ANNUAL
REPORT
2014
His Highness
Sheikh Tamim Bin Hamad Bin Khalifa Al-Thani
Emir of the State of Qatar
CONTENT
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46
Company Profile
Financial Highlights
Investment Rationale
Chairman’s Report
Vice Chairman’s Report
Managing Director’s Report
Corporate Governance
Board of Directors
Executive Management and General Managers
Organisational Chart
Functional Chart
Corporate Social Responsibility
Operations Review
Industrial Manufacturing Division
Trading and Distribution Division
Property Division
Managed Services Division
Financial Statements
COMPANY PROFILE
“Generating revenues of QAR 2,139m (US$ 588m) in 2014, Aamal Company is one of the largest, most
diversified and fastest-growing companies in Qatar offering investors a high quality and balanced
exposure to the remarkable Qatar growth story.”
Company Snapshot
xx Incorporated in 2001 in Qatar and listed on the Qatar Exchange in 2007
xx Geographical focus on Qatar at present with intentions to expand further in the Gulf region
xx Operations across 23 business units with market leading positions in key sectors including: industrial manufacturing, property,
trading in pharmaceuticals and medical equipment and managed services
xx Strategy focused on three pillars for sustained, profitable growth: i) Increasing focus on industrial manufacturing and related
high growth sectors ii) Continued growth, diversification and innovation across other existing businesses to enhance market
position and optimise performance iii) Continued application of clear and disciplined operational and financial principles
underlying our strategic growth initiatives
xx Uniquely positioned to benefit from increased private and public sector demand, particularly for infrastructure development,
as Qatar is transformed into an advanced and self-sustaining economy. The award of the 2022 FIFA World Cup to Qatar and
the National Vision 2030 is anticipated to accelerate this capital investment as infrastructure projects are commissioned and
new projects come on stream
xx Current market capitalisation of QAR 11bn* (US$ 3bn), making Aamal Company one of the largest diversified companies
listed on the Qatar Exchange
xx Al Faisal Holding Company is the major shareholder
*As on 3 March 2015
Aamal Annual Report 2014 Aamal Company Q.S.C.
9
QARm
FY 2014
FY 2013
Change%
Revenue
2,139.1
2,122.6
0.8%
Gross Profit
506.0
420.5
20.3%
Gross Profit Margin %
23.7%
19.8%
390 basis points
348.5
267.2
30.4%
Net Underlying Profit Margin Before Fair Value Gain %
15.4%
11.7%
370 basis points
Fair Value Gains on Investment Properties
251.7
245.1
2.7%
Net Profit
600.2
512.3
17.2%
Net Profit Before Value Gains on Investment Properties
2
Reported EPS
0.96
0.85
13.9%
Adjusted EPS3
0.54
0.44
24.3%
Revenue1
Net Profit Before
Fair Value Gains on
Investment Properties2
Industrial Manufacturing
1,134.2
51.7
Trading and Distribution
728.8
114.9
Property
288.8
223.3
Managed Services
64.2
8.3
2,215.9
398.2
1 There may be slight calculation discrepancies due to rounding
2 Excluding share of profit from equity accounted for investments in associates and joint ventures
3 EPS adjusted to show underlying profitability (i.e. excluding fair value gains on investment properties)
2014: Revenue and Net Profit breakdown by division (QARm)
Division
Total
1 Revenue shown before deduction of inter divisional revenue
2 Net Profit shown before deduction of Head Office costs
Revenue* by division
3%
51%
Net Profit* by division
13%
13%
33%
2%
29%
56%
FINANCIAL HIGHLIGHTS
Industrial Manufacturing (51%)
Property (13%)
Industrial Manufacturing (13%)
Property (56%)
Trading and Distribution (33%)
Managed Services (3%)
Trading and Distribution (29%)
Managed Services (2%)
*Before deduction of inter divisional revenue
*Before fair value gains on investment properties and deduction of Head Office Costs
Aamal Annual Report 2014 Aamal Company Q.S.C.
11
INVESTMENT RATIONALE
1) A powerful, cohesive growth platform
xx xx xx xx 20.00
19.00
18.00
17.00
16.00
15.00
One of the fastest growing diversified companies, offering high quality exposure to the Qatar growth story
Diversified for balanced exposure across the Qatari economy
Strong market positions in key sectors
Superior combination of high quality asset base, strong operating profitability and earnings visibility (delivering a compound
annual growth rate in net profit excluding fair value gains on investment properties in excess of 13% from 2006-2014, and
generating revenues of QAR 2,139m (US$ 588m) in 2014.
2) Balance sheet strength – strong backing of major shareholders
xx Strong asset backing
xx Readily available access to debt capital markets, which in addition to strong cash flow generation, provides strong liquidity
for future growth
xx Low gearing
xx Al Faisal Holding Company and Sheikh Faisal Al Thani are the major shareholders
3) Experienced, proven senior management team
xx Strength in strategic asset allocation, corporate governance and risk control
xx Proven track record of historical profit growth and value creation driven by clear focus on returns on capital and capital
discipline
xx Highly effective corporate decision-making with short lines of communication with operational management
4) Strength in depth
xx
xx
xx
xx
Development of shared services policy, allowing divisional management to focus on core business
Each subsidiary managed as an individual entity, optimising management’s operational focus and transparency
Talented and motivated managers with significant experience and excellent customer relationships in their respective areas
Clear segregation between management and ownership, reinforcing best practice corporate governance guidelines
Aamal Annual Report 2014 Aamal Company Q.S.C
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Esteemed Shareholders
On behalf of the Board of Directors, I am very 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.
Summary of financial results - 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%
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%
8.3
5.2
60.1%
less: Head Office costs
(49.7)
(47.9)
3.8%
TOTAL
600.2
512.3
17.2%
NET PROFIT
Managed Services
As well as a record year for financial performance, we achieved a number of significant operational milestones. First, 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 center 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.
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.
CHAIRMAN’S REPORT
Faisal Bin Qassim Al Thani
Chairman
Aamal has achieved exemplary financial and operational results for 2014, evidencing the Company’s ability to seize opportunities
offered by Qatar’s growing and flourishing economy, as well as its ability to do so profitably by focusing on revenue growth alongside
operational efficiency and cost control, and in line with the Company’s balanced strategy for risk assessment and management.
Aamal’s key strengths lie in its clear vision and strategy that are closely aligned with Qatar’s national strategy for economic
development. Aamal has succeeded in building a solid base with its industrial manufacturing division, whilst developing further
the other sectors in which it operates. Looking at the Company’s performance alongside the performance of the overall Qatari
economy, we believe that our strategy of diversifying revenue sources is in line with the country’s strategy for economic growth and
plans for development; that is, aiming to diversify the economy away from over-dependence on the hydrocarbon sector towards
transforming Qatar into a center for manufacturing and services which will help to underpin the country’s long term prosperity.
Besides, Aamal seeks to build on opportunities resulting from the MSCI upgrade of Qatar from frontier market to emerging market
status. This upgrade has undoubtedly raised the appeal of those companies listed on the Qatar Exchange to international investors,
leading to an enhancement in investor confidence and an increase in liquidity. Accordingly, Aamal has applied to raise the level of
permitted foreign ownership to 49%, aiming to attract private capital from non-Qatari nationals both abroad and from the increasing
number resident within Qatar, who may wish to participate in a company that is able to offer directly, a high quality and balanced
exposure to the remarkable Qatar growth story.
