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Investor PresentationQ4 2018
2
What to look forward to
Investment
thesis3
King Abdullah
Economic City4
How we are
different5
Business
model6-9
Financial
position
10-
13
Intrinsic &
future value
14-
29
Management
team
30-
31
Additional
information
32-
39
Financial
results 40-
43
3
• Supported by Saudi Vision 2030
• Well positioned to benefit from strong demand and favourable outlook, driven by social,
demographic and macroeconomic tailwinds
• Creating a stable business ecosystem to attract investment (FDI, third party investment)
• Developing a logistics gateway to capitalize on KAEC’s strategic location on the Red
Sea coast
• Establishing a manufacturing hub, focusing on high-growth non-oil industries
• Creating a tourism and leisure destination to meet demand from domestic and
international tourism
• Supporting the development and activities of SMEs and entrepreneurs
• Fostering a modern Saudi lifestyle through fully serviced residential communities
• Unique business model with a diversified asset base with a long term goal of delivering
results to shareholders
• Portfolio of built assets consists of:
• Residential communities and industrial zone, with land and developed properties that
are either sold or leased;
• 50% ownership in King Abdullah Port (KAP), KSA’s 2nd largest deep sea port;
• Commercial assets (hospitality, retail, F&B, office space), generating recurring income
Investment thesis
Developing the
largest privately
funded
new city in the
world
Diversified
portfolio of
assets that
creates long-term
benefits to
shareholders
Clear, focused
strategy aimed
at capitalizing
on emerging
opportunities
Page 4
King Abdullah Economic City
KAEC is a fast growing coastal city in the western region of Saudi Arabia with a booming manufacturing and logistics hub, up and coming vibrant living community and a burgeoning entertainment destination
5
Emaar Economic City – why we are different
Unique business model with a diverse portfolio of real estate and
infrastructure assets, providing synergies and self-sustaining growth
1BUSINESS MODEL
Well-capitalized and growing balance sheet supported by smart
cash-flow management
2FINANCIAL POSITION
Significant value creation opportunity backed by a focused strategy,
allowing us to grow profitably
3INSTRINSIC & FUTURE VALUE
Experienced and dynamic management team with a proven track record
of creating value and managing risk
4MANAGEMENT TEAM
Unique business model with a diverse portfolio
of real estate and infrastructure assets,
providing synergies and self-sustaining growth
1 BUSINESS MODEL
7
Our approach and unique competitive advantageWe take a long-term, value focused view and leverage our unique proposition to expand in a
measured way
Our balanced approach
Identify opportunity
Develop relevant assets and smartly
manage project pipeline
Actively manage assets
Diversify revenue source
Provide earnings visibility for shareholders in various stages of economic cycles
1
Our competitive advantage
Partnership & endorsement from various Government entities
Strategic location and ease of access
Sole owner and operator of mega greenfield project in
KSA
8
Our business model
Residential
CashDebt and Equity
Land Bank168 million sqm
+
Primary infrastructure supports assets and increases base land value
Port
Sales
Cover debt obligations
IndustrialCommercial
& LeisureRetail and
F&BPort
City Operations
Ca
pE
X+
O
pE
X
Leasing
Operating Activities
ChargesOne time revenue Recurring revenue
Fund projects
Pay dividends
Re
inve
stm
en
t
Banks and creditors
Investors
1Our business model will help us to deliver financial returns in a sustainable way
Disbursement
Long term
9
Multiplied value
Building foundations & early development
Aggressive development & expansionNew city was born
Modern city with organic population growth
Vibrant city contributing to KSA’s socio-economic development
Land acquisition value
= SAR 3.8 bnValue of Investment
Property = SAR 48 bn*
Multiplied value
Funded via debt, operating income
2006
2035
Self-sustaining
In excess ofSR 30 bn capital invested since inception (by EEC and third parties)
2018
1
Operations & maintenance
* Based on fair value assessment survey conducted by Valustrat as of Dec 31, 2018
Well-capitalized and growing balance sheet
supported by smart cash-flow management
2 FINANCIAL POSITION
11
4,171
3,780
3,258
2,605
1,421
1,183
1,066
1,047932
298
Housing
Land (purchase)
Primary infrastructure
Port
Commercial, Hospitality & Leisure
