Talaat Mostafa Group Holding Company

Transcription

1 Talaat Mostafa Group Holding Group Presentation March. 2017

2 Safe Harbour Statement 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. 2

3 Outline TMG Corporate Profile TMG at a Glance Projects Development, Achievements and Growth Prospects Share Data Board of Directors and Corporate Governance, Executive Team and Business Partners Strategy and Business Model, Quality Control and Operating Systems Market and Operational Review Macroeconomic Indicators, Real Estate Drivers Financial and Operational Review, Hotels & Resorts Operational Review Future Growth Real Estate Development Plans And Projects Progress Real Estate Future Growth Hotels & Resorts Future Growth Investment and Risk Considerations

4 TMG Corporate Profile TMG at a Glance Projects Development Achievements and Growth Prospects Share Data Board of Directors and Corporate Governance Executive Team and Business Partners Strategy and business model Quality Control and Operating Systems

5 n A successful, over 20-year track record in which over 28 MN SQM of land was developed and over 95 thousand real estate units with a BUA that exceeded 16 MN SQM were sold n n n n n n n TMG at a Glance (TMGH.CA) Strong management capabilities with 8 board members, 9 vice presidents, 3,000 employees and 60,000 on-sites workforce 43.2 MN SQM of quality land bank in prime locations and high growth areas. Geographic Diversification: Expanding in the region with an eye on markets of shared similarities with the Egyptian real estate markets. Business line Diversification to increase contribution of stable income: Five additional Hotel & Resort projects currently under development Self contained urban communities targeting the middle to upper middle classes Different styles and size of units that cater to changes of income levels, average household size, life style and consumer preference Four operational large scale luxury hotel complexes including high-end residencies, shopping malls and office parks and soft launch of a fourth boutique hotel specifically tailored to business travelers n A sales backlog of EGP 25 BN at the end of March n Healthy financial position and minimal gearing: cash EGP 7.05 BN, debt EGP 5.01 BN, debt to equity ratio of 1:6 as of March

6 Projects Development 6

7 Achievements Growth Prospects Breakdown of Sold Units Breakdown of Land Bank 0.37% 0.95% 0.48% 1.36% 0.05% 9% 0.54% 0.18% % 47.83% 34.13% City & Community Hoteles & resorts virgenia May fair Rabwa Rabwa ii Sant stefano Four S. Sharm Nile Plaza Rehab ii Rehab i Madinaty Developed 28 MN SQM of land Sold over 95 thousand residential units Developed over 16 MN SQM. residential BUA Sold 44% of Madinaty residential BUA, 92.7% of Al Rehab II and 99.9% of Al Rabwa II units Award winning operational hotels Development rights of 43.2 MN SQM in Egypt. Master development of 8.14 MN SQM of quality land for strategic non-residential developers for value creation and knowhow Sales backlog of EGP 25 BN to be delivered and recognized over next four years 1,737 hotel keys and 2,464 attached residential units in various design and development stages, upcoming in next three to four years Increase contribution of stable income from operating assets to reach 35% of total revenue (a target of 5,000 hotel rooms) Maintain minimum of 35 MN SQM of land inventory 7 through on going local expansion.

8 Share Data Shareholders Structure Share Performance Other major shareholders 25.75% Other shareholders including free float 23.98% TMG RE & Tourism Investment * 50.27% *Including Talaat Mostafa Family and Saudi group EGX RE INDEX TMG As

9 Board of Directors and Corporate Governance Executive and nonexecutive members with longstanding experience in real estate and construction in the MENA region Independent and non executive members that are publicly renowned in the economic, legal and commercial circles Audit, nomination and remuneration committees have been appointed The audit committee has the responsibility to review and approve related party transactions Board of Directors Tarek Talaat Moustafa (Executive Chairman) Hani Talaat Moustafa Yehia Mohamed Awad Mohamed Ali Akbar Gamal El Guindy (Executive Director) Ahmed Ali Abou El Einein - Misr Insurance representative Mohamed El Tokhy Hossam Abdallah Helal (Chairman of the audit committee) Directors are bound by non-compete rules in Egypt. Shareholder directors Independent 9

