Q3 2017 Earnings Presentation (KSE: ALTIJARIA) Earnings Presentation Q3 2017 1
Table of Content 1. Business Overview 3 2. Leadership Team 5 3. Chairman Commentary 6 4. Quarter Highlights 7 5. Financial Performance 8 6. Segment Reporting 13 7. Ongoing Project 14 8. Recent Developments 15 Earnings Presentation Q3 2017 2
Business Overview Al-Tijaria At a Glance Business Segments Leading commercial real estate company in Kuwait Hotel Business Quality and superior designed iconic properties Diversified portfolio of income generating properties Rental Business Building and Leasing Commercial and Residential Properties Property Management Services High occupancy levels are maintained at all times Strong network of Co-Investors and Banks Earnings Presentation Q3 2017 3
Business Overview Diversified portfolio of income generating properties Presence in Kuwait Residential Buildings Retail Properties Commercial Properties 8 Buildings 469 Units 93.2% Average Occupancy 6 Properties 329 Units 90.1% Average Occupancy 6 Properties 352 Units 96.6% Average Occupancy Residential Retail Commercial Note: Average occupancy rates as at end of June-17 Earnings Presentation Q3 2017 4
Leadership Team Board of Directors Senior Management Mr. Abdulfatah M.R. Marafie Mr. Adwan Mohammad Aladwani Mr. Ebrahim Mohammad Alghanim Chairman Vice Chairman Board Member Mr. Saleh Ahmad Al Aryan Mr. Samir Patel CEO Admin and Legal Affairs CEO Properties Group Mr. Hussain Abdulla Jowhar Board Member Mr. Abdulmutaleb AM Marafie CEO Technical Affairs Group Mr. Abdulaziz M. A. Al Hasawi Board Member Mr. Faisal I. Al Musallam Board Member Mr. Abdulmuttalib A.M. Marafie Board Member Mr. Talal J. Al Bahar Board Member Earnings Presentation Q3 2017 5
Chairman Commentary Commenting on the results and outlook, Mr. Abdulfatah M. R. H. Marafie, Chairman of Al-Tijaria said: We are pleased to report a remarkable growth in results for the third quarter of the year which is also in line with management expectations. Both our real estate and investment segments performed well, with real estate significantly outperforming the same period last year. The growth in rental revenues was pleasingly underpinned by a combination of both higher rental yields and tightening in occupancy levels. In addition, management remains committed to implementing efficiency changes and reducing operating costs. Our newly established unit Edara, which provides world class property management services catering to residential and commercial property owners, has gained significant traction with customers. The construction of our 46-storey Al Tijaria Tower in Al Hoora, Bahrain which includes: 6 car park floors (GF,1,2,3,4 & 5 - total of 468 parking slots), gym and swimming pool floor, in addition to 39 typical floors (total 351 flats) comprising of 3 Bedrooms, 2 Bedrooms, 1 Bedroom and Studio Apartments is progressing well and in line with our plans. We will be launching the sales and marketing plan across the region soon, please stay tuned for that. We continue to realign our business interest to support long term, sustainable growth and create maximum value for all Al-Tijaria stakeholders. Abdulfatah M. R. H. Marafie Chairman Earnings Presentation Q3 2017 6
Quarter Highlights Q3 Sep 2017 Financial Performance Q3 CY2017 Profit and Loss o Total revenue of KWD 9.6 million, an increase of 25.2% y-o-y o Operating profit increased to KWD 4.5 million, Margin of 47.1% o Net Profit increased to KWD 3.5 million; Margin of 36.3% Segment Performance o Real Estate segment primarily constitutes of rental and hotel revenue which increased to KWD 7.3 million, an increase of 31.7% y-o-y o Property rental revenue constituting 84% of the total revenue increased to KWD 6.1 million, an increase of 36.3% y-o-y Operational Performance o Both Real Asset segment and Investment segment posted a strong y-o-y growth Balance Sheet Overview o Net Debt as on 30 Sep, 2017 KWD 183.1 million as compared to KWD 179.2 million on 31 Dec, 2016 o Interest coverage ratio of 3.0x Earnings Presentation Q3 2017 7
