Talaat Mostafa TMG E : TMG Holding First Half ending June 30, 2021 Earning Release. August, 2021

1H2021 earnings release

Cairo | August 2021

TMG Holding reports net sales of EGP21bn in 1H2021, the highest in recent history, and

healthy net profit of EGP869mn, up 23.2% y-o-y

Talaat Moustafa Group Holding (TMG Holding) has released its consolidated financial results for the first half of the year ended 30 June 2021 (1H2021).

Key 1H2021 financial highlights

§ Revenues of EGP5.49bn, up 19.8% y-o-y, of which 24.7% or EGP1.354bn was generated from hospitality and other recurring income lines, still affected by aftermath of COVID-19 pandemic but recovering steadily

• Gross profit of EGP1.85bn, up 17.3% y-o-y, of which 18.7% generated by recurring income lines
• Profit before minority interest and tax of EGP857mn, up 25.0% y-o-y
• Net profit after tax and minority interest of EGP869, up 23.2% y-o-y
• Net cash position of EGP3.1bn as at end-1H2021
• Debt-to-equityratio of 23.3% only
• Total backlog of EGP63.9bn and remaining collections of EGP50.8bn

Financial review

TMG Holding closed 1H2021 with total consolidated revenues of EGP5.49bn, expanding by a strong 19.8% y-o-y despite negative headwinds from the prevailing COVID-19 pandemic still affecting hospitality and other recurring income lines during the period. Development revenue came in at EGP4.14bn, growing by a strong 25.2% y-o-y, supported by timely scheduled delivery of 1,258 residential and non-residential units. Gross margin on development operations came in at a wide 36.3% in 1H2021, showing improvement from 1Q2021. Total revenue from recurring income segments (hotels, sporting clubs, retail and others) showed a modest growth of 6.1% y-o-y and came in at EGP1.35bn. Importantly, hospitality revenue in 1H2021 delivered a significant growth of 33.6% y-o-y, on the back of continues recovery from COVID-19 pressures witnessed during 2020, while revenue from other recurring income lines combined contracted by just 3.3% y-o-y. Net income after tax and minority interest expense came in at EGP869.4mn, expanding by a strong 23.2% y-o-y despite the lingering weakness in recurring income lines growth. The company closed 1H2021 with a net cash position of EGP3.1bn, recovering strongly during 2Q2021, as it continued spending on backlog development and investment in recurring income segments during the quarter. Following the successful issuance of EGP2.0bn worth of Ijarah sukuk in April 2020, the company's debt-to-equity ratio now stands at an optimal 23.3% only. Most of the company's debt remains tied to recurring income segments and is attractively priced, posing no additional burden on the business in case of a temporary market slow-down, especially as interest rates continue to decline.

TMG Holding S.A.E.	ﺔﻋﻮﻤﺠﻣ	( [phone]	Publicly held since 2007
34/36 Mossadek St., Dokki	عرﺎﺷ،ق٣٦ﺪﺼ/٣٤ﻣ	[e-mail]	EGX: TMGH.CA / TMGH EY	1/8
Giza, Egypt	،ةﺰﻴﺠﻟا	www.talaatmoustafa.com

1H2021 earnings release

Cairo | August 2021

City and Community Complexes segment performance

Noor sales reach a record EGP15bn in just three weeks, achieving the highest launch sales for a real estate developer in Egypt

In less than six months after signing a contract to acquire 5,000 feddans or 21.0mn square meters (sqm) of prime land in East Cairo from New Urban Communities Authority, the company has launched sales in "Noor", a new integrated mega-city towards the end of 2Q2021. Since the launch at the beginning of June and, until 30 June 2021, Noor has recorded unprecedented sales in excess of EGP15bn, achieving the highest launch sales for a real estate developer in Egypt and meeting unmatched demand from new and existing clientele. Following detailed market study and good understanding of the needs of our target segment of end-users and long-term investors in the current macroeconomic environment, multi-tenant and stand-alone units have been launched on very attractive and competitive payment plans of 5, 10 and 15 years in length.

Unique financial engineering applied in Noor significantly reduces long-term development risks while guaranteeing fixed profits

As evidenced by the remarkably strong sales result in Noor, TMG Holding's management has accurately recognized the market's need for long-term yet affordable payment plans. These payments plans swiftly improve product affordability and unlock yet untapped additional demand and are provided without affecting the company's liquidity and working capital position going forward. Longer payment plans applied in Noor were achieved through a unique hedging mechanism agreed upon between TMG Holding, National Bank of Egypt, Banque Misr and Banque du Caire, eliminating any future interest rate risks on the Group while offering these long-term and affordable payment plans. Thanks to this arrangement, TMG Holding will be able to discount up to EGP15bn worth of uncollected receivables from Noor project post unit delivery at a net discounted value of EGP9bn (covering EGP33bn worth of sales) at a fixed and known cost, which the Group was able to already price into its payment plans upon launch. Given that TMG has already sold EGP15bn worth of units in Noor as at end 1H2021, it still has significant room of EGP18bn of new sales to be covered by this facility. This unique mechanism thus i) allows the Group to address untapped demand through longer payment plans improving product affordability, resulting in significant additional sales, ii) eliminates downside risks related to changing interest rate environment in the long-term and iii) allows the Group to recognize additional profits upon discounting of cheques post-delivery.

