ARAMEX PJSC — Interim / Quarterly Report 2015

May 3, 2015

ARAMEX PJSC AND ITS SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31 MARCH 2015

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF ARAMEX PJSC

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Aramex PJSC and its subsidiaries ("the Group") as at 31 March 2015, comprising the interim consolidated statement of financial position as at 31 March 2015 and the related interim consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month period then ended and explanatory information. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting "IAS 34". Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

Einst & Yamng

Signed by Ashraf Abu-Sharkh Partner Registration no. 690

26 April 2015 Dubai, United Arab Emirates

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 Märch 2015 (Unaudited)

		31 March	31 December
		2015	2014
	Notes	AED'000 (Unaudited)	AED '000 (Audited)
ASSETS
Non-current assets
Property, plant and equipment	$\overline{\bf{4}}$	535,811	530,616
Goodwill		1,076,098	1,087,646
Other intangible assets		43,245	32,839
Investments in joint ventures and associates		46,178	47,548
Deferred tax assets		2,780	3,365
Other non-current assets		5,404	6,801
		1,709,516	1,708,815
Current assets
Accounts receivable, net		719,467	686,677
Other current assets		181,841	191,766
Bank balances and cash	5	593,040	619,991
		1,494,348	1,498,434
TOTAL ASSETS		3,203,864 Maranthewski a marathani	3,207,249
EQUITY AND LIABILITIES
Equity
Share capital		1,464,100	1,464,100
Statutory reserve Foreign currency translation reserve		170,632 (179, 283)	170,632 (151, 421)
Reserve arising from acquisition of non-controlling interests		(28, 268)	(28, 268)
Cash-flow hedge reserve		2,204	2,056
Retained earnings		794,636	708,001
Equity attributable to equity holders of the Parent		2,224,021	2,165,100
Non-controlling interests		14,835	24,476
Total equity		2,238,856	2,189,576
Non-current liabilities
Interest-bearing loans and borrowings		87,610	97,286
Employees' end of service benefits		120,335	117,717
Employees' benefit liability		10,643	8,336
Deferred tax liabilities		1,715	2,093
		220,303	225,432
Current liabilities
Accounts payable		176,945	178,587
Bank overdrafts Interest-bearing loans and borrowings	5	20,802 53,496	12,922 53,939
Other current liabilities		493,462	546,793
		744,705	792,241
Total liabilities		965,008	1,017,673
TOTAL EQUITY AND LIABILITIES		3,203,864	3,207,249
A. Mars
Abdullah Al Mazrai Hussein Hachem		Bashar Obeid

(Chief Financial Officer)

The attached notes from 1 to 10 form part of these interim condensed consolidated financial statements

(Chief Executive Officer)

(Chairman)

INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME For the three months ended 31 March 2015 (Unaudited)

		31 March	Three months ended
	Note	2015 AED'000	2014 AED'000
Continuing operations Rendering of services Cost of services		930,380 (410, 102)	851,622 (381, 325)
Gross profit		520,278	470,297
Share of results of joint ventures and an associates Selling and marketing expenses Administrative expenses Operating expenses Other income		(744) (47, 044) (177, 383) (187, 152) 1,610	(525) (41, 790) (157, 941) (176, 705) 834
Operating profit		109,565	94,170
Finance income Finance expense		2,015 (1, 803)	1,748 (1,789)
Profit before tax from continuing operations		109,777	94,129
Income tax expense		(12, 728)	(7,650)
Profit for the period from continuing operations		97,049	86,479
Discontinued operations
Loss after tax for the period from discontinued operations			(85)
Profit for the period		97,049	86,394
Attributable to: Equity holders of the Parent Profit for the period from continuing operations Loss for the period from discontinued operations		86,635	78,818 (85)
		86,635	78,733
Non-controlling interests Profit for the period from continuing operations		10,414	7,661
		97,049	86,394
Earnings per share attributable to equity holders of the Parent
Basic and diluted earnings per share	6	AED 0.059	AED 0.054

The attached notes from 1 to 10 form part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the three months ended 31 March 2015 (Unaudited)

	Three months ended 31 March
	2015 AED'000	2014 AED'000
Profit for the period	97,049	86,394
Other comprehensive income, net of tax:
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations	(28, 031)	(895)
Foreign currency gain from disposal of a subsidiary		242
(Loss) gain on cash flow hedge Cash flow hedge expense recycled to consolidated income statement	(115) 263	207 357
Net other comprehensive income to be reclassified to profit or loss in subsequent periods	(27, 883)	(89)
Other comprehensive income for the period, net of tax	(27, 883)	(89)
Total comprehensive income for the period	69,166	86,305
Aattributable to:
Equity holders of the Parent	58,921	78,589
Non-controlling interests	10,245	7,716
	69,166	86,305

