Annual Report 2020 4 5 H.H. SHEIKH TAMIM BIN HAMAD AL THANI H.H. SHEIKH HAMAD BIN KHALIFA AL THANI THE EMIR OF THE STATE OF QATAR THE FATHER EMIR 6 7 The Barwa brand has become synonymous with careful project identification, timely execution, adherence to quality standards, cost efficiency and prudent fiscal management, complemented by valuable local expertise. Straddling the residential, commercial, mixed-use and hospitality sectors, we continuously strive to produce a well-balanced portfolio that is geared towards consistent income-generating annuity assets. Our strategy is centered on keeping our portfolio optimized, by aligning it with market and stakeholder demand, while being focused on long-term value creation. We have invested wisely in a well-proportioned development pipeline that adds further diversity to our portfolio, and enables us to capitalize on future market opportunities in a thoughtful and risk-mitigated way. By diversifying into the healthcare and education-based assets, PPPs and other well studied opportunities, we aim to further insulate ourselves from economic-cycle swings. By adding mid-to-high residential units to our portfolio, we aim to strengthen our holdings of annuity income-generating assets and further bolster our ability to produce free cash-flows. To enable a more sustainable payback from our new freehold positions taken in emerging areas such as Lusail, we aim to add the “built-to-sell” model as part of a judicious portfolio mix that yields appreciable returns. With efficient capital allocation, well- conceived projects, operational excellence and efficient corporate structures, we are on the path to strengthening our position as a multi asset-class realty major. Barwa Real Estate Company Q.P.S.C. Annual Report 2020 8 9 CONTENTS OVERVIEW CORPORATE GOVERNANCE REPORT Barwa at a glance 10 Corporate Governance Report 71 Financial highlights 14 Appendix (1) Board Member CVs 88 What we do 16 Management Assessment of Internal Control over Financial Reporting 90 Where we do it 18 Shari’a Supervisory Board Report 92 STRATEGIC REPORT FINANCIAL REPORT Board of Directors report 22 Independent Auditor’s Report 96 Six compelling reasons to invest in Barwa 28 Consolidated statement of financial position 100 Message from the group Chief Executive officer 30 Consolidated statement of profit or loss 101 Our market drivers 34 Consolidated statement of comprehensive income 102 Our well positioned development pipeline 36 Consolidated statement of changes in equity 103 Freehold zones a growing opportunity 38 Consolidated statement of cash flows 104 Securing Barwa’s ICT framework 39 Notes to the consolidated financial statements 106 Actively managing risk 40 Our people: Bringing Barwa’s vision and values to life 42 Our commitment to community 44 Real estate projects in Qatar 48 Qatar real estate investments 50 International real estate investments 61 Independent subsidiaries 62 International Associate Companies 64 Board of Directors 66 Barwa Real Estate Company Q.P.S.C. Annual Report 2020 10 11 Barwa At Glance About our portfolio Barwa is one of the leading real estate developers, headquartered in Doha, Qatar. We develop and manage properties that reflect the changing needs of the people living, working and visiting the country. QR 201 million QR 3,388 million Company Vision And Strategy Properties available for sale Properties under development 7.7 mn. sq. m. QR 29,598 million QR 8,073 million QR 21,525 million Land bank available Total properties book value Book value of land bank Book value of real estate (Real Estate & Land Bank) To be a reliable real estate company recognized for its To create better places in an Entrepreneurship, strong values, excellence efficient manner for people to commitment, reliability, and sustainable returns to its live, work and enjoy. teamwork and integrity. stakeholders. Strategic Direction • Barwa’s fundamental strategic direction is to be a real • Barwa will make balanced income yielding estate development and investment holding company investments in both its core real estate and synergistic businesses with above market return on investment The Segmented Business Model is organized around the following elements: CORE BUSINESS EFFECTIVE GOVERNANCE SYNERGISTIC BUSINESSES Real Estate Development, (Proper Control & Risk Subsidiaries (Controlling stake) Investments and Operations Management): Investment Private Equity (Diversifies and (Value Creation): We will establish management best practices and enhances revenue stream) the Barwa way of planning and performance management that - Well-balanced portfolio. delivering projects and will replicate sustain the value proposition. - Supporting profitability and the model to the expanded and sustainable growth. emerging portfolio. - Enhance credibility and strengthen the brand geographically. Barwa Real Estate Company Q.P.S.C. Annual Report 2020 12 13 Our Financial Strength What We Have Accomplished Balanced Product Mix Resulting in a stable yield QR million QR million Landbank