Resilient performance in a challenging year Presentation of - - PowerPoint PPT Presentation

Resilient performance in a challenging year

Presentation of financial results for the year ended 31 December 2019

19 FEBRUARY 2020

Co Contents



FY FY 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outlo look



App Appendix

• Group Results – Revenue and Net Profit by Segment
• Aamal’s Investment Case

"Strength Through Diversity" 1

2019 HI HIGHLIGHTS

"Strength Through Diversity"

2

1 Before the deduction of net profit attributable to non-controlling interests 2 Restated to reflect the stock split implemented in June 2019 (a QFMA initiative requiring QSE-listed companies to split each of its shares into 10) 3 Internal control over financial reporting



A A year of

• f str

strategic de development and and evo evolution – Resilient response to weaker contracts environment, strong competition and customer ‘price sensitivity’



Fin Financial Perf erformance

• Revenue up 0.6% to QAR 1,294m
• Net profit1 down 28.0% to QAR 322m
• Reported EPS2 down 27.6% at QAR 0.05



Div Dividend of

• f QAR

QAR 0.04 0.04 a a sha share pro proposed

• Equivalent to 4% of paid-up share capital
• Subject to approval at AGM on 1 April 2020



Despite subdued real estate market, pr property segm egment pe performed wel ell versus pe peers



Mixed performance in Trading and Distribution – str strong sa sales les gr growth at at Ebn Ebn Sina Sina offs

• ffset by

by mar argin ero erosi sion at at Aam Aamal Med edical



Industrial Manufacturing impacted by slow slowdown in in maj ajor inf infrast structure pr projects s and and inte intense com competition



Further strengthened Aamal’s corporate governance to ensure the Group is well managed to deliver sustainable growth

Co Contents



FY FY 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outloo

• ok



App Appendix

• Group Results – Revenue and Net Profit by Segment
• Aamal’s Investment Case

"Strength Through Diversity" 3

FIN INANCIAL SUMMARY

• Slowdown in major infrastructure projects affecting

Industrial Manufacturing

• Increased competition driving sales prices down and

reducing profit margins

• Increase in finance costs due to loan agreed in late 2018
• Clearance of obsolete inventory coupled with revenue

recognition correction..

• Increase in provision balance related to IFRS 9 due to

slow down

"Strength Through Diversity"

4

Profitability im impacted by: y:

* Restated to reflect the stock split implemented in June 2019 (a QFMA initiative requiring QSE-listed companies to split each of its shares into 10). Note: there may be slight differences due to rounding.

QARm 2019 2018 % change Revenue 1,294.1 1,286.6 0.6% Net profit before share of net profit of associates and joint ventures accounted for using the equity method and FV gains on investment properties 259.9 347.6 (25.2%) Net underlying profit margin % 20.1% 27.0% (6.9 ppts) Share of net profit of associates and joint ventures accounted for using the equity method 62.3 100.0 (37.8%) Fair value gains on investment properties

• Total Company net profit

322.1 447.6 (28.0%) Less: non controlling interests (0.1) 2.3 (105.9%) Attributable to Aamal shareholders 322.3 445.3 (27.6%) Earnings per share (QR) 0.05 0.07* (27.6%)

Co Contents



FY FY 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outloo

• ok



App Appendix

• Group Results – Revenue and Net Profit by Segment
• Aamal’s Investment Case

"Strength Through Diversity" 5

IN INDUSTRIAL MANUFACT CTURING

• Financia

ial pe performance attr trib ibutable to to a com

• mbin

inatio ion of

• f fac

actors



Slowdown in the Qatari construction sector impacted sales volumes



Market competition pushed sales prices down (impacting margins)

• Suc

uccessfully lly pr prog

• gressed str

trategic ic investm tments and nd ope peratio ional pr proje

• jects

ts



Construction of Senyar Drum and Copper factories progressed (production est. late Q4 2020, benefits expected 2021)



Doha Cables increased production of HV cables, expanded product range and exported to new Asian markets



ACI implemented initiatives to improve processes and production volumes

• Imp

mprovin ing outlo utlook



Pipeline of major contracts in Industrial Manufacturing (beyond FIFA World Cup Tournament in 2022)



Aamal Readymix awarded iconic projects (Lusail Boulevard and expansion of Doha Port)

"Strength Through Diversity"

6

Note: there may be slight differences due to rounding.

