INVESTOR PRESENTATION FY 2017 MARCH 2018

Transcription

1 INVESTOR PRESENTATION FY 2017 MARCH 2018

2 CONTENTS TABLE OF CONTENTS Majid Al Futtaim 2017 Performance Update Appendix Majid Al Futtaim Group Overview 2 2

3 MAJID AL FUTTAIM GROUP: OVERVIEW Mr. Majid Al Futtaim (Founder) MAJID AL FUTTAIM PROPERTIES Group Corporate Structure MAJID AL FUTTAIM CAPITAL LLC 99.6% 0.4% MAJID AL FUTTAIM HOLDING (Rated BBB/BBB) MAJID AL FUTTAIM RETAIL 99.9% Mr. Tariq Al Futtaim MAJID AL FUTTAIM VENTURES Solid Track Record Majid Al Futtaim Holding LLC Consolidated Financials (USDmn) Revenue EBITDA 8,788 8,128 7,445 6,868 6,180 5,604 Shopping Malls Hotels Carrefour Cinemas L&E Gourmet Gulf (JV) ,044 1,145 1,152 Communities Fashion Enova (JV) Project Management Finance Healthcare Best in Class Governance Principles Regional Footprint 15* countries since 1992 Kazakhstan Voluntarily adopted the principles of the Combined Code on Corporate Governance for listed companies in the UK Strong operating company board structures reporting to a group board Lebanon Egypt Georgia Armenia Iraq Kuwait Qatar Saudi Arabia Bahrain UAE Pakistan Highest Rated Privately Owned Corporate in the GCC Rating Agency Rating Outlook Latest Affirmation Date Standard & Poor s BBB Stable June 2017 Kenya Fitch Ratings BBB Stable July 2017 USD / AED EXCHANGE RATE OF IS USED THROUGHOUT THE PRESENTATION ** MAJID AL FUTTAIM RETAIL CLOSED THEIR HYPERMARKET IN KAZAKHSTAN ON 30 JUNE 2017 BUT CONTINUE TO RETAIN THE COUNTRY HEAD OFFICE 3 3

4 NAVIGATING A DYNAMIC RETAIL LANDSCAPE Hyper-connected consumer redefining value Greater emphasis on personalised services and experiences 1 TBD Evolving Consumer Behavior Demand for integrated community/retail spaces to serve business and social needs The next decade is seen as the Golden Age of the consumer Disruptive technology such as Internet of Things, Artificial Intelligence, Augmented Reality 3 Substitution TBD Effect 2 Intensifying TBD Competition Competition becoming global Blurred lines between offline and online realms Increased automation in last mile delivery Stores will transition to places that tell stories through experiences Value migrating from brick-andmortar to e-commerce 4

5 WHILE REMAINING COMMITTED TO OUR STRATEGIC PRIORITIES Maintain leadership in our core countries Expand to be leaders in adjacent/core geographies Long Term Strategy Our aspiration is to become a regionally focused lifestyle conglomerate Protect our leadership position in the UAE Build a foundation position in Africa Expand our presence in Egypt and Saudi Arabia, driven by our shopping malls business Grow at scale in at least one adjacent business Brand & Customer Experience 1 A signature customer experience with a stellar global reputation Creating great moments for everyone, every day 2 Top notch talent and capabilities Human Capital Seamless and Integrated Omnichannel Offering Expand in additional African countries, primarily with Carrefour Evaluate business opportunities in adjacent businesses Digital Customer Intelligence 5

6 EXECUTING OUR STRATEGY Lead strategy & development Foster the Majid Al Futtaim way Develop Talent Nurture Innovation & Knowledge Sustainability Institutionalised a company-wide strategy development and planning process Built advanced analytics capabilites Launched School of Analytics & Technology Identified and implemented data-driven transformation programme at Majid Al Futtaim- Retail First company in the MENA region committing to carbon and water Net Positive Secured global and regional partnerships to digitise our business (e.g. Fetchr) Enhanced and digitised customer experience Invested in next generation leaders Positioned our business for leadership in omni-channel LEED Gold accreditation for all new mall developments since 2014 Identified and pursued new business verticals Rollout of NPS programme Developed our talent pipeline Ventured into VR (Dreamscape Immersive) First LEED platinum shopping mall in the MENA region Established our presence to silicon valley (Silicon Foundry) Green star within GRESB s assessment of above 600 Real Estate companies globally, for 4 consecutive years 6