of Debt:Equity mix of QR 5.41 billion 33,155 9,337 5.4 million sqm Total assets Net debt 1:2 Dividend distributed for in Qatar, 80% owned years 2014 to 2019 Leadership 3.6 mn. sq.m. in affordable housing BUA Under Operation *BUA Built-up area 8,148 37,322 Total number of Workers rooms residential units Balanced Portfolio Of Assets (BUA distribution) Land Bank 1% Commercial Warehouse International 2.4% 97% 6.04% 3.73% 13% Mixed Use 30% 14% Local 39% 33% 70% CAGR - Rental Operating profit from Return Return Income (FY2017-20) net recurring rentals On Equity On Assets Workers Residential accommodation Barwa Real Estate Company Q.P.S.C. Annual Report 2020 14 15 Financial Highlights 2.714 2.572 1.637 1,080 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Income And Operating Revenue Operating Profit Dividend Payout Ratio | (%) Dividend Yield | (%) QR in Million QR in Million 486 1,215 807 826 841 493 433 566 1,874 1,599 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Ebitda Profit After Tax Recurring Cash Profits Dividends QR in Million QR in Million (excl. profit from sales of property) QR in Million QR in Million Barwa Real Estate Company Q.P.S.C. Annual Report 2020 16 17 What We Do Outputs This is how we allocate our capitals to create value. Our ability to generate value is dependent on our access to five different capitals: portfolio; funding; relationships; team; and sustainability. OUTCOMES PORTFOLIO CAPITAL RELATIONSHIPS CAPITAL The Company’s updated strategy focuses on active Stakeholder communication is vital for active stakeholder asset management to ensure maximized returns engagement, which is fundamental to the Company’s ability to Inputs Operational from existing portfolio while also developing new create long-lasting relationships. During the year the Company opportunities. interacted with various institutional investors, availed quarterly FrameWORK result update conference calls and with the help of proactive and PORTFOLIO CAPITAL RELATIONSHIPS CAPITAL dedicated Investor Relations team it also interacted with analysts FUNDING CAPITAL whenever required. The Company’s investment Value created with stakeholders: Barwa’s strong balance sheet gives sufficient room for property portfolio: TEAM CAPITAL AQUIRE levered growth with prudent gearing. During the year, - Close working relationship with the Company took QR 1,962 million additional debt. The Company has established a strong team with extensive - QR 201 million Properties development partners in invested The increase in debt has resulted in a rise in the net knowledge and experience across its invested markets. Throughout available for sale markets The Company’s strategy is to grow debt to equity ratio to 0.46 from 0.41. The Company the year, several initiatives were completed to enhance, attract, the income in a sustainable manner. achieved distributable earnings per share for the year motivate and retain the team. The Company has robust and reliable - QR 3,388 million Properties - Investor confidence established To enable this, the Company sources of QR 0.31, compared to QR 0.39 in the previous year. processes and operating systems in place. under development through regular the best opportunities in its invested A distribution of QR 0.125 per share was declared in communications markets. A robust appraisal process relation to the earnings for the year. SUSTAINABLE CAPITAL - 7.7 million square meters land facilitates effective allocation of The Company recognizes the importance of using natural resources bank available - Engagement with local communities resources to acquire accretive responsibly and efficiently to ensure they are sustainable for the and Governments property. environment. Also, it recognizes the importance of investing in the communities in which it operates, and it is at the heart of all its capitals. FUNDING CAPITAL TEAM CAPITAL DEVELOP Effective capital management: Knowledge and expertise of our team: - Share Capital of QR 3,891 - Skilled diversified Board Through active engagement with million tenants and communities, the TRADE OFFS - Talented people Company develops properties to meet the needs of prospective tenants and - QR 10,083 million of PORTFOLIO CAPITAL TEAM CAPITAL outstanding debt - Continued investment in established their customers. systems and processes, The Company’s property portfolio has a long-term Investing in the Company’s people is imperative to generate - QR 9,337 million of net debt investment horizon. Strong investment discipline sustainable and long- term growth. Investing in the Company’s - Strong corporate governance MANAGE is required to mitigate the risk of sacrificing long- systems and processes has a negative impact on funding - 0.46 Net Debt to Equity Ratio term growth for shorter-term distribution growth capital in the short term. However, once implemented, there targets. is a positive impact, improving the quality of information and - Recurring cash flows in form The Company actively manages the increasing efficiency and staff morale.