QARm 2019 2018 % change

Revenue 169.1 230.5 (26.6%) Net profit - fully consolidated activities (1.5) 6.9 (121.5%) Net underlying profit margin % (0.9%) 3.0% (3.9 ppts) Share of net profit of associates and joint ventures accounted for using the equity method 54.1 94.6 (42.8%) Total net profit 52.6 101.5 (48.2%)

• Pos
• sit

itiv ive sales sales pe performance dr driv iven by by Ebn Ebn Sina Medic ical (up up 25 25% YoY)

• Profi
• fitabili

ility imp mpacted by by one ne-off fac actor

• rs in

in Ebn Ebn Sina Medic dical and nd Aam amal Trad adin ing



Ebn Sina Medical - revenue recognition adjustment in respect of unsold inventory QAR 5.8m



Aamal Trading - stock shortfall for fast tyre sizes due to supplier’s system issues; profit margins impacted by clearance of expired tyres and slow-moving stocks of home appliances; new credit limits imposed on higher credit risk clients

• Aam

amal Medic ical imp mpacted by by a less favourable le pr prod

• duct mix
• mix. Outlo

utlook mor more enc ncouragin ing due due to to ne new su supp pplie lier agreements ts



Olympus: providers of surgical and endoscopy products – broadening diversification in medial technology



Acetech: providers of ambulance tracking systems – in line with strategy to become the leading supplier in Emergency Medical Services and ambulance technology

• Imp

mproved outlo tlook k for

• r 20

2020 20



New supplier agreements at Ebn Sina Medical and Aamal Medical



2020 performance expected to be enhanced through partnerships with tier 2 and 3 tyre manufacturers and exiting from home appliances

"Strength Through Diversity"

7

QARm 2019 2018 % change

Revenue 799.6 696.4 14.8% Net profit 98.9 125.3 (21.1%) Net profit margin % 12.4% 18.0% (5.6 ppts)

TRADING AND DIS DISTRIBUTION

Note: there may be slight differences due to rounding.



Prop

• perty

y se segment pe performin ing well l de despit ite challe hallenging real al estate mar market

 Decline in performance at City Center Doha due to rental support provided to tenants, increased bad debt provision, maintenance and insurance costs, and one-off

lease termination penalty income of QAR 3.2m in 2018 and not repeated this year

 Aamal Real Estate impacted by reduced demand for residential property coupled with an increase in renovation costs 

Imp mproved pe performance expec xpected in n 20 2020 20

 Corporate rental agreements agreed for residential units, increasing occupancy rates to 95% (benefits expected from Q1 2020)  City Center Doha renovation set to complete in H1 2020 with major corporate clients leasing space (benefits expected from Q4 2020 "Strength Through Diversity"

8

QARm 2019 2018 % change

Revenue 290.1 295.4 (1.8%) Net profit - fully consolidated activities 218.4 235.7 (7.4%) Net underlying profit margin % 75.3% 79.8% (4.5 ppts) Share of net profit of associates and joint ventures accounted for using the equity method 5.6 5.4 3.1% Total net profit 223.9 241.1 (7.1%)

PROPERTY

Note: there may be slight differences due to rounding.

"Strength Through Diversity"

9

MANAGED SERVICES

• A chal

halle lengin ing ye year ar for

• r the

he Man anaged Servic ices se segment

• ECCO Gulf reclassified from a subsidiary to a JV (impacting accounting treatment and financial presentation)
• Market headwinds from increased competition and customer ‘price sensitivity’ impacted Aamal Services by QAR 1.8m
• New business wins helping to offset decline (e.g. Ministry of Justice, Mowasalat) following loss of Al Meera in 2018
• Com
• mpanie

ies in in the he se segment are pur pursuin ing initia nitiativ ives to to di differentia iate the hemselv lves as as a qualit quality of

• fferin

ing

• ECCO Gulf installed systems to support efficiency and quality of CRM
• Aamal Services will focus on small to medium sized business which place a premium on quality
• A po

posit itive ye year ar for

• r Aam

amal Travel (profit it up up 25 25% YoY)

• Agreements established with football playing South American countries and
• New Aamal Travel branch to open in 2020

Note: there may be slight differences due to rounding.

QARm 2019 2018 % change

Revenue 63.2 96.7 (34.7%) Net profit - fully consolidated activities 3.1 8.2 (61.5%) Net underlying profit margin % 5.0% 8.4% (3.5 ppts) Share of net profit of associates and joint ventures accounted for using the equity method 2.6

• 100%

Total net profit 5.7 8.2 (29.7%)

Co Contents



FY FY 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outloo

• ok



App Appendix

• Group Results – Revenue and Net Profit by Segment
• Aamal’s Investment Case

"Strength Through Diversity" 10

Co Corporate Governance Update

"Strength Through Diversity"

11

2019 2019 mark arked a a yea year of

• f signifi

ficant t dev development t in n term terms of

• f furt

urther stre trengthening cor corporate gov

• vern

rnance …

• Impl

plemented desi design an and ope

• perating ef

effe fecti tiveness of

• f cont

controls in n com compliance with th QF QFMA cod code (5) ) 2016 2016

 Achieved a clean Internal Controls over Financial Reporting (ICoFR) and Corporate Governance audit opinion from PWC.

• Cor

Corporate Gov

• vern

rnance Fra ramework improved through the implementation of:

 Whistleblowing policy  Code of Conduct policy  Delegation of authority matrixes

• Implemented all amendments to the Company’s Artic

rticles of

• f Associati

tion to comply with the QFMA Corporate Governance Code e.g. the change of nominal value of shares.

Co Contents



FY FY 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outloo

• ok



App Appendix

• Group Results – Revenue and Net Profit by Segment
• Aamal’s Investment Case

"Strength Through Diversity" 12

MARKET UPDATE

"Strength Through Diversity"

13

Industrial manufacturing:



Infrastructure spending on Qatar National Vision 2030 projects



More than 150 projects (focused on roads, hospitals and schools) expected in 2022 (worth c.$200bn)

Trading and distribution



Significant investment expected in an integrated healthcare system (under government’s National Development Strategy)



Growing demand for medical equipment, underpinned by government’s expansion plans in the public health sector

Property



Government is dedicated to modernizing and/or replacing dilapidated buildings



Growing number of luxury cruises and charter flights are supporting tourism and driving increased footfall in shopping malls

Managed Services



1.7 million visitors expected during FIFA World Cup. After which, arrivals are projected to more than double by 2025, making Qatar one of the fastest-growing tourist destinations



Qatar is expected to continue to grow as a major MICE destination

Supportive Qatari government

• Qatar National Vision 2030
• Largest budget in 5 years (significant

investment earmarked for construction)

• Non-oil industries (e.g. infrastructure,

healthcare and residential housing) expected to be key growth drivers

Encouraging macroeconomic statistics forecasted for 2020

• Inflation: 2.4%
• Real GDP: 3.2%

Macroeconomic backdrop provides many opportunities across Aamal’s segments…



Fina Financial performance in in 201 2019 9 reflects s ch challenging g ma market dynamics



Posi Positive developments emerging acro across ss all all business ss segm segments

• Improving conditions in Industrial Manufacturing e.g. award of Lusail Boulevard and Doha Port projects
• Corporate contracts signed in Q4 drive Aamal Real Estate occupancy levels to 95%
• City Center Doha redevelopment in final stages
• Notable contracts agreed in Trading and Distribution
• Implementation of cost control measures underway



Internal projects will ill be progressed

• Digital transformation (ERP implementation)
• Investment in high-calibre employees
• Investment in shared services



Bala alance she sheet stre strength ensures s Company can can take ad advantage of

• f ar

arisi sing op

• pportunities



Qatar’s macroeconomic backdrop offers Aamal many opportunities in 2020 and beyond

• Qatari government announced biggest budget in 5 years
• FIFA 2022 World Cup

"Strength Through Diversity"

14

SUMMARY AND OUTLOOK

ANY Y FU FURTHER QU QUESTIONS?