7 SUMMARY OF MAJID AL FUTTAIM S 2017 PERFORMANCE RESILIENT FINANCIAL PERFORMANCE DELIVERED IN 2017 Revenue +8% year on year to: USD 8.8bn EBITDA +1% year on year to: USD 1.2bn Assets +12% year on year to: USD 16.1bn STABILITY AND STRENGTH THROUGH DIVERSIFICATION Geographical Split 31 December 2017 Segmental Split 31 December 2017 By Revenue By EBITDA By Revenue By EBITDA Others, 15% Oman, 5% Saudi, 9% Qatar, 8% Bahrain, 4% Egypt, 6% UAE, 53% Qatar, 5% Bahrain, 9% Others, 5% Oman, 6% Saudi, 1% Egypt, 4% UAE, 70% Ventures, 7% Retail, 79% Properties, 14% Retail 27% Ventures 6% Properties 67% Contribution from Egypt diluted due to EGP devaluation Segment split remains broadly unchanged in OTHERS INCLUDES KUWAIT,JORDAN, PAKISTAN, LEBANON, IRAQ, GEORGIA, ARMENIA, KENYA

8 2017 PERFORMANCE: MAJID AL FUTTAIM PROPERTIES Operational Highlights Opening of Mall of Egypt, our first Super Regional mall in Egypt Broke ground on 5 new shopping malls Completed the construction of My City Centre Al Dhait in Ras Al Khaimah, which opened in January 2018 Revenue (USDmn) 1,223 1, EBITDA (USDmn) Malls avg occupancy 1 94% Footfall y-o-y 6% Rent to sales 12% Hotels avg occupancy REVPAR change y-o-y 76% -6% 1 EXCLUDING MALL OF EGYPT SOFT OPENING, OCCUPANCY STANDS AT 97% 8

9 2017 PERFORMANCE: MAJID AL FUTTAIM RETAIL Operational Highlights Expanded Carrefour s network through the acquisition of Retail Arabia 58 new stores Launched Carrefour online Accelerated footprint in Kenya Revenue (USDmn) EBITDA (USDmn) 6,487 7, Sales (LFL) 1-3% Hypermarket openings Supermarket openings Total stores AT CONSTANT FX RATES, LFL GROWTH WOULD HAVE BEEN +4% 9

10 2017 PERFORMANCE: MAJID AL FUTTAIM VENTURES Operational Highlights Revenue (USDmn) EBITDA (USDmn) Expanded VOX cinemas with the addition of 59 new screens, solidifying its presence in Egypt and Bahrain Introduced new customer experiences, including multi-sensory experience, Orbi, and Ski Egypt Welcomed 3 new homeware and fashion brands Cinema screens added 59 Total cinema screens 301 VOX cinemas awarded the 2017 CinemaCon Global Achievement Award in Exhibition New L&E venues New brands

11 GROUP DEBT PROFILE (1/2) Majid Al Futtaim Group s Balance Funding Profile Majid Al Futtaim Holding Level (USD 2,375mn) Primarily Senior Unsecured obligations at Holding level Cross guarantees Majid Al Futtaim Properties Level (USD 493mn) Primarily senior unsecured obligations at Properties level All Senior Unsecured financing obligations rank pari passu among themselves Other (USD 209mn) Primarily project finance with limited recourse to borrower Total gross debt amounted to c. USD 3.1bn as at 31 Dec 2017 (excluding bank overdrafts and USD 1Bn hybrid issuance) Issued new USD 500M NC5.5 subordinated perp to partially pre-fund Retail Arabia acquisition Both Fitch Ratings and Standard & Poor s have reaffirmed BBB rating with stable outlook in 2017 Optimized maturity profile and liquidity cover through early refinancing of near term maturities Cash position of over USD 400mn and undrawn available committed lines of c.usd 2.2bn (as of 31 Dec 2017) Average debt life of 4.3 years as of 31 Dec 2017 BANK OVERDRAFTS AND USD1BN EQUITY HYBRIDS NOT TAKEN INTO ACCOUNT IN DEBT AND AVERAGE DEBT LIFE CALCULATIONS 11

