Annual results for year ended 31 December 2010
Diversified growth strategy continues to deliver impressive growth in both revenues and profits across all four divisions
Doha, 1 February 2011 – The Board of Directors of Aamal Company QSC (‘Aamal’), one of the largest, most diversified and fastest-growing companies in Qatar, today announces the audited financial results for the year ended 31 December 2010.
Financial Highlights
- Group revenue up 72.6% to QAR 1,217.1m (2009: QAR 705.2m)
- Gross profit up 33.9% to QAR 383.1m (2009: QAR 286.1m)
- Net profit (before fair value gains on investment properties) up 28.5% to QAR 232.8m (2009: 181.1m)
- Net profit (after fair value gains on investment properties) up 125.1% to QAR 561.9m(2009: QAR 249.6m)
- Net profit margins (before fair value gains on investment properties) decreased to 19.1% (2009: 25.7%) primarily due to an acquisition and impact of start-up costs at Doha Cables
- Low financial gearing* at 11.2% (31 December 2009: 8.5%)
- Reported earnings per share up 108.9% to QAR 1.17 (2009: QAR 0.56**)
- Adjusted*** earnings per share up 8.9% to QAR 0.44 (2009: QAR 0.40**)
- Net investment in capital expenditure of QAR 176.0m (2009: QAR 292.3m)
* net debt to net debt plus equity
** in April 2010, Aamal issued and capitalised bonus shares so 2009 EPS has been adjusted accordingly (Company share capital increased to QAR 4.5bn)
*** EPS adjusted to show underlying profitability (i.e. excluding fair value gains on investment properties)
Operational Highlights
- Improved trading performance across all divisions reflects Aamal’s diversified strategy of investment in developing leading market positions in key growth sectors of the Qatari economy
- Official launches of Aamal Cement Industries (January 2010), ECCO Gulf (January 2010) and Doha Cables (May 2010)
- Acquisition of a 49% stake in Elsewedy Cables Qatar through Aamal subsidiary Senyar Industries Qatar Holding, a 50:50 JV with Elsewedy Electric, with effect from 1 January 2010
H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal Company QSC, commented:
“2010 has been a year of growth for Aamal and I am pleased to report another good full year performance. Our financial and operational performance highlights the increasing strength of the platform we have created to leverage off Qatar’s economic growth trends. We established new revenue streams in key segments of our trading, industrial production and managed services businesses consolidating our existing market-leading positions, while continuing to deliver double-digit growth in revenue, net profit and earnings per share up 73%, 125% and 109%, respectively.
“In the course of the year, we launched four new business ventures, further expanded our private and Government sector customer base and secured a range of significant new contracts and approved supplier awards including from Kahramaa, as Qatar’s power distribution network is upgraded. Our new businesses, Doha Cables, Aamal Cement Industries and ECCO Gulf, and the acquisition of a 49% stake in Elsewedy Cables Qatar through our subsidiary Senyar Industries Qatar Holding, a joint partnership with Elsewedy Electric, have been performing in line with our original expectations. We believe our industrial companies will be the principal growth drivers for Aamal, at least in the short to medium term.
We continue to explore a number of partnership opportunities and believe that Aamal is well positioned for 2011 and beyond to benefit from increasing public and private sector demand anticipated for our products and services as deferred infrastructure projects are resumed and as new projects come on line following the award of the 2022 FIFA World Cup.”
CHAIRMAN'S STATEMENT
Aamal’s financial year was underpinned by continuing strong economic conditions in Qatar. Through our diversified business model to establish leading long term market positions in all major sectors of our economy, we delivered another year of organic growth reporting net profit before fair value gains of QAR 232.8m, an increase of 28.5% over 2009.
Our financial position continues to be strong, with healthy cash generation continuing to be a key theme across our operations. To supplement our organic growth, in 2010 we launched four significant new business ventures in key sectors that we believe will be fundamentally geared to Qatar’smedium term growth. We have been pleased with the progress that these companies have made to date. These new businesses are: Aamal Cement Industries, producing building blocks, paving and tiling for the construction industry; Doha Cables, Qatar’s first domestic cable manufacturer with a production capacity of 40,000 tons of copper per annum; Elsewedy Cables Qatar, a distributor of electro-mechanical equipment and cables, 49% acquisition from Egypt’s Elsewedy Electric and ECCO Gulf a joint venture in partnership with Egyptian Contact Centre Operator (“ECCO”) focusing on the provision of contact centre services, business process outsourcing services and training and development services in Qatar.
