Investor update presentation - February 2017 - Seera.sa
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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
Update on online travel and E-Commerce 15-17
2
Section 1 Update on Q4 2016 financial performance
Sector performance impacted by general macroeconomic
environment and government austerity measures
Revenue of government segment Revenue of corporate segment Revenue of retail segment
173 182 2,138 2,188
4,000 3,925 3,200 3,165
3,900 1700 1,652
3,100 3,054
3,800 1600
(SAR million)
(SAR million)
3,700 3,000
(SAR million)
1500
3,600 1,414
3,500
3,462 2,900
1400
3,400
1300 2,800
3,300
3,200 1200 2,700
2015 2016 2015 2016 2015 2016
Net revenue from government sector Net revenue from corporate sector
Number of corporate clients Net revenue from retail sector
Number of government clients
Performance of government sector is Retail sales grew due to significant
Corporate revenue declined
impacted by government austerity contribution from E- commerce
reflecting the economic slowdown
measures business unit
E-commerce contribution to retail revenue
600 567
500
422
400
(SAR Million)
300 240
200
100 66
0
Q1 2016 H1 2016 9months 2016 FY 2016
Notwithstanding the challenging macroeconomic environment for retail sector, E-commerce revenues
have shown significant growth inline with ATG’s strategic focus
4
ATG financial performance showed resilience in the midst
economic slowdown
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 &
COGS (1,722) (1,768) (6,552) (6,831) transportations/others revenue grew by 48% & 29%
respectively due to contribution from e-commerce
GP 314 417 1,489 1,800
business and that is mainly from Almosafer along with
GPM 15% 19% 19% 21% Hanay car rental.
Selling exp (86) (74) (272) (277) • Gross margin declined to 19% with +/- 2% fluctuation
which is considered normal in the business, given that
Admin exp (118) (126) (396) (415) the contribution from government sector is less.
Other operating income 58 54 192 173 • Selling expenses and administrative expenses
decreased compared to last year by -2% and -4%
Other income (expense) (8) (37) (116) (58) respectively, as a result of cost rationalization plan.
EBIT 159 234 906 1,223 • Other operating income mainly consist of incentives
received from airlines and GDSs (i.e. Amadeus,
EBIT margin 8% 11% 11% 14%
Galileo)
Interest (13) (7) (46) (19)
• Net profit declined for the period of about -29% but the
zakat (2) (11) (30) (36) Normalized net profit decline is -26% after excluding
the impact impairment loss recorded on equity
Minority 1 (0) (3) (7) investment and impairment loss on intangible assets
and gain/loss on PPEs.
Net income 145 215 826 1,162
Net income margin 7% 10% 10% 13%
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
5
Tourism segments contributed positive performance driven
by e-commerce revenue
Net revenue by business segment Comments/outlook
9,000
325 • Ticketing currently contributes close to
8,500 72% of ATG’s net revenue
(SAR million)
160 419
8,000 • The contribution from the hospitality
173
segment, primarily in Makkah, is expected
7,500 165 to start 2017
161 8,146
7,000 7,377 7,457
6,500
2014 2015 2016
Travel and tourism services Cargo Transportation and others
Net revenue by client Comments/outlook
10,000 251 • Revenues from government declined by -
8,000 207 289 12%, whereas revenues from corporate
2,803
(SAR million)
2,374 2,876 declined by -14% and retail grew by 4%.