10 Executive Management In addition to the board, the executive management of the company is composed of 9 Vice Presidents. A number of committees including the Steering Committee, Higher Management Committee and Executive Committee support the Management decision making process. Over 3000 professionals are directly employed in the various sectors and subsidiary companies of the Group. In addition, a workforce of approximately 60,000 technical staff is operational in the various projects sites. Managing Director & Vice Presidents Tarek Talaat Mostafa (Managing Director) Sherif Ghoneim V.P. Sales and Marketing, Joined: 1993 Jihad M. Sawaftah V.P. Chief Financial Officer, Joined: 2004 Gamal El Guindy V.P. Administration of the Chairman s Office, Joined: 1983 Ahmed Afifi V.P. Madinaty Project Management, Joined: 1995 Mohamed Atef V.P. Technical Affairs, Joined: 2005 Wael EL Dieb V.P. Projects Management, Joined: 2014 Sami Mokhtar V.P. San Stefano Project, Joined: 1992 Mohamed Al Shazly V.P. Sales, Joined: 2001 Mohamed M. Noh V.P Real Estate Affairs, Joined :

11 Business Partners n The Four Seasons and Kempinski :internationally reputable management chains of our hotels n Top class worldwide contractors, master planners, designers of projects components and execution: Main contractor for our completed projects as Joannou and Paraskavides, Hyundai, Murray and Roberts and Bin Laden The master planning of Madinaty was made by a group of consulting firms from the United States: Sasaki, SWA and HHCP and their Egyptian counterparts Cairo Group for planning and architecture Architects as HKS, USA for Sharm extension design WZMH, Canada for Luxor design, Studio Sergi, Italy for Marsa Alam design MEP companies as MMM Canada for Sharm extension Interior design companies as GA, UK for Luxor Signature golf courses designers as Robert Trent Jones II and HHCP Design International 11

12 Strategy and Business Model Geographical diversification Integrated development concept Integrated process capitalizing on brand name, reputation and experience Stable and recurring income from Operating assets Scale and Land bank positioning In-house Centralized Operations Top Class Designers and Contractors Reputable Business Partners flexible phasing self financing construction real estate model units sales Flagship Developments financing schemes catering to customers' affordability Low risk, model: (sell first then construct) Ongoing after sale integrated facilities management operations 12

13 Quality Control and Advanced Operating Systems 2007: Application of the SAP Enterprise Resources Planning System (ERP) on all functions of the Group Subsidiaries. The result is a smooth process integration between sales, accounting and treasury, with facilitated financial and managerial reporting, streamlined accounting bookkeeping and consolidation, improved administration of internal controls, corporate governance and transparency, and an optimized cash management process. Feb 2008: qualified for the ISO 9001:2000 certification requirements for a quality management system and maintained the certificate upon renewal in 2010 where an organization: 1. needs to demonstrate its ability to consistently provide product that meets customer and applicable regulatory requirements, and 2. aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable regulatory requirements. 13

14 Market and Operational Review Macroeconomic Indicators Real Estate Market Drivers Financial Review Consolidated Operational Review Hotels & Resorts Operational Review

15 Macroeconomic Indicators Real GDP growth was 2.6% during the ending year compared to the same period last year; after changing the base year from 2006/2007 prices to 2011/2012 prices; Net International Reserves reached US $ 26.5 BN at the end of February, Annual headline inflation rate reached 30.91% in March, The CBE announced that the overnight deposit rate will be at 14.75%, and the lending rate at 15.75% effective March,

16 Real Estate market drivers in Egypt Growing population n 90 MN population with 60% under the age of 30, and 840,000 new marriages per annum on average n Urban and general population growing by 3.1% and 1.9%, respectively n Growing middle to upper classes has created a growing demand for good quality, affordable housing Supply / Demand Gap n Total demand of 500k units per year. Approximate demand of 225k units per year in urban areas n Supply/demand gap in urban areas of 5k, 50k and 70k in the High-end, Middle and Low-end residential units, respectively 16

17 Financial Review 1Q2017 Key figures Total assets: EGP 65.7 BN Cash and cash equivalents: EGP 7.05BN Total debt: EGP 5.01BN A positive net Cash: 2.04 BN Debt to Equity Ratio: 1:6 Revenue Contribution 1Q2017 Hotels 18% Other Revenue 7% Residential 74% Assets Growth Quarterly revenue recognition 70,000 1,500 60,000 50,000 40,000 1,400 1,300 1,200 1,100 1,286 1,214 30,000 20,000 10,000 1, EGP MN - 1Q2008 4Q2008 4Q2009 4Q2011 4Q2012 4Q2013 4Q2014 1Q Q2017 Consolidated revenue 1Q

