Transcript & Meeting with January 22nd 2007

Aramex PJSC
Investor Presentation
1st quarter 2015
 Company Profile
 Company Structure
 Strategic Direction
 Financial Analysis
Aramex Quick Overview
Highlights
Background
 Established: 1982, 27 years in operation
 Hubs: Main hubs in Amman, Dubai, Hong Kong, Liege, London, New York and Singapore.
 Offices: 309 offices in 200 major cities worldwide
 Staff: Over 10,295 employees
 Founder of the Global Distribution Alliance (GDA) and co-founder of the WFA World Freight Alliance.
 Activities: Aramex is a logistics and supply chain management company providing total transportation
solutions – One Stop Shop.
Financial
Performance
Year 2014
 Revenue (Year 2014): US$994 million
 Gross Margin (Year 2014): 54.9%
 Net Income (Year 2014): US$86.7 million
 Net Margin: (Year 2014 ) 8.7%
 Shareholders Equity (Year 2014): US$596 million
 Total Assets (Year 2014): US$873 million
 Cash (Year 2014): US$169 million
Financial
Performance
1st Q - 2015
 Revenue Q1-2015): US$253 million
 Gross Margin (Q1-2015): 55.9%
 Net Income Q1-2015): US$23.6 million
 Net Margin: (Q1-2015 ) 9.3%
 Shareholders Equity (Q1-2015): US$610 million
 Total Assets (Q1-2015): US$872 million
 Cash (Q1-2015): US$161.5 million
Aramex Background History
Ownership
1982
1997
2002
2005
Established as a
Privately Held
Company
First Arab-based
Company on
NASDAQ
Returned to
Private
Ownership
Public on Dubai
Financial Market
Product Progression
1982
Express
Wholesale
Delivery
1984
Express
Retail
1985
Multiple
Product
Offering
1997
2004
Value Added
Services
Supply Chain
Solutions
Shareholders Value Creation
Growth in Aramex’s Value (US$ Million)
Value
1400
1200
1000
800
1,379
600
829
400
718
1,212
1,236
Dec-13
Dec-14
797
569
200
0
25
65
185
1997 2002- De2005Listing on listing from Listing on
Nasdaq
Nasdaq
DFM
Dec-09
Dec-10
Dec-11
Dec-12
Mar-15
Aramex Geographic Coverage
Aramex People
Growth in Number of Staff in the past 7 years
12,943
11,432 11,649
9,500
7600
6,031
8100
8675
6600
4,002
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sustainability
Key Sustainability Issues
Aramex is one of the first companies in the region to report on its sustainable business practices
•
Community Empowerment: Community based projects that target
community and youth’s needs through a highly interactive participatory
approach. Partners include NGOs, private sector, public sector,
community centers, etc.
•
Youth Empowerment & Education: Providing internship and training
opportunities to students, as well as developing applied training
programs in partnership with universities.
•
Sports: Sponsorship of sports events, the Riyadi Club (Basketball and
Squash) in Jordan, Jeddah United (the first women basketball team in
Saudi Arabia, etc.)
•
Environment: Introduction of Hybrid cars into aramex fleet, change to
unleaded gas, using biodegradable and recycled material, commitment
to become the first carbon neutral company in the region, etc.
•
Emergency Relief : Providing logistics support and aid donation
campaigns to disaster stricken areas such as: Asia Tsunami, Pakistan
Earthquake, Lebanon War, Gaza War, etc.
 Company Profile
 Company Structure
 Strategic Direction
 Financial Analysis
Asset Light Model
•
Aramex asset-light business model translated into a high degree of flexibility and
agility in pursuing opportunities as well as efficient cost management.
•
During the recession, Aramex asset-light business model allowed the company to
create considerable efficiencies improving both the gross profit and net profit margins.
(Gross Profit) & (Net Income) Margins
60%
Margins
50%
40%
30%
GP%
20%
N.I%
10%
0%
2010
2011
2012
2013
Years
2014
Q1-2015
The Aramex Model
Highlights
Federal System
Front
Line
Global
Services
Office
• Federation of interdependent companies, that function as an
independent unit managed by a local CEO
• Each unit sets its own business plans, objectives and budgets in line
with the corporate strategy
• Manages interaction among members of the federation
• Sets policies, procedures, & monitors compliance
• Provides marketing, network infrastructure & IT infrastructure
• Aramex geographic regions are divided into five areas: Levant, Gulf,
Africa, Asia and West (Europe and US)
Area
Boards
• Each area has a board composed of the senior regional manager, and
other functional directors …etc
• Area boards are responsible for the area’s strategic direction,
budgeting, performance, and operations
The Aramex Model
Culture and Values
Highlights
Unique
Corporate
Culture
 Belief that people are Aramex’s most significant asset.
 Encouraging creativity, innovation and entrepreneurship.
 Empowering employees through continuous development &
training.
