Aramex PJSC

Investor Presentation

3rd quarter 2015

  

 

   

Company Profile

Company Structure

Strategic Direction

Financial Analysis

Financial PerformanceYear 2014

Financial PerformanceYear 2014

BackgroundBackground

Revenue (Year 2014): US$994 millionGross Margin (Year 2014): 54.9%Net Income (Year 2014): US$86.7 millionNet Margin: (Year 2014 ) 8.7%Shareholders Equity (Year 2014): US$596 millionTotal Assets (Year 2014): US$873 millionCash (Year 2014): US$169 million

Highlights

Established: 1982, 33 years in operationHubs: Main hubs in Amman, Dubai, Hong Kong, Liege, London, New York and Singapore. Offices: 309 offices in 200 major cities worldwideStaff: Over 12,943 employeesFounder 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.

Aramex Quick Overview

Financial Performance3rd Q - 2015

Financial Performance3rd Q - 2015

Revenue (Q3-2015): US$255 millionGross Margin (Q3-2015): 56.3%Net Income (Q3-2015): US$20.3 millionNet Margin: (Q3-2015 ) 8.0%Shareholders Equity (Q3-2015): US$599 millionTotal Assets (Q3-2015): US$865 millionCash (Q3-2015): US$88.8 million

2004 2004

2005 2005 2002 2002 1997 1997 1982 1982

First Arab-based Company on NASDAQ

Returned to Private Ownership

Public on Dubai Financial Market

Established as a Privately Held Company

Aramex Background History

Ownership

1997 1997 1985 1985 1984 1984 1982 1982

Express Retail

Express Wholesale Delivery

Product Progression

Multiple Product Offering

Value Added Services Supply Chain Solutions

Shareholders Value Creation

Growth in Aramex’s Value (US$ Million)

Aramex Geographic Coverage

Aramex People

Growth in Number of Staff in the past 7 years

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

4,002

6,0316600

76008100

86759,500

11,432 11,649

12,943

Sustainability

Aramex is one of the first companies in the region to report on its sustainable business practices

Key

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ilit

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• 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.

Fed

eral

Sys

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Front LineFront Line

• 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

The Aramex Model

Highlights

• Manages interaction among members of the federation

• Sets policies, procedures, & monitors compliance

• Provides marketing, network infrastructure & IT infrastructure

Global Services Office

Global Services Office

• Aramex geographic regions are divided into five areas: Levant, Gulf, Africa, Asia and West (Europe and US)

• 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

Area BoardsArea Boards

Cu

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Val

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Unique Corporate Culture

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.

Key ValuesKey Values

The Aramex Model

Highlights

Customer centric and dedication to service excellence

Decentralized and flat organization

Trust based system that empowers the front line

 

Company Profile

Company Structure

Strategic Direction

Financial Analysis

• 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.

Vision: To enable and facilitate regional & global trade & commerce

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.

Regions Identified for Geographic Expansion

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.

Advantage Highlights

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Financial Financial

Management / EmployeesManagement / Employees

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.

Expansion through Acquisitions

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

Expansion of Warehousing Facilities

Expansion of Warehousing 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.

Acquisition Acquisition

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.

New Product DevelopmentNew Product Development

Highlights

Leveraging Existing Infrastructure

 

Company Profile

Company Structure

Strategic Direction

Financial Analysis

Revenue

2010 2011 2012 2013 2014

602,297

699,971

836,353 904,194

993,711

CAGR13.3%

Growth in Revenue (US$’000)

Product Distribution

2010

Change in Product Distribution

Q3 -2015

Geographic Distribution

Change in Geographic Distribution

2010 Q3- 2015

324,066 368,048

450,455 489,838 545,317

53.8% 52.6% 53.9% 54.2% 54.9%

2010 2011 2012 2013 2014Gross Profit GP%

Gross Profit & Gross Margin

Growth in Gross Profit (US$’000)

CAGR 13.9%

55,572 57,599 66,471

75,684 86,696

9.2%

8.2%7.9%

8.4%8.7%

2010 2011 2012 2013 2014

Net Income Net Margin

Net Income & Net Margin

Growth in Net Profit (US$’000)

CAGR

11.8 %

Aramex PJSC Income Statement

All values in 000' USD 2010A 2011A 2012A 2013A 2014A Sep YTD 2015

Continuing operations

Rendering of service 602,297 699,971 836,353 904,194 993,711 771,516

Cost of services (278,231) (331,923) (385,897) (414,356) (448,394) (337,347)