Financial Performance: P&L (in KWD mn) Sep 2017 Q3 Sep 2016 Y-o-Y Growth (%) Nine Months Ended Sep-17 Sep-16 Y-o-Y Growth (%) Real Estate 7.3 5.5 31.7% 23.6 17.2 36.8% Investment 2.3 2.2 8.4% 5.6 7.6 (27.1)% Total Revenue 9.6 7.7 25.2% 29.2 24.8 17.7% Gain from investment in associate companies 0.7 1.4 (47.9)% 1.9 6.0 (67.4)% Operating Profit 4.5 3.3 38.5% 15.5 9.97 55.7% Margin (%) 47.1% 42.6% 53.2% 40.2% Net Profit attributable to Shareholders of the Parent Company 3.5 3.0 15.7% 11.3 8.4 34.6% Margin (%) 36.3% 39.3% 38.6% 33.8% Earnings per share attributable to Shareholders of the Parent Company (fils) 1.98 1.71 15.7% 6.40 4.74 34.6% o Total revenue increased from KWD 7.7 million in Q3 2016 to 9.6 million in Q3 2017, an increase of 25.2% y-o-y o Total revenue growth is supported by robust real estate rental revenue growth of 36.3% y-o-y o Operating profit increased to KWD 4.5 million, an increase of 38.5% Margin of 47.1% o Net Profit increased to KWD 3.5 million, a growth of 15.7% y-o-y; Margin of 36.3% Earnings Presentation Q3 2017 8
Financial Performance: Balance Sheet Q3 Y-o-Y (in KWD mn) Sep-17 Sep-16 Growth (%) Assets Land and properties held for trading 8.7 11.8 (26.1)% Investments at fair value through profit or loss 30.1 30.5 (1.3)% Trade & Other Receivables 7.8 7.6 2.1% Cash and cash equivalents 4.4 5.7 (23.1)% Property, Plant & Equipment 26.6 28.4 (6.4)% Investment Properties 372.5 360.6 3.3% Investment in Associates 42.6 37.8 12.5% Investments Available for Sale 26.3 21.3 23.6% Total Assets 518.9 503.8 3.0% Liabilities and Equity Trade & Other Payables 19.0 23.8 (20.3)% Short Term Financing 21.4 18.9 12.8% Employees' End of Service Indemnity 1.0 1.2 (15.3)% Long Term Financing 166.2 148.9 11.6% Shareholder's Equity 287.8 278.2 3.5% Non-Controlling Interests 23.6 32.7 (27.9)% Total Liabilities and Equity 518.9 503.8 3.0% Investment Properties (KWD mn) 371.4 372.5 367.5 367.5 360.6 Shareholder s Equity (KWD mn) 287.8 284.7 284.1 280.1 278.2 Earnings Presentation Q3 2017 9
Financial Performance: Leverage Profile (KWD mn) Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Net Debt (KWD mn) Short Term Debt 18.9 28.8 31.0 22.1 21.4 Long Term Debt 148.9 153.8 152.6 166.2 166.2 0.58x 179.2 175.9 0.63x 0.63x 184.6 0.65x 183.1 0.64x Total Debt 167.9 182.7 183.6 188.3 187.5 162.1 Less: Cash & Cash Equivalents 5.7 3.5 7.7 3.7 4.4 Net Debt / (Net Cash) 162.1 179.2 175.9 184.6 183.1 Net Debt Net Debt / Equity Shareholders Equity 278.2 284.7 280.1 284.1 287.8 Gross Debt / Equity 0.60x 0.64x 0.66x 0.66x 0.65x Net Debt / Equity 0.58x 0.63x 0.63x 0.65x 0.64x Earnings Presentation Q3 2017 10
Financial Performance: Quarterly Trends Total Revenue (KWD mn) and Y-o-Y Growth (%) 13.6 101.4% 7.7 9.5 10.1 9.6 25.8% 35.7% 5.1% (27.6)% 4.5 15.1% Rental Revenue (KWD mn) 6.2 6.2 6.2 6.1 54.2% 51.3% 37.1% 36.3% Operating Profit (KWD mn) Net Profit (KWD mn) 72.8% 42.8% 3.3 9.9 62.7% 6.0 49.9% 5.0 47.1% 4.5 47.7% 3.0 6.9 38.2% 41.3% 38.3% 3.9 3.9 36.3% 3.5 Earnings Presentation Q3 2017 11
Financial Performance: Key Ratios Return on Equity % Book Value Per Share (fils) 9.8% 163 161 161 4.5% 5.7% 5.5% 4.9% 158 159 Current Ratio (x) Interest Coverage Ratio (x) 1.3x 1.0x 0.9x 1.2x 1.3x 3.2x 4.7x 3.4x 3.2x 3.0x Earnings Presentation Q3 2017 12
Segment Reporting Focus on greater geographical diversification to minimize the concentration risk Q3 2016 Net Revenue KWD 5.4 million Q3 2017 Net Revenue KWD 6.9 million 3% 12% Kuwait Gulf Countries (1)% 18% Others 85% 83% Earnings Presentation Q3 2017 13
Ongoing Project: Al-Tijaria Tower Bahrain Al-Tijaria Construction Excellence; Residential Tower in Bahrain o Al Tijaria Residential Tower, situated in the Kingdom of Bahrain o To be constructed over a land of 3,858 sqm, comprising of 46 storey s with 351 residential units o Construction started at the beginning of April 2017 and is expected to be completed by 2019 o Construction progressing well and is in line with our plans. We will be launching the sales and marketing plan across the region soon Earnings Presentation Q3 2017 14