Together, these factors give cause for continuing confidence in the Company’s future performance. I am sure that Aamal will
continue to prosper whilst focusing on delivering the best results for all stakeholders first and foremost. Our leading positions in
the sectors in which we operate as well as our strong financial position enable us to offer comprehensive and balanced growth
opportunities within Qatar, one of the fastest growing economies in the world.
Mohammed Bin Faisal Al Thani
Vice Chairman
VICE CHAIRMAN’S REPORT
I am pleased to present another positive set of results as the Company continues to grow and
develop in line with the expansion of the broader Qatari economy.
I would like to emphasize two key points that our strong 2014 performance clearly bears out. The first is
the importance of diversifying the Company’s revenue streams and the impact this has on reducing risk and
achieving sustainable growth. The second is the quality of Aamal’s activities and investments.
Although Aamal is positioned as a leading industrial company, as it continues to build a solid industrial base across a
range of businesses that benefit from Qatar’s significant infrastructure programme, it has also built a prominent market
positions in other key sectors that are meeting the demand for increasingly sophisticated products and services as Qatar’s
economy continues to evolve at a rapid pace.
Investment in the industrial manufacturing sector is at the heart of Aamal’s long-term growth strategy.
The success of our core focus on this sector is evident from its growing contribution to the Company’s net profit, which continues
to increase - in 2014, it made up 13% of overall net profit compared to 7% the previous year. More importantly, our long term
approach to this sector is starting to deliver increasing profitability as production continues to increase in line with the anticipated
acceleration in infrastructure project build, as evidenced by the tenfold year-on-year increase in the net profit margin for the
Industrial Manufacturing division.
However, we continue to ensure that the growth that our industrial manufacturing activities deliver for the Company is balanced
against the growth of Aamal’s other activities (whether by establishing new projects or through developing existing activities), as
their positive cash flow underpins our expansion plans. Balanced and sustained diversification also enhances our overall strength,
reducing our exposure to the impact of market conditions that might affect one particular sector more than others from time to time.
Across all of our businesses in each of our four core sectors, delivering the highest quality of products, services and investments
is a fundamental principle on which we never compromise. This principle underpins the strength of our market positions, customer
reputation and our track record in attracting the best global expertise and partners, and in creating jobs opportunities in new
fields. Our investment commitment to maintaining our leadership in this respect is reflected in our sector operational performance
throughout the year.
To highlight a number of examples, in 2014, production began at the Advanced Pipes and Casts factory, the largest factory in Qatar
with an area of 85,000 square metres and a production capacity of 450,000 tonnes per year. It will produce a range of infrastructure
and construction products including jacking pipes, reinforced concrete pipes, circular precast concrete manholes and precast
concrete box culverts, which is considered a new product that will be manufactured in Qatar for the first time.
At our core Aamal ready mix operation, we completed a significant investment in new equipment and the complete overhaul of its
batching and ice plants that will enable us to deliver further growth in production at the highest standards of quality and efficiency.
And in our trading and distribution sector, we have established “Aamal Optical Supplies” in partnership with Qatar Optics, a leading
company in the optical care field. The Company will be involved in the import, manufacture and distribution of prescription lenses
and eyeglasses, the import and distribution of contact lenses, and other eye care products and services. There are also other
projects under consideration that will be announced in due time.
Looking ahead, we continually appraise potential new investment opportunities and we expect a number of these to be announced
over the course of the next 12 months as we continue to capitalise on opportunities for balanced and profitable growth.
MANAGING DIRECTOR’S
REPORT
Tarek M. El Sayed
Managing Director
“Aamal’s Board and Management are committed to meeting the expectations of
stakeholders in practicing sound corporate governance. Aamal Company views
corporate governance as an important factor in delivering success.”
Board committees
The Board of Directors has formed five committees: 1) Audit Committee; 2) Nomination Committee; 3) Corporate Governance
Committee; 4) Compensation Committee; and 5) Executive Committee. The dedicated committees meet regularly to assess
operational effectiveness and ensure that the Company is performing in line with the set objectives.
Segregation of responsibility
In accordance with the highest standards of good Corporate Governance, the Board has decided to segregate the executive
management duties from the Board.
The executives operate from a well-defined rule authorisation matrix and have various quantitative and qualitative targets set for
them.
The executive management acts upon authorities approved by the Board of Directors. The Company policies and procedures are
reviewed and updated regularly.
Relations with shareholders
Aamal Company is committed to maintaining an active and open dialogue with its shareholders through a planned programme of
investor relations activities centred on the financial reporting calendar. Our website has a dedicated Investor Relations section to
provide further information for all investors or potential investors while our Investor Relations team provides a channel for any other
queries to be answered.
CORPORATE GOVERNANCE
Support systems
The Company uses the Oracle system as the primary Group IT System.
Aamal Annual Report 2014 Aamal Company Q.S.C
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BOARD OF DIRECTORS
Sheikh Faisal Bin Qassim Al Thani
Sheikh Mohamed Bin Faisal Al Thani
Mr. Tarek M. El Sayed
Sheikh Turki Bin Faisal Al Thani
Managing Director
Board Member
Sheikh Abdullah Al Thani
Mr. Bader A. Al Fehani
Chairman
Board Member
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Vice-Chairman
Board Member
Aamal Annual Report 2014 Aamal Company Q.S.C
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EXECUTIVE MANAGEMENT
GENERAL MANAGERS
Parveez Aslam
Sherif Shehata
Ayman Morrar
Ahmed El Sewedy
Hesham Kaoud
Keith Smith
Osama Al Hajj
Amr Goher
Jorg Harengerd
Homok Chungg
Samy Hanna
Samy Ibrahim
Aamal Readymix
Gulf Rocks
Mr. Tarek M. El Sayed
Managing Director
Mohamed Ramahi
Chief Financial Officer
Aamal Medical
Aamal Cement Industries
Aamal Travel and Tourism
Aamal Real Estate
El Sewedy Cables Qatar,
Doha Cables
ECCO Gulf
Maha Jadallah Harper
Chief Legal Advisor
City Center - Doha
Innovative Lighting QLEDs
Ebn Sina Medical
Al Farazdaq Company
Sameer Abu Hannun
Advanced Pipes and Casts
Company
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Aamal Annual Report 2014 Aamal Company Q.S.C
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ORGANISATIONAL CHART
FUNCTIONAL CHART
Aamal Company Q.S.C.
Corporate Governance
Committee
Compensation
Committee
Executive Committee
Audit Committee
Nomination
Committee
Chief Business
Development Officer
Business Development
Department
Chief Operating
Officer
Aamal Branches
General Managers
INDUSTRIAL
MANUFACTURING
TRADING AND
DISTRIBUTION
PROPERTY
MANAGED SERVICES
Aamal Readymix
Aamal Trading
and Distribution
City Center Doha
Aamal Travel and
Tourism
Aamal Cement
Industries
Aamal Medical
Aamal Real Estate
Aamal Services
Advanced Pipes
and Casts Company
Ebn Sina
Medical
ECCO Gulf
Senyar Industries
Qatar Holding
Ebn Sina Health Care
Solutions
Johnson Controls
Qatar
Doha Cables
Foot Care Centre
Elsewedy Cables
Qatar
Aamal Optical
Supplies
Doha Transformers
Al Farazdaq Company
Board of Directors
Chairman
Managing Director
Chief Legal Adviser
Chief Financial Officer
Legal Department
Finance Department
Head Office, Branches
and Subsidiaries
Subsidiaries
Operations
Administration
Department
Human Capital
Department
Treasury Department
Corporate
Communications
Innovative Lighting
Procurement
Department
Ci-San Trading
Gulf Rocks
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Aamal Annual Report 2014 Aamal Company Q.S.C.