12 745 2, , , ,179 1,034 2,517 1,126 2,612 1,152 2,804 1,882 5,975 1,924 6,580 2,179 7,603 2,517 8,642 2,612 9,080 2,804 10,158 GROUP DEBT PROFILE (2/2) Majid Al Futtaim s Robust Capital Structure Debt Maturity Profile (USDmn) 1,200 Secured debt as a percentage of Gross Debt Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec % 13% 14% 13% 6% Total Borrowings: USD 3.1bn EBITDA from encumbered assets as % of Total EBITDA 4% 4% 3% 3% 4% Strong Leverage Metrics Majid Al Futtaim s Capital Structure 3,000 2,500 2, x 2.3x 2.2x 2.2x 2.4x 2.3x 2.4x ,000 10,500 9,000 7,500 31% 40% 1,500 1, ,000 4,500 3,000 1,500 29% 29% 29% 29% 28% 30% EBITDA Net Debt (USD mn) Net Debt / EBITDA (times) Net Debt (USD mn) Equity (USD mn) Net Debt / Equity (%) 20% 12 1 NET/DEBT EBITDA ADJUSTED AS PER S&P METHODOLOGY IS ESTIMATED AS ~3.7X BANK OVERDRAFTS AND USD 1BN EQUITY HYBRIDS NOT TAKEN INTO ACCOUNT IN DEBT CALCULATION

13 PRUDENT FINANCIAL MANAGEMENT PROVIDING SOUND PLATFORM FOR GROWTH Funding Risk Management Framework The Group focuses on two very important pillars: (1) Liquidity (2) Risk Management Target at least 18 months of financing requirements Maintain flexibility in terms of capital commitments Active management of interest rate, credit and FX risk Financial covenants further reinforce capital management framework Current Status Funding Risk Management Framework Policy Covenant Status as of 31 December 2016 Status as of 31 December 2017 Liquidity Coverage Months Interest Rate Risk Duration in Years Tangible Net Worth USD billion Total Net Debt to Total Equity (x) < EBITDA Interest Cover (x) * >2.5 >10 10 * EBITDA Interest Cover means EBITDA over Net Finance Charges 13 USD1B EQUITY HYBRID IS NOT TAKEN INTO ACCOUNT IN DEBT CALCULATION

14 KSA EGYPT UAE & OMAN MEASURED GROWTH & STEADY DEVELOPMENT PIPELINE TRUE TO OUR COMMITMENT TO OUR CREDIT RATING, OUR TOP-DOWN CAPITAL ALLOCATION APPROACH IS MANAGED WITHIN THE DEBT CAPACITY OF THE BBB METRICS AND WITH AN EYE ON PRUDENT FINANCIAL MANAGEMENT Mall Development Pipeline onwards City Centre Al Zahia Super Regional Mall (Sharjah) GLA: 136,000 M 2 City Centre Al Jazira Regional Mall (Abu Dhabi) GLA: 80,500 M 2 Mall of Oman Super Regional Mall (Muscat, Oman) GLA: 141,400 M 2 City Centre Almaza Super Regional Mall (Cairo, Egypt) GLA: 103,000 M 2 City Centre Ishbiliyah Super Regional Mall (East Riyadh, KSA) GLA: 113,900 M 2 Mall of Saudi Super Regional Mall (North Riyadh, KSA) GLA (Phase 1): 112,000 M 2 14 PLANNEDCONSTRUCTION START PLANNED OPENING