Industrial Valley Infrastructure
Residential land development
Fixed Assets
Utilities
Education & Healthcare
Invested capital and debt & equity profile
Invested capital, healthy financial leverage has enabled us to build KAEC, and will continue to
support our growth
2
8.5
5
5
Paid up Capital
MoF Loan
Commercial Loan
• Financial leverage is significantly lower than regional
and international property developers
Breakdown of EEC’s invested capital (SAR mn) Debt and equity (SAR bn)
• KAEC is the largest privately funded city in the world
SAR
18.5 bn
debt and
paid up
capital
SAR
19.8 bn
invested in
building
KAEC (as
of Dec
2018)
12
Cash and liquidity analysis
Strong liquidity position with a comfortable cash buffer to help fund current projects and pay down
debt
SA
R M
illio
ns
• Combination of liquid assets and unused commercial loans can cover construction in progress
• Comfortably cover our short-term debt obligations
2
SA
R M
illio
ns
738 768
2017 2018
AR
1,228
603
524
2017
50
2018
1,752
653
Cash & cash equivalents
Murabaha term deposits
1.13
Current Ratio (as of Dec 31, 2018)
Capital Work in Progress (as of Dec 31, 2018)
2.28
SA
R B
illio
ns
13
Recurring revenue is contributing to a greater portion of our profit, and as more operating assets come online we expect that contribution to escalate
Number of projects under operation
2 Recurring income from operational assets
• Over 30 projects earmarked for leisure and tourism segment
• Smart budgeting and liquidity management to cover SAR 16 bn
CAPEX over next 7 years
SA
R M
illi
on
s
6 3281 116
186237 222 251
348
1,022
1,351
1,668
2,083
2,473
3,039
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Recurring revenue & planned CAPEX
Budgeted CAPEX Recurring Income (Actual)
Recurring Income (Projected)
19
34
6063
160
20182015 20172016 2025
Significant value creation opportunity backed
by a focused strategy, allowing us to grow
profitably
3 INTRINSIC & FUTURE VALUE
15
3.9
12.5
18.8
41.1
54.0
47.7
13.8
8.27.1
11.0 11.5 6.7
DEC 2006 DEC 2009 DEC 2012 DEC 2015 DEC 2017 DEC 2018
Valuation Mkt Cap
Valuation vs. Market Capitalization
SA
R B
illio
ns
We are trading at a discount to our intrinsic value; our stock price does not reflect the strength of our assets or our future earnings potential
3 Intrinsic value
Initial developments,
infrastructure
IV, Residential
developments
KAP, IV, residential
developments,
hospitality
KAP, IV, residential developments, hospitality, leisure amenities
So
urc
e o
f
va
lua
tio
n
Purchase
price
Internal
estimation JLL
Commercial
Banks Valustrat Valustrat
16
There are some imminent catalysts that are set to increase our value in the short to mid-term
3 Near term value enhancers
Easy access to 10
million people
within 1 hour of
KAEC.
Haramain high-
speed rail is now
operational
Additional 30 IV
licensed
companies
expected to
come online in 12-18
months
KAP’s operational
volume rose
significantly. YOY
Container volume up
by 40% and no. of
Vessel calls up by
20%, Bulk and
general cargo
handling operation
started and 484 MT of
cargo already
handled
1,023 ready to
move vertical units;
464 residential land
units readily
available for sale
and 546 near
completion
Imminent opening of
2 specialty, high
quality assets;
development of a
mega water park
17
Future outlook3
Well integrated and focused strategy to capitalize on new
demand trends
Macroeconomic and social tailwinds
accelerating demand
Multiplied value for all major stake holders
Shareholders
Residents
KSA
Business owners
We are well positioned to benefit from the socio-economic changes underway in Saudi Arabia and are capitalizing on those opportunities by having a focused strategy for each segment
Saudi Vision 2030
Growing population, with
young demographic profile
Regulation and changes to
industry framework
Modernization of Saudi
Arabian society
Industry,
Commerce
& SME
Leisure &
Tourism
Residential
KAEC
18
Unlocking value via industry & commerce segment033
Ease of foreign business establishment
Growing private sector contribution to GDP
Underdeveloped specialized non-oil industrial zones
Increasing the role of SMEs in the economy
Fast growing regional market of over 600 million people
Increase in Red Sea cross border trade
Strategically located on the Chinese maritime trade
route, connecting Asia, Europe and Africa
Attract greater number of non-oil manufacturing
companies
Increase container volumes in port by capturing greater
volume of trade via Red Sea
Catering to underserved local manufacturing industries
(automotive, pharmaceuticals etc.)