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CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Aamal continued its partnership with The Qatar Football Association for the third consecutive year as part of its commitment to play
a proactive and responsible role in promoting sport which is one of the key elements of Qatar’s National Vision 2030.
Key CSR activities by division:
INDUSTRIAL MANUFACTURING DIVISION
Doha Cables
xx Established a summer internship programme where aspiring engineers can attend full training programmes to help them
prepare for a career in electrical engineering
xx Continuing to expand the Doha Cables Academy by organising various workshops for a number of engineering organisations,
xx
such as the Institute of Integrated Electrical Engineers, as well as a number of educational seminars for consultants and
contractors in Qatar
Doha Cables is an affiliate member of The Gulf Organization for Research and Development (GORD)
Aamal Readymix
xx Renewed its Green Building certification to re-emphasize its commitment for the study and achievement of reduced carbon
footprints in the readymix industry
xx In the process of finalizing the installation of new recycling plant at its industrial area factory. This will enable the branch to
recycle all the unused and scrap quantities of the Readymix concrete, thereby minimising waste
xx Aamal Readymix was honoured for its participation in a recent blood donation campaign
Aamal Cement Industries
xx Continued to focus on in-house recycling, and dust suppression to improve the environmental impacts on site
xx Joined the Green Building Council, adding support to the green building lobby in Qatar that is leading the drive for greater
environmental controls
TRADING AND DISTRIBUTION DIVISION
Ebn Sina Medical
xx Continued focus on education through the adoption of two programmes:
xx
a) Support of pharmacy students at the University of Qatar and the College of the North Atlantic, through the provision of
collaborative training work experience opportunities within the Ebn Sina pharmacy chain
b) Support of the scholarship programme for the Bachelor’s, Master’s and PhD Pharmacy students at Qatar University
Continuing to substitute environmentally harmful plastic bags with d2w oxo-biodegradable bags throughout its pharmacy
chain
Aamal Medical
xx Organised an AED Awareness and Training Programme in Shopping Centres and Residence Towers. AED (Automated
External Defibrillator) is a portable electronic device that automatically diagnoses the life-threatening cardiac arrhythmias of
ventricular fibrillation and ventricular tachycardia in patients
Aamal Trading & Distribution
xx Annual hosting of the ‘Bridgestone Tyre Safety and Eco Station Campaign’ to promote road safety and environmental
awareness
PROPERTY DIVISION
City Center Doha
xx Continued to support various awareness campaigns in collaboration with the Government and other non-profit organisations
Aamal Real Estate
xx Organised blood donation event at Souq Al Harraj with coordination with Hamad Medical Cooperation
Aamal will continue to build upon its core values of responsibility and sustainability implementing strategies that address
environmental issues, empower people and provide training and safety awareness programmes to all its employees.
Aamal Annual Report 2014 Aamal Company Q.S.C
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INDUSTRIAL MANUFACTURING
DIVISION
QAR m
Revenue
2014
2013
Change %
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 %
For the year ended 31 December 2014, the Industrial Manufacturing Division generated 51% of the Company's revenues, and
13% of its net profit. 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.
Aamal Industrial Manufacturing operations currently include:
a. Senyar Industries Qatar Holding: production and distribution of electric cables, equipment and tools, as well as the distribution
of electro-mechanical equipment;
b. Aamal Readymix: production of high quality ready-mixed concrete;
c. Aamal Cement Industries: production of interlocking paving stones, concrete blocks and tiles;
d. Ci-San Trading: importation and supply of high quality gabbro aggregates through Gulf Rocks;
e. Innovative Lighting Company: trading and supplying of LED and other lighting products; and
f. Advanced Pipes and Casts Company: manufacturer of pipes
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Senyar Industries Qatar Holding
A 50:50 joint venture between Aamal and El Sewedy Electric Company, an Egyptian company
listed on the Egyptian Exchange and producer of integrated cables and electrical products (such as
transformers, tools and energy and water measurement and management). Senyar’s operations
include:
Doha Cables
The first and largest cables manufacturing facility in Qatar, Doha Cables commenced operations
in May 2010 specialising in the manufacturing of power cables, special cables, winding wires and
cables accessories. Annual manufacturing production capacity is 40,000 tonnes of cable. Doha
Cables is 85% interest owned by Senyar (El Sewedy Cables Qatar (of which Senyar owns 55%)
owns a 12.5% interest, with an unaffiliated third party the remaining 2.5%). Effective ownership by
Aamal in Doha Cables is thus 45.9%).
In 2014, Doha Cables has achieved LPCB certification for Fire Resistant Cables, and it has been
approved by Kahramaa up to 66kV and has successfully passed the 132kV loop type test held at
KEMA laboratories, the world renowned testing, inspection and certification organisation.
Aamal Annual Report 2014 Aamal Company Q.S.C
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El Sewedy Cables Qatar
El Sewedy Cables Qatar commenced operations in 2006, specialising in the distribution of electromechanical equipment and cables for Doha Cables and third party manufacturers. A 49% stake (with
55% share of profits/losses) was acquired by Senyar from El Sewedy Electric Company in January
2010 with unaffiliated third parties owning the remaining 51%. Effective ownership by Aamal in El
Sewedy Cables Qatar is 27.5% and is equity accounted for as an Associate.
Doha Transformers
Established in 2009 to build a transformers factory to produce primarily oil-filled and dry transformers.
This project is still under development.
Aamal Readymix
An entity 100% owned by Aamal. It commenced operations in 1994 and is one of the largest producers
of quality ready-mixed concrete in Qatar with an annual production capacity of 600,000 cubic metres.
In 2014, Aamal Readymix has acquired 60 pieces of new equipment and fleet including trailer heads,
trailer boxes, transit mixers, concrete pumps (62 metres in boom length), wheel loaders and water
tankers
The branch re-opened its batching plants at Lusail after the complete renovation and overhaul of
its batching plant and ice plant. Also, a new office and new Quality Control lab was built at the
Lusail plant. Certifications of compliance with IMS standards, TUV ISO 9001:2008, ISO 14001:2004
and BS OHSAS 18001:2007 were renewed. The batching plants at the industrial area and Lusail
were certified by NRCMA (National Readymix Concrete Association) for its compliance with the
international standards of readymix concrete production and quality control.
Aamal Cement Industries W.L.L.
Aamal Company owns 99%. It commenced production of decorative interlocking paving stones and
concrete blocks in 2010 with an annual production capacity of approximately 25 million blocks or two
million square metres of paving stones. The plant has one of the largest block and pavement making
machines in Qatar.
In 2014, Aamal Cement Industries continued to its increase its product offering as it successfully
introduced four new curb stone products to the market and is expected to add six more in 2015.
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Ci-San Trading W.L.L.
Gulf Rocks is the sole trading entity of this joint venture established in 2008 with Masraf Al Rayyan,
to evaluate investments in various sectors such as industrial, real estate, and trading opportunities in
both local and international markets. Effective ownership by Aamal is 74.5%; in 2012, Ci-San Trading
purchased 51% with Aamal directly acquiring the remaining 49%.