6,000
1,560 1,652 • ATG is looking to increase its market
4,000 1,414
share in the retail segment
2,000 3,570 3,925 3,462
0
2014 2015 2016
Govt Corporates Retail Travel agency
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
6
The successful closing of Thakher acquisition has
significantly increased the total assets and equity
Highlights of ATG balance sheet
Assets Liabilities and shareholders equity
10,500
9,376 9,376
9,000 739 Accrued
8,421 1,250 Cash and
bank liabilities
1,526
7,500 Trade payables
6,201 1,536 Trade
receivable 479 Other liabilities
562 Pre
6,000 5,474 1,088 Bank debts
payment & 34
other assets Minority interest
4,500
3,000 6,028 Fixed
5,510 Shareholder’s
assets
equity
1,500
0
2013 2014 2015 2016 2016
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
7
Cash flow has been impacted significantly due to economic
condition
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
Cash from change in working capital 1,214 44 343 (709) resulting in negative cash
flow from operating activities
Net Cash flow from operating activities 2,157 1,163 1,505 118 • The majority of investments
is related to the acquisition
Cash flow used in investing activities (net) (370) (735) (2,422) (474) of the Wadi.com and
capitalization of Sheraton
hotel
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
8
Section 2 Recap on ATG Evolution
ATG started as a retail travel agency, and has evolved into a
synergistically diversifies travel and tourism group
ATG Strategic evolution (1979-Current) ATG Evolution
Organic Horizontal Vertical Synergistic • In 1979, ATG started as a classic retail
Expansion Consolidation Integration Diversification travel agency company focused on basic
travel and tourism booking services; until
2000, ATG has focused on organically
expanding its retail footprint
Offer basic Focus on Expand into Diversify the
travel and becoming a Hajj & Umrah portfolio
Strategies
tourism full TMC and through focusing on
• Between 2000 and 2012, ATG focused on
services and pursue targeted opportunities
consolidation and horizontal integration
organically horizontal vertical to benefit
where it made a number of acquisitions of
expand retail consolidation integration from
like for like competitors
footprint synergies
• Between 2012 and 2015, ATG primarily
1979 – 2000 2000 – 2012 2012 – 2015 2015 - Current focused expand its hajj and umrah
offerings through vertical integration into
the destination management and
hospitality industry segments; moreover,
Associated Brands
during this time, ATG expanded its global
footprint by entering the UK travel
management market
• Since 2015, ATG has focused on
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
10Section 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
Hospitality Activity Areas
Activity Area Description Brands
1
• This activity area is focused on asset development for hospitality use
Asset • Key objective behind asset ownership is to maximize cash flow from the asset and to
Ownership improve overall asset value.
• ATG has invested heavily in hospitality assets with key investments including venture in
Thakher and Muthmera
2
• Asset management is focused on protecting asset owner interests through ensuring that
asset operators perform in accordance with legal and commercial agreements
Asset
Management • 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
3
• Asset operations is focused on developing asset revenues through daily use of the hotel
asset
Asset
Operations • 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
12ATG has invested on a well located projects to complete its
vertical integration strategy…
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(1)
Expected delivery Q4 2017 Delivered Q1 2017
Expected market value (SAR mn) 200 260 1,500
(1) The expected operating income is from the serviced apartment + service charges
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 of SAR1,200mn to
recover a significant amount of the
invested capital
13…with a large portfolio of hospitality assets
Muthmerah has developed residential and commercial towers
Albawaba Sheabquresh
Tower Name 3rd Ring Road Masafi Hotel Beer Balela
1&2 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
31,300 sqm 192 547 8,298 sqm 491
(office and retail)
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 Masafi Hotel Beer Balela Hotel Al Bawaba Shebalquresh
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
14Section 3 Update on online travel and E-commerce
Within 1 year only, Tajawal has become a leading OTA in the GCC
120 Number of Orders (thousands)
Within 100
ca.
~ 50k ~ 300
1
80
Sessions/day Orders/Day
Year 60
40
~ $133k ~Average
$447
order
20
Gross Sales / day 0
value Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
~ 14% ~ 535k
60,000
50,000
Monthly flight sales (USD thousands)
Marketing
App Installs
Cost/Sales Ratio 40,000
30,000
~ 16% 2M+ 20,000
Mobile App
Active Users 10,000
Share
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Tajawal reflects the latest global developments and insights and is showing strong growth in first few months
16Almosafer is a locally grown hotel booking tool offering more than
500,000 hotels around the globe through Mobile Tablet apps
1,300,000
1.3 Million
>20% In 2016
1.5
Million >500K
500,000
313M SAR
In 2016
+325%
120,000
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