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Building thriving ecosystems

Delivering sustainable growth

TECOM Group PJSC | Annual Report 2023

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Financial Statements

Strategic Report

ESG

Corporate Governance

During a year of record performance and memorable milestones, TECOM Group has built on a quarter century of ground breaking achievements and delivered on its promises to shareholders and stakeholders, while creating a new vision for its next quarter century to power progress for our business, our partners and our society.

Creating value for our stakeholders

Colleagues Communities[Read more on page 82][Read more on page 34]

Shareholders[Read more on page 22]

Customers[Read more on page 54]

Key facts

AED 23B Valuation as at 31 December 2023

10 Business Districts

185M Leasing Space (sqft)

6 Sectors

11,000+

Customers

124,000+ Professionals

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Our regulatory announcements, financial and shares information, press releases and periodic reports can be found on our group Website: tecomgroup.ae

What's inside

1 About Us 2 2023 Highlights 8 At A Glance 10 Where We Operate 12 Our Customers

Strategic Report

16 Chairman's Statement 18 CEO's Statement 20 Reasons To Invest 24 Our Business Model 36 Our Strategy 44 Our Market 56 Business Overview 70 Property Review 74 CFO’s Message 77 Financial Review 84 Key Performance Indicators 86 Risk Management 94 Stakeholder Engagement

Environmental, Social and Governance

98 Letter from the CEO 102 ESG Policies and Governance 118 Forward-Looking Statement

Corporate Governance

122 Chairman’s Letter 124 At A Glance 126 Our Governance Framework 130 Our Board of Directors 138 Board Committees 143 Our Executive Management 147 Internal Controls and Compliance 151 Engaging and Informing our Shareholders 153 Supporting our Society and Environment 154 Driving Innovation and Engagement

Financial Statements

158 Board of Directors’ Report
159 Independent Auditor’s Report
Consolidated Financial Statements
162
166 Notes to the Consolidated Financial Statements 201 EPRA Reporting
208 Glossary

Dubai Internet City

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

2023 HIGHLIGHTS AND YEAR IN REVIEW

Key operational highlights

Delivering strong financial performance

Financial highlights

EPRA Measure

EPRA Return

Revenue

AED 2,169M

AED 0.30

+10% Growth YOY

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2023 0.30
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2023 2,169
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2022 1,973
2021 1,766
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2022 0.20 2021 0.18

EPRA NIY

EBITDA

6.7%

AED 1,654M

+23% Growth YOY

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2023 6.7%
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2023 1,654
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2022 1,347
2021 1,171
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2022 6.6%
2021 6.8%
EPRA NTA per Share
AED 3.43
2023 3.43
2022 3.01
2021 2.27
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EBITDA Margin

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76%
2023 76.2%
2022 68.2%
2021 66.3%
Net Profit
AED 1,078M
2023 1,078
2022 726
2021 569
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+8% Higher than 2022

EPRA Earnings

AED 1,502M

+49% Growth YOY

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2023 1,502
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2022 1,024
2021 898
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2023 ESG highlights

30

LEED certified buildings 8 buildings certified in 2023 representing a 36% increase compared to 2022

380

active start-ups in our incubator in5, a 9.83% increase from 2022

AED 1.47 M

AED 1,919M Passing Annual Rent +11% higher than 2022

89%

Occupancy

91% 9.9 Years Customer Retention WALT including land

WALT including land

As commercial real estate leaders, we innovate sustainable spaces and prioritize tenant satisfaction. This dual focus ensures not only customer retention but also a continuous increase in our occupancy rates.

9.14%

reduction in Electricity intensity from 8.19 KWh / sq ft in 2022 to 7.44 KWh / sq ft in 2023.

15.27

average training hours per employee, an increase of 61% from 2022

in Corporate Social Responsibility (CSR) spending

2023 HIGHLIGHTS AND YEAR IN REVIEW CONTINUED

In our first full year as a publicly listed company, TECOM Group delivered on our promises and exceeded expectations.

We continued to build our world-class communities by attracting partners, capital and talent to Dubai, while setting new operational and financial benchmarks to create value for our stakeholders and position the Group for further growth in the years ahead.

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Dubai Design Week
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Social engagement and community wellness

WeWalk for Dubai

Autism Centre

TECOM Group partnered with WeWalk 2023 to raise over AED 87,310 in support of the Dubai Autism Centre mission to empower children with autism through education and therapeutic interventions.

Celebrating Emirati Women’s Day TECOM Group marked Emirati Women’s Day 2023 with an initiative that shed a light on the accomplishments of Emirati women and their enduring contributions in shaping the UAE’s reputation as a global hub for innovation and excellence.

Supporting breast cancer awareness

The Group took part in the Pink Caravan Initiative by rolling it out across all of our communities in support of breast cancer awareness.

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Industry events and awards
Dubai Fashion Week turns heads
The second edition of Dubai Fashion Week
was successfully held, with Carolina Herrera as
the guest of honor and participation of world
renowned global and local brands.
Dubai Design Week highlights
design innovation
d3 held the biggest edition of Dubai Design
Week, the region’s largest creative festival,
reflecting Dubai’s position as design capital
of the Middle East.
Recognition and awards at the Middle
East Public Relations Association
The Good Store and Emirati Women’s Day were
recognized by the 2023 MEPRA Awards, with
The Good Store securing six awards, including
Best B2B Campaign, Best Retail Campaign,
Best ESG Campaign and Best Use of Content
Dubai Industrial City wins at 1st edition
of Emirates Labour Market Awards
DIC won Best Workers Accommodation
Investments at the UAE’s 1st edition of Emirates
Labour Market Awards, achieving the highest
classification for its category: Diamond
Classification for Distinguished Companies
Dubai Design District
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TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

2023 HIGHLIGHTS AND YEAR IN REVIEW CONTINUED

Future growth

Expansion of D/Quarters footprint

High demand for Innovation Hub Phase 2

Following the growing demand for flexible workspaces in the region, D/Quarters continued to expand with the launch of a new location in Dubai Science Park.

TECOM succeeded in pre-leasing over 90% of Innovation Hub Phase 2 in Dubai Internet City, which broke ground at the end of 2022.

New storage and logistics facilities in Dubai Science Park

Launch of in5 Science

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TECOM launched in5 Science, in collaboration with Dubai Science Park, to facilitate entrepreneurship and investment for science-based start-ups under the Dubai Economic Agenda ‘D33’ umbrella.

TECOM announced the development of new warehouses with a GLA of over 200,000 sqft in Dubai Science Park to satisfy surging demand for Grade A warehouses across Dubai.

New jewelry academy in d3 L’ÉCOLE, School of Jewelry Arts, has decided to establish a permanent campus in d3, which was the fourth permanent international campus for the world-class academy.

Prestigious business school EM Normandie first ever campus in Middle East

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Reinforcing Dubai’s growing renown for educational excellence in the region and in line with the Dubai Economic Agenda ‘D33’, the EM Normandie French Business School inaugurates its first regional campus at Dubai Knowledge Park.

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L’Ecole opening
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Strategic engagement

Dubai Industrial City strategic partnerships to catalyze UAE manufacturing industry growth The Group signed three strategic partnerships with the Ministry of Industry and Advanced Technology (MoIAT), the UAE Ministry of Climate Change and Environment (MOCCAE) and Emirates Development Bank (EDB) & Department of Economy and Tourism in Dubai (DET) to stimulate growth in the UAE’s manufacturing industry.

in5 partners with Dubai Chamber for Dubai startup growth

in5 signed a partnership with Dubai Chamber to provide one-stop solutions to startups within and outside the UAE through the new Business in Dubai digital platform.

Expanding the reach of Dubai Internet City

Dubai Internet City signed three MOUs with German Entrepreneurship, Polish Investment & Trade Agency, and NIPA to expand its market reach and enhance the overall ecosystem.

Sit back, relax and relive another remarkable year

Our busy year has been captured on film and is available to watch online at our media gallery on the TECOM Group website. Click the icon below or scan the QR code to enjoy the highlights of another remarkable year.

View our corporate video tecomgroup.ae

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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AT A GLANCE

Home to more than 11,000 customers

Large, diverse, industry-leading, international and loyal regional customer base

We build thriving ecosystems that empower our clients and power the future of Dubai.

Across strategic sectors of Dubai’s economy, TECOM brings together the world’s leading companies with regional powerhouses and dynamic SMEs, creating connected communities and delivering seamless services to support sustainable success and create lasting value, today and for generations to come.

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Technology Education Media Manufacturing Design
We operate
10 Business
Districts
Strategically located Science
specialised ecosystems
across six vibrant
industry sectors.
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Each of our districts has been designed Built-to-lease Built-to-lease and developed to create industry-specific Occupancy Area (sq. ft.) and vibrant ecosystems for the technology, media, education, science, design and 89% 21M manufacturing sectors. They provide our customers with dynamic and fit-for-purpose spaces and solutions to operate, collaborate, Land Leasing Land grow and succeed.

Across our 10 vibrant business districts in Dubai, we empower over 11,000 customers and 124,000 professionals to build their dreams and create value for their companies and our society.

Our market-leading commercial, industrial and land leasing portfolio provides a comprehensive range of choice, across asset classes, sectors and communities, while our suite of government and business services unlocks value and accelerates success.

Land Leasing Land Area (sq. ft.) Occupancy 164M 94%

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185m sq ft
Leasing Space
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Spread across a range of real estate products and ancillary business services

Commercial Leasing

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• Offices
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• Retail
Read more on page 58
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Industrial Leasing
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Logistics

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• Worker accommodation
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Read more on page 62
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Land Leasing

Industrial Land
Commercial Land

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Read more on page 64
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Services

Business and Government Services (axs)
Co-working space
Innovation Centers for start-ups and entrepreneurs
Freelance services
Advertising and Venue Management (AVMS)

Portfolio mix by sector - by revenue

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4%
8%
31%
11%
14%
17%
15%
Manufacturing Design
Technology Science
Media Business Services
Education
Customer Loyalty (in years)
17%
34%
64% 19%
5+ Years
30%
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Customer Loyalty (in years)
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<2 years 2-5 years 5-10 years >10 years
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TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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WHERE WE OPERATE

Our portfolio of strategically located and differentiated business districts is an integral part of Dubai’s economic diversification and global competitiveness. They provide easy access to key services and transportation routes, enabling our customers to operate and connect within their community, with other communities and across Dubai.

What we offer

Complementary Services

[ D/Quarters][ in5]

[ axs] business and future-focused enabling platform government digital co-working spaces for entrepreneurs platform to support and start-ups customers

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Our comprehensive suite of real estate
offerings includes offices, logistics, worker
accommodation and land leasing.
DUBAI
We provide industry specialized sector-specific
facilities, including media production studios,
laboratories and higher education campuses.
We also empower our customers and the wider
community with critical government and business
services, including:
• axs – our business and government digital
platform to support customers in countless way
• in5 – our enabling platform for entrepreneurs
and start-ups to grow and succeed
• D/Quarters – our future-focused
co-working spaces that deliver stimulating
work environments
• GoFreelance – our business license package for
freelance talent to operate independently
147
Commercial Buildings
1,128
Warehouses
81
Worker Accommodations
164M
Land Leasing Area (sqft)
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Strategic Report ESG Corporate Governance Financial Statements

OUR CUSTOMERS

A key enabler to success is a partner with a shared vision, ambition, and goal. Ten years ago, Unilever partnered with Dubai Industrial City to build a start-of-the-art manufacturing facility that would supply to the world beauty products manufactured in the UAE. Today, Unilever’s Dubai Personal Care (DPC) Factory stands as proud testament to this successful partnership with its ‘Made in UAE’ labelled products exported to over 35 countries and recognized by the World Economic Forum as an ‘Advanced 4th Industrial Lighthouse’. My thanks to the Dubai Industrial City leadership team for their relentless support in helping us build and operate an iconic unit that serves as a source of pride to Unilever and continues to contribute to the UAE’s sustainable development.

As global leader in AI CRM, Salesforce investment towards Middle East is more and more important. With the Hyperforce Data Center that allows data residency of customer data, the Opening of the New Office is the most relevant action of our commitment for the Region. Dubai Internet City is clearly the place to be. From there we will be able to expand and grow serving our clients and dealing with our Ecosystem in the best way. With TECOM Group we share vision of the future and we have in place a mutual collaboration to have an impact in local economy.

Our new office at Dubai Science Park has provided us with the perfect opportunity to relocate to a new home with state-of-theart infrastructure and access to key industry players. This will enable us to expand our local footprint in the UAE and demonstrate our support for the government’s ambition to drive and accelerate sustainable development in healthcare, aligning with We the UAE 2031 vision.

A.P. Moller – Maersk (Maersk), the global integrated logistics company, opened the doors to its first cold store facility in Dubai Industrial City, part of TECOM Group PJSC, in 2023. At Maersk, our purpose is to integrate global efforts for the greater good, and we saw an opportunity to achieve this goal by leveraging the specialised infrastructure, transport connectivity, and cross-sector collaboration pathways offered by Dubai Industrial City. Having an address within TECOM Group’s ecosystem of economic destinations – which serves critical sectors such as manufacturing, science, and technology – is helping us safeguard the integrity of perishables and offer them to end users through uninterrupted cold chain solutions.

Strategic Report

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ESG Corporate Governance Financial Statements
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Strategic Report

as well as what makes us unique.

Corporate Governance Financial Statements

Strategic Report

ESG

CHAIRMAN’S STATEMENT

Malek Al Malek

2023 highlights

The United Arab Emirates (UAE) stands as a global business and investment powerhouse, having succeeded in building a nurturing economic, legislative, and social environment. Dubai has further enhanced its attractiveness for investments and business activities driven by a range of factors, foremost among them economic growth, security and stability, and state of art infrastructure. The emirate showcased an outstanding economic performance with a growth rate of 3.3% in the first nine months of 2023. Several economic sectors recorded strong performances, including the commercial real estate sector, which outpaced major global cities, solidifying TECOM Group’s leadership in creating specialised business districts. This affirms our pivotal role in propelling Dubai toward a knowledge and innovation-based economy.

In tandem with Dubai’s economic agenda (D33), geared toward sustaining growth and elevating Dubai among the world’s top three economic cities, TECOM Group possesses robust capabilities and resources that enable it to play a significant role in achieving these ambitious goals. We are poised to significantly contribute by attracting global and regional companies, fostering talent in key sectors, and streamlining business operations within the emirate.

The synergy between our approach, business model, D33, and the Dubai Creative Economy Strategy is no coincidence. It’s a strategic decision aimed at fortifying the emirate’s future readiness, grounded in innovation, technology, knowledge, creativity and sustainability.

Since our successful listing on the Dubai Financial Market, we’ve maintained a firm focus on leveraging on sustainable economic growth in UAE. Our ability to transform challenges and fluctuations in the global economy into opportunities is a testament to our high readiness levels, adaptability and swift responses. The Group’s robust strategic planning aligns seamlessly with the enduring strength of the Dubai’s economy.

A diverse range of innovative solutions and services

TECOM Group, with a legacy spanning over two decades, continues to deliver cuttingedge solutions and services. Specialising in the development and management of integrated business complexes, we cater to the pivotal needs of vital and knowledge-based strategic sectors. Our commitment extends to fostering collaboration across diverse economic sectors, solidifying our role as a strategic driver in the business landscape.

Our business districts serve as integrated work environments, providing essential resources for success and growth. Purposefully designed to nurture innovation, creativity and collaboration, these environments have allowed the Group to attract a wide and diverse range of prominent global companies and top talents from various sectors.

Dubai Design District (d3) and Dubai Industrial City. Thoughtful strategic initiatives and operational efficiency played pivotal roles, substantially boosting revenues across commercial and industrial assets, lands, services and other business activities.

TECOM Group remains committed to dividend distribution, as outlined during the initial public offering. With a semi-annual distribution totalling up to AED 800 million, this commitment was fulfilled in 2023, showcasing our dedication to delivering optimal and sustainable results for shareholders.

Operating within TECOM Group, our strategy is laser-focused on each vital sector within our business complexes. This targeted approach allows us to tailor solutions and services to the unique requirements of knowledge-based strategic sectors. By providing specialised, competitive work environments supported by advanced infrastructure, we contribute to the growth and prosperity of each sector.

Towards a more sustainable future

We are dedicated to strengthening our portfolio and fostering growth through the establishment of a comprehensive initiative for the development and acquisition of new projects, as we actively seek out investment opportunities.

In charting our path forward, we are dedicated to shaping the future of workspaces. Our primary goal is to solidify our leading position and elevate Dubai’s appeal as the premier global hub for business and investments. We also aim to embed social and environmental responsibility at the core of our operations, increasing energy efficiency and fostering community engagement. Our objective is to establish a culture of sustainability across all business districts under the Group.

By leveraging our synergistic relationship with the city’s evolution, we have created a unique ecosystem where businesses, big and small, can find a fertile ground for growth.”

At the core of our exceptional services and solutions lies a deep commitment to On behalf of the Board of Directors, I extend sustainability and corporate social responsibility sincere thanks to the governments of UAE and principles. Beyond developing business Dubai for their pivotal role in solidifying the complexes, our mission extends to creating country’s and the emirate’s global standing, sustainable environments that foster long-term in implementation of the wise directives of growth. This holistic approach sets TECOM visionary leadership. I also express my heartfelt Group apart, positioning us as the preferred thanks to the executive management team destination for global and regional companies. for their exceptional leadership, driving the We offer unparalleled opportunities for success, Group’s growth and achievements. I also tapping into the rapid growth of markets in the extend heartfelt appreciation to our dedicated region and beyond. employees for their continuous commitment to realising the vision and strategic goals of the Achieving optimal returns for our Group, and to our valued shareholders for their shareholders precious trust in us.

In 2023, TECOM Group delivered exceptional financial results, surpassing set goals and exceeding expectations. Achieving a remarkable 49% year-on-year increase in net profits, we broke the AED 1 billion threshold for the first time in our history. These outcomes underscore our adept financial management strategy, demonstrating resilience in dynamic economic landscapes.

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Malek Al Malek

Chairman, TECOM Group

The Group’s strong financial performance is credited to key business clusters, notably

Corporate Governance Financial Statements

Strategic Report

ESG

CEO’S STATEMENT

Abdulla Belhoul

2023 highlights

In 2023, TECOM Group marked a series of noteworthy accomplishments, witnessing substantial growth in revenues and net profits. The valuation of our investment asset portfolio increased by 7.7% annually and an impressive 18.2% since the initial public offering. This underscores our exceptional performance across various fronts, with most business districts in central locations experiencing high occupancy rates. Meanwhile, other business districts continue to maintain their outstanding growth trajectory.

TECOM Group is dedicated to providing an attractive, flexible and ever-evolving work environment. Our commitment fosters client growth, success and the realisation of their ambitions. This dedication has attracted leading global and regional companies, establishing valuable strategic partnerships. Notably, our consistently high customer retention rates underscore client satisfaction with our interconnected business ecosystems. We empower customers to surpass their aspirations.

TECOM Group has charted a clear and specific path to robust growth through a focused plan built on three key pillars. These pillars, centring on project development and strategic acquisitions, aim to elevate asset value and deliver enhanced returns to shareholders. Our commitment is to exceed customer expectations, ensuring sustained strong performance.

In regard to innovation, TECOM Group has demonstrated significant progress this year. We proudly foster the growth of startups as well as small- and mediumsized enterprises through cutting-edge research and development facilities across our business districts. Positioned as the foremost incubator for innovation centres in Dubai, we offer both existing and prospective customers a comprehensive suite of solutions and services, empowering them to innovate, expand and thrive.

Outstanding financial performance

In 2023, our robust growth surged through the strategic application of our unparalleled business model and the Group’s formidable market presence. Notably, our revenues soared by 10% annually, reaching an unprecedented AED 2.2 billion, attaining record highs. Meanwhile, EBITDA stood at AED 1.7 billion, showcasing a remarkable 23% surge from the preceding year. This rise is attributed to augmented revenues, heightened operational efficiency, and robust demand in the land leasing sector, fortifying our financial performance.

Our effective capital management strategy and proactive refinancing of credit facilities on more favourable terms have yielded substantial and immediate interest expense savings over the next five years.

Enhancing and diversifying the business portfolio

In 2023, our operational strength ensured a robust 89% occupancy rate across our commercial and industrial assets, while the occupancy rate for our land assets rose to 94%. Market trends underscored our success, particularly in commercial assets where discerning customers favoured distinctive office spaces in strategic Dubai locations. Notably, high-quality storage units and logistics services, alongside the innovative D/Quarters co-working spaces, experienced heightened demand.

Our commitment to cultivating strategic relationships bore fruit, propelling a substantial 15% growth in our customer base, now exceeding 11,000 customers. Within our commercial asset portfolio, we welcomed leading global entities such as AstraZeneca, Conde Nast, Giorgio Armani, Hisense and Trip com, augmenting the expansion plans of numerous existing customers.

The surge in demand for research and development facilities and innovation centres showcased our appeal, with Dubai Science Park labs and the first phase of the Innovation Hub in Dubai Internet City nearly at full capacity. Dubai Design District (d3) retained its status as the preferred destination for major companies and events in design, fashion and creative domains. Simultaneously, the industrial asset portfolio flourished, diversifying into crucial sectors like manufacturing, food and beverages, and pharmaceuticals. This strategic move enhances the economy’s flexibility and sustainability in the UAE.

Sustainability at TECOM Group

In 2023, sustainability commanded the spotlight in the UAE, and TECOM Group unequivocally affirmed its dedication to a sustainable future. We are unwavering in our embrace of an environmental, social and governance (ESG) performance framework as the cornerstone of our growth strategy.

Actively engaging in a myriad of initiatives

throughout the year, we cement our social impact. This includes a strategic partnership with the UAE Red Crescent to unveil the pioneering ‘The Good Store’ initiative – a remarkable virtual and physical donation experience.

On the environmental frontier, we accelerated clean energy generation with an emphasis on solar power. Our portfolio witnessed an expansion in LEED-certified buildings, championing energy efficiency and environmental design. Furthermore, 235 tons of waste were recycled across our business districts, with ambitious targets set for 2024.

Our commitment to exploring ESGaligned investment opportunities remains unwavering, aligning with the UAE’s vision for attaining net zero emissions by 2050.

Accelerating toward our goals

As we forge into 2024, TECOM Group is resolved in its mission: to advance and fortify our business districts as the top choice for both current and potential customers. Our commitment is firm, creating an inspiring workspace for collaboration and innovation. We’ll intensify efforts to uphold high occupancy rates, enhance asset portfolio efficiency, implement strategic development and significantly contribute to national economic growth. Moreover, we’ll strengthen Dubai’s global standing as a business and investment hub, fostering foreign investment and establishing pivotal partnerships with industry leaders.

We are poised to implement major initiatives in 2024, foreseeing fruitful results in the coming days. I express my pride and deep gratitude to our dedicated employees for their tireless efforts and exceptional contributions to executing our strategy. I extend sincere thanks to our customers who have reinforced our role as the preferred partner for ambitious companies seeking new opportunities for expansion and growth. I also extend gratitude to our Board of Directors for their guidance and diligent oversight, and to our valued shareholders who placed their trust in our vision, resulting in record-breaking achievements in the past year. I am confident in the Group’s ability to achieve outstanding results in 2024, continuing the journey of successes and exceptional accomplishments.

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Abdulla Khalifa Belhoul

Chief Executive Officer, TECOM Group

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

REASONS TO INVEST

Reasons to invest

A unique investment proposition positioned

1 2 Dubai’s leading Loyal and diversified ecosystem creator customer base

Sustainable financial performance

TECOM Group brings together the growth story of Dubai with a dynamic and trusted organization that has delivered continuous growth and value creation for over two decades. With Dubai’s largest commercial real estate portfolio, fully integrated and diversified across strategic high-growth sectors, we build thriving ecosystems that support the sustainable success of the world’s best companies and talent, while creating lasting value for our stakeholders and shareholders in particular.

Organic Growth Drivers

Occupancy Rates

Occupancy rates growth driven by strong demand across business districts and further headroom to achieve occupancy ramp-up

Rental Rates

Growth in Dubai office rental rates, as the economy recovered from COVID-19

Built-to-suit Projects

Delivery of high-quality built-to-suit properties tailored to customised specifications, setting a strong ability to deliver future BTS projects

4 5 Strategic roadmap for Outstanding talent accelerating growth and experience at every level

6

Best practice approach to corporate governance and ESG

Growth Projects

Future organic growth upside from committed and future developments and access to a large land bank available for developments

Complementary Services

Complementary services driven by growth in occupancy rates and GLA

Strategic Report

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CREATING VALUE FOR OUR INVESTORS
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Our Shareholders

our shareholders

Our shareholders play a pivotal and influential role, going beyond mere financial interests to encompass a profound commitment to the overall strategic progress and financial performance of the Group. We are committed to maximising shareholder value through superior financial results, distribution of committed dividends and adoption of best corporate governance models, creating a transparent and collaborative foundation for sustainable growth.

Valuation Growth 7.7%

TSR 28%

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Corporate Governance Financial Statements

Strategic Report

ESG

OUR BUSINESS MODEL

How our business model drives sustainable progress

OUR RESOURCES AND STRENGTHS

OUR VALUE CHAIN

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Creating industry
ecosystems
Fostering talent
and innovation
Delivering a
full-service offering
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DRIVEN BY OUR STRATEGY

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Pillars
1 2 3
Optimise Develop Build New
Core Business Differentiated Sources of
& Performance Value Proposition Growth
Enablers
People & ESG Technology
Organizations Sustainability & Innovation
Read more on page 36
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OUR VALUE CREATION Read more on page 28
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Employees

Shareholders

Customers

Community

Partners

We offer our customers We build long-term Our value proposition In fostering an a high-quality asset relationships and trust has a positive impact on environment that base with integrated with our partners so the local community as values diversity and infrastructure, full-service we can provide better we play an instrumental inclusion, we believe offerings, a large range services to our role in Dubai’s economic that by empowering of thought-leadership customer base. diversification, our employees to thrive and industry-focused competitiveness and within a supportive events for businesses to We have a close global positioning by culture, we are not just conduct their operations, dialogue with the developing the emirate's building careers; we enabling them to grow Government working business ecosystem, are cultivating a rich and expand in Dubai and on multiple national fostering innovation, tapestry of perspectives the wider region. initiatives. entrepreneurship and and unique talents. talent development.

We deliver a robust and resilient financial performance on the back of a high-quality portfolio of commercial and industrial assets, land and value-added services. There are multiple growth avenues and embedded growth potential within the portfolio and the industries we target.

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VALUE CREATED FOR OUR STAKEHOLDERS
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EPS EPRA NTA ROE 49% 14% 17.5% Growth Growth Number of Customer High Performing Community Events satisfaction Employee Retention 7 87.4% 96.8%

At TECOM Group, our value proposition goes beyond the conventional. Over the last 25 years, we have built a diversified portfolio of business districts, each catering to strategic sector needs. This unique approach has positioned us as a differentiated player in the market, offering unparalleled opportunities for business growth and innovation.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

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CASE STUDY
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Dubai Design District

As demand continues to grow for d3’s unique fashion, design and creative community, we look to expand our offering in the near future.

Having launched in 2013, the Dubai Design District has established itself over the past 10 years as a prominent hub for design and creativity, spanning 11 buildings offering an array of products.

It has become home for more than 1,000 customers including international and regional design industry leaders.

Home to over 1,000 creative industry leaders — Dubai Design District d3 has become home for more than 1,000 customers including international and regional design industry Customers Occupancy leaders, along with up-and-coming brands and designers. Some of our notable clients include the likes 1,000+ 97% of LVMH, Kering, Prada, D&G, Adidas, Chalhoub Group, and Christian Dior. Thriving eco-system — The ecosystem at its Buildings core comprises Fashion and Luxury companies, representing over half of d3’s customer base, whilst Architecture and Interior design firms and Government 11 entities also choose d3 for its premium office spaces. Area sqft Nurturing next-gen talent — The Dubai Institute of Design and innovation (DIDI) together with in5 not only nurtures the next generation of designers and 1.6M+ successful startups but continues to live up to TECOM’s overarching vision. Furthermore, the recent addition of Paris-based L’ECOLE School of Jewelry Arts, supported by Van Cleef & Arpels continues to position d3 as a holistic eco-system fostering the development of the fashion and design industries. Leading industry events — Notable events include Dubai Fashion Week, Sole DXB, and Dubai Design Week, offering d3 customers regular and impactful high-quality programming. The next phase of growth — With d3 at virtually full occupancy and demand continuing to rise, the next exciting phase in d3’s strategic growth will aim to satisfy existing customers already looking to expand as well as serve a growing waiting list of top-tier global clients. Furthermore, the upcoming surrounding residential development coming up in tandem, will naturally add to d3’s appeal for customers to join this evolving fashion and design community, while also promoting a balanced working and living concept.

FROM CONCEPT TO ECOSYSTEM

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1 2 3 4 5 6 7 8 9
Idea Infrastructure Concept Site Industry Empowering d3 Expansion Residential Well Integrated
Inception Development Design Activation & Talent Entrepreneurs Component Master Plan
& Market Development
Opportunity
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TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

OUR BUSINESS MODEL CONTINUED

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Creating the environment for business to thrive

As a market-leading ecosystem developer and operator, TECOM Group creates and manages vibrant business communities that foster collaboration, innovation, and growth across diverse sectors.

Our value chain

We provide real estate, infrastructure, and business services catering to all types of customers, from start-ups to Fortune 500 companies. Through innovation and exceptional customer experience, we are constantly leading and adapting to the dynamic business environment of the UAE.

ecosystems

Fostering talent and innovation

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Creating industry ecosystems

TECOM creates industry-focused ecosystems to promote a synergistic environment where companies, talent, academia and research institutions, and supporting organisations work together to foster growth, innovation, and competitiveness within a specific industry. This collaborative model leads to higher success rates for businesses within these ecosystems, which has been demonstrated by TECOM since the establishment of Dubai Internet City in 1999.

Benefits of Cluster-Focused Ecosystems

Industry and Supply Chain Efficiencies

Proximity to suppliers and related industries can lead to a more efficient and streamlined supply chain, which can reduce costs and improve logistics.

For more than two decades, our ecosystems have attracted leading global corporations, entrepreneurs, and specialised talent, contributing to the UAE’s economic diversification, competitiveness, and global positioning.

Knowledge Sharing

Proximity fosters collaboration and knowledge sharing among companies in the same industry, which can lead to innovation and the exchange of best practices.

To deliver a competitive and attractive environment for businesses and entrepreneurs to thrive and to facilitate engagement between the districts’ community members, we offer additional services such as startup incubation and venue management. We also offer corporate and government services, including licensing and visas, through our integrated digital platform.

Talent Pool

Industry-focused ecosystems attract a concentrated pool of skilled professionals and specialised talent. This concentration of expertise makes it easier for companies to find and recruit the specific skills they need, and also retains the expertise within the ecosystem as talent moves between businesses.

Our sector-focused business districts, supported by long-term strategic customers, have developed and advanced key sectors such as technology, media, education, manufacturing, science, and design. The districts have also provided a robust governance framework and infrastructure which enable us to capitalise on Dubai’s unique positioning, favourable macroeconomic tailwinds, and supportive real estate fundamentals.

Innovation and Research

Proximity to academia, corporate innovation centres, and research and development facilities enable collaboration between businesses and institutions. This synergy can lead to innovation, technology transfer and the commercialisation of research findings.

Brand and Reputation

Being part of a renowned industry cluster can enhance a company’s brand and reputation. Customers and partners may associate their business with the expertise and innovation of the cluster.

Increase in Freelancers

850+

Increase in Professionals

Delivering a full-service offering

18,500+

18% growth YoY

Dubai Internet City

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OUR BUSINESS MODEL CONTINUED

Fostering talent and innovation

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At TECOM Group, we foster talent and innovation within our ecosystems by creating an environment that encourages the development of skills, promotes collaboration and enables innovation.

Research and Development Collaboration

We facilitate collaboration between businesses and research institutions. This involves joint research projects, technology transfer initiatives and the sharing of expertise to drive innovation. TECOM Group is home to over 15 R&D innovation centres and institutions.

Incubators and Accelerators

This is crucial for the sustained growth and competitiveness of businesses within the ecosystem.

In 2013, TECOM Group established in5 to provide a supportive environment for start-ups and entrepreneurs. in5 offers key benefits including a robust business set-up framework, training and mentorship, networking, investment opportunities, prototyping labs, studios and creative workspaces.

Key elements in fostering talent and innovation include:

Education and Skill Development

We provide education and training programmes to develop a skilled workforce, and ensuring educational institutions tailor curricula to the needs of the industry ecosystem. TECOM Group has over 30 academic and training institutions across its business parks, educating over 29,000 students who will become part of the future workforce.

Our in5 centres currently incubate over 380 start-ups across the technology, media, design and science industries. The facilities are equipped with industryspecific assets. in5 Design, for example, features a design room, fashion lab, and makers lab with 3D printers, while in5 Media hosts a green room, editing suites, video recording studio, and production studios.

Networking Events and Conferences

We organise and participate in industry-specific networking events, conference, and workshops. These gatherings provide opportunities for professionals to connect, share ideas, and stay updated on the latest trends and technologies.

By integrating these elements, our ecosystems create dynamic and supportive environments that attract talent and foster innovation, while sustaining a culture of continuous improvement and adaptation to changing market dynamics.

Planned investment in Start-ups incubated Science Sector in 2023 AED 75M 150+

New Universities at Innovation TECOM in 2023 centers 2 15+

Dubai Internet City — in5 Tech

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Delivering a full-service offering

TECOM Group is a one stop shop which covers all business needs, from licensing to accommodating real estate and infrastructure requirements.

Services provided through axs include more than 200 corporate services, such as registration and licensing, as well as government services related to facilitating visas such as medical (Dubai Health Authority) and Emirates ID Services, customs and postal services. These services are paid for on a service-by-service basis and are currently being provided to more than 153,000 professionals, entrepreneurs, students, and dependents.

axs is TECOM Group’s leading business and government smart services platform, providing our community access to a seamless digital platform as well as customer care centres. axs provides comprehensive services under one umbrella to tenants, customers, companies, employees and other individuals within our business districts.

Corporate services

200+

Business Services Customer Satisfaction

Population served

153,000+

89%

Financial Statements

Strategic Report

ESG

Corporate Governance

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

OUR BUSINESS MODEL CONTINUED

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Partnering with regulatory authorities to establish a favourable regulatory environment

Creating a favourable regulatory environment for an industry ecosystem involves collaborative efforts between TECOM Group, industry stakeholders and regulatory authorities.

on existing and proposed policies and regulations, and actively participates in regulatory processes, including consultations, workshops, and other platforms. Furthermore, TECOM Group strategically partners with various regulatory authorities for the benefit of the businesses within its ecosystems.

Through axs, our dedicated services platform, we also benefit from a close relationship with the Dubai Development Authority and various government councils, which serve our customers and business partners across various immigration, insurance and other regulatory services.

Establishing effective partnerships can lead to regulations that balance the needs of businesses with public interest.

TECOM Group regularly engages with regulatory authorities and industry associations to provide input

Building a collaborative and constructive relationship between an industry ecosystem and regulatory authorities is essential for TECOM Group to create a regulatory environment that promotes innovation, sustainability, and economic growth.

Active Strategic Partnerships

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Building business districts

Our business districts feature purposebuilt facilities and industry-specific infrastructure, delivering a competitive mix of commercial and industrial space suited for businesses of any scale. Our assets include:

Innovation and Research and

Development Spaces

TECOM Group is home to the largest number of innovation centres in the UAE. We establish incubation spaces, such as in5 Science, in5 Tech, in5 Media and in5 Design, to provide services to start-ups and early-stage companies. We also offer specialised laboratory spaces for companies involved in research and development (R&D) and scientific fields.

Commercial Assets

We offer office and retail spaces for businesses of any size, start-ups, and entrepreneurs, either through leasing our existing properties or building customised ones according to their needs. Our commercial leasing assets include built to lease and built to suit properties, which differ in the number and type of tenants they accommodate.

Land Bank

TECOM Group leases plots of land of various sizes for commercial and industrial use, and we have access to one of the largest land banks in the UAE. This unoccupied land within our business districts already has or is expected to develop necessary infrastructure.

Land Leasing

Commercial Leasing

Total GLA: 163.7 million sqft

Total GLA: 9.5 million sqft Retail Space: 553,000 sqft

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Innovation Hub
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Industrial Assets

Industrial Leasing offers warehouses, showrooms, manufacturing spaces and facilities, and workers’ accommodation for businesses involved in production and industrial activities. The majority of our industrial assets are based in Dubai Industrial City, with further assets located in Dubai Science Park and Dubai Production City.

Industrial Leasing

Total GLA: 11.5 million sqft

BTL Products Offered

20+

10+

TECOM Group PJSC | Annual Report 2023

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Financial Statements

Strategic Report

ESG

Corporate Governance

SUPPORTING THE SUCCESS OF OUR SOCIETY

We empower Dubai’s progress by looking after our people and building thriving communities

Our Community & Society

As a leading socially responsible corporate citizen, we recognise the central and vital role we play in our communities and for our society at large. We are proud to uphold this trust by adhering to our social and ethical responsibilities, maintaining a cohesive and collaborative coexistence with the people, organisations and natural environment across our operational footprint. We have built these commitments into our strategies and work hard to live up to these standards each day.

Waste Recycled Emiratisation 235 Tonnes 1/4

Dubai Internet City

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report

OUR STRATEGY

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Vision Strategic Pillars Strategic Priorities Enablers
To be a world-renowned
curator of innovative Retain & Strengthen
Relationships
1
ecosystems
Optimise Core Business &
Performance
Operational
Excellence
Customer &
Community Experience
2
Develop Differentiated
Value Proposition Product Innovation
Eco-system
Enhancement
Acquisitions
3
Build New Sources
of Growth New Industries
New Developments
ESG Sustainability
People & Organization
Technology & Innovation
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TECOM Group’s five-year strategy continued to deliver results during a year of outstanding financial performance, innovation and growth

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Develop Differentiated
Value Proposition Product Innovation
Eco-system
Enhancement
Acquisitions
3
Build New Sources
of Growth New Industries
New Developments
Dubai Knowledge Park Dubai Outsource City
37
ESG Sustainability
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Anchored in our vision to be a worldrenowned curator of innovative ecosystems, we have maintained focus on three core pillars: optimizing our core business performance, developing a differentiated value proposition, and building new sources of growth.

These strategic pillars, coupled with our commitment to operational excellence and customer-centric approach, have guided our actions and decisions, ensuring that we continue to create value for our people, customers and stakeholders.

As we look to the future, our strategy remains adaptable and forward-thinking, poised to meet the ever-evolving needs of the market and our community.

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OUR STRATEGY CONTINUED

Optimise Core Business & Performance Pillar

1 Optimise Core Business & Performance

Strengthening customer relationships

In line with our commitment to put customers at the heart of what we do, we are continuously innovating and exploring ways to strengthen relationships with our customers. This relentless focus continued to bolster our core business and performance in 2023, which saw retention rates rise to over 91% as a result of our dedication to creating value through three key principles:

Objectives

Retain and strengthen relationships with customers
Focus on prudent cost, cashflow and capital management
Deliver ongoing commercial built-to-suit (BTS) and infrastructure programme
Review and refine pricing to align with market conditions

Delivering exceptional customer service

We have an unparalleled offering in the market, with 400+ assets over 10 locations and a 91% digitised services platform.
We provide our customers with a full suite of services and maintain close relationships throughout their customer journey to ensure we deliver what we promise.
relationships throughout their customer journey to ensure we deliver what we promise.
• We regularly engage and communicate, both formally and informally, to identify and alleviate pain points and ultimately enhance customer service.
• Our customer satisfaction score of c.87% is higher than industry benchmarks.

2023 Accomplishments

89% occupancy achieved
Land occupancy at 94%
Achieved a high retention rate of 91%
Delivered 23% EBITDA growth
Updated pricing across selected communities

Occupancy EBITDA High retention achieved growth rate achieved 89% 23% 91%

2024 and beyond

Identify customer priorities and retention initiatives on an on-going basis
Review and refine pricing across products and services as per market conditions
Continue to expand the use of business intelligence tools to unlock value
Maintain focus on operational excellence

Building better communities

• We create and foster vibrant and dynamic ecosystems that bring all stakeholders together.

We believe that the whole is greater than the sum of its parts and each customer should share in the benefits that come from the community.
We have a busy events calendar throughout the year, with hundreds of events across our communities.

Enabling customer success and innovation

• TECOM Group is the region’s largest hub of innovation, home to 15+ innovation centres within Dubai Internet City, 30 customers using laboratory spaces and 10+ conducting R&D in Dubai Science Park, and 380 start-ups at in5.
• With a diverse portfolio and decades of experience, we partner with our customers to help them focus on delivering their business objectives.