Gulf Rocks itself was established in 2000 by Al Faisal Holding, and is a leading importer and provider
of high quality gabbro aggregates, which is widely used in concrete products.
Advanced Pipes & Casts Company W.L.L.
Aamal owns 50% of Advanced Pipes and Casts Company. Established in July 2010 as a joint
venture between the Company and a Saudi Arabian subsidiary of the Lokma Group, a leading pipe
manufacturer in the Middle East.
In 2014, the factory commenced commercial production at its 85,000 square metre facility at Mesaieed
with an annual production capacity of 450,000 tonnes. It produces a range of infrastructure and
construction products including jacking pipes, reinforced concrete pipes, circular precast concrete
manholes and precast concrete box culverts, a first for Qatar in manufacturing terms.
Innovative Lighting W.L.L.
Aamal owns 70% of Innovative Lighting ‘QLEDs’. Established in 2012 as a joint venture with C&C
Lightway of South Korea, Innovative Lighting currently trades in and distributes light emitting diodes
(“LEDs”) and other lighting products (indoor, outdoor and façade) for the Qatari market and other
GCC countries.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
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TRADING & DISTRIBUTION
DIVISION
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 basis points
For the year ended 31 December 2014, the Trading and Distribution generated 33% of the Company's revenues, and 29% of its
net profit. The Trading and Distribution division net profit 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 20112016, designed to ensure that the population has increasing access to world-class treatment facilities.
Aamal Trading and Distribution operations currently include:
a.
b.
c.
d.
e.
f.
g.
Ebn Sina Medical: the leading pharmaceutical distribution company in Qatar
Aamal Medical: a leading medical equipment supplier
Aamal Trading & Distribution: a leading distributor of automotive products
Foot Care Centre: provider of a range of foot care services and products
Ebn Sina Health Care Solutions: a modern chain of pharmacies located in City Center Doha
Aamal Optical Supplies W.L.L.: an importer, manufacturer and supplier of optical supplies and services
Al Farazdaq Company: provider of printing solutions and trader of office supply products
Ebn Sina Medical
Aamal owns 100% of Ebn Sina Medical, the Qatari leading provider of pharmaceutical, hospital
supplies and consumer health products, representing 50+ international reputable healthcare
manufacturers from more than 20 countries including Roche, AstraZeneca, Novartis Pharma,
B-Braun, Boston Scientific and Nuxe. Ebn Sina Medical also operates a retail chain including a
pharmacy and three Foot Care Centre that provide a range of clinical foot care services, foot care
products and specialist footwear.
In 2014, Ebn Sina Medical has signed four contracts with leading multinational pharmaceuticals
and consumer companies. Also, it has registered with the Supreme Council of Health, eight new
pharmaceutical and herbal companies as well as more than 45 new products.
Despite price reductions of 30% to 40% for medicines during 2014, Ebn Sina Medical managed to
achieve more than 8% growth in the private market and more than 12% growth in both the retail
pharmacy and the Foot Care Centers.
Ebn Sina Medical has succeeded to complete the renewal of ISO 9001- 2008 Certification, up to
June 2017.
Ebn Sina Health Care Solutions
Aamal has a 100% interest in Ebn Sina Health Care Solutions and was formerly known as Good Life
Pharmacy. The renaming was done in order to capitalise on the strong Ebn Sina brand as expansion
plans for this pharmacy chain are undertaken.
36
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Aamal Annual Report 2014 Aamal Company Q.S.C.
37
Foot Care Centre
Aamal has a 100% interest in Foot Care Centre, offering a broad range of biomechanical, orthopaedic
and therapeutic services for feet along with a variety of foot care products from the well-known brand
SCHOLL. Foot Care Centre is considered an important addition to the local market offering several
popular therapeutic services. Foot Care Centre is a registered trademark in Qatar.
There are currently two Foot Care Centres operating in Qatar with a third one due to open in the
Pearl Madina Centrale during the first half of 2015
Aamal Medical
Aamal owns 100% of Aamal Medical, a leading medical equipment supplier in Qatar. Aamal Medical
has exclusive distribution agreements with a number of leading international medical equipment
suppliers. In addition to sales of medical equipment, Aamal Medical also provides consultancy on,
and builds, operating room theatres, and installs hospital information systems.
In 2014, the branch has signed multiple distribution agreements with leading companies providing
diverse products such as a) surgical ceiling pendants, operating lights and operating tables; b) Noninvasive patient monitoring technologies; c) emergency defibrillation and automated CPR equipment;
d) communicable disease management system that has been designed by health professionals to
meet specific population health needs; and e) patient monitoring, infotainment, nursing care and
medical record tracking that also helps to ensure the safety, accuracy and reliability of medical data.
Aamal Optical Supplies W.L.L.
Aamal has a 51% interest in Aamal Optical Supplies
A partnership agreement between Aamal Company and Qatar Optics was signed in 2014 establishing
Aamal Optical Supplies W.L.L.. The Company will be involved in the import, manufacture and
distribution of prescription lenses, the import and distribution of contact lenses and other eye care
products and services, and the opening of a specialised optical medical centre in the near term.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
39
Aamal Trading & Distribution
40
Al Farazdaq Company
Aamal owns 100% of Aamal Trading and Distribution, the exclusive distributor in Qatar of Bridgestone
tyres since 1971 and a non-exclusive distributor of TOTAL oil and lubricant products since 1990
and is also involved with the supply, installation, commissioning of ‘GETTCO’ home appliances and
maintenance of air conditioning and refrigeration equipment.
Aamal Company holds 65% of Al Farazdaq Company which started its operations in 2013 to provide
printing solutions and trade in various office supplies products. The printing press is equipped
with state of the art printing machines, offering innovative digital printing solutions to the business
community.
In addition, Aamal Trading and Distribution has the sole Qatari distribution rights to supply Energizer
Automotive Batteries, under license from Johnson Controls Battery Group.
Al Farazdaq is also the sole agent of ‘Gettco Office Supplies’, offering a wide range of a high quality
stationery that is durable, innovative reliable and competitively priced.
In 2014, Al Farazdaq has added more printing machines in order to increase its offerings and cater
to a wider customer base
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Aamal Annual Report 2014 Aamal Company Q.S.C.
41
PROPERTY DIVISION
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 basis points
*Net profit before fair value gains on investment properties
For the year ended 31 December 2014, the Property Division generated 13% of the Company's revenues, and 56% of its net profit,
excluding fair value gains on investment properties. Net profit for the Property division rose by 11.2% to QAR 223.3 million yearon-year 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.
Occupancy rate at both City Center and Aamal Real Estate remained at a high level of 95%, with 5% held back as a strategic
reserve in order to allow for active management
Fair value gains on investment properties for the year were QAR 251.7 million (2013: QAR 245.1million).
Aamal Property division owns and leases retail and residential properties through two subsidiaries: City Center Doha, the largest
shopping mall in Doha, and Aamal Real Estate.
City Center Doha
Aamal owns 100% of City Center Doha, inaugurated in 2000, one of the first shopping malls in Doha
and remains the largest, based upon its net leasable area. Widely regarded as the premier mall in
Qatar, City Center Doha has 372 shops, 62 kiosks, a 14-screen cinema, family entertainment facility
and an indoor ice skating rink.
In 2014, good progress had been made towards securing the necessary permissions for Phase 2 of
the redevelopment of the mall.
