Investor update presentation February 2017 Content Update on Q4 - - PowerPoint PPT Presentation

Investor update presentation

February 2017

Content

Update on Q4 2016 financial performance 3-8 Recap on ATG Evolution 9-10 Update on hospitality strategic business unit 11-14

2

Update on online travel and E-Commerce 15-17

Section 1

Update on Q4 2016 financial performance

Sector performance impacted by general macroeconomic environment and government austerity measures

4

Revenue of government segment

3,925 3,462

3,200 3,300 3,400 3,500 3,600 3,700 3,800 3,900 4,000 2015 2016

(SAR million)

Net revenue from government sector

Performance of government sector is impacted by government austerity measures Revenue of retail segment

3,054 3,165

2,700 2,800 2,900 3,000 3,100 3,200 2015 2016

(SAR million)

Net revenue from retail sector

Retail sales grew due to significant contribution from E- commerce business unit Revenue of corporate segment

1,652 1,414

1200 1300 1400 1500 1600 1700 2015 2016

(SAR million)

Net revenue from corporate sector

Corporate revenue declined reflecting the economic slowdown

(SAR Million)

Notwithstanding the challenging macroeconomic environment for retail sector, E-commerce revenues have shown significant growth inline with ATG’s strategic focus

66 240 422 567

100 200 300 400 500 600 Q1 2016 H1 2016 9months 2016 FY 2016

E-commerce contribution to retail revenue

2,138 173 182 2,188 Number of government clients Number of corporate clients

ATG financial performance showed resilience in the midst economic slowdown

5 Ticketing business declined as a main contributor to the top line while tourism and leisure businesses grew due to the strong performance of e-commerce initiatives

Highlights of the income statement In SAR million Q4 2016 Q4 2015 FY 2016 FY 2015 Comments

Revenue 2,036 2,185 8,041 8,631

• ATG top line declined of about -7%, from core ticketing

segment

• 18%,

however tourism & transportations/others revenue grew by 48% & 29% respectively due to contribution from e-commerce business and that is mainly from Almosafer along with Hanay car rental.

• Gross margin declined to 19% with +/- 2% fluctuation

which is considered normal in the business, given that the contribution from government sector is less.

• Selling

expenses and administrative expenses decreased compared to last year by -2% and -4% respectively, as a result of cost rationalization plan.

• Other operating income mainly consist of incentives

received from airlines and GDSs (i.e. Amadeus, Galileo)

• Net profit declined for the period of about -29% but the

Normalized net profit decline is -26% after excluding the impact impairment loss recorded

• n

equity investment and impairment loss on intangible assets and gain/loss on PPEs.

COGS (1,722) (1,768) (6,552) (6,831) GP 314 417 1,489 1,800 GPM 15% 19% 19% 21% Selling exp (86) (74) (272) (277) Admin exp (118) (126) (396) (415) Other operating income 58 54 192 173 Other income (expense) (8) (37) (116) (58) EBIT 159 234 906 1,223 EBIT margin 8% 11% 11% 14% Interest (13) (7) (46) (19) zakat (2) (11) (30) (36) Minority 1 (0) (3) (7) Net income 145 215 826 1,162 Net income margin 7% 10% 10% 13%

Tourism segments contributed positive performance driven by e-commerce revenue

6 Ticketing services contribution is lower on yearly basis because of government austerity measures in favor of tourism and transportation as online business and acquisitions in 2015 started to perform

Net revenue by business segment Net revenue by client Comments/outlook Comments/outlook

• Ticketing currently contributes close to

72% of ATG’s net revenue

• The

contribution from the hospitality segment, primarily in Makkah, is expected to start 2017

• Revenues from government declined by -

12%, whereas revenues from corporate declined by -14% and retail grew by 4%.

• ATG is looking to increase its market

share in the retail segment

7,377 8,146 7,457 161 160 165 173 325 419 6,500 7,000 7,500 8,000 8,500 9,000 2014 2015 2016 (SAR million) Travel and tourism services Cargo Transportation and others 3,570 3,925 3,462 1,560 1,652 1,414 2,374 2,803 2,876 207 251 289 2,000 4,000 6,000 8,000 10,000 2014 2015 2016 (SAR million) Govt Corporates Retail Travel agency

5,474 6,201 8,421 6,028 5,510 562 34 1,536 1,088 1,250 479 1,526 739 1,500 3,000 4,500 6,000 7,500 9,000 10,500 2013 2014 2015 2016 2016

The successful closing of Thakher acquisition has significantly increased the total assets and equity

7

Highlights of ATG balance sheet

The vast majority of ATG’s assets are in working capital related to its core operations of flight tickets and more importantly to its investments in the hospitality segment in Makkah

Assets Liabilities and shareholders equity Fixed assets Pre payment &

• ther assets

Trade receivable Cash and bank Shareholder’s equity Minority interest Bank debts Other liabilities Trade payables 9,376 9,376 Accrued liabilities

Cash flow has been impacted significantly due to economic condition

8

Highlights of cash flow statement In SAR million 2013 2014 2015 2016 Comments

Net profit for the year 943 1,119 1,162 826

• During 2016, most of

corporates/government clients utilized the advances resulting in negative cash flow from operating activities

• The majority of investments

is related to the acquisition

• f the Wadi.com and

capitalization of Sheraton hotel

Cash from change in working capital 1,214 44 343 (709) Net Cash flow from operating activities 2,157 1,163 1,505 118 Cash flow used in investing activities (net) (370) (735) (2,422) (474) Cash flow from financing activities 26 (42) 986 (372) Dividend paid (443) (545)