• We are constantly improving by seeking to better understand and deliver against our customers’ evolving needs.

With a workforce of 124,000+ employees and a student base of 29,000+, there’s no shortage of talent and knowledge across our ecosystems.

	1 Relevant	Strategic Pillars Optimise Core Business & Performance	Locations 10 Assets	Innovation centres 15+ Start-ups
			400+	380

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

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OUR STRATEGY CONTINUED

Develop Differentiated Value Proposition Pillar

2 Develop Differentiated Value Proposition

Providing a unique proposition to our customers

TECOM Group is the only ecosystem developer and operator that covers multiple industries across multiple locations in Dubai, with a wide range of attractive real estate products and value-added services.

Many businesses require more than just an office – they also need warehousing, lab spaces or manufacturing facilities. We are able to cater to these demands, while also helping our customers be present across multiple locations to unlock potential logistical benefits.

Objectives

Deliver a compelling value proposition

We provide our customers with the opportunity to conveniently and efficiently scale their businesses across our ecosystems, benefiting from our diverse portfolio of products and locations.

Deliver best-in-class customer experiences
Identify improvements for selected commercial assets
Maximise synergies across TECOM Group ecosystem

2023 Accomplishments

Increased year-on-year number of customers and workforce by 15% and 18% respectively
Delivered leading industry events within our communities, such as Dubai Fashion Week, Dubai Design Week, Dubai Lynx, Advance Health and WeWalk
Launched in5 Science in Dubai Science Park to grow the Science community and start-up base

Increased Increased year-on-year year-on-year number of customers number of workforce 15% 18%

2024 and beyond

Continuously improve customer journeys throughout our ecosystems
Integrate business development and customer management processes for a seamless customer experience

TECOM Group Industrial & Outsourcing Customers Industries Office Laboratory Warehouses Facilities Pharma Pharma Chemicals Cosmetics ICT ICT

Continue to address underperforming assets

Relevant Strategic Pillars

Develop differentiated value proposition

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

Strategic Report

OUR STRATEGY CONTINUED

Build New Sources of Growth Pillar

3 Build New Sources of Growth

Objectives

Drive new opportunities in high-growth industry segments • Develop new product offerings in emerging office asset classes • Expand and challenge existing commercial business models • Support the development of Dubai’s economy and strategic sectors

2023 Accomplishments

Broke ground on Innovation Hub Phase 2 at Dubai Internet City • Expanded D/Quarters co-working space to Dubai Science Park, now in addition to Dubai Internet City and Dubai Media City
• Signed strategic partnerships with public and private sector entities to benefit our customers, including:
Dubai Industrial City and MoIAT, MOCCAE, EDB and DET to stimulate growth in the UAE’s manufacturing industry
• in5 and Dubai Chamber to provide one-stop-shop solutions for startups through the ‘Business in Dubai’ digital platform
Dubai Internet City signed multiple MoUs with various international entities to strengthen the startup and technology ecosystem

2024 and beyond

Identify novel, differentiated products to be launched within our ecosystems and adapt existing products for current and expected market demand
Continue to support the development of Dubai’s economy through various strategic initiatives

Expanding our footprint with Innovation Hub Phase 2

As Dubai continues its stunning rise as a global business hub and businesses look to attract their workforce back to the office, large regional firms and multi-nationals have realised that providing best-in-class office space with attractive amenities is a key driver to competing for and retaining the best talent. In 2023, this has resulted in a significant increase in demand for high-quality, single owned Grade A assets in Dubai.

Across our market-leading portfolio of thriving ecosystems, we are ideally positioned to capitalise on growing market demand from large and discerning customers. We have developed a pipeline of projects, new products and asset enhancements to drive further growth across our commercial segments.

Innovation Hub is one of our latest world-class commercial offerings, which will add a total of 1.3 million sqft of commercial office space over four phases. It is designed to diversify our customer portfolio by focusing on technology, education and new media businesses. Completed in 2018, Innovation Hub Phase 1 in Dubai Internet City is operational and at full capacity, housing technology players such as Google, Hewlett-Packard and Gartner.

Construction of Innovation Hub Phase 2 is currently underway, as one of the few commercial projects bringing new Grade Grade Pre-let A supply to the market in Dubai. It is currently over 90% pre-let to globally and regionally leading technology A +90% companies and is expected to reach capacity shortly after launch. LEED Certified Target Launch Relevant Strategic Pillars Gold 2024 3 Build new sources of growth Leasing space 355k sqft

TECOM Group PJSC | Annual Report 2023

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OUR MARKET

UAE Macroeconomic

Overview

The UAE is experiencing an economic surge, with higher oil prices, strong capital and investment inflows, and growing domestic activities boosting the country’s growth outlook. Gross domestic product (GDP) is forecast to increase by 2.3% in 2023, building on an exceptional 2022 in which the economy grew by 7.0% due to spiking oil production and the effect of COVID-19 stimulus measures.

Due to favourable government initiatives and political stability, the UAE has become a preferred destination for professionals seeking a sustainable environment. Recent government policies include a liberalised visa framework allowing 10-year residency permits, 100% foreign ownership of onshore companies in multiple sectors, and forwardlooking digital regulations ranging from e-commerce to cryptocurrencies.

The UAE’s prospects are also supported by its safe-harbour status; start-ups, entrepreneurs and investors are flocking to the country following economic stagnation and instability in other neighbouring regions.

With the UAE’s population forecasted to reach 10 million within the next two years, the nation’s population and employment grew by 0.8% and 2.5%, respectively, in 2023. This surge in population and employment is expected to lead to a rise in need for infrastructure and thereby the broader real estate sector.

Key Macro-economic Indicators (Historical & Forecasted)

Population (in Millions)

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10.0
9.9
9.8
9.7
9.5 9.5
9.3
2019 2020 2021 2022 2023 2024 2025
Source: Oxford Economics (OE)
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Employment (in Millions)

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7.0 6.7 6.8 7.0 7.1 7.3 7.5
2019 2020 2021 2022 2023 2024 2025
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Source: Oxford Economics (OE)
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Dubai Macroeconomic Overview

Gross Domestic Product (GDP)

Consumer Price Index

Dubai Science Park-Built to Suit Assets

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Population

Commercial Market

Key Market Drivers

Employment (in ‘000)

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10%
2,814 2,922 2,818 2,814 2,880 2,953 3,087 3,112
5%
0%
-5%
2018 2019 2020 2021 2022 2023 2024 2025
2814 2922 2818 2814 2880 2953 3087 3112
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Dubai’s population is estimated to have grown by 2.8% in 2023, which has been supported by government initiatives and Dubai’s attractiveness as a place to live and do business. As per Dubai’s 2040 Urban Master Plan, the emirate aims to reach a population figure of 7.8 million. This plan is expected to further boost the construction activity in the emirate.

Overview

Market Drivers Sector Implications GDP and Employment GDP is expected to grow by 3.2% in 2024 whereas employment is expected to grow by 2.8% during the same period. Workplace The widespread prevalence of prolonged work-from- Trends home options observed in cities across North America and Europe is not widely noticed in Dubai. However, the growing popularity of co-working spaces and other short-term leasing options might have an impact on the demand for traditional offices in the long run. Government New visa offerings such as the Golden visa, Green Initiatives visa, Freelance visa and Jobseeker visa are supporting the workforce and positioning Dubai among the most desirable cities for businesses and investors.

The outlook for the commercial market in Dubai remains bright due to high demand and limited availability of quality office space. The market trend of occupiers gravitating towards new Grade A developments has continued to intensify this year. Domestic and international occupiers are actively seeking efficiently managed, ESG accredited, and well-maintained offices. The lack of Grade A developments has led to tenants encountering increasingly stringent lease terms, leaving limited room for negotiations. Secondary office stock, however, is still facing challenges, with ease rates in older buildings still trailing pre-COVID levels.

The widespread prevalence of prolonged work-fromhome options observed in cities across North America and Europe is not widely noticed in Dubai. However, the growing popularity of co-working spaces and other short-term leasing options might have an impact on the demand for traditional offices in the long run.

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Source: Oxford Economics (OE)
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As part of the strategy, the government will ensure that 55% of the population resides less than 800 metres from a major public transit hub. The 2040 Urban Master Plan also aims to increase green spaces, spaces for educational and medical institutions, and land set aside for commercial and industrial operations. Furthermore, it is estimated that a large parcel of the city’s territory will be set aside for nature reserves.

Population (in millions)

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7.8
3.2 3.4 3.4 3.5 3.5 3.6
2018 2019 2020 2021 2022 2023 2040 Forecast
Source: Dubai Statistics Centre (DSC)
7.8
3.2 3.4 3.4 3.5 3.5 3.6
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employment is expected to lead to a rise in need for infrastructure and thereby the broader real estate sector.

Employment

In 2023, based on data published by Oxford Economics, it is estimated that employment levels in Dubai increased by 2.5%. Over this period, the Consumer Services and Industry sectors, accounting for 35% and 29% of total employment, recorded increases of 2.9% and 2.3%, respectively. Despite the recent introduction of corporate tax, the outlook for staffing levels remains positive whereby employment is expected to grow by 2.8% and 2.5% in 2024 and 2025, respectively.

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Regional green building
concentrations
UAE
Global rank: 14
Green buildings: 869
Qatar
Global rank: 32
Green buildings: 140
KSA
Global rank: 54
Green buildings: 38
Kuwait
Global rank: 69
Green buildings: 12
Oman
Global rank: 70
Green buildings: 12
Source: Knight Frank
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Dubai Industrial City
47
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A greener future for Dubai and the UAE

The UAE hosted the 28th edition of the United Nations’ Climate Change Conference, commonly known as COP28, an event of global importance. By hosting this event in Dubai, the UAE strengthened its position as an advocate for climate action and highlighted its continuous efforts in collaborating with world leaders to combat climate change and strive towards a greener economy.

On a global scale, the UAE has the 14th highest concentration of green-rated buildings. At a city level, London leads the pack with almost 3,000 green buildings (all BREEAM-rated), closely followed by New York and Singapore. With 563 green buildings, Dubai is the only city from the region in the world’s top 25 cities for the highest number of environmentally accredited buildings, which includes both local and international accreditations.

Dubai’s future urban development has been irrevocably tied to sustainability, with the government legislating for a greener future through a raft of policies and initiatives, ranging from the construction of the world largest single-site solar power plant - now in operation and responsible for 15% of the emirate’s energy needs (75% of power generation in the city is expected to come from renewables by 2050) – to the decision to have 35% of all buildings delivered using 3D printing by 2030. Furthermore, the government’s green commitments have also seen the recent declaration that 60% of the emirate’s 4,100 square kilometre land area will be dedicated to nature reserves.

Sources: Knight Frank and JLL research

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OUR MARKET CONTINUED

Market Performance

Office Supply

The laser-focus on the city’s dwindling Grade A supply is a critical factor in helping to sustain and grow prime office lease rates. In response to the heightened demand and occupancy levels in the emirate, developers plan to add approximately 3 million sqft of office space to Dubai’s stock in the next three years.

Noteworthy developments include TECOM’s Innovation Hub Phase 2, One Za’abeel Tower, Uptown Tower, Gate Avenue Link Bridge, 6 Falak, and Al Wasl Tower. As announced, the expansion project of the Dubai International Financial Centre includes the development of 13 million square feet of leasable area, out of which almost half of the space will be dedicated for offices.

Share of new office requirements by sector – H1 2023

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3%
3%
6%
2% 1%
6%
37%
10%
14%
18%
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Business services

Manufacturing & industry

Confidential

Logistics

Technology
Retail & leisure
Banking & finance

Health service

Public sector

Retail estate development

Source: Knight Frank

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Dubai Industrial City
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Office Demand What this means for Despite the current challenge posed by TECOM Group the lack of Grade A office stock, new requirements continue to grow. In fact, as Our average rents across business per Knight Frank research, total new office demand climbed to 580,000 sqft in the first half of 2023, representing an increase of 23% limited availability of stock. Rising on H1 2022.

Our average rents across business districts continue to increase as demand for quality office space rises amid the limited availability of stock. Rising construction costs and supply chain issues are impacting project delivery timelines, which means office stock will likely remain in relatively limited supply, further driving up existing occupancy levels across our business districts.

As shown in the pie-chart, excluding confidential requirements, the business services (37%) and manufacturing & industry sectors (18%) are together responsible for more than 318,000 sqft of new demand.

We plan to capitalise on the high demand for Grade A space and ESG compliance through new developments and by enhancing our existing assets. Furthermore, rising interest rates have impacted business cash flows as we see increasing requests for consolidation of space, and we are making larger office spaces available to existing and prospective tenants. In addition, some of our existing and future customers may increasingly prefer Built-to-Suit (BTS) products as their stringent and customised requirements for office space intensifies.

In terms of location-specific demand, Business Bay (103,000 sqft), Dubai Investment Park (99,000 sqft), and Dubai Internet City (76,000 sqft) are at the league table. The growing demand is also reflected in occupancy levels, which reached 85% in the first six months of this year, up from 82% in the same period last year. Certain Grade A buildings are close to, or at 100% occupancy.

Office Rental Performance

The office lease rates in Dubai within most of the prime sub-districts have demonstrated strong performance. Tenants who had negotiated favourable lease terms during the pandemic are now reaching the end of their lease terms and are facing rental escalations during renewals. DIFC remains the city’s most expensive location to rent offices, driven by ICD Brookfield Place, where rents are well above the wider DIFC. TECOM’s business districts have also shown strong growth in both occupancy and lease rates, with Dubai Design District representing a 5% increase in the average lease rate as compared to last year.

The demand for co-working space and short-term leases have also experienced an upward trend in recent years. We have taken a pro-active approach and identified the growing need for flexible workspace solutions by expanding our D/Quarters footprint with the launch of a new location in Dubai Science Park, with plans for multiple new locations in the coming years.

What this means for TECOM Group

Industrial Market Overview

Dubai Industrial City (DI), Dubai Airport

Freezone (DAFZA), and Dubai South, with plans to further increase its warehousing space to 430,000 sqft by 2026.

The industrial market in Dubai is a thriving sector that plays a key role in the emirate’s economy, accounting for around 60% of GDP. Demand for industrial and logistics space during the first half of 2023 was the strongest on record across Dubai. The sector has witnessed continued growth since 2020. Initially, the demand was driven by companies moving their operations from another emirate to Dubai, followed by the near-shoring trend adopted by many companies.

DI stands in an optimal position to capitalise on the expanding industrial market and the heightened demand for warehouses. DI has strategic plans to further exploit its exclusive location advantages, particularly with the upcoming Etihad Rail 1 station in the industrial zone.

The e-commerce sector was another

key driver of demand during the current review period of H1 of 2023. There is an evolving model of e-commerce companies establishing a hub-and-spoke approach to their delivery channel. It is a very popular concept in mature markets, and we are starting to witness this trend across Dubai as well.

Moreover, in 2023, DI entered into strategic partnerships with the Ministry of Industry and Advanced Technology, MOCCAE, Emirates Development Bank and Dubai Economy & Trade. These collaborations aim to stimulate growth in the UAE’s manufacturing industry and fortify the country’s standing as a sustainable and appealing global industrial hub.

A strong push by the government to establish the country as a key hub for exports and reexports has led to increased occupancy levels across most of the warehousing hubs in the city. Demand was led by the manufacturing sector, especially from textile and building material suppliers. The emirate has also benefitted from the ‘China Plus One’ strategy (diversifying to one or more countries other than China) and the close economic ties between China and the UAE. An increasing number of Chinese manufacturing sector companies are leasing space to manufacture in the UAE and export to countries across the GCC and Africa.

Market Performance

The demand for occupier logistics and fulfilment centres has grown substantially post COVID-19, across all the major industrial hubs of the UAE. Industrial lease rates for most locations across the UAE have shown an increasing trend. Al Quoz remains a popular location due to its close proximity to major consumption centres of Dubai and Sharjah. Whereas JAFZA being an established free zone in the market since 1983, commands the interest from international and domestic players alike.

DI is committed to maintaining high occupancy levels in its current warehouses and bolstering revenue by aligning pricing with market trends. Additionally, DI is actively pursuing opportunities arising from underserved growth sectors. These sectors are predominantly influenced by the escalating prevalence of e-commerce activities and the growing demand for specialised warehousing and inventory space.

Along with companies from the manufacturing sector, demand was driven by third-party logistics players. A notable example is J&T Express from Indonesia – it has significantly ramped up its operations across Dubai and currently leases approximately 161,000 sqft of space across

The outlook for the industrial sector lease rates is expected to stay positive with an increasing focus on grade A segment, custom made fulfilment centres and Built-to-Suit (BTS) projects.

Sources: Knight Frank and Savills research

Key Market Drivers

Market Drivers Connectivity Government Policies Major Development – Etihad Rail

Sector Implications

Dubai’s central location makes it the epicentre of trade flows. The government has substantially invested through well-developed ports and airports.

Dubai’s industrial sector have benefited from several favourable government policies. ‘Operation 300Bn’ is a project that launched by the UAE’s Ministry of Industry and Advanced Technology (MoIAT) that aims to stimulate the national economy and raise the manufacturing sector’s contribution to the UAE’s GDP from AED 133 billion in 2020 to AED 300 billion in 2031.

In addition, the Comprehensive Economic Partnership Agreement (CEPA) was signed between the UAE and India, with expansion plans set to include Israel, Indonesia, Turkey, and Colombia, contributing to a positive outlook for Dubai’s industrial occupier market.

The development of Etihad Rail, a rail network of 1,200 km to connect seaports, major transportation hubs, distribution centres, free zone areas, major warehousing areas, and freight terminals is also playing a crucial role in accelerating the growth of the logistics sector in the UAE.

Source: Knight Frank research

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

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Target Employment Sector
Under Construction Site
Manufacturing Industries
Warehouse Facilities
Maritime Related Activities
Dubai Industrial City
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OUR MARKET CONTINUED

Market Performance

Worker Accommodation Market Overview

As of 2022, Knight Frank research Popular worker accommodation

estimated the bed supply at 1.2 million locations in Dubai beds with an estimated occupancy of 75%. If the projected employment and population figures are met, Knight Frank research estimates occupancy to rise to 82% by 2030. However, according to MEED, there are presently 18 projects either under construction or in the design stage. These projects are expected to be completed between 2024 and 2027 which might impact the actual occupancy rates in this segment. 3 1 The below map represents the prominent 2 labour camp areas in Dubai along with the average rent per bed. As per Knight Frank 5 4 research, these areas account for 94% of the total transactions in this segment from 2021 to Q3 2023. The significant variations in rental charges for labour 6 rooms in different areas can be attributed to several factors that command premiums such as quality and age of development, the number of individuals sharing a room, room 1 Al Quoz 4 Al Khawaneej size, available amenities and facilities within the accommodations, accessibility to roads, 2 Jebel Ali 5 Dubai Investment Park and more. 3 Muhaisnah 6 Dubai Industrial City Source: Knight Frank Research

There is a range of different forms of worker accommodation available in Dubai. However, the conventional segment consists of accommodation for workers within the construction and industrial sectors. The primary target audience for this segment includes workers in the construction and industrial sectors who have a low-income profile.

The demand for worker accommodation in Dubai mainly stems from increased employment in the industrial sector, transport, logistics, storage facilities, and, to a lesser extent, the agricultural sector.

Despite a projected gradual decrease in demand for industrial employment from 31% in 2021 to 28% in 2035, the impact on current worker accommodation demand is expected to be minimal.

The transport and logistics sector is projected to experience a steady 1.07% Compound Annual Growth Rate (CAGR), contributing to the rising demand for this segment.

While agriculture employment in Dubai makes a minor contribution to the worker accommodation demand, other sectors such as real estate construction industries are anticipated to play a more significant role in meeting the future accommodation needs

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Dubai Industrial City — Worker Accommodation
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What this means for TECOM Group

Key Market Drivers

Dubai’s continuous economic growth and expansion across various industries serve as a catalyst for an increased need for a skilled workforce, leading to a consistent demand for accommodations. We have worker accommodation assets in DI and will look to further capitalise on the growth within this segment.

Market Drivers

Sector Implications

Construction/Real Estate

The ongoing and ever-increasing construction activity in Dubai is a key driver for job growth in the labour force that subsequently translates into additional worker accommodation requirements.

Maritime & Logistics As per Knight Frank research, the logistics sector is expected to increase to AED 11.87 billion by 2026 with its growth rate set to accelerate at a CAGR of 6.84% throughout the forecast period. Additionally, the trade volume has displayed a consistent compound annual growth rate of 4.5% since 2014 with the maritime sector notably contributing to this growth.

Our diverse base of customers across industry segments, such as construction, manufacturing and logistics, provide our worker accommodations with multiple growth streams. In addition, we expect significant demand for our assets in DI following the development of Etihad Rail in the vicinity.

Retail – Food The UAE has about a third share of the total GCC wide retailing. The majority of the workers within this sector fall within the blue collar and grey collar workforce. Despite Saudi Arabia and the UAE being responsible for 85% of GCC food production, the region heavily depends on food imports, albeit with a recent decrease in volume. Despite over 80% urbanisation across the GCC, the surge of last mile delivery services, including Talabat and Uber Eats, increased labour demand, although the advancement of technology and autonomous drones might have an impact.

As a high-quality asset developer and operator, we review evolving customer needs and market trends, along with regulations to continuously assess and improve our workers accommodation product. Ensuring we provide the right amenities along with high quality assets will help us maintain our competitive advantage.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

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Dubai Industrial City
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OUR MARKET CONTINUED

Land Lease Market Overview

requirement. The surge in demand has resulted in a shortage of available land (particularly industrial land) in attractive, prime locations.

have led to investors showing increasing preference in such non-central zones.

Growing economic activity and favourable government initiatives specifically in the industrial, logistics, warehousing and sustainability sectors have resulted in an increased demand within the land lease segments. The lack of available high-quality stock in these segments remains the most prevalent challenge for occupiers. This has resulted in occupiers securing longterm land lease contracts and building their own facilities as per their customised

The map below shows the industrial land leasing communities across UAE with JAFZA, Dubai Industrial City and Dubai South being the most popular among the customers.

Concentration of Land in Key Industrial Areas in Dubai Historically, investors have sought to lease land within central industrial locations in Dubai. However, the depleting land inventory in these locations and the growth of industrial parks in secondary locations

Land Lease Density in Dubai

Dubai Maritime City

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Al Quoz
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Al Qusais Umm DAFZA Ramool Ras Al Khor

Jebel Ali Industrial Area National JAFZA Industries Park Dubai Investment Dubai Park Dubai Industrial South City

Market Performance

What this means for TECOM Group

Industrial land is typically available for lease terms ranging from 1 year to 45 years with most of the contracts secured over longer lease terms. The grace period and rent-free period varies between the industrial zones subject to the size of the land plot and development period.

Source: Savills Research

DI has a significant competitive advantage with its large land bank and breadth of plot sizes. DI will continue to capitalise on this, particularly as industrial land supply becomes more limited across the city. Land lease rates in central locations have skyrocketed as options become increasingly scarce. Customers have started shifting towards non-central locations with better lease terms and plot options, which DI continues to benefit from, particularly given its competitive rates.

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Dubai Industrial City
52
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Furthermore, supportive government initiatives for industrial segments, such as Operation 300 Billion, and DI’s strategic partnerships with government entities and other stakeholders continue to facilitate increased demand for DI land leases, and it is well positioned to benefit following the opening of Etihad Rail 1 station.

The outlook for the land lease segment remains buoyant as master-developers are looking to capitalise on the shortage of available land with higher lease rates and more stringent contracts.

Strategic Report

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ESG Corporate Governance Financial Statements
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POWERED BY GROWING AND SATISFIED CUSTOMERS
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prospective customers

Our Customers

We do much more than provide spaces for our customers to work. Our modern, integrated ecosystems are vibrant homes and dynamic communities for businesses of all sizes, encompassing leasing space development, co-working spaces, an incubation platform, and our wide-ranging complementary services. We are responsive to our customers’ needs to ensure exceptional experiences that enhance our reputation and drive business growth by supporting customer expansions and attracting new customers.

New Customers Renewal Success Rate 1,400+ 91%

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report

BUSINESS OVERVIEW

Capturing growth across our four business segments

OUR BUSINESS SEGMENTS

64% of Industrial customers are with 14% Typical Lease term 1 - 5 Years TECOM Group for five or Warehouses Worker more years. Accommodation This steadfast customer loyalty serves not only as a testament to our axs brand's integrity but also Others as a driving force behind our sustained success in a competitive market.

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Commercial Industrial
52% 14%
Typical Lease term 1 - 5 Years Typical Lease term 1 - 5 Years
Retail Warehouses
Office Worker
Accommodation
axs
Land Leasing
Others
Typical Lease term 30 - 50 Years
23% 11%
Land Services & Others
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TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Corporate Governance Financial Statements

Strategic Report

ESG

BUSINESS OVERVIEW CONTINUED

Commercial Leasing

Commercial Leasing has been the driving force behind the success and sustained growth of TECOM over the past two decades. As the owner of the largest commercial real estate portfolio in Dubai, our success is both a generator and product of the Emirate’s transformation into a knowledge and innovationbased economy. We continue to drive innovation and exceptional customer experience to attract leading organisations from around the world, who invest in, and create value for, key sectors in Dubai and the UAE.

Ammar Al Malik

Executive Vice-President Commercial Leasing

OVERVIEW In 2023, Commercial Leasing delivered an COMMERCIAL LEASING exceptional performance due to bolstered demand for high-quality office and coGross Leasable Area (million sqft) working space coupled with a short supply in the market. While the commercial sector around the world has been facing 2023 9.5 challenges amidst increasing preference for 2022 9.5 flexible workspace, Dubai has capitalised 2021 9.1 and positioned itself as a global hub for new and growing businesses. The UAE’s robust and diverse economy, along with the Occupancy (%) Government’s expansive value propositions for a diverse range of enterprises, have driven 2023 89.0 the occupancy levels to all time highs.

OVERVIEW COMMERCIAL LEASING

Gross Leasable Area (million sqft)

Occupancy (%)

2022 85.4 2021 80.4 TECOM’s 10 commercial districts continued to be the preferred choice for Fortune 500 and other multinational companies aiming to tap into opportunities in the UAE and wider Retention (%) region. Customers demonstrated increasingly stringent requirements, which led them to 2023 92.7 explore built-to-suit opportunities to fit their 2022 91.7 needs amid limited local supply. Grade A 2021 90.8 offices in our business districts experienced average occupancy levels above 90% during the year.

Retention (%)

In 2023, we welcomed more than 1,000 new customers to our commercial facilities. These included leading global companies such as AstraZeneca, Conde Nast, Giorgio Armani, Hisense, and Trip com, as well as educational institutions such as Harrisburg University and L’École School of Jewellery Arts. We also supported numerous expansions of existing customers, including CNN, Salesforce, LVMH, Sony Music, Puma, Farfetch, Middlesex University, Yum Brands, and Eppendorf.

Commercial Leasing experienced a notable uptick in demand for our research and development facilities and innovation centres, reflecting an increased focus on innovation for our clients. Our laboratory building at Dubai Science Park reached 99% occupancy in 2023. Jotun, one of the largest global manufacturers of paints and coating products, also commenced operations at its new research facilities in Dubai Science Park, following the examples of Himalaya Wellness and Firminech last year. With a proactive response to these market trends, we launched in5 Science at Dubai Science Park to further attract startups and entrepreneurs seeking to scale their businesses in the science industry.

Gross Leasable Area (sqft) 9.5M

Outstanding Financial Performance

to 63% in 2022. Improvements stemmed from higher top-line growth coupled with cost optimisation initiatives across our operations.

Commercial Leasing boasted stellar financial performance in 2023, accounting for 52% of the Group’s revenue. The segment earned revenue of AED 1,124 million, a 7% increase compared to AED 1,047 million the previous year.

WALT 2.8 years

Occupancy also increased in 2023 across the TECOM commercial properties to 89%, an improvement of 4% compared to the previous year. Retention stood at 93%, with the average lease lasting between one and five years.

Commercial Buildings 147

Growth was driven by increased occupancy levels across the portfolio, as well as improvements in rental rates across the central business districts. An addition of 858,000 square feet of new leases at higher rental rates during the year also added to the top line.

In response to growing and projected demand, Commercial Leasing is exploring various options for increasing its leasable area through acquisition or new developments.

Annual Passing Rent (AED) 1,119M Occupancy Rate 89%

EBITDA for 2023 was AED 772 million, a 18% improvement compared to the previous year. EBITDA margins for Commercial Leasing were 69%, compared

Estimated Rental Value (AED) 1,171M

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1 Dubai Internet City
2 Dubai Media City
3 Dubai Knowledge Park
4 Dubai Design District
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6 Dubai Studio City
7 Dubai Production City
8 Dubai International Academic City
9 Dubai Outsource City
10 Dubai Industrial City
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Valuation (AED) 12.2B 9.2% growth

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Our Location

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TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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BUSINESS OVERVIEW CONTINUED

Customer Loyalty (in years)

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<2 years 5-10 years 2-5 years >10 years

Strategic Focus

TECOM’s success with Commercial Leasing is based on our ability to provide a full ecosystem to support the growth of the world’s leading companies, while further developing our infrastructure and services to meet their expanding business needs. Our approach is aligned with the strategic growth of Dubai, including structural and regulatory changes that have made it a top global city. Customer engagement is central to our strategy, as we continuously enhance our service offerings and lead the way through innovation and digital transformation.

Our commitment to building robust ecosystems involves connecting our partners and their people. This year, we widened our partnerships by signing several memorandums of understanding (MoUs) with leading trade and educational organisations. These included MoUs between Dubai Internet City and German Entrepreneurship GmbH and the Polish Investment and Trade Agency, as well as between Dubai Design District (d3) and the Italian Interior Designers Association.

Commercial Leasing held many of the region’s most important events throughout the year, including Dubai Fashion Week and Dubai Design Week. We also hosted the Cartier’s ‘Into the Wild’ event at d3 to celebrate the global jewellery company’s history. Further, we participated in important events such as GITEX, Arab Health, and Gulf Food, as part of our outreach to connect with potential and existing customers and stay ahead of industry trends.

Key Commercial Leasing Milestones

Across our 10 commercial districts, 2023 was a year of outstanding achievements and memorable milestones

Dubai Design District (d3)

Dubai Internet City

Van Cleef & Arpels announces launch of L’ECOLE School of Jewellery Arts
Construction of Innovation Hub Phase 2 continued on schedule, with the AED 442 million project
MoU with the Italian Interior Designers Association AIPI
Strategic partnership with German Entrepreneurship GmbH to strengthen the start-up and entrepreneurship ecosystem
Successful launch of the second edition of Dubai Fashion Week
Cartier hosts its ‘Into the Wild’ campaign at d3
MoU with the Polish Investment
Biggest Dubai Design Week to date
and Trade Agency to provide Polish companies with insights and data on the Dubai market

in5

Formalised partnership with Dubai Chamber of Commerce to create Business in Dubai, a one-stop digital platform for start-ups outside the UAE
MoU with NIPA to enhance collaboration and facilitate the use of Korean technology
in5 start-ups raise more than AED 3 billion in investment capital

Dubai Media City

Global Media Congress strategic partnership

Dubai Science Park

Biopharmaceutical giant AstraZeneca announces plans to construct 27,680 square feet of sustainable office space

Dubai Knowledge Park

Launch of Harrisburg University and Plekhanov Russian University of Economics
Virax Biolabs Group announces establishment of regional headquarters
Celebrated 20th Anniversary, breaking a Guinness World Record for the world’s largest Rubik’s Cube.
TECOM launches its second D/Quarters co-working solutions location, following last year’s successful launch in Dubai Internet City
Launch of in5 Science to incubate science-focused start-ups

Future Outlook

TECOM will also focus on inorganic growth through new developments and asset acquisitions. We continue to invest in constructing new facilities and properties tailored to our strategic goals. As in previous years, we will expand our operations rapidly by acquiring existing assets such as operational facilities or land for leasing purposes.

In the year ahead, Commercial Leasing will continue to build upon our ecosystems, developing new offerings where there is strong demand and take advantage of growth opportunities. We aim to maximise occupancy by targeting growing industry segments and building, upgrading, and maintaining our high-quality spaces. We will focus on customer retention efforts and continue to enhance customer experience by offering market-leading amenities and engaging in continuous innovation and digitalisation.

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Commercial Leasing Events

Dubai Internet City

d3

in5

Dubai Science Park

Commercial Leasing looks forward to exciting growth opportunities coming to fruition in 2024. Construction on Innovation Hub Phase 2 at Dubai Internet City’s Commercial Offices is progressing on track. The facility will help us to meet market demand by providing more than 355,000 square feet of gross leasable area, including two high-end office buildings, four boutique offices, retail spaces, and more than 800 parking spaces.

In our market-leading portfolio of thriving ecosystems, we are strategically positioned to capitalize on growing market demand from large and discerning customers. With a robust pipeline of projects and asset enhancements, we aim to drive further growth across our commercial segments.

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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BUSINESS OVERVIEW CONTINUED

Industrial Leasing & Land Leasing

TECOM Group’s remarkable growth over the past decades is built on our customer-centric approach that promotes the success of our partners and the progress of the larger business community. In Industrial Leasing, we support the world’s leading companies by providing a full ecosystem of office space, logistics, land leasing, and worker accommodation. Through our comprehensive range of offerings, we provide our customers with a selection and experience that is unmatched in the market. We contribute to Dubai’s growth, benefiting from its success and playing a key role in attracting business and investments across all sectors, positioning Dubai as a global industrial hub for today and the future.

Saud Abu Alshawareb

Executive Vice-President Industrial Leasing

of 2023. We closed the year with more than 170 business partners for Industrial Leasing, compared to 120 the previous year.

TECOM’s Industrial Leasing portfolio soared this year as we met a surge in demand for logistics and worker accommodation. This is a testament to our exceptional infrastructure and continued focus on customer service excellence. Our wide-ranging leasing options across Dubai Industrial City, Dubai Science Park, and Dubai Production City continued to be the prime choice for leading multinationals seeking to expand their operations in the region and beyond. Dubai Industrial City alone, which accounts for 88% of our industrial assets, attracted more than AED 1.3 billion in investments from local and global manufacturing companies this year.

OVERVIEW INDUSTRIAL LEASING

Gross Leasable Area (million sqft)

This exceptional performance made Industrial Leasing a strong contributor to TECOM’s sustained growth in 2023, with the segment achieving revenues of AED 304 million. This was a 11% improvement compared to AED 274 million the previous year. Warehousing performed exceptionally well, with 11% revenue expansion year on year.

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Occupancy (%)
City alone, which accounts for 88% of our
2023 88.7
industrial assets, attracted more than AED 1.3
2022 86.5 billion in investments from local and global
2021 76.6 manufacturing companies this year.
In 2023, the Industrial Leasing segment
accounted for 14% of TECOM Group’s revenue.
Retention (%)
Our commitment to customer support and
2023 88.3 retention led to more than 700 lease renewals
2022 92.8 across our industrial properties. Over the course
2021 97.9 of the year, the number of operational factories
within our land leasing portfolio increased
from 300 at the end of 2022 to 306 at the end
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TECOM contributed to Dubai’s growing reputation on the world stage as a strategic destination for manufacturing and industrial activities. Revenues stemmed from a diverse mix of industries, such as manufacturing, construction, chemical production, food and beverage packaging, and pharmaceuticals. This portfolio remained balanced across industries, demonstrating and contributing to the resilience and sustainability of the UAE economy.

Throughout the year, we made a conscious effort to increase our average lease rates. Although our retention rates decreased compared to last year, we were able to counteract this drop by leasing these spaces at higher lease rates, while also improving our occupancy.

EBITDA for 2023 was AED 220 million, a 30% improvement compared to 2022. This staggering EBITDA performance is attributable to consistent growth in the industrial market, high occupancies, strong retention rates, rent escalations and efficient cost management. Industrial EBITDA margins were 72% in 2023, compared to 62% the previous year.

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Customer Loyalty (in years)
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Overall occupancy increased from 86% at
the end of 2022 to 89% at the end of 2023.
Warehousing achieved an occupancy rate
of 94% While our worker accommodations 26%
occupancy stood at 92% excluding inactive 31%
inventory. Further, overall customer retention
rate for Industrial Leasing was 88%. 42%
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customers by organising industry-related events and arranging one-on-one meetings with key clients. Our strong customer satisfaction rate of 88% further reiterates our conscious efforts of creating a customercentric environment.

Strategic Focus

In 2023, our strategic focus remained centred around contributing to the success of our business partners in tangent with the growth and prosperity of Dubai. Industrial Leasing provided exceptional support to our customers through prompt and professional service, coupled with high-quality facilities and market-leading innovation. We engaged proactively with our existing and potential

This year, we capitalised on opportunities in the market, tapping into demand from existing warehouse tenants seeking

Gross Leasable Area (sqft) 11.5M Warehouses 1,128

Worker Accommodation Buildings 81

Annual Passing rent (AED) 319M Occupancy 89%

Estimated Rental Value (AED) 412M Valuation (AED) 2.9B 21% growth

expansions, as well as new tenants from high-potential sectors. Notably, construction on Dubai Science Park’s Phase 2 is underway, in response to growth in pharmaceutical and device manufacturing. Encompassing 200,000 square feet of new warehouses, the project broke ground in 2023. With existing warehouses operating at full occupancy and a surge in demand for Grade A warehouses across Dubai, we expect the development to be significantly pre-let.

Our relationship with the UAE Government grew even stronger in 2023 as we worked hand in hand to strengthen and diversify the country’s industrial sector. This was demonstrated by the continued progress we achieved in partnership with Etihad Rail to plan the new railway station at Dubai Industrial City.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

DUBAI INTERNATIONAL AIRPORT

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Strategic Report ESG Corporate Governance Financial Statements
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BUSINESS OVERVIEW CONTINUED

This year, we also formalised three

government partnership agreements as part of our Make Brilliance campaign to elevate Dubai’s Industrial hub status globally. We partnered with the UAE Ministry of Industry and Advanced Technology and Emirates Development Bank for Make it in the Emirates, which provides AED 1 billion in financing. We also worked with the UAE Ministry of Climate Change and the Environment (MOCCAE) through our commitment to Net Zero by 2050, as well as by sharing our success stories of decarbonisation in the industrial sector. Further, we aligned with the MOCCAE’s 2050 Vision.

In line with Dubai Industrial City’s continuous efforts to contribute to sustainable growth in the UAE, we joined in partnership with the Dubai Department of Economy and Tourism to implement the D33 Agenda. As a key player in the industrial sector, we are committed to working with the Government to meet its goal of applying innovative approaches to double the GDP by 2033.

We also participated in COP28 this year – see case study on p.119 for more information.

Key Industrial Milestones

Across our industrial footprint, we continued to progress our strategy and build on our track record of achievement during 2023.

Dubai Industrial City

• COP 28

Opening of the THRYVE facility, the • Construction begins on Substation 5 to add first plant-based meat factory in the 200 megawatts to the existing capacity Middle East • TECOM wins the Leading Manufacturing
Middle East • TECOM wins the Leading Manufacturing
• Silver Line Gate Group, a leading supplier and logistics HUB award within the of milk powder, announces plans for its Logistics and transport 2023 Awards. AED 200-million manufacturing facility

Dubai Science Park

Khayyat Investments breaks ground Dubai Science Park on its 650,000 square-foot facility, its • Phase 2 construction begins, adding largest to date 200,000 square feet of warehouses

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Dubai Industrial City
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Gross Leasable Area (sqft)

164M

Number of Plots

789

Annual Passing Rent (AED)

481M

Occupancy Rate 94%

Estimated Rental Value (AED)

495M

Valuation (AED)

7.9B

2% growth

WALT

OVERVIEW A significant amount of new leasing and LAND LEASING exceptional receivables management contributed to the segment’s successful year Gross Leasable Area (million sqft) in 2023, both in terms of revenue and EBITDA. 2023 163.7 TECOM’s Land Leasing segment contributed 23% of the Group’s revenue this year, earning 2022 163.7 AED 502 million. This was a 15% improvement 2021 163.7 on the segment’s 2022 revenues of AED 436 million. EBITDA for Land Leasing in 2023 was AED 481 million, compared to AED 367 million in 2022, a significant 31% increase. Land Occupancy (%) Leasing EBITDA margins were 96%, 2023 94.0 compared to 84% the previous year.

The segment served more than 600 active land lease customers across nine of its districts. Total land leased amounted to 155 million square feet at the end of 2023. This was a 21 million-square-foot increase compared to 2022, more than the previous year’s expansion of 10 million square feet. Occupancy stood at 94% at the end of 2023, compared to 81% the previous year.

OVERVIEW LAND LEASING

Gross Leasable Area (million sqft)

Growth was largely due to a shortage of industrial land in the market and efficient utilisation of the opportunity by TECOM, with companies centralising their locations and securing larger plots.