Aamal Real Estate
Aamal owns 100% of Aamal Real Estate which comprises a) the Souq Najma (Al Haraj) which
was built in 1993 as a traditional Middle Eastern souq comprising of 347 shops, 25 kiosks and 24
residential flats; b) the Markhiya residential complex; and c) four other residential buildings.
In 2014, Aamal Real Estate completed the renovation of three of these four residential buildings,
comprising a total of 30 apartments in the Bin Mahmoud area, that were all successfully rented out
to new tenants.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
43
MANAGED SERVICES
DIVISION
QAR m
2014
2013
Change %
Revenue
64.2
86.3
(25.6)%
Net Profit
8.3
5.2
60.1%
12.9%
6.0%
+690 basis points
Net profits margin
For the year ended 31 December 2014, the Managed Services Division generated 3% of the Group's revenues and 2% of its net
profit. 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%
Johnson Controls Qatar W.L.L.
Aamal Company owns 51% of Johnson Controls Qatar which provides facility improvement and
energy solutions to customers in Qatar. Johnson Controls Qatar offers green building and building
efficiency solutions using eco-friendly materials and techniques that help lower carbon emissions
and lower electricity consumption by approximately 30%. This is in line with Aamal’s strategy to offer
environmentally-friendly products and services.
The major factor behind this growth is a greater focus on cost control, along with the curtailment of several low margin contracts
which also helps to explain the 25.6% drop in revenues.
The Managed Services operations focus primarily on providing commercial facilities management, outsourcing and other business
support services, and currently include:
ECCO Gulf W.L.L.
Aamal Company owns 51% of ECCO Gulf which is a joint venture with ECCO Outsourcing, the
leading Egyptian contact centre operator and business process outsourcer. ECCO Gulf commenced
operations in 2010 offering Business Process Outsourcing, professional service outsourcing and
human resources outsourcing to clients in Qatar.
In 2014, ECCO Gulf has introduced new services and successfully diversified its client sectors to
include banking, real estate, insurance and shipping.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
45
Aamal Services
Aamal owns 100% of Aamal Services which provides a wide range of services, including cleaning,
hotel and hospitality services, waste collection and disposal (including medical waste and solid
waste), ground maintenance and landscaping, pest control and fleet/car washing.
Aamal Travel and Tourism
Aamal owns 100% of Aamal Travel and Tourism, which is an International Air Transport Association
(IATA) accredited travel agency providing a range of travel services, including airline reservations
and ticketing, worldwide hotel bookings and holiday packages.
Aamal Travel has officially joined “Lufthansa City Center International” network of 688 Travel
Agencies in 88 countries around the world; this strategic move will enable Aamal Travel to exchange
knowledge and business with the network partners around the world.
Accordingly, the branch trade name was rebranded to “Aamal Travel Lufthansa City Center”,
becoming the first Lufthansa City Center partner in Qatar.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
47
AAMAL COMPANY Q.S.C.
Consolidated Financial Statements
31 December 2014
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF AAMAL COMPANY Q.S.C.
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Aamal Company Q.S.C. (the “Company”), which comprise
the consolidated statement of financial position as at 31 December 2014, and the consolidated statements of income, profit or loss
and other comprehensive income, cash flows and changes in equity for the year then ended, and notes, comprising a summary of
significant accounting policies and other explanatory information.
Board of Directors’ responsibility for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards and, for such internal control as the Board of Directors determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
Report on other legal and regulatory requirements
We have obtained all the information and explanations which we consider necessary for the purposes of our audit. The Company
has maintained proper accounting records and its consolidated financial statements are in agreement therewith. We confirm that
physical count of inventories was carried out in accordance with established principles. We have reviewed the accompanying
report of the Board of Directors and confirm that the financial information contained therein is in agreement with the books and
records of the Company. We are not aware of any violations of the provisions of the Qatar Commercial Companies Law No. 5 of
2002 or the terms of the Company’s Articles of Association during the year which might have had a material adverse effect on the
business of the Company or on its consolidated financial position as at 31 December 2014.
3 February 2015
Gopal Balasubramaniam
Doha
KPMG
State of Qatar
Qatar Auditors Registry Number 251
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
the Company as at 31 December 2014 and its consolidated financial performance and consolidated cash flows for the year then
ended in accordance with International Financial Reporting Standards.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
51
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF INCOME
At 31 December 2014
For the year ended 31 December 2014
Note
2014
QR
2013
QR
Note
ASSETS
Current Assets
Cash and bank balances
4
554,659,257
436,136,756
Accounts receivable and prepayments
5
518,412,487
510,089,839
Amounts due from related parties
6
318,597,869
214,439,950
Inventories
7
300,570,431
316,699,545
1,692,240,044
1,477,366,090
Non-current assets
-
Available-for-sale investments
24,983
Equity-accounted investees
8
150,304,676
133,106,907
Investment properties
9
6,669,136,000
6,402,486,000
Property, plant and equipment
10
553,338,058
519,970,890
7,372,778,734
7,055,588,780
9,065,018,778
8,532,954,870
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities
4
2,346,320
6,836,280
Accounts payable and accruals
11
413,573,770
445,046,573
Amounts due to related parties
12
38,405,073
48,199,591
Interest bearing loans and borrowings
13
671,682,995
749,520,820
1,126,008,158
1,249,603,264
Non-current liabilities
Interest bearing loans and borrowings
13
232,698,286
165,384,481
Employees’ end of service benefits
14
22,011,182
19,957,976
254,709,468
185,342,457
1,380,717,626
1,434,945,721
TOTAL LIABILITIES
EQUITY
Share capital
15
6,000,000,000
6,000,000,000
Legal reserve
16
435,842,111
378,132,552
Treasury shares
(2,075,865)
(2,075,865)
Cumulative change in fair value
-
4,069
2013
QR
QR
Revenue
17
2,139,104,614
2,122,595,133
Direct costs
18
(1,633,072,684)
(1,702,139,177)
506,031,930
420,455,956
11,785,913
11,516,688
(23,508,622)
(18,995,918)
20
(125,134,749)
(109,981,101)
(8,569,845)
(9,331,067)
Finance costs
21
(30,238,041)
(44,930,877)
Share of profits of equity-accounted investees
8
18,122,554
18,499,901
348,489,140
267,233,582
251,692,874
245,051,107
600,182,014
512,284,689
577,095,585
506,874,507
23,086,429
5,410,182
600,182,014
512,284,689
0.96
0.85
GROSS PROFIT
Other income
19
Marketing and promotion expenses
General and administrative expenses
Depreciation
PROFIT BEFORE FAIR VALUE GAINS ON
INVESTMENT PROPERTIES
Net fair value gains on investment properties
9
PROFIT FOR THE YEAR
Bank overdrafts
2014
Profit attributable to:
Equity holders of the parent
Non-controlling interests
Basic and diluted earnings per share (QR)
(attributable to equity holders of the parent)
22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2014
Profit for the year
2014
2013
QR
QR
600,182,014
512,284,689
Retained earnings
1,031,009,690
526,628,214
Equity attributable to equity holders of the parent
7,464,775,936
6,902,688,970
Other comprehensive income
Items that are or may be reclassified to profit or loss
219,525,216
195,320,179
Total equity
7,684,301,152
7,098,009,149
Unrealised (loss)/gain on available-for-sale investments
(5,461)
6,020
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
600,176,553
512,290,709
TOTAL LIABILITIES AND EQUITY
9,065,018,778
8,532,954,870
577,091,516
506,878,992
23,085,037
5,411,717
600,176,553
512,290,709
Non-controlling interests
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interests
Sheikh Faisal Bin Qassim Al-Thani
Chairman
52
Tarek Mahmoud El Sayed
Managing Director
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Mohammad Ramahi
Chief Financial Officer
Aamal Annual Report 2014 Aamal Company Q.S.C.