Aramex PJSC and its subsidiaries
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the three months ended 31 March 2015 (Unaudited)
				Attributable to equity holders of the Parent
	AED'000 capital Share	Statutory reserve AED'000	translation 000. GFV currency reserve Foreign	of non-controlling from acquisition Reserve arising 000, G3V interests	Cash flow AED '000 hedge reserve	Retained 000, G TP earnings	000. G3Y Total	Non-controlling interests OOO.GTV	000.G3Y Total
Three month period ended 31 March 2015
At 1 January 2015	1,464,100	170,632	(151, 421)	(28, 268)	2,056	708,001	2,165,100	24,476	2,189,576
Total comprehensive income for the period	ı		(27, 862)		148	86,635	58,921	10,245	69,166
Dividends of subsidiaries	٠		,		t	$\pmb{\mathsf{1}}$		(20,368)	(20,368)
Non-controlling interest	٠		٠	٠			٠	482	482
At 31 March 2015	1,464,100	170,632 ∥	(179, 283)	(28, 268)	2,204	794,636	2,224,021	14,835	2,238,856
Three month period ended 31 March 2014
At 1 January 2014	1,464,100	145,254	(90, 579)	(15, 763)	$\overline{10}$	586,953	2,089,975	36,870	2,126,845
Total comprehensive income for the period		$\mathbf{I}$	(708)		564	78,733	78,589	7,716	86,305
Dividends of subsidiaries	٠	$\blacksquare$	ï	٠		٠	ŧ	(12, 549)	(12, 549)
Acquisition of non-controlling interest	$\mathbf{I}$	$\bar{\phantom{a}}$	$\pmb{\mathfrak{g}}$	(8,540)	I.	$\pmb{\mathfrak{g}}$	(8,540)	(2,038)	(10, 578)
At 31 March 2014	1,464,100	145,254 I	(91, 287)	(24,303)	574	665,686	2,160,024	29,999	2,190,023

The attached notes from 1 to 10 form part of these interim condensed consolidated financial statements

$\sim$

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the three months ended 31 March 2015 (Unaudited)

		31 March	Three months ended
	Notes	2015 AED'000	2014 AED'000
OPERATING ACTIVITIES Profit before tax from continuing operations Loss before tax from discontinued operations		109,777	94,129 (85)
Profit before tax		109,777	94,044
Adjustment for:
Depreciation of property, plant and equipment		19,758	18,628
Amortization of other intangible assets		1,142	810
Loss (gain) on disposal of property, plant and equipment		116	(387)
Provision for employees' end of service benefits Provision for doubtful accounts, net		5,924 570	4,959 785
Net finance (income) expense		(212)	41
Share-based payment expense		2,307	1,426
Share of results of joint ventures and associates		744	525
Loss on disposal of the discontinued operations			85
		140,126	120,916
Working capital adjustments: Accounts receivable		(33,359)	(36, 458)
Accounts payable		(1,641)	3,323
Other current assets		8,563	(20, 215)
Other current liabilities		(57, 258)	5,002
Cash from operations		56,431	72,568
Employees' end of service benefits paid Income tax paid		(3,036) (7, 233)	(1, 289) (5,896)
Net cash flows from operating activities		46,162	65,383
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(37,001)	(11, 195)
Proceeds from sale of property, plant and equipment		863	1,196
Interest received		2,015 301	1,748
Margin deposits Proceeds from sale of a subsidiary, net of cash			(328) (193)
Investment in an associate		(498)
Acquisition of non-controlling interests			(10, 578)
Net cash flows used in investing activities		(34, 320)	(19, 350)
FINANCING ACTIVITIES
Interest paid		(1, 803) (10, 116)	(1,789) (11, 807)
Repayments of loans and borrowings Dividends paid to non-controlling interests		(20, 368)	(12, 549)
Non-controlling interests		482
Net cash flows used in financing activities		(31, 805)	(26, 145)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(19, 963)	19,888
Net foreign exchange difference		(14, 567)	599
Cash and cash equivalents at 1 January	5	595,096	645,444
CASH AND CASH EQUIVALENTS AT 31 MARCH	5	560,566	665,931

The attached notes from 1 to 10 form part of these interim condensed consolidated financial statements

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2015 (Unaudited)

$\mathbf{1}$ ACTIVITIES

Aramex PJSC ("the Parent Company") is a Public Joint Stock Company registered in the Emirate of Dubai, United Arab Emirates on 15 February 2005 under United Arab Emirates Federal Law No 8 of 1984 (as amended). The condensed consolidated financial statements of the Company as at 31 March 2015 comprise the Parent Company and its subsidiaries (collectively referred to as "the Group" and individually as "Group entities").