Occupancy (%)

2022 81.0 2021 74.6

Diversified Land Lease Portfolio

Land Leasing

Land Leasing is an important source of income for TECOM, providing flexibility to the 10 1 1. Base Metal 19% Group and prospective investors. It allows 2. Machinery 16% TECOM to generate revenues with lower 9 3. Food & Beverage 14% amounts of investment and operational costs, 8 4. Mineral 12% while prospective investors incur no costs of 7 5. Chemical 7% upfront land acquisition. It also enables us 6 600+ 2 6. Logistics and Transport 7% to reduce our overall risk exposure, as most 7. Automotive 4% of the leases are tied through long-term 5 8. Research and Development 2% contracts, giving TECOM more stability even 3 9. Fabrication and Production 2% 4 through unforeseen events. 10. Other 18%

31.8 years

Our Locations

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1 Dubai Internet City
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6 Dubai Production City

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2 Dubai Media City
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7 Dubai International Academic City

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3 Dubai Knowledge Park
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8 Dubai Outsource City

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PALM
JEBEL ALI
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9 Dubai Industrial City PALM
JUMEIRAH
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4 Dubai Design District
5 Dubai Science Park

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DUBAI MALL
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6
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EMIRATES ROAD
SHEIK AMMEDBIN
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EXPO
2020 DUBAI
SHEIKH MOHAMMEDBINZAYEDR
OAD
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9 AL MAKTOUM INTERNATIONAL AIRPORT

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

BUSINESS OVERVIEW CONTINUED

Business Services

Business Services has played a pivotal role in shaping the achievements of TECOM Group by offering a diverse range of services tailored to meet the ever-evolving needs of our clients across various industries. Moreover, it represents a distinct competitive advantage, setting us apart from our industry peers, with no other organisation offering such depth of support services and customer care.

In 2023, our strategic focus expanded to introduce additional revenue streams, driven by the need for sustained growth and adaptability in a dynamic business landscape. We emphasised technological innovation to enhance operational efficiencies and elevate the overall customer experience, aligning with our commitment to staying at the forefront of industry trends.

Ahmad Al Mheiri

Senior Vice President Business Services

Segmented Revenue

Segmented Revenue Our goal at TECOM Business Services is to create a vibrant and dynamic environment where businesses and entrepreneurs can 8% 5% grow and connect with each other. 10% We provide a variety of services that add value to our business districts and generate additional income for the Group, including 58% government processes, registration, and licensing. 19% Our portfolio of award-winning business services also includes D/Quarters flexible coworking space, in5 innovation and incubation services, and Advertising and axs Freelancers Venue Management Services (AVMS), Co-working Others which collectively offer a range of valueadded solutions to businesses of all sizes PMLA*

We provide a variety of services that add value to our business districts and generate additional income for the Group, including government processes, registration, and licensing.

Our portfolio of award-winning business services also includes D/Quarters flexible coworking space, in5 innovation and incubation services, and Advertising and Venue Management Services (AVMS), which collectively offer a range of valueadded solutions to businesses of all sizes across Dubai.

*Property Management and Lease Agreements

Financial Performance

This year, Business Services continued to grow by offering exemplary services to TECOM Group’s customers. Our EBIDTA for the function stood at AED 180 million, a 17% increase compared to 2022, while our EBITDA margin stood at 75%, increasing 4% over the previous year – a strong result in light of regulatory changes during the year that directly impacted Business Services’ revenues.

Business Services showcased agility and resilience to respond to these changes, earning AED 240 million in total revenue. This was a 11% increase compared to 2022, where it achieved revenues of AED 216 million.

In 2023, Business Services contributed to 11% of TECOM’s total revenue. Of the Division’s revenue, 58% was attributable to axs, our business and government smart services platform. This was followed by D/Quarters, property management and leasing, and freelancer services.

Key Metrics

Strategic Focus

The success of Business Services in 2023 revolved around expanding our service portfolio, offering a more comprehensive range of solutions to meet the diverse needs of our customers. This expansion allowed us to address a wider spectrum of challenges and provide tailored solutions, ultimately improving overall customer satisfaction and loyalty. We received consistently positive feedback from our customers, further affirming the effectiveness and value of axs and our Business Services Division.

Customer Satisfaction

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2023 89.0%
2022 89.8%
2021 81.3%
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We also leveraged advanced digital technologies to streamline and modernise our customer interactions. Through user-friendly digital platforms and tools, we provided customers with more accessible and efficient ways to access our services, reducing response times thereby enhancing convenience.

Digitisation of Services: 91% 2023 15,650 2022 19,685 2021 50,335

Innovation Milestones

At TECOM Group, our commitment to digitisation and innovation helps us stand out from our competitors and maintain our status as a world-leading ecosystem builder.

Number of Freelancers

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2023 4,342
2022 3,486
2021 2,728
Number of Coworking Spaces
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Implementation of automated process orchestration in service processing

Delivered axs digital service enhancements and new features

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8%
13%
5%
Document Attestation
services partnered with VFS 16%
2,800+
71%
Integration with Ejari facilitated
documentless licence renewals
for PMS partners
Private Offices Hot Desks
Dedicated Desks
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Enabled the D/Quarters App and parking services in new locations

Automated the Collection Dunning Process

Key Business Services Milestones

axs

axs revenue

axs is a comprehensive platform for our customers, providing a variety of critical business services via a seamless digital platform as well as customer care centres. Transactions through axs increased to reach 169,000 in 2023, while customer satisfaction stayed at a healthy level of 89%.

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2023 140
2022 138
2021 113
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Revenues generated from axs services totalled AED 140 million in 2023, compared to AED 138 million the previous year. This maintenance of revenues at or above the last year’s level is an achievement given the various visa reforms introduced by the government recently.

No. of Transactions in thousands

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2023 169
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Efforts towards digitalisation paid off with a reduction in footfall from 19,685 to 15,650 reflecting on our continuous efforts towards innovation and digitisation.

2022		160
2021	136

Building on this strong foundation, axs is not only a recognised leader in its field but continues to widen the gap by investing in digitisation and customer experience.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Financial Statements

Strategic Report

ESG

Corporate Governance

D/QUARTERS

Our inaugural D/Quarters facility at Dubai Internet City and Dubai Media City has reached full occupancy, marking a significant milestone. Excitingly, during 2023, we unveiled a brand-new location at Dubai Science Park, extending our presence in co-working spaces market.

D/Quarters

The landscape of the traditional commercial segment is evolving as we see an increasing preference for flexible workspace options and shorter-term contracts. In 2022, we launched the D/Quarters co-working space to address growing demand for dynamic business environments where like-minded individuals can work and collaborate. Showcasing TECOM’s ability to adapt and innovate to meet evolving market demand and customer preferences, it provides modern office solutions for a wide range of clients, from freelancers to small businesses to multinationals.

D/Quarters is currently offered in Dubai Internet City, Dubai Media City and Dubai Science Park, with plans for expansion at additional locations across TECOM’s communities in Dubai to meet growing demand. D/Quarters also aims to continue to enhance and expand its service offering to meet the evolving needs of its clientele.

GoFreelance

GoFreelance offers a competitive package for freelancers that covers 70 activities in media, technology, design and education sectors. GoFreelance helps freelancers find new jobs and grow their network, including through our online marketplace.ae which connects them with potential corporate customers from our ecosystem.

D/Quarters Revenue

in5

in5 continues to foster creativity and growth to entrepreneurs and start-ups in Dubai by 2023 45 offering five key benefits to its members: 2022 45 business setup, creative workspaces, 2021 42 mentorship, workshops and events, and access to investors. in5 has four specialised and fully equipped innovation centres, each focusing on a different sector. GoFreelance Revenue • in5 Tech, located in Dubai Internet City, helps aspiring entrepreneurs scale their 2023 15 disruptive ideas. 2022 12 • in5 Design, located in Dubai Design District, is an innovation centre for 2021 9 aspiring talent to achieve their design ambitions.

in5 Media, located in Dubai Production City, is a digital media hub with a focus on creative output and content creation.

in5 Revenue

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2023 12
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in5 Science, located in Dubai Science

City, is a digital media hub with a focus on creative output and content creation. in5 Science, located in Dubai Science	2023		1
Park, is a dedicated vertical for scientific	2022		11
entrepreneurship that opened in 2023.	2021	9

Advertising and Venue Management

(AVMS)

AVMS Revenue

TECOM’S AVMS continued to offer a range of services for businesses and events in 2023. This included renting commercial 2023 spaces for advertising purposes, both short 2022 5 and long term. It also involved managing 2021 5 indoor and outdoor venues for various occasions, such as events, meetings, conferences, and exhibitions.

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Future Outlook
In the year ahead, Business Services aims to accelerate digitisation of its client-facing services to deliver a more efficient and
engaging experience. This will involve adding new services to the axs platform, such as digital signatures and property insurance
support, and shortening the processing times for a number of our services.
Another key initiative will be the implementation of a new AVMS strategy. This will involve adding out-of-home (OOH) advertising
locations to our existing portfolio of OOH products. We will also launch an AVMS online platform for our clients to conveniently book
venues across our communities for their business meetings and events.
In line with our commitment to continuously enhancing our value proposition to our customers, we are developing a customer
engagement strategy that we plan to roll out in 2024. This strategy will aim to develop stronger customer relationships and improve
client satisfaction, by creating differentiated and enhanced customer value across our services and footprint.
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TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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PROPERTY REVIEW

TECOM Group maintained strategic focus to deliver on our promises during another year of robust valuation growth, reflecting our unwavering focus on maximizing shareholder value while expanding and enhancing our market-leading portfolio across all our dynamic business districts.

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Dubai Internet City
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Key valuation facts

Valuation

TECOM Group’s Investment Property (IP) was valued at AED 22.9 billion , as of 31 December 2023, according to CBRE’s valuation. This represents an increase of 7.7% (AED 1.5 billion+) in value of underlying assets compared to the previous year’s annual valuation, which was primarily driven by an increase in value of the Group’s operating assets by 11.3% that account for two-thirds of the IP portfolio.

We continued to deliver on our promises to our shareholders and stakeholders, having made significant strides since the IPO. Our IP valuation has increased by more than 18.2% since the Group was listed last year, representing value growth of AED 3.5 billion+ and in line with our focus on sustainable value creation.

Investment Property Valuation (in AED billion)

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Q4 2023 22.9
+7.7%
Q4 2022 21.3
Q1 2022 (IPO) 19.4
Q4 2021 19.1
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Valuation Contribution – By Business Segments

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6%
29%
53%
12%
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Commercial leasing Available land Land leasing Industrial leasing

This year, we proactively amplified our customer acquisition efforts in order to expedite our organic growth, aiming to achieve stabilized occupancies for our operating assets across our business districts. This approach yielded an increase in occupancy uptake across both our office and industrial leasing portfolios. Central Business District (CBD) offices occupancy (Dubai Internet City, Dubai Media City, Dubai Knowledge Park and Dubai Design District) increased by 4%, while occupancies for non-core CBD offices and warehouses both increased by 1%, respectively, since the beginning of 2023.

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Dubai Knowledge Park
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In addition, the shortage of Grade A office supply in Dubai’s commercial market and the overall improvement in Dubai’s real estate sector performance enabled us to increase average lease rates for our operating assets. A prime example of this is our performance in Dubai Design District, wherein our average lease rates increased 5% compared to last year.

In terms of our land bank this year, we secured 91 longterm land lease contracts, for an additional 21 million sqft of land area, resulting in an overall land lease portfolio of 155 million sqft

Following the significant post-pandemic rebound in economic activity across the UAE, the overall investment market in Dubai remained buoyant, leading to stable cap rates across the asset classes.

Portfolio Equivalent Yield (%)

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8.6
8.0
7.8
7.7
2021 2022 2022 2023
Q4 Q1 (IPO) Q4 Q4
Sources: CBRE valuation dated 31 December 2022 and 31 December 2023;
JLL valuation dated 31 March 2022.
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Breakdown of existing/new projects – by GLA (in '000)

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46%
0.9m
54% Total GLA added/
to be added
Completed BTS projects (2021 onwards)
Projects under development
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Our Assets

TECOM Group’s growth strategy is designed to maximize the operational performance of existing assets, while adding new inventory through development of builtto-suit and built-to-lease facilities as well as asset acquisitions.

Considering the booming commercial and industrial real estate market, we will continue to explore asset acquisition and development opportunities to expand our portfolio.

TECOM Group PJSC | Annual Report 2023

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Strategic Report ESG Corporate Governance Financial Statements
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PROPERTY REVIEW CONTINUED

At TECOM Group, we hold all our assets to the highest quality standards in the industry.

All our assets undergo a rigorous asset enhancement and maintenance program, which is based on an exhaustive prioritization process grounded on the most optimal risk mitigation and cost/benefit consideration.

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Assets Enhancement Cycle
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Asset Management & Enhancement Objectives

Renovation & Preventive Modernization Maintenance

CAPEX investments

Internal & External Tenant Assessments Engagement

Our portfolio comprises state-of-the art, well-maintained and long-lasting assets, which we continuously monitor to ensure that all our commercial and industrial assets meet the highest operating standards and technical conditions.

We continue to take a conservative approach to setting aside funds to finance necessary refurbishment and maintenance expenditures, maintaining an effective balance between growth and maintenance expenditures across our portfolio.

In 2023, we invested AED 104 million to ensure bestin-class operating standards and technical conditions across our portfolio. As shown below, our CAPEX was evenly spent on value-add enhancement and asset management during the year. The increase in CAPEX is in line with our ongoing commitment to keep all our assets up to date through adherence to exceptional maintenance standards.

Maintenance and Enhancement Capex (in AED Million)

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2023 104
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2022 119
2021 84
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60%
40%
Asset Maintenance
Value Add Enhancement
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Invested in Asset Upgrades AED 104 M

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Dubai Media City -
Boutique Offices
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Strategic Report ESG Corporate Governance Financial Statements

CFO’S MESSAGE

Michael Wunderbaldinger

2023 highlights

2023 was a great year for the commercial real estate market in Dubai. As the emirate’s largest curator and operator of a diverse portfolio of commercial and industrial properties, we were uniquely positioned to convert attractive demand-driven market opportunities into profitable growth.

Revenue for the year reached an alltime high AED 2.2 billion, exceeding our expectations. The 10% YoY growth in the top line was predominately driven by high occupancy rates across the portfolio, while an increase in rental rates, especially in centrally located built-to-lease assets, also contributed to top-line expansion. Importantly, our revenue quality is improving, driven by better business and operating conditions, and is now more diverse thanks to an encouraging increase in the number of customers across the portfolio. We anticipate sustaining revenue growth in 2024, underpinned by our confidence in maintaining occupancy levels at an average of 89%, as we continue to retain and grow our diverse customer base through acquisitions and organically.

During the year our focus was on optimising operations and streamlining the Group’s cost base to help drive EBITDA expansion. Our efforts are paying off. In 2023, EBITDA increased 23% YoY to AED 1,654 million, with EBITDA margins coming in at a very healthy 76%, well above industry average. We expect to keep EBITDA margins at current levels, as we optimise and grow our business and portfolio.

We ended the year with a net profit of AED 1,078 million, a 49% YoY increase. Our strong operating performance was the main contributor to bottom line expansion. Furthermore, our ability to drive financing costs lower through the refinancing of an existing AED 7.6 billion loan facility also helped us in delivering a robust bottom line. In the absence of a black swan event, we are confident in our ability to continue delivering robust profitable growth in 2024 and beyond.

Broad-based growth across all business segments

All business segments delivered a robust performance in 2023, with the Commercial Leasing and Land Leasing businesses standing out as our star performers this year.

The Commercial Leasing business enjoyed a 7% YoY increase in revenue to AED 1,124 million, driven by an increase in occupancy rates compared to the year-ago period to 89%. Of note, our prime offices in central business districts (CBD) delivered an exceptional performance, with vacancy rates of only 9%. This reflects existing and new customers’ appetite for those types of workspaces, and our ability to satisfy market trends. As a result, rental rates across CBD properties rose by 3% YoY.

Structural changes in several industries, such as e-commerce and retail sectors, together with government-led initiatives and programmes, have spurred strong demand for warehouses, storage, and logistics spaces and solutions. We have been a key beneficiary of this trend, which translated into a 11% YoY revenue growth in the Industrial Leasing segment. Within our current warehouse portfolio, which is concentrated mainly in Dubai Industrial City, we are operating at near full capacity. This is why we took the strategic decision earlier this year to launch new logistics and storage facilities in Dubai Science Park.

The Land Leasing segment, which provides us with the greatest revenue stability at very low capex and costs, produced resilient growth, with revenue increasing 15% YoY to AED 502 million. As for the valueadded services segment, it too had a good performance, with revenue increasing by 11% YoY to AED 240 million, predominately driven by strong growth in revenue from D/Quarters, our co-working space.

Flexing our financial muscle

A critical achievement in 2023 was successfully refinancing an existing AED 7.6 billion loan facility at significantly lower rates and better terms, leading to significant and immediate interest expense savings over the five-year period. The new facility, maturing in June 2028, converted the remaining AED 3.2 billion from the previous syndicated loan into a revolving credit facility, providing us with greater financial flexibility till maturity.

The refinancing has already yielded a positive impact; our average cost of borrowing for the next five years is 4.41%, below industry average. Our ability to successfully negotiate lower terms despite a rising interest rate environment is a testament to our solid market reputation and the banking community’s confidence in our financial prowess and our ability to deliver profitable growth in the mid to long term.

Geared up to accelerate growth

We ended the year on a strong financial footing, very well placed to harness the growing demand of commercial real estate market and enhance our revenues with more than 350,000 sq. ft. of innovation hub phase -2 leasable space expected to be added during 2024.

Our liquidity position is strong, with funds from operations at AED 1.4 billion and recurring free cash flow of AED 1.2 billion, which will predominately be deployed to fund parts of the five-year new development and asset acquisition initiatives. Through our prudent capital management, and with AED 3.2 billion in untapped capital available to us through the revolving credit facility, we believe we can execute our strategic initiatives while committing to dividend distribution, in line with our dividend policy.

As a result of our pro-active approach towards efficient capital management, we successfully refinanced an existing AED 7.6 billion loan facility at significantly lower rates and better terms.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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CFO’S MESSAGE CONTINUED

FINANCIAL REVIEW

Delivering continued growth and shareholder value

On a final note, I would like to extend my gratitude to our dedicated employees, valued customers, and our shareholders for your continued support and confidence in TECOM Group. We look forward to continuing to build on our success to create sustainable value for all stakeholders.

Committed to investor engagement

We believe that by maintaining open lines of communication with the investment community, we will be able to help drive greater interest in the TECOM Group story and attract a broader shareholder base. To that end, I am very pleased that today we have eight sell-side research houses covering our stock and we anticipate continuing adding more in the coming months.

We are also firmly committed to engaging with our shareholders and the wider investment community to ensure our strategy and unique value proposition are well understood. Over the course of the year, we attended several investor conferences, held investor meetings, hosted an earning call on a quarterly basis to keep the investment community well-informed about the key drivers of our financial and operational performance vis-a-vis macroeconomic and operational conditions, and discussed our strategic priorities for the year.

TECOM Group posted a robust financial performance in 2023, with significant revenue and EBITDA growth compared to the previous year to surpass targets for the year. This achievement was further augmented by a combination of effective cost management, strategic investments, and a keen focus on customer satisfaction.

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Michael Wunderbaldinger

Overall, this strong performance reflects the successful execution of our financial strategy, demonstrating resilience and adaptability in a dynamic economic landscape. As we move forward, we remain dedicated to sustaining this positive momentum and delivering sustained value to our stakeholders.

Our EBITDA margin improved by 8%, underscoring our commitment to operational efficiency, while our prudent financial strategies allowed us to reduce overall debt cost by 23%, strengthening our financial position. In addition, our cash flow remained healthy, providing us with the flexibility to reinvest in core business areas and pursue strategic opportunities.

Chief Financial Officer TECOM Group

Income Statement	2023	2022	Variance	Variance %
AED m
Revenue	2,169	1,973	196	10%
EBITDA	1,654	1,347	307	23%
EBITDA Margin	76%	68%	8%
Net Profit	1,078	726	353	49%
Net Profit Margin	50%	37%	13%
Revenue	Ad	ditionally, our focus on customer		satisfaction

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EBITDA 1,654 1,347 307
EBITDA Margin 76% 68% 8%
Net Profit 1,078 726 353
Net Profit Margin 50% 37% 13%
Revenue
Our Group has achieved remarkable success
in 2023, reporting a substantial year-over-year expanding their leases. Product expansion
revenue growth of 10% and crossing AED 2 efforts, particularly D/Quarters and in5,
billion milestone for the first time. Our flagship
business districts, Dubai Design District and to the increase in revenue. The success of
Dubai Industrial City, played pivotal roles,
contributing to a majority increase in revenue. market visibility, directly impacting on the
Revenue by Segment (AED million) Revenue by segment (%)
2023 1,124
Commercial 2022 1,047 11%
2021 900
304 23%
Industrial 274
52% 2,169M
244
502
14%
Land Lease 436
439
Dubai Science Park 240 Services & Industrial
Services & Others 216 Others Commercial
182 Land Lease
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Additionally, our focus on customer satisfaction has resulted in numerous business partners expanding their leases. Product expansion efforts, particularly D/Quarters and in5, have borne fruit, with notable contributions to the increase in revenue. The success of partnerships has significantly heightened our market visibility, directly impacting on the increase in revenue attributed to these efforts.

2023 Highlights

Commercial Leasing Revenue

AED 1,124M

7% Growth

Land Leasing Revenue

AED 502M

15% Growth

Industrial Leasing Revenue

AED 304M

11% Growth

Services & Others Revenue

AED 240M

11% Growth

Net Profit Margin

50%

13% Increase

Return on Assets

7%

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3% Increase
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TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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FINANCIAL REVIEW CONTINUED

Commercial Leasing

Land Leasing

The Commercial Leasing segment exhibited sturdy performance, witnessing a revenue surge of AED 76 million, translating to a remarkable 7% increase from AED 1,047 million in 2022 to AED 1,124 million in 2023. Notable contributions were observed across various sectors.

The Land Leasing segment’s revenue has shown promising growth of 15% over the year, reaching AED 502 million in 2023 from AED 436 million in 2022. This increase comes from long list of new leases and can be attributed to the following key factors.

Economic trends in the region have positively influenced the demand for industrial land, aligning with our portfolio. This macroeconomic support, combined with our proactive approach to identifying and capitalising on market opportunities, has played a significant role in driving revenue growth.

The Design sector experienced phenomenal revenue growth, attributed to the consistently high occupancy, and rent rate escalations driven by new leases and strategically negotiated renewal leases. Education, Technology, Media and Science sectors all made significant contributions to revenue growth, banking on stable occupancies, new leases and strong customer retention and satisfaction.

Costs-Excluding depreciation and amortisation

Costs	2023	2022	Variance	Variance
	AED m	AED m	AED m	%
Direct Costs	(389)	(410)	21	5%
Operating Expenses	(174)	(259)	85	33%
Total	(563)	(669)	106	16%

In line with our ESG framework we continued our commitment to green energy initiatives with investments in solar generation projects keeping our utility cost on a flatter trajectory, despite the addition of new leasing spaces. For more information about TECOM’s ESG focus and performance, see p.98.

Direct Costs

Direct costs, encompassing facilities management, utilities, and visa services, dropped by AED 21 million during 2023. This was primarily driven by lower costs of sales for visa services, as new products were introduced with different cost structures.

Direct Cost Components

Operating Expenses (OpEx)

Operating expenses (OPEX) witnessed a decrease of AED 85 million in 2023, attributed to prudent cost control and reversal of bad debt provisions driven by efficient receivables and collections management.

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14%
9% 39%
38%
FM axs
Utilities Others
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Industrial Leasing

The Industrial Leasing segment demonstrated robust growth, with revenues of AED 304 million, marking an increase of AED 31 million or 11% from the previous year. The leasing performance in both warehouse and worker accommodation products has exhibited commendable growth, with persistent occupancy growth alongside lease rate escalations.

Services and Others

Revenue from our Services and Others segment experienced a solid growth of 11% to reach AED 240 million. This growth was attributed to rising demand for co-working spaces alongside stable performance of our well-known visa services.

Finance costs – net

The Group’s weighted average cost of debt exhibited a declining trend over the years reaching 4.03% from 5.19% in 2022, reflecting efficient capital and debt management. Derivative financial instruments, such as interest rate swaps, provided security, with a current fair value of AED 219 million fully recognised in equity.

Net finance costs dropped by AED 54 million from AED 235 million in the previous year to AED 181 million in 2023. Factors influencing this drop included lower margin on refinanced facility and derivative instruments, along with interest income earned on efficiently managed surplus funds.

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5.64%
5.19%
227
235
181
4.03%
2021 2022 2023
Weighted average cost of debt
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Recurring Free Cashflow (RFCF)

Funds from Operations (FFO)

The Group’s recurring free cash flow has consistently demonstrated resilience and effectiveness with a 23% growth and 72% conversion from EBITDA, showcasing its prowess in generating positive cash flow from core operations. This not only underscores financial stability but also hints at potential avenues for strategic investments or returning value to shareholders in the form of dividends.

FFO performance has been vigorous, with a noteworthy 21% growth to AED 1,447 million, underscoring the Group’s strong cash generation from core operations. 87% EBITDA conversion to FFO reflects a strong cash conversion from core activities of the Group.

Furthermore, positive trend signifies the ability to sustain shareholders’ expectations and support further growth initiatives. FFO remains a key metric for evaluating the financial strength and income-generating capacity of the Group’s real estate assets.

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89% 87%
72% 72%
75% 59%
1,447
1,198 1,189
1,009 964
798
2021 2022 2023 2021 2022 2023
% Age of EBITDA % Age of EBITDA
1447
1198 1189
1009 964
798
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Balance Sheet

Solid equity growth of 6% for the year to reach AED 6,329 million despite dividend distributions indicates a strong financial foundation, providing a cushion for operational fluctuations and potential expansions. No change in outstanding debt from 2022 apart from amortisation of arrangement fee, as we recycled equity for any capital expenditures and maintained a healthy balance between debt and equity. We also remained significantly better off the debt covenants over the year.

Growth in assets of 2% underscores effective capital allocation and strategic investments, contributing to the Group’s overall value. Adequate cash & bank of AED 1,535 million alongside AED 3,200 million un-utilised debt facility showcase liquidity readiness, offers flexibility for operational needs and strategic opportunities. Healthy working capital position reflects efficient day-to-day operational management, ensuring the Group can meet its short-term obligations.

Balance Sheet	2023	2022	2021
	AED m	AED m	AED m
Investment Properties	11,865	11,874	13,368
Cash & Bank	1,535	1,261	1,246
Total Assets	14,814	14,555	16,364
Debt	4,352	4,342	3,965
Equity (IFRS net Assets)	6,329	5,968	5,613
Net Debt	2,817	3,081	2,719

In summary, the balance sheet paints a picture of a financially sound company, strategically managing its resources to foster stability, growth, and sustained shareholder value.

2023 Highlights

Equity

AED 6,329M

6% Growth

Total Assets

AED 14,814M

2% Growth

Direct Costs

AED 389M

5% Decrease

Operating Expenses AED 174M 33% Decrease

Finance Costs-Net

AED 181M

23% Decrease

Return on Capital Employed 12%

2% Increase

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

Strategic Report

FINANCIAL REVIEW CONTINUED

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Net Debt (AED)
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Available Funds

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3,500 3,200 3,081
3,200
2,817
2,719
1,535
1,246 1,261
2021 2022 2023 2021 2022 2023
Undrawn Facility Cash
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2023 Highlights

Available Funds

AED 4,735M

CAPITAL MANAGEMENT AND FUNDING

In the realm of capital management, our Group has demonstrated a commitment to excellence, implementing strategies that have not only optimised our financial structure by maintaining robust leverage levels and healthy interest cover but also led to a substantial reduction in finance costs.

Cashflow

Our operating cashflows currently stand at AED 1,631 million, representing an increase of 8% over 2022. This growth reflects strong working capital management in general, along with efficient receivables management in particular.

Our capital expenditure during 2023 was AED 433 million, which is 29% lower compared to 2022, as we are in the design stage of the upcoming growth projects, however we continued to invest in the enhancement of our existing assets.

EPRA Performance Measures

The Group exhibited substantial growth in terms of EPRA performance measures. EPRA Earnings grew by 47%, reaching an all-time high of AED 1,502 million, with Earnings per Share reaching AED 0.30. EPRA net assets stood at AED 17,160 million, reflecting a substantial increase of AED 2,108 million compared to 2022. The net initial yield reached 6.7%, marking a 10 basis points increase from the previous year.

Our year-end EPRA performance measures highlight the financial strength and operational efficiency within the real estate sector as EPRA earnings grew by 47% reflecting the core operational performance, excluding depreciation and valuation impacts. Furthermore, positive trend in EPRA NTA despite slight increase in net initial yield by 10 basis points reflects the value creation within the Group for its existing and new assets.

On the financing activities front, in the absence of major capital expenditure, we paid off dividends and the interest on the loan balance which was drawn last year.

Cashflow	2023	2022	2021
	AED m	AED m	AED m
Operating Cashflow	1,631	1,504	1,254
Investing Cashflow	(477)	(1,043)	494
Financing Cashflow Net Cashflow	(761) 393	(953) (492)	(1,550) 198
Cash & Cash Equivalents	670	277	768

Overall, the positive performance across these EPRA measures suggests a well-managed real estate portfolio, aligned with industry best practices, and positions TECOM Group favourably within the market.

DIVIDENDS

In June 2022, we announced our dividend policy as part of our IPO prospectus, with a commitment of semi-annual dividend pay-outs adding to AED 800 million per annum.

2023 Highlights

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FFO Dividend Coverage
H2-2022 2023 2024 H1-2025 181%
RFCF Dividend Coverage
149%
Paid Planned
400 400 400 400 400
200 200
Nov 22 Apr 23 Aug 23 Apr 24 Sep 24 Apr 25 Sep 25
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We have delivered on this commitment since the Group’s listing and remain committed to honouring our future dividend pay-outs of AED 800 million annually, as per our dividend policy based on our strategy and business model.

With our healthy profitability and cashflows, we have a strong dividend coverage ratio of 149%, based on 2023 recurring free cashflow and planned annual dividend.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

A CARING AND CONNECTED CORPORATE CULTURE

We create places to work where our colleagues enjoy a collaborative and supportive culture

Our Colleagues & Culture

We prioritise the health and well-being of all our colleagues, ensuring that they have modern, healthy and safe work environments, and connecting them by fostering a supportive and collaborative corporate culture. In order to achieve our individual and organisational objectives, we continue to invest in attracting, developing, engaging and retaining the best possible talent at every level of the Company, prioritising work-life balance, diversity and inclusion.

Employee Retention Training hours per employee 93%+ 15+

Dubai Outsource City

TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements

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KEY PERFORMANCE INDICATORS

Measuring our performance

TECOM Group sets strategic targets and tracks progress against our targets to evaluate strategic progress, the impact of our work and the value we create. These Key Performance Indicators (KPIs) are also used to manage internal resources effectively and to determine variable remuneration rewards for our Senior Management and employees.

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Revenue (in AED) EBITDA (in AED) Funds From Operations (FFO) (in AED)
2,169M 1,654M 1,447M
2023 2,169 2023 1,654 2023 1,447
2022 1,973 2022 1,347 2022 1,198
2021 1,766 2021 1,171 2021 1,009
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Why we use this indicator

EBITDA is one of the key measures to evaluate TECOM Group’s operating and financial performance and the most important driver behind cashflows and dividend distribution. EBITDA is net income before deduction of interest, taxes, depreciation, and amortisation.

FFO measure helps us to maintain healthy operational cashflows to meet our capex obligation of maintaining our assets up to the expectations of our tenants and paying dividends to our shareholders. It is calculated by deducting net financing costs paid from Cash flow from operations before.

Revenue is the primary measure to evaluate TECOM Group’s operating and financial performance which eventually drives the bottom line and the cashflows.

Strategic component

Our performance

The year-on-year revenue increase of 10% was fuelled by the sustained growth of complementary business services, positive macroeconomic indicators, strong customer retention rates, high occupancy levels, an increase in the number of new customers across the portfolio.

Our FFO continued upward trajectory with a growth of 21% to further cement our commitments to business partners and shareholders for maintenance capex and dividend pay-outs. Strong revenue performance coupled with discretionary cost management and prudently managed financing structure with declining average cost of debt were the key contributor to FFO increase.

The company’s EBITDA jumped 23% compared to 2022 bringing margin to 76% with phenomenal increase of 8%, illustrating robust revenue performance, effective cost management and operational efficiency.

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Our KPIs are identified by linking
strategy and risks to operations, and
by synthesising key elements of our
business plan under the following
priorities:
the value we deliver to our investors
how well we serve our customers
what strategic processes we deploy
to deliver value
how we sustain growth and continue
to create values for our stakeholders
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Strategic Pillars Strategic Enablers Optimise Core Business Build Superior People and & Performance Organisational Capabilities Develop Differentiated ESG Sustainability Value Proposition Build New Sources Technology & Innovation of Growth

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Occupancy Retention Customer Satisfaction
88.8% 91.1% 87.4%
2023 88.8 2023 91.1 2023 87.4
2022 86.0 2022 92.3 2022 87.7
2021 78.3 2021 93.2 2021 83.2
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Why we use this indicator

Customer satisfaction is paramount in shaping the success and longevity of any business. It serves as a barometer of the company’s ability to meet and exceed customer expectations, fostering loyalty and repeat business.

Occupancy is a vital measure of performance at TECOM Group, which helps us measure the utilisation and performance of our portfolio of offerings. This is calculated by identifying the total leased space divided by the total leasable space.

We use this metric to measure lease renewals and reduce revenue at risk, which is ultimately achieved by building a strong relationship, providing our customers with a feedback loop, and diversifying our offerings. It is calculated by identifying the total lease value of built-to-lease tenants retained in the group.

Strategic component

Our performance

We managed to outperform our ten year historical average retention of 89% for both commercial and industrial offerings owing to high rate of lease renewals and tenant satisfaction. Considering the uptick in the market slight drop in retention worked in group’s favour as vacated spaces were leased at higher rates.

Occupancy levels for commercial and industrial assets reached 89%, demonstrating resilience, leveraging commitment to customer satisfaction and flexible work arrangements to optimise office space.

We continuously seek ways to elevate the customer experience and identify areas for improvement and are attentive to recent shift in customer satisfaction mainly driven by rent escalations. Customers’ feedback is vital to understanding the factors contributing to any decline and help us identify specific areas that may require additional attention and refinement.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Strategic Report ESG Corporate Governance Financial Statements

MANAGING RISKS

Risk management overview

Risk management is an integral part of all TECOM Group activities. Our culture drives us to consider the risks and opportunities of any new business decision. We focus on key risks which could impact the achievement of our strategic goals and therefore on the performance of our business.

Risk management

Risks are considered at every level of the business including when approving corporate transactions, property acquisitions and whenever undertaking refurbishment and redevelopment projects. Our approach to risk management is designed to protect and enhance value for our stakeholders, ensuring long term resilience and adaptability in a dynamic market landscape.

The Risk Appetite Statement was updated in line with the recent changes in business and approved by the Board.

highlights in 2023

TECOM Group continuously strives to strengthen and enhance its risk management, internal control and compliance practices. In 2023, following achievements were made:

ESG factors were integrated into our risk assessment process (see on page 88).
The Compliance Manual was updated to align with the recent changes in business and departments’ responsibilities.
Risk Management awareness sessions were provided to TECOM Group employees.
We have ensured regular and periodic reporting to the Risk Committee on the TECOM Group risk profile, whereby five Risk Committee meetings were conducted in 2023. Please refer to the Corporate Governance section for further details.

This section outlines our comprehensive risk management framework, highlighting our commitment to not only identifying and mitigating risks but also integrating key Environmental, Social, and Governance (ESG) factors into our risk assessment and management processes. As we navigate through an ever-evolving business environment, our dedicated focus on risk management positions TECOM Group to effectively manage potential challenges and seize emerging opportunities.

TECOM Group’s Internal Audit
- Department conducted a review of the principal risks, focusing on the risks’ identification, analysis, evaluation and treatment plans.
An Annual fraud risk assessment workshop was carried out for selected areas across TECOM Group to identify main fraud risks and assess the effectiveness of fraud controls.

Dubai Internet City

Risk management Governance

Strategic Oversight and Governance

The Board’s responsibilities include:

Accountability:

Strategic Oversight: Ensuring that risk management strategies and policies support the company’s long-term goals and are effectively integrated into corporate planning.

Setting the Tone: Establishing a risk management culture and philosophy that aligns with TECOM Group’s values and business objectives.

Holding the Risk Committee and management accountable for effective risk management and compliance with established policies.

The Board of Directors at TECOM Group plays a crucial role in the overall governance and strategic direction of risk management.

Risk Oversight

TECOM Group’s risk management practices include:

Risk Appetite and Tolerance: The Committee assists the Board in setting and monitoring the risk appetite and tolerance levels.

Specialised Oversight: The committee oversees the development, implementation, and effectiveness of risk policies and procedures.

Reporting and Advisory: It regularly reports to the Board on risk exposure, mitigation strategies, and advises on significant riskrelated decisions.

Operating under the mandate of the Board, the Risk Committee provides more focused and detailed oversight of TECOM Group’s risk management practices.

Operational Implementation

The day-to-day tasks include:

Risk awareness

Risk Identification Mitigation and Assessment: and Control: Conducting Monitoring the thorough risk risk mitigation assessments across strategies and various functions controls as and reporting approved by the findings to the Risk Committee. Risk Committee.

Monitoring Risk awareness and Reporting: training: Continuously Providing regular monitoring the risk risk awareness environment and training to TECOM providing regular Group employees. reports to the Risk Committee and the Board.

The Risk Management Department, led by the Director of Risk, is responsible for the dayto-day management of risks.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Corporate Governance Financial Statements

Strategic Report

ESG

MANAGING RISKS CONTINUED

Enterprise risk management (ERM) framework

TECOM Group’s enterprise risk management framework emphasises proactive risk identification, thorough assessment, and effective mitigation. Our policy and strategy are deeply integrated with our strategic objectives, ensuring alignment with our overall vision. Responsibilities are clearly delineated within the organisation, from the Board level to operational teams, creating a culture of risk awareness and accountability.

Our framework is dynamic, undergoing regular reviews and updates to remain responsive to the evolving internal and external conditions. This dynamic approach ensures that our risk management practices are always aligned with the current risk landscape and TECOM’s evolving strategic priorities.

We leverage different tools, techniques and methodologies. This includes an internal risk management platform (ERM software), which enables us to capture, assess, track and monitor risks. This centralised repository maintains documents, assigns duties and tasks, generates reports and tracks progress.

To ensure that risks are appropriately identified, assessed and mitigated we also leverage different techniques and methodologies, including setting and monitoring KRIs, which are a vital part of trend analysis and identifying emerging risks. The Risk Management process is illustrated beside:

Incorporation of ESG in

risk management

During the risk assessment process, every identified risk underwent a thorough assessment from an ESG perspective, shedding light on the nuanced impacts

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Risk Management Process
Establish Context
Risk Assessment
Risk Identification
Risk Analysis
Risk Evaluation
Risk Treatment
Recording and Reporting
Monitoring and Review
Communication and Consultation
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Dubai Design District
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Risk identification and assessment

Risk appetite and tolerance

Risk mitigation and treatment

that these risks may have on our ESG commitments. This approach not only strengthens our risk management capabilities but also aligns with our broader commitment to sustainability, ensuring that ESG considerations are woven into the fabric of our organisational resilience and growth.

Each Department and business district has its own risk register which is reviewed on a regular basis and monitored continuously. Further, we have developed a corporate risk register through collaboration with Senior Management and other stakeholders. The corporate risk register includes the key financial, strategic, operational and compliance risks that could have an impact on the organisation. The corporate risk register is reviewed by the Risk Committee on a regular basis before it is presented to the Board.

The Board is responsible for defining the level of risk that the Group is willing to take and ensuring it remains in line with our strategy. The risk appetite differs for each risk and varies between the different categories of risks.

To mitigate identified risks, TECOM Group implements a range of strategies tailored to the nature and severity of each risk. These strategies include but are not limited to, risk avoidance, reduction, sharing, and acceptance.

Our approach to risk identification and assessment is comprehensive and systematic. This process is continuous, allowing us to promptly identify emerging risks and adjust our strategies accordingly. Our risk assessments consider both the likelihood of occurrence and potential impact, enabling us to prioritise risks effectively and allocate resources where they are most needed.

