STRATEGY PRESENTATION MARCH 2019 About TMG Holding Talaat Moustafa - - PowerPoint PPT Presentation

STRATEGY PRESENTATION

MARCH 2019

Investor presentation 2

About TMG Holding

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.

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

• utstanding 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 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. TMG Holding is the developer of Al Rehab city in New Cairo, Al Rabwa in Sheikh Zayed city, Mayfair in Al Shorouk city and 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. Having 875 upscale hotel rooms in total and is currently expanding its portfolio by 443 additional rooms in two new upscale hotel properties in Sharm El Sheikh and Cairo. It is also the 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 accommodating about 200 thousand members and an additional club under construction. The company is publicly held since 2007 and is the largest listed developer by market capitalization, at EGP23.6bn as of

• today. It has a total land bank of 45mn sqm, the largest land bank held by a listed developer in Egypt. TMG Holding has the

largest backlog among local developers, at EGP41.7bn and to be fully delivered within the coming four years. Market capitalization

EGP23.6bn

Annual turnover

EGP10.9bn

Backlog

EGP41.7bn

Total assets

EGP96bn

Investor presentation 3

FY2018 milestones

■ Achieved record-high sales of EGP21.3bn, the highest in the history of the company and over 50% higher than any other competitor in the market ■ Launch of the New Administrative Capital project Celia which saw stellar performance, with sales reaching EGP12bn in 2018 ■Sales in just 25 days since launch reached EGP7.2bn, reflecting the strong brand equity and capability of the Group ■ Total habitants and commuting population reached 700k turning TMG Holding’s projects into self-sustained cities ■ Succeeded at attracting major renowned names to partner with TMG Holding, including GEMS Education, JLL MENA, Carrefour, among others ■ Began embarking on implementing smart city solutions through partnerships with Huawei and Telecom Egypt ■ Implemented upgrades to all existing facilities which significantly improved costumer satisfaction and reflected in stellar sales performance in FY2018

Investor presentation 4

TMG at a glance [TMGH.CA/TMGH EY] as at end-2018

Note (1): Includes Four Seasons Sharm El Sheikh extension (under construction) and Four Seasons Madinaty (in design phase) Note (2): Includes Open Air mall (plan to open in 2019, Carrefour operating since October 2018, achieving the highest Carrefour sales per sqm in Egypt) Note (3): 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 club which is under process of licensing. Note (4): Contributed 25% in 2017. Note (5): By number of units delivered. Note (6): Preliminary figure

#1 Egyptian RE developer by market cap

30+ years track record

86k+ / 5k+ units sold

(since inception / 2018 only)

c90k+ units delivered

(since inception, including ministry units)

Highest cumulative deliveries by a single MENA developer

875 operational hotel rooms

443 rooms under development(1)

New sales [EGPbn]

127.5k sqm GLA portfolio(2)

40k sqm GLA leased

c16mn sqm remaining BuA

c3.5mn BuA commercial BTS and BTL

197k club membership capacity(3)

Sold c45k memberships, c152k memberships yet to be sold

Egypt’s leading developer of premium master planned communities with sufficient land bank for 17 Years and Sizeable Portfolio

• f Recurring Income Assets contributed 30% of GOP for 2018(4) and planned to increase to 40-45%

MENA’s leading developer(5)

Backlog [EGPbn](6) Remaining collections [EGPbn](6)

Expected net cash flow from backlog and delivered units [EGPbn](6)

Net cash position [EGPbn]

13.1 21.3 2017 2018 30.0 41.7 2017 2018 9.0 12.5 2017 2018 1.55 3.13 2017 2018 21.3 31.2 2017 2018

