Posted on February 03, 2015

The Board of Directors of Aamal Company QSC (“Aamal”), one of the GCC’s fastest growing diversified companies, today announces the financial results for the year ended 31 December 2014.

Financial Highlights1

  • Group revenue up 0.8% to QAR 2,139.1m (2013: QAR 2,122.6m)
  • Total net profit2 increased 17.2% to QAR 600.2m (2013: QAR 512.3m)
  • Net profit before fair value gains on investment properties increased 30.4% to QAR 348.5m (2013: QAR 267.2m)
  • Net underlying profit margins3 of 15.4% (2013: 11.7%)
  • Fair value gains on investment properties of QAR 251.7m (2013: QAR 245.1m)
  • Adjusted4 underlying earnings per share increased 24.3% to QAR 0.54 (2013: QAR 0.44)​
  • Reported4 earnings per share increased13.9% to QAR 0.96 (2013: QAR 0.85)
  • Gross investment in capital expenditure fell by 41.1% to QAR 92.9m (2013: QAR 157.6m), as Phase 1 of the City Center Doha expansion project and the Advanced Pipes and Cast Company plant were largely completed during 2013
  • Financial gearing5reduced to4.5% (31 December 2013: 6.6%)

1There may be slight calculation discrepancies due to rounding

2 After fair value gains on investment properties but before the deduction of non-controlling interests

3 Excluding share of profit from equity accounted for investments in associates and joint ventures

4Adjusted underlying earnings per share excludes the fair value gains on investment properties; Reported earnings per share includes them

5Net debt to net debt plus equity

H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal Company QSC, commented: “I am pleased to report excellent results for 2014. We have managed to grow our total net profit by over 17% to exceed QAR 600 million for the first time, with earnings per share rising by almost 14%. Excluding the net fair value gains on investment properties which were largely flat at QAR 251.7 million, net profit was up by 30%. Today’s results extend Aamal’s proud and long-established track record of profit growth and value creation underpinned by a clear focus on efficient capital allocations and returns.

In 2014, we established Aamal Optical Supplies in partnership with Qatar Optics, one of the leading companies in this sector, which is involved in the import, manufacture and distribution of prescription lenses and contact lenses. It is also the intention to open a specialised optical medical centre in the near future that will diversify operations and revenue channels further, and allow us to capitalise on opportunities in this fast-growing sector. Another important milestone was the start of commercial production at Advanced Pipes Company following construction of its state-of-the-art factory in Mesaieed.  A total of QAR 200 million (US$ 55m) has been invested in establishing this new facility which specialises in the manufacture of concrete pipe products to supply infrastructure and pipeline projects both in Qatar and across the region.

Given the outstanding performance of the Company, the Board of Directors recommends a 10% cash dividend and 5% in bonus shares to be approved by the General Assembly meeting which will take place on 16 March 2015.

As Qatar continues to prosper and diversify its industrial base under the wise leadership of H.H. the Emir of Qatar Sheikh,Tamim Bin Hamad Al Thani, Aamal remains very much at the vanguard of this growth. It is the ‘best in class’ in terms of the products and services it is able to offer, and continues to be the partner of choice for those blue chip companies wishing to enter Qatar, bringing market leading knowledge and skills with them.”

BREAKDOWN BY DIVISION

(nb.there may be slight differences due to rounding)

REVENUE

QAR m

2014

2013

Change %

Industrial Manufacturing

1,134.2

1,261.2

(10.1)%

Trading and Distribution

728.8

585.8

24.4%

Property

288.8

261.6

10.4%

Managed Services

64.2

86.3

(25.6)%

less: inter-divisional revenue

(76.8)

(72.2)

 

TOTAL

2,139.1

2,122.7

0.8%

 

NET PROFIT

QAR m

2014

2013

Change %

Industrial Manufacturing

51.7

22.6

128.3%

Trading and Distribution

114.9

86.5

32.8%

Property (ex-fair value gains on investment properties)

223.3

200.8

11.2%

Fair value gains on investment properties

251.7

245.1

2.7%

Managed Services

8.3

5.2

60.1%

less: Head Office costs

(49.7)

(47.9)

3.8%

TOTAL

600.2

512.3

17.2%

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DIVISIONAL REVIEW

(nb.there may be slight differences due to rounding)

INDUSTRIAL MANUFACTURING

QAR m

2014

2013

Change %

Revenue

1,134.2

1,261.2

(10.1)%

Net profit: fully consolidated activities

33.6

4.1

711.4%

Net underlying profit margin %

3.0%

0.3%

+270 bps

Net profit: share of equity accounted for investee net profits

18.1

18.5

(2.0)%

Total net profit

51.7

22.6

128.3%

Net profit grew by 128.3% to QAR 51.7 million, driven principally by a 270 basis point improvement in the net margin to 3.0%. The improvement was due mainly to an acceleration in infrastructure project build in Qatar, translating into an increase in demand for various products offered by this division. An important milestone reached was the start of the commercial production at the Advanced Pipes and Casts Company in the last quarter of 2014; initial trading signs have been very positive with the winning of several key orders and we foresee positive performance for this unit during 2015.

 

TRADING AND DISTRIBUTION

QAR m

2014

2013

Change %

Revenue

728.8

585.8

24.4%

Net profit

114.9

86.5

32.8%

Net profit margin %

15.8%

14.8%

+100 bp

Net profit for the Trading and Distribution division rose by 32.8% to QAR 114.9m along with an improvement of 100 basis points in the net margin to 15.8%. The major contributors to this growth have been Aamal Medical and to a lesser degree, Ebn Sina Medical, due to increased demand from both the private and public medical sectors, underpinned by the significant increase in government spending to develop the medical sector in Qatar.

During 2014, a new business entity was established called Aamal Optical Supplies, a joint venture with Qatar Optics, one of Qatar’s leading companies in the optometry industry, in which Aamal has a 51% interest.The establishment of this new business is in keeping with the development of Qatar’s healthcare system through the setting-up of the Qatar National Health Strategy for 2011-2016, designed to ensure that the population has increasing access to world-class treatment facilities.

 

PROPERTY

QAR m

2014

2013

Change %

Revenue

288.8

261.6

10.4%

Net profit*

223.3

200.8

11.2%

Net profit margin %

77.3%

76.8%

+50 bp

* before fair value gains on investment properties

Net profit for the Property division rose by 11.2% to QAR 223.3millionyearonyear with the net margin increasing by 50 basis points to 77.3%. Main components to this growth were first, the completion of renovations to three buildings owned by Aamal Real Estate, comprising 30 apartments, which have now all subsequently been rented out; and secondly, the annual rental increases for properties owned by the Company. Good progress towards securing the necessary permissions for Phase 2 of the redevelopment of City Center is being made. Fair value gains on investment properties for the year were QAR 251.7 million (2013: QAR 245.1m).

 

MANAGED SERVICES

QAR m

2014

2013

Change %

Revenue

64.2

86.3

(25.6)%

Net profit

8.3

5.2

60.1%

Net profit margin %

12.9%

6.0%

+690 bp

Net profit for the Managed Services division rose by over 60% to QAR 8.3m over the course of the year,principally due to the 690 basis point increase in the net margin to 12.9%. The major factor behind this growth is a greater focus on cost control, along with the curtailment of several low margin contracts that is also behind the 25.6% drop in revenues.

 

SUMMARY AND OUTLOOK

H.E. Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman of Aamal, commented: “This very strong set of results bears witness to the Company’s ability to seize the opportunities that are presenting themselves across the economic spectrum in Qatar, continuing its long established track record of financial and operating performance that is clearly focused on both returns and cost control, aligned with a prudent approach to risk.”

Tarek M. El Sayed, Managing Director of Aamal, commented:“We are very pleased to witness such impressive results in 2014 and going into 2015, I am very positive that this current rate of growth will be sustained across the Company. In addition to growth by organic means, we are open to growth by establishing joint ventures too, as we always have been, but only if they meet our strict investment criteria such that value will be created for all our stakeholders. Consequently, I am very positive about the year ahead and am genuinely excited.”

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