Gross profit 324,066 368,047 450,455 489,838 545,317 434,169

Share of results of joint ventures and associates (70) (205) (1,088) (1,354) (995) (758)

Selling and marketing expenses (29,485) (33,333) (39,993) (41,523) (49,046) (38,883)

Administrative expenses (111,856) (127,671) (163,872) (172,576) (191,730) (153,227)

Operating expenses (121,058) (138,456) (166,027) (180,622) (200,389) (156,398)

other income 863 714 1,003 1,598 1,181 936

Operating profit 62,461 69,096 80,478 95,360 104,338 85,839

Finance Income 4,434 2,004 1,169 1,710 2,090 1,284

Finance Expense (317) (478) (774) (2,306) (1,924) (1,719)

Profit before tax from continuing operations 66,577 70,622 80,873 94,764 104,504 85,404

Income tax (4,067) (4,803) (7,257) (8,740) (10,009) (9,402)

Profit for the period from continuing operations 62,511 65,819 73,616 86,024 94,495 76,002

Discontinued operations

Loss after tax for the period from discontinued operations 0 63 313 (219) (23) (142)

Profit of the period 62,511 65,882 73,929 85,805 94,471 75,860

Attributable to

Equity holders for the parent

Profit for the period from continuing operations 55,572 57,552 66,263 75,921 86,719 69,195

Loss for period from discontinued operations 0 47 208 (236) (23) (104)

55,572 57,599 66,470 75,684 86,696 69,092

Non -Controlling interest

Profit for the period from continuing operations 6,939 8,267 7,354 10,104 7,776 6,807

Profit for the year from discontinued operations 0 16 105 17 0 (38)

Profit of the period 62,511 65,882 73,929 85,805 94,471 75,860

Aramex PJSC Balance Sheets

All values in 000' USD 2010A 2011A 2012A 2013A 2014A Sep'15

AssetsCurrent AssetsCash and cash equivalents 151,048 85,501 90,855 178,885 168,815 88,782Receivables (net) 110,012 136,054 158,870 164,434 186,973 219,327Other current assets 26,602 46,029 36,858 34,561 52,215 47,713

Total current assets 287,662 267,584 286,583 377,880 408,004 355,822Non-Current AssetsProperty, Plant and equipment (net) 90,438 121,266 155,170 147,464 144,480 182,378Goodwill (net) 235,037 275,039 272,056 265,106 296,152 298,791Other non current assets 9,435 14,862 25,496 22,549 24,656 27,950Total non-current assets 334,910 411,167 452,721 435,119 465,287 509,120

Total assets 622,572 678,751 739,303 812,999 873,291 864,941

Liabilities, Minority Interest and Shareholders' Equity

Current Liabilities:Due to Banks 1,869 5,295 3,085 0 3,518 10,252Current Portion of LTD 1,828 3,268 4,276 13,424 14,687 9,302Trade payables 35,165 44,444 42,529 44,426 48,627 48,332Other current liabilities 71,720 84,522 103,591 112,707 148,884 133,473Total current liabilities 110,582 137,529 153,481 170,557 215,716 201,359Non-Current Liabilities:Long term debt 1,771 2,624 3,367 34,879 26,490 25,121Other non current liabilities 18,585 22,321 25,337 28,452 34,892 39,270Total non-current liabilities 20,356 24,945 28,704 63,330 61,382 64,391Non -Controlling interest 6,692 8,433 8,830 10,039 6,665 7,812Shareholders' Equity:Issued and paid-up capital 398,655 398,655 398,655 398,655 398,655 398,655Reserve 16,956 23,774 33,188 39,551 46,461 46,461Cumulative change in fair value 345 (137)Accumulated other comprehensive income (loss) (1,724) (4,820) (9,433) (24,663) (41,230) (51,163)Cash Flow Hedge (806) 3 560 0 Reserve arised from acquisition of non-controlling interest (3,376) (4,160) (4,360) (4,292) (7,697) (7,656)Retained earnings 74,086 94,532 131,044 159,819 192,779 205,082

Total shareholders' equity 484,942 507,844 548,288 569,073 589,528 591,378

Total Liabilities, minority interest and shareholders' equity 622,572 678,751 739,303 812,999 873,291 864,941