We only seek investments where we believe we can generate appropriate returns and deliver value for shareholders and partnership opportunities where the quality is proven and benchmarked to the requisite standards. It is these principles that support our business; linking them together with the opportunities arising from the transformation of Qatar into an advanced and self-sustainable economy (in particular from an infrastructure development perspective), I believe places Aamal in a unique position to prosper.
Balance Sheet
Aamal’s balance sheet includes fully paid up share capital of QAR 4.5bn and a net asset value per share of QAR 11.9. Gearing levels are low at 11.2%.
Aamal has readily available access to financing which provides strong liquidity for future growth.
Trading Performance
Group revenue increased by 72.6% to QAR 1217.1m and Net Profit (before fair value gains on investment properties) was up 28.5% to QAR 232.8m. Including fair value gains on investment properties, net profit was up 125.1% to QAR 561.9m.
Employees
Our employees now number almost 2,300 and I would like to thank them all for their continued hard work and dedication. Human capital is a fundamental component of Aamal’s past and present success and we are proud to be a major contributor to employment and career development in Qatar.
DIVISIONAL REVIEW
INDUSTRIAL MANUFACTURING
| QAR m | 2010 | 2009 | % |
|---|---|---|---|
| Revenue | 553.5 | 132.2 | 318.7% |
| Net Profit | 49.4 | 22.4 | 120.5% |
HIGHLIGHTS
Branches and subsidiaries in the Industrial Manufacturing division include Senyar Industries Qatar Holding, the holding company for Doha Cables, Elsewedy Cables Qatar, Aamal Readymix and Aamal Cement Industries.
Senyar Industries Qatar Holding, the holding company for Doha Cables and the 49% interest in El Sewedy Cables Qatar, is a 50:50 joint venture with Elsewedy Electric.
Doha Cables formally commenced production in May 2010 following receipt of its final completion certificate from Messaied Industrial City. Since then, the Company has won the right to supply cables to a number of major industrial companies including Kahramaa, Qatar Petroleum and Ashgal and has exported orders to several other countries in the region including UAE, Kuwait, Bahrain, Oman and Iraq.
In July 2010 Aamal Company acquired a 49% stake in Elsewedy Cables Qatar. The business has become one of Aamal Company’s key sales channels for Doha Cables.
The prices of ready mix concrete which declined by almost 50% compared to 2009; this led to a fall in revenues of 35.2% despite Aamal Readymix increasing market share. Aamal Readymix has taken this opportunity to review its infrastructure and production capability, replacing old facilities with a new state of the art plant and relocating another plant to a more suitable location.
Aamal Cement Industries saw operations officially start in Q1 2010. The Company is increasing the presence of the business in the market by targeting the major contractors with its growing range of block, paving and tile products.
TRADING & DISTRIBUTION
| QAR m | 2010 | 2009 | % |
|---|---|---|---|
| Revenue | 428.7 | 381.3 | 12.4% |
| Net Profit | 47.5 | 46.0 | 3.3% |
HIGHLIGHTS
Branches in the Trading and Distribution division include Aamal Trading & Distribution, Ebn Sina Medical, Aamal Medical, Bottega Verde, Foot Care Centre, City Center Pharmacy, Good Life Pharmacy and our newly opened operations in Bahrain through Aamal Qatar Holding Bahrain.
Aamal Trading & Distribution retained its market share and position as market leader winning a number of major tenders with the Qatari Government, semi Government and private clients. This performance drove an increase in revenue of 15.8% supported by a new strategy introduced in the fourth quarter to deliver a more customer-focused after-sales service. Elsewhere within the branch an aggressive marketing campaign to expand the retail network of the TOTAL lubricants concession was initiated in April 2010 and this has yielded results and, following a number of orders to supply air conditioning units to large residential compounds, Aamal Refrigeration now constitutes over 6% of Aamal Trading and Distribution net profit.
Within the Ebn Sina Medical branch, new distribution agreements with new manufacturing partners have increased sales by 5%. This has been supported by a new agreement signed with Qatar Pharma, the first intravenous solution manufacturer in Qatar to supply products to the local market.
Aamal Medical continues to be a partner in the delivery of integrated operating rooms and pharmacy automation with the branch installing 7 new operating theatres at one of Hamad Medical Corporation’s Hospitals during the period. A number of projects were undertaken at the Hamad Medical Corporation (HMC) and Ministry of Health helping increase revenues by 29.4%. Further opportunities are expected in 2011 as the HMC continues with its expansion plans.
Bottega Verde and the Foot Care Centre are now renting new outlets in prime locations in Doha.
Both the City Center and Good Life Pharmacies performed well, boosted by an increase in customer numbers due to the opening of new hotels in the West Bay area.
PROPERTY
| QAR m | 2010 | 2009 | % |
|---|---|---|---|
| Revenue | 200.3 | 181.1 | 10.7% |
| Net Profit | 156.1 | 127.2 | 22.7% |
* before fair value gains on investment properties
HIGHLIGHTS
Branches in the Property division comprise City Center Doha and Aamal Real Estate.
In the period City Center Doha achieved an occupancy rate of 95% driving an increase in operational income of 11.8%. An average rate of 70,000 visitors per day was maintained, commensurate with the maximum available parking capacity. In light of this, City Center applied for, and obtained, all of the authority permits necessary to build a 7,000m² retail area extension, with space for an additional 400 cars, to drive future growth.
Within Aamal Real Estate, revenues rose by 6.8% with the company completing the construction of 45 residential buildings, each with 10 en-suite bedrooms and communal living areas, in Markhiya while maintaining a 100% occupancy rate in Souk El Najma and nearly 100% occupancy rates at Aamal Real Estate’s four other investment properties.
MANAGED SERVICES
| QAR m | 2010 | 2009 | % |
|---|---|---|---|
| Revenue | 45.7 | 25.6 | 78.5% |
| Net Profit | 10.1 | 5.8 | 74.1% |
HIGHLIGHTS
Branches and subsidiaries in the Managed Services division comprise Aamal Services, Aamal Travel & Tourism and ECCO Gulf.
During Q4 2009 and throughout 2010 Aamal Services was awarded several major cleaning and janitorial contracts, in particular in the hospitality/government sector, which have helped to drive an increase in performance with revenues increasing 44% in 2010. With the growing number of market entrants, due to the low barriers to entry, Aamal Services has sought to develop its service offering with the addition of new services including pest control, waterless car washing and medical waste management.
Aamal Travel & Tourism won several new big accounts during the year. These new contracts helped drive revenues up 19.0%. The branch sales team headcount has been increased in response to the increased workload.
ECCO Gulf is considered to be one of the leading suppliers of business process outsourcing and call centre services in Qatar and already provides its services to the Qatari Government and a number of local banks. The Company is currently targeting a number of new clients, across a range of sectors including banking, insurance, retail, healthcare and service sectors with plans for a new contact centre to open in 2011.
SUMMARY & OUTLOOK
2010 has been another year of progress for Aamal and I am delighted to report a good full year performance. Our financial and operational performance highlights the increasing strength of the platform we have created to leverage off Qatar’s economic growth trends. We established new revenue streams in key segments of our managed services, industrial production and trading businesses and consolidated our existing, market-leading positions during the year, while delivering double-digit growth in revenue, net profit and earnings per share, up 72.6%,125% and 109% respectively.
In the course of the year, we launched four substantial new businesses in partnership with international industry leaders, further expanded our private and Government sector customer base and secured a range of significant new contracts as it upgrades Qatar’s power distribution network.
To conclude, I believe Aamal is well positioned for 2011 and beyond as public and private sector demand for our products and services have continued to grow.
H.E. Faisal Bin Qassim Al Thani
Chairman
Further enquiries
| Aamal Company | |
|---|---|
| Arwa Goussous, Corporate Communications Manager | + 974 5513 9539 |
| Citigate Dewe Rogerson | |
| Andrew Hey / Seb Hoyle / Nick Cox-Johnson | +974 4452 8335 |
| Ayman Hammamieh / HabibBacha (for Arabic media) | +971 (0)2 401 2612 |
PLEASE NOTE: A video webcast of Aamal Company management presenting the 2010 Full Year Results will be available for equity analysts and investors to download from the Investor Relations section of the Aamal Company website from 10 am (Doha Time) 2 February 2011:
http://www.axisto.com/webcasting/investis/aamal/financial-results-2011/
About Aamal Company QSC
Aamal Company QSC (‘Aamal’) is one of the largest, most diversified and fastest-growing companies in Qatar, delivering a CAGR in net profit, excluding fair value gains, of over 22% p.a.from 2007-2010 and generating revenues of QAR 1,217m (US$334m) in 2010. Focused on sustained, profitable growth and strongly diversified for balanced exposure across Qatar’s growing economy, Aamal’s operations comprise of 22 business units with market leading positions in the key, industrial, retail, property, managed services and medical equipment and pharmaceutical sectors. With a current market capitalisation of QAR 9.5bn (US$2.6bn), Aamal is one of the largest diversified companies listed on the Qatar Exchange