+62% y-o-y +39% y-o-y +46% y-o-y +102% y-o-y +39% y-o-y

Investor presentation 5

Key financial highlights of FY2018

6,406 7,495 2,128 3,432

• 2,000

4,000 6,000 8,000 FY2017 FY2018 EGPmn

Revenue

Development revenue Recurring revenue

+17% y-o-y +61% y-o-y

2,339 2,834 779 1,223

• 500

1,000 1,500 2,000 2,500 3,000 FY2017 FY2018 EGPmn

Gross profit

Development Recurring

+21% y-o-y +57% y-o-y

1,327 1,705

• 500

1,000 1,500 2,000 FY2017 FY2018 EGPmn

Net income

+28% y-o-y

25% 30% 0% 5% 10% 15% 20% 25% 30% 35% FY2017 FY2018

Recurring GP as % of total

+5pp y-o-y

73,119 96,274

• 20,000

40,000 60,000 80,000 100,000 120,000 FY2017 FY2018 EGPmn

Total assets

+32% y-o-y

17.9% 16.9% 16.0% 16.5% 17.0% 17.5% 18.0% 18.5% FY2017 FY2018

Debt-to-equity

• 1pp y-o-y

75% 13% 12% 68% 15% 17%

Annual improvement in revenue mix with strong growth in recurring income achieved in FY2018

Development Hospitality Others

FY2017 FY2018

■ Revenues of EGP10.93bn, up 28.0% y-o-y, of which 31% or EGP3.43bn generated from hospitality and other recurring income lines, growing 61.3% y-o-y ■ Gross profit of EGP4.06bn, up 30.1% y-o-y; gross profit margin of 37.1%, up 0.6pp y-o-y ■ Net profit before minority interest of EGP1.77bn, up 28.0% y-o-y ■ Net profit after tax and minority interest of EGP1.70bn, up 28.5% y-o-y

Investor presentation 6

We continue to deliver on our key strategic priorities previously communicated to the market

Achieving robust growth in sales

FY2019 sales target: EGP24bn, up 13% y-o-y New upscale launch planned in Madinaty in mid-2019

Continue building our recurring income portfolio –

• target 40-45% of Gross Profit by 2020, up from 30% in 2018

Executing the Group’s strategy of monetizing non-core assets Disciplined approach for land acquisitions while managing financial risk Preserving capital appreciation while providing a dividend stream

No equity increases since IPO, moderate leverage, stable dividend payout since 6 years

Mission: Provide exceptional services to all our clients and ensure great customer experience and capitalize on such client base for new projects

New sales [EGPbn] Backlog [EGPbn] Hospitality EBITDA [EGPmn]

The Group invested EGP1bn to increase its stake in ICON to 83.3% Signed JLL to manage and operate Open Air Mall in Madinaty Signed Carrefour as anchor tenant in Rehab & Madinaty malls, opened in Open Air mall in October 2018

EGP1bn proceeds from the transaction Strategic land EGP12.0bn sales in 2018

13.1 21.3 2017 2018 428 695

38.1% 42.8%

2017 2018 30.0 41.7 2017 2018

Investor presentation 7

We are on track to achieve all-time high sales

■ Strong brand equity, and development progress drive strong growth residential and non-residential sales since 2017 ■ Achieved EGP3.6bn in non-residential sales in FY2017 and EGP2.9bn in FY2018 as sales efforts were concentrated on the residential launch of Celia since mid-year

• 2.0

4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EGPbn

Evolution of residential sales across all projects

• 0.5

1.0 1.5 2.0 2.5 3.0 3.5 4.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EGPbn

Evolution of non-residential sales across all projects

• 5.0

10.0 15.0 20.0 25.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EGPbn

Evolution of total sales across all projects

Investor presentation 8

Strategic vision allowed for early foothold in rapidly urbanizing East Cairo

Population: 1.5mn Population: 4.5mn Expected population: 10mn Population: 30k

Investor presentation 9

Case in point: successful launch and sales of Celia –a testament to the strength of TMG brand

14% 86%

Units breakdown by type

Villas Apartments

Unmatched brand equity of TMG in the Egyptian market

■ Celia is a new mixed-use development located on 500 feddans in the New Administrative Capital (NAC) – largest land plot launched in NAC to date ■ Total residential BuA of c1.03mn sqm, in addition to 148k sqm