 Promotion from within
 Committed to economic and social development as well as
environmentally friendly practices.
Customer centric and dedication to service excellence
Key
Values
Decentralized and flat organization
Trust based system that empowers the front line
 Company Profile
 Company Structure
 Strategic Direction
 Financial Analysis
Vision: To enable and facilitate regional & global trade & commerce
• Emerging markets: Capitalizing on experience, technology, product offering
and international network by expanding the geographic reach into emerging
economies with high growth potential.
• Core markets: Leveraging and expanding infrastructure in existing geographic
locations to strengthen market positioning by introducing new products and
services.
• Mediums of geographic expansion:
•
Franchising which will provide Aramex with a revenue stream, requiring minimal
capital and management.
•
Small and medium-sized attractive acquisitions and Joint Ventures which can be
integrated.
Regions Identified for Geographic Expansion
Aramex has extensive knowledge and experience in underdeveloped and developing
markets and sees tremendous value in developing its global network by introducing its
asset light model and product offering into new markets with high growth potential.
Taking the Aramex model to new markets will strengthen its position as a key global
provider specialized in emerging markets while operating a global independent
network:
Potential areas for expansion
1.
Africa and CIS: Aramex is looking to invest in key African and CIS markets that enjoy political stability and
economic growth potentials by working with partners that possess industry knowledge and can benefit from
Aramex’s network and know-how.
2.
Asia: Aramex will further expand its current operations in locations like Singapore, Hong Kong, Indonesia,
Vietnam, while developing its gateways in China and looking for investment opportunities in other South East
Asian countries. The Asian presence aims at servicing important trade routes between Asian markets and
other markets.
3.
India: Aramex has a sizable operation in India that offers international and domestic express service, and is
looking to further enlarge its geographic presence and product offering.
Expansion through Acquisitions
Advantage
Performance
Financial
Management /
Employees
Highlights
 Profitable company with margins in line with Aramex’s margins.
 Capacity to support reasonable levels of leverage to allow for financing.
 Proper financial disciplines with accredited auditors.
 Non-asset based companies.
 Experienced management teams that are willing to continue post acquisition
 Track history of having met projections and budgets
 Diversified client base with minimal reliance on top clients or on network of
agents
 Not part of or affiliated with an already established network
 Strong corporate culture that is in line with Aramex’s
 Ability to change and incorporate the Aramex Accounting and IT systems.
Leveraging Existing Infrastructure
Highlights
Expansion of
Warehousing
Facilities
Acquisition
New Product
Development
Supply chain solutions outsourcing is expanding in the Middle East and South Asia;
warehousing is a critical pre-requisite for offering these services and where appropriate
warehousing space is not available Aramex will invest in purpose built facilities
There are a number of small to medium size businesses within the region that can be
integrated with the existing Aramex operation and produce considerable efficiencies.
Aramex continuously seeks to identify such companies to grow revenues and profit at
higher efficiency.
Aramex has succeeded in introducing new products when it acquired Info-Fort, a
records and information management service provider. The offering has proved to be a
very successful and niche one that has already expanded to 9 countries (GCC, Jordan,
Egypt, Iran) and that has potential to other core markets.
There are also various opportunities across the network, to further develop products
and services, using existing infrastructure.
 Company Profile
 Company Structure
 Strategic Direction
 Financial Analysis
Revenue
Growth in Revenue (US$’000)
CAGR
13.3%
993,711
904,194
836,353
699,971
602,297
2010
2011
2012
2013
2014
Product Distribution
Change in Product Distribution
Year 2014
2010
Logistics
4.7%
Others 7.3%
Express
31.2%
Domestic
15.0%
Logistics
5.4%
Others 5.7%
Domestic
21.4%
Freight
Forwarding
41.8%
Express
34.9%
Freight
Forwarding
32.5%
Geographic Distribution
Change in Geographic Distribution
2010
North
America
2.1%
Year 2014
Asia 8.7%