Entice entrepreneurs to establish presence in KAEC
Operating environment
Opportunity Development of re-export zone
On schedule development of KAP
On schedule development of IV
Gas zone to provide feedstock for
industrials
Tech hub to support data centers
Managing a viable entrepreneur/start
up ecosystem
Current activity
19
Industrial Valley
36 companies in operation; 30 under construction; 116 licensed
Land value tripled since 2012
Phase 1
(launched 2007)
22 thousand sqm leased
Phase 2
(launched 2011)
16 thousand sqm sold
7 thousand sqm leased
Phase 3
(launched 2014)
21 thousand sqm sold
92 thousand sqm leased
Phase 4
(launched 2017)
369 thousand sqm sold
033
¾ of developed industrial land sold
20
4 King Abdullah Port
Commercial operation began in 2014
3
2nd fastest
growing port in
2018.
(Alphaliner)
2nd Largest port
in KSA by
capacity &
market share
and throughput.
82nd largest port
in the world
Multipurpose
Terminal
handled Bulk
cargo
throughput of
689k Tons in
2018, up by
560% vs. 2017
At par with
world’s deepest
water berths
(18m)
Reached
4.5 million TEU
capacity
in 4 years
SAR 5.2 bn initial invested capital
Capacity of
20m TEU,
15m tons of
Bulk cargo and
1.5m vehicles
upon
completion
959 vessels
received in
2018, up by
16% vs. 2017
70% Customs
clearances are
completed
within 24 hours
Crown Prince Muhammad Bin Salman, Deputy Premier and Minister of
Defense, inaugurated the King Abdullah Port on 11 Feb 2019
21
Supporting youth and entrepreneurship
Circle 301 is an EEC initiative which serves to create an efficient start-up ecosystem
3
Circle
301
KNOWLEDGE
EMPOWERMENT
GOVERNMENT
SERVICES
ENTREPRENEURSHIP
HUB
VENTURE
CAPITAL (SAR 75
MILLION FUND)
SCHOLARSHIP
HOUSING
SOLUTIONS
22
Unlocking value via residential segment033
Growing Saudi population with a young demographic
profile
Shifting mindset of young Saudis towards modernity
Expanded private-sector role in mortgage market
Attract first-time home buyers
Cater to various income groups and psychographic
needs
Operating environment
Opportunity Develop high end and middle income
housing communities
Building unique, upscale golf
community
Sports complex and other amenities
Enhancing landscaping and
beachfront
Current activity
23
Complete portfolio of housing solutions readily available
Bay La Sun
is an urban
district
Residential communities
72% of launched
vertical units
Sold / Leased
87% of launched
residential
land sold
3
Al Murooj
is an upmarket
community
(golf or
beachfront
options)
Al Talah
Gardens
is a series of mid-
income housing
community villas
and community
plots on the
coastal road
Al Waha
is an award
winning
mid-income
district
Miram Al-
Hejaz
is a mid-
income
community
close to
Haramain
station
Al Shurooq
is suitable for
first time home
owners
The Village
is located
within the
Industrial
Valley
Many
upcoming
unique,
modern
residential
communities
24
Unlocking value through leisure & tourism 033
Anticipated introduction of leisure tourist visa
Increase in number of Muslim pilgrims
Boom in nascent entertainment sector
Latent demand for international quality entertainment
and leisure
Convert repeat visitors to home owners
Attract greater number of visitors by positioning KAEC
as leisure lifestyle and tourism destination
Leverage location and Haramain rail, (catchment area
of 10m people within 1 hour of KAEC)
Operating environment
Opportunity
Over 30 projects under development
including:
• Sports complex (Esmeralda)
• Marina and yacht club
• Souq
• Malls
• Islamic exhibition center
• Tethered balloon
• Laguna (amusement & waterpark)
• Motor park
• Desert camps
• Culinary and aviation academy
Current activity
25
Booming leisure and entertainment destination
2018
700,000 visitors
2017
400,000 visitors
Visitors
2019
1 million visitors
(expected)
Integrated
resorts and
independent
hotels
Bay La Sun
Hotel and Marina
The Views
World-class
golf course
Royal Greens
selected for PGA
European Tour
Championship
2019-21
Independent
exhibition
centre
Bay X exhibition
centre to offer
2,800m of hall
space
Juman Park
Over 70,000
sqm of family
friendly park,
walking, cycling
and games
30+ projects
under
development
Theme park,
water park,
desert camping,
motor park
Fully
integrated
leisure and
entertainment
Lagoona:
water-park,
ecology park,
outlet mall
033 Leisure and tourism assetsInvested around SAR 2bn in developing a premier leisure and entertainment destination
26
Lagoona
A large scale leisure destination situated within the lagoon waterfront; designed
around a unique blend of local and international IP
033
27
Bay la Sun Yacht Club and Marina
Luxury marine and
watersports facility with
berthing for private boats
Opening up nascent
marine tourism industry
for KAEC
033
28
Royal Greens Golf and Country Club
The Royal Greens Golf
and Country Club is an
exclusive, first-class golfing
experience.
Successfully hosted the
European PGA Tour
Championship in Feb
2019. Also, scheduled to
host in 2020 and 2021.
Formally opened in April 2018, the first of its kind golf course in the Kingdom
033
29
Esmeralda Sports & Wellness Center
First of its kind family
fitness and leisure center
in the kingdom
Won 2017 International
Property Award for Best
International Leisure
Development
Expected to open in Q3 2019
033
4 MANAGEMENT TEAMExperienced and dynamic management team with a
proven track record of creating value and managing risk
31
World-class management teamLocal and international management team with proven track record of creating value and managing risk
4
Board of Directors
H.E. MR. MOHAMED
ALABBAR
Chairman
MR. ABDULLAH
KAMEL
Vice Chairman
MR. AHMED
LINJAWY
Group CEO
Board Members
H.E. ENG.
KHALID
AL-MOLHEM
H.E. SAUD
AL-SALEH
MR. JAMAL
BIN
THENIYEH
MR. AHMED
LINJAWY
ENG. MR.
ABDULRAHMAN
AL-ROWAITA
MR. AHMED
JAWA
Management Team
ENG. MR.
ABDULLAH
TAIBAH
ADDITIONAL INFORMATION
33
Prince Mohammad Bin Salman Collegeof Business and Entrepreneurship (MBSC)
1st private business and
entrepreneurship college
in Saudi Arabia offering
MBA program
Inspired by Vision 2030
Female and male students
taught by high caliber
professors
Practical learning and academic teachings to
cultivate a well rounded entrepreneurial culture
Under the umbrella of MISK
Foundation
Established in partnership with Babson Global, Lockheed Martin and MISK foundation
34
GEMS World Academy was set up in 2014, now with a capacity of 2,000 students, offering an international K-12 education
Tomouh provides thousands of young Saudi men and women with the skills and training required to compete in the modern work environment
Education & training
Vocational training facilities including: • Culinary Academy, in partnership with
MISK Foundation• Aviation Academy in partnership with
GACA
Offering every generation the ability to explore, learn, create and teach
35
Haramain Station
The High Speed Railway will reduce the travel times significantly making KAEC an ideal housing location and leisure destination
450 km high speed train
• 25 minutes to new Jeddah
International Airport
• 35 minutes to downtown
Jeddah
• 55 minutes to Makkah
• 55 minutes to Medina
Area around Haramain
Station will be the new
downtown with retail,
housing and other
commercial centers
Harmain station is currently operational
36
KAEC
Strategic geographic location
Prime location along the Red Sea trade route
Tourism
attraction: Red Sea coastal city
located close to
Jeddah offering a
variety of
entertainment and
leisure facilities
Business
advantage:Opportunity to join
the Western
Region’s well-
established
international and
local business
clusters
Commerce &
Trade advantage: >10% of world trade
passes through the
Red Sea which is a
prime East-West hub
on the main trade
route between Asia,
Europe and Africa
Gateway to the
Middle East’s 400+
million population
Resident
attraction: Proximity to Jeddah,
Makkah, Madinah and
well connected by every
mode of transport to
other cities
37
KAEC’s development
38
Hard and soft infrastructure All of KAEC’s offerings are underpinned by high quality infrastructure that serves businesses, residents and visitors
Secondary
roads
84.5 km
Primary roads
83 km
Water network
127.6 km
Bicycle ways
11.0 km
12 Shops and
Retail
15 tenants
office space
Sewage network
94.1 km
5 mosques
Electricity
network
425.8 km
19 Restaurants
and cafes
2 renowned
education
institutions
Water ways
3.1 km
1 fire, 2 security