Online sales platform delivers remarkable performance during its first weeks of operation

Upon the launch of Noor and in swift recognition of new emerging trends in commerce brought on us globally by the COVID-19 pandemic, TMG Holding has simultaneously inaugurated its innovative state-of-the-art online sales platform, allowing its clients to view and purchase all available residential products in its portfolio online, without the need of visiting TMG's physical sales centres. This new sales channel has delivered a remarkable performance in the short timespan since its inauguration of just three weeks, contributing over EGP1.3bn of new sales in Noor and boding remarkably well for the future, as more and more trade moves online. Importantly, the new sales channel allowed the Group to tap into global international markets, with some online sales originating outside of Egypt. The success of our online sales platform is also a good testimony to the strong purchasing power present in our target segments, boding well for the limitless opportunities for online-based services that our vibrant communities are and will be offering in the future, especially as we enter the Smart City era, marked by multi-platform mobility, new sales channels, and cash-less payments.

TMG Holding S.A.E.	ﺔﻋﻮﻤﺠﻣ	( [phone]	Publicly held since 2007
34/36 Mossadek St., Dokki	عرﺎﺷ،ق٣٦ﺪﺼ/٣٤ﻣ	[e-mail]	EGX: TMGH.CA / TMGH EY	2/8
Giza, Egypt	،ةﺰﻴﺠﻟا	www.talaatmoustafa.com

1H2021 earnings release

Cairo | August 2021

New sales surpass EGP21bn by end of June, sales guidance increased to EGP30bn for FY2021

Following the launch of Noor and on the back of strong demand for TMG-branded properties elsewhere, both retail and institutional, the company has booked total 1H2021 new sales in excess of EGP21bn, having already posted EGP3.5bn in sales for 1Q2021, representing some 5 thousand units. This is the strongest sale period in the Group's history and the Egyptian real estate market. Given the stronger-than-expected market response to the launch of Noor, as well as still strong institutional demand for the Group's non-residential inventory in Madinaty and Al Rehab City, and the fact that sales to-date have already exceeded the previously announced guidance of EGP17-18bn for FY2021, management is now expecting the Group to close FY2021 with total sales nearing EGP30bn. Backlog as at 30 June 2021 exceeded EGP63bn. This is the highest sales achieved and largest backlog among Egyptian real estate development and investment companies, giving a clear visibility on the Group's revenues and earnings over the medium term and is to be recognized as revenues and profits in the following 5 years.

Massive liquidity unlocked since mid-2020 through innovative transactions with prominent financial institutions

Starting 2020, TMG Holding's management was also focused on unlocking new liquidity required to proceed with new investments and accordingly it has devised [4] unique and strategically important transactions with high-profile partners focusing on accelerating sales, profit recognition, uptake of existing unsold inventory and further de-risking of our robust business model.

These four large scale transactions could be summarized as follows:

• Starting August 2020, TMG Holding has successfully entered into the first transaction which entailed a strategic alliance with First Design Company which is owned by National Bank of Egypt and Banque Misr, the two largest and oldest operating Egyptian banks, to develop around 335 thousand square meters of land located in Al Rehab and Madinaty cities, against cash proceeds of EGP4.0bn collected between September 2020 and March 2021. The land plots will be developed by TMG Holding into quality mixed-use projects (residential neighbourhoods, retail outlets, and offices) starting from 2023, leveraging on TMG's unmatched market expertise, high-quality infrastructure and its vibrant and ever-growing communities of Al Rehab and Madinaty. Capital expenditure required for the development of these lands will be financed through the off-plan sales business model. The new projects will contribute a new type of high-quality product in the two cities and further improve the quality of services available to their estimated 700,000 residents, promoting new demand, and ongoing population build-up and inbound footfall and thus giving rise to significant monetary and strategic value to all parties. Management believes that this was one of the key reasons encouraging the two banks to enter into such an alliance. Excess liquidity from the transaction was used for early repayment of various liabilities, significantly strengthening the balance sheet as a precaution against any potential macroeconomic volatility during 2021, 2022 and 2023 and risks related to the ongoing COVID-19 pandemic.
• The second large-scale transaction was entered into in December 2020 and involved bulk sale of a pool of non- residential assets worth EGP1.5bn to an entity owned by institutional investors.
• Furthermore, in May 2021 the Group concluded another bulk sale, composed primarily of the yet unsold stock of non-residential units nearing completion in Madinaty and Al Rehab, valued at some EGP1.7bn, to Rawasy - a real estate investment arm of National Bank of Egypt and Banque Misr.
• Majority of the cash proceeds from these two transactions have already been collected by the Group.
• Last but not least, in June 2021, TMG concluded its fourth transaction and the second with Rawasy, valued at a massive EGP9bn, pertaining to some non-residential assets in Madinaty currently under development. This last transaction will result in gradual sales for the Group over the coming three quarters. It will also generate

