Investor update presentation October 2015
Content Introduction 4 6-11 Update on financial performance Overview of E-Commerce initiatives 13-21 Update on Makkah investments 22-31 2
Section 1 Introduction
Al Tayyar Travel Group Holding Co (ATG) at a glance • With market capitalization of about US$ 4.8 billion, ATG is the leading integrated travel service provider in the MENA region • ATG is the leading travel management service Top sales award Newly awarded Top agent award Silver award provider of corporate and government travel with (2009, 2010, 2011, Exclusive GSA (1999, 2002, 2004, (2010, 2011, interest in hospitality sector 2012, 2013) 2005, 2011, 2012 2012, 2013) & 2013) • Enabled by a robust technology platform, ATG serves its clients through a global network of more than 430 branches • ATG is building a strong position in the religious Passengers Sales Sale Excellence Top agent award Top sales agent fro award awards tourism market in Makkah through a vertical (2009, 2010, 2011, (2008, 2009, 2010, 2011, (1994, 1995, 1996, (2009, 2010, 2011, 2012, 2013) 2012, 2013, 2014) in integration strategy owning large number of hotels 2010, 2011, 2012 2012, 2013) Central province • ATG has consistently won prestigious awards and and 2013) recognitions from its partners and leading airlines Top low-cost carrier in the GCC ATG’s success story • IPO in June 2012 • Acquisition of • Acquisitions of • Acquisition of 100% of • Acquisition of Mawasim Elegant Resorts, Muthmerah CTM, and Al Hanove • Investment in Careem 2014 Muthmerah Real Estate company 2012 2013 2014 2015 • Kenzi Hotel • Formation of • Increase of stake in private jet operating Muthmerah Real Estate • Acquisition of company company Thakher in 2015 ATG has coupled its successful organic growth with vertical and horizontal acquisitive approach 4
Section 2 Update on financial performance
ATG delivers its full suite of products and services to a highly valued client base … Growth in government revenue Growth in private corporate revenue Growth in cash sales (Retail) 74 89 102 133 149 1,315 1,399 1,431 1,947 2,029 1.3 1.7 1.8 1.9 2.4 1,560 2,581 4,000 1,600 2,800 3,570 1,400 3,124 2,400 1,222 1,914 3,000 1,200 1,043 2,593 (SAR million) (SAR million) 2,000 1,754 (SAR million) 1,663 2,164 1,000 780 1,600 1,307 1,822 695 2,000 800 1,200 600 800 1,000 400 400 200 0 0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Net revenue from government clients Net revenue from corporate clients Net Cash Sales Number of government clients Number of corporate clients Number of transactions (million) Note: cash sales is mainly retail clients but includes sales to other travel agencies ATG’s services are extended to a large number of established corporate and government agencies. Additionally ATG’s foreign subsidiaries are serving more than 750 government and corporate clients in their respective countries . 6
…continued growth organically and through acquisitions Growth in government revenue Growth in private corporate revenue Growth in cash sales (Retail) 111 146 164 1,478 2,025 2,134 1.3 1.6 2.1 2,500 3,500 3,044 1,305 2,097 1400 2,765 1,127 2,800 2,000 2,368 1,636 (SAR million) 967 1050 (SAR million) (SAR million) 1,332 2,100 1,500 700 1,000 1,400 350 500 700 0 0 0 Sept. 2013 Sept. 2014 Sept. 2015 Sept. 2013 Sept. 2014 Sept. 2015 Sept. 2013 Sept. 2014 Sept. 2015 Net revenue from government sector Net revenue from corporate sector Net revenue from retail sector Number of government clients Number of corporate clients Number of transactions (million) 7
ATG has registered strong financial performance… September - 2015 – Highlights of the income statement In SAR million Q3 2015 Q3 2014 Sept. 2015 Sept. 2014 Comments • ATG has achieved top line growth of about Revenue 1,907 1,759 6,446 5,528 17%, from core ticketing segment 13% along (1,508) (1,384) (5,051) (4,313) COGS with tourism & transportation revenue growth by 21% & 401% due to acquisition of Elegant GP 399 376 1,395 1,215 Resorts, CTM & Al Hanove. GPM 21% 21% 22% 22% • Gross margin has been maintained around 20% with +/- 2% fluctuation which is Selling exp (68) (59) (208) (176) considered normal in the business (108) (82) (296) (217) Admin exp • Increase in marketing expenses and G&A in 2015 is attributed to adjustment in wages and Other operating income 58 22 119 74 due to consolidation of new subsidiaries Other income (expense) (3) 2 (21) 41 acquired during the year 2014 (e.g.CTM,ER, CTS, Hanove, Fayfa) EBIT 278 259 990 937 • Other operating income mainly consist of EBIT margin 15% 15% 15% 17% incentives received from airlines and GDSs (i.e. Amadeus, Galileo) Interest (5) (3) (11) (10) • Net profit growth for the period is 7% but the zakat (4) (10) (25) (30) Normalized net profit growth is 13% after (4) (2) (7) (10) Minority excluding the impact of gain on Jarwal disposal in 2014 and impairment loss Net income 265 244 946 887 recorded on equity investment in 2015. Net income margin 14% 14% 15% 16% ATG’s financial performance was largely driven by growth in air travel demand and increase in market share as well as by new business acquisitions 8
…driven by organic growth and acquisitions Net revenue by business segment Comments/outlook 232 6,800 • Ticketing currently contributes close to 46 123 81% of ATG’s net revenue 5,400 (SAR million) 47 122 • The contribution from the hospitality 92 segment, primarily in Makkah, is expected 4,000 6,091 to start 2016 5,359 4,528 2,600 1,200 Sept. 2013 Sept. 2014 Sept. 2015 Travel and tourism services Cargo Transportation and others Net revenue by client Comments/outlook 232 128 • Revenues from government clients grew 6,000 by 10% whereas revenues from corporate 1,865 116 1,508 (SAR million) 4,500 and retail clients grew by 16% and 24% 1,216 1,305 respectively 1,127 3,000 967 • ATG is looking to increase its market 1,500 3,044 share in the retail segment 2,765 2,368 0 Sept. 2013 Sept. 2014 Sept. 2015 Govt Corporates Retail Travel agency ATG financial performance has been driven mainly by growth in ticketing services 9
…with robust balance sheet… Highlights of ATG balance sheet Assets Liabilities and shareholders equity 7,966 7,966 7,500 Accrued 1,468 Cash and 1,948 liabilities bank 6,201 877 Trade payables 6,000 5,474 Trade 970 236 Other liabilities receivable 644 Pre Bank debts 1,593 4,500 payment & other assets Minority interest 31 3,250 3,000 Fixed 4,404 Shareholder’s assets 3,761 equity 1,500 0 2012 2013 2014 Sept. 2015 Sept. 2015 The vast majority of ATG’s assets are in working capital related to its core operations of ticketing and more importantly to its investments in the hospitality segment in Makkah 10
…coupled with strong cash flow generating capacity… Highlights of cash flow statement In SAR million 2012 2013 2014 Sept. 2014 Sept. 2015 Comments • ATG has achieved Cash flow from operations 934 1,087 1,261 887 946 relatively high cash conversion results Cash from change in working capital 281 1,070 (98) (1,108) (325) • Cash flow generated from reduction in working Net Cash flow from operating activities 1,215 2,157 1,163 (220) 622 capital is largely attributed to pre-payment from key government Cash flow used in investing activities (net) (472) (370) (735) (608) (1,743) clients • The majority of (96) 23 (47) 1,116 Cash flow from financing activities 164 investments is related to the acquisition of the (307) (440) (540) (5) Dividend paid (545) additional stake in Muthmerah, CTM, Elegant Resorts & Increase/decrease in cash 339 1,370 (159) (1,209) (11) Kenzi hotel Cash at beginning 407 747 2,117 2,117 1,959 Cash in hand 747 2,117 1,959 908 1,948 ATG generates substantial operating cash flow enabling it to make significant discretionary investments in its core businesses such as online platform and more importantly in new business segments in Hajj and Umrah hospitality 11
Section 3 overview of E-Commerce initiatives
Tab A ATG’s new OTA project
Most of the Middle East travel industry growth in the last 4 years has been fueled by online travel growth While the overall B2C and unmanaged business travel market … the online share of the overall market more than doubled! in the Middle East has grown by 37.6% from 2011 to 2014… 80.0 18.0 71 15.6 16.0 70.0 14.0 60.0 Gross bookings in USD billion Gross bookings in USD billion 51.6 12.0 50.0 10.0 40.0 7.7 8.0 30.0 6.0 20.0 4.0 10.0 2.0 0.0 0.0 2011 2014 2011 2014 Source: PhocusWright Industry experts expect most of the future growth to come from mobile and online consumer sales 14
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