18 Consolidated Operational Review Quarterly Review 1Q2017 1Q2016 Revenues breakdown Revenues from units sold Revenues from Hotels Other revenues Total consolidated revenue 1,286 1,214 COGS breakdown Real Estate & Construction Cost (562) (669) Hotels Cost (154) (94) Services Cost (64) (99) Total cost of goods sold (780) (862) Gross profit GP% 39% 29% SG&A, Other income and expenses (123) (60) Net profit before tax NPBT% 30% 24% income tax and deferred tax (78) (92) Net Profit NP% 24% 16% Minority's share (17) 8 attributable to shareholders % 17% Quarterly profits Q Q Gross profit Net profit before tax Net profit 18

19 Hotels & Resorts Operational Review ARR and Rev Par Nile Plaza Q17 97 combined ARR 252 1Q16 combined Rev Par 118 Total Revenue (EGP Mn) % 49% Q17 1Q16 80% 70% 60% 50% 40% 30% 20% 10% 0% GOP % San Stefano Sharm El Sheikh Total Revenue (EGP Mn) % 33 1Q17 24% 25 1Q16 40% 35% 30% 25% 20% 15% 10% 5% 0% GOP % Total Revenue (EGP Mn) % 26 1Q17-6% 18 1Q16 20% 15% 10% 5% 0% -5% -10% -15% -20% GOP % 19

20 Future Growth Real Estate Projects Progress Real Estate Future Growth Hotels and Resorts Future Growth

21 Future Growth Real Estate Development Hotels and Resorts Capitalizing on land-bank in existing projects Master Development and sale of prime land plots; value created through project development and units delivery over 10 ten year period Looking for worthwhile opportunities to expand land-bank in Egypt Expanding in the region with an eye on markets of shared similarities with the Egyptian real estate markets The target is to have a minimum land-bank of 35 MN SQM at any point of time The target is to build a stock of 5,000 hotel rooms with a minimum IRR of 18%, and increase the contribution of stable income to 35% of total revenue Development of hotel projects in the pipeline, early launch of real estate sales to co-finance development and enhance returns Continue to grow through purchase of minorities when the opportunity arise Looking for further local opportunities that enjoy prime location and have a market gap to increase weight of stable income from hotels operations. 21

22 Madinaty: development progress Key statistics* Location New Cairo Madinaty - % of Sold Residential BUA Total land size (m2) 33,600,000 Land area to be dev. (m2) 33,600,000 BUA to be dev. (m2) 20,856,908** Land for mega developments 7,450,380 Expected population 600,000 Commence date July 2006 % of sold residential BUA: 44%* Available for sale 56% Sold BUA 44 % Project description* n Mix-use community designed by three prominent American companies n Construction is to take place over 6 overlapping phases, each 3-4 years long n Intended residential BUA of million m2 (19% increase in BUA)* n In addition to business district, international hospital, a university, 22 schools and 3 shopping malls * As per revised program area of April 2013 ** including estimated BUA on land for mega developments 22

23 Madinaty: progress to date Infra structure work mn m2 of Land levelling and roads preparation 8.85 mn m2 of roads levelling work 5.00 mn m2of base and sub base layers 450 km of borders works 3.47 mn m2 of asphalt work 730 km length of water, sewage and irrigation water pipes 4.97 mn of electricity cables 455km of telephone cables Residential BUA work 11.8 mn m3 of digging and filling mn tons of cement tons of steel 5.95 mn m3 of concrete mn meters of walls 9.85 mn meters of ceramics 1075 k meters of marble mn meters of paints 785 k pieces of windows and doors Updated Mar. 31,

24 Madinaty Phase I: delivery of residential units with complete community services Key statistics Residential land area (m2) 9,358,440 Facilities land area 2.456,534 Residential BUA 4,270,275 Expected population 68,620 Commence date Jan 2007 Delivery date April Dec 2014 USE Area Fadden Gross Land Area m2 Built Up Area total units Zone 1 Apartment ,119,300 1,111,754 6,524 Zone 2 Apartment , ,388 3,724 Zone 6 Apartment 245 1,029,000 1,141,378 10,350 Total Apartment 640 2,688,000 2,831,520 20,598 Zone (I)Villa Golf ,128, ,763 1,105 Zone (II)Villa Golf 698 2,931, ,848 1,381 Zone (4)Villa , , Zone (5)Villa , ,812 1,455 Total Villas ,670,440 1,438,755 4,395 Services: Northern District USE Area Fadden Gross Land Area m2 Language School ,668 British School ,133 Medical Center ,340 Bank Complex office Fire Station ,527 Mosque ,730 park and parking ,196 Total area ,474 Services: Southern District USE Area Fadden Gross Land Area m2 Retail (Restaurant, Commercial..ex , Experimental School Buss Station , Medical Center , Telephone Exchange , Admin Building , Police Station , Municipal Building , Mosque , park and parking , Total area ,249 Other Facilities Land Use phase 1 of sports club Area / Fadden 203 Area / m2 852,600 District centers ,561 Regional Services , Roads and City utility ,270 Total 2,119,811 24