Recent Developments Al-Tijaria continue to make its contribution to the society in which it operates Blood Donation awareness campaign The Take time out of your busy life to save a life campaign was held at the Symphony Style Hotel in July, 2017 as a part of the Al-Tijaria s We Care CSR initiatives. This campaign is held on an annual basis to increase awareness about how blood donation can help save lives. We would like to thank our sponsors for the campaign; Symphony Style Hotel, Six Senses Spa, Cavaraty and Orangetheory fitness. The Gergi an Celebration for special needs children and cancer patients With Al-Tijaria s We Care focus on original Kuwaiti traditions, the Symphony Style Mall celebrated the Gergi an by hosting celebrations and inviting children s from the Beit Abdullah Hospital and NBK Hospital. Celebrations started at the Symphony Style Hotel, Children's Club where gifts were distributed by the Royal Pharmacy, followed an exclusive show by the Sheyaab Group. Earnings Presentation Q3 2017 15
Recent Developments Boulevard events and activities Adventures in Candyland Event: Conducted by Al Salmiya Group for Enterprise Development Co. at the Boulevard Mall. The event successfully attracted many attendees and was a vibrant and energetic day. We would also like thank our sponsors; Al Anbaa newspaper, Jarir Bookstore, Shrimpy, Pizza Hut, Burger King, Play, Six Senses Spa and Genève Novelties for their immense support and cooperation throughout the event Ramadan Night, June 2017 - Gergeaan and a gifts for childrens, Montania Gergeaan event and Sears Ramadan event. Boulevard Sport s Exercise in Boulevard Park every Saturday between July to August 2017 Music Night at the Boulevard Mall with classical from a live music band was held in September 2017 World Palm Day in September 2017, included mini seminar and the planting of 3 palm trees at Boulevard Park in cooperation with Date Palm Friends Society, a nonprofit organization. Earnings Presentation Q3 2017 16
Disclaimer This document is an information purpose document only. No information, forward looking statements, or estimations represent any final determination. While the information presented in this document has been researched and thought to be reasonable, in general, real estate investment is highly speculative, real estate values can go up but they can also go down, and thus The Commercial Real Estate Company ( Al- Tijaria ) and/or its affiliates cannot and do not guarantee any rate of return or invested amount or investment timeline. By reading and reviewing the information contained in this document, the investor acknowledges and agrees that Al-Tijaria and/or its affiliates do not assume and hereby disclaim any liability to any party for any loss or damage caused by the use of the information contained herein or errors or omissions in the information contained in this investor interest seeking document to make any investment decision in the venture referred to herein, whether such errors or omissions result from negligence, accident or any other cause. The investors are required to conduct their own investigations, analysis, due diligence, draw their own conclusions, and make their own decisions. Any areas concerning taxes or specific legal or technical situations should be referred to lawyers, accountants, consultants, realtors, or other professionals licensed, qualified or authorized to render such advice. In no event shall Al-Tijaria and/or its affiliates be liable to any party for direct, indirect, special, incidental, or consequential damages of any kind whatsoever arising out of the use of the information contained herein. Al-Tijaria and/or its affiliates specifically disclaim any guarantees, including, but not limited to, stated or implied potential profits or rates of return or investment timelines. Jasem J. Al Majadi The Commercial Real Estate Co. J-majadi@altijaria.com +965 229 029 52 Ravi Gothwal Churchgate Partners altijaria@churchgatepartners.com +971 4313 2432 Earnings Presentation Q3 2017 17
Contact Us: Address : Al-Sharq Jaber Al Mubarak St. Al Tijaria Head Office Building Phone : +965-22902900, +965-1805252 Fax : +965-22902901 Email : info@altijaria.com Earnings Presentation Q3 2017 18