Tecom Group records 28% rise in net profit to Dhs725.6m in 2022

Tecom Group announced a record 28 per cent YoY increase in net profit to Dhs725.62m for the financial year that ended on December 31 2022. The growth was supported by the resilience of the economic environment in Dubai and the upward trend in the real estate market.

The revenue for 2022 rose by 12 per cent year-on-year to Dhs1.97bn, driven by higher occupancy levels, stronger customer retention rates, and an increase in the number of new customers across the group’s portfolio.

As of December 31, 2022, the occupancy level for commercial and industrial assets was 86 per cent, registering the fourth quarter of sequential growth and a substantial increase from year end 2021 occupancy level of 78 per cent.

Key highlights of Tecom’s performance in 2022

Customer retention rates stood at 92 per cent, surpassing market expectations and reaffirming the unparalleled customer offerings provided by Tecom Group.

Over the year, more than 1,700 new customers joined the business districts that cater to six different strategic sectors – technology, media, education, science, design and industrial – with high demand for both ‘built-to-suit’ and ‘built-to-lease’ properties.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased by 15 per cent year-on-year to Dhs1.35bn and the EBITDA margin expanded to 68 per cent in FY 2022, compared to 66 per cent in FY 2021.

The higher EBITDA and EBITDA margin was due to improved revenue quality from all the different business segments as well as enhanced management of operating expenses.

Funds from operations (FFO) stood at Dhs1.20bn, representing a 19 per cent year-on-year increase, a testament to enhanced operational efficiency across all income-generating assets.

Recurring free cash flow increased to Dhs964m, up 21 per cent year-on-year, on the back of healthy accounts receivables and effective cash conversion.

Tecom Group said it has a well-balanced portfolio of assets with both short and long-term contracts, which supports cash flow predictability.

At the end of 2022, the group maintained a highly controlled cost of debt and healthy debt profile with a loan to value (LTV) ratio of 14.5 per cent and net debt of Dhs3.08bn.

The robust performance and overall positive real estate market sentiment resulted in an increase in the fair value of our investment property portfolio by 9.7 per cent since March 2022 from Dhs19.4bn to Dhs21.29bn, translating to solid net asset value growth and further strengthening the real long-term value realised by shareholders.

We are pleased to share our strong financial results for FY 2022 in the year that saw us become a publicly listed company on the DFM. FY 2022 revenues up 12% to AED 2 billion, highest in 22 years with 28% increase in net profit to AED 725.62 million. pic.twitter.com/anPCA2Buuq

— TECOM Group (@TECOMGroupDubai) February 10, 2023

Committed to shareholders

Malek Al Malek, chairman of Tecom Group, said: “Since our successful IPO in July 2022, we’ve continued to realise unparalleled achievements, demonstrating strong results and rewarding shareholders with attractive returns. The excellent performance, surpassing expectations at the time of our listing, has benefitted from Dubai’s strong economy and the long-term vision of our nation’s leadership, which continues to support sustainable economic growth through robust government reforms and initiatives.

“As per our declared dividend policy, we have distributed Dhs200m in cash dividends to our shareholders in November 2022. Following our exceptional FY 2022 performance, the Board of Directors has recommended an interim dividend payment of Dhs200m to be distributed in April 2023, which will bring the total dividend to Dhs400m for the second half of 2022.

“We remain committed to distributing a total dividend of Dhs800m per annum in our first three years of being a listed company, subject to the Board of Directors and General Assembly required approval.

“Looking ahead, we are focused on expanding and optimising our world class assets, embedding sustainability deeper into our core operations and capitalising on the booming real estate market in Dubai, which is continuing to grow and yield strong returns.”

Abdulla Belhoul, CEO of Tecom Group, added: “Our strong first full year results since listing are a testament to our ability to deliver on the growth strategy outlined at our IPO and our rigorous financial and operational discipline. The strong growth in our occupancy rates in 2022 indicates a sharp return in demand for quality commercial and industrial real estate assets in Dubai and reflects the attractiveness of Tecom Group’s specialist real estate offerings.

“I am encouraged by the progress we have made this past year, particularly in increasing the value of our investment property portfolio by nearly 10 per cent, as well as increasing and enhancing our high-quality customer base to reach more than 9,500 including companies and freelancers which represents a 22 per cent YoY growth.”

Read: Power Letters 2023: Abdulla Belhoul, chief executive officer, Tecom Group