TMG Holding S.A.E.	ﺔﻋﻮﻤﺠﻣ	( [phone]	Publicly held since 2007
34/36 Mossadek St., Dokki	عرﺎﺷ،ق٣٦ﺪﺼ/٣٤ﻣ	[e-mail]	EGX: TMGH.CA / TMGH EY	3/8
Giza, Egypt	،ةﺰﻴﺠﻟا	www.talaatmoustafa.com

1H2021 earnings release

Cairo | August 2021

additional revenues for the Group to be recognized until 2023. TMG Holding has already collected EGP3.5bn of cash proceeds from this transaction, with the reminder to be collected in three instalments during 2022-2024. The upcoming remaining instalments will be used for investment in Noor, based on our detailed studies. That said, management believes that all required funding for Noor project is already in place.

As the Group retains the role of property managers for these respective units, these bulk sales will facilitate a smooth lease out process, and this will positively contribute to footfall and rental yields achieved elsewhere. More importantly, these transactions have a positive impact on sales, liquidity and profitability and help to mitigate the risks inherent to COVID-19 pandemic, providing liquidity available for early prepayment of various commitments and also providing liquidity for the investment in Noor.

TMG Holding S.A.E.	ﺔﻋﻮﻤﺠﻣ	( [phone]	Publicly held since 2007
34/36 Mossadek St., Dokki	عرﺎﺷ،ق٣٦ﺪﺼ/٣٤ﻣ	[e-mail]	EGX: TMGH.CA / TMGH EY	4/8
Giza, Egypt	،ةﺰﻴﺠﻟا	www.talaatmoustafa.com

1H2021 earnings release

Cairo | August 2021

Hotels and Resorts segment performance

Operational and financial results of the company's hotel segment during 1H2021 have shown significant improvement compared to the last three quarters of 2020 which were marked by global challenges related to the COVID-19 pandemic and the resulting pressure on global travel patterns. Total revenue from hotel operations in 1H2021 came in at EGP433mn, driven by an average occupancy of 35.5% and Average Room rate of EGP3,614, posting a strong growth of 16.3% y-o-y. Notably, FS Sharm El Sheikh delivered strong improvement in its performance, with occupancy of 44.3% in 1H2021, significantly above the budget of 34.2% and 1H2020 result of just 16%, when COVID-19 impact was not yet as prominent as for the reminder of FY2020. Revenue of FS Sharm El Sheikh came in at EGP152mn in 1H2021, significantly higher than EGP54.5mn reported in 1H2020. The property delivered positive EBITDA of EGP31.5mn, contributing the lion's share of the total consolidated hospitality EBITDA of EGP55.5mn achieved in 1H2021.

Management remains confident that the long-term potential and outlook for the segment remains positive, with current global headwinds for the travel industry being temporary and expected to resolve gradually, especially on the back of global COVID-19 vaccine rollout which should encourage more travel during the remainder of 2021 and onwards.

Hotel KPI summary

		Four Seasons Nile Plaza				Four Seasons San Stefano
	1H2020	1H2021	2Q2020	2Q2021		1H2020	1H2021	2Q2020	2Q2021
ARR [EGP]	4,320	3,816	2,385	3,585	3,719	4,631	4,641	4,504
ARR [USD]	274	243	150	229	236	295	292	288
Occupancy	35.4%	35.4%	5.1%	34.4%	24.8%	44.9%	10.9%	47.5%
GOP [EGPmn]	44	61	-40	28	-13	22	-13	12
GOP margin	23.9%	28.2%	-476.5%	28.9%	-25.5%	18.2%	-102.7%	21.2%
EBITDA [EGPmn]	35	51	-35	23	-15	17	-13	9.9
EBITDA margin	19.3%	23.4%	-409.9%	24.2%	-30.5%	14.1%	-105.1%	17.7%
	Four Seasons Sharm El Sheikh			Kempinski Nile Hotel
	1H2020	1H2021	2Q2020	2Q2021		1H2020	1H2021	2Q2020	2Q2021
ARR [EGP]	4,053	5,035	2,866	5,746	2,082	1,751	1,381	1,642
ARR [USD]	257	321	180	368	132	112	87	105
Occupancy	16.0%	47.4%	5.3%	44.0%	35.6%	41.8%	1.6%	42.4%
GOP [EGPmn]	-28	56	-22	27	7	8	-8	5
GOP margin	-52.3%	30.1%	-172.8%	33.0%	20.7%	13.9%	-811.7%	18.9%
EBITDA [EGPmn]	-31	42	-21	21	3	5	-9	2.1
EBITDA margin	-57.2%	22.3%	-168.5%	25.2%	7.4%	8.6%	-919.4%	8.0%

TMG Holding S.A.E.	ﺔﻋﻮﻤﺠﻣ	( [phone]	Publicly held since 2007
34/36 Mossadek St., Dokki	عرﺎﺷ،ق٣٦ﺪﺼ/٣٤ﻣ	[e-mail]	EGX: TMGH.CA / TMGH EY	5/8
Giza, Egypt	،ةﺰﻴﺠﻟا	www.talaatmoustafa.com