15 BALANCING OPPORTUNITIES & RISKS FROM A STRONG FOUNDATION Established Track Record, Reputation & Brand Alliances and Partnerships with Key Retailers Prime Locations Secured for Business Publicly Rated Privately Owned Strong Balance Sheet Best in Class Corporate Governance UAE Core Focus Stable Cash Flow Generation Diversified Sources of Funding WE ARE WELL POSITIONED TO SEIZE OPPORTUNITIES AMIDST A VOLATILE ENVIRONMENT WHILE APPROPRIATELY MANAGING THE RISKS STRENGTHENING UAE POSITION EXPANDING IN GROWTH MARKETS BUSINESS PERFORMANCE MANAGEMENT TOP DOWN CAPITAL ALLOCATION STRESS TESTING COUNTRY RISK MANAGEMENT DEFINED POLICIES & PROCEDURES 15

16 Q&A Great Moments For Everyone,Everyday 16

17 CONTENTS TABLE OF CONTENTS Majid Al Futtaim 2017 Performance Update Appendix Majid Al Futtaim Group Overview 17

18 HISTORICAL FINANCIAL PERFORMANCE OVERVIEW SOLID FINANCIAL PERFORMANCE ON THE BACK OF A MANAGED GROWTH STRATEGY Financial Highlights Majid Al Futtaim has a proven track record of delivering strong financial results on the back of an effective growth strategy Majid Al Futtaim Holding LLC Consolidated Financials (USDmn) Item Assets 10,325 10,743 12,151 13,853 14,375 16,182 Revenue 5,604 6,180 6,868 7,443 8,128 8,788 EBITDA ,034 1,145 1,152 The Group s ability to combine capital intensive high margin business (shopping malls) with capital positive, high volume business (hypermarkets) allows it to effectively manage its growth. EBITDA Margin by Entity (%) Majid Al Futtaim Properties (USDmn) Revenue EBITDA 1,223 1,254 1,114 1, Majid Al Futtaim Retail (USDmn) Revenue EBITDA 7,049 6,503 6,011 5,603 5,032 4, % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 62.0% 62.6% 62.0% 63.00% 63.00% 64.00% 17.5% 14.2% 14.2% 12.98% 12.00% 12.00% 5.5% 5.3% 5.6% 5.30% 5.20% 4.70% MAF Properties MAF Retail MAF Ventures Majid Al Futtaim Ventures (USDmn) Revenue EBITDA

19 BUSINESS OVERVIEW: MAJID AL FUTTAIM PROPERTIES GROUP S CORE BUSINESS Overview of Majid Al Futtaim Properties Majid Al Futtaim Properties is the Group s largest contributor in terms of EBITDA and combines a balanced mix of operating assets (primarily shopping centers) and developments. Majid Al Futtaim Properties Key Strengths Alliances and Partnerships with Key Retailers The subsidiary s core business is Shopping Malls: Currently operates 21 shopping malls (includes 4 JVs) in the UAE, Egypt, Oman, Bahrain and Lebanon, and currently developing new malls in UAE, Egypt and Oman. Leasable area of approx. 1.3 million square meters as at 31 December 2017 aggregate visitors of 186 million in 2017, reflecting 6% growth over Established Track Record, Reputation & Brand MAJID AL FUTTAIM PROPERTIES Unique Leisure Offers (Through Majid Al Futtaim Ventures) Iconic Assets In-House Expertise (Fully Integrated Operations) Prime Locations Secured for Business 94% Occupancy Rate * Competitive Rent to Sales Ratio % 97% 97% 97% 98% 94% 120% 100% % 75% 69% 72% 75% 76% 80% 60% 60 40% Majid Al Futtaim Properties also owns 12 hotels adjacent to shopping malls in the UAE (10) and Bahrain (2), with one under development in Dubai, which aim to capitalize on tourist shopping and enhance the value of the malls, while capturing higher traffic % % Total Shopping Mall Footfall - Million Shopping Mall Occupancy Hotels Occupancy 19 *EXCLUDING MALL OF EGYPT SOFT OPENING, OCCUPANCY STANDS AT 97%

20 MAJID AL FUTTAIM PROPERTIES MARKET LEADERSHIP WITH STRONG OCCUPANCY City Centre Maadi Opened Dec 02 30K m 2 GLA 97% occupancy 8mn footfall City Centre Alexandria Opened Jan 03 51K m 2 GLA 92% occupancy 11.4mn footfall Mall of Egypt Opened Mar K m 2 GLA 71% occupancy 8mn footfall** City Centre Beirut Opened Apr 13 63K m 2 GLA 94% occupancy 8.3mn footfall City Centre Muscat Opened Oct 01 68K m 2 GLA 98% occupancy 11.5mn footfall City Centre Bahrain* Opened Sep K m 2 GLA 98% occupancy 15.1mn footfall 2017 Total Footfall up 6% at 186M City Centre Qurum Opened Nov 08 27K m 2 GLA 94% occupancy 3.9mn footfall 20 Mall of the Emirates* Opened Sep K m 2 GLA 99% occupancy 42.2mn footfall City Centre Mirdiff* Opened Mar K m 2 GLA 97% occupancy 20.6mn footfall City Centre Fujairah Opened Apr 12 34K m 2 GLA 99% occupancy 3.6mn footfall My City Centre Nasseriya Opened Feb 14 5K m 2 GLA 86% occupancy 1.8mn footfall My City Centre Barsha Opened Sep K m 2 GLA 100% occupancy 0.8mn footfall City Centre Deira Opened Nov K m 2 GLA 93% occupancy 22.7mn footfall City Centre Sharjah Opened Sep 01 38K m 2 GLA 99% occupancy 9.4mn footfall City Centre Ajman Opened Dec 98 27K m 2 GLA 100% occupancy 6.6mn footfall City Centre Me aisem Opened Sept 15 23K m 2 GLA 99% occupancy 3.2mn footfall City Centre Shindagha Opened Dec 15 25K m 2 GLA 97% occupancy 7.7mn footfall *SUPER REGIONAL MALLS ** MALL OF EGYPT OPENED IN MARCH 2017 NOTE: GLA REFERS TO GROSS LEASABLE AREA

21 BUSINESS OVERVIEW: MAJID AL FUTTAIM RETAIL GENERATING STEADY CASHFLOWS Overview of Majid Al Futtaim Retail Majid Al Futtaim Retail is one of the most active retailers in the region and introduced the first hypermarket in the Middle East in Operating Framework Majid Al Futtaim Retail aims to capitalize on its strong supply chain and procurement procedures to deliver value to its customers. Majid Al Futtaim Hypermarkets is a wholly owned subsidiary since 25 June 2013 when Majid Al Futtaim acquired the remaining 25% from Carrefour SA. As part of the transaction, Majid Al Futtaim also renewed its exclusive franchise partnership with the Carrefour group until 2025 and extended it to an additional 19 new countries. It now has the exclusive franchise rights for Carrefour in 38 countries predominantly across the Middle East, Africa and CIS regions. Reinvest Rebates Sales Volume Purchasing Power Carrefour charges a sale-based franchise fee and provides approval on new store openings. As at 31 December 2017, Majid Al Futtaim Retail operated over 230 Carrefour outlets, with presence across 15 countries. Supplier Rebates Majid Al Futtaim plans to open 11 new Carrefour hypermarkets, and 23 Carrefour supermarkets during Low Prices Good Quality Wide Choices 21

22 MAJID AL FUTTAIM RETAIL EXPANDING FOOTPRINT Overview of Majid Al Futtaim Retail NUMBER OF HYPERMARKETS Country Stores Country Stores Country Stores UAE 28 Saudi Arabia 14 Egypt 11 Oman 7 Qatar 5 Jordan 4 Pakistan 6 Iraq 4 Kuwait 3 Bahrain 8 Georgia 2 Lebanon 1 Armenia 1 Kenya 3 22