• f non-residential space

■ Launched in June 2018, to be completed within the next 5 – 7 years ■ Very good market reception as a testimony to brand equity ■ Significant pent-up demand in location despite earlier launches by smaller companies before the launch of Celia ■ Good outlook on demand dynamics following launch ■ More than 16% of clients are returning clients ■ 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 ■ Master plan accommodates for a sporting club and basic services ■ Land purchased in 2017 for EGP2,100/sqm, payable over 9 years (10% down payment, 2 years grace period + 7 years installments, interest of 10% only)

500 feddans

Celia land area

1.03mn sqm

Total residential area

cEGP12.0bn

Total net sales since launch until end-2018

7,561 units

Total residential units for sale

3,125 units (c41%)

Units sold until end-2018

2,718 407 3,778 658 0% 20% 40% 60% 80% 100% Apartments Villas

Sales status as at end-2018

Units sold Units unsold 22% 65% 13%

BuA breakdown by type

Villas Apartments Services

Investor presentation 10

Continue investing in hotel portfolio – significant improvement across all KPIs

Four Seasons Nile Plaza, Cairo [366 keys, opened 2004] Four Seasons San Stafano, Alexandria [118 keys, opened 2007] Four Seasons Sharm El Sheikh [200 keys, opened 2001] Kempinski Nile Hotel, Cairo [191 keys, opened 2010]

■ Freed liquidity from monetizing non-core assets and invested EGP1.0bn in ICON in a value accretive transaction, increasing stake in TMG’s yielding hospitality segment to 83.3% ■ Appointed Hotel Chief Operating Officer in 2019 to

• versee existing portfolio and its expansion

■ 443 new keys under development: ■ 346 keys in FS Madinaty + 121 residential units, construction breaking ground in 2018, to be completed in 2021 ■ 97 keys in FS Sharm El Sheikh ext. + 69 residential units; under construction, to be completed in 2020 ■ Ongoing phased renovation of FS Nile Plaza

608 356 421 378 551 702 748 1,123 1,625 322 95 145 105 221 308 320 509 816 261 68 113 79 182 266 382 428 695 0% 10% 20% 30% 40% 50% 60% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2010 2011 2012 2013 2014 2015 2016 2017 2018 EGPmn

Hospitality segment performance

Revenue GOP EBITDA GOP margin (RHS) EBITDA margin (RHS)

Investor presentation 11

Continue building our recurring income portfolio – target 40-45% of consolidated gross profit

Revenue and occupancy rate EBITDA and EBITDA margin Hotel rooms evolution Short-term initiatives - ongoing

Four Seasons Sharm El Shaikh § 97 hotel keys § 69 residential Units § Licenses/permits Issued Four Seasons Nile Plaza § Renovation plan ongoing § Execution to start in 2018 § Self-funded from existing cash resources Four Seasons Madinaty § 346 Hotel Keys § 121 residential units § Design ongoing

1,123 1,625 58% 68% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2017 2018

EGPmn

Revenue Occupancy

+45% y-o-y

428 695 38% 43% 100 200 300 400 500 600 700 800 2017 2018 EGPmn EBITDA % margin

+63% y-o-y

875 97 346 1,318 2018 1H2020 FS Sharm El Sheikh Ext. Jan-2022 Four Seasons Madinaty (construction to start in 2019) 2021 target

Investor presentation 12

Significant improvement across hotel KPIs

3,082 4,039 5,510 54% 65% 76% 0% 20% 40% 60% 80% 100% 1,000 2,000 3,000 4,000 5,000 6,000 2016 2017 2018 EGP ARR Occupancy (RHS) 420 620 956 200 400 600 800 1,000 1,200 2016 2017 2018 EGPmn Revenue

Four Seasons Nile Plaza KPIs Kempinski Nile Hotel KPIs Four Seasons Sharm El Sheikh KPIs Four Seasons San Stefano KPIs