The Parent Company was listed on the Dubai Financial Market on 9 July 2005.

The Principal activities of the Group are to invest in the freight, express, logistics and supply chain management businesses through acquiring and owning controlling interests in companies in the Middle East and other parts of the world.

The Parent Company's registered office is Business Center Towers, 2302A, Media City (TECOM), Sheikh Zayed Road, Dubai, United Arab Emirates.

The interim condensed consolidated financial statements were authorized for issue by the Board of Directors on 26 April 2015.

$\overline{2}$ BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The interim condensed consolidated financial statements for the three months ended 31 March 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2014. In addition, results for the three months ended 31 March 2015 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2015.

Changes in accounting policies

The accounting policies used in the preparation of the interim consolidated financial statements are consistent with those used in the preparation of the annual financial statements for the year ended 31 December 2014.

$\overline{\mathbf{3}}$ DIVIDENDS

The General Assembly approved in its meeting held on 19 April 2015 a cash dividend for 2014 of 14% of the Company's share capital.

The General Assembly approved in its meeting held on 16 April 2014 a cash dividend for 2013 of 11.5% of the Company's share capital.

PROPERTY, PLANT AND EQUIPMENT $\overline{\mathbf{4}}$

During the three months ended 31 March 2015, the Group acquired property and equipment with a cost of AED 37 million (three months ended 31 March 2014: AED 11 million).

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2015 (Unaudited)

5 CASH AND CASH EQUIVALENTS

	31 March 2015	31 December 2014 AED'000
	AED'000
Cash and short term deposits	593,040	619,991
Less: cash margin	(11,672)	(11, 973)
Less: bank overdrafts	(20, 802)	(12, 922)
	560,566	595,096

Included within cash and short term deposits are amounts totaling AED 217,291 thousand (31 December 2014; AED 272,114 thousand) held at foreign banks abroad.

$6 \overline{6}$ EARNINGS PER SHARE

		Three months ended 31 March
	2015	2014
Profit attributable to shareholders of the Parent (AED'000)	86,635	78,733
Weighted average number of shares during the period (shares)	1,464 million	1,464 million
Basic and diluted earnings per share (AED)	0.059	0.054

$7\phantom{.0}$ SEGMENT INFORMATION

For management purposes, the Group is organized into five operating segments:

• International express: includes delivery of small packages across the globe to both, retail and wholesale $\overline{a}$ customers.
• Freight forwarding: includes forwarding of loose or consolidated freight through air, land and ocean transport, warehousing, customer clearance and break bulk services.
• Domestic express: includes express delivery of small parcels and pick up and deliver shipments within the country.
• Logistics: includes warehousing and its management distribution, supply chain management, inventory management as well as other value added services.
• Other operations: includes catalogue shipping services, document storage, airline ticketing and travel, visa services and publication and distribution.

Management monitors the operating results of the operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.

Transfer prices between operating segments are on an arm's - length basis in a manner similar to transactions with third parties.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2015 (Unaudited)

$\overline{7}$ SEGMENT INFORMATION (continued)

The following table presents revenue and profit information regarding the Group's operating segment for the three months ended 31 March 2015 and 2014, respectively.

	International express AED'000	Freight forwarding AED'000	Domestic express AED'000	Logistics AED'000	Others AED'000	Eliminations AED'000	Total AED'000
Three months ended 31 March 2015
Revenue
Third party	324,946	302,713	198,959	50,545	53,217		930,380
Inter-segment	142,257	57,115	112	1,114	1,750	(202, 348)
Total revenue	467,203	359,828	199,071	51,659	54,967	(202, 348)	930,380
Gross profit	219,163	82,366	133,548	40,037	45,164		520,278
	International	Freight	Domestic
	express	forwarding	express	Logistics	Others	Eliminations	Total
	AED'000	AED'000	AED'000	AED'000	AED'000	AED'000	AED'000
Three months ended 31 March 2014
Revenue
Third party	287,662	298,570	168,343	44,112	52,935		851,622
Inter-segment	127,973	59,348	17	1,087	1,918	(190, 343)
Total revenue	415,635	357,918	168,360	45,199	54,853	(190, 343)	851,622
Gross profit	189,404	82,295	119,111	34,165	45,322		470,297

Transactions between stations are priced at agreed upon rates. All material intra group transactions have been eliminated on consolidation. The Group does not segregate assets and liabilities by business segments and accordingly such information is not presented.