The risk appetite reflects TECOM Group’s risk management philosophy, and in turn influences culture and operating style. To embed risk appetite effectively in the business requires management to establish limits and thresholds for the key risk indicators associated with each risk. Our corporate risk register outlines these Key Risk Indicators (KRIs) which are monitored regularly against thresholds set for our key risks. These risks are aligned to TECOM’s strategy.

Risk owners are accountable for confirming adequate controls are in place and that the necessary treatment plans are implemented to bring the risk within an acceptable tolerance level.

The results of the risk assessment highlighted that 63% of the identified risks have moderate to significant inherent impact from an ESG standpoint. In addition, ESG management itself emerged as one of our principal risks, underscoring the importance of strengthening our ERM processes in this domain.

We continue to monitor the status of our risk treatment plans across the year and report on the progress to the Risk Committee and the Board on a regular basis.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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MANAGING RISKS CONTINUED

Principal risks overview

in risk movements and an addition of a new risk. The Board has finalised its assessment of these risks and of any changes to the residual risk profile during the year.

Performance. One compliance risk – Regulatory change.

Our principal risks consist of the ten most significant internal and external risks, and include five strategic risks – Market and economic Volatility, Environmental, Social and Governance (ESG), Geopolitical instability, TECOM Group brand and Ageing Assets. Three operational risks – Cybersecurity Threats, People and Development Projects. Two commercial risks – Market Competition and Asset

The identified list of principal risks is not an exhaustive description of all possible risks but rather a snapshot of TECOM Group’s main risk profile.

The table below summarises TECOM Group’s internal and external principal risks, showing how each links to our strategic objectives.

TECOM Group’s overall risk profile has not significantly changed compared to 2022. Nevertheless, there have been minor changes

Strategic objectives

		Optimise Core	Develop	Build New
		Business &	Differentiated	Sources of
Principal Risks		Performance	Value Proposition	Growth	Risk Change
1	Market and economic Volatility	•
2	Environmental, Social and Governance (ESG)	•	•	•
3	Geopolitical instability	•
4	Ageing assets	•	•
5	Cybersecurity Threats	•
6	People Risk	•
7	Development Project		•	•
8	Market Competition	•	•	•
9	Asset Performance	•	•	•
10	Regulatory Changes	•

Market and Economic Volatility

Risk Movement

Risk details

The increasingly challenging global economic environment in which we operate may adversely impact our cost base, pricing strategies, profitability and market share.

Potential impact

Increase in operational expenses, which may affect operations and ability to meet financial targets.

Controls and mitigations

Continuous monitoring and review of products and pricing structures across all products and brands to sustain the current high occupancy and avoid potential loss of revenue due to long vacancy periods.
Treasury risk management to mitigate against any adverse movements in financial markets.

Geopolitical instability

Risk Movement

Risk details

Geopolitical instabilities that affect the region can cause unplanned impacts that can affect the sustainability of businesses and create barriers for companies and people – and affect global supply chain activities.

Potential impact

Geopolitical instabilities can affect core businesses and develop complications amongst different markets.

Risk Movement

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Decrease No Change New
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Increase
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Environmental, Social and Governance (ESG)

Risk Movement

Risk details

We are subject to risks related to our ESG activities and disclosures and the inability to manage TECOM Group’s operations in alignment with ESG requirements that bring awareness to the different climate issues and thorough governance culture.

Potential impact

Our reputation and brand could be harmed if we fail to meet the ESG requirements and our sustainability targets and goals.

Controls and mitigations

TECOM Group embeds ESG elements and principles as part of the strategic planning and initiatives.
TECOM Group ensures its ESG reporting meets the regulatory requirements.
TECOM Group has allocated specific budgets for ESG initiatives across the Group.

Ageing Assets

Risk Movement

Risk details

Ageing assets base will lead to a potential impact on revenue performance and business requirements changes over time. Assets may become less attractive and profitable over time.

Potential impact

Renovation involves significant costs and might adversely affect our profitability. A certain number of our property assets are ageing, and this may materially impact the attractiveness and commercial value of such assets.

Controls and mitigations

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Due to changes in commercial trading dynamics, we are adopting a proactive practice to monitor and record all geopolitical matters through available channels.
Business Continuity and Disaster Recovery plans are being updated and reviewed based on recent changes in the market and organisation.

Controls and mitigations

Developing programmes of enhancement by analysing risk-related assets in seeking applicable improvements to extend asset life.
Proactive maintenance schedules.
Monitoring overall performance of ageing assets and regular reporting on progress and results.

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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MANAGING RISKS CONTINUED

Risk Movement

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Increase Decrease No Change New
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Cybersecurity Threats

Risk Movement

Risk details

Cyber-attacks and security breaches may threaten the integrity of our intellectual property and other sensitive information, disrupt operations and activities.

Potential impact

Cyber risks may have a significant impact on the operations and cause business disruption.
Regulatory non-compliance resulting in potentially significant financial penalties.
Loss of consumer confidence in our brands leading to reputational damage.

Controls and mitigations

Several preventive security IT controls are implemented and active to protect our IT networks and infrastructure.
An Information Security Incident Response Plan is in place and will be activated in case of any incidents or threats to identify the necessary procedures.

Development Projects

Risk Movement

Risk details

Our existing development or future planned projects may be delayed, suspended, terminated, or materially changed in scope.

Potential impact

Increased costs.
Loss of potential customers.
Reputational damage.

Controls and mitigations

Implement robust contractor prequalification, selection of proper consultant to supervise the performance of the contractor, setting realistic timeframes, etc.
Continuous monitoring by our internal projects and engineering departments and our external parties to identify and report any major delays or events that could have a negative impact on our projects.
Response plans are in place to address any major events and arising risks.

People Risk

Risk Movement

Risk details

Inability to attract, develop and retain talent impacting our ability to achieve our strategic objectives.

Potential impact

Loss of critical skills and knowledge as experienced team members leave the organisation.
Inability to successfully compete and achieve our business objectives.
Our performance could be negatively impacted.

Controls and mitigations

Human Capital follows an effective retention strategy thereby maintaining low employee turnovers.
Internal initiatives to champion diversity and inclusion, social impact and employee wellbeing.
Succession plan has been developed to ensure a smooth transition period.
Employees’ performances are reviewed and rewarded on an annual basis.

Market Competition

Risk Movement

Risk details

We operate in a competitive market that is likely to become more competitive in the future. Companies with commercial properties compete to attract customers based on rental rates, operating costs, location, condition and features of the property.

Potential impact

Negative impact on the market share that will result in less profitability.

Controls and mitigations

The Board reviews the growth strategy that considers future competition, in addition to periodic review of our pricing strategy to be dynamically adjusted based on the market conditions and landscape.
Introduction of Innovative and alternative products to customers.
Strengthen customer loyalty by enhancing customer experience wherever possible.

Asset Performance

Regulatory Changes

Risk Movement

Risk details

Potential difficulties or delay in leasing or re-leasing spaces.

Non-compliance with relevant laws and regulations resulting in potential financial penalties and damage.

Potential impact

Negative impact on our revenue and cash flows.

Potential impact

Reputational damage.
Inability to achieve our targets and strategic aspirations.
Significant potential fines.

Controls and mitigations

Asset performance is monitored through live dashboards and reported on a monthly basis to Management and on a quarterly basis to the Board.

Controls and mitigations

Embedded legal and compliance teams supported by external legal experts as needed.
Dedicated Ethics & Compliance programme, including Code of Conduct, compliance policies and procedures, annual compliance training, and whistleblowing programme.
Regularly review and update pricing policy and product positioning based on market trends, competitor benchmarking, and nature of asset.
Introduction of Innovative and alternative products to customers.
Enhance market insights and intelligence reports to support the business decisions.

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Dubai International Academic City
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TECOM Group PJSC | Annual Report 2023 Celebrating 25 years of achievements Strategic Report ESG Corporate Governance Financial Statements
STAKEHOLDER ENGAGEMENT
We are committed to working hand-in-hand with all our stakeholders to create meaningful bonds and sustainable value together.
We tailor our engagement approach to the unique context and needs of each stakeholder group, fostering a spirit of close
collaboration and open communication to build mutually beneficial relationships and achieve our shared purpose and ambitions.
Stakeholder group Our employees Our customers Our partners Our community Our shareholders
Who are they? Everybody who works at TECOM Group. Everyone who uses TECOM Group Every entity with a contractual Every neighbourhood where TECOM Everybody who own shares in
services. relationship or shared purpose with Group has operations, as well as every TECOM Group.
TECOM Group. professional, resident, local business
and government.
Why do they matter? Dedicated motivated and Our existence centers on serving They provide invaluable contributions Our communities are a source of Shareholders are key to company’s
engaged workforce adds value customers who shape our reputation to our business through a variety of enhanced reputation and brand image. success as they inject the capital for
for all stakeholders through active and contribute to our income across services, ranging from development and An engaged community also becomes investments, operations, expansions
contributions to strategy in the form business lines. Their valuable feedback maintenance of our spaces, providing a provider of potential customers and and innovations. Their perception
of productivity, fostering innovation, serves as a compass guiding company approvals for developments to assisting skilled employees. drives the company’s image and
and customer satisfaction. towards products enhancement and in license allocation. attracts new investors. Additionally,
innovation. they participate in all major
company related decisions.
What do they want from Employees typically want to enjoy They look for high quality spaces, top Business partners seek fair and They want us to have a positive impact Shareholders want to see a positive
TECOM Group? fulfilling careers, opportunities for notch services, fair pricing, convenience, transparent relationships, opportunities on the social and physical infrastructure return in the form of share price
growth, fair compensation, recognition, flexibility, professionalism, and for growth, fair negotiations & pricing, of their area, so they can thrive. Job appreciation and dividends on
and supportive & positive work responsiveness to their needs. long term relationship and reliability in creation, economic development and their investments. They also value
environment which embraces diversity orders and payments. support for local initiatives also are the transparency in financial reporting
and inclusion. key wishes of a community. and effective corporate governance.
How do we engage with them? • We implement employee satisfaction • Voice of Customer (VoC) Surveys • We aim to build long-term • Job opportunities are created for • Quarterly investor calls are hosted
surveys and act on ideas for triggered at each customer touch relationships with our partners, so local talent with a target to go a step for formal results presentations,
improvement. point. We analyse these internally we can provide better services to our further every year which all shareholders are invited
• Communication channels are set up and implement the findings into the customers. • Charitable events such as We Walk to attend in person or online.
in the form of employee intranet and plans and decision-making of the • Meetings are arranged to are hosted. • Quarterly reports are published
e-mails. company. communicate requirements for • Free meals are distributed during the on our website.
• Relevant training and development • Regular customer interviews to products or services required month of Ramadan • Roadshows are hosted in
programs are organized. better understand their needs. • Partners are regularly invited to • We host networking events, sporting coordination with local financial
• We also a focus on wellness, sports • Targeted updates to each sector events challenges and specialist workshops. market and banks.
activities, health and exercise with through a range of channels to keep • Constant dialogue with government • We host a general assembly
events and activations throughout them updated and engaged with and relevant authorities that we event for our investors on an
the year. relevant activities and information. work with on a range of key national annual basis.
initiatives.
2023 Highlights 76% >5 Years 87% 100% 7 8
Employee Loyalty Customer satisfaction On time payments Number of CSR Events Analysts coverage
4,200 15% 7.31% 12,000 40+
Employee trainings hours Growth in number of customers Spending on procurement from Number of Iftar meals donated Investor meetings and roadshows
SMEs & TECOM customers
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ESG

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Strategic Report
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Corporate Governance Financial Statements
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Environmental, Social and Governance

Financial Statements

Strategic Report

ESG

Corporate Governance

LETTER FROM THE CEO

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Our Environmental, Social and Governance (ESG) efforts reflect our ongoing journey towards a more sustainable and equitable future.

Executive Summary

In the pursuit of a sustainable and responsible business approach, our ESG Report provides a comprehensive overview of our progress across five pillars — Governance, Economy, Community, People and Environment.

Governance Pillar

Upholding the highest standards of corporate governance, we emphasise transparency, accountability and ethical conduct at all levels of our organisation. Through our policies, procedures and governance structure, we create a foundation for principled business conduct.

Economy Pillar

Abdulla Khalifa Belhoul

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Nurturing a vibrant start-up ecosystem is a key focus, with more active start-ups in 2023 and an increased percentage of them being women-led. This ecosystem not only promotes innovation but also contributes to economic growth. As a strategic move, we proudly sponsored the Fortune Global Forum, which was held in the UAE, underlining our dedication to engaging in global economic dialogues.

People Pillar

At the core of our operations is a people-centric approach, reflecting our dedication to diversity, employee well-being, and a secure and inclusive work environment. We achieved a higher Emiratisation rate in 2023 and maintained a balance of one-third female employees across our workforce. Our commitment to employee development is demonstrated through the provision of training and capacity building, ensuring continuous skill enhancement and professional growth.

Community Pilar

Underscoring our commitment to community welfare, in 2023, we allocated almost AED 1.5 million to CSR activities, including impactful donations that address immediate community needs. Notable campaigns including ‘The Good Store’ and ‘Together We Can’ showcased our dedication to community engagement, addressing essential needs and fostering a sense of unity. Organising events like the ‘WeWalk’ walkathon further highlights our commitment to supporting worthy organisations, such as the Dubai Autism Center, contributing to the health of our communities.

Environment Pillar

Our commitment to environmental sustainability is highlighted by achievements in clean energy generation, waste reduction and sustainable infrastructure, amongst others. From energy-saving initiatives to LEED certifications of our buildings, we continued our efforts to minimise our environmental footprint and enhance the sustainability of our operations.

TECOM Group PJSC | Annual Report 2023

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TECOM Group has been developing strategic, sector-focused business districts across the Emirate of Dubai since 1999. Today, our portfolio consists of 10 business districts catering to six vital knowledge-based economic sectors: technology, media, education, science, design and manufacturing.

As we present this year’s ESG Highlights, we take pride in the strides that we have made in our ESG implementation across the pillars of Governance, Economy, Community, People and Environment. These highlights embody our dedication to ensuring transparent governance, driving economic growth, making meaningful contributions to the communities we serve, nurturing a diverse and inclusive workplace, and fostering sustainable practices. We aim not only to create value for our shareholders but also to contribute positively to the well-being of our planet, our communities and our employees.

People

Environment

Community

12.35 GWh

24%

AED 1.5m

Emiratisation rate compared to 23% in 2022

clean energy generated compared to 11.14 GWh in 2022

Invested into CSR activities that delivered initiatives such as ‘The Good Store’, ‘Together We Can’ canned food drive, collaboration with Pink Caravan, and the ‘WeWalk’ walkathon supporting Dubai Autism Center

1/3

235

female employees

tonnes of waste recycled compared to 205 tonnes in 2022

4,200

7

training hours delivered to employees compared to 2,658 hours in 2022

CSR events organised during 2023

LEED certified buildings 8 buildings certified in 2023 representing a 36% increase compared to 2022

0 ESG Framework and Material Topics

TECOM Group’s robust governance and ESG Framework are at the core of our operating model. Our approach to ESG is centred around our five ESG pillars; Governance and Risk, Economy, Community, People and Environment.

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Our vision Our mission
World-renowned curator of Realise Dubai's aspirations by creating sector-focused
innovative ecosystems communities and thriving work environments that enable the
success of business and talent in Dubai
Our core pillars
Governance and Risk
Ethical business policies Robust Prudent risk Responsible sourcing
and practices governance management and procurement
Economy Community People Environment
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work related injuries or fatalities

Economy

380

active start-ups in our incubator in5, a 9.83% increase from 2022

7.32%

increase in women-owned start-ups compared to 2022

COP28 Engagements

Active engagements around COP28, with the aim of promoting climate action and showcasing innovations through several initiatives and partnerships, including with Ministry of Industry and Advanced Technology, and Ministry of Climate Change and Environment

Governance

Enterprise Risk Management updated with ESG impacts and mitigation plan

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Optimise Develop Build new
core differentiated sources of
business & value growth
performance proposition
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Supported by

These are supported by national strategies and plans, such as:
- UAE Clean Growth Strategy 2030; • Alignment with international • ‘We the UAE 2031’ vision; standards and aspirations, • UAE Circular Economy Policy 2031; such as the UN Sustainable • UAE Centennial 2071; and Development Goals.
The 2030 Dubai Integrated Energy Strategy;
Dubai Integrated Waste Management Strategy 2041;
UAE Net Zero 2050;

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ESG Policies and Governance

Our commitment to ESG principles is upheld through a suite of comprehensive policies governing our operations:

Human Capital (HC) Manual

Recruitment Policies
Leave Policies
Compensation Policies
Benefits and Allowances Policies
Employee Development Guidelines
Code of Conduct
Grievance Mechanism

We are actively enhancing the integration of ESG and increasing alignment on ESG issues and initiatives across various levels of TECOM Group. This will allow us to ensure that there is accountability to achieve our ESG ambitions and commitments.

Health, Safety and Environmental (HSE) Policy

Environmental (HSE) Policy Underscoring our • Ensures the highest standards of commitment to sustainable occupational health and safety, as well as environmental responsibility, across our operations and responsible business • Meets all applicable HSE regulatory requirements, as well as our own HSE practices, a specialised ESG management standards Policy will be developed in 2024 in order to govern and guide all the ESG initiatives across the Group.

Dubai Knowledge Park

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Governance and Risk

Our objective is to implement a robust corporate governance structure that aligns with our core values while upholding the highest standards of transparency, accountability, integrity and ethical business across all levels. Our policies and procedures promote anti-corruption, legal and regulatory compliance, and ensure cyber-security and data protection.

Robust Governance

Ethical Business

Practices and Policies

Prudent Risk Management

SDG Alignment:

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Responsible Sourcing and Procurement

CASE STUDY 1: ESG Integration in ERM

capabilities but also aligns with our broader commitment to sustainability, ensuring that ESG considerations are woven into the fabric of our organisational resilience and growth. The results of the risk assessment highlighted that 63% of the identified risks have moderate to significant inherent impact from an ESG standpoint. In addition, ESG management itself emerged as one of our principal risks, underscoring the importance of strengthening our ERM processes in this domain. Additionally, in 2023, we have provided TECOM group employees with Dubai International Academic City Training and awareness on Risk Management.

TECOM Group embarked on a strategic initiative in 2023 to seamlessly integrate ESG considerations into our Enterprise Risk Management (ERM) framework. The primary objective was not only to support the incorporation of ESG principles across all business operations, but also to proactively manage any associated risks arising from these factors. During the risk assessment process, every identified risk underwent a thorough assessment from an ESG perspective, shedding light on the nuanced impacts that these risks may have on our ESG commitments. This approach not only strengthens our risk management

CASE STUDY 2: 2 Sustainable Procurement

Future initiatives in this domain include due diligence through audits, verifying the alignment of our suppliers with our ESG requirements. Moreover, we are actively engaging with our suppliers to provide support in aligning with our sustainability ambitions, fostering a collective and collaborative approach.

We increased our spending on Small and Medium Enterprises (SMEs) and customers in our business districts by 13.51% from 2022. Sustainable procurement is still in its early stages of development in the UAE, so we aspire to become pioneers in setting industry standards and leading the way for others to follow suit.

EcoVadis is the world’s largest and most trusted provider of business sustainability ratings, using the respected methodology of international sustainability standards, including the Global Reporting Initiative (GRI) and the United Nations Global Compact.

As a foundational step in establishing our Sustainable Procurement System, we conducted a rigorous risk assessment utilising EcoVadis ratings and Supplier Assessment Questionnaires (SAQs) for our highrisk suppliers, focusing on Facilities Management, IT, Marketing, Food & Beverage, Operating Supplies & Equipment, and Professional Services. The questionnaires and assessments cover environment, labour and human rights, ethics, and sustainable procurement. To date, more than half of these high-risk suppliers have undergone assessments, setting the stage for an annual evaluation to ensure ongoing adherence to our sustainability standards.

Key Highlights from 2023

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2022 Performance 2023 Plans 2023 Achievements
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	2022 Performance 2023 Plans 2023 Achievements
Ethical Business Policies & Practices	98% employees briefed on Code of Conduct. Work towards achieving 100% coverage and training on our Code of Conduct for employees. Achieved:100% of employees briefed and educated on Code of Conduct.
	Work towards further strengthening TECOM Group’s mechanisms for data privacy. Achieved:We are working towards developing a Data Privacy Policy.
Robust Governance	Further embed ESG throughout our business and will set up ESG Champions to identify, collate and manage material ESG issues and implement the ESG strategy and targets. Achieved:ESG initiatives being tracked (e.g.: utilities, solar, employee training, etc.).
Responsible Sourcing & Procurement	8.52% of procurement spend on SMEs and customers in our business districts Achieve a 5% increase in procurement with SMEs and TECOM Group’s existing customers. Achieved:In 2023, our procurement spend on SMEs and TECOM Group customers was 7.31%. We achieved a 13.51% increase in absolute procurement spend between 2022-23.

Plans for 2024

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2024 Plans
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	2024 Plans
Robust Governance	Restructure and enhance our ESG governance framework to embed sustainability in our
	decision-making process.
Responsible Sourcing	Undertake ESG assessment for high-risk suppliers.
& Procurement	Support local sustainable sourcing with a focus on SMEs and women-owned businesses.

Looking ahead to 2024, we will be developing ESG criteria for prequalification, and working to increase suppliers that are locally owned and women owned, in line with GRI.

This initiative is part of our overarching commitment to shaping a procurement landscape that prioritises ethical, social and environmental considerations.

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Economy

We understand the importance of sustainable and inclusive economic growth to drive progress.

Economic Performance

SDG Alignment:

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CASE STUDY 3: Midori

Midori, meaning “green” in Japanese, has embarked on a mission to revolutionise the eyewear industry. Part of the in5 community and with nine years of market experience, Midori identified key areas for improvement, focusing on sustainability and social impact.

The company employs innovative materials like recycled plastic and wood, decentralises manufacturing to minimise carbon footprint, shortens supply chains for efficiency, adopts on-demand production to eliminate dead stocks, and prioritises durability and repairability. Midori’s strategic initiatives showcase a pioneering commitment to sustainability, making strides in creating a more ecoconscious and equitable future for the eyewear industry and beyond.

CASE STUDY 4: in5 Events

Entrepreneurial Education and Networking: Offer valuable education and provide a platform for start-ups to connect with industry leaders and potential collaborators.
Our dynamic start-up incubator, in5, Entrepreneurial Education and curates a rich tapestry of events aimed Networking: Offer valuable education at fostering innovation, skill development and provide a platform for start-ups and networking opportunities for a to connect with industry leaders and burgeoning community of entrepreneurs. potential collaborators. In 2023, 102 events were organised • Funding and Investment: Provide catering to the start-ups’ needs and invaluable insights and networking interests. Below are a few examples of opportunities, connecting start-ups the various types of events and activities with potential investors and mentors. organised for in5 start-ups. • Creativity and Branding: Empower
Creativity and Branding: Empower start-ups to effectively communicate their brand story and aesthetics.
Skill Development: Empower
Global Exposure: Offer start-ups exposure to global markets, fostering international collaborations and partnerships.

founders with hands-on knowledge, enhancing their technical capabilities for their ventures.

Technology and Industry Insights: Bring the latest technological insights and industry trends directly to our start-ups, ensuring they stay at the forefront of innovation.

These events ensure that in5 startups receive tailored support, enabling them to navigate the challenges of entrepreneurship and thrive in an everevolving business landscape.

Key Highlights from 2023

Incubating Innovation

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2022 Performance 2023 Plans 2023 Achievements
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	2022 Performance 2023 Plans 2023 Achievements
Economic Performance	Align economic performance targets with the UN SDGs. Achieved: Currently aligned with SDG 8: Decent Work and Economic Growth, through delivering sustainable growth by attracting talent and investment to Dubai.
	Develop a business plan that creates synergies between wider ESG objectives and TECOM Group’s financial performance. Achieved: As part of Group Business Plan 2024-2028, Strategic objectives embedded with ESG (2024-28), and ESG activity planning and consolidation is a priority (2023).
Robust Governance	Continue alignment with a global standard, such as the Global Real Estate Sustainability Benchmark (GRESB), to benchmark our ESG performance of commercial real estate. Opportunity: Reporting on GRESB alignment required.
Incubating Innovation	346 net active start-ups in in5 Serve as an incubator for social impact start-ups and innovation, and increase the number of start-ups year- on-year. Achieved: 9.83% increase in net active start-ups in in5 from 346 in 2022 to 380 in 2023.
Customer Centricity	87.7% Customer Satisfaction Rate (based on feedback across transactional surveys only). Continue to adhere to our robust and unified Voice of Customer tracking system to gather feedback from all customers and set targets. Continued to adhere while expanding the VOC programme beyond transactional interactions, to include in-depth interviews with customers exploring their focus, challenges and identify how we could support them even better going forward. In 2023, we adopted a new score called Customer Experience (CX) Index in which we incorporated additional ‘Likelihood to Recommend’ metric in our transactional surveys, resulting in an increase from last year’s score to 87.9%. When we include the results of our in-depth interviews, our score is 87.4%.

CASE STUDY 5: Customer Interviews for Strategic Feedback

To gain profound insights into the customer experience across diverse business districts, we are conducting in-depth interviews to understand the perspectives and expectations of our customers. Implemented extensively for the first time at TECOM Group, this customer-centric initiative is pivotal as it enables us to integrate valuable feedback directly into the broader strategy of the Group, ensuring that our initiatives are better aligned with the evolving needs and preferences of our customers.

Plans for 2024

Customer Centricity

2024 Plans

Economic Performance	Continue to integrate sustainability in business performance by implementing sustainability
	initiatives.
Incubating Innovation	Support start-ups in in5, including start-ups run by women, with trainings and access to
	development opportunities.
Customer Centricity	Leverage feedback across customers and communities to enhance facilities, services and value
	chains, ultimately leading to an improved customer experience.

D/Quarters

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Community

As a responsible organisation, focusing on our communities’ long-term sustainability and growth is essential. We aim to support and contribute to vibrant, sustainable communities across our business footprint.

Investing in

Local Communities

SDG Alignment:

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CASE STUDY 6: The Good Store

Powered by TECOM Group, in collaboration with the Emirates Red Crescent, The Good Store is an immersive and innovative shopping experience set up in 2023. Taking over grocery stores, installing pop-up shops and even a roaming shopping cart, The Good Store opened in various forms across 12 Dubai communities to unite TECOM Group’s 124,000+ strong community as a force for good during Ramadan. It had a huge impact, reaching 8.9 million people and raising AED 90,700 for those in need.

The Good Store campaign won six awards at the 2023 Middle East PR Association (MEPRA) Awards, including four Golds for ‘Best Business to Business Campaign’, ‘Best Retail Campaign’, ‘Best Use of Content/Creative/Editorial/ Video’ and ‘Best Sustainability, Social Responsibility or ESG Campaign’; one Silver for ‘Best Campaign in the UAE’ and one Bronze for ‘Best Use of Digital Communications’.

CASE STUDY 7: Emirati Women’s Day

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7
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On 28 August, we launched ‘Hands of Tribute’, an integrated and interactive campaign that combined Emirati traditions with a call for female empowerment through collaboration. The initiative celebrated Emirati women the way they celebrate major milestones – through henna. On-ground pop-ups featuring henna artists took over our business districts across Dubai, encouraging private sector workers and students to choose a design to be applied to their hand in tribute to Emirati women in the UAE’s past, present and future. A female-led corporate video honouring Emirati female role models and a digital henna Augmented Reality (AR) filter allowed remote support of the campaign across Dubai as well.

To commemorate Emirati Women’s Day 2023, we launched an interactive campaign that celebrated Emirati women in our communities.

The goal was to amplify the contributions of Emirati women in the UAE’s economic development, a journey we have been intricately linked with over the past two decades, while activating our international community of 124,000+ professionals across our districts.

Key Highlights from 2023

CASE STUDY 8: 8 WeWalk

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2022 Performance 2023 Plans 2023 Achievements
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TECOM Group organised the fourth edition of WeWalk walkathon at Dubai Science Park in collaboration with the Dubai Autism Center. This event proved to be a beacon of community engagement, showcasing not only our dedication to community wellbeing by promoting physical activity, but also our role in making a positive impact on autism awareness.

Investing in Local Communities	AED 883,000 in donations. Raised AED 11,800 from communities Host events to raise funds for the community. AED 358,010 in donations. Raised AED 103,010 from communities Highlights: The Good Store:Partnered with Emirates Red Crescent to launch a virtual and ‘phygital’ donation experience, which raised AED 90,700. WeWalk:Raised AED 87,310 for Dubai Autism Centre.
	2 CSR events held in 2022. Continue building a tolerant and inclusive society and improve the health and well-being of communities. Achieved:7 CSR events undertaken in 2023. Highlights:Together We Can: Launched a canned food drive for the UAE Food Bank to provide care packages and grocery kits for those in need.
	Continue to invest strategically in sector- aligned community projects that deliver lasting impact long-term partnerships with select community partners. Achieved: AED 1.47 million CSR spending in 2023. Highlights: Colon Cancer:Launched an interactive awareness campaign to educate UAE residents on the importance of early screening for the detection of colon cancer, as part of National Colon Cancer Awareness Month.
	Enhance the volunteering culture of the Group by promoting skill-based volunteering through an incentivised corporate volunteering programme. Achieved. Highlights: Employees volunteered during Ramadan for iftar meal distribution. TECOM Group offers employees 3 days per year to volunteer at registered organisations.
	Monitor and analyse the impact of our initiatives and fundraising activities across all business districts and entities. In progress.

The strategic partnership with the Dubai Autism Centre underscored TECOM Group’s unwavering commitment to social responsibility, showcasing a collaborative effort to make a meaningful difference in the lives of children with autism. The walkathon’s robust media coverage, achieved through partnerships with top-tier outlets, solidified its status as one of the most impactful charitable events in Dubai and the UAE.

With a deliberate focus on enhancing exposure through traditional and digital media, WeWalk not only brought together over 1000 attendees, 10 sponsors, and 260+ volunteers but also succeeded in raising AED 12,310 in ticket sales (an increase from AED 11,800 in 2022), AED 75,000 in cash donations, AED 200,000 in media sponsorship, alongside an impressive AED 385,000 in-kind donations. This amounts to a total of AED 672,310 raised for Dubai Autism Center.

Plans for 2024

	2024 Plans
Investing in Local Communities	Continue to invest in local communities with donations, fundraising and investments in strategically aligned community projects, increase employee volunteering and improve community well-being.

Through strategic communication efforts, we not only supported our sponsors but also amplified the impact of WeWalk in the broader community through various media channels, achieving a circulation of 239 million views and an ad-value of AED 973,212.

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People

We are dedicated to equality, non-discrimination, talent development, employee health and safety, and promoting a culture of inclusion and diversity within our organisation.

SDG Alignment:

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Safe and Healthy Workspaces

Training and Development

opportunities.

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Dubai Internet City — D/Quarters
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CASE STUDY 9: Employee Trainings

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9
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“The Art of Presenting and Public Speaking”

From October 31st to December 15th, 2023, our employees engaged in a diverse array of training programmes designed to nurture both personal and professional development. Notable sessions included:

In our unwavering commitment to fostering professional development and growth for our employees, we continue to achieve significant milestones in employee training.

“Creativity & Innovation”

These sessions underscore our commitment to not only enhancing technical skills but also fostering creativity and effective communication. Through strategic and diverse training initiatives, we reinforce our belief that an empowered and knowledgeable workforce is the foundation for sustained organisational success.

“Collaborate for Success”, emphasising effective teamwork

Our efforts have resulted in an average of almost 15.27 hours of training per employee, culminating in an impressive total of 4,200 training hours in 2023. This achievement represents a substantial increase of 60.86% from the previous year, underlining our commitment to enhancing the skillset and knowledge base of our workforce.

the “G.E.M.S Management Program”, which provided comprehensive insights into effective management practices
“Customer Relationship Management”
“Conflict Resolution”
”Coaching Skills for Managers”
“Emotional Intelligence”

Key Highlights from 2023

CASE STUDY 10: 10 Incorporating Employee Feedback

	2022 Performance	2022 Performance	2023 Plans	2023 Achievements	Employee Feedback
Safe and	Conducted a series of		Continue engagement programme	Wellness activities include health
Healthy Workspace	wellness hub sessions to promote wellbeing		for employee wellness through Wellness Hub sessions.	check ups, awareness campaign, and sports tournaments.	In our unwavering commitment to fostering a workplace that nurtures
	• Gallup surveys for employee engagement. • Adopted Dubai Holding’s		Continue focusing on: • Employee engagement and recognition	Achieved: Highlights:	employee growth and satisfaction, we have embarked on a journey guided by
	DEI Framework & Strategy. • 34.64% of the workforce		• Diversity, inclusion and equity • Wellness activities • Gender balance and Emiratisation	• Employee engagement and recognition programme in place. • Wellness activities mentioned	insights gathered from our employees through Gallup surveys, providing a
	are women. • 23.21% Emiratisation rate. • 0 work related injuries		• Employee health and safety • Safe and healthy workspaces • Completing ongoing initiatives,	above. • Adopted Dubai Holding’s DEI Framework & Strategy, now	holistic understanding of our employees’ needs and aspirations.
		and ill health	such as Nursing Mothers Room	looking at ensuring a relevance
				check on commitments. Examples include – Blind recruitment	These surveys shed light on the
				process, non-discriminative promotion opportunities and maternity leave.	factors that contribute to employee thriving, enabling us to develop tailored
				• 33.45% of the workforce are	action plans for a more fulfilling work
				women. • 24.43% Emiratisation rate, an	environment. Examples include an
				increase of 1.22% from 2022.	increased frequency of team meetings to
				• 0 work related injuries and ill health.	foster collaboration and communication,
				• 8x increase in staff trained on	and the implementation of mentoring
				H&S. • Completing ongoing initiatives, such as Nursing Mothers Room.	programmes to facilitate professional development.
Training and	2,658 training hours in		Achieve a 5% increase in training	Achieved:
Development	2022.		hours per employee compared to	4,200 training hours in 2023, an	Additionally, two rounds of visits have
	9.49 average training hours		2022 figures.	increase of 57.99% from 2022.	been conducted across all departments,
	per employee.			15.27 training hours per employee,	to get in touch personally with employees
				an increase of 60.86% from 2022.	and listen to their feedback and
					suggestions. A report on the feedback
					received was then developed and shared
Plans for		2024			with our CEO.
		2024 Plans			As part of our commitment to continuous
Safe and Healthy		Continue investing in employee health, enhancing safety		and well-being, and improving	improvement, we plan to conduct the nex
Workspace		employee satisfaction.			Gallup survey in April of 2024. This will
Training and		Continue investing in employee training and development to build a high-performing			not only serve as a benchmark to measur
Development		workforce, and increase employee awareness on ESG matters relevant to their roles.			h ff f ld

Additionally, two rounds of visits have been conducted across all departments, to get in touch personally with employees and listen to their feedback and suggestions. A report on the feedback received was then developed and shared with our CEO.

As part of our commitment to continuous improvement, we plan to conduct the next Gallup survey in April of 2024. This will not only serve as a benchmark to measure the effectiveness of our implemented initiatives but also as an opportunity to identify new areas for improvement, ensuring that our organisation remains dynamic and responsive to the evolving needs of our valued workforce.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED

Environment

We aim to manage our environmental impact through sustainable business practices. This includes implementing innovative methods to optimise energy and water efficiency, managing our waste, measuring and controlling our carbon footprint, and promoting green building design.

SDG Alignment:

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Energy Efficiency and Renewables

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7.44
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Dubai Media City - Boutique Offices
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Water Efficiency

We aim to implement measures to manage our water resources sustainably and reduce consumption.

In 2023, our water intensity increased by 7.64%. The reason for the increase in water intensity is two-fold. On one hand, we installed Adiabatic Cooling system to enable efficient chiller operations in four of our business districts.

This has led to an increase in water consumption but a complementary decrease in energy consumption. On the other hand, we have observed an increase in footfall and occupancy in six of our business districts which has impacted our water intensity as well. To enhance water conservation, we have implemented water-saving measures including water displacement bags at flush tanks, installation of water flow reducers at wash basins and shataffs, and a small greywater treatment plant in Dubai Design District (d3). We have also enhanced our water audit procedures, actively identifying and rectifying leaks to minimise wastage.

These initiatives outline our dedication to responsible water management.

Waste Management

We continuously seek areas to improve our waste collection process and increase our recycling rate.

We track our diversion from landfill tonnage, our paper and plastic recycling tonnage, as well as our total waste generated tonnage through our service provider dashboard.

In 2023, our waste intensity increased by 31.65%. However, our commitment to waste reduction is evident in the recycling of

The graph below displays water intensity figures from the years 2019-2023.

Water Intensity (IG/sq.ft.) from 2019-2023

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15.44
15.16
14.79 16.62
13.50
2019 2020 2021 2022 2023
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Dubai Internet City
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Additionally, Dubai Can water fountains installed in Dubai Internet City, Dubai Media City, and Dubai Knowledge Park saved an equivalent of 162,448; 334,082; and 173,644 disposable water bottles respectively.

234.97 tonnes of waste in 2023 (14.62% increase from 2022) and the diversion of 9% of our general waste to Dubai Waste Management Center, a Waste-to-Energy plant.

This plant, when completed, will convert 45% of Dubai’s municipal solid waste to energy that will power 2% of Dubai’s homes. The total emissions avoided from waste diversion is 868.77 tCO2e. We also installed an e-waste sculpture in Dubai Internet City to capture the community’s attention on issues surrounding e-waste and the importance of reuse and recycling.

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Strategic Report ESG Corporate Governance Financial Statements

ENVIRONMENT CONTINUED

Reducing Greenhouse Gas (GHG) Emissions We are committed to measuring emissions from sources and developing a carbon inventory to reduce overall GHG emissions.

Within TECOM Group, we are collaborating with asset managers to evaluate the environmental performance of our assets and prioritise areas for improvement. To enhance our strategic approach, we are actively working on establishing a representative baseline to use as a reference point against which our GHG emissions will be measured going forward, while also working to refine our data quality.

Scope 1 emissions refer to the direct greenhouse gas emissions from sources that are owned or controlled by an entity (e.g. fuel used for vehicle fleets), while Scope 2 emissions encompass indirect emissions from the generation of purchased energy consumed by the entity. As part of our commitment to transparent reporting, we closely monitor and disclose our Scope 1 and 2 emissions.

Moving forward, we aim to improve our reporting on Scope 3 emissions, which are the indirect greenhouse gas emissions that occur throughout the value chain, including in our supply chain, transportation and product use. We recognise the challenges of low data availability and tracking across all entities, and often rely on estimated figures. This commitment underscores our dedication to transparently communicating

our environmental impact and continuous improvement in emissions management.

While the majority of our Scope 1 and 2 emissions arise from waste and utility consumption, with a notable portion attributed to our tenants, our proactive measures in the areas of energy management have led to a 3.50% decrease in Scope 2 emissions compared to 2022. However, Scope 1 emissions increased by 54.52% compared to 2022. This increase is primarily due to an increase in Liquefied Petroleum Gas (LPG) consumption. Scope 1+2 emissions increased from 171.55 ktCO2e in 2022 to 215.09 ktCO2e in 2023. The emissions intensity (Scopes 1+2+3) increased by 24.87%. The figure below, adapted from the GHG Protocol, depicts what categories fall under Scopes 1, 2 and 3.

Sustainable Buildings LEED (Leadership in Energy and Environmental Design) certification is a globally recognised standard for assessing and certifying the sustainability and environmental performance of buildings, with criteria including energy efficiency, water conservation and the use of environmentally-friendly materials.

Our focus on sustainable infrastructure is reflected in the 8 New LEED certified buildings, of which 6 are Gold rated and 2 are Platinum rated. The 8 LEED-certified buildings are in addition to the existing 22 (16 Gold, 6 Silver) LEED-certified buildings in our portfolio.

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Dubai Science Park
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CASE STUDY 11: Solar Project

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Purchased electricity, steam,
heating & cooling for own use
Transportation
Scope 2 INDIRECT
and distribution
Purchased goods Leased Company Processing of sold
and services assets facilities products
Capital Fuel and energy- Employee Company Use of sold
goods related activities commuting vehicles products
Transportation Business Wasted generated End-of-life treatment
and distribution travel in operations of sold products
Scope 1
Scope 3 INDIRECT DIRECT Scope 3 INDIRECT
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Upstream activities Reporting company Downstream activities
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9.9%
55.3%
34.9%
Emissions Breakdown 2022 v 2023
23.53
83.16
19.54
86.17
131.93
85.38
2022 2023
Total Scope 1 Total Scope 3
Total Scope 2
Emissions (kt COe)2
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Strategically located in Dubai The success of these projects is Science Park, a new solar project attributed to strategic partnerships was successfully completed in with leading industry players, 2023, which added 0.576 MWp of such as ALEC Engineering and clean energy to our portfolio and Contracting L.L.C. This collaboration enhanced our capacity to generate not only facilitated the successful sustainable power. execution of the projects but also allowed us to leverage This new project is targeted to their expertise and resources in deliver 922.6 MWh of clean energy advancing our sustainability goals. annually, and constitutes 6.9% of As we continue to expand our our total capacity, showcasing renewable energy portfolio, these the substantial impact it will have. solar projects serve as a testament This underscores our dedication to our proactive approach in to reducing carbon emissions combating climate change and and promoting a greener, more transitioning towards a more sustainable energy landscape. sustainable energy future.

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Dubai International Academic City
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ENVIRONMENT CONTINUED

Key Highlights from 2023

CASE STUDY 12: Energy Savings Project

In a strategic move towards enhanced of outdated chillers with energy-efficient sustainability and operational efficiency, alternatives; installation of Variable we initiated an energy savings project in Frequency Drives (VFD); upgrades 2022. We have invested AED 43.7 million to Building Management Systems in this project, which covered multiple (BMS); optimisation of chilled water facets of our operational infrastructure pump systems; and implementation of in many of our districts, including Dubai occupancy-based cooling strategies. Internet City, Dubai Media City, Dubai Additionally, the integration of adiabatic Knowledge Park, Dubai Outsource City, cooling for chillers; installation of Dubai International Academic City, Dubai motion/occupancy sensors; adoption of Studio City, Dubai Science Park, Dubai energy-efficient water heaters; upgrade Production City and Dubai Industrial City. of chiller plant manager; installation of water displacement bags at flush tanks; The project encapsulated a series replacement of conventional lights to of innovative initiatives, showcasing LED; and the use of programmable our commitment to cutting-edge thermostats were pivotal initiatives that technologies and sustainable practices. contributed to overall energy savings. Key measures included the replacement

CASE STUDY 13:

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2022 Performance 2023 Plans 2023 Achievements
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Energy Efficiency and Renewables	Electricity intensity = 8.19 KWh / sq ft. District Cooling intensity = 2.35 RTH / sq ft. Achieve a 5% saving in utilities (electricity, water and district cooling) as compared to the approved budget* Achieved: • 9.14% reduction in Electricity intensity from 8.19 KWh / sq ft in 2022 to 7.44 KWh / sq ft in 2023. • 1.28% reduction in District Cooling intensity from 2.35 RTH / sq ft in 2022 to 2.32 RTH / sq ft in 2023.
	Solar Capacity = 7.765 MWp Electricity generation from solar = 11.14 GWh % electricity from solar = 6.57% Improve solar power capacity by 5% compared to the available solar capacity of end of 2022 through planned solar PV projects at Dubai Science Park and Dubai Industrial City. Achieved: • Solar Capacity = 8.341 MWp, increase of 7.42% from 2022. • Electricity generation from solar = 12.35 GWh, increase of 10.86% from 2022 • % electricity from solar = 7.13%, in 2022 contribution was 6.57%. Highlights: • Solar Project in Dubai Science Park completed. • Two solar projects in Dubai Industrial City in execution stage.
Water Efficiency	Water Intensity = 15.44 IG / sq ft Achieve a 5% saving in utilities (electricity, water and chilled water) compared to approved budget. Water Intensity = 16.62 IG / sq ft, an increase of 7.64% from 2022 due to energy-efficiency enhancements at four business districts and increased footfall and occupancy in six business districts.
Waste Management	Waste intensity = 1.03 kg / sq ft. Dubai Can initiative that saved 151,502 plastic bottles. Work with waste management partners to run campaigns and improve recycling initiatives. Waste intensity = 1.38 kg / sq ft, increase of 31.65% from 2022. Achieved: • Diversion of 9% of waste to Waste-to- Energy plant. • Dubai Can initiative that saved 670,174 plastic bottles.
	Undertook 2 E-waste Awareness campaigns Install a new e-waste art sculpture called ‘The Thinker’ at Dubai Internet City. Achieved: Sculpture installed in Dubai Internet City
Sustainable Buildings	22 LEED certified buildings – 16 with a Gold Rating and 6 with a Silver Rating. 4 buildings to be LEED certified. Achieved: LEED certification of 8 buildings (6 Gold and 2 Platinum), resulting in a total of 30 LEED certified buildings.

Plans for 2024

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2024 Plans
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Energy Efficiency	Continue implementation of energy efficiency measures and increase our solar capacity.
and Renewables
Water	Continue implementation of water efficiency measures and work towards a
Efficiency	closed-water loop.
Waste Management	Focus on waste management, strengthen measures to divert waste from landfill, and enhance
	our contributing to the circular economy.
Reducing GHG Emissions	Improve our emissions data collection, accounting and reporting to include Scope 3, along with increased accuracy of figures for Scopes 1 and 2.
Sustainable Buildings	Improve our sustainable buildings portfolio by increasing the proportion of buildings within our portfolio with sustainable building certifications.

COP28 ENGAGEMENTS

As the UAE took the global stage by hosting COP28, TECOM Group was deeply engaged in supporting and advancing sustainability awareness initiatives across our districts and through collaborations with other agencies.

Among the most notable, this year’s annual Dubai Design Week, curated in strategic partnership with Dubai Design District (d3), had a strong focus on sustainability. We also held a campaign at Dubai Knowledge Park and Dubai International Academic City concentrating on promoting academic programmes centred around sustainability. Furthermore, Dubai Science Park is developing a white paper covering various segments within the science sector, including sustainability. Early findings of the upcoming white paper were launched during a panel at COP28, outlining our commitment to supporting ESG integration and knowledge dissemination.

In collaboration with the Ministry of Climate Change and Environment (MOCCAE) and the Ministry of Industry and Advanced Technology (MoIAT), we inaugurated the THRYVE factory (which produces plant-based meat) at Dubai Industrial City. Additionally, AstraZeneca’s Dubai Science Park offices have been unveiled as LEED Platinum certified, a testament to our dedication to sustainable infrastructure.

As the global push towards positive climate action prompts greater investment in sustainable food production, we inaugurated Sokovo (a vertical farm which produces leafy greens and microgreens) at Dubai Industrial City.

In partnership with Emirates Nature-WWF and the Environment Agency Abu Dhabi, we organised a themed escape room, providing an immersive experience to advocate for environmental awareness. Serving as a key sponsor for the Fortune Global Forum reinforced our dedication to global sustainability dialogues, while our in5 platform proudly showcased groundbreaking initiatives from 10 start-ups at COP28. In a landmark achievement for climate-tech, Midori Network, nurtured within the in5 ecosystem, has secured a substantial $200,000 in funding from Kirill Veselov, angel investor and former investment director of venture capital firm Mint Capital at COP28.

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Strategic Report ESG Corporate Governance Financial Statements

FORWARD-LOOKING STATEMENT

As we embark on the journey into 2024, TECOM Group is unwavering in its commitment to advancing sustainability across all facets of our business.

The year ahead holds exciting promises as we chart a course toward a more sustainable, innovative, and impactful future.

Our governance is undergoing a transformative journey. We are fostering a culture of ethical practices, where every decision aligns with our commitment to sustainability. A significant stride is the restructuring of our ESG governance framework, ensuring that sustainability isn’t an addendum but is a cornerstone in every decision we make.

Community is at the heart of our endeavours. Beyond donations and fundraising, our commitment extends to strategic projects that uplift local communities. We are stepping up our efforts in employee volunteering, connecting with the communities we serve.

We continue to prioritise the well-being, safety, and development of our employees. Investing in a safe and healthy workspace is not just a commitment; it’s a promise. Training and development are not mere initiatives; they are the building blocks of a high-performing workforce ready to navigate the challenges of tomorrow.

Beyond aiming for energy and water efficiency and improved waste management practices, we want to push the boundaries of what is possible. We are expanding our solar capacity, working towards a closed-water loop, and creating a circular economy, where every resource contributes to a sustainable future. Our commitment to accurate emissions data collection spans Scopes 1, 2, and 3, a testament to our dedication to transparency and accountability. And in our pursuit of sustainable buildings, we’re not merely increasing the proportion; we’re setting a new standard, where every building is a beacon of sustainability.

In 2024, TECOM Group continues to strive for excellence in ESG, reflecting our dedication to embark on a journey of transformation and innovation, where sustainability is not merely a goal, but a way of life.

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Corporate Governance

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Corporate Governance

integral part of good performance

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

Corporate Governance

CHAIRMAN’S LETTER

As we reflect on the first full year of TECOM Group as a publicly listed company, I am pleased to present our Corporate Governance Report for 2023, on behalf of the Board of Directors.

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Dubai Media City
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We foster an open and transparent culture. This core value shapes how we operate and make decisions at every level of our organisation.”

Malek Al Malek

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AT A GLANCE

TECOM Group PJSC (the “Company” or “TECOM Group”) is a company incorporated in Dubai and listed on the Dubai Financial Market (“DFM”) since 5 July 2022.

2023 highlights

The Company complies with the applicable regulations and governance requirements, in particular The Chairman of the Securities and Commodities Authority (“SCA”) Board of Directors’ Decision No. (3/R.M) of 2020 Concerning Approval of Joint Stock Companies Governance Guide, as amended from time to time (“Governance Guide”).

The Company’s Board of Directors (“the Board”) is committed to adopting effective and robust corporate governance that promotes efficient and sound decision-making, and accountable and transparent conduct, to ensure the creation and safeguarding of long-term and sustainable shareholder value.

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100%

24% as at 31 Dec 2023

67

31

256

On 16 November 2023, TECOM Group marked a significant milestone in its journey of strategic planning and corporate governance.

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2
(29%)
Board
gender
diversity
5
(71%)
Female
Male
Read more on page 133
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3
(43%)
Board
composition
4
(57%)
Independent Non-Executive
Non-Executive
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OUR GOVERNANCE FRAMEWORK

TECOM Group’s governance framework was designed to comply with the applicable rules and regulations and adopt international best practices. It aims to ensure the strategic guidance of the Company, the effective monitoring of management by the Board, and the Board’s accountability to the Company and the shareholders. It demonstrates the four pillars outlined in the Governance Guide: Accountability, Responsibility, Fairness, and Transparency and Disclosure.

Governance Framework

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Shareholders
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Board
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• Strategic direction
• Long-term shareholder value
• Dividend declaration
• Interests of all stakeholders
• Delegation of Authority
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Board Committees
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Accountability

The Board ensures there is adequate, effective, well-defined and wellintegrated risk management, internal control and compliance frameworks.

Fairness

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The Board ensures that the rights of
all shareholders and stakeholders are
properly safeguarded and there is an
effective dialogue between the Board
and the shareholders and stakeholders.
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Responsibility

The Board is responsible for overseeing the management of the Company and monitoring its performance. The Board is required to act in the best interests of the Company.

Transparency and Disclosure

The Board is responsible for ensuring that the shareholders and stakeholders are informed about the Company’s activities, plans and any risks involved in its business. Transparency boosts the shareholders confidence in the decision-making and management of the Company. Timely and adequate disclosures of financial performance, strategic and material events, as well as the integrated report reinforce the Company’s commitment to transparency and disclosure.

The Board has the ultimate responsibility to monitor the effectiveness of the governance framework and amending it, as and when necessary.

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Audit Committee Risk Committee Nomination and
• Integrity of financial statements • Risk management strategy Remuneration Committee
• Efficiency of internal controls • Effective risk • Remuneration and annual
• Compliance framework management framework incentive plans
• Assessment of external auditor • Business continuity and disaster • Succession planning
• Governance Framework recovery plans • Nomination of Directors
• Sustainability framework • Human capital policies
and awareness program • Executive management
performance and KPIs
Internal
Compliance Risk Management
Audit
CEO
• Overall financial performance
• Overall strategy implementation
• Operational decisions
• Communication with the
Board and investors
Executive Committees
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Management Committee Crisis Management Committee Integrity Committee • Oversight of strategy implementation • Oversight and directing the response/ • Oversight and management of • Financial performance recovery from crisis whistleblowing processes • Policy development and implementation • Crisis communication policy and plan • Oversight and management • Investment and transactions of investigations • Sustainability and culture Insider and Disclosure Committee Balanced Scorecard Review Tender Committee • Managing share dealing and insiders list Committee • Oversight and monitoring of • Trading reports • Balance scorecard framework tendering process • Regulatory disclosures • Management and monitoring of • Governance of procurement process corporate KPIs to meet corporate • Approvals and recommendations in line objectives with Delegation of Authority

Dubai Internet City

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KEY GOVERNANCE FRAMEWORK POLICIES

Governance in Action

Board Strategy Day

In line with our commitment to developing and implementing robust corporate governance that safeguards the business and support strategic progress, TECOM Group has put in place a range of key policies that form an integral part of its governance framework.

External Auditor Policy

Dividend Policy

Director Nomination and Election Policy

TECOM Group’s Board of Directors and Audit Committee are committed to ensuring the suitability, objectivity and independence as well as the sound performance of the external auditor. The Company has established a transparent and formal relationship with the external auditor, who is ultimately accountable to the Company’s shareholders and plays an essential role in providing credibility to the financial statements by performing the requisite audit procedures. The External Auditor Policy defines the guidelines and procedures for the Audit Committee to assess and monitor the external auditors.

TECOM Group’s Board ensures a clear policy for the distribution of the Company’s profits in a manner that serves the interests of both the Company and the shareholders. The Dividend Policy defines the principles of determining, declaring and paying dividends. Approved at the General Assembly held on 14 March 2023.

TECOM Group’s Board of Directors is dedicated to maintaining a qualified and competent Board to set the strategic direction of the Company and ensure proactive oversight and management of the interests of all its stakeholders. The Director Nomination and Election Policy defines the process to address the nomination and election requirements, and ensures the Board’s diversity.

Disclosure Policy

TECOM Group’s Board of Directors is responsible for ensuring that all disclosures provide sufficient, timely, accurate and true information to shareholders and investors. The Board ensures the Company’s affairs are conducted in a fair and transparent manner and that all shareholders are treated equally and fairly. The Disclosure Policy sets out the fundamental principles and responsibilities for all employees involved in handling material information related to the business activities of the Company’s assets, owned and/or operated. It regulates the relationship with the Company’s stakeholders to ensure the Company’s fulfilment of its obligations towards all stakeholders, preserving their rights and providing them with required information, and establishing sound relations with them in accordance with the regulatory requirements and best practices.

Director Remuneration Policy

TECOM Group’s Board of Directors and the Nomination and Remuneration Committee (NRC) are committed to ensuring that the level and composition of remuneration to the Board Members are sufficient and justifiable to attract and maintain talented individuals able to fulfil the duties and responsibilities of a Board Director. The Director Remuneration Policy outlines the method and types of remuneration for its Members, for their roles, contributions and participation in the Board and Board Committees. It was approved at the General Assembly held on 14 March 2023.

On 16 November 2023, TECOM Group marked a significant milestone in its journey of strategic planning and corporate governance. The Board of Directors, alongside the senior management, convened for a pivotal Board Strategy Day workshop. This gathering was a collaborative and forward-looking session dedicated to sculpting the future trajectory of the Company.

Setting TECOM Group’s Strategic Direction The strategy day was designed to deliver tangible outcomes. TECOM Group emerged from this workshop with a set of clear strategic imperatives, structured around three key dimensions:

Product Offerings

Innovating and diversifying our real estate portfolio to meet the future needs of a dynamic market.

Customers

Deepening our understanding of customer requirements and preferences to deliver exceptional value and service.

Internal Focus

Concentrating on our people and technology, ensuring that our team is equipped and our technological infrastructure is primed to support our strategic vision.

This Board Strategy Day exemplifies TECOM Group’s commitment to proactive and participatory governance. By engaging both the Board and senior management in strategic planning, we ensure that our decisions are wellinformed, comprehensive, and aligned with both current and future market realities.

Through initiatives like the Board Strategy Day, TECOM Group reaffirms its dedication to keep pace with the evolving business landscape and play a leadership role in shaping it. Our focus remains steadfast on sustaining growth, fostering innovation and continuing to be a leader in developing strategic, sector-focused business in Dubai.

For a detailed overview of our strategic priorities and progress.

OUR BOARD OF DIRECTORS

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Malek Al Malek Chairman Non-Executive

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A R NR
Ahmed Alqassim
Vice Chairman
Independent
Non-Executive
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A R NR Aref Ahli Aysha Miran Independent Independent Non-Executive Non-Executive

Skills and experience

Malek Al Malek served as Group CEO of TECOM Group (2018-2020) Ahmed Alqassim is a seasoned banking and management professional and CEO of TECOM Business Parks (2013-2017). He has played an with more than 18 years of experience in commercial and investment integral and strategic role in TECOM’s growth story since joining banking. He is responsible for corporate and institutional coverage at in 2002, evolving the Group’s status as a key enabler of Dubai’s Emirates NBD, a leading banking Group in the MENAT (Middle East, Knowledge Economy. He has consolidated TECOM’s Group’s position North Africa and Turkey) region. by launching innovative solutions that contributed to attracting major He previously served as CEO of Dubai Group and held senior roles international and regional companies while creating an enabling at General Electric and Mubadala – GE capital. He served as a Board environment for start-ups – many of which acquired unicorn status. member of Bank of Muscat, EFG-Hermes, Shuaa Capital and Sun Hung Malek holds a Bachelor’s degree in Business Management from the Kai properties. Higher Colleges of Technology in UAE. Ahmed holds a Bachelors’ degree in Engineering Management from the Higher Colleges of Technology in UAE and an MBA from the University of Victoria in Canada.

Ahmed Alqassim is a seasoned banking and management professional with more than 18 years of experience in commercial and investment banking. He is responsible for corporate and institutional coverage at Emirates NBD, a leading banking Group in the MENAT (Middle East, North Africa and Turkey) region.

Aref Ahli serves as the Executive Director of the Budget and Planning Division in the Department of Finance of the Government of Dubai, a position he has held since 2011. He held various positions at Dubai Municipality from 1989 to 2010. He served as financial expert in the courts of the UAE from 1994 to 1996, and as a manager in the audit office from 1993 to 2001. He is an active member of the Association of UAE Accountants and Auditors, and a member of the International Arab Society of Certified Accountants. He is a certified lecturer and Knowledge Ambassador at the Mohammed bin Rashid School of Government. Aref is a member of various judicial committees and the Government Financial Policy Coordination Council at the UAE level. Aref holds a Bachelor’s degree in Accounting from UAE University and is a certified auditor by the Audit Department of the Ministry of Economy.

Aysha Miran has over 20 years of experience within the public sector. She has expertise within the realm of strategy management, as well as knowledge within a multitude of disciplines including strategic planning, performance management, policy-making and governance within the public sector. She started her career with The Executive Office, a private office of HH Sheikh Mohammed Bin Rashid Al Maktoum in 2002. She previously held the position of Assistant Secretary General, Strategy Management and Governance Sector at the Executive Council Government of Dubai , with specific focus on setting the strategic agenda for the Executive Council and its Strategic Affairs Council and assisting in decision making.

Aysha holds a Master’s in International Business Law from Paris II and an EMBA from American University of Sharjah. She has an Executive Diploma in Public Administration from National University of Singapore and is certified in Balance Scorecard Practice.

Other Membership or Joint-Stock Company Positions

Chairman of Emirates Integrated Telecommunications Company PJSC (EITC) (Du)

Other Key Regulatory, Government or Commercial Positions Education and certifications

Group CEO of DHAM L.L.C.

Director General of Dubai Development Authority (DDA) Chairman of Dubai Institute of Design and Innovation and Centre of Excellence for Applied Research and Training Board Member of Dubai Waste Management Company, Higher Colleges of Technology, Higher Committee for Future Technology & Digital Economy (Dubai)

Group Head of Wholesale Banking at Emirates NBD Bank PJSC Board Member of Emirates Post Group

Executive Director of Budget and Planning Division, Department of Finance of the Government of Dubai

Director General, Knowledge and Human Development Authority Board Member of Knowledge Fund Establishment Deputy Chairperson of Mohammed Bin Rashid School of Government

Council Member of Dubai Freezone Council, Dubai Media Council and the Dubai Urban Planning 2040 Executive Council/Supreme Committee

A Member of the Audit Committee Chair of the Audit Committee R Member of the Risk Committee Chair of the Risk Committee Member of the Nomination Chair of the Nomination NR and Remuneration Committee and Remuneration Committee

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Corporate Governance

OUR BOARD OF DIRECTORS CONTINUED

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NR A R NR
Fatima Hussain Amit Kaushal Omar Karim
Non-Executive Non-Executive Non-Executive
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The composition and diversity of the TECOM Group Board exemplify our commitment to progressive leadership and diverse representation at every level of the Group. Our Board’s diversity spans gender, nationality, age and professional background, reflecting a broad spectrum of perspectives and expertise.

With 28.57% female representation, our Board proudly exceeds the SCA mandate, which requires public joint-stock companies listed in the financial markets to achieve at least 20% female representation on their boards.

Skills and experience

Fatima Hussain has worked with several reputed private and semigovernment organisations across various strategic HR disciplines that include performance management, total rewards, talent acquisition and development, Emiratisation and talent redeployment. She has partnered with senior leadership and C-Level executives to lead various critical projects related to quality management and business process improvement in order to realise organisational effectiveness and achieve set business objectives. Fatima is a Senior Assessor Member with the Department of Economic Development in Dubai for Human Development Awards.

Fatima holds a Master’s degree in Business Administration from University of Dubai and completed an executive leadership programme from Wharton Business School (United States).

Other Membership or Joint-Stock Company Positions

Chairperson of Takaful Emarat Insurance PSC

Other Key Regulatory, Government or Commercial Positions Education and certifications

Chief People Officer of Dubai Holding LLC Board Member and Chairperson of the Nomination and Remuneration Committee of Memaar Building Systems LLC Board Member and Member of the Nomination and Remuneration Committee of Ell Capital PSC

Under Amit’s leadership, Dubai Holding has achieved sustainable economic growth and accomplished unparalleled results, further cementing Dubai Holding’s position as one of the UAE’s largest and most diverse investment conglomerates.

Amit has vast experience in financial services, having spent more than a decade in the earlier years of his career with leading investment banks in London and Dubai, where he worked for Goldman Sachs, UBS and Deutsche Bank across transaction advisory, structuring and capital markets disciplines.

Amit holds a Master of Philosophy degree in Finance from the University of Cambridge and a BSc (First Class Hons.) in Mathematics, Operational Research, Statistics and Economics from the University of Warwick.

Board Member of Emirates Central Cooling Systems Corporation PJSC

Group Chief Executive Officer of Dubai Holding LLC Board Member of Azadea Holding Company DIFC Ltd Advisory Board Member of Warwick Business School

Omar Karim oversees the investment strategy of a US$35 billion multinational portfolio of strategic and financial investments across real estate, hospitality, leisure and entertainment, telecommunications and media, travel and tourism, consumer retail and sustainable and renewable energy.

Before joining Dubai Holding, Omar served as an investment banker at UBS Investment Bank (NYSE:UBS).

Omar started his career at KPMG in Australia in their corporate finance practice.

Omar holds a Bachelor’s degree in Accounting and Finance from Monash University in Australia.

Chief Investment Officer of Dubai Holding LLC Chairman of Merex Investment Group LLC Board Member of Azadea Holding Company DIFC Ltd Board Member of Shamal Venture Cruise Terminal LLC Board member of Certares Holdings (Blockable) LLC Board member of Dubai Hills Estate LLC, Dubai Hills Estate Retail LLC, Dubai Hills Estate Hospitality LLC and Dubai Hills Estate District Cooling LLC

Our Board comprises of seven members from three countries: five are Emirati, one British and one Australian. We have three Independent Non-Executive Directors and four Non-Executive Directors. The average age of our Board Members is 43.7 years old and the average tenure is 1.5 years, as of year-end 2023.

At TECOM Group, we believe in genuine inclusion. Our approach to diversity is rooted in the conviction that diverse boards are more effective, bringing a range of perspectives that drive better decision-making and foster a more inclusive corporate culture. The diversity of our Board is a testament to our commitment to leading by example in the realm of corporate governance and ethical business practices.

Through our ongoing efforts, TECOM Group will continue to champion the cause of boardroom diversity and inclusiveness, setting the standard for our Company, partners and market.

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Board gender diversity Board composition 28.5% 43% Female Independent Non-Executive 71.5% 57% Male Non-Executive

Board Member of Aurora Holding Company Limited

A Member of the Audit Committee

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Average age Average Tenure 43.7years 1.5years

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OUR BOARD OF DIRECTORS CONTINUED

Board Roles and Responsibilities

Setting clear and precise standards and procedures for the nomination, remuneration and development of Directors.

The Board is the decision-making authority for all matters of significance to the Company of strategic, financial or reputational consequences or implications. The Board provides strategic leadership and is responsible for leading the Company towards the attainment of its vision and goals. The Board has the final authority to decide on all matters except those reserved for shareholders’ approval at the General Assembly meeting. The Board Charter provides the key functions of the Board and the guiding principles for its composition, responsibilities and accountabilities.

Setting a clear delegation policy.
Setting a code of conduct.
Setting transparency and disclosure policies including inside information and share dealing code.
Adopting criteria for granting incentives, bonuses and privileges to Directors and senior executive management in a manner that serves the Company’s interest and realises its objectives.
Setting a clear policy for distribution of the Company’s profits.
Ensuring the protection of shareholders’ interests and Company assets.

Key Areas of Responsibility

Setting policies on sustainability, gender diversity and human
Adopting the strategic approaches and main objectives of the Company and supervising implementation thereof.

resources.

Taking the necessary procedures to ensure an efficient internal auditing function.

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----- Start of picture text -----

Number of
Number of attendees by Names of absent
Date of Board Meeting attendees proxy members
----- End of picture text -----

Ensuring the establishment of a compliance function, adopting policies and procedures to ensure compliance with applicable laws, regulations and the requirements of the supervisory authorities.

9 February 2023	7	–	–
2 May 2023	7	–	–
1 August 2023	7	–	–
31 October 2023	7	–	–
11 December 2023	7	–	–

Setting risk management strategy and determining the risk appetite.
Specifying the optimal capital structure, strategies, financial objectives and approving annual budgets.
Setting performance objectives and monitoring implementation and the overall performance of the Company.

Key Activities during 2023

Approved the 2023 quarterly and 2022 full year financial statements.
Considered and approved payment of interim cash dividend of AED 400 million for the first six-month period ending 30 June 2023.
Reviewed and approved 2022 performance incentive plan.
Approved the Internal Controls over Financial Reporting Framework.
Considered and approved the 2024-2028 Business Plan, 2024 Budget and Balanced Scorecard.
Considered and approved debt refinancing.
Considered and recommended the Directors’ remuneration, Directors’ Remuneration Policy and Dividend Policy for shareholders’ approval at the General Assembly.
Approved the Group Investment Policy.

The Board did not issue any decisions by passing during the financial year 2023.

Board Remuneration

The Board remuneration proposal for 2023, AED 5,990,000 plus VAT (including Sitting Fees), will be presented to the shareholders for approval at the Annual General Assembly, taking place on 4 March 2024.

The Members of the Board are entitled to a ‘Sitting Fee’ for attending the Board Committees’ meetings. The proposed Sitting Fees are outlined in the table below and will be presented to the shareholders for approval at the Annual General Assembly.

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Number of meetings attended
Nomination &
Remuneration
Director Name Sitting fee in AED Audit Committee Risk Committee Committee Total in AED
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Aref Ahli	10,000	6	5	–	110,000
Ahmed Alqassim	10,000	6	5	4	150,000
Amit Kaushal	10,000	6	5	–	110,000
Fatima Hussain	10,000	–	–	4	40,000
Omar Karim	10,000	–	–	4	40,000
Aysha Miran	10,000	–	–	4	40,000
Total					490,000

The Board Members did not and will not receive any additional allowances, salaries or fees other than the allowances for attending the Committees’ meetings.

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Board Evaluation leadership and collaboration. Commodities Authority’s (SCA) Governance
At TECOM Group, Board evaluation is more • Sending a positive signal to investors Guide. The Chairman of the Board, aided by
than a procedural task; it is a cornerstone and stakeholders about our commitment the Company Secretary, leads this process.
of our Corporate Governance Framework. to good governance. To ensure candour and honesty in feedback,
Recognising its significance, our Board • Aiding in efficient decision-making. the responses are collected anonymously.
considers this evaluation an integral • Demonstrating our commitment to
component for enhancing governance, continually developing the Board’s Impact and Outcome
fostering accountability, promoting capabilities. This structured evaluation process plays a
transparency and reinforcing strategic thinking. pivotal role in ensuring that TECOM Group’s
Annual Evaluation Process Board remains dynamic, effective and aligned
Board evaluation at TECOM Group serves The evaluation of the Board and its with the evolving needs of the business
multiple purposes, including: Committees is an annual exercise. The and its stakeholders. It is a testament to
• Strengthening governance practices. process follows a three-year cycle, with our dedication to excellence in corporate
• Fostering a culture of accountability evaluations being internally facilitated for governance and our unwavering commitment
and transparency. two years and externally facilitated every to the continuous improvement of our
• Encouraging strategic thinking, third year in line with the Securities and leadership and governance practices.
----- End of picture text -----

The evaluation process follows a seven-step process:

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----- Start of picture text -----

Dubai Design District
----- End of picture text -----

Determine Finalise Develop and Define Evaluation Establish Conduct Analyse and Submit Implement Objectives Scope Methodology Evaluation Results Report Action Plan Setting clear Identifying Selecting Utilising an Evaluating both Compiling goals for what who will be appropriate electronic qualitative and findings into the evaluation evaluated, evaluation platform for quantitative a report for aims to achieve. including the method be it efficient and data to gain Board review. Board, its questionnaires, effective data comprehensive for each action Committees surveys or gathering. insights. and regularly and individual one-on-one monitoring the Directors. interviews.

Creating an action plan based on the evaluation results, setting a timeline for each action and regularly monitoring the progress.

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OUR BOARD OF DIRECTORS CONTINUED

Board Training and Development

At TECOM Group, we recognise that the continuous training and development of our Board of Directors is not just an option, but a necessity for fostering strong corporate governance and ensuring informed decision-making at the highest level.

This year, we placed a high emphasis on enhancing the knowledge and skills of our Board Members, reflecting our belief that an informed Board is integral to the success and integrity of our Company. In line with this commitment, our Board Members received updates and briefings on critical topics, including:

Related Party Transactions: Al Tamimi & Company delivered a presentation on related party transactions. The briefing covered the legal and governance requirements as per the applicable rules and regulations, including the Directors fiduciary duties, accountability and liabilities of the Board Members, the transparency and disclosure obligations and management of conflict of interests.
Effective Corporate Governance: Hawkamah (The Institute of Governance) delivered a presentation on corporate governance. The briefing covered governance vs compliance, the evolving focus and role of the Board, authority and responsibility, strategy, Board and culture, stakeholder engagement, sustainability and Board evaluation.

All the Board Members attended both briefings.

Board Share Dealings

The key responsibilities delegated include:

Implementing the Company’s strategy as determined by the Board.
Developing and implementing the risk management framework, as determined by the Board and subject to the oversight of the Risk Committee.
Developing and implementing the internal control and compliance frameworks, subject to the oversight of the Audit Committee.
Developing and implementing TECOM Group Remuneration Policy, as determined by the Board and subject to the oversight of the Nomination and Remuneration Committee.

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Authorised person Power of authorisation Duration of authorisation
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Chief Executive Officer	To undertake the day-to-day	Valid until revoked by the Board.
	management of the Company,
	subject to the limits set by the Board.

Company Secretary

The Board appointed Mrs. Ritva Kassis-Nicholas as Company Secretary effective 19 September 2022.

Mrs. Nicholas is a Chartered Governance Professional and Chartered Company Secretary, an ethics and compliance specialist with over 15 years of experience in listed companies across various industries. She is a Fellow of the Chartered Governance Institute (UK) and holds an MSc in Corporate Governance from London South Bank University.

The Share Dealing Policy provides the framework for Board Members and employees while dealing with the Company’s securities. It ensures appropriate controls are embedded, and relevant notifications and clearances are obtained as necessary. The Board is committed to complying with the Policy and the disclosure requirements.

Based on the disclosures made by the Board Members, the table below shows the dealings of the Board and their first-degree relatives in TECOM Group securities during 2023.

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Dubai Outsource City
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Owned Shares as
Name Position on 31/12/2023 Total sale Total purchase
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Malek Al Malek	Chairman	0	0	0
Ahmed Alqassim	Vice Chairman	0	0	0
Aref Ahli	Board Member	0	0	0
Aysha Miran	Board Member	0	0	0
Fatima Hussain	Board Member	0	0	0
Amit Kaushal	Board Member	0	0	0
Omar Karim	Board Member	0	0	0

Board Delegation

The Board delegated the day-to-day management of the Company to the Chief Executive Officer, in line with the approved Delegation

of Authority.

The Board defined and approved the Company’s delegation of authority which determines the types and maximum number of obligations that may be approved by the Chief Executive Officer, matters reserved for General Assembly, Board or Board Committees approval. The Delegation of Authority facilitates the effective decision-making process and the ability to be resilient in response to market demands.

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BOARD COMMITTEES

The Board established three Board Committees: Audit Committee (“AC”), Risk Committee (“RC”) and Nomination and Remuneration Committee (“NRC”) (collectively, “the Committees”).

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Nomination and
Remuneration
Name Audit Committee Risk Committee Committee
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The Committees support the Board in discharging its duties. Each Committee focuses on a specific area of expertise and makes informed decisions within its delegated authority by the Board and reports regularly to the Board.

Ahmed Alqassim	Member	Member	Chair
Amit Kaushal	Member	Member
Omar Karim			Member
Fatma Hussain			Member
Aysha Miran			Member
Aref Ahli	Chair	Chair

The Board delegated some of its authority to the Committees, with each Committee governed by its own charter. The table on the right shows the membership of each Committee.

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Audit Committee

As Chairperson of the Audit Committee at TECOM Group, it is my responsibility to ensure the effectiveness and integrity of our financial reporting and audit processes. Our commitment to rigorous compliance with the UAE’s regulations, the SCA and the DFM is paramount. We continuously strive to enhance the governance and financial transparency that our stakeholders expect from us.”

Mr. Aref Ahli

Key focus areas/achievements in 2023

Chairperson, Audit Committee

Reviewed and endorsed the 2023 quarterly financial statements and 2022 full year financial statements.
Considered and approved internal audit annual budget and plan.

Mr. Aref Ahli, Chairperson of the AC, acknowledges his responsibility for the committee system in the Company, review of its work mechanism and ensuring its effectiveness.

Completed the external auditor’s assessment.
Reviewed the quarterly internal audit reports.
Considered and endorsed the Internal Controls over Financial Reporting (ICFR) Framework.
Considered and reviewed fraud risk assessments.
Approved the Company’s Compliance Manual.

The AC gives due consideration to the applicable laws and regulations of the UAE, the SCA and the DFM, including the provisions of the Governance Rules.

guidelines on independence issued by the relevant accountancy and auditing bodies.

and expertise in financial and accounting matters, and at least two Members must be Independent. One of the Independent Members must be appointed as the Chairperson of the AC. The Company complies with these provisions and details of membership are defined hereafter.

The AC assists the Board in discharging its responsibilities concerning financial reporting, external and internal audits and controls, including:

The Governance Guide requires that the Audit Committee must comprise at least three Members who are NonExecutive Directors and have knowledge

reviewing and monitoring the integrity of the Company’s annual and interim financial statements,

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----- Start of picture text -----

Name Position
----- End of picture text -----

	Aref Ahli	Chairperson
	Ahmed Alqassim Amit Kaushal	Member Member

reviewing and monitoring the extent of the non-audit work undertaken by external auditors,
advising on the appointment of external auditors,
overseeing the relationship with the external auditors,

The AC held six (6) meetings during the financial year ending 31 December 2023.

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Number of Number of Names of
Date of Audit attendees attendees absent
Committee meeting in person by proxy members
----- End of picture text -----

reviewing the effectiveness of the external audit process, and
reviewing the effectiveness of the Company’s Internal Audit function.

1 February 2023	3	–	–
8 February 2023	3	–	–
1 May 2023 31 July 2023	3 3	– –	– –
30 October 2023	3	–	–
7 December 2023	3	–	–

The AC takes appropriate steps to ensure that the Company’s external auditors are independent of the Company and intends to obtain written confirmation from the Company’s auditors that they will comply with

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ESG

Corporate Governance

BOARD COMMITTEES CONTINUED

Risk Committee

As Chairperson of the Risk Committee at TECOM Group, I am committed to ensuring the effectiveness of our risk management and sustainability strategies. We focus on maintaining robust internal controls and aligning our risk management framework with the highest governance standards, thereby safeguarding the Company’s long-term interests.”

Aref Ahli

Key focus areas/achievements in 2023

Chairperson, Risk Committee

Appointed the Director of Risk and Compliance.
Approved 2023 revised ERM plan.
Reviewed and considered the quarterly risk reports.
Approved 2024 plan and budget for Risk and Compliance.

Mr. Aref Ahli, Chairperson of the RC, acknowledges his responsibility for the committee system in the Company, his review of its work mechanism and ensuring its effectiveness.

Considered and debated the corporate risks.
Approved Crisis Communication Policy.
Considered sustainability strategy and its implementation.

The RC assists the Board in discharging its duties concerning risk management and sustainability including:

The Chairperson must be an Independent Director elected by the Committee.

The Company complies with these provisions and details of membership are defined hereafter.

ensuring that appropriate systems and procedures are in place for effective risk management within the Company,
analysing, evaluating and approving the effectiveness of internal risk management procedures and internal controls regularly,

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Name Position
----- End of picture text -----

	Aref Ahli	Chairperson
	Ahmed Alqassim Amit Kaushal	Member Member

reviewing and recommending the risk management target operating model, framework, policies, risk appetite and tolerance to the Board,

The RC held five (5) meetings during the financial year ending 31 December 2023.

assessing whether the Company has appropriate up-to-date contingency, business continuity and disaster recovery plans, and

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----- Start of picture text -----

Number of Number of Names of
Date of Risk attendees attendees absent
Committee meeting in person by proxy members
----- End of picture text -----

	8 February 2023 1 May 2023	3 3	– –	– –
	31 July 2023 30 October 2023 7 December 2023	3 3 3	– – –	– – –

ensuring that an effective sustainability strategy is in place and overseeing its implementation.

The Governance Guide requires that the Risk Committee must be comprised of at least three (3) Non-Executive Directors of which two (2) must be Independent Directors.

Nomination and Remuneration Committee

As Chairperson of the Nomination and Remuneration Committee at TECOM Group, I am dedicated to guiding the strategic composition and remuneration framework of our Board and senior management. We are pivotal in ensuring a balanced mix of skills and experience on the Board, and in establishing remuneration policies that align with the Company’s goals and governance standards.”

Ahmed Alqassim,

Key focus areas/achievements in 2023

Chairperson, Nomination and Remuneration Committee

Reviewed and endorsed the Board Remuneration Policy.
Reviewed and considered the discretionary increments during the year. • Considered and recommended the Board remuneration for 2022.

Mr. Ahmed Alqassim, Chairperson of the NRC, acknowledges his responsibility for the committee system in the Company, his review of its work mechanism and ensuring its effectiveness.

Reviewed and considered annual recruitment and Emiratisation.
Reviewed the independence declarations of the Board Members and reported to the Board.
Considered and endorsed the Board composition and skillset guidelines.

The NRC assists the Board in discharging its responsibilities relating to the composition and make-up of the Board and any Committees of the Board. It is responsible for:

the Company’s Directors and senior management.

at least two (2) must be Independent Directors. One of the Independent Members must be appointed as the Chairperson of the NRC. The Company complies with these provisions and details of membership are defined hereafter.

evaluating the balance of skills, knowledge and experience and the size, structure and composition of the Board and its Committees,

The Governance Rules require that the Nomination and Remuneration Committee must comprise of at least three (3) Members who are Non-Executive Directors, of whom

monitoring the independent status of the Independent Non-Executive Directors, and

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----- Start of picture text -----

Name Position
----- End of picture text -----

	Name	Position
	Ahmed Alqassim Aysha Miran	Chairperson Member
	Fatima Hussain	Member
	Omar Karim	Member

reviewing periodically the Board’s structure and identifying potential candidates to be appointed as Directors or Committee Members as the need may arise.

In addition, the NRC assists the Board in determining its responsibilities concerning remuneration, including:

The NRC held four (4) meetings during the financial year ending 31 December 2023.

Date of Nomination and Remuneration Committee meeting	Number of attendees in person	Number of attendees by proxy	Names of absent members

7 February 2023	4	–	–
17 April 2023 31 July 2023	4 4	– –	– –
6 December 2023	4	–	–

making recommendations to the Board on the Company’s policy on executive remuneration,
setting the over-arching principles, parameters and governance framework of the Remuneration Policy, and
determining the individual remuneration and benefits package of each of

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BOARD COMMITTEES CONTINUED

OUR EXECUTIVE MANAGEMENT

Insider and Disclosure Committee

As Chairperson of the Insider and Disclosure Committee of TECOM Group, I am committed to maintaining the transparency and integrity of the Group’s trading activities by ensuring that all applicable laws in relation to disclosure and insider trading are adhered to. In addition, it is also my responsibility to provide guidance and educate our employees about disseminating any possible sensitive information, in order to safeguard and prevent any malpractice while trading TECOM Group’s shares.”

Haissam Baydoun,

Chairperson, Insider and Disclosure Committee

Haissam Baydoun, Chairperson of the Insiders and Disclosure Committee (IDC), acknowledges his duty to assist the Board with the oversight of the Company’s obligations arising out of applicable laws and regulations in relation to insider trading, disclosure and transparency. Its responsibilities include:

developing and implementing procedures to regularly review and update the Corporate Disclosure Policy and Share Dealing Policy while also monitoring the compliance for the same,
identifying and establishing what constitutes material non-public information,
determining the disclosure treatment of material and potential inside information and, where appropriate, ensuring its timely and accurate communication with the relevant authorities,
educating our employees and reminding them about their responsibilities about treatment of such information,
identifying employees and external consultants who have regular access to material non-public information and creating an insider list which is regularly updated,
notifying SCA and DFM annually about the insider list. In addition, submitting a copy of the list to the authorities at any given time upon request, and

Key Activities during 2023

Reviewed the share dealing policy which was subsequently approved by the Board.
Communicated to our employees about what constitutes material non-public information while also providing guidance regarding the adherence to the disclosure and transparency regulations in line with SCA and DFM requirements.
Regularly reviewed, monitored and updated the insider list and the disclosure in line with the market regulations.
Reviewed the quarterly trading reports while confirming that there were no abnormalities to report.
Prepared the annual report for the Board summarising the activities carried by the Committee during the year.
preparing quarterly trading reports including concerns over any of the
trades and submitting it to the Audit Committee.

The Insider and Disclosure Committee consists of:

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Name Job Title Position
----- End of picture text -----

	Haissam Baydoun	VP Corporate Finance	Chairperson
	Matthew Madanat	Director Risk and Compliance	Member
	Elizabeth Board	VP Legal	Member

The IDC held four (4) meetings during the financial year ending 31 December 2023.

Date of Meeting	Number of Attendees in Person	Number of Attendees by Proxy	Names of absent members
17 April 2023	2*	0	0
15 September 2023 30 November 2023	3 3	0 0	0 0
21 December 2023	3	0	0

Note: The Director – Risk & Compliance joined TECOM Group in Q2 2023. He assumed his role as an IDC Member effective 1 June 2023.

Abdulla Belhoul Chief Executive Officer

Ammar Saud Ahmad Michael Haif Abdulla Al Malik Abu Alshawareb Al Mheiri Wunderbaldinger Zamzam Bahroozyan Executive Vice Executive Vice Senior Vice Chief Financial Senior Vice Senior Vice President – President – President – Officer President – President – Commercial Industrial Business Strategy Engineering Leasing Leasing Services and Marketing

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Dubai Knowledge Park
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OUR EXECUTIVE MANAGEMENT CONTINUED

Executive Biographies

Abdulla Belhoul Chief Executive Officer

Before he was appointed as Chief Executive Officer, Abdulla was the Chief Commercial Officer of DHAM, where he managed an extensive portfolio of 10 business districts, 20 leading retail destinations and 15 residential communities.

Abdulla was appointed Chief Executive Officer of Dubai Industrial City in 2013 and Chief Commercial Officer of TECOM Group in 2018. Between 2007 and 2013, Abdulla held various leadership positions in Dubai Holding, overseeing the construction of key projects that make up Dubai’s skyline today. From 2002 to 2007, he held various managerial positions at Dubai World Trade Centre and the Dubai Department of Civil Aviation’s Engineering.

Haif Zamzam Senior Vice President (Strategy and Marketing)

Michael Wunderbaldinger Chief Financial Officer

Michael joined TECOM Group in 2014 as the Chief Financial Officer and served as the Chief Financial Officer of DHAM from 2020 to June 2022. Before joining TECOM Group, Michael was the Chief Financial Officer at Unibail-Rodamco-Westfield from 2007 to 2013, a listed and fully integrated commercial real estate conglomerate in Europe, where he was responsible for operations in Central and Eastern Europe. Between 1997 and 2007, Michael held various chief financial officer and chief operating officer roles at General Electric (GE Capital) with various responsibilities for European wide operations in the banking and real estate industries.

Abdulla Bahroozyan Senior Vice President (Engineering)

Ammar Al Malik Executive Vice President (Commercial Leasing)

Ammar is responsible for the growth and development of nine business communities and for building an innovative ecosystem for companies and individuals.

Ammar joined the TECOM Group in 2005 and held a variety of leadership positions including Managing Director of Dubai Internet City and Dubai Outsource City, where he assumed the leadership of the technology sector within the Group’s portfolio and established the position of those districts until they have become the region’s leading technology hub.

Ahmad Al Mheiri Senior Vice President (Business Services)

Saud Abu Alshawareb Executive Vice President (Industrial Leasing)

Saud is responsible for nurturing relationships with customers and attracting new business, determining Dubai Industrial City’s strategic vision, and planning and implementing long-term business strategies to develop the sector as Dubai becomes a major destination for local, regional and global industrial and logistics companies. Saud has extensive experience and expertise in the food and beverage, machinery and equipment, transportation, minerals, base metals and chemical sectors.

Saud joined TECOM Group in 2006. He previously held the positions of Managing Director and Chief Operating Officer of Dubai Industrial City.

The Management team’s experience and expertise is contributing to the sustainable, long-term expansion of TECOM Group’s specialised business communities.”

Abdulla Belhoul Chief Executive Officer

Haif joined TECOM Group in July 2020. Between 2016 and 2020, Haif held various leadership positions in Abu Dhabi National Oil Company (ADNOC), including as Vice President Transformation & Business Support and Vice President Group Strategy.

From 2015 to 2016, Haif was responsible for overseeing and managing the energy assets within Mubadala Development Company’s portfolio. Prior to that, she worked with Boston Consulting Group on a range of projects in the GCC region (for public and private sectors). Haif began her career in 2008 at Masdar Group, where she was an active private equity investor and asset manager.

Abdulla is responsible for the provision of state-of-the-art services and value-added engineering management solutions to TECOM Group in the areas of sustainable building solutions, facilities management, HSE, project delivery, interior design and overall property management. Abdulla joined TECOM Group in 2012 as Director of Facilities Management. Before that, Abdulla was in charge of facilities maintenance at National Petroleum Construction Company where he was also responsible for executing construction of offshore and onshore camp accommodation, office renovation and refurbishment. Abdulla commenced his career in 2007 as a Civil Engineer at Dubai Technology and Media Free Zone Authority.

Ahmad joined the TECOM Group in 2017 as an Executive Director in axs and was responsible for leading digital transformation initiatives and the adoption of the state-of-the-art technologies, enabling the platform to provide a smooth 24/7 experience. Before 2017, Ahmad was the Executive Director of Business Development, Real Estate and Government Services at twofour54. Ahmad has extensive experience with over 15 years of working within free zones in the UAE, including Khalifa Industrial Zone and Jebel Ali Free Zone Authority.

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OUR EXECUTIVE MANAGEMENT CONTINUED

Executive Remuneration

The details of the executive management, their jobs, date of appointment and total salaries for the fiscal year 2023 are defined hereafter. The bonuses for 2023 will be considered by the NRC and approved by the Board in H1 2024.

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Any other cash/
Total salaries and Total bonuses in-kind bonuses
Appointment allowances paid paid during for 2023 or due
Name Position date for 2023 (AED) 2023 (AED) in the future
----- End of picture text -----*

Abdulla Belhoul	Chief Executive Officer	7-Jan-2007	2,400,000	2,400,000
Michael Wunderbaldinger	Chief Financial Officer	1-Apr-2014	2,040,000	1,445,000
Ammar Al Malik	Executive Vice President (Commercial Leasing)	4-Sep-2005	1,200,000	800,000
Saud Abu Alshawareb	Executive Vice President (Industrial Leasing)	28-Aug-2006	1,200,000	800,000
Haif Zamzam	Senior Vice President (Strategy and Marketing)	1-Jul-2020	1,080,000	360,000
Abdulla Bahroozyan	Senior Vice President (Engineering)	1-Apr-2012	1,020,000	340,000
Ahmad Al Mheiri	Senior Vice President (Business Services)	4-Sep-2017	1,020,000	340,000

INTERNAL CONTROLS AND COMPLIANCE

The Board’s responsibility is to establish a robust framework that ensures the effectiveness of the internal control system. The AC and RC support the Board by reviewing the effectiveness of the Company’s internal control and risk management systems, as well as assessing emerging and principal risks.

Bonuses paid for 2022 as approved by the NRC during Q1 2023.

RELATED PARTY TRANSACTIONS

The Company has not entered into any transaction with related parties under the definitions provided for these terms in the Governance Guide: “The Chairman and Members of the Company Board, members of the senior executive management of the Company, employees of the Company and the companies in which any of such persons holds 30% or more of its capital, as well as subsidiaries or sister companies or affiliate companies”.

Please refer to Note 10 in the notes to the audited financial statements, as it provides the key related party transactions as such term is defined in the International Financial Reporting Standards (IFRS) and which are already reflected in the consolidated financial statements for the year 2023, and carried out during the year in the normal course of business on the terms agreed between the parties.

TECOM Group operates a three lines of defence model, enabling us to achieve effective risk management and internal control across the organisation.

The IA Department is headed by Jahangir Ali Muhammad (Vice President – Internal Audit) since 1 July 2022. He has more than 23 years of experience in internal and external auditing, risk management, corporate governance, compliance and fraud investigations. He is a Fellow Chartered and Certified Accountant (FCCA), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE) and UAE Chartered Accountants (UAECA).

Management

The IA Department assists the Company in achieving its goals by employing a systematic and disciplined approach to evaluate and enhance risk management, internal control systems and governance processes. In the event of identifying a major problem within the scope of the IA process, the IA team collaborates with other functions/ departments within the Company to develop and implement a plan to effectively address the issue. This plan may involve introducing new controls or procedures, providing employee training or implementing other corrective actions. As per the approved annual audit plan, the IA Department has not encountered any significant issues within the Company that require disclosure in 2023.

Risk and Compliance

Independent Assurance

During 2023, IA has issued 16 reports, including special reviews, and submitted four quarterly IA reports to the AC, summarising the key findings from the audits and reviews conducted during each quarter, the status of the audit log and key outstanding issues, and the status of the audit plan.

No violations were committed by the Company during 2023.

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Strategic Report ESG

Governance in Action

TECOM Group ICFR Governance

The ICFR framework provides a clear governance structure, delineating roles and responsibilities across the organisation. This structure ensures that everyone understands and executes their responsibilities effectively.

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Scoping
and
External Materiality Process
Auditor’s Universe and
Coordination Documentation
1
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Identification
and
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9 4 Statements
Line Items
Mapping
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Data Sampling
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40+

235+

450+

Our ICFR framework outlines various activities to be performed throughout the year, aiming to achieve defined objectives. These activities, supported by detailed guidelines, provide a solid basis for consistent and reliable financial reporting.

Board of Directors Internal Audit Risk and Compliance External Audit Oversee the system of Provide support to Provide support to Issue an opinion on the internal controls within internal control team internal control team ICFR of the Company the organisation, approve the annual report and the financial statements

Audit	Senior	ICFR	Internal	Process
Committee	Management	PMO Team	Control Team	Owners
• Monitor the annual	• Establish	• Lead the ICFR	• Interim review of	• Responsible for
ICFR program to	strong control	project and	RCM and report to	implementation
ensure compliance	environment	provide guidance	ICFR PMO.	of entity policies,
with accounting,	by providing	to all internal	• Liaison with	procedures,
statutory, legal	leadership and	control team and	process owners.	guidelines,
and regulatory	direction to	process owners.	• Report to ICFR	standards and
requirements.	the entity.	• Coordinate with	PMO team on	manual to ensure
	• Sign the	auditors and senior	status of each	effective ICFR.
	representation	management.	ICFR review and	• Responsible for
	for ICFR of	• Periodic update	implementation.	implementation
	the entity.	and project		of remediation of
		management.		control gaps.

Higher Efficiency: Streamlining processes and reducing the risk of errors in financial reporting.
The successful implementation of the ICFR framework is a testament to our dedication to upholding the highest standards of financial integrity and transparency.

Benefits of ICFR Implementation

The implementation of the ICFR framework at TECOM Group has brought about several key benefits:

Positive Audit Outcomes: Facilitating smoother audits with fewer discrepancies.
Enhanced Compliance: Aligning with regulatory standards and best practices in financial reporting.
Improved Shareholder Trust: Building confidence among investors and stakeholders in the reliability and integrity of our financial statements.

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INTERNAL CONTROLS AND COMPLIANCE CONTINUED

Compliance Officer

Matthew Madanat joined the Company on 25 May 2023 as Risk and Compliance Director. He brings a wealth of experience in compliance and risk management to the role. With a solid background in the real estate industry, Matthew has a track record spanning over a decade.

Previously, Matthew spent around seven years at Deloitte, followed by a four-year stint at PwC from February 2019 to May 2023 before moving to TECOM Group. During this time, Matthew gained valuable experience in compliance and risk management, working with a variety of organisations, including public, listed and private entities.

Matthew has been actively involved in establishing compliance programmes and functions with different entities, contributing to the security and regulatory adherence of the organisations he has worked with. This extensive experience equips Matthew with the knowledge and skills necessary to lead TECOM Group’s compliance efforts effectively.

As Compliance Director, Matthew is committed to upholding the highest compliance standards, leveraging his substantial expertise to navigate the complex regulatory landscape on behalf of TECOM Group.

External Auditor

Deloitte in the UAE is part of Deloitte & Touche (M.E.). Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL).

ENGAGING AND INFORMING OUR SHAREHOLDERS

At TECOM Group, we place immense value on fostering transparent and robust engagement with our investors.

Our commitment to this endeavour is deeply rooted in the belief that a well-informed investment community is fundamental to understanding our strategic direction and the unique value proposition we offer.

We aim to ensure that our shareholders and potential investors are not just observers but informed participants in our journey. Throughout the year, we have actively participated in several investor conferences, conducted numerous investor meetings and hosted quarterly earnings calls. These initiatives are designed to provide comprehensive insights into the key drivers of our financial and operational performance, framed within the context of broader macroeconomic and operational conditions. Such transparency guides us in building trust and interest in the TECOM Group story, thereby widening our shareholder base.

For more information about how TECOM Group engages its shareholders.

A core practice within the Middle East region, today Deloitte has over 7,000 professionals. They are a full-service firm in the UAE, and have well-developed practices serving leading enterprises and institutions in banking and financial services, real estate, leisure and hospitality, construction, public sector activities, trading, manufacturing, telecom, retail, and energy and resources.

Their clients include many of the United Arab Emirates’ largest entities and clients in energy and resources, financial services institutions, real estate, construction, trading, and manufacturing in the public and governmental sectors.

Name of the audit office and partner auditor Deloitte & Touche (M.E.) Partner: Firas Anabtawi Number of years served as the Company external auditor Five years (2019-2023)

The number of years that the partner auditor spent auditing the Company's accounts Total audit fees for 2023 (AED)

One Year

AED 1,500,000

Fees and costs of other private services other than auditing the financial statements for 2023 (AED), if any, and in case of absence of any other fees, this shall be expressly stated.

AED 360,000 To issue an opinion on the effectiveness of the Internal Controls over Financial Reporting (ICFR)

Details and nature of the other services (if any). If there are no other services, this matter shall be stated expressly.

Nil

Statement of other services that an external auditor other than the Company accounts auditor provided during 2023 (if any). In the absence of another external auditor, this matter is explicitly stated.

No other external auditor provided services during 2023.

There were no reservations that Deloitte & Touche (M.E.) included in the interim financial statements and the annual financial statements for 2023.

Share Price Activity during 2023

TECOM Group PJSC was admitted to trading on DFM on 5 July 2022. The share price activity defined hereafter is for the period 1 January to 31 December 2023.

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2.95
2.86
2.77
2.69 2.74 2.75
2.66
2.59 2.62 2.65
2.55 2.6
2.5 2.5 2.54
2.46 2.46 2.56
2.53
2.38 2.42 2.42 2.45 2.46 2.49 2.51
2.38 2.38
2.4
2.33 2.38
2.31
2.28
2.25
2.23
2.2
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
High Low Close
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ENGAGING AND INFORMING OUR SHAREHOLDERS CONTINUED

The Company’s comparative performance with the general market index and sector index to which it belongs during 2023.

2023 Monthly Performance of TECOM Group Shares

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2023 TECOM DFMGI Real Estate
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|||||
|---|---|---|---|
|January|2.33|3,303.27|5,143.180|
|February|2.38|3,437.76|5,207.380|
|March|2.38|3,406.72|5,413.710|
|April|2.42|3,544.79|5,664.520|
|May|2.42|3,567.30|5,821.150|
|June|2.45|3,791.99|6,187.360|
|July|2.54|4,059.27|6,662.400|
|August|2.62|4,082.87|6,865.630|
|September|2.74|4,163.58|7,457.100|
|October|2.60|3,877.08|6,394.480|
|November|2.65|3,992.36|7,071.570|
|December|2.75|4,059.80|7,324.140|

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SUPPORTING OUR SOCIETY AND ENVIRONMENT

TECOM Group remains a force for positive change, partnering with worthy organisations and supporting outstanding charitable initiatives to contribute to the wellbeing and improvement of our local communities and the natural environment.

During 2023, cash and cash-in-kind contributions included:

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Initiative Funds Raised/Donations (AED) Recipient
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||||
|---|---|---|
|The Good Store|90,700|Emirates Red Crescent|
|Iftar Meals|180,000|Beit Al Khair Society|
|WeWalk|87,310|Dubai Autism Centre|
|Total|358,010|

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Awareness campaigns

Colon Cancer Campaign, and

Shareholders ownership distribution as of 31 December 2023

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Percentage of Owned Shares
Shareholders Classification Individuals Companies Banks Government Total
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|||||||
|---|---|---|---|---|---|
|Local|2.01%|91.40%|0.45%|1.32%|95.18%|
|Arab|0.09%|0.00%|0.00%|0.00%|0.09%|
|GCC|0.36%|2.37%|0.01%|0.00%|2.74%|
|Foreign|0.23%|1.76%|0.00%|0.00%|1.99%|
|Total|2.69%|95.53%|0.46%|1.32%|100.00%|

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Shareholders owning 5% or more of the Company’s capital as of 31 December 2023

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|---|---|---|
|Percentage of Owned Shares|
|Name|Number of Owned Shares|of the Company’s Capital|
|DHAM L.L.C.|4,235,000,000|86.50%|

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Shareholders Distribution

TECOM Group Shareholders according to the Size of the Ownership Stake as of 31 December 2023

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Number of Owned Owned Quantity
Category Investors Quantity (%)
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|||||
|---|---|---|---|
|Less than 50,000|6,886|15,605,953|0.312|
|Between 50,000 and 500,000|184|31,690,846|0.634|
|Between 500,000 and 5,000,000|80|133,754,969|2.675|
|Greater than 5,000,000|26|4,818,948,232|96.379|
|Total|7,176|5,000,000,000|100.000|

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Pink Caravan

For more information about these activities and TECOM Group’s broader ESG commitments and initiatives.

DRIVING INNOVATION AND ENGAGEMENT

TECOM Group’s reputation as a dynamic centre of innovation was reinforced during 2023, as we continued to identify and implement novel, differentiated products and services across our ecosystems to meet changing industry dynamics and customer needs. As business requirements change and the ways of working evolve, proactive innovation is a critical component of our future sustainable growth.

Innovation in Action

Key 2023 events

TECOM Group and our vibrant communities across Dubai continued to set the pace in 2023, organising, hosting and taking part in a plethora of events and programs covering a wide range of key issues and exciting initiatives, including:

JANUARY Arab Health 2023 Dubai Science Park participated in the region’s leading healthcare event, alongside industry key players. FEBRUARY Step Conference Step Conference, one of the region’s leading tech focused events, kicked off its 11th edition, presented by Dubai Internet City. in5 showcased 20 innovative start-ups at the event. Gulfood 2023 Dubai Industrial City participated in this year’s edition of the world largest food exhibition that took place in DWTC, where it announced the expansion of one of its biggest customers into the Indian market. MARCH Dubai Lynx Dubai Lynx, region’s creative festival, and Dubai Media City brought the brightest minds and creative talent together.

Dubai Industrial City participated in this year’s edition of the world largest food exhibition that took place in DWTC, where it announced the expansion of one of its biggest customers into the Indian market.

Dubai Fashion Week

First official Dubai Fashion Week at Dubai Design District (d3) recorded over 50% growth.

Annual General Assembly Meeting

380

in5 Science has curated a holistic ecosystem for businesses in the life sciences, healthcare, wellness, food and agriculture, energy and environment sciences segments. in5 Science will also present a curated calendar of networking events, panel discussions and educational forums to cover pertinent topics by thought leaders in the science industry. Collaborating with Dubai Science Park allows in5 to tap into a global ecosystem of MNEs and regional SMEs across pharmaceuticals, healthcare, energy and environment, research, and development for partnership opportunities and access to specialised facilities.

There are currently several startups at in5 Science, and they are working towards solving pertinent issues, including:

Greener Crop

A start-up enabling vertical farming in the Middle East and Africa by offering a range of services, from farm set-up and maintenance to growth management, harvesting and produce sales. The start-up has customers across the US, UAE, Oman and Qatar.

Sentient Labs

The start-up employs advanced technologies such as robotics, artificial intelligence and the Internet of Things (IoT) to promote sea clean-up.

RelphaCare Technologies

A social healthcare tracking platform that enables real-time communication and monitoring by doctors and family.

We4Recycle

A mobile app-based door-to-door valet trash service that simplifies waste segregation at home and strives to increase the awareness of sustainable and environmentally conscious lifestyles.

TECOM Group PJSC held its Annual General Assembly Meeting at one of its major business parks, Dubai Internet City. During the meeting, shareholders approved the Group’s financial statements for the year ended 31 December 2022 and a recommendation by the Board of Directors to distribute a cash dividend of AED 200 million in April 2023, bringing the total amount of dividend distributions for the second half of 2022 to AED 400 million. The shareholders resolved by a special resolution to amend the Company’s articles of association which were subsequently approved by SCA and published in the official gazette.

APRIL The Good Store MAY Make Brilliance CABSAT regional media and entertainment landscape. JUNE Make It In The Emirates in5 Science Launch SEPTEMBER Anuga 2023 OCTOBER GITEX Global 2023 Dubai Internet City participated in GITEX Global 2023. North Star 2023 Dubai Fashion Week NOVEMBER WeWalk The annual charitable walkathon focused on Autism empowerment.

Dubai Industrial City launched Make Brilliance campaign, synergising objectives with Make it in the Emirates and UAE’s efforts to boost the manufacturing industry. Dubai Industrial City signed key strategic partnerships with MoIAT, MOCCAE, EDB and Dubai’s DET to promote and grow UAE manufacturing sector.

Dubai Studio City participated at the event and was proud to bring together industry leaders across two informative sessions to explore the latest trends shaping the regional media and entertainment landscape.

Dubai Industrial City participated in the 2023 edition of Make it in the Emirates, which brought together the largest industrial players and enablers to boost local manufacturing. Dubai Industrial City confirmed almost AED 1 billion in investments at Make it in the Emirates Forum.

Dubai Industrial City participated in Anuga 2023 in Germany, spotlighting the importance of food security globally and locally.

in5 revealed 20% growth in funding for its start-ups at the ultimate super connector event for global start-ups and investors, North Star 2023.

Dubai Design Week

In strategic partnership with d3, Dubai Design Week and Downtown Design were organised. in5 presented region’s largest 3D printed event stand at Dubai Design Week.

d3 Architecture Exhibition

d3 teamed up with the esteemed Royal Institute of British Architects (RIBA) Gulf Chapter to curate and launch what marks the fourth instalment of its architectural showcase, with the theme of this year’s exhibition being Sustainability – Past, Present and Future.

Global Media Congress

Dubai Media City participated at the event and in panel discussion.

COP 28

DECEMBER

Dubai Science Park shed the light on UAE’s commitment to healthcare resilience and sustainability at COP28. in5 announced that its plastic recycling start-up Midori raised USD 200,000 in funding at COP28.

Sole DXB

Highly anticipated youth and contemporary culture festival in the region, organised in strategic partnership with d3.

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Corporate Governance

Financial Statements

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BOARD OF DIRECTORS’ REPORT

Dear Shareholders and Readers

The Board of Directors of TECOM Group PJSC (the “Company”) has the pleasure in submitting their report and the audited consolidated financial statements of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2023.

Board of Directors

The Board of Directors comprised of:

Chairman Mr. Malek Sultan Rashed Al Malek Vice Chairman Mr. Ahmed Al Qassim Members Mr. Amit Kaushal Mr. Omar Karim Ms. Fatma Hussain Ms. Aisha Abdulla Miran Mr. Aref Abdulrahman Ahli

Principal activities

The principal activities of the Group are property leasing, development, facilities management and services.

Financial highlights

2023 was a successful year for the Group where exemplary growth in our top line revenue and net profit validated the strength of our strategy, building the Company’s confidence and driving momentum. The Group emerged stronger, leaner and better equipped to advance its growth agenda.

Net Profit for the year increased by 49% to AED 1,078 million, compared to AED 726 million in 2022. This is mainly driven by solid revenue growth of 10% as Revenue in 2023 stood at a record high level of AED 2,169 million compared to AED 1,973 million achieved in 2022. This revenue growth was achieved across the board and was evident in all business segments and products.

In accordance with the Articles of Association of the Company and applicable UAE Federal Law, an apportionment of AED 22 million is made to legal reserve from the profits of the subsidiaries of the Group.

On 30 January 2024, the Board of Directors has recommended cash dividend of AED 400 million (AED 0.08 per share), which is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company. The balance of the distributable profit after considering appropriation to legal reserve and proposed dividend will be transferred to retained earnings.

As at 31 December 2023, total equity attributable to owners of the Company amount to AED 6,329 million (2022: AED 5,968 million), total liabilities of AED 8,485 million (2022: AED 8,587 million), Cash and bank balances of AED 1,535 million (2022: AED 1,261 million) and total assets of AED 14,814 million (2022: AED 14,555 million). Investment properties of the Group were fair valued at AED 22,935 million (2022: AED 21,289 million).

Transactions with related parties

The audited consolidated financial statements disclose related party transactions and balances in note 10. All transactions are carried out in compliance with applicable laws and regulations.

Implementation of Governance Framework

During 2023, the Group has adopted Committee of Sponsoring Organization (COSO) framework to further strengthen the Group's ability to implement a strong internal control environment over financial reporting.

Outlook 2024

Over the past 12 months, the real estate market in UAE has shown a bullish trend and has demonstrated great growth potential. We believe that we are well-positioned and have the right infrastructure, resources and technical know-how to continue capturing these growth opportunities.

As part of our growth strategy, we will be looking to enhance our commercial offerings by a combination of strategic acquisitions and new developments. Further we will be looking to expand our land bank to cater high demand especially in Industrial leasing sector.

As we move forward, we remain dedicated to sustaining this positive momentum and delivering remarkable growth underpinned by strong business sentiment.

Auditors

The consolidated financial statements for the year ended 31 December 2023 have been audited by Deloitte & Touche (M.E.).

For the Board of Directors

Malek Sultan Rashed Al Malek

Chairman

Dubai, United Arab Emirates 30 January 2024

INDEPENDENT AUDITOR’S REPORT

Basis for opinion

To the Shareholders of TECOM Group PJSC

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the other ethical requirements that are relevant to our audit of the Group’s consolidated financial statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of TECOM Group PJSC (the “Company”) and its subsidiaries (together, the “Group”), which comprise the consolidated balance sheet as at 31 December 2023, and the consolidated statement of income, statement of other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2023, and their consolidated financial performance and their consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS Accounting Standards).

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Impairment assessment of investment properties Key audit matter

How the matter was addressed in our audit

We assessed the controls in the process over the determination of the valuation of investment property to determine if they had been appropriately designed and implemented.

The Group’s investment properties portfolio is carried at AED 11,865 million in the consolidated balance sheet. Investment properties are carried at cost less accumulated depreciation and accumulated impairment, if any.

The Group undertakes a review of indicators of impairment and, wherever indicators of impairment exist, an impairment assessment is performed by determining if the recoverable amount based on qualitative and quantitative factors, exceeds or is equal to its carrying amount.

We assessed the valuer’s competence, capabilities, independence and objectivity and read their terms of engagement with the Group to determine that the scope of their work was sufficient for audit purposes.

Ascertaining the value of these properties is a significant judgement area and is underpinned by a number of assumptions. The determination of the recoverable amount of these investment properties is based on external valuations using the income approach and sales comparable approach for its assets.

We tested the data provided to the valuer by the Group, on a sample basis by agreeing the data to the Group’s accounting records.

We involved our internal real estate valuation specialist to review selected properties and assessed whether the valuation of the properties was performed in accordance with IFRS Accounting Standards.

The Group’s income approach requires valuers to make significant estimates and assumptions related to future occupancy levels, growth rates, rental rates, and discount rates. The sales comparable approach requires the valuers to examine and analyse market transaction/data and requires adjustments to be made for the data to account for individual characteristics. Further, the Group allocates common infrastructure costs (including cost to complete) on properties in the portfolio on a systematic basis. Accordingly, the allocation of estimated infrastructure cost and valuation of its underlying assets is a significant judgement area based on a number of assumptions. The existence of significant estimation uncertainty warrants specific audit focus in this area as any bias or error in determining the cost base of investment properties and its recoverable amount could lead to a material misstatement in the consolidated financial statements.

We assessed and challenged the underlying key assumptions used in the recoverable amount assessment and estimation of cost to complete infrastructure work.

We performed sensitivity analyses on the significant assumptions to evaluate the extent of their impact on the determination of fair values.

We reperformed the arithmetical accuracy of the determination of infrastructure cost allocations and recoverable amounts.

We considered the valuation of investment properties as a key audit matter because of the quantitative materiality of the balance and the significant judgements applied and estimates made in determining the fair value.

We assessed the disclosures made relating to this matter to determine if they were in accordance with the IFRS Accounting Standards.

Refer to notes 4 (d), 4 (e) and 6 for more information regarding the impairment assessment of investment property.

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INDEPENDENT AUDITOR’S REPORT CONTINUED

Other information

Management is responsible for the other information. The other information comprises the information included in the Annual report but does not include the consolidated financial statements and our auditor’s report thereon. We obtained the Board of Directors’ Report, at the date of our auditors’ report, and we expect to obtain the remaining sections of the Annual report after the date of the auditors’ report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards and their preparation in compliance with the applicable provisions of the UAE Federal Decree Law No. (32) of 2021 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

As required by the UAE Federal Decree Law No. (32) of 2021, we report that for the year ended 31 December 2023:

we have obtained all the information we considered necessary for the purposes of our audit;
the consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Decree Law No. (32) of 2021;
the Group has maintained proper books of account;
the financial information included in the Board of Directors report is consistent with the books of account of the Group;
the Group has not purchased or invested in any shares during the financial year ended 31 December 2023;
note 10 to the consolidated financial statements discloses material related party transactions, and the terms under which they were conducted;
note 26 to the consolidated financial statements discloses social contributions made during the year; and
based on the information that has been made available to us, nothing has come to our attention which causes us to believe that the Group has contravened during the year ended 31 December 2023, any of the applicable provisions of the UAE Federal Decree Law No. (32) of 2021 or in respect of the Company, its Articles of Association which would materially affect its activities or its financial position as at 31 December 2023.

Deloitte & Touche (M.E.)

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Firas Anabtawi

Registration No.: 5482 30 January 2024 Dubai United Arab Emirates

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet

As at 31 December 2023

	Notes	2023 AED’000 2022 AED’000
ASSETS
Non-current assets
Property and equipment	5	93,459 96,995
Intangible assets		20,427 18,944
Investment property	6	11,864,542 11,873,927
Derivative financial instruments	7	221,995 315,519
Other receivables	8	14,215 17,024
Unbilled receivables	9	802,057 726,421
		13,016,695 13,048,830
Current assets
Other receivables	8	124,803 65,575
Trade receivables	9	102,159 150,515
Due from related parties	10	35,425 29,899
Cash and bank balances	11	1,535,183 1,260,514
		1,797,570 1,506,503
Total assets		14,814,265 14,555,333
EQUITY AND LIABILITIES
Equity attributable to owners of the company
Share capital	12	500,000 500,000
Legal reserve	13	458,410 436,321
Hedge reserve		218,995 336,647
Retained earnings		5,151,602 4,695,416
Total equity		6,329,007 5,968,384
LIABILITIES
Non-current liabilities
Trade and other payables	14	3,304 —
Borrowings	15	4,351,767 4,341,982
Advances from customers	16	623,533 645,326
Project liabilities	17	829,445 869,271
Derivative financial instruments	7	3,000 2,817
Employees’ end of service benefits	18	43,912 43,909
Provision for other liabilities and charges	19	902,807 881,124
		6,757,768 6,784,429
Current liabilities
Trade and other payables	14	348,523 410,036
Advances from customers	16	836,605 767,207
Project liabilities	17	460,533 401,047
Due to related parties	10	60,244 203,691
Provisions for other liabilities and charges	19	21,585 20,539
		1,727,490 1,802,520
Total liabilities		8,485,258 8,586,949
Total equity and liabilities		14,814,265 14,555,333

These consolidated financial statements were approved by the Board of Directors on 30 January 2024 and were signed on its behalf by:

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Malek Sultan Rashed Al Malek Abdulla Khalifa Belhoul Chairman Chief Executive Officer

Michael Wunderbaldinger

Chief Financial Officer

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statement of Income

For the year ended 31 December 2023

Consolidated Statement of Income For the year ended 31 December 2023
	Notes 2023 AED’000 2022 AED’000
Revenue	21 2,169,197 1,973,368
Direct costs	22 (760,382) (767,854)
Gross profit	1,408,815 1,205,514
Other operating income	23 47,162 41,986
	1,455,977 1,247,500
Expenses
General and administrative	24 (154,104) (245,363)
Marketing and selling	26 (42,823) (41,547)
	(196,927) (286,910)
Operating profit	1,259,050 960,590
Finance income	27 81,592 77,213
Finance costs	27 (262,367) (312,185)
Finance costs — net	(180,775) (234,972)
Profit for the year	1,078,275 725,618
*Earnings per share attributable to the owners of the Company*
Basic and diluted (AED)	28 0.22 0.19

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2023

	Notes	2023 AED’000 2022 AED’000
Profit for the year		1,078,275 725,618
*Items that may be subsequently reclassified to consolidated statement of income*
Fair value (loss)/gain on cash flow hedges		(93,707) 373,214
Less: Cumulative gain arising on cash flow hedges
reclassified to profit and loss	7	(23,945) (44,008)
Other comprehensive (loss)/income for the year		(117,652) 329,206
Total comprehensive income for the year		960,623 1,054,824

The accompanying notes form an integral part of these consolidated financial statements.

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CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023

Consolidated Statement of Changes in Equity For the year ended 31 December 2023
Notes	Attributable to owners of the company
	Share capital AED’000 Legal reserve AED’000 Hedge reserve AED’000 Retained earnings AED’000 Total equity AED’000
At 1 January 2022 Profit for the year Other comprehensive income for the year	300 171,518 7,441 5,434,003 5,613,262 — — — 725,618 725,618 — — 329,206 — 329,206
Total comprehensive income for the year	— — 329,206 725,618 1,054,824
Transactions with owners: Increase in share capital Capital contribution 10(d) Dividends declared 20 Transfer to legal reserve 13	499,700 — — (499,700) — — — — 404,293 404,293 — — — (1,103,995) (1,103,995) — 264,803 — (264,803) —
	499,700 264,803 — (1,464,205) (699,702)
At 31 December 2022	500,000 436,321 336,647 4,695,416 5,968,384
At 1 January 2023 Profit for the year Other comprehensive loss for the year	500,000 436,321 336,647 4,695,416 5,968,384
	— — — 1,078,275 1,078,275
	— — (117,652) — (117,652)
Total comprehensive income for the year	— — (117,652) 1,078,275 960,623
Transactions with owners: Dividends declared 20 Transfer to legal reserve 13
	— — — (600,000) (600,000)
	— 22,089 — (22,089) —
	— 22,089 — (622,089) (600,000)
At 31 December 2023	500,000 458,410 218,995 5,151,602 6,329,007

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

Consolidated Statement of Cash Flows For the year ended 31 December 2023
	Notes 2023 AED’000 2022 AED’000
Cash flows from operating activities
Cash generated from operations	29 1,634,959 1,507,386
Payment of employees’ end of service benefits	18 (4,174) (3,684)
Net cash generated from operating activities	1,630,785 1,503,702
Cash flows from investing activities
Purchase of property and equipment	5 (7,711) (9,271)
Purchase of intangible assets	(13,977) (4,743)
Payments for investment property, net of advances to contractors,
project liabilities and related provisions	(411,227) (592,612)
Due to related party	(150,000) —
Movement in fixed deposits with maturities greater than three months	58,547 (445,632)
Interest received	47,568 9,622
Net cash used in investing activities	(476,800) (1,042,636)
Cash flows from financing activities
Interest paid	(166,973) (209,060)
Issuance cost paid	(53,796) —
Net proceeds from borrowings	— 371,279
Repayment of borrowings	— (64,215)
Dividends paid	(600,000) (1,050,000)
Restricted cash against borrowing facility	11 60,000 (60,000)
Exit from cash flow hedges	— 59,413
Net cash used in financing activities	(760,769) (952,583)
Net increase/(decrease) in cash and cash equivalents	393,216 (491,517)
Cash and cash equivalents, beginning of the year	11 276,666 768,183
Cash and cash equivalents, end of the year	11 669,882 276,666
Significant non-cash transactions:
Retained earnings capitalised into share capital of the company	— 499,700
Capital contribution adjusted against due to related parties	10(d) — 404,293
Settlement of dividend against due from the parent company	10(c) — 53,995

The accompanying notes form an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2023

1. LEGAL STATUS AND ACTIVITIES

TECOM Group PJSC (the “Company”) is a public joint stock with trade license number 577858 issued by the Department of Economy and Tourism in Dubai.

The Company was initially established as a limited liability company on 14 February 2006. The legal status of the Company has been converted to a public joint stock company on 30 June 2022 by virtue of Company’s shareholders resolution.

On 5 July 2022, the Company listed its 12.5% ordinary shares on the Dubai Financial Market (“DFM” or the “Exchange”) through an Initial Public Offering (“IPO”).

The Company is domiciled in the United Arab Emirates (UAE) and its registered head office address is P.O. Box 66000, Umm Suqeim, Dubai, United Arab Emirates.

The principal activities of the Group are property leasing, development, facilities management and services.

The parent company is DHAM LLC (the “Parent Company”), which is a fully owned subsidiary of Dubai Holding Commercial Operations Group LLC (the “Intermediate Parent Company”), The Intermediate Parent Company is a fully owned subsidiary of Dubai Holding LLC (the “Ultimate Parent Company”). The “Ultimate Shareholder” of the Company was His Highness Sheikh Mohammed Bin Rashid Al Maktoum till 8 January 2023. On 8 January 2023, the Ultimate Shareholder and Ruler of Dubai issued Law No. 1 of 2023, transferring his direct ownership in the Ultimate Parent Company to the Government of Dubai. The Company and its subsidiaries are collectively referred to as the Group (the “Group”).

The Group consolidates investments in the following principal subsidiaries:

Name of the entity Nature of business	Ownership% 2023 2022
TECOM Investments FZ LLC Develop and lease properties Dubai Industrial City LLC Develop and lease properties Dubai Design District FZ LLC Develop and lease properties Tamdeen LLC Project management engineering and feasibility studies Dubai Design District Hospitality FZ LLC Develop and lease properties and real estate services AXS FZ LLC Incorporation and visa related services DMC Butterfly Building FZ LLC Real estate services Innovation Hub FZ-LLC Real estate services IN5 FZ LLC Regional headquarters for real estate services DIC 1 FZ LLC Develop properties and real estate services DIC 2 FZ LLC Develop properties and real estate services DKV 1 FZ LLC Develop properties and real estate services Innovation Hub Phase 1 FZ-LLC Real estate services Master Project 1 FZ-LLC Real estate services Dquarters FZ LLC Regional headquarters for real estate services	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Name of the entity
Nature of business

Ownership%
2023
2022

TECOM Investments FZ LLC
Develop and lease properties
Dubai Industrial City LLC
Develop and lease properties
Dubai Design District FZ LLC
Develop and lease properties
Tamdeen LLC
Project management engineering and feasibility studies
Dubai Design District Hospitality FZ LLC
Develop and lease properties and real estate services
AXS FZ LLC
Incorporation and visa related services
DMC Butterfly Building FZ LLC
Real estate services
Innovation Hub FZ-LLC
Real estate services
IN5 FZ LLC
Regional headquarters for real estate services
DIC 1 FZ LLC
Develop properties and real estate services
DIC 2 FZ LLC
Develop properties and real estate services
DKV 1 FZ LLC
Develop properties and real estate services
Innovation Hub Phase 1 FZ-LLC
Real estate services
Master Project 1 FZ-LLC
Real estate services
Dquarters FZ LLC
Regional headquarters for real estate services

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

The ownership percentage represents the beneficial ownership of the Group in these subsidiaries.

The Group only operates in the UAE and has no subsidiaries in foreign jurisdictions.

2. MATERIAL ACCOUNTING POLICY INFORMATION

2.1 Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS Accounting Standards”) issued by the International Accounting Standards Board (IASB) and applicable requirements of the law of the UAE.

2.2 Basis of preparation

The consolidated financial statements are presented in United Arab Emirates (AED) which is the Company’s functional currency and the Group’s presentation currency. All amounts have been rounded to the nearest AED thousands (‘000s), unless stated otherwise.

The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments that are measured at fair values at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying IFRS Accounting Standards. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

Certain comparative information have been reclassified to conform with the current year’s presentation.

2.3 Application of new and revised IFRS Accounting Standards

(a) New and revised IFRS Accounting Standards applied with no material effect on the consolidated financial statements

The following new and revised IFRS Accounting Standards, which became effective for annual periods beginning on or after 1 January 2023, have been adopted in these consolidated financial statements. The application of these revised IFRS Accounting Standards has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements.

Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors — Definition of Accounting Estimates
Amendment to IFRS 17 Insurance contracts
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgments — Disclosure of Accounting Policies
Amendments to IAS 12 Income Taxes relating to deferred tax related to assets and liabilities arising from a single transaction
Amendments to IAS 12 Income Taxes — International Tax Reform — Pillar Two Model Rules

(b) New and revised IFRS Accounting Standards in issue but not yet effective

The Group has not early adopted the following new and revised standards that have been issued but are not yet effective. The management is in the process of assessing the impact of the new requirements.

management is in the process of assessing the impact of the new requirements.
	Effective for annual periods
New and revised IFRS Accounting Standards	beginning on or after
Amendments to IFRS 16 Leases — Lease Liability in as Sale and Leaseback	1 January 2024
Amendments to IAS 1_Presentation of Financial Statements relating to classification of liabilities as current_	1 January 2024
or non-current
Amendments to IAS 1_Presentation of Financial Statements —_Non-current Liabilities with Covenants	1 January 2024
Amendments to IAS 7_Statement of Cash Flows_and IFRS 7_Financial Instruments: Disclosures_— Supplier	1 January 2024
Finance Arrangements
Amendment to IFRS 10_Consolidated Financial Statements_and IAS 28_Investments in Associates and Joint_	Effective deferred indefinitely
_Ventures_relating to treatment of sale or contribution of assets from investors

The Group has not purchased or invested in any shares during the financial year ended 31 December 2023.

On 3 October 2022, the UAE Ministry of Finance (“MoF”) issued Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses, Corporate Tax Law (“CT Law”) to implement a new CT regime in the UAE. The new CT regime is applicable for accounting periods beginning on or after 1 June 2023.

Management anticipates that these new standards, interpretations and amendments will be adopted in the Group’s consolidated financial statements for the period of initial application and adoption of these new standards, interpretations and amendments may have no material impact on the consolidated financial statements of the Group in the period of initial application.

2.4 Principles of consolidation

The entities within the Group will be subject to a corporate tax rate ranging from 0% to 9% on taxable income above a threshold of AED 375,000 for periods beginning on or after 1 June 2023.

The CT Law is considered enacted for reporting purposes and the management has concluded that there is no deferred tax impact on the reporting date.

The Group has not identified any material risks or uncertainties in the structure from a corporate perspective and will continuously monitor further developments that could impact the tax profile.

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.4 Principles of consolidation continued

(a) Subsidiaries continued

incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of income, except when deferred in other comprehensive income and accumulated in equity as qualifying cash flow hedges and qualifying net investment hedges.

Balances and transactions denominated in US dollars (“USD”) have been translated into the presentation currency at a fixed rate as the exchange rate of AED to USD has been pegged since 1981.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the consolidated statement of income.

Business combinations involving entities under common control do not fall under the scope of IFRS 3 “Business Combinations”. Transfer of businesses under common control is accounted for under the uniting of interest method. Under the uniting of interest method, there is no requirement to fair value the assets and liabilities of the transferred entities and hence no goodwill is created as the balances remain at book value. The results and cash flows of the entities/businesses under common control are consolidated prospectively from the date of transfer without restatement of the consolidated income statement and the consolidated balance sheet comparatives.

Where settlement of any part of the net identifiable assets acquired is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which similar borrowings could be obtained from independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently re-measured to fair value with changes in fair value recognised in the consolidated statement of income.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in the consolidated statement of income.

(b) Eliminations on consolidation

Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(c) Changes in ownership interests in subsidiaries without change in control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions — that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of income within ‘Finance income/costs’. All other foreign exchange gains and losses are presented in the consolidated statement of income within ‘Other operating income’. Changes in the fair value of monetary securities denominated in foreign currency classified as fair value through other comprehensive income are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in the consolidated statement of income, and other changes in carrying amount are recognised in other comprehensive income. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in the consolidated statement of income as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as fair value through other comprehensive income are included in other comprehensive income.

2.6 Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic earnings per share is calculated by dividing the consolidated profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is determined by adjusting the consolidated profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

2.7 Property and equipment

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment, if any. The cost of property and equipment is its purchase cost together with any incidental costs of acquisition. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using straight-line method, at rates calculated to reduce the cost of assets to their estimated residual value over their expected useful lives, as follows:

assets to their estimated residual value over their expected useful lives, as follows:
Type of assets	Years
Buildings	20 – 50
Building interior improvements, furniture and fixtures	3 – 10
Computer hardware	3 – 5
Motor vehicles	5
Other assets	3 – 5

(d) Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in the consolidated statement of income. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to consolidated statement of income.

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the consolidated financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in United Arab Emirates Dirhams (“AED”), which is the Company’s functional and Group’s presentation currency.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.10).

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are recognised within ‘Other operating income’ in the consolidated statement of income.

2.8 Investment property

Investment property comprises property held for capital appreciation, rental yields or both, and is carried at cost less accumulated depreciation and impairment losses, if any. Investment property also includes related infrastructure and property that is being constructed or developed for future use as investment property. In addition, land held for undetermined use is classified as investment property and is not depreciated. The Group engages professionally qualified external valuers at least once every three years to determine the fair values for disclosure purposes. The fair values for all other years are updated by management by using models and bases similar to the external valuers.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.8 Investment property continued

When the development of investment property commences, it is classified under capital work in progress until development is complete, at which time it is transferred to the respective category, and depreciated on the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

values over their estimated useful lives, as follows:
Type of assets	Years
Buildings and infrastructure	20 – 50

Any expenditure that results in the maintenance of property to an acceptable standard or specification is treated as repairs and maintenance and is expensed in the period in which it is incurred.

Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale or becomes owner-occupied, the property is transferred to property held for development sale or property and equipment respectively.

When investment property is sold, gains and losses on disposal are determined by reference to its carrying amount and are recognized in the consolidated statement of income.

Capital work in progress are properties or assets in the course of construction for production, supply or administrative purposes, are carried at cost, less any recognised impairment loss. Cost includes all direct costs attributable to the acquisition of the property including related staff costs, and for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. When the assets are ready for intended use, the capital work in progress is transferred to the appropriate investment property category and is accounted in accordance with the Group’s policies.

2.9 Intangible assets

(a) Computer software

The Group’s computer software comprises software acquired or software developed by the Group entities. Acquired computer software licenses are capitalised on the basis of the costs incurred to bring to use the specific software. Costs associated with maintaining computer software programs are recognised as an expense as incurred.

income within ‘Other operating income’. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash generating units”).

2.10 Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its property and equipment, investment property and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the consolidated statement of income. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the consolidated statement of income to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years.

2.11 Investments and other financial assets

2.11.1 Classification

Computer software are carried at cost less accumulated amortisation and impairment losses, if any.

The Group classifies its financial assets in the following measurement categories:

Those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss); and

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

i) it is technically feasible to complete the software product so that it will be available for use; ii) management intends to complete the software product and use or sell it;

iii) there is an ability to use or sell the software product;

iv) it can be demonstrated how the software product will generate probable future economic benefits;

v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and vi) the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. These costs are amortised over their estimated useful lives of 3 years. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Intangible assets which are in the course of development, are carried at cost, less any recognised impairment losses, if any. When the assets are ready for intended use, the capital work in progress is transferred to the appropriate intangible asset category and is accounted in accordance with the Group’s policies.

(b) Licenses

Separately acquired software licenses are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses, if any.

(c) Masterplans

The costs of developing the Group’s masterplans are capitalised and are subject to amortisation. These are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount and is included in the consolidated statement of

Those to be measured at amortised cost.

The classification depends on the Group’s business model for managing the financial assets and contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in the consolidated statement of income or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Group reclassifies debt instruments only when its business model for managing those assets changes.

2.11.2 Recognition and derecognition

Purchases and sales of financial assets are recognised on the date on which the Group commits to purchase or sell the asset. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in the consolidated statement of income.

2.11.3 Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Transaction costs of financial assets carried at fair value through profit or loss are expensed in the consolidated statement of income.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.11 Investments and other financial assets continued

2.11.3 Measurement continued

Debt instruments continued

Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in the consolidated statement of income and presented in ’Other operating income’.

Impairment losses are presented under ‘General and administrative expenses’ in the consolidated statement of income.

Fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income.

Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in the consolidated statement of income.

When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the consolidated statement of income and recognised in ‘Other operating income’. Interest income from these financial assets is included in ‘Finance income’ using the effective interest rate method. Exchange gains and losses are presented in ‘Other operating income’ and impairment losses are presented under ‘General and administrative expenses’ in the consolidated statement of income.

Fair value through profit or loss

Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in the consolidated statement of income within ‘Other operating income’ in the year they arise.

Equity instruments

The Group subsequently measures all equity investments at fair value. The Group’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in the consolidated statement of income under other operating income when the Group’s right to receive payment is established.

(ii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

Significant financial difficulty of the issuer or the borrower
A breach of contract, such as a default or past due event (see (ii) above)
The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation
The disappearance of an active market for that financial asset because of financial difficulties

(iii) Write-off policy

The Group writes off a financial asset considering various factors which includes but not limited to the information indicating debtor’s severe financial difficulty and no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in the consolidated statement of income.

(iv) Measurement and recognition of expected credit losses

The measurement of ECLs is a function of the probability of default, loss given default (i.e., the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount of guaranteed debt that has been drawn down as at the reporting date, together with any additional guaranteed amounts expected to be drawn down by the borrower in the future by default date determined based on historical trend, the Group’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate. For a lease receivable, the cash flows used for determining the ECLs is consistent with the cash flows used in measuring the lease receivable in accordance with IFRS 16.

The Group recognises an impairment gain or loss in the consolidated statement of income for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve and does not reduce the carrying amount of the financial asset in the consolidated balance sheet.

2.12 Financial liabilities and equity

Classification as debt or equity

Changes in the fair value of financial assets at fair value through profit or loss are recognised in ‘Other operating income’ in the consolidated statement of income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at fair value through other comprehensive income are not reported separately from other changes in fair value.

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

2.11.4 Impairment of financial assets

IFRS 9 requires the Group to record an allowance for expected credit losses (ECLs) for all trade and unbilled receivables, contract assets, loans and other debt financial assets not held at fair value through profit or loss (FVTPL). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate.

For trade and unbilled receivables and other receivables, the Group has applied the standard’s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Group has established a provision matrix that is based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtor’s general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting day, including time value of money where appropriate.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in the consolidated statement of income on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in the consolidated statement of income to the extent that they are not part of a designated hedging relationship (see Hedge accounting policy). The net gain or loss recognised in the consolidated statement of income incorporates any interest paid on the financial liability and is included in the ‘Finance costs’ line item in the consolidated statement of income.

(i) Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable:

When there is a breach of financial covenants by the debtor.
Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for- trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.12 Financial liabilities and equity continued

Financial liabilities continued

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in the consolidated statement of income.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. Increases in provisions due to the passage of time are recognised as interest expense. Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

2.19 Employee benefits

2.13 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.14 Trade receivables

Trade receivables are amounts due from customers for properties leased or services performed in the ordinary course of business. Trade receivables are recognised initially in line with IFRS 15 and 16 and subsequently measured at amortised cost using the effective interest method, less loss allowance.

(a) End of service benefits to non-UAE nationals

Provision is made for the end of service benefits due to employees in accordance with the UAE Labour Law for their periods of service up to the balance sheet date.

(b) Pension and social security policy within the UAE

The Group is a member of the pension scheme operated by the Federal Pension General and Social Security Authority. Contributions for eligible UAE National employees are made and charged to the consolidated statement of income, in accordance with the provisions of Federal Law No. 7 of 1999 relating to Pension and Social Security Law. The Group has no further payment obligations once the contributions have been paid.

2.20 Derivative financial instruments and hedging activities

2.15 Cash and cash equivalents

Cash and cash equivalents include cash on hand, balances in current accounts, call accounts and term deposits with original maturity of three months or less with no withdrawal restrictions and which are subject to an insignificant risk of changes in value and cash pledged against guarantees.

2.16 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less from the balance sheet date (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Contract advances include instalments received from customers for lease and services. These are subsequently released to the consolidated statement of income once the revenue recognition criteria are met (Note 2.21).

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the consolidated statement of income over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group designates certain derivatives as either hedges of the fair value of recognised assets or liabilities (fair value hedge) or hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions. Derivatives are only used by the Group for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedging criteria under IFRS Accounting Standards, they are classified as ‘held for trading’ for accounting purposes only. The fair values of various derivative instruments used for hedging are disclosed in Note 3.3. Movements in the hedging reserve is disclosed in the consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability when expected to be settled within 12 months; otherwise, they are classified as non-current.

The Group uses interest rate swaps for hedging, which are commitments to exchange one set of cash flows for another. Swaps result in an economic exchange of interest rates (for example, fixed rate for floating rate). No exchange of principal takes place. The Group’s credit risk represents the potential cost to replace the interest rate swap contracts if counterparties fail to perform their obligation. This risk is monitored on an ongoing basis with reference to the current fair value, a proportion of the notional amount of the contracts and the liquidity of the market.

(a) Cash flow hedges that qualify for hedge accounting

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the consolidated statement of income.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed. Borrowings are classified as payable within 12 months unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.18 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the consolidated statement of income within ‘Finance income/costs’.

Amounts accumulated in equity are recycled in the consolidated statement of income in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the consolidated statement of income within ‘Finance income/costs’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example inventory or fixed assets), the gains and losses previously recorded in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in direct costs.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss and deferred costs of hedging existing in equity at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset (such as inventory) and is recognised when the forecast transaction is ultimately recognised in the consolidated statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the consolidated statement of income within ‘Finance income/costs’.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.20 Derivative financial instruments and hedging activities continued

(b) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any of these derivative instruments are recognised immediately in the consolidated statement of income within ‘Finance income/costs’.

(b) Service income

Services revenue relates to outsourcing services provided to a government authority in relation to incorporation, government and other related services. The revenue is recognised at a point in time when the services are rendered.

2.22 Leases

(a) The Group as Lessee

2.21 Revenue recognition

The Group recognises revenue from contracts with customer based on five step model as outlined under IFRS 15:

Step 1 Identify the contract with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations.
Step 2 Identify the performance obligations in the contract: A performance obligation in a contract is a promise to transfer a good or service to the customer.
Step 3 Determine the transaction price: Transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties.
Step 4 Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Group will allocate the transaction price to each performance obligation in an amount that depicts the consideration to which the Group expects to be entitled in exchange for satisfying each performance obligation.
Step 5 Recognise revenue as and when the Group satisfies a performance obligation.

The Group recognises revenue over time if any one of the following criteria is met:

The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; or
The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
The Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance obligation completed to date.

For performance obligations where none of the above conditions are met, revenue is recognised at the point in time at which the performance obligation is satisfied. When the Group satisfies a performance obligation by delivering the promised goods or services it creates a contract-based asset on the amount of consideration earned by the performance — unbilled receivables. Where the amount of consideration received from a customer exceeds the amount of revenue recognised this gives rise to a contract liability — advances from customers.

Revenue is measured at the fair value of consideration received or receivable, taking into account the contractually agreed terms of payment excluding taxes and duties. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or an agent and has concluded that it is acting as a principal in all of its revenue arrangements.

Revenue is recognised in the consolidated financial statements to the extent that it is probable that the economic benefits will flow to the Group and the revenue and costs, if and when applicable, can be measured reliably.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for the Group for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

the contract involves the use of an identified asset — this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:
the Group has the right to operate the asset; or
the Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, where the contract is not separable into lease and nonlease component then the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;

(a) Service charges

For investment property held primarily to earn operating lease income, the Group enters as a lessor into lease agreements that fall within the scope of IFRS 16. Certain lease agreements include certain services offered to tenants (i.e., customers) including common area services (such as security, cleaning, maintenance, utilities) as well as other support services (e.g., customer service and management). The consideration charged to tenants for these services includes fees charged based on a percentage of the operating lease income and reimbursement of certain expenses incurred. These services are specified in the lease agreements and separately invoiced.

The Group has determined that these services constitute distinct non-lease components (transferred separately from the right to use the underlying asset) and are within the scope of IFRS 15. The contracts of the Group specifically highlight stand-alone price for the services. In respect of the revenue component, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Group. The Group applies the time elapsed method to measure progress.

Income arising from cost recharged to tenants is recognised in the period in which the cost can be contractually recovered. The Group arranges for third parties to provide some of these services to its tenants. The Group concluded that it acts as a principal in relation to these services as it controls the specified services before transferring them to the customer. Therefore, the Group records revenue on a gross basis.

variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in the consolidated statement of income if the carrying amount of the right-of-use asset has been reduced to zero.

Determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

Discounting of lease payments

The lease payments are discounted using the Group’s incremental borrowing rate (“IBR”). For calculation of IBR, the Group has taken appropriate benchmarks after adjusting for Group’s specific risk, term risk and underlying asset risk.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

2. MATERIAL ACCOUNTING POLICY INFORMATION continued

2.22 Leases continued

2.26 Dividend income

Dividend income is recognised when the right to receive the dividend is established.

(b) The Group as a Lessor

The Group enters into lease arrangements as a lessor with respect to its investment property. Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating leases.

Operating lease income

The Group earns revenue from acting as a lessor in operating leases which do not transfer substantially all the risks and rewards incidental to ownership of an investment property. In addition, the Group subleases investment property acquired under head leases with lease terms exceeding 12 months at commencement. Subleases are classified as a finance lease or an operating lease by reference to the rightof-use asset arising from the head lease, rather than by reference to the underlying investment property. All the Group’s subleases are classified as operating leases.

Operating lease income arising from operating leases on investment property is accounted for on a straight-line basis over the lease term and is included in revenue in the consolidated statement of income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the underlying asset and recognised as an expense over the lease term on the same basis as the lease income.

Lease incentives that are paid or payable to the lessee are deducted from lease payments. Accordingly, tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Group is reasonably certain that the tenant will exercise that option. Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the consolidated statement of income when the right to receive them arises.

Finance leases

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying assets. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

Lease payments are payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the fixed payments, less any lease incentives; variable lease payments; the exercise price for a purchase option if the lessee is reasonably certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. When the Group is an intermediate lessor, it accounts for its interest in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right of use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

Amounts from leases under finance lease are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases. When a contract includes both lease and non-lease components, the Group applies IFRS 15 to allocate the consideration under the contract to each component.

3. FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities potentially expose it to a variety of financial risks: market risk (including foreign exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk

i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the functional currency of the particular Group entity. The Group has no significant exposure to foreign exchange risk as majority of its transactions are in the respective functional currencies of the Group companies.

ii) Cash flow and interest rate risk

The Group is exposed to interest rate risk on its interest-bearing assets and liabilities. Borrowings at variable rates expose the Group to cash flow interest rate risk.

Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating to fixed rates. In the case of long-term borrowings from banks and financial institutions, the Group generally borrows funds at floating rates and swaps them into fixed rates. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts.

At 31 December 2023, if interest rates on interest bearing financial assets had been 200 basis points (2022: 200 basis points) higher/lower with all other variables held constant, post-tax profit for the year would have been AED 19,306,000 (2022: AED 18,477,000) higher/lower, mainly as a result of higher/lower interest income. In addition, at 31 December 2023 had the Group not entered in any interest rate swap agreements, if interest rates on borrowings had been 200 basis points (2022: 200 basis points) higher/lower with all other variables held constant, post-tax profit for the year would have been AED 87,035,000 (2022: AED 86,840,000) lower/higher, mainly as a result of higher/ lower interest expense.

(b) Credit risk

The Group is exposed to credit risk in relation to its monetary assets, mainly trade receivables, lease receivables, derivatives, due from related parties, unbilled receivables and cash and bank balances.

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. When such an event happens, it is considered as a default event. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management has established policies under which each new customer is analysed for creditworthiness before Group’s standard payment and service delivery terms and conditions are offered.

The credit review can include customer reputation, customer segmentation, business plans, bank references and external credit worthiness databases when available. Derivative financial instruments and bank deposits are limited to high-credit-quality financial institutions. The Group has policies that limit the amount of credit exposure to any financial institution.

2.23 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the Company’s shareholder.

2.24 Segment reporting

Reportable segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the reportable segments, has been identified as the Group’s Chief Executive Officer that makes strategic decisions.

2.25 Interest income

Interest income is recognised in the consolidated statement of income on a time proportion basis using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivable is recognised using the original effective interest rate.

The credit quality of cash and bank balances at the balance sheet date can be assessed by reference to external credit ratings as illustrated in the table below:

in the table below:
	2023 AED’000 2022 AED’000
A1 A2 A3	374,749 159,575 329,610 320,345 358,033 406,503
Aa3	6 8
Ba1	100,017 31
Baa1	372,070 373,402
	1,534,485 1,259,864

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

3. FINANCIAL RISK MANAGEMENT continued

3.1 Financial risk factors continued

(b) Credit risk continued

The rest of the consolidated balance sheet item, ‘cash and bank balances’ is cash on hand. The Group’s exposure to credit risk arising from trade and unbilled receivables is disclosed in Note 9.

3.3 Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

With respect to the credit risk arising from other financial assets of the Group, which comprise due from related parties, other receivables and deposits and financial assets at fair value through other comprehensive income, the Group’s exposure to credit risk arises from default of the counterparty, with maximum exposure equal to the carrying amount of these assets.

The fair value of financial instruments traded in active markets is based on quoted market prices at the consolidated balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available. Management reviews cash flows at regular intervals.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the consolidated balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant:

	Notes	Less than 3 months AED’000	Between 3 months and 1 year AED’000	Between 1 and 5 years AED’000	More than 5 years AED’000
31 December 2023
Borrowings		38,867	121,970	4,963,400	—
Trade payables and other
liabilities		—	1,037,643	420,152	821,785
Derivative financial instruments	7	—	—	3,000	—
Due to related parties	10	60,244	—	—	—
		99,111	1,159,613	5,386,552	821,785
31 December 2022
Bank borrowings		45,505	134,155	5,070,111	—
Trade payables and other
liabilities		—	1,020,914	415,865	924,508
Derivative financial instruments	7	—	—	—	2,817
Due to related parties	10	203,691	—	—	—
		249,196	1,155,069	5,485,976	927,325

Trade payables and other liabilities exclude operating lease advances and contract advances.

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Group consists of gross debt (borrowings of the Group disclosed in Note 15) and total equity of the Group.

The Group has a target to keep its gearing ratio below 65%, which is determined as a proportion of gross debt to total capital (equity plus gross debt).

The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is based on valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, these instruments are included in level 2. All derivative financial instruments held by the Group have been categorised as level 2 as shown below, where the fair valuation of such instruments has been determined based on discounting future cash flows using observable discount factors. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties. There is no change in the valuation technique in comparison to prior years.

If one or more of the significant inputs is not based on observable market data, these instruments are included in level 3.

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2023 and 2022:

	Level 2 AED’000
2023
Assets
Derivatives designated as cash flow hedges	221,995
Liabilities
Derivatives designated as cash flow hedges	3,000
	Level 2
	AED’000
2022
Assets
Derivatives designated as cash flow hedges	315,519
Liabilities
Derivatives designated as cash flow hedges	2,817

There were no transfers between the levels for recurring fair value measured during the year.

The carrying value of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Other receivables and payables approximate their fair values.

The gearing ratios at 31 December 2023 and 2022 were as follows:

		2023	2022
		Notes AED’000	AED’000
Total	borrowings	15 4,351,767	4,341,982
Total	equity	6,329,007	5,968,384
Total	capital	10,680,774	10,310,366
Debt	to total capital/gearing ratio	40.74%	42.11%

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Provision for infrastructure costs

The Group recognises provisions for infrastructure based on assessments by third party specialists. This requires the use of significant estimates and judgements to determine the quantum of infrastructure required, the costs and time related to the construction, and the expected share of costs that may be recharged to the master developer. Infrastructure developed or under development by third parties or government authorities will be recharged to the master developer and subsequently to the Group based on its share of such costs. The significant components of infrastructure include construction of roadworks and power stations to service the master planned communities.

The provision for infrastructure costs are based on management’s best estimate of the future costs of construction of the related infrastructure facilities and the total costs to be actually incurred will be determined based on inputs from the relevant authorities and cost structures prevalent at each such future date. Hence, the Group’s actual cost of infrastructure may be materially different to the current estimates as advised by third party specialists.

Change in accounting estimate

In 2022, the Group’s periodical assessment of the infrastructure cost estimates using third party specialists resulted in a reduction in the carrying value of investment property and provision for infrastructure cost by AED 1,262,622,000.

Provisions are recorded at the present value of the expected cash outflows required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the obligation.

Revisions to key assumptions and inputs have contributed to the change in estimates. The expected timing of incurring the infrastructure cost is one such key variable which has been revised. In this regard, management estimates the present value of cost to be incurred over a period of up to 15 years in a phased manner and would be non-interest bearing. For roadworks related infrastructure estimates, key variables used are information from traffic impact studies performed by third party specialists. For power stations related infrastructure estimates, the key variables used are the historical costs of constructing similar infrastructure assets and the stage of development of the master planned communities to which the infrastructure costs relate.

(b) Calculation of loss allowance

The Group assesses the impairment of its financial assets based on the ECL model. Under the ECL model, the Group accounts for ECLs and changes in those ECLs at the end of each reporting period to reflect changes in credit risk since initial recognition of the financial assets. The Group measures the loss allowance at an amount equal to lifetime ECL for its financial instruments.

When measuring ECL, the Group uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. There has been no change in the estimation techniques or significant assumptions in assessing the ECL during the current year.

The fair values have been determined by taking into consideration market comparable and/or the discounted cash flows where the Group has on-going lease arrangements and operations. In this regard, the Group’s current lease arrangements, which are entered into on an arm’s length basis and which are comparable to those for similar properties in the same location, have been taken into account.

In case where the Group does not have any on-going lease arrangements, fair values have been determined, where relevant, having regard to recent market transactions for similar properties in the same location as the Group’s investment property. These values are adjusted for differences in key attributes such as property size.

The key assumptions on which management has based its cash flow projections when determining the fair value of the assets are as follows:

Discount rate based on the Group’s weighted average cost of capital with a risk premium reflecting the relative risks in the markets in which the businesses operate.
Growth rate based on long-term rate of growth.

Management of the Group has reviewed the assumption and methodology used by the independent registered valuer and/or internal specialist and in their opinion these assumptions and methodology seems reasonable as at the reporting date considering the current economic and real estate outlook in UAE.

(e) Impairment of non-financial assets

Asset recoverability is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the recoverable amount, which is the higher of the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate (“value in use”), and the assets’ fair value less costs to sell.

No impairment charge has been recognised against property and equipment, investment property and intangible assets.

Critical judgements in applying the Group’s accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the management have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

(a) Identification of a cash generating unit

A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Group determines the recoverable amount of the cash-generating unit (‘CGU’) to which the asset belongs (the asset’s cash-generating unit). Where a reasonable and consistent basis of allocation can be identified, corporate assets (infrastructure costs) are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

In identifying whether cash inflows from an asset (or group of assets) are largely independent of the cash inflows from other assets (or groups of assets), the Group considers various factors including how management monitors the Group’s operations or how management makes decisions about continuing or disposing of the Group’s assets and operations.

Certain assets developed to enhance the ecosystem of master planned communities do not generate cash inflows that are largely independent and generate incidental revenue only. Because these assets do not generate largely independent cash inflows, the recoverable amount of these assets cannot be determined. As a consequence, if there is an indication that these assets may be impaired, recoverable amount is determined for the cash-generating unit or group of cash-generating units to which these assets belong, and is compared with the carrying amount of this cash-generating unit or group of cash-generating units.

(c) Useful lives of investment property

Management reviews the residual values and estimated useful lives of investment property at the end of each annual reporting period in accordance with IAS 40. Management determined that current year expectations do not differ from previous estimates based on its review.

(d) Valuation of investment property

The fair value of investment property is determined by an independent registered valuer or the internal valuation performed by the Group’s finance department.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

5. PROPERTY AND EQUIPMENT

	Notes	Buildings AED’000	Building interior improvements, furniture and fixtures AED’000	Computer hardware AED’000	Motor vehicles AED’000	Other assets AED’000	Capital work in progress AED’000	Total AED’000
2023
Cost
At 1 January 2023		137,840	124,873	45,415	1,364	14,137	390	324,019
Additions		—	1,778	839	—	4,940	154	7,711
Transfers from investment property
— net	6	—	1,664	—	—	—	(390)	1,274
Transfers to related parties		—	—	(18)	—	—	—	(18)
Disposal		—	—	(55)	—	—	—	(55)
At 31 December 2023		137,840	128,315	46,181	1,364	19,077	154	332,931
Accumulated depreciation
At 1 January 2023		52,115	118,611	43,997	456	11,845	—	227,024
Depreciation charge for the year		3,496	2,920	838	530	3,060	—	10,844
Transfers from investment property	6	—	1,664	—	—	—	—	1,664
Transfers to related parties		—	—	(5)	—	—	—	(5)
Disposal		—	—	(55)	—	—	—	(55)
At 31 December 2023		55,611	123,195	44,775	986	14,905	—	239,472
Net book value at
31 December 2023		82,229	5,120	1,406	378	4,172	154	93,459
2022
Cost
At 1 January 2022		135,056	127,705	44,625	1,379	10,824	5,926	325,515
Additions		—	3,169	938	—	7	5,157	9,271
Transfers to investment property	6	—	(74)	—	—	—	(10,693)	(10,767)
Reclassifications		2,784	(5,927)	(148)	(15)	3,306	—	—
At 31 December 2022		137,840	124,873	45,415	1,364	14,137	390	324,019
Accumulated depreciation
At 1 January 2022		46,631	119,764	41,834	469	8,521	—	217,219
Depreciation charge for the year		2,700	4,774	2,311	2	18	—	9,805
Reclassifications		2,784	(5,927)	(148)	(15)	3,306	—	—
At 31 December 2022		52,115	118,611	43,997	456	11,845	—	227,024
Net book value at
31 December 2022		85,725	6,262	1,418	908	2,292	390	96,995

The depreciation charge for the year is recognised under general and administrative expenses amounting to AED 10,844,000 (2022: AED 9,805,000).

6. INVESTMENT PROPERTY

6. INVESTMENT PROPERTY
	Notes	Land AED’000	Buildings AED’000	Infrastructure AED’000	Capital work in progress AED’000	Total AED’000
2023
Cost
At 1 January 2023		3,687,468	10,355,799	3,244,663	3,405,743	20,693,673
Additions		—	—	—	382,041	382,041
Transfers to related parties	10	—	—	—	(20,421)	(20,421)
Transfers to property and equipment — net	5	—	(1,664)	—	390	(1,274)
Transfers within other captions of
investment property		—	167,856	—	(167,856)	—
At 31 December 2023		3,687,468	10,521,991	3,244,663	3,599,897	21,054,019
Accumulated depreciation and impairment
At 1 January 2023		1,946,344	4,303,841	1,043,833	1,525,728	8,819,746
Depreciation charge for the year	22	—	312,260	59,135	—	371,395
Transfers to property and equipment	5	—	(1,664)	—	—	(1,664)
At 31 December 2023		1,946,344	4,614,437	1,102,968	1,525,728	9,189,477
Net book value at 31 December 2023		1,741,124	5,907,554	2,141,695	2,074,169	11,864,542
2022
Cost
At 1 January 2022		3,941,421	9,635,273	4,686,963	4,365,430	22,629,087
Additions		—	287,371	1,174	210,345	498,890
Transfers to related parties	10	(253,953)	(112)	(1,923,437)	995,053	(1,182,449)
Transfers from property and equipment	5	—	74	—	10,693	10,767
Transfers within other captions of
investment property		—	433,193	479,963	(913,156)	—
Cost adjustments*		—	—	—	(1,262,622)	(1,262,622)
At 31 December 2022		3,687,468	10,355,799	3,244,663	3,405,743	20,693,673
Accumulated depreciation and impairment
At 1 January 2022		1,946,344	4,006,242	1,321,753	1,986,588	9,260,927
Depreciation charge for the year	22	—	297,599	60,277	—	357,876
Transfers to related parties	10	—	—	(338,197)	(460,860)	(799,057)
At 31 December 2022		1,946,344	4,303,841	1,043,833	1,525,728	8,819,746
Net book value at 31 December 2022		1,741,124	6,051,958	2,200,830	1,880,015	11,873,927

Effective from 1 January 2022, the Group revised its estimated provision for infrastructure cost measured at the present value of the expected cash outflows (Note 4(a)). The change in estimate decreased the carrying value of investment property by AED 1,262,622,000.

The capital work in progress includes buildings under construction, land and infrastructure under construction for investment property.

The depreciation charge for the year is recognised under direct costs amounting to AED 371,395,000 (2022: AED 357,876,000).

As at 31 December 2023, no investment property have been pledged as security against loan facilities obtained by the Group (2022: certain investment property having a net book value of AED 993,208,000 was pledged as security against the previous loan facilities of the Group) (Note 15).

The following amounts have been recognised in the consolidated statement of income in respect of investment property:

		2023	2022
	Notes	AED’000	AED’000
Operating lease income	21	1,929,534	1,751,663
Direct costs (including depreciation) arising from investment property that generated
operating lease income		668,423	662,210

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

6. INVESTMENT PROPERTY continued

Valuation techniques underlying management’s estimation of fair value

The Income capitalisation and residual price methods have been applied for the fair valuation of income generating properties.

The sales comparison and income capitalisation methods have been applied for the valuation of land held by the Group.

Income capitalisation method is a growth implicit valuation technique. The term (current/passing) income is based on the gross income generated from the contracted lease agreement(s) in place (including any anticipated changes at future rent reviews) and the reversionary income stream is based on the estimated market rent of the property at the valuation date. The hypothetical purchaser’s operating costs associated with ownership of the property (including current and future anticipated void periods) are deducted to arrive at the term and reversionary net operating income streams (“NOI”). The NOI streams are then capitalised over the term of the lease agreement(s) in place or in perpetuity respectively using a market related yield. The significant unobservable inputs used in the fair value measurement categorised within level 3 of the fair value hierarchy using income capitalisation method are stabilised average monthly market rent and capitalisation rate.

Sales comparison method involves determination of the value of the investment property with reference to comparable market transactions for properties in close proximity. These values are adjusted for differences in key attributes such as size, gross floor area and location. The valuation method adopted for these properties fall under level 3. The significant unobservable input used in the fair value measurement categorised within level 3 of the fair value hierarchy using sales comparison method is sales rate per Gross Floor Area (“GFA”).

Residual price method involves determination of the estimated selling price of a project development on the respective plots of land; reduced by the estimated construction and other costs to completion that would be incurred by a market participant and an estimated profit margin that a market participant would require to hold and develop the plots to completion. The significant inputs into this valuation approach are the estimated selling prices, costs to complete and developers’ margins. The significant inputs into this valuation approach are the estimated selling prices, costs to complete and developers’ margins. The valuation method adopted for these land plots fall under level 3.

There were no changes to the valuation techniques during the years presented.

For all investment properties, their current use approximately equates to the highest and best use.

As at 31 December 2023, the estimated fair value of the Group’s investment property is AED 22,934,827,000 (2022: AED 21,288,814,000).

7. DERIVATIVE FINANCIAL INSTRUMENTS

7. DERIVATIVE FINANCIAL INSTRUMENTS
	Notional amount AED’000	Assets AED’000	Liabilities AED’000
At 31 December 2023
Designated as cash flow hedges
Interest rate swap contracts	3,990,747	221,995	3,000
Total	3,990,747	221,995	3,000
At 31 December 2022
Designated as cash flow hedges
Interest rate swap contracts	4,907,871	315,519	2,817
Total	4,907,871	315,519	2,817

Changes in the fair market values of interest rate swaps that are considered effective and designated as cash flow hedges are recognised in the hedge reserve in other comprehensive income. Amounts are reclassified to the consolidated statement of income when the associated hedged transaction affects the consolidated statement of income. There was no ineffectiveness to be recorded from the cash flow hedges. The change in fair values of interest rate swaps designated as cash flow hedges for the year ended 31 December 2023 amounted to a loss of AED 93,707,000 (2022: gain of AED 373,214,000).

During the year, certain derivatives designated as hedging instruments were settled, and therefore hedge accounting is discontinued prospectively on these items. The amount of AED 23,945,000 (2022: AED 44,008,000) that had been accumulated in the hedge reserve has been recycled through the consolidated statement of income.

8. OTHER RECEIVABLES

8. OTHER RECEIVABLES
	2023 AED’000 2022 AED’000
Advances to contractors and suppliers	71,778 25,730
Finance lease receivables	18,336 21,146
Prepayments	19,902 22,837
Other receivables	29,002 12,886
Less: non-current	139,018 82,599 (14,215) (17,024)
Current	124,803 65,575

Finance lease receivables relate to property leases with a lease term of up to 50 years. The lease term generally provides an option to lessees to buy the properties after initial period (usually 10 years). The leases carry interest rate linked to LIBOR.

A summary of the gross repayment schedule for the finance lease receivable is presented below:

A summary of the gross repayment schedule for the finance lease receivable is presented below:
	2023 AED’000 2022 AED’000
Within one year	4,121 4,121
After one year but not more than five years	14,475 17,335
Unearned future finance income on finance leases	18,596 21,456 (260) (310)
Net investment in finance leases	18,336 21,146

Fair value of long-term finance receivables has been estimated by discounting the gross value of finance lease receivables using a borrowing rate of 6% (2022: 6%).

The Group uses derivatives only for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedging criteria under IFRS, they are classified as ‘held for trading’ for accounting purposes as required by IFRS. In particular, the Group uses interest rate swaps to minimise the effect of interest rate fluctuations on its borrowings. The contracts entered into by the Group are principally denominated in AED. The fair values of these contracts are recorded in the consolidated balance sheet and is determined by reference to valuations by reputable external financial institutions.

Interest rate swaps are commitments to exchange one set of cash flows for another. The swaps result in an economic exchange of interest rates, no exchange of principal takes place. These swap transactions entitle the Group to receive or pay amounts derived from interest rate differentials between an agreed fixed interest rate and the applicable floating rate prevailing at the beginning of each interest period.

At 31 December 2023, the fixed interest rates vary from 1.52% to 4.37% per annum (2022: 1.52% to 4.37% per annum). The floating rates are linked to Emirates Interbank Offered Rate (“EIBOR”).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

9. TRADE AND UNBILLED RECEIVABLES

9. TRADE AND UNBILLED RECEIVABLES
2023	2022
AED’000	AED’000
Trade receivables 193,814	270,298
Less: loss allowance (91,655)	(119,783)
102,159	150,515
Less: non-current —	—
Current 102,159	150,515
Unbilled receivables — operating leases 958,987	893,186
Less: loss allowance (156,930)	(166,765)
802,057	726,421
Less: non-current (802,057)	(726,421)
Current —	—
Trade and unbilled receivables Current 102,159	150,515
Non-current 802,057	726,421
904,216	876,936

The fair values of trade and unbilled receivables approximate their carrying amounts.

Unbilled receivables arise on revenue recognition based on straight lining which is mainly driven by rent free periods and rent escalation as per the contracts.

The Group has a broad base of customers with no concentration of credit risk within trade receivables at 31 December 2023 and 2022.The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable.

The Group has a broad base of customers with no concentration of credit risk within trade receivables at 31 December 2023 maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable.	and 2022.The
2023	2022
AED’000	AED’000
Trade receivables and unbilled receivables Not past due 958,987	898,438
Up to 3 months 59,244	89,392
3 to 6 months 9,877	42,378
Over 6 months 124,693	133,276
1,152,801	1,163,484

2023	2022
AED’000	AED’000
Loss allowance against trade receivables and unbilled receivables Not past due 156,930	166,931
Up to 3 months 8,129	19,259
3 to 6 months 7,392	14,434
Over 6 months 76,134	85,924
248,585	286,548

The provision against not past due receivables reflects loss allowance against specific customers considered having a higher probability of default. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. The majority of the Group’s trade and unbilled receivables are denominated in AED.

The movement in the Group’s loss allowance on unbilled receivables is as follows:

The movement in the Group’s loss allowance on unbilled receivables is as follows:
	2023 AED’000 2022 AED’000
At 1 January	166,765 261,805
Loss allowance	1,747 51,874
Receivables written off	(11,582) —
Transfer to the Parent Company	— (146,914)
At 31 December	156,930 166,765

There has been no change in the estimation techniques or significant assumptions made in assessing the ECL during the current year.

10. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

Related parties comprise shareholders, ultimate parent company, parent company and key management personnel and businesses which are controlled directly, by the shareholders or key management personnel. Related parties also includes entities over which the ultimate parent company has control or significant influence.

(a) Due from related parties

(a) Due from related parties
	2023 AED’000 2022 AED’000
Intermediate Parent Company	49 —
Parent Company	1,691 —
Other subsidiaries of the Parent Company	14,774 925
Other related parties	18,911 28,974
	35,425 29,899

The amount due from related parties as at 31 December 2023 and 2022 are classified as current in the consolidated balance sheet. The receivables are unsecured in nature and bear no interest. The maximum exposure to credit risk at the reporting date is the fair value of each of the amount receivable from related parties.

The fair values of due from related parties approximate their carrying amounts and are fully performing at 31 December 2023 and 2022.

Due from and due to related party balances are offset and the net amount is reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the due from and due to balances simultaneously.

(b) Due to related parties

(b) Due to related parties
	2023 AED’000 2022 AED’000
Ultimate Parent Company	9,111 7,358
Parent Company	— 149,368
Other subsidiaries of the Parent Company	11,520 11,108
Other related parties	39,613 35,857
	60,244 203,691

The payables to related parties arise mainly from purchase transactions and are non-interest bearing, and payable on demand.

The movement in the Group’s loss allowance on trade receivables is as follows:

The movement in the Group’s loss allowance on trade receivables is as follows:
2023	2022
AED’000	AED’000
At 1 January 119,783	153,353
(Reversal)/loss allowance (28,128)	5,760
Transfer to the Parent Company —	(39,330)
At 31 December 91,655	119,783

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

10. BALANCES AND TRANSACTIONS WITH RELATED PARTIES continued

(c) Related party transactions

Break up of other significant transactions with related parties in the normal course of the business is as follows:

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||||
|---|---|---|
|2023|2022|
|AED’000|AED’000|
|Transactions between related parties:|
|Dividends declared to the Parent Company|525,000|1,078,995|
|Transfer of intangible assets to Parent Company|227|1,593|
|Transfer of investment property to Parent Company|20,421|383,392|
|—|
|Capital contribution|404,293|
|Transfer of end of service benefits|—|37,513|
|—|
|Transfer of trade receivable from customers (net of provisions)|30,940|
|Services provided to related parties included in revenue:|
|Operating lease income from fellow subsidiaries and other related parties|29,303|22,338|
|Cost recovery income|18,242|19,614|
|Services income from the Parent Company and fellow subsidiaries|5,291|2,930|
|Services provided by related parties included in expenses:|
|Direct costs — operation and maintenance costs|
|— Entities under common control|99,488|100,303|
|—|
|— Ultimate Parent Company|6,200|
|—|
|— Parent Company|2,615|
|— Other related parties|52,160|52,054|
|General and administrative expenses — cost recharged|
|— Ultimate Parent Company|1,752|22,256|
|— Parent Company|45,360|17,974|
|—|
|— Other related parties|3,795|

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In 2022, a dividend of AED 53,995,000 had been adjusted against the balance receivable from the Parent Company.

(d) Capital contribution

In 2022, capital contribution amounting to AED 404,293,000 represented dividends declared from entities previously under the Group but were transferred out for the purpose of the IPO and was adjusted against balance payable to the related parties.

(e) Remuneration of key management personnel

The compensation to key management personnel for employee services is shown below:

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||||
|---|---|---|
|2023|2022|
|AED’000|AED’000|
|Salaries and other short-term employee benefits|18,170|15,702|
|End of service, termination and other post-employment|732|2,971|
|Board of Directors’ remuneration|1,926|5,000|
|20,828|23,673|

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Board of Directors’ remuneration for the year ended 31 December 2023 is recorded in Accrued expenses under ‘Trade and other payables’ in the consolidated financial statements and will be approved in the next Annual General Meeting.

11. CASH AND BANK BALANCES

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||||
|---|---|---|
|2023|2022|
|AED’000|AED’000|
|Cash on hand|698|650|
|Cash at banks|
|— Current account|569,184|336,016|
|— Fixed deposits|965,301|923,848|
|1,535,183|1,260,514|

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Cash and cash equivalents include the following for the purposes of the consolidated statement of cashflows:

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||||
|---|---|---|
|2023|2022|
|AED’000|AED’000|
|Cash and bank balances|1,535,183|1,260,514|
|Fixed deposits with maturities greater than three months|(865,301)|(923,848)|
|—|
|Restricted cash against a bank facility|(60,000)|
|669,882|276,666|

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Bank accounts are held with locally incorporated banks and branches of international banks. Fixed deposits carry interest in the range of 3.11% to 5.75% (2022: 0.85% to 5.25%) per annum.

12. SHARE CAPITAL

The total authorised and issued share capital of the Company comprises 5,000,000,000 shares (2022: 5,000,000,000 shares) of AED 0.10 each. All shares were fully paid-up.

13. LEGAL RESERVE

In accordance with the UAE Federal Decree Law No. (32) of 2021 and Articles of Association, 10% of the profit for the year of the public joint stock company and 5% of the profit for the year of each UAE limited liability registered company are transferred to a legal reserve, which is not distributable. Transfers to this reserve are required to be made until such time as it equals at least 50% of the paid-up share capital of the respective companies. Transfers to the legal reserve have accordingly been made by the individual entities within the Group.

As at 31 December 2023, legal reserve of the Company amounted to AED 250,000,000 (2022: AED 250,000,000). The remaining amount pertains to the subsidiaries of the Group.

14. TRADE AND OTHER PAYABLES

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||||
|---|---|---|
|2023|2022|
|AED’000|AED’000|
|Accrued expenses|222,589|252,389|
|Trade payables|72,489|94,309|
|Other payables|56,749|63,338|
|351,827|410,036|
|Less: non-current|(3,304)|—|
|348,523|410,036|

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

15. BORROWINGS

15. BORROWINGS
2023	2022
AED’000	AED’000
Bank borrowings 4,400,000	4,400,000
Unamortised transaction costs (48,233)	(58,018)
Carrying amount 4,351,767	4,341,982
Less: non-current (4,351,767)	(4,341,982)
Current —	—

On 14 June 2023, the Group refinanced its existing bank facilities through a new facility aggregating to AED 7,600,000,000 with multiple tranches from consortium of banks, in exchange of settlement of existing obligation. On account of the settlement, the Group has derecognised the existing liability which has resulted in the release of unamortised issue costs of AED 52,183,000 in finance costs. The issue cost incurred on the new facility amounted to AED 53,796,000, of which the unamortised portion as at 31 December 2023 is AED 48,233,000.

The purpose of the new loan facility is to repay existing facilities and for general corporate purposes of the Group. The new facility is repayable in a single bullet payment in 2028.

As at 31 December 2023, the Group has undrawn floating rate borrowing amounting to AED 3,200,000,0000 from the above facility (2022: AED 3,200,000,000).

The Group has sufficient headroom to enable it to conform to covenants on its existing borrowings and sufficient working capital and undrawn financing facilities to service its operating activities and ongoing investments as at 31 December 2023 and 2022.

Below are major financial covenants as required by the terms of the facility:

i) Leverage for each period not to exceed certain ratios as specified in the facility agreement. ii) Debt Service Cover Ratio not to be less than 1.20:1.

iii) Minimum Net Worth in respect of any relevant period not to be less than AED 3,673,000,000 (or its equivalent in any other currency).

The Group has complied with all covenants in line with the borrowing facility agreements at each reporting period. The Group has not had any defaults of principal, interest or redemption amounts during the periods on its borrowed funds. Interest rate on the above bank borrowings ranged from 6.12% to 6.39% (2022: ranged from 2.74% to 6.39%) per annum.

Total borrowings of AED 4,400,000,000 (2022: AED 4,400,000,000) are subject to re-pricing within three months of the consolidated balance sheet date.

The maturity profile of the borrowings is as follows:

The maturity profile of the borrowings is as follows:
2023	2022
AED’000	AED’000
Within one year — After one year but not more than five years 4,400,000	— 4,400,000
More than five years —	—
4,400,000	4,400,000

16. ADVANCES FROM CUSTOMERS

16. ADVANCES FROM CUSTOMERS
	2023 AED’000 2022 AED’000
Operating lease advances	1,187,616 1,159,525
Contract advances	42,144 35,809
Refundable deposits	230,378 217,199
Less: non-current	1,460,138 1,412,533 (623,533) (645,326)
Current	836,605 767,207

Operating lease advances and contract advances represents amounts collected from customers in advance which are subsequently released to the consolidated statement of income once the revenue recognition criteria are met.

The movement of contract advances is as follows:

The movement of contract advances is as follows:
	2023	2022
	AED'000	AED'000
At 1 January Amount billed	35,809 146,668	40,823 132,945
Revenue recognised	(140,333)	(137,959)
At 31 December	42,144	35,809

17. PROJECT LIABILITIES

17. PROJECT LIABILITIES
	2023 AED’000 2022 AED’000
Project payables	1,158,574 1,159,426
Retentions payable	131,404 110,892
Less: non-current	1,289,978 1,270,318 (829,445) (869,271)
Current	460,533 401,047

Project payables include amount contracted with a government authority to pay its share of costs of roadworks serving the Group’s developments with present value of AED 923,675,000 (2022: AED 968,099,000). These costs are paid based on agreed annual fixed installments and are recorded at the present value of the expected cash outflows required to settle the obligation.

18. EMPLOYEES’ END OF SERVICE BENEFITS

	2023 AED’000 2022 AED’000
At 1 January	43,909 71,990
Charge for the year	4,177 13,116
Payments	(4,174) (3,684)
Transfers	— (37,513)
At 31 December	43,912 43,909

The Group’s borrowings are denominated in AED.

19. PROVISIONS FOR OTHER LIABILITIES AND CHARGES

19. PROVISIONS FOR OTHER LIABILITIES AND CHARGES
	Notes	2023 AED’000 2022 AED’000
Provision for infrastructure cost	4(a)	902,807 881,124
Provision for terminations and legal claims		21,585 20,539
Less: non-current		924,392 901,663 (902,807) (881,124)
Current		21,585 20,539

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Strategic Report ESG Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

20. DIVIDENDS

On 14 June 2022, the shareholders approved to distribute dividends of AED 903,995,000.

At the general assembly meeting held on 14 November 2022, the shareholders approved the recommendation of the Board of Directors to distribute dividends of AED 200,000,000 (AED 0.04 per share).

At the Annual General Meeting held on 14 March 2023, the shareholders approved the recommendation of the Board of Directors to distribute dividends of AED 200,000,000 (AED 0.04 per share).

On 1 August 2023, the shareholders approved the recommendation of the Board of Directors to distribute interim dividends of AED 400,000,000 (AED 0.08 per share).

On 30 January 2024, the Board of Directors has recommended cash dividend of AED 400,000,000 (AED 0.08 per share), which is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

21. REVENUE

21. REVENUE
		2023	2022
	Notes	AED’000	AED’000
Operating lease income	6	1,929,534	1,757,003
Service income		239,663	216,365
		2,169,197	1,973,368

The payments for service income are received in advance and have no significant financing component.

The aggregate amount of sale price allocated to performance obligations that are unsatisfied/partially satisfied as at 31 December 2023 amounted to AED 42,144,000 (2022: AED 35,809,000). The Group expects to recognise revenue from these unsatisfied performance obligations over a period of 2 years.

22. DIRECT COSTS

22. DIRECT COSTS
	2023	2022
	Notes AED’000	AED’000
Depreciation	6 371,395	357,876
Operation and maintenance costs	338,015	354,749
Payroll and related costs	25 50,972	55,229
	760,382	767,854

23. OTHER OPERATING INCOME

23. OTHER OPERATING INCOME
2023	2022
AED’000	AED’000
Cost recovery 18,242	19,614
Lease termination and other penalties 15,039	11,539
Liabilities written back 12,589	8,138
Others 1,292	2,695
47,162	41,986

24. GENERAL AND ADMINISTRATIVE EXPENSES

24. GENERAL AND ADMINISTRATIVE EXPENSES
	Notes	2023 AED’000 2022 AED’000
Payroll and related costs	25	71,279 92,161
Management fees and consultancy		60,950 48,369
(Reversal)/loss allowance on trade and unbilled receivables	9	(26,381) 57,634
Depreciation and amortisation		23,111 28,328
Professional memberships		3,877 7,442
Communication		3,825 5,431
Others		17,443 5,998
		154,104 245,363

25. PAYROLL AND RELATED COSTS

25. PAYROLL AND RELATED COSTS
	2023	2022
	AED’000	AED’000
Salaries and allowances	121,178	133,459
End of service benefits and pension	6,908	20,475
	128,086	153,934

Payroll and related costs are split as follows:

Payroll and related costs are split as follows:
		2023	2022
	Notes	AED’000	AED’000
Direct costs	22	50,972	55,229
General and administrative expenses	24	71,279	92,161
Marketing and selling expenses	26	5,835	6,544
		128,086	153,934

26. MARKETING AND SELLING EXPENSES

26. MARKETING AND SELLING EXPENSES
		2023	2022
	Notes	AED’000	AED’000
Promotions		31,546	30,817
Payroll and related costs	25	5,835	6,544
Advertising		5,442	4,186
		42,823	41,547

Promotions include social contributions amounting to AED 358,000 (2022: AED 311,000).”

Cost recovery income relates to expenses recharged based on a cost sharing agreement with related parties.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

27. FINANCE COSTS — NET

27. FINANCE COSTS — NET
	2023	2022
	Notes AED’000	AED’000
Interest (expense)/income on:
Bank borrowings	(292,953)	(180,454)
Derivative financial instruments	127,772	(30,473)
Amortisation of transaction costs	(64,323)	(69,726)
Unwinding of discount on non-current liabilities	(32,863)	(31,532)
	(262,367)	(312,185)
Interest earned on:
Bank fixed deposits	27,090	4,933
Islamic deposits	14,888	4,090
Current accounts	14,367	7,881
Gains on derivatives	23,945	59,413
Other finance income	1,302	896
	81,592	77,213
	(180,775)	(234,972)

28. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing consolidated profit for the year attributable to ordinary equity holders of the company by the weighted average number of ordinary shares outstanding during the year.

As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical. The calculation of basic and diluted earnings per share attributable to the owners of the company is based on the following data:

earnings per share attributable to the owners of the company is based on the following data:
	2023	2022
Earnings
Earnings for the purpose of basic and diluted earnings per share (consolidated profit for the year
attributable to owners of the company) rounded to the nearest AED’000	1,078,275	725,618
Weighted average number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share	5,000,000,000	3,780,821,991
Basic and diluted earnings per share attributable to owners of the company
rounded to the nearest Fil	0.22	0.19

29. CASH GENERATED FROM OPERATIONS

	2023	2022
	Notes AED’000	AED’000
Profit for the year	1,078,275	725,618
Adjustments for:
Depreciation and amortisation	394,506	386,204
(Reversal)/loss allowance on trade and unbilled receivables	9 (26,381)	57,634
Provisions for end of service benefits and other liabilities and charges	5,223	11,442
Liabilities written back	23 (12,589)	(8,138)
Finance income	27 (81,592)	(77,213)
Finance costs	27 262,367	312,185
Changes in operating assets and liabilities:	1,619,809	1,407,732
Trade and other receivables, before provision and write offs	(9,552)	(33,146)
Trade payables and other liabilities, excluding project liabilities	3,014	59,482
Due from related parties	15,135	560,365
Due to related parties	6,553	(487,047)
Cash generated from operations	1,634,959	1,507,386

30. FINANCIAL INSTRUMENTS BY CATEGORY

The accounting policies for financial instruments have been applied to the following line items:

	Notes	Financial assets at amortised cost AED’000	Financial assets at fair value through other comprehensive income AED’000	Total AED’000
*Assets*
31 December 2023
Derivative financial instruments	7	—	221,995	221,995
Trade and other receivables		942,070	—	942,070
Due from related parties	10	35,425	—	35,425
Cash and bank balances	11	1,535,183	—	1,535,183
		2,512,678	221,995	2,734,673
31 December 2022
Derivative financial instruments	7	—	315,519	315,519
Trade and other receivables		907,473	—	907,473
Due from related parties	10	29,899	—	29,899
Cash and bank balances	11	1,260,514	—	1,260,514
		2,197,886	315,519	2,513,405

Trade and other receivables exclude advances to contractors and suppliers, prepayments and other receivables.

	Notes	Derivatives used for hedging AED’000	Other financial liabilities AED’000	Total AED’000
*Liabilities*
31 December 2023
Trade payables and other liabilities		—	1,872,183	1,872,183
Derivative financial instruments	7	3,000	—	3,000
Due to related parties	10	—	60,244	60,244
Borrowings	15	—	4,351,767	4,351,767
		3,000	6,284,194	6,287,194
31 December 2022
Trade payables and other liabilities		—	1,897,553	1,897,553
Derivative financial instruments	7	2,817	—	2,817
Due to related parties	10	—	203,691	203,691
Borrowings	15	—	4,341,982	4,341,982
		2,817	6,443,226	6,446,043

Trade payables and other liabilities exclude operating lease advances and contract advances.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the year ended 31 December 2023

31. NET DEBT RECONCILIATION

31. NET DEBT RECONCILIATION
		2023	2022
	Notes	AED’000	AED’000
Cash and bank balances	11	1,535,183	1,260,514
Borrowings — repayable after one year	15	(4,351,767)	(4,341,982)
		(2,816,584)	(3,081,468)

	Cash and bank AED’000*	Borrowing due within 1 year AED’000	Borrowing due after 1 year AED’000	Total AED’000
Net debt as at 1 January 2023	1,260,514	—	(4,341,982)	(3,081,468)
Cash flows	274,669	—	53,796	328,465
Other non-cash movement	—	—	(63,581)	(63,581)
Net debt as at 31 December 2023	1,535,183	—	(4,351,767)	(2,816,584)
Net debt as at 1 January 2022	1,246,399	(302,015)	(3,663,105)	(2,718,721)
Cash flows	14,115	64,215	(371,279)	(292,949)
Other non-cash movement	—	237,800	(307,598)	(69,798)
Net debt as at 31 December 2022	1,260,514	—	(4,341,982)	(3,081,468)

The presentation of cash and bank balances within the net debt reconciliation is a voluntary inclusion in addition to the reconciliation of liabilities arising from financing activities as disclosed in the consolidated statement of cashflows.

32. COMMITMENTS

(a) Capital commitments

32. COMMITMENTS (a) Capital commitments
	2023	2022
	AED’000	AED’000
Property and equipment Intangible assets	4,679 5,606	2,094 6,377
Investment property	612,463	289,554

(b) Operating lease arrangements — the Group as lessor

Operating non-cancellable leases relate to the investment property owned by the Group with lease terms of between 1 to 5 years for building leases and between 20 to 50 years for land leases.

Future minimum rentals receivable under non-cancellable operating leases are as follows:

2023	2022
AED’000	AED’000
Later than five years 12,157,819	11,767,418
Later than one year and not later than five years 2,818,047	2,930,035
Not later than one year 798,861	858,220
15,774,727	15,555,673

(c) Letter of credit

Letters of credit of AED 96,602,000 (2022: AED 20,295,000) issued for construction of certain infrastructure costs.

33. SEGMENT REPORTING

Information regarding the Group’s reportable segments is set out below in accordance with IFRS 8 Operating Segments. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group’s Chief Executive Officer, as the chief operating decision maker, in order to allocate resources to the segment and to assess its performance. Information reported to the Group’s Chief Executive Officer for the purpose of resource allocation and assessment of segment performance focuses on the financial performance of each business segments only. No information that includes the segments’ assets and liabilities are reported to the Group’s Chief Executive Officer.

The Group is organised into four reportable segments: (i) commercial leasing, (ii) industrial leasing, (iii) land leasing and (iv) services and others. The following describes the types of properties, products or services that fall within each of our financial segments:

Commercial leasing consists of built-to-lease and built-to-suit properties. Built to lease properties are our commercial properties which are typically developed for multiple tenants and are leased out to customers, and include office, retail space and business centres (built to lease). Built to suit properties typically represent our commercial properties where we were able to identify customers in advance of developing the property in order to build a single-tenant customised property that meet a customer’s specifications, which are then leased out to them upon completion or similar properties (built to suit).
Industrial leasing consists of warehouses and staff accommodation (housing for businesses to use to accommodate their workers).
Land leasing consists of land leases. Our land leases represent land available within our business districts that already has or is expected to develop the necessary infrastructure (such as connecting roads, water, electricity and sewage) that allows us to lease the land. We have intentionally retained such land in order to be able to lease it to customers to suit their specific needs, such as manufacturing, commercial, retail, residential or academic purposes.
Services consist of fees from the services that we provide, including those generated from our AXS platform, venue management services, property management and leasing agreements and our in5 platform.
Other segments include businesses that individually do not meet the criteria of a reportable segment. These segments include operations and support functions.

The Group operates primarily in United Arab Emirates and accordingly no further geographical analysis of revenue and profit are given. Segment revenue reported represents revenue generated from customers and there were no intersegment sales.

The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment results represents the profit earned by each segment before interest, depreciation and amortisation. This is the measure reported to the Group’s Chief Executive Officer for the purpose of resource allocation and assessment of segment performance.

Information regarding these segments are as follows:

Information regarding these segments are as follows:
	Commercial leasing AED’000	Land leasing AED’000	Industrial leasing AED’000	Services and others AED’000	Total AED’000
31 December 2023 Revenue Direct cost Other operating income Other expenses	1,123,536 (231,551) 46,426 (166,246)	501,716 (3,772) — (16,774)	304,282 (66,629) 630 (17,854)	239,663 (36,063) 106 (23,914)	2,169,197 (338,015) 47,162 (224,788)
Segment results before interest and depreciation and amortisation	772,165	481,170	220,429	179,792	1,653,556
Depreciation and amortisation Unallocated net finance cost	(323,748) —	— —	(65,000) —	(5,758) —	(394,506) (180,775)
Profit for the year	448,417	481,170	155,429	174,034	1,078,275
31 December 2022
Revenue	1,047,422	435,877	273,704	216,365	1,973,368
Direct cost	(244,036)	(18)	(56,678)	(54,017)	(354,749)
Other operating income	38,062	—	814	3,110	41,986
Other expenses	(184,911)	(68,923)	(47,642)	(12,335)	(313,811)
Segment results before interest and depreciation
and amortisation	656,537	366,936	170,198	153,123	1,346,794
Depreciation and amortisation	(316,178)	—	(65,045)	(4,981)	(386,204)
Unallocated net finance cost	—	—	—	—	(234,972)
Profit for the year	340,359	366,936	105,153	148,142	725,618

Management primarily relies on net finance cost, not the gross finance income and finance cost in managing all segments and does not allocate to segments. Therefore, unallocated net finance cost is disclosed.

No single customer contributed 10% or more to the Group’s revenue.

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Strategic Report ESG Corporate Governance Financial Statements
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EPRA Reporting

TECOM Group PJSC | Annual Report 2023

Celebrating 25 years of achievements

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Strategic Report ESG Corporate Governance Financial Statements
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EPRA REPORTING

EPRA PERFORMANCE MEASURES

Summary table EPRA performance measures

The European Public Real Estate Association (EPRA) founded in 1999, is a not-for-profit association widely recognized for setting framework and best practices for Property investment companies.

The EPRA Best Practices Recommendations (BPR) Guidelines focus on those areas of reporting that are of most relevance to investors and enhance quality, comparability, and overall transparency of the listed Real estate sector. These standardised EPRA performance measures provide additional relevant earnings, balance sheet and operational metrics which facilitate simple and effective comparison of performance-related information across the industry.

TECOM Group PJSC (the Group) is a member of EPRA since its listing on Dubai Financial Market (DFM) in 2022 and among the few real estate companies in the GCC region to voluntarily adopt the EPRA BPR disclosures.

The Group applies EPRA BPR Guidelines (last published in February 2022) for the reporting of EPRA Performance Measures which are presented in this section for the first time (Page 203 to Page 206).

For more information about EPRA and EPRA’s best practice policies please visit EPRA’s web site (www.epra.com).

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Measure Definition Purpose 2023 2022
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1 EPRA EARNINGS	Earnings from operational activities. A key measure of a company’s underlying operating results and an indication of the extent to which current dividend payments are supported by earnings.	1,501,853 1,024,081
2 EPRA NAV METRICS	EPRA Net Reinstatement Value: Assumes that entities never sell assets and aims to represent the value required to rebuild the entity. The EPRA NAV set of metrics make adjustments to the NAV per the IFRS financial statements to provide stakeholders with the most relevant information on the fair value of the assets and liabilities of a real estate investment company, under different scenarios. EPRA Net Tangible Assets:Assumes that entities buy and sell assets, hereby crystallising certain levels of unavoidable deferred tax. EPRA Net Disposal Value:Represents the shareholders’ value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax.	17,180,297 15,070,569
		17,159,870 15,051,625
		17,399,292 15,383,271
3(i) EPRA NET INITIAL YIELD (NIY)	Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers’ costs. A comparable measure for portfolio valuations. This measure should make it easier for investors to judge themselves, how the valuation of portfolio X compares with portfolio Y. This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and step rents).	6.75% 6.55%
(ii) EPRA “TOPPED-UP” NIY		7.01% 6.66%
4 EPRA VACANCY RATE	Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio. A ‘pure’ (%) measure of investment property space that is vacant, based on ERV.	10.95% 16.78%
5 EPRA COST RATIOS	Administrative & operating costs (including costs of direct vacancy) divided by gross rental income. A key measure to enable meaningful measurement of the changes in a company’s operating costs. Administrative & operating costs (excluding costs of direct vacancy) divided by gross rental income.	12.87% 22.71%
		10.31% 18.67%
6 EPRA LTV	Debt divided by market value of the property. A key (shareholder-gearing) metric to determine the percentage of debt comparing to the appraised value of the properties.	25.32% 29.30%

The details for the calculation of the EPRA performance measures are shown in the following tables.

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Strategic Report ESG Corporate Governance Financial Statements

EPRA PERFORMANCE MEASURES CONTINUED

1. EPRA Earnings

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||||
|---|---|---|
|(Amounts in AED 000)|2023|2022|
|Earnings per IFRS income statement|1,078,275|725,618|
|Adjustments to calculate EPRA Earnings, exclude:|
|Changes in value of investment properties, development properties held for investment and other interests|(371,395)|(357,876)|
|Profits or losses on disposal of investment properties, development properties held for investment and other|
|interests|—|—|
|Profits or losses on sales of trading properties including impairment charges in respect of trading properties.|—|—|
|Tax on profits or losses on disposals|—|—|
|Negative goodwill/goodwill impairment|—|—|
|Changes in fair value of financial instruments and associated close-out costs|(52,183)|59,413|
|Acquisition costs on share deals and non-controlling joint venture interests|—|—|
|Deferred tax in respect of EPRA adjustments|—|—|
|Adjustments (i) to (viii) above in respect of joint ventures (unless already included under proportional|
|consolidation)|—|—|
|Non-controlling interests in respect of the above|—|—|
|EPRA Earnings|1,501,853|1,024,081|
|Basic number of shares|5,000,000|5,000,000|
|EPRA Earnings per Share (EPS)|0.30|0.20|

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2. EPRA Net Asset Value (NAV) Metrics

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||||||||
|---|---|---|---|---|---|---|
|2023|2022|
|(Amounts in AED 000)|EPRA NRV|EPRA NTA|EPRA NDA|EPRA NRV|EPRA NTA|EPRA NDA|
|IFRS Equity attributable to shareholders|6,329,007|6,329,007|6,329,007|5,968,384|5,968,384|5,968,384|
|Include/Exclude*:|
|Hybrid instruments|—|—|—|—|—|—|
|Diluted NAV|6,329,007|6,329,007|6,329,007|5,968,384|5,968,384|5,968,384|
|Include:|
|Revaluation of IP (if IAS 40 cost option is used)|11,070,285|11,070,285|11,070,285|9,414,887|9,414,887|9,414,887|
|Revaluation of IPUC|[¹]|(if IAS 40 cost option is|
|used)|—|—|—|—|—|—|
|Revaluation of other non-current investments|—|—|—|—|—|—|
|Revaluation of tenant leases held as finance|
|leases|—|—|—|—|—|—|
|Revaluation of trading properties|—|—|—|—|—|—|
|Diluted NAV at Fair Value|17,399,292|17,399,292|17,399,292|15,383,271|15,383,271|15,383,271|
|Exclude:|
|Deferred tax in relation to fair value gains of IP|—|—|—|—|
|Fair value of financial instruments|(218,995)|(218,995)|(312,702)|(312,702)|
|Goodwill as a result of deferred tax|—|—|—|—|—|—|
|Goodwill as per the IFRS balance sheet|—|—|—|—|
|Intangibles as per the IFRS balance sheet|(20,427)|—18,944|
|Include:|
|Fair value of fixed interest rate debt|—|—|
|Revaluation of intangibles to fair value|—|—|—|—|
|Real estate transfer tax|—|—|—|—|
|NAV|17,180,297|17,159,870|17,399,292|15,070,569|15,051,625|15,383,271|
|Fully diluted number of shares|5,000,000|5,000,000|5,000,000|5,000,000|5,000,000|5,000,000|
|NAV per share|3.44|3.43|3.48|3.01|3.01|3.08|

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3. EPRA Net Initial Yield (NIY) and EPRA “Topped-up” NIY

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|||||
|---|---|---|---|
|(Amounts in AED 000)|2023|2022|
|Investment property — wholly owned|22,934,827|21,288,814|
|Investment property — share of JVs/Funds|—|—|
|Trading property (including share of JVs)|—|—|
|Less:|developments|1,293,389|1,645,606|
|Completed property portfolio|21,641,438|19,643,208|
|Allowance for estimated purchasers’ costs|726,973|659,849|
|Gross up completed property portfolio valuation (B)|22,368,411|20,303,057|
|Annualised cash passing rental income|1,905,703|1,715,838|
|Property outgoings|396,849|385,780|
|Annualised net rents (A)|1,508,854|1,330,058|
|Add:|notional rent expiration of rent free periods or other lease incentives|58,164|22,330|
|Topped-up net annualised rent (C)|1,567,018|1,352,388|
|EPRA NIY (A/B)|6.75%|6.55%|
|EPRA “topped-up” NIY (C/B)|7.01%|6.66%|

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4. EPRA Vacancy Rate

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||||
|---|---|---|
|(Amounts in AED 000)|2023|2022|
|Estimated Rental Value of vacant space (A)|233,011|348,424|
|Estimated rental value of the whole portfolio (B)|2,128,349|2,076,042|
|EPRA Vacancy Rate (A/B)|10.95%|16.78%|

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5. EPRA Cost Ratios

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||||
|---|---|---|
|(Amounts in AED 000)|2023|2022|
|Include:|
|Administrative/operating expense line per IFRS income statement|547,491|640,553|
|Net service charge costs/fees|121,601|139,750|
|Management fees less actual/estimated profit element|—|—|
|Other operating income/recharges intended to cover overhead expenses less any related profits|—|—|
|Share of Joint Ventures expenses|—|—|
|Exclude (if part of the above):|
|Investment property depreciation|371,395|357,876|
|Ground rent costs|3,747|—|
|Service charge costs recovered through rents but not separately invoiced|78,904|78,618|
|EPRA Costs (including direct vacancy costs) (A)|215,046|343,809|
|Direct vacancy costs|42,697|61,132|
|EPRA Costs (excluding direct vacancy costs) (B)|172,349|282,677|
|Gross Rental Income less ground rents — per IFRS|1,750,361|1,592,751|
|Less: service fee and service charge costs components of Gross Rental In-come (if relevant)|78,904|78,618|
|Add: share of Joint Ventures (Gross Rental Income less ground rents)|—|—|
|Gross Rental Income (C)|1,671,457|1,514,133|
|EPRA Cost Ratio (including direct vacancy costs) (A/C)|12.87%|22.71%|
|EPRA Cost Ratio (excluding direct vacancy costs) (B/C)|10.31%|18.67%|

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¹ Difference between development property held on the balance sheet at cost and fair value of that development property

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EPRA PERFORMANCE MEASURES CONTINUED

6. EPRA Loan-to-Value (LTV)
AS AT 31 DECEMBER 2023	Group as	Share of Joint	Share of Material	Non-controlling
(Amounts in AED 000)	Reported	Ventures	Associate	interests	Combined
Include:
Borrowings from Financial Institutions	4,351,767				4,351,767
Commercial paper	—				—
Hybrids (including Convertibles, preference shares, debt,
options, perpetuals)	—				—
Bond Loans	—				—
Foreign Currency Derivatives (futures, swaps, options and
forwards)	—				—
Net Payables	3,051,832				3,051,832
Owner-occupied property (debt)	—				—
Current accounts (Equity characteristic)	—				—
Exclude:	—				—
Cash and cash equivalents	1,535,183				1,535,183
Net Debt (A)	5,868,416				5,868,416
Include:
Owner-occupied property	—				—
Investment properties at fair value	22,934,827				22,934,827
Properties held for sale	—				—
Properties under development	—				—
Intangibles	20,427				20,427
Net Receivables	—				—
Financial assets	218,995				218,995
Total Property Value (B)	23,174,249				23,174,249
LTV (A/B)	25.32%				25.32%

AS AT 31 DECEMBER 2022	Group as	Share of Joint	Share of Material	Non-controlling
(Amounts in AED 000)	Reported	Ventures	Associate	interests	Combined
Include:
Borrowings from Financial Institutions	4,341,982				4,341,982
Commercial paper	—				—
Hybrids (including Convertibles, preference shares, debt,
options, perpetuals)	—				—
Bond Loans	—				—
Foreign Currency Derivatives (futures, swaps, options and
forwards)	—				—
Net Payables	3,252,716				3,252,716
Owner-occupied property (debt)	—				—
Current accounts (Equity characteristic)	—				—
Exclude:	—				—
Cash and cash equivalents	1,260,514				1,260,514
Net Debt (A)	6,334,184				6,334,184
Include:
Owner-occupied property	—				—
Investment properties at fair value	21,288,814				21,288,814
Properties held for sale	—				—
Properties under development	—				—
Intangibles	18,944				18,944
Net Receivables	—				—
Financial assets	312,702				312,702
Total Property Value (B)	21,620,460				21,620,460
LTV (A/B)	29.30%				29.30%

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Dubai Internet City
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GLOSSARY

ARM – Active Risk Manager

BTL – Built-to-lease: multi-tenant investment properties

BTS – Built-to-suit: purpose-built investment properties as per requirements of tenants

GDP – Gross domestic product

GLA – Gross leasable area

IMF – International Monetary Fund

IP – Investment property

CAPEX – Capital expenditure

IPPF – International Professional Practices Framework

CBD – Central business district

KPI – Key Performance Indicator

CEO – Chief Executive Officer

KRI – Key Risk Indicator

CFE – Certified Fraud Examiner

LEED – Leadership in Energy and Environment Design

CFO – Chief Finance Officer

Leverage – Net debt divided by EBITDA

CIA – Certified Internal Auditor

COSO – The Committee of Sponsoring Organizations of the Treadway Commission

Like-for-Like Valuation gain – Percentage change in valuation of properties held at the beginning of the period

LTV – Loan to value ratio

CSR – Corporate social responsibility

MENA – Middle East and Northern Africa

Customer Retention – Value of leases renewed during a period divided by value of leases due for renewal during the period

Customers – Includes tenants, freelancers, and services clients

DDA – Dubai Development Authority

DFM – Dubai Financial Market

DHAM – Dubai Holding Asset Management

EBITDA – Earnings before interest, tax, depreciation, and amortisation

EITC – Emirates Integrated Telecommunications Company PJSC

Employee Retention – Percentage of high performing employees retained

EPRA – European Public Real Estate Association

EPRA BPR – EPRA best practice recommendations

EPRA Earnings – IFRS net profit adjusted mainly to remove impacts of depreciation and fair valuation in accordance with EPRA BPR

EPRA NAV – Net asset value calculated in accordance with EPRA BPR

EPRA NIY – EPRA net initial yield

MENAT – Middle East, North Africa and Turkey

MNC – Multi national company

MoIAT – Ministry of Industry and Advanced Technology

MOU – Memorandum of understanding

NAV – Net asset value

NCBD – Non-central business district

Net Debt – Gross debt minus cash and bank balances

OE – Oxford Economics

OpEx – Operating expenses

PMLA – Property management and leasing agreement

Report Currency – United Arab Emirates Dirham (AED)

RFCF – Recurring free cashflow (FFO minus enhancement and maintenance capital expenditure additions)

ROE – Return on equity

RPT – Related Party Transactions

SCA – Securities and Commodities Authority

TSR – Total Shareholder Return

EPS – Earnings per share (net profit divided by number of shares)

UAECA – UAE Chartered Accountant

ERM – Enterprise Risk Management

ESG – Environmental, Social and Governance

WALT – Weighted Average remaining Lease Term

FFO – Funds from operations (Funds generated from operations, including net finance costs paid, before working capital changes)

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TECOM GROUP PJSC — Annual Report 2023

66431_rns_2024-02-22_158993f0-58e7-4437-ab40-93bc3fd075a3.pdf

Building thriving ecosystems

Key facts

What's inside

Strategic Report

Environmental, Social and Governance

Corporate Governance

Financial Statements

2023 HIGHLIGHTS AND YEAR IN REVIEW

Key operational highlights

Delivering strong financial performance

Financial highlights

EPRA Measure

EPRA Return

Revenue

EPRA NIY

EBITDA

AED 1,654M

EBITDA Margin

EPRA Earnings

2023 ESG highlights

30

380

AED 1.47 M

89%

9.14%

15.27

2023 HIGHLIGHTS AND YEAR IN REVIEW CONTINUED

In our first full year as a publicly listed company, TECOM Group delivered on our promises and exceeded expectations.

Social engagement and community wellness

WeWalk for Dubai

Autism Centre

2023 HIGHLIGHTS AND YEAR IN REVIEW CONTINUED

Future growth

Expansion of D/Quarters footprint

High demand for Innovation Hub Phase 2

New storage and logistics facilities in Dubai Science Park

Launch of in5 Science

Prestigious business school EM Normandie first ever campus in Middle East

Strategic engagement

in5 partners with Dubai Chamber for Dubai startup growth

Expanding the reach of Dubai Internet City

Sit back, relax and relive another remarkable year

AT A GLANCE

Home to more than 11,000 customers

We build thriving ecosystems that empower our clients and power the future of Dubai.

Commercial Leasing

Land Leasing

Services

Portfolio mix by sector - by revenue

WHERE WE OPERATE

What we offer

Complementary Services

[ D/Quarters][ in5]

OUR CUSTOMERS

Strategic Report

CHAIRMAN’S STATEMENT

Malek Al Malek

2023 highlights

A diverse range of innovative solutions and services

Towards a more sustainable future

Malek Al Malek

CEO’S STATEMENT

Abdulla Belhoul

2023 highlights

Outstanding financial performance

Enhancing and diversifying the business portfolio

Sustainability at TECOM Group

Accelerating toward our goals

Abdulla Khalifa Belhoul

REASONS TO INVEST

Reasons to invest

A unique investment proposition positioned

Organic Growth Drivers

Occupancy Rates

Rental Rates

Built-to-suit Projects

6

TECOM GROUP PJSC Annual Report 2023