed to non-residents Target aggregate cash inflows from memberships sold EGP22-25bn in the next 10 years ■ Maintenance and operation covered by annual renewal fees ■ Additional sales reached EGP282mn in 9M2019 (9M2018: nil) EBITDA margin 85%
Target 2020e EBITDA EGP500mn
Investor presentation 21 Maintain robust growth in sales in existing projects
The Spine(1) Fully integrated residential complex including retail, leisure, hospitality, and offices designed to international standards
2.7mn sqm land area 4.5mn sqm total BuA(2) 13 years of development Downtown
2.3mn sqm of residential BuA
Civic Spine
Strategic location Unique accessibility
Quality infrastructure Superior quality standards Uptown
Note (1): Areas subject to change as per the final master plan and utilization Investor presentation 22 Note (2): Including c1.2mn sqm of garage BuA Continue building our recurring income portfolio – target 40-45% of consolidated gross profit
The Spine(1)
400k sqm of retail portfolio 35:65% / BTS:BTL
635k sqm of office GLA 25:75% / BTS:BTL
600+ hotel keys to be managed by operators
Uptown
Note (1): Areas subject to change as per the final master plan and utilization Investor presentation 23 The Spine concept
Entertainment and mixed-use Family and nature Sophisticated living
Privado neighborhood
Uptown Parkside
■ Each district is tailored for a specific target audience: ■ Downtown: seniors, families and youth ■ Parkside: families and youth Downtown ■ Uptown: professionals
Investor presentation 24 Maintain robust growth in sales in existing projects
■ EGP14.3bn of net cash flow from backlog and Historical sales ■ EGP47.7bn of backlog delivered units ■ Avg. gross profit margin 30%-35%
■ Land bank sufficient for the next 16 years ■ 11.5mn sqm ■ Sell all remaining units in Al Rehab and Al Unlaunched residential BuA ■ Target gross profit margin 30% - 35% Rabwa in the short term ■ Target 3,500 residential units to be launched each year
■ 6.3mn sqm of land (of which 237k sqm in Al ■ BTS strategy preferred over land sales to Rehab) translating into BUA of 3.5mn sqm unlock additional value Non-residential BuA/land ■ This area will be split between BTS and BTL ■ Plan to sell over the next 10 years, assets assets that are non core to our recurring income ■ Average gross profit margin for BTS 75% hold / BTL strategy
Significant cash flows expected from the sale of residential and BTS commercial units to fund:
Dividends Building recurring income portfolio Acquisitions of land
Note: all estimates stated at today’s market prices, figures as at end-1H2019 Investor presentation 25 Monetize value of certain assets at the right timing
■ We believe that today the market does not ascribe value to most of our recurring income portfolio (namely hotels, retail, clubs, and non-residential land bank) which offers a significant long-term upside for equity investors Potential monetization plan ■ We will keep monitoring the performance of such businesses and invest to grow them over the coming period provided such new investments meet our target returns criteria
■ Once these assets reach a stage of maturity to run on their own and continue the In that regard we have current growth trend independently we will start exploring our monetization options successfully monetized EGP1bn from the schools that we have ■ Such monetization options will include either IPOs or M&As that would create value built in our projects to GEMS / to the Group EFG as operators, which had very minimal contribution to our profits and used the proceeds to ■ For smaller non-core assets, we will aim to fully divest to an Operator that would invest in the hospitality business create further value to our communities in what we believe is a value accretive transaction ■ Proceeds from such monetization plan will finance dividends and business growth
Investor presentation 26 Disciplined and selective land acquisition approach
Strategic acquisition criteria Financial acquisition criteria ■ Large plots that allow for the development of urban ■ Preference towards cash acquisitions to manage communities targeting the middle to upper middle financial risk classes ■ Opportunistically consider JVs or revenue / profit ■ Focus on Greater Cairo primarily, and the North Coast sharing while maintaining control can also be selectively considered ■ Target minimum gross profit margin of 30%-35%
Current land bank sufficient for 16 years In line with development timeframe allowed by land contracts
Investor presentation 27 Preserving capital appreciation while providing a dividend stream
Net cash from contracted sales ■ cEGP14.3bn net cash flow pre-tax from backlog sales
■ 11.5 mn sqm (BuA) of BTS residential Net cash from future residential assets to be launched and sold in the Avg. sales price of at least EGP20k/sqm at launches next 10 – 15 years current market prices ■ Average GP margin of 30-35% ■ 2.0 mn sqm (BuA) (1.4 mn sqm of net Cash profits from BTS commercial sellable area) of BTS commercial Avg. sales price of at least EGP130k/sqm at assets to be launched and sold in the sales current market prices next 10 years ■ Average GP margin of 75%
■ EGP22-25bn of aggregated cash inflows in the next 10 years Cash inflows from club ■ Based on target to sell 151k additional memberships in Al Rehab Club and Madinaty Club (only memberships sold EGP0.8bn CAPEX remaining)
■ 2020e EBITDA cEGP0.45bn for retail (existing & under-construction) Value realization from recurring ■ 2020e EBITDA of cEGP0.7bn for operational hotels income portfolio ■ 2020e total recurring income of at least cEGP1.6bn with significant upside risks ■ Market does not assign value to these assets in management’s views. We will plan to realize value from these once they reach a state of maturity
Investor presentation 28 Share price performance beating the indices since 2H2017
TMG share price performance compared to EGX indices Key facts 15.0 14.0 ■ Listed on EGX since 2007 13.0 12.0 ■ c2,063mn shares outstanding 11.0
EGP 10.0 ■ No foreign ownership limits 9.0 8.0 ■ Shariah observant 7.0 ■ Reuters/BBG: TMGH.CA/TMGH EY 6.0 ■ Member of EGX30 index and MSCI Small Cap Egypt index Jul-17 Jul-18 Jul-19 Jan-18 Jan-19 Sep-17 Sep-18 Sep-19 No v-17 Mar-18 No v-18 Mar-19 No v-19 May-18 May-19 ■ The only active primary real estate developer listed on EGX capable of TMGH [6.8%] EGX30 (rebased) [0.4%] EGXRE (rebased) [-13.1%] sustainable dividend distribution since 2014
Share price returns of select real estate companies listed on the EGX since July 2017
TMGH EMFD OCDI EGX30 EGXRE HELI PHDC MNHD PORT 90% 70% 50% 30% 6.8% 10% 0.4% FY2018 dividend -10% +4% y-o-y -30% 1.4% - 5.0% -
-50% 13.1% 15.1% - - -70% 39.9%
- EGP0.176/share
-90% 53.4% 64.8% - -
Note: pricing data as of 3 September 2019 Investor presentation 29 Thank you