53
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(77,952,101)
(147,870,074)
(87,606,081)
(141,346,463)
(10,524,020)
(149,939,995)
1,120,000
70,000
(9,404,020)
(149,869,995)
Net cash used in investing activities
Net movement in interest bearing loans and borrowings
Contributions from non-controlling interests
Net cash used in financing activities
INCREASE IN CASH AND CASH EQUIVALENTS
123,012,461
64,304,275
Cash and cash equivalents at 1 January
429,300,476
364,996,201
552,312,937
429,300,476
CASH AND CASH EQUIVALENTS AT 31 DECEMBER
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4
219,525,216 7,684,301,152
1,031,009,690 7,464,775,936
(2,075,865)
435,842,111
(15,004,550)
(15,004,550)
(15,004,550)
-
1,120,000
1,120,000
-
(57,709,559)
57,709,559
600,182,014
(5,461)
(1,392)
23,086,429
577,095,585
(4,069)
-
577,095,585
-
(4,069)
-
-
-
195,320,179 7,098,009,149
4,069
526,628,214 6,902,688,970
(12,807,117)
(12,807,117)
-
(12,807,117)
70,000
70,000
6,020
1,535
4,485
-
(50,687,451)
512,284,689
5,410,182
-
FINANCING ACTIVITIES
6,000,000,000
10
Balance at 31 December 2014
Additions to property, plant and equipment
-
(9,568,047)
Contribution to social and sports activities fund
(14,957,126)
-
9
Contribution from non-controlling interest
Additions to investment properties
-
11,992,985
Transfer to legal reserve
924,785
-
Dividends received from a joint venture
1,274,457
-
-
26,072
Proceeds from sale of available-for-sale investments
Other comprehensive income for the year
1,036,890
Proceeds from disposal of property, plant and equipment
Profit for the year
19
(2,075,865)
2,824,216
Interest income received
378,132,552
3,315,399
INVESTING ACTIVITIES
6,000,000,000
355,520,733
Balance at 31 December 2013
220,022,562
Net cash from operating activities
-
(2,210,756)
14
-
(2,467,649)
End of service benefits paid
-
(45,056,522)
-
(30,540,830)
Contribution to social and sports activities fund
Finance costs paid
-
402,788,011
-
253,031,041
-
Cash from operations
-
53,120,387
(44,382,753)
Net movement in amounts due from and due to related parties
Contribution from non-controlling interest
(46,477,353)
(113,952,437)
Accounts payable and accruals
4,485
(30,102,654)
-
(11,017,195)
-
82,822,711
-
16,050,683
-
341,330,320
50,687,451
Accounts receivable and prepayments
408,427,343
-
Inventories
(18,499,901)
-
Operating profit before working capital changes:
(18,122,554)
Transfer to legal reserve
8
Other comprehensive income for the year
Share of profit of equity-accounted investees
-
506,874,507
44,930,877
(6,550)
506,874,507
30,238,041
-
21
Gain on sale of available-for-sale investments
-
Finance costs
-
(2,824,216)
-
(3,315,399)
Profit for the year
19
-
Interest income
-
2,380,617
(555,000,000)
78,431
-
7
-
Provision for slow moving inventories
-
(737,647)
555,000,000
(287,032)
Bonus shares issued
19
189,838,462 6,598,455,557
Profit on disposal of property, plant and equipment
638,248,275 6,408,617,095
2,294,590
(416)
2,694,547
(2,075,865)
20
327,445,101
Allowance for impairment of trade accounts receivable
5,445,000,000
4,056,969
Balance at 31 December 2012
42,495,449
4,520,855
QR
44,137,864
14
QR
10
Provision for employees’ end of service benefits
QR
Depreciation
QR
(245,051,107)
QR
(251,692,874)
Total
9
Attributable to equity holders of the parent
Net fair value gains on investment properties
Non-controlling
interests
Adjustment for:
QR
512,284,689
QR
Profit for the year
Retained
earnings
600,182,014
OPERATING ACTIVITIES
Cumulative
change in fair
value
QR
Treasury
shares
QR
Legal
reserve
2013
Share
capital
Note
2014
QR
For the year ended 31 December 2014
Total
Equity
For the year ended 31 December 2014
Aamal Annual Report 2014 Aamal Company Q.S.C.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
1
CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES
Aamal was formed on 13 January 2001 as a private shareholding company with limited liability (W.L.L.) under the Commercial
Registration Number 23245 in the State of Qatar. On 12 July 2007, the private shareholders resolved to transform Aamal into a
Qatari Shareholding Company (Q.S.C.) (the “Company”). Accordingly, the Company was listed on Qatar Exchange on 5 December
2007. The Company’s registered office is at P.O. Box 22477, Doha, State of Qatar.
The Company is organised into a head office (Aamal) and branches and operates in the State of Qatar. The following table sets
out the principal activities of the branches:
Branch
Principal activities
City Center Qatar Branch
Leasing the facilities of the retail outlet complex in City Center Doha.
Aamal Real Estate Branch
Residential and commercial real estate investment and property rental.
Aamal Readymix Branch
Production and sale of readymix concrete.
Ebn Sina Medical Branch
Wholesale and retail distribution of pharmaceuticals and general consumable
products.
Aamal Medical Branch
Wholesale distribution of medical equipment.
Aamal Trading and Distribution Branch
Sale of tyres, lubricants, batteries and home appliances.
Aamal Services Branch
Providing facilities management and cleaning services.
Aamal Travels Branch
Operating a travel agency.
Aamal for Industrial Projects Branch
Industrial investments.
Ebn Sina Heath Care Solutions City Center
Pharmacy (Good Life Pharmacy Branch)
Sale of pharmaceuticals, baby care products, medicine and general consumable products.
Foot Care Centre Branch
Sale of footwear, clinical activities and general commercial trading products.
For the year ended 31 December 2014
2
BASIS OF CONSOLIDATION (continued)
Company name
Country of
incorporation
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of Aamal Company Q.S.C. (the “Company”) and its
subsidiaries, associates and joint controlled entity (together referred to as the “Group”).
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns of its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until
the date on which control ceases. When the Group loses control over a subsidiary, it dereognises the assets and liabilities of the
subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in
consolidated statement of income. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Set out below are the Group’s principal subsidiaries at 31 December 2014. Unless otherwise stated, the subsidiaries as listed
below have share capital consisting solely of ordinary shares, which are held directly by the group and the proportion of ownership
interests held equals to the voting rights held by Group. The country of incorporation or registration is also their principal place of
business:
56
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Proportion of
ownership
held by the
Group
Non
controlling
interest
Aamal Cement Industries
W.L.L.
Qatar
Development and management of factories and the
production of curb stone, interlock slabs and cement
bricks.
99%
1%
IMO Qatar Company W.L.L.
Qatar
Construction and repair of power plant, establishment
and management of industrial enterprises and acting as a
representative for the international companies.
60%
40%
Senyar Industries Qatar
Holding W.L.L.