North
America
2.6%
Europe
18.4%
Asia 10.3%
Europe
14.3%
Middle East
& Africa
70.7%
Middle
East &
Africa
72.8%
Gross Profit & Gross Margin
Growth in Gross Profit (US$’000)
CAGR
13.9 %
53.8%
324,066
2010
52.6%
368,048
2011
53.9%
450,455
2012
Gross Profit
54.2%
489,838
2013
GP%
54.9%
545,317
2014
Net Income & Net Margin
Growth in Net Profit (US$’000)
CAGR
11.8 %
9.2%
8.2%
55,572
57,599
2010
2011
8.4%
7.9%
75,684
66,471
2012
Net Income
2013
Net Margin
8.7%
86,696
2014
Aramex PJSC Income Statement
All values in 000' AED
2009A
2010A
2011A
2012A
2013A
2014A
Q1-2015
Rendering of service
1,960,786
2,211,996
2,570,713
3,071,589
3,320,742
3,649,502
Cost of services
(852,745) (1,021,830) (1,219,022) (1,417,247) (1,521,764) (1,646,771) (410,102)
Continuing operations
Gross profit
Share of results of joint ventures and associates
1,108,041 1,190,166 1,351,691 1,654,342 1,798,978 2,002,731
930,380
520,278
130
(256)
(754)
(3,995)
(4,974)
(3,656)
(744)
(98,814)
(108,285)
(122,418)
(146,880)
(152,497)
(180,125)
(47,044)
Administrative expenses
(390,520)
(410,802)
(468,884)
(601,837)
(633,803)
(704,147) (177,383)
Operating expenses
(412,798)
(444,596)
(508,495)
(609,749)
(663,353)
(735,950) (187,152)
(250)
3,168
2,623
3,682
5,868
4,338
1,610
205,789
229,395
253,763
295,563
350,219
383,191
109,565
Selling and marketing expenses
other income
Operating profit
Finance Income
14,204
16,283
7,360
4,294
6,281
7,675
2,015
Finance Expense
(1,830)
(1,166)
(1,756)
(2,842)
(8,469)
(7,065)
(1,803)
Profit before tax from continuing operations
218,163
244,512
259,367
297,015
348,031
383,801
109,777
Income tax
(11,441)
(14,935)
(17,640)
(26,652)
(32,098)
(36,760)
(12,728)
Profit for the period from continuing operations
206,722
229,577
241,727
270,363
315,933
347,041
97,049
0
206,722
0
229,577
231
241,958
1,149
271,512
(805)
315,128
(85)
346,956
0
97,049
184,287
204,092
211,364
243,356
278,826
318,483
86,635
0
174
763
(868)
(85)
0
184,287
204,092
211,538
244,119
277,958
318,398
86,635
Profit for the period from continuing operations
22,435
25,485
30,362
27,007
37,107
28,558
10,414
Profit for the year from discontinued operations
Profit of the period
206,722
0
229,577
58
241,958
386
271,512
63
315,128
0
346,956
0
97,049
Discontinued operations
Loss after tax for the period from discontinued operations
Profit of the period
Attributable to
Equity holders for the parent
Profit for the period from continuing operations
Loss for period from discontinued operations
Non -Controlling interest
Aramex PJSC Balance Sheets
All values in 000' USD
Assets
Current Assets
Cash and cash equivalents
Receivables (net)
Other current assets
2010A
2011A
2012A
2013A
2014A
Q1-2015
151,048
110,012
26,602
85,501
136,054
46,029
90,855
158,870
36,858
178,885
164,434
34,561
168,815
186,973
52,215
161,477
195,901
49,513
Total current assets
Non-Current Assets
Property, Plant and equipment (net)
Goodwill (net)
Other non current assets
Total non-current assets
287,662
267,584
286,583
377,880
408,004
406,891
90,438
235,037
9,435
334,910
121,266
275,039
14,862
411,167
155,170
272,056
25,496
452,721
147,464
265,106
22,549
435,119
144,480
296,152
24,656
465,287
145,894
293,007
26,577
465,478
Total assets
622,572
678,751
739,303
812,999
873,291
872,369
1,869
1,828
35,165
71,720
110,582
5,295
3,268
44,444
84,522
137,529
3,085
4,276
42,529
103,591
153,481
0
13,424
44,426
112,707
170,557
3,518
14,687
48,627
148,884
215,716
5,664
14,566
48,180
134,362
202,773
1,771
18,585
20,356
6,692
2,624
22,321
24,945
8,433
3,367
25,337
28,704
8,830
34,879
28,452
63,330
10,039
26,490
34,892
61,382
6,665
23,855
36,130
59,986
4,040
398,655
16,956
345
(1,724)
398,655
23,774
(137)
(4,820)
398,655
33,188
398,655
39,551
398,655
46,461
398,655
46,461
(3,376)
74,086
(4,160)
94,532
(9,433)
(806)
(4,360)
131,044
(24,663)
3
(4,292)
159,819
(41,230)
560
(7,697)
192,779
(48,816)
600
(7,697)
216,369
Total shareholders' equity
484,942
507,844
548,288
569,073
589,528
605,571
Total Liabilities, minority interest and shareholders' equity
622,572
678,751
739,303
812,999
873,291
872,369
Liabilities, Minority Interest and Shareholders' Equity
Current Liabilities:
Due to Banks
Current Portion of LTD
Trade payables
Other current liabilities
Total current liabilities
Non-Current Liabilities:
Long term debt
Other non current liabilities
Total non-current liabilities
Minority interest in subsidiaries
Shareholders' Equity:
Issued and paid-up capital
Reserve
Cumulative change in fair value
Accumulated other comprehensive income (loss)
Cash Flow Hedge
Reserve arised from acquisition of non-controlling interest
Retained earnings