• Increase/decrease in cash

1,370 (158) 68 (728) Cash at beginning 747 2,117 1,959 2,009 Cash in hand 2,117 1,959 2009 1,250

Increase in working capital requirements attributed to the growing receivables from government accounts

Section 2

Recap on ATG Evolution

ATG started as a retail travel agency, and has evolved into a synergistically diversifies travel and tourism group

10

ATG Evolution

• In 1979, ATG started as a classic retail

travel agency company focused on basic travel and tourism booking services; until 2000, ATG has focused on organically expanding its retail footprint

• Between 2000 and 2012, ATG focused on

consolidation and horizontal integration where it made a number of acquisitions of like for like competitors

• Between 2012 and 2015, ATG primarily

focused expand its hajj and umrah

• fferings through vertical integration into

the destination management and hospitality industry segments; moreover, during this time, ATG expanded its global footprint by entering the UK travel management market

• Since

2015, ATG has focused

• n

diversifying its portfolio of businesses in a synergistic manner; its has aggressively focused the OTA space, and expanded its hospitality offerings by both entering into hospitality operations, and re-focusing its rental car and ATG Strategic evolution (1979-Current)

• Diversify the

portfolio focusing on

• pportunities

to benefit from synergies

• Expand into

Hajj & Umrah through targeted vertical integration

• Focus on

becoming a full TMC and pursue horizontal consolidation

• Offer basic

travel and tourism services and

• rganically

expand retail footprint Strategies Associated Brands

1979 – 2000 2000 – 2012 2012 – 2015 2015 - Current

Organic Expansion Horizontal Consolidation Vertical Integration Synergistic Diversification

Section 3

Update on hospitality strategic business unit

A key growth area that seen considerable investment is hospitality area; here, ATG is focused on 3 activity area

12

Hospitality Activity Areas Asset Management

• Asset management is focused on protecting asset owner interests through ensuring that

asset operators perform in accordance with legal and commercial agreements

• ATG performs this activity through its Equinox subsidiary , which is regarded as one of

the very few professional asset management companies in the middle east

• This activity area is focused on asset development for hospitality use
• Key objective behind asset ownership is to maximize cash flow from the asset and to

improve overall asset value.

• ATG has invested heavily in hospitality assets with key investments including venture in

Thakher and Muthmera Asset Ownership Asset Operations

• Asset operations is focused on developing asset revenues through daily use of the hotel

asset

• Through its exclusive partnership with Choice Hotels, the 2nd largest hotel company in

the world, ATG has a best in-class hotel operations capability and plethora of brands to pffer hospitality asset owners

1 2 3

Activity Area Description Brands

ATG has invested on a well located projects to complete its vertical integration strategy…

13

ATG developed and acquired different hospitality properties to fuel growth

Tower Name Prince Majed Rd Hotel Movenipick City star Hotel Sheraton Hotel Property use Hotel Hotel Hotel Location Prince Majed Rd, Jeddah Madina Rd, Jeddah In front of Holy mosque, Makkah

• No. of rooms/suits

200 228 422 Expected operating income p.a (SAR mn) 20 25 70 Expected delivery Q4 2017 Delivered Q1 2017 Expected market value (SAR mn) 200 260 1,500 Prince Majed Rd Hotel Movenpick City Star Hotel Sheraton Hotel

• ATG board approved a selling

serviced apartments strategy from Sheraton hotel with an expected revenue

• f

SAR1,200mn to recover a significant amount of the invested capital

(1) (1) The expected operating income is from the serviced apartment + service charges

…with a large portfolio of hospitality assets

14

Muthmerah has developed residential and commercial towers

Tower Name 3rd Ring Road Masafi Hotel Beer Balela Albawaba 1 & 2 Sheabquresh Hotel Property use Offices Hotel Hotel Retail Hotel Distance from Haram 4 KM 0.3KM 0.3KM NA 0.45KM No of rooms (residential) / GLA (office and retail) 31,300 sqm 192 547 8,298 sqm 491 Expected Rental income p.a (SAR mn) 15 9 25 3 15 Expected delivery Delivered Delivered Delivered Delivered Q1 2017 Expected market value (SAR mn) 300 160 500 33 300 3rd Ring Road Note: Muthmerah owns 3 parcels of land that have been under compulsory purchase order by the government which their book value is over SAR 410 million Masafi Hotel Beer Balela Hotel Al Bawaba Shebalquresh

Section 3

Update on online travel and E-commerce

Within 1 year only, Tajawal has become a leading OTA in the GCC

16 Tajawal reflects the latest global developments and insights and is showing strong growth in first few months

20 40 60 80 100 120 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Number of Orders (thousands) 10,000 20,000 30,000 40,000 50,000 60,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly flight sales (USD thousands)

~ 50k

Sessions/day

~ 300

Orders/Day

~ $133k

Gross Sales / day

~ 14%

Marketing Cost/Sales Ratio

~ $447

Average order value

~ 16%

Mobile App Share

1

Year

Within thin ca.

2M+

Active Users

~ 535k

App Installs

Almosafer is a locally grown hotel booking tool offering more than 500,000 hotels around the globe through Mobile Tablet apps

17

>20%

+325%

1.5 Million

>500K

1.3 Million In 2016 120,000 500,000 1,300,000 313M SAR

In 2016