stations
Gas stations
Sports arenas
and facilities
2 clinics
Parks
Irrigation
121.2 km
Telecom
network
319.7 km
39
Industrial Valley
Home to over 110 leading global and local non-oil businesses
6 fully serviced clusters
Building
materials
Logistics
Consumer
Goods
Pharma
Automotive
Packaging
APPENDIX: Q4 2018 FINANCIAL RESULTS
41
Quarterly Revenue and Net Income 2017-2018
Revenue and Net Income (SAR Mn)
-19
35 27
180
3
-45-135
47
318223 269
628
281 244
112
371
Q1 2017 Q1 2018 Q4 2018Q2 2017 Q3 2018Q3 2017 Q4 2017 Q2 2018
Industrial Valley
166(47%)
132(37%)
Residential
57(16%)
Other
2018 Order intake breakdown(%)
2018 Order intake
SAR 354Mn
Net Income Revenue
562(56%)
Residential
251(25%)
146(15%)
49(5%)
Industrial Valley
Hospitality & Leisure
Other
1%
2018 Revenue breakdown(%)
42
2018 Revenue breakdown by segmentS
AR
mill
ion
s
24% 69%
Op
era
tin
g p
rofit
ma
rgin
• Residential and Industrial business segments are very profitable and are helping fund the expansion into
hospitality and leisure
562
1,008
25149
146
Total RevenueHospitality & LeisureResidential Industrial Valley Other
43
Intrinsic valueAppraised value of investment property, as disclosed in the financial statements, implies high upside potential to market capitalization
Investment property valued at SAR
47.7 billion
based on fair value assessment survey conducted by Valustrat
as of Dec 31, 2018
Development and Investment
Property on the books in 2018
is SAR 7.1 billion
Market capitalization of the company is
SAR 6.7 billion (as of 31/12/2018)
Va
lue
me
tric
s
44
Units
Residential Vertical Sales Summary
24 (80%)
170 (89%)
93 (65%)
11 (6%)
Beach 2
85 (44%) 50 (26%)
1,050 (73%)
Waha Aptts
Marina 1
114 (78%)
Marina 2
116
Total Verticals
90 (78%)
Marina 3
192
GC1C Villa
147 (82%)
25 (22%)
77 (66%)6 (5%)Marina 4 33 (28%)
Waha Villas
15 (13%)Beach 1
8 (17%)
33 (22%)
49 (42%)42 (36%)
121 (8%)11 (92%)
26 (87%)
13 (9%)
82 (21%)
GC2
388
TG1.3
4 (13%)2 (7%)
38 (83%)
39 (10%)
57 (30%)
1 (0%)
266 (69%)
Waha PH
4 (0%)
38 (26%)
277 (81%)65 (19%)Waha 1BAptts
4 (13%)Waha 1B PH
181 (13%)Shurooq
11 (6%)
206 (14%)
1,023 (28%)435 (12%)
1,441
100%
2,145 (59%)
Waha TH
11 (9%)
33 (18%)
192
116
5 (0%)
116
147
180
30
46
144
342
30
3,608
116 (100%)
116
Sold Leased Inventory Unlaunched Inventory
Hig
h E
nd
Mid
En
dA
ffo
rd-
able
45
Hig
h E
nd
Mid
En
dResidential Land Sales Summary
1 (1%)
379 (72%)
102 (99%)
Total Land
182 (41%) 98 (22%)
BC1
5 (1%)
1 (0%)
387 (98%)
432 (69%)
125 (53%)
BC2
694
1 (0%)
TG1.2
81 (37%)
18(7%)
16 (7%)
138 (63%)BC3
546 (14%)
11 (11%)
274 (98%)
1 (1%)
4,021
91 (88%)
145 (100%)
GC1C
94 (40%)GC3
235 (93%)
521 (75%)
TH4
TG1.1
116 (17%)57
(8%)TG3
32 (6%)TG4
Hejaz
125 (20%)72 (11%)TG5
114 (22%)
464 (12%)3,011 (75%)
5 (2%)
100%
103
393
220
162 (37%)
235
253
145
279
525
629
442
103
Sold Inventory Unlaunched Inventory
46
IV Land Sales Summary
Phase 2.3
2,477 (100%)
2,320 (66%)
204 (40%)
1,197 (68%)
Phase 4F
3,207 (100%)
877 (100%)
3,805 (100%)Phase 2.1
201 (100%)
163 (100%)
Phase 2.5
Phase 3F
897 (100%)Phase 3B
Phase 1A
Phase 3E
965 (75%)
337 (100%)
Phase 4A
311 (60%)Phase 4B
637 (92%)
808 (100%)
2,477
58 (8%)Phase 4D
511 (100%)
599 (100%)Phase 4C
Phase 3C 914 (83%)
Phase 4E
217 (100%)
Phase 4
325 (25%)
572 (32%)
877
Phase 3D
Phase 1B
1,186 (34%)
100%
Phase 2.2
191 (17%)
956
3,110 (94%)194 (6%)
1,367 (100%)
3,733 (13%)
Phase 3A
956 (100%)
15,180 (53%)
BRZ
1,290
9,693 (34%)Total Land
Phase 2.2
3,805
3,207
201
897
337
514
696
511
1,769
163
217
3,506
1,105
3,304
1,367
808
28,606
599
LeasedSold Inventory
SALE
PH
ASE
SLE
ASE
PH
ASE
S
Developed Under Development Not Started
Page 47
[email protected] T. +966 12 510 6955KAEC.net/Investor-Relations
KAEC Investor Relations APP44
48
DISCLAIMER
This presentation (Presentation) has been prepared by Emaar the Economic City (EEC) and/or its subsidiaries based on information available to it internally and thirdparty sources. This Presentation does not purport to contain all the information that a prospective investor may require in connection with any potential investment inEEC. You should not treat the contents of this Presentation, or any information provided in connection with it, as financial advice, financial product advice or advicerelating to legal, taxation or investment matters. No representation or warranty is made by EEC or any of its advisers, agents or employees as to the accuracy,completeness or reasonableness of the information in this Presentation or provided in connection with it. No information, including but not limited to numbers, maps,drawings, or maps contained in this Presentation or any other written or oral communication in connection with it is, or shall be relied upon as, a promise orrepresentation and no representation or warranty is made as to the accuracy or attainability of any estimates, forecasts or projections set out in this Presentation. Noliability will attach to EEC, with respect to any such information, estimates, forecasts or projections. EEC does not accept responsibility or liability for any loss ordamage suffered or incurred by you or any other person or entity however caused (including, without limitation, negligence) relating in any way to this Presentationincluding, without limitation, the information contained in or provided in connection with it, any errors or omissions from it however caused (including without limitation,where caused by third parties), lack of accuracy, completeness, currency or reliability or you, or any other person or entity, placing any reliance on this Presentation, itsaccuracy, completeness, currency or reliability. EEC does not accept any responsibility to inform you of any matter arising or coming to EEC’s notice after the date ofthis Presentation which may affect any matter referred to in this Presentation. Any liability of EEC, their advisers, agents and employees to you or to any other personor entity arising out of this Presentation including pursuant to any applicable Saudi law is, to the maximum extent permitted by law, expressly disclaimed and excluded.
This Presentation contains reference to certain intentions, expectations, future plans, strategy and prospects of EEC. Those intentions, expectations, future plans,strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affectedby known and unknown risks. The performance and operations of EEC may be influenced by a number of factors, many of which are outside the control of EEC. Norepresentation or warranty, express or implied, is made by EEC, or any of its directors, officers, employees, advisers or agents that any intentions, expectations orplans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties that may cause EEC’s actual futureresults, performance or achievements to be materially different from those expected, planned or intended, Recipients should not place undue reliance on theseintentions, expectations, future plans, strategy and prospects. EEC does not warrant or represent that the actual results, performance or achievements will be asexpected, planned or intended.