Board of Director ’ s Letter
Implementation of the first phase also saw an improvement in operational performance and a review of pricing strategies in public good services markets and the AlTameer Public Transportation Center. This led to an increase in rental and operational revenues , diversification of revenue sources , and the introduction of new units in the market as well as new sources of income , which recorded an increase of 16% in recurring revenue compared to the previous year. Work was also done to utilize an area of 100 thousand m2 within AlTameer International Car Auction through contracting with a driving school , which is expected to bring an annual revenue ranging between 5-12 Mn SAR , through rental income and profit sharing. These efforts have contributed to raising the quality of the company’s recurring revenues in line with its objective towards achieving sustainable growth. Regarding investment and real estate development , the company inked a 25-year framework agreement with the Misk Foundation , through which the company will develop educational facilities to be operated by Misk in a BTS (Built-to-suit) arrangement. The first of these projects will be the development of the first educational facility on lands owned by an ARDCO-led consortium in Tilal AlRiyadh , AlMalqa district. The company also signed a memorandum of understanding with Riyadh Holding Company to establish a new entity charged with investment , management , development and centralization in the operation of all markets owned by the two companies in AlDirah district (AlTameer Wholesale Market , Al-Meaigliyah Commercial Center , AlDirah Markets) as well as improving the city’s urban landscape and developing it into a tourist destination. Through this , the agreement seeks to maximize the return on asset. In terms of human capital , ARDCO is proud of the increase in its Saudi workforce from 52% in 2022 to 75% in 2023 , as well as the doubling of female employees in our organization from approximately 4% of the workforce in 2022 to 8% in 2023. We look to continue efforts to improve our work environment and culture as well as enhance inclusion and diversity within the organization. The company achieved revenues amounting to 339 Mn SAR for our main business in the fiscal year ending December 31 , 2023 . This is an increase of 31% over the previous year , while total revenues amounted to 486 Mn SAR , an increase of 3% over the previous year. This comes despite the decrease in income from Tanal , an associate company , by 49% , as a result of the decrease in the volume of land sales compared to 2022 , regardless of the increase in average selling prices. This contributed to achieving profits of 271 Mn SAR in 2023 compared to 300 Mn SAR for the previous year. In conclusion , we would like to express our gratitude to all who contributed to achieving all the successes we have witnessed in 2023 , particularly all our valued customers and suppliers for their constant cooperation. And to our shareholders , we extend our sincere gratitude for your trust and support.
In 2023, the Riyadh Development Company experienced a significant turning point in its journey, after 30 years of success and progress. At the beginning of the year, the company launched its “ Investing for Growth ” strategy, culminating all the efforts made towards institutional development in 2022. Some of these efforts included the modernization of the company ’ s basic infrastructure, digital & regulatory systems, and attracting exceptional talent to lead and implement the transformation journey. The company’s new strategy aims to achieve sustainable growth and strive towards excellence in real estate development and development management , as well as to strengthen our leading position in the fresh produce sector and public good service markets through their development and expanding into its value chain. This will allow us to raise our operational efficiency and property management , aiming to diversify our investments and maximize the return on our asset portfolio , ultimately maximizing total shareholder return. We are committed to achieving our objectives with a business model that seeks to create positive impact around us and our community as well as achieve sustainability in its broadest sense , reflecting positively on our clients , colleagues , partners , and shareholders. The strategy also establishes a set of key targets for the company , including doubling our net income to more than 500 Mn SAR , raising recurring revenues to one Bn SAR , and restructuring investments to shift from an all-equity structure to one that comprises of a 28% leverage of the value of assets within 5 years , reaching 23% by 2032. This is a key enabler in allowing the company to enter into new projects worth more than 6 Bn SAR by 2032. The company’s strategy outlines a roadmap with three main phases towards achieving its objectives. The first phase includes improving the operational performance of current assets. The second phase will include the diversification and development of its investment portfolio in target sectors. The third phase seeks to achieve sustainable growth and explore promising opportunities. In 2023 , the company focused its efforts on executing the first phase of the strategy. In particular , it worked towards improving the operational performance of the company’s current assets by raising operational efficiency and upgrading its business infrastructure , maximizing the return on the value of its current assets , and exiting underutilized and low-performing assets. As a result , the company invested in maintaining , restoring and improving all of the company’s real estate assets and centers in 2022 and 2023 , obtaining necessary civil defense certificates and safety licenses. This was followed by the issuance of municipal licenses necessary to carry out various activities and contributed to an increase in the occupancy rate to 94% in 2023 , driven mainly by an increase in the occupancy rate in Oteiqah Central Market from 67% to 95%. It also led to an increase in market revenues in 2023 by 39 Mn SAR in 2023 compared to the prior , as it rose from 259 Mn to 298 Mn. This was achieved despite the termination of the AlBatha Meat & Vegetables Market operation , which was exited due to its lack of economic feasibility as a result of the dilapidation of its infrastructure. In its stead , work is underway to establish a high-standard meat market in Oteiqah Central Market. Investment was also made in a multi-purpose area in Oteiqah Central Market to host our fresh produce seasons throughout the year. This allowed us to host the second edition of the Oteiqah Dates Season in the market , where it attracted 800 thousand visitors , compared to 300 thousand visitors in the previous edition; saw the trade of over 14 thousand tons of dates; and rented space to more than 70 traders , with a marked rise in trader and customer satisfaction and sentiment compared to the first edition.
Board of Directors Riyadh Development Company
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