Agility Public Warehousing Company
Webcast for Analysts of the Year 2021
Sunday April 3rd 2022
Please find attached the minutes of Agility analyst webcast, held on Wednesday, March 30, 2022 at 12:00 p.m. Kuwait time to discuss the full year 2021 results.
Ehab Aziz – Group Chief Financial Officer
Soriana Borjas – Senior Investor Relations Manager
From the capital of Arqaam:
Sidharth Saboo: Good morning, ladies and gentlemen, and thank you for joining us today. This is Sidharth
Saboo and on behalf of Arqaam Capital, I welcome you to Agilityit’s FISCAL YEAR 2021
Earnings webcast. With me here today. I have Mr. Ehab Aziz, CFO of Agility
Agility’s Investor Relations Officer and team. Without further ado, I will now turn the call over to Soriana Borjas, Agility’s Head of Investor Relations.
Soriana:Thank you Sidharth and welcome to all for Agility Webcast on exercise results. With us today, Mr. Ehab Aziz, our Group Finance Director who introduce you to the full year of Agility financial and operational performance and major developments during the year. We will be happy to answer your questions after the presentation. For this, as you can see there is a chat box on your screen, please enter your question there and we will answer it towards the end of the session. Before we begin, I would like to draw your attention to the disclaimer available on this page. As this presentation may contain forward-looking statements. These statements are subject to risks and uncertainties. Please take a moment to read this and then I will deliver it to Ehab. Thank you. Ehab, over to you.
Hello and good afternoon everyone. Today we are going to try to tackle different subjects, certainly the finances of the year; but also as you have seen, the company has gone through a lot of changes in the last year and changes are still on the way with the ongoing acquisitions. So we want to share with you our vision for the business now and in the future, in terms of its structure and how you should think about the business, and the different assets and investments that we are getting into. So I think that would be the best way to look at it, as we go from the previous structure where we had the GIL logistics business, and then we restructure into a new way of doing things. I think it’s important for you to understand this early on, and as we evolve, we’ll keep you updated.
So we’re going to start with the company overview, and that’s to give you an idea of how we look at it, and then we’ll get into the financials for the year 2021, and then we’ll come back to the Agility company profile. We will also give you more details about each company. And then, finally, we will share with you the return to shareholders, probably most of you have seen, as we shared with you the year before.
So today, as you know, last year we sold our logistics business, which was our biggest business in terms of revenue, but not in terms of profitability. As a result, there has been a fundamental shift in the corporate profile, the financial profile as well as the strategic profile. So now when you look at our financials, there’s a lot of noise in the numbers, especially in the P/L. On the balance sheet, you will realize this, no doubt dominated by the non-negligible asset, which is the 8% that we have in DSV. So I think the way we look at business today; and again, this is a preliminary view, since we are still evolving in terms of numbers and how we divide and segment the business, but broadly speaking, we view business today as controlled businesses , which we own and operate, we hold a majority stake in this more than 50% and non-controlled businesses, which are mainly the minority stake we have in different areas. And we have a slidewho will talk about it later in the game. This uncontrolled area is mainly made up of DSV actions. So what we’re trying to do in the future, starting in 2022 and you won’t see it in the 2021 numbers because, as I said, there’s a lot of noise because of the exclusion of Gil in August. Because until August we have line by line numbers and after that we excluded that. But in the future, starting from the first quarter of 2022, we will publish the figures under two segments, controlled companies and non-controlled companies.
Then I think the rest of this slide is just to give you an idea of the company profile today, we are the fifth largest company by market capitalization on the Kuwait Stock Exchange, at the end of 2021 the market capitalization was KD 2.1 billion. We are among the few non-banking or non-telecom companies on this list. Most of the top eight companies are dominated by banks and telecommunications. The main shareholders are mainly Kuwaiti: NREC Kuwait holds about 22% and public social security about 19%. And since inclusion in the FTSE-MSCI index, we have started to see foreign, non-Kuwaiti investors entering our shareholder register; like The Vanguard Group and BlackRock, as you can see on the bottom right.
The second slide talks about how the company has evolved over the years. I joined the company in 1999, and ithas been a very exciting journey to see the company grow from a very small Kuwaiti warehousing company in 1999 to what we are today (1997 is when the company was privatized as it was an entity owned by the government). So joining the management team and seeing the company over the years has been an exciting and very rewarding experience. As you can see the revenue at the time was around KD 15 million, and you can see we have grown tremendously over the years. I think for a non-banking, non-governmental and non-telecom organization to grow and expand beyond the borders of Kuwait and the region is quite remarkable. We are therefore very proud of what we have been able to accomplish over the years. The numbers show a very compelling story. These are operating assets that we owned from 2003 to 2010. We have made over 40 acquisitions and all of them were operating assets, so these are not financial stocks, passive investments or real estate that we have sat on and enjoyed overtime. These were real operations and cash flows, competing globally. Thus, strategically and financially, the company has evolved in a very profound way, and we are all proud to be part of this history.
The company’s market capitalization, and we have a full slide talking about that later, has grown significantly, and we’ve created a significant amount of wealth and value for our shareholders over the years. The market capitalization was approximately KD 123 million in 2002. In 2021, the market capitalization was KD 2.1 billion, which represents significant value creation for a non-banking, non-governmental and non-telecom sector. , which by default has significant capital and market share thanks to a license, etc. So the importance of this history and this evolution is a very solid basis for us to see how things should evolve in the future. So again, that’s just an overview of the key acquisitions we’ve made. As you can see, we’ve acquired businesses, integrated them, and they’re all workingcompanies over the years: Tristar and all the companies you see today as part of our operating entities, which have contributed significantly to our results. You see Transoceanic, you see NAS in 2013 and you see UPAC. This is only an overview and not an exhaustive list of all the acquisitions we have made, but I think it gives you an idea company DNA and mergers and acquisitions activity.
This slide is a summary, the company today has a market capitalization of 2.1 billion KD and approximately 15,000 employees. We focus on multiple sectors: supply chain services, industrial infrastructure, commercial real estate under UPAC and the Reem Mall investment, and then the aviation sector which was quite active recently; and then all the venture capital and technology investments that we have made, in which we have a minority stake. And I will explain to you where it all fits into the two segments we talked about earlier. We are guided by an experienced leadership, the leadership with which we have been together for quite a long time. We see ourselves as disciplined, properly governed in terms of investments and capital allocations as well as from an ESG perspective. Our shareholder commitments value creation has been validated by what we have done over the years and what we have contributed and delivered over the years to our shareholders.
We are going to present the financial statements to you and it will be brief because today we are not have any segment. But hopefully once we start reporting our numbers in the new way in the first quarter of 2022, you’ll start seeing the numbers in a different format. So the key message here is that 2021 has been a recovery, I would say a recovery of 90-95% of our numbers. The numbers you see here are continuous operations; thus, we exclude all GIL-related figures from revenue, net revenue or net profit. I think we have seen a recovery to pre-COVID levels to a large extent (90-95%). We see the recovery continuing. So revenue is up 22%, net revenue is up 17%, net revenue margins are high, if you remember when we had GIL the net revenue margin was much lower, today it’s d ‘about 51.7%, then EBITDA to 109.0 million KD, again the margin is much higher than the days of GIL at 24%, and net profit. There was some confusion over the fourth quarter results, we reported losses in the fourth quarter but it was not an operating loss, we presented adjusted earnings here to give you a clearer picture. If you adjust for one-time items, like the revaluation of investment properties, because it is an accounting year at the end of each period and its non-monetary effects, and we also adjust the revaluation of the mainly Hyliion investment where the share price fluctuation is brought back to the P/L whichit’s also creating some noise. If we adjust for all of that, we had 47.6% year-on-year growth in our net income.
If we look at the reported numbers, of course, the reported numbers are a bit skewed by the one-time profit from the sale of GIL which is nearly KD 1 billion.
Then we have the balance sheet and what we’re trying to show you here is how much of the business‘today’s assets are controlled and how many are uncontrolled, so at the end of 2021 we have 2.9 billion KD, of which 56% is attributed to non-controlled assets and 44% is attributed to controlled assets. You can see that we have a very strong