25 Madinaty Phase II: delivery of residential units with complete community services Key statistics Residential land area (m2) 3,135,300 Facilities land area 315,810 Residential BUA 3,133,423 Expected population 67,192 Commence date March 2008 Delivery date April Dec 2014 Phase 2 Residential Units to be Delivered Land Use Area / feddan Area / m2 Total BUA / m2 No. of Unit Zone 3 Apartment , ,464 3,864 Zone 7 Apartment , ,847 7,272 Zone 8 Apartment , ,359 4,554 Zone 11 Apartment , ,753 8,340 Total Apartments 748 3,135,300 3,133,423 24,030 Services: Northern District Other Facilities Land Use Area / feddan Area / m2 language school ,668 Medical Center ,340 Retail 2.4 9,880 Fire Station.4 1,527 Mosque 2.3 9,730 district park ,301 Land Use Area / feddan Area / m2 commercial center ,840 zones 1 and 6 community centers: mosque, admin building, commercial shops, nursery, Roads and City Gates, international medical city ,970 75,19 315,810 25

26 Madinaty Phase III: delivery of residential units with complete community services Key statistics Phase 3 Residential Units to be Delivered Residential land area (m2) 4,863,600 Facilities land area 2,182,943 Residential BUA 3,801,999 Expected population 67,192 Land Use Area / feddan Area / m2 Total BUA / m2 No. of Unit Mixed used ,000 2,268,000 15,120 Zone 10 Apartment , ,151 7,320 Total apartment 420 1,764,000 3,237,151 22,440 zone (III)villa golf 738 3,099, ,848 1,027 Services: District centre Land Use Area / Feddan Area / m2 Commercial ,000 Day care ,667 Admin ,667 Mosque ,000 Green areas & parking Regional services ,097,480 Roads and City utility , ,182,943 26

27 Al Rehab Development Progress Key statistics* Location: New Cairo, an extension to Al Rehab I Total land size (m2) 9,900,400 Land size to be dev. (m2) 4,684,225 Al Rehab II - % of Sold Residential BUA 7.3% Available BUA to be dev. (m2) 2,839,834** Land for mega developments (m2) 687,971 Expected population 200,000 Commence date Nov 1996 / Jul % BUA sold % of sold residential BUA (Rehab II) 92.7 % Project description* 1. Rehab I / Rehab II Al Rehab I: n n Only the shopping centre and phase 6 villas (633 villas) are yet to be completed. Out of which 22 villas are remaining to be sold Rental revenue from two shopping malls (6,274 SQM) the British school as well as club fees (membership fees) and F&B Al Rehab II: n Consists of villas (BUA million m2), apartments (BUA million m2) * As per revised program area of November 2009 ** including estimated BUA on land for mega developments 27

28 Al Rabwa Development Progress Key statistics Location: Sixth of October City an extension to Al Rabwa I Total land size (m2) 2,137,828 Land size to be dev. (m2) 819,028 (Al Rabwa II) Al Rabwa II - % of Sold Units 0.1% Available BUA to be dev. (m2) 129,748 (Al Rabwa II) Expected population 4,965 Commence date January 2006 % of sold residential BUA (Al Rabwa II): 99.9% 99.9% BUA sold Project description Al Rabwa I n n n an exclusive compound targeting the high end Construction is completed and consists of 648 villas, a shopping centre, 9 hole golf course and sports pavilion. The development is fully sold and covers a land area of 1,318,800 m2 Al Rabwa II n n Al Rabwa II will follow a similar model consisting of 386 villas and an interlinking 9 hole golf course Only 2 villas are remaining to be sold 28

29 Real Estate Future Growth: Capitalise on Land with unrecognized value 2010: Delivery of residential units completed with facilities and infra structure in Rehab II and Madinaty Master development and sale of SQM 8.14 MN land plots in prime locations for strategic non residential use Estimated land sale of 500ksqm/annum at an estimated selling price of EGP 10K/SQM n Master planning and development of high quality land plots all set with the required infrastructure n Land value created as a result of the development progress and delivery of a full-fledged phase of the project n To be sold to strategic partners that would bring a know-how, fill an existing gap in the area; e.g. medical projects, banking corporations, large exhibits, key service providers, etc. n The plan is to create more value to the project, enhance the operational cash flow and achieve more favourable project s returns n To be launched over a 10 years period starting 2012 after delivery of phase I units at an estimated average selling price of EGP 10,000 per SQM. 29