23 BUSINESS OVERVIEW: MAJID AL FUTTAIM VENTURES SEEKING COMPLEMENTARY BUSINESSES Overview of Majid Al Futtaim Ventures Majid Al Futtaim Ventures builds and manages value enhancing businesses for the Majid Al Futtaim Group, focusing on selected sectors that are relevant for the wider business in the region. The current portfolio comprises both wholly owned companies and joint ventures. Majid Al Futtaim Ventures holdings are further split between strategic and investment holdings strategic businesses comprise those which provide a strategic fit to the Group s business. Strategic Holdings MAJID AL FUTTAIM VENTURES Majid Al Futtaim Leisure & Entertainment LLC Provides unique leisure offerings to Majid Al Futtaim malls (Ski Dubai, Magic Planet, Lego, etc). Majid Al Futtaim Cinemas LLC Cinema business with 301 screens across the MENA region. Majid Al Futtaim Finance LLC Credit card issuer business Introduced Visa cards in 2010 (172,940 active cards). Majid Al Futtaim Fashion LLC Retail brands with exclusive licensing rights for MENA (e.g. Abercrombie & Fitch, AllSaints, lululemon athletica etc). 99 stores in 6 countries. ENOVA by VEOLIA JV providing Energy Services and Facilities Management. Formed in 2002 (as Dalkia). Majid Al Futtaim Food & Beverages LLC Acquired in 2013, JV operates portfolio of international brands like California Pizza Kitchen, Yo Sushi, etc. Wholly-Owned Joint Venture 23

24 ROBUST GOVERNANCE STRUCTURE EFFECTIVE OVERSIGHT OF SYNERGISTIC BUSINESSES Governance Principles Majid Al Futtaim places considerable emphasis on governance and transparency within its operational framework. The company has voluntarily adopted the principles of the Combined Code on Corporate Governance for listed companies in the UK across all areas of its business Strong operating company Board structures reporting to a group Board Set out the principles of Corporate Governance across each of the group s operating entities and geographies Board & Committee Structure To promote a consistent, group-wide strategy, Holding s CEO attends the Board meetings of all three subsidiaries. The Board of Directors for the various subsidiaries meet a minimum of four times a year. Board Responsibilities Majid Al Futtaim Holding Board Properties Board Retail Board Ventures Board The Board of Majid Al Futtaim Holding provides independent oversight to protect shareholders interests: 1) Acting as shareholder of operating companies; Sub Committees Sub Committees Sub Committees 2) Controlling decisions related to strategic new businesses / markets or divestments; and 3) Via managing Funding and Capital allocation Operating Companies Boards Each operating company maintains its own Board of Directors responsible for setting strategic goals, measurement of the success of the businesses in achieving objectives and maintaining corporate accountability. Audit & Risk Committee HR & Remuneration Committee Audit & Risk Committee HR & Remuneration Committee Audit & Risk Committee HR & Remuneration Committee 24

25 MAJID AL FUTTAIM HOLDING BOARD OF DIRECTORS Sir Michael Rake Chairman Former Chairman of BT Group and KPMG International On the Boards of Barclays and McGraw Hill. Khalifa Sulaiman Deputy chairman Former ambassador to the Court of St James in the UK. Ian Davis Non Executive Director Chairman of Rolls Royce and former Worldwide Managing Director at McKinsey & Company. Tariq Al Futtaim Non-executive Director Former chairman of the Majid Al Futtaim Charity Foundation. Alan Keir Non Executive Director Non Executive Director at HSBC Non Executive Director at Sumitomo Mitsui Banking Corporation. Victor Chu Non-executive Director Chairman of First Eastern Investment Group Co-founder and director of Peach Aviation. Alain Bejjani Chief Executive Officer of Majid Al Futtaim Holding. Former Executive Vice- Chairman of the Investment Development Authority of Lebanon. 25