2,726 4,269 4,864 25% 29% 41% 0% 10% 20% 30% 40% 50% 1,000 2,000 3,000 4,000 5,000 6,000 2016 2017 2018 EGP ARR Occupancy (RHS) 104 174 261 50 100 150 200 250 300 2016 2017 2018 EGPmn Revenue 2,499 3,653 3,961 61% 64% 71% 0% 20% 40% 60% 80% 100% 1,000 2,000 3,000 4,000 5,000 2016 2017 2018 EGP ARR Occupancy (RHS) 143 189 232 50 100 150 200 250 2016 2017 2018 EGPmn Revenue 1,341 2,074 2,379 63% 73% 81% 0% 20% 40% 60% 80% 100% 500 1,000 1,500 2,000 2,500 2016 2017 2018 EGP ARR Occupancy (RHS) 81 140 176 50 100 150 200 2016 2017 2018 EGPmn Revenue

Investor presentation 13

Continue building our recurring income portfolio – target 40-45% of consolidated gross profit

40 88 127.5 20 40 60 80 100 120 140 Leased GLA Open Air mall opening (start operations in 2019) Total GLA

k sqm

Retail GLA

Remaining CAPEX EGP1.1bn Target 2020e revenue EGP723mn Target EBITDA margin 92.5% Target 2020e EBITDA EGP669mn

Retail revenue grows in significance

143 180 20 40 60 80 100 120 140 160 180 200 FY2017 FY2018

EGPmn

+26% y-o-y

■ Retail revenues benefit from continuous population build-up in TMG Holding projects ■ Some 8k sqm of GLA in Open Air mall already signed or under negotiation as of mid-February, ■ Carrefour hypermarket, opened in October 2019, achieves the highest sales per sqm in Egypt.

Investor presentation 14

Continue building our recurring income portfolio – target 40-45% of consolidated gross profit

45 152 197 50 100 150 200 250 Sold memberships Memberships to be sold Total memberships

k memberships

■ Emerging player on Cairo sporting club scene – revenue up +62 y-o-y to EGP426.1mn in FY2018, unrecognized revenue backlog

• f cEGP0.7bn as at end-FY2018

■ One time life membership sold for cEGP130-150k, below market rates as memberships are not yet availed to non-residents ■ Maintenance and operation covered by annual renewal fees ■ Additional sales reached EGP107mn in FY2018 (FY2017: nil)

Club memberships – sold and remaining

Remaining CAPEX EGP872mn for extension, main club is already completed and operational

• Avg. membership EGP130-200k

Target aggregate cash inflows from memberships sold EGP22-25bn in the next 10 years

EBITDA margin 85% Target 2020e EBITDA EGP500mn

Club revenue grows in significance

263 426 50 100 150 200 250 300 350 400 450 FY2017 FY2018

EGPmn

+62% y-o-y

Investor presentation 15

Maintain robust growth in sales in existing projects

Note (1): Areas subject to change as per the final master plan and utilization Note (2): Including c1.2mn sqm of garage BuA

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

2.3mn sqm of residential BuA

Downtown Civic Spine Uptown

Strategic location Unique accessibility Quality infrastructure Superior quality standards

Investor presentation 16

Continue building our recurring income portfolio – target 40-45% of consolidated gross profit

Note (1): Areas subject to change as per the final master plan and utilization

The Spine(1)

400k sqm of retail portfolio

35:65% / BTS:BTL

635k sqm of office GLA

25:75% / BTS:BTL

Uptown

600+ hotel keys

to be managed by operators

Investor presentation 17

Historical sales Unlaunched residential BuA Non-residential BuA/land

Maintain robust growth in sales in existing projects

Note: all estimates stated at today’s market prices, figures as at end-1Q2018

■ EGP12.5bn of net cash flow from backlog and delivered units ■ 12.5mn sqm ■ Target gross profit margin 30% - 35% ■ 6.3mn sqm of land (of which 237k sqm in Alrehab) translating into BUA of 3.5mn sqm ■ This area will be split between BTS and BTL assets ■ Average gross profit margin for BTS 75%

■ EGP41.7bn of backlog ■

• Avg. gross profit margin 30%-35%

■ Land bank sufficient for the next 17 years ■ Sell all remaining units in Alrehab and Alrabwa in the short term ■ Target 3,500 residential units to be launched each year ■ BTS strategy preferred over land sales to unlock additional value ■ Plan to sell over the next 10 years, assets that are non core to our recurring income 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

Investor presentation 18

■ 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

• ffers a significant long-term upside for equity investors

■ 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 current growth trend independently we will start exploring our monetization options ■ Such monetization options will include either IPOs or M&As that would create value to the Group ■ For smaller non-core assets, we will aim to fully divest to an Operator that would create further value to our communities ■ Proceeds from such monetization plan will finance dividends and business growth

Monetize value of certain assets at the right timing Potential monetization plan

In that regard we have successfully monetized EGP1bn from the schools that we have built in our projects to GEMS / EFG as operators, which had very minimal contribution to our profits and used the proceeds to invest in the hospitality business in what we believe is a value accretive transaction

Investor presentation 19

Strategic acquisition criteria Financial acquisition criteria

■ Large plots that allow for the development of urban communities targeting the middle to upper middle classes ■ Focus on Greater Cairo primarily, and the North Coast can also be selectively considered ■ Preference towards cash acquisitions to manage financial risk ■ Opportunistically consider JVs or revenue / profit sharing while maintaining control ■ Target minimum gross profit margin of 30%-35%

Disciplined and selective land acquisition approach

Current land bank sufficient for 17 years

In line with development timeframe allowed by land contracts

Investor presentation 20

Preserving capital appreciation while providing a dividend stream

Net cash from contracted sales Net cash from future residential launches Cash profits from BTS commercial sales Cash inflows from club memberships sold Value realization from recurring income portfolio

■ cEGP12.5bn net cash flow pre-tax from backlog sales ■ 12.5 mn sqm (BuA) of BTS residential assets to be launched and sold in the next 10 – 15 years ■ Average GP margin of 30-35% ■ 2.1 mn sqm (BuA) (1.5 mn sqm of net sellable area) of BTS commercial assets to be launched and sold in the next 10 years ■ Average GP margin of 75% ■ EGP22-25bn of aggregated cash inflows in the next 10 years ■ Based on target to sell 152k additional memberships in Al Rehab Club and Madinaty Club (only EGP1.3 – 1.4bn CAPEX remaining) ■ 2020e EBITDA EGP669mn for retail (existing & under-construction) ■ 2020e EBITDA of at least EGP720mn for operational hotels ■ 2020e total recurring income of at least EGP1.6bn 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

• Avg. sales price of at least EGP17k/sqm at

current market prices

• Avg. sales price of at least EGP100k/sqm at

current market prices

Investor presentation 21

Share price performance beating the indices since 2H2017

Note: pricing data as of 26 February 2019

■ Listed on EGX since 2007 ■ c2,063mn shares outstanding ■ No foreign ownership limits ■ Shariah observant ■ Reuters/BBG: TMGH.CA/TMGH EY ■ Member of EGX30 index and MSCI Small Cap Egypt index ■ The only active primary real estate developer listed on EGX capable of sustainable dividend distribution

Key facts

Proposed FY2018 dividend +4% y-o-y, 21% payout

EGP0.176/share

44.7% 11.4% 10.4% 6.4%

• 8.7%
• 24.6%
• 24.9%
• 43.9%
• 44.4%
• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% TMGH OCDI EGX30 EGXRE PHDC HELI MNHD PORT AMER

Share price returns since July 2017 of select real estate companies listed on the EGX

6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 2-Jul-17 2-Aug-17 2-Sep-17 2-Oct-17 2-Nov-17 2-Dec-17 2-Jan-18 2-Feb-18 2-Mar-18 2-Apr-18 2-May-18 2-Jun-18 2-Jul-18 2-Aug-18 2-Sep-18 2-Oct-18 2-Nov-18 2-Dec-18 2-Jan-19 2-Feb-19

EGP TMG Holding share price performance compared to key EGX indices

TMGH [44.7%] EGX30 (rebased) [10.4%] EGXRE (rebased) [6.4%]

Thank you