30 Real Estate Future Growth: Location of Land with unrecognized value Al Rehab Madinaty 30

31 Hotels and Resorts Future Growth Business line Diversification to increase the contribution of stable income to total revenue Targeted Future Growth Reach 5,000 hotel rooms with a minimum IRR of 18%, and increase the contribution of stable income to 35% of total revenue Steps taken to achieve targeted growth Acquisition of Marsa Alsadeed land in Sharm El Sheikh, upon which an extension of the existing Four Seasons resort will be constructed Purchase of land in downtown Cairo to develop a high-end office and hotel complex Purchase of Sednawy Villa adjacent to the Nile Hotel to develop an exclusive business club and parking that will also serve the hotel Obtained a 50 years renewable concession agreement to develop a resort on Sultana Malak Land in a prime location in the historic city of Luxor signed up Letters of Intent with the Four Seasons renowned chain to operate the hotels in Luxor, Madinaty, and Sharm Extension and appointed Kempinski to operate the Nile hotel Raised ownership stake to 100% of the Four Seasons Sharm el-sheikh Resort and Four Seasons Nile Plaza complex in Cairo by acquiring the minority stake held by Kingdom Hotel Investments (KHI) in both hotels 31

32 Build-up of 2,615 hotel rooms 2023 Operational: 875 rooms / keys Under development: 1,740 rooms / key Four Seasons Madinaty 2022 Four Seasons Luxor TMG Building Hotel 2019 Marsa Alam Kepminsk Nile Hotel Four Seasons Sharm Extension 2004 San Stefano 2001 Four Seasons Sharm Nile Plaza

33 Upcoming projects Open Air Mall Development Progress Consists of 11 Buildings Design was made by F+A architects Land area: 404 k sqm BUA: 116k sqm n To be developed over 3 phases n Opening target date Four Seasons Sharm Extension Rooms/ keys : 99 Residential properties: 114 Operator: Four Seasons Land area 960k SQM BUA: 490 k SQM Development Progress n Purchased land n Finished design n Issued licenses and permits n Appointed four seasons management company n Under Construction 33

34 Upcoming projects Four Seasons Luxor Rooms/ keys :201 Operator: Four Seasons Land area 20k SQM BUA: 43k SQM Development Progress n Signed concession agreement n Finished design n Issued licenses and permits n Appointed four seasons management company n Floated tender documents Four Seasons Madinaty Rooms/ keys :240 Residential properties: 100 Operator: Four Seasons Land area 175k SQM BUA: 49k SQM Development Progress n Finished design n Appointed four seasons management company 34

35 Upcoming projects Marsa Alam Rooms/ keys :1000 Residential properties: 2250 phase one : 474 units Land area 3.2 MN SQM BUA: 390k SQM Development Progress n Purchased land n Finished design n Obtained TDA approval n Issued licenses and permits Madinaty Medical City Rooms/ beds:450 Contains Hospital, Children and Women Hospital, Cancer Research centre, Transplantation centre, and Outpatient Clinics. In addition to Academy and a Hotel. TMG Building Hotel Development Progress n To be developed over 3 phases n Phase 1 includes Main Hospital with 220 beds n Opening target date 2018 Development Progress Rooms/ keys :200 Operator: TBD Land area 2k SQM BUA: 16k SQM n Purchased land n Finished design n Issued licenses and permits 35

36 Investment Considerations Risks and Mitigants

37 Investment Considerations Real Market need Concept and selling features Investment Considerations Experience and Track Record Integrated low risk, self finance Business Model Diversified products and markets Guaranteed revenue and profitability (sales backlog) Healthy financial Position High Growth Prospects 37

38 Risks and Mitigant Risks Mitigants Competition from new entrants Entry barriers to prospective new comers: Integrated Business Model First mover advantage Failure to achieve overall growth target A diversified growth plan with no over-dependence on one revenue segment.; Revenue growth in one segment is likely to offset sluggish growth in another New products and land development ideas Difficulty to attract customers to the new product idea Product features that meet customers needs and affordability A carefully planned promotion strategy that aims at introducing the product idea and publicizing its value to the target market Economic Slowdown A safety cushion of a sales backlog that exceed EGP 18.8 bn to be recognized over next four years Stable income from operating assets Entering new markets with high growth potential 38

39 Thank you