Geographical Information

The business segments are managed on a worldwide basis, but operate in four principal geographical areas, Middle East and Africa, Europe, North America Asia and others. In presenting information on the geographical segments, segment revenue is based on the geographical location of customers. Segments assets are based on the location of the assets.

Revenue, assets and liabilities by geographical segment are as follows:

	31 March	Three months ended
	2015 AED'000	2014 AED'000
Revenues
Middle East and Africa	677,208	631,847
Europe	132,734	133,477
North America	24,608	12,427
Asia and others	95,830	73,871
	930,380	851,622

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2015 (Unaudited)

$\overline{7}$ SEGMENT INFORMATION (continued)

	31 March	31 December
	2015	2014
	AED'000	AED'000
Assets
Middle East and Africa	2,539,265	2,514,175
Europe	386,127	413,129
North America	36,016	30,615
Asia and others	242,456	249,330
	3,203,864	3,207,249
	31 March	31 December
	2015	2014
	AED'000	AED'000
Non-current assets*
Middle East and Africa	539,530	519,443
Europe	52,512	58,789
North America	5,166	5,323
Asia and others	28,026	27,448
	625,234	611,003
	31 March	31 December
	2015	2014
	AED'000	AED'000
Liabilities Middle East and Africa	779,441	802,297
Europe	101,386	113,579
North America	16,153	14,758
Asia and others	68,028	87,039
	965,008	1,017,673

Non-current assets for this purpose consist of property, plant and equipment, other intangible assets, investments $\ast$ in joint ventures and investments in associates. Goodwill is allocated to business segments.

8 COMMITMENTS AND CONTINGENCIES

2015 2014 AED'000 AED'000
93,045 Letters of guarantee	92,004

As at 31 March 2015, the Group has capital commitments of AED 123 million (2014: AED 130.7 million) towards purchase / construction of property, plant and equipment.

Claims against the Group

The Group is a defendant in a number of lawsuits amounting to AED 20,260 thousand (31 December 2014: AED 20,260 thousand) representing legal actions and claims related to its ordinary course of business. The management and their legal advisors believe that the provision recorded of AED 5,469 thousand as of 31 March 2015 (31 December 2014: AED 5,469 thousand) is sufficient to meet the obligation that may arise from the lawsuits.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2015 (Unaudited)

$\boldsymbol{Q}$ RELATED PARTY TRANSACTIONS

Certain related parties (directors, officers of the Group and companies which they control or over which they exert significant influence) were suppliers of the Company and its subsidiaries in the ordinary course of business. Such transactions were made on substantially the same terms as with unrelated parties.

Transactions with related parties included in the consolidated statement of income are as follows:

	Related party	Total
	Companies controlled by the directors AED'000	31 March 2015 AED'000	31 March 2014 AED'000
Rent expense	347	347	406

Key management compensation

Compensation of the key management personnel including executive officers, comprises the following:

	31 March 2015 AED'000	31 March 2014 AED'000
Salaries and other short term benefits	3,022	2.776
End of service benefits	41	41

The following table provides the total amount of transactions that have been entered into with related parties during the three months ended 31 March 2015 and 2014, as well as balances with related parties as at 31 March 2015 and 31 December 2014:

		Sales to related parties AED'000	Cost from related parties AED'000	Amounts owed by related parties* AED'000	Amounts owed to related parties** AED'000	Loans*** AED'000
Associates	2015	233	72	641	1,847	59
	2014	77	3	318	1,555	$\overline{\phantom{a}}$
Joint ventures in which the
Parent is a venturer:	2015	74	4,046	2,820	5,326	5,352
	2014	68	1,770	4,050	6,745	6,751

These amounts are classified as trade receivables and other current assets.

• These amounts are classified as trade payables. **
• *** This amount represents a long term loan granted to Aramex Logistics LLC Oman to build a warehouse. The loan is unsecured and interest free.

10 SEASONALITY OF OPERATIONS

The Group's business is seasonal in nature. Historically, the Group experienced a decrease in demand for its services in the post-winter holiday and summer vacation seasons. The Group traditionally experiences its highest volumes towards the latter half of the year. The seasonality of the Group's revenue may cause a variation in its quarterly operating results. However, local Middle East and Islamic holidays vary from year to year, and as a result, the Group's seasonality may shift over time.