Qatar
Management of subsidiaries and associates, owning of
patents, businesses and subletting them and provision of
investment portfolio management for its subsidiaries and
associates. Under the shareholders agreement signed
between the Group and the other shareholders, the Group
is able to appoint the chairman and two other members to
the Board of Directors (out of six members) and is able
to govern the financial and operating policies of Senyar
Industries Qatar Holding W.L.L. Accordingly, the company
is considered as a subsidiary of the Group.
50%
50%
Doha Cables Qatar W.L.L.
Qatar
Maintenance and manufacture of electric cables,
equipment and tools. Doha Cables Qatar W.L.L. is
91.875% (effectively) owned by Senyar Industries Qatar
Holding W.L.L., a subsidiary of the Group. The Group
has the power, indirectly through Senyar Industries
Qatar Holding W.L.L., to govern financial and operating
policies of Doha Cables Qatar W.L.L. and accordingly the
company was considered as a subsidiary of the Group.
45.9%
54.1%
Ecco Gulf Company W.L.L.
Qatar
Offers professional and business process outsourcing
and call center services.
51%
49%
Advanced Pipes and Casts
Company W.L.L.
Qatar
Manufacturing of wide cement and glass reinforced pipes
systems for infrastructure and pipeline projects. The
Group has the power to govern the financial and operating
policies of Advanced Pipes and Casts Company W.L.L. by
virtue of a shareholders’ agreement. Thus the Company
has been considered as a subsidiary of the Group.
50%
50%
Johnson Controls Qatar
W.L.L.
Qatar
Provision of facilities management services, energy
services and building maintenance and cleaning services
to corporate clients.
51%
49%
Ci-San Trading W.L.L.
Qatar
Selling, buying, renting and developing real estate,
investment in shares, management of real estate
properties, owning the patent and trademark and trading
in equipment and vehicles. The Group has the power to
govern the financial and operating policies of Ci-San by
virtue of a shareholders’ agreement.
50%
50%
Gulf Rocks
Qatar
Retail distribution of aggregates.
74.5%
25.5%
Innovative Lighting Company
W.L.L.
Qatar
Trading of Light Emitting Diode (LED) Lamps and other
lighting products.
70%
30%
The consolidated financial statements were authorised for issue by the representatives of the Board of Directors of Aamal Company
Q.S.C. on 3 February 2015.
2
Principal activity
Aamal Annual Report 2014 Aamal Company Q.S.C.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
2
For the year ended 31 December 2014
BASIS OF CONSOLIDATION (continued)
Subsidiaries (continued)
Country of
incorporation
Company name
Principal activity
Non
controlling
interest
Al Farazdaq Company W.L.L.
Qatar
Trading of office supplies and providing printing and
laminating services.
65%
35%
Aamal Optical Supplies
W.L.L.
Qatar
Trading of optical supplies
51%
49%
Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquision date.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to
the extent of the Group’s interest in the investee. Unreaslised losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Interests in joint arrangements and associates
Details of each of the Group’s material joint ventures and associates at the end of the reporting period are as follows
Country of
incorporation
Company name
El Sewedy Cables Qatar
W.L.L.
Frijns Structural Steel Middle
East W.L.L.
Qatar
Qatar
Principal activity
Proportion of
ownership and voting
power held by the
Group
Trading in electro-mechanical equipment and providing
related services. El Sewedy Cables Qatar W.L.L. is 49%
owned (with 55% share of profits / (losses) by Senyar
Industries Qatar Holding W.L.L., a subsidiary of the Group.
However due to a revised shareholders agreement, the
entity has become a joint venture effective from 1 January
2012 which is accounted for under the equity method.
55%
Entity is engaged in steel fabrications. Group measure the
associate under equity method.
20%
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1
BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS),
and the applicable requirements of Qatar Commercial Companies’ Law No. 5 of 2002.
Proportion of
ownership
held by the
Group
3
The consolidated financial statements have been presented in Qatari Riyals (QR), which is the Company’s functional and
presentation currency and have been rounded to the nearest Qatari Riyal. The consolidated financial statements are prepared
under the historical cost convention modified to include the measurement at fair value of investment properties and available-forsale investments.
3.2
CHANGES IN ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the previous financial year except for the following standards effective
for the annual period beginning on or after 1 January 2014. These standards and amendments, did not have any material impact
to the Group.
Amendments to IFRS 10, IFRS 12 and IAS 27 “Investment Entities”
The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment
entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated
and separate financial statements.
Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment
entities.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically,
the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and
settlement’. The amendments have been applied retrospectively.
Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets
The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which
goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal
of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when
the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the
fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair
Value Measurements.
Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting
The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative designated as
a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the
derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement
of hedge effectiveness. The amendments have been applied retrospectively.
IFRIC 21 Levies
IFRIC 21 on Levies (amendments to IAS 32) provide guidance on the accounting for levies in the financial statements of the entity
that is paying the levy.
58
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Aamal Annual Report 2014 Aamal Company Q.S.C.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
For the year ended 31 December 2014
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.3
IASB STANDARDS AND INTERPRETATIONS ISSUED BUT NOT ADOPTED
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following IASB standards/amendments have been issued but are not yet mandatory, and have not been early adopted by the
Group:
Standard/Interpretation
Content
Effective date
IFRS 9
Financial Instruments (new standard)
1 January 2018
IFRS 15
Revenue from Contracts with Customers (new standard)
1 January 2017
IFRS 11
Accounting for Acquisitions of Interests in Joint Operations (amendment) 1 January 2016
IAS 16 and IAS 38
Clarification of Acceptable Methods of Depreciation and Amortisation
(amendments)
1 January 2016
The Group is considering the implications of the above standards, and the timing of adoption by the Group.
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business combinations
The Group accounts for business combinations using the acquisition method when control is trnasferred to the Group. The
consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if reltated to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are
recognised in profit or loss.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consdieration is classified
as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value
of the contingent consderation are recognised in profit or loss.
Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and bank balances and
short term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts.
Accounts receivable
Accounts receivable are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of
recovery.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing each product
to its present location and condition.
Goods for resale/work in progress -
Cost of direct materials and labour plus attributable
overheads based on a normal level of activity.
Raw material and spare parts
Purchase cost on a weighted average basis.
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Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal.
Interests in equity-accounted investees
The Groups, interest in equity-accounted investees comprise interest in associates and joint venture.
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and
operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net
assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
Interests in associates and the joint venture are accounted for using the equity method. They are recognised initially at cost, which
includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of
the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or
joint control ceases.
The reporting dates of the equity-accounted investees and the Group are identical and the equity-accounted investees’ accounting
policies conform to those used by the Group for like transactions and events in similar circumstances.
Investment properties
Land and buildings are considered as investment properties only when they are being held to earn rentals or for capital appreciation
or for both.
Investment properties are measured initially at cost, including transaction costs and borrowing costs that are directly attributable
to construction of the asset. The carrying amount includes the cost of replacing part of an existing investment property at the time
that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting
date. Gains or losses arising from changes in the fair values of investment properties are included in the consolidated statement
of income in the year in which they arise.
Investment properties are derecognised when either they have been disposed off or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal
of an investment property are recognised in the consolidated statement of income in the year of retirement or disposal.