IMR MRAN CHUGHTAI Chief Financial Officer E: imran.chughtai@aamal.com.qa ZAID AID SHELLEH Risk and Compliance Manager E: zaid.shelleh@aamal.com,qa T: +974 4422 3888 www.aamal.co com.qa qa

"Strength Through Diversity"

15

AAM AAMAL COMPANY FI FINANCIAL PR/ R/IR R AD ADVISORS

LUCY CY EY EYLES Investor Relations E: E: Lucy.Eyles@citigatedewerogerson.com T: +44 (0)7525 951 207 AN ANDREW HEY HEY Financial PR Advisor E: E: Andrew.Hey@citigatedewerogerson.com T: +44 (0)7903 028 448 TOB OBY Y MOO MOORE Financial PR Advisor E: E: Toby.Moore@citigatedewerogerson.com T: +44 (0)7768 981 763 RAM RAMIZ AL AL-TURK Arabic Media Enquiries E: E: Ramiz.Al-Turk@citigatedewerogerson.com T: +974 5014 9201 www.ci citigatedewerogerson.com

Co Contents



FY FY 2019 2019 High Highlig ights



Fi Fina nancia ial l Su Summary ry



Segm Segmental l Review



Co Corp rpor

• rate Go

Governance Upd pdate



Su Summary and and Out Outloo

• ok



App Appendix

• Gr

Grou

• up Resu

esult lts – Revenue and and Ne Net Profi

• fit by

y Seg Segment

• Aam

Aamal’s Investment Cas Case

"Strength Through Diversity" 16

"Strength Through Diversity"

17 QARm Rm 2019 2019 2018 2018 Chan ange %

Industrial Manufacturing 169.1 230.5 (26.6)% Trading and Distribution 799.6 696.4 14.8% Property 290.1 295.4 (1.8)% Managed Services 63.2 96.7 (34.7)% less: inter-divisional revenue (27.9) (32.4) (14.0)% Tota

• tal

1,294.1 1,286.6 0.6%

GROUP RESULTS (B (BY SEGMENT)

Note: there may be slight differences due to rounding.

REVENUE

QARm Rm Net Net pr prof

• fit

it 2019 2019 Net Net pr prof

• fit

it 2018 2018 Chan ange % Mar argin in (%)* )* 2019 2019 Mar argin in (%)* )* 2018 2018

Industrial Manufacturing 52.6 101.5 (48.2)% 31.1% 44.0% Trading and Distribution 98.9 125.3 (21.1)% 12.4% 18.0% Property (ex-FV gains) 223.9 241.1 (7.1)% 77.2% 81.6% Fair Value gains 0.0 0.0

• Managed Services

5.7 8.2 (29.7)% 9.1% 8.4% less: Head Office costs (59.0) (28.5) (107.5%) 211.8% 87.8% Tota

• tal

322.1 447.6 (28.0)% 24.9% 34.8%

NET PROFIT

"Strength Through Diversity" 18

Exp Experienced, pr proven sen senior man anag agement tea eam

• Highly effective corporate decision-making
• Ability to successfully partner with leading

international companies

• Talented and motivated managers with

significant experience

Fin Financial strength

• Strongly capitalised with low financial gearing

and a net cash position

• Readily available access to debt capital markets
• Supportive backing from Aamal’s major

shareholders

• One of the highest dividend yield payers

amongst QSE listed companies

St Strength through div iversi sity

• Diversified for balanced exposure across the

Qatari economy

• 26 active business units
• Market leading positions in key growth sectors
• Each subsidiary managed as a standalone entity,
• ptimizing operational focus

Ope perating in in an an attractive, , gr growing g mar arket

• Qatar is one of the world’s fastest growing and

most successful economies

• Strong market positions in key high-growth

sectors

• Significant growth opportunities

DE DELIVERING ON OUR IN INVESTMENT CA CASE

"Strength Through Diversity" 19

Shukran