Property under construction is dealt with under IAS 40 and recorded at cost less accumulated impairment losses until either its
fair value becomes reliably determinable or construction is completed (whichever is earlier). At that time, it is reclassified as
investment property and a fair value adjustment is recognised in the consolidated statement of income.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property
to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner
occupied property becomes an investment property, the difference between the carrying value and the fair value at the date of
transfer is recognised as a revaluation reserve in the equity and is released to the consolidated statement of income upon disposal
of such property.
Aamal Annual Report 2014 Aamal Company Q.S.C.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
For the year ended 31 December 2014
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment
Property, plant and equipment is stated at cost including borrowing costs that are eligible for capitalisation and excluding the costs
of day-to-day servicing, less accumulated depreciation and any impairment in value.
Depreciation is provided on a straight-line basis on all property, plant and equipment. The rates of depreciation are based upon the
following estimated useful lives:
Buildings
20 years
Leasehold improvements
2-8 years
Truck mixers and motor vehicles
4-15 years
Plant and machinery
8-25 years
Furniture, fixtures and office equipment
3-5 years
Computers and related software
3-5 years
Capital work in progress
Not depreciated
The carrying amounts are reviewed for impairment when events or changes in circumstances indicate that the carrying value may
not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the
assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.
Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is
capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised
only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is
recognised in the consolidated statement of income as the expense is incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising on derecognition of the asset is included in the consolidated statement of income in
the year the asset is derecognised.
The asset’s residual values, useful lives and method of depreciation are reviewed, and adjusted if appropriate, at each financial
year end.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other
borrowing costs are expensed in the year they incur. Borrowing costs consist of the interest and other costs that the Group incurs
in connection with the borrowing of funds.
Accounts payable and accruals
Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.
Interest bearing loans and borrowings
Interest bearing loans and borrowings are recognised initially at fair value of the amounts borrowed, less directly attributable
transaction costs. Subsequent to initial recognition, interest bearing loans and borrowings are measured at amortised cost
using the effective interest method, with any differences between the cost and final settlement values being recognized in the
consolidated statement of income over the period of borrowings. Instalments due within one year at amortised cost are shown as
a current liability.
Tenant deposits
Tenant deposit liabilities are initially recognised at fair value and subsequently measured at amortised cost where material. Any
difference between the initial fair value and the nominal amount is included as a component of rental income and recognised on
a straight-line basis over the lease term.
Decognition of financial assets and liabilities
a)
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised
where:
• The rights to receive cash flows from the asset have expired;
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred
substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset,
the asset is recognised to the extent of the Group’s continuing involvement in the asset.
In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
b)
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of
a new liability, and the difference in the respective carrying amounts is recognised in the consolidated statement of income.
Impairment and uncollectibility of financial assets
An assessment is made at each reporting date to determine whether there is objective evidence that a specific financial asset may
be impaired. If such evidence exists, any impairment loss is recognised in the consolidated statement of income. Impairment is
determined as follows:
a. For assets carried at fair value, impairment is the difference between cost and fair value;
b. For assets carried at cost, impairment is the difference between cost and the present value of future cash flows discounted at
the current market rate of return for a similar financial asset.
c. For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future
cash flows discounted at the original effective interest rate.
Provisions
Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past event, and the costs to settle
the obligation are both probable and able to be reliably measured.
Gains or losses are recognised in the consolidated statement of income when the liabilities are derecognised. Interest relating to
interest bearing loans and borrowings is expensed in the year in which it is incurred except those qualify for capitalisation.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Employees’ end of service benefits
The Group provides end of service benefits to all employees in accordance with employment contracts and Qatar Labour Law.
The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a
minimum service period. The expected costs of these benefits are accrued over the period of employment.
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received excluding discounts, rebates and duty.
The following specific recognition criteria must also be met before revenue is recognised:
Sale of goods
Sales are recognised when significant risks and rewards of ownership of the goods have passed to the buyer and the amount
of revenue can be measured reliably.
Rental income
Rental income from investment properties is accounted for on a time proportion basis over the period of tenancy. Incentives
for leases to enter into lease agreements are spread evenly over the lease term, even if the payments are not made on such
basis. Income arising from expenses recharged to tenants is recognised in the year in which the expenses can be contractually
received. Service charges and other such receipts are included gross of related costs in revenues as the Group acts as
principal in this regard. Premiums received to terminate leases are recognised in the consolidated statement of income when
they arise.
Service income
Service income is recognised when the service is rendered and the outcome of the transactions can be estimated reliably.
Commission
Commission is accounted for on an accrual basis, when the right to receive the income is established.
Income on travel agencies
Income on travel agencies is accounted for in the year in which the airline tickets are sold.
Interest income
Interest income is recognised as the interest accrues using the effective interest rate method.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are
recognised in the statement of income.
Use of estimates
The preparation of the Group’s consolidated financial statements in conformity with International Financial Reporting Standards
(IFRS) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and expenses during
the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual
results may ultimately differ from those estimates. (Significant assumptions, accounting judgments and estimates used in preparing
these consolidated financial statements are disclosed in Note 30).
The estimates and underlying assumptions are reviewed regularly. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
64
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For the year ended 31 December 2014
3
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values
A number of Group’s accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values.
When measuring the fair value of an asset or a liability, the Group uses market observable data for the valuation. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
a. Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities,
b. Level 2 – Other observable inputs not included within level 1 of the fair value hierarchy
c. Level 3 – Unobservable inputs (including entity’s own data, which are adjusted if necessary to reflect the assumptions market
participants would use in the circumstances.)
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
Treasury shares
When share capital recognized in equity is repurchased (by the Company or any of its subsidiaries), the amount of the consideration
paid, which includes directly attributable costs, is recognized as a deduction from equity. When treasury shares are sold or reissued
subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is
presented in share premium.
4
CASH AND CASH EQUIVALENTS
For the purpose of consolidated statement of cash flows, cash and cash equivalents comprise the following balances:
2014
QR
2013
QR
Cash and bank accounts
200,575,677
330,333,904
Short term bank deposits
354,083,580
105,802,852
Cash and bank balances
554,659,257
436,136,756
(2,346,320)
(6,836,280)
552,312,937
429,300,476
Bank overdrafts
Cash and cash equivalents
The short term bank deposits are made for varying periods between one day and three months, depending on the immediate cash
requirements of the Group, and earn interest at the respective short term deposit rates.
5
ACCOUNTS RECEIVABLE AND PREPAYMENTS
2014
QR
2013
QR
Trade accounts receivable
435,448,524
437,912,979
Less: Impairment of trade accounts receivable
(27,267,833)
(26,901,412)
408,180,691
411,011,567
Advances to suppliers and prepayments
55,455,801
50,787,921
Retention receivables
47,886,103
36,217,081
6,889,892
12,073,270
518,412,487
510,089,839
Other receivables
Aamal Annual Report 2014 Aamal Company Q.S.C.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
5
For the year ended 31 December 2014
7
ACCOUNTS RECEIVABLE AND PREPAYMENTS (continued)
INVENTORIES
As at 31 December 2014, trade accounts receivable amounting to QR 27,267,833 (2013: QR 26,901,412) were impaired.
Movements in the allowance for impairment of trade accounts receivable were as follows:
2014
QR
At 1 January
26,901,412
24,984,025
2,694,547
2,294,590
(2,262,731)
(19,949)
(65,395)
(357,254)
27,267,833
26,901,412
Charge for the year (Note 20)
Amounts written off
Unused amounts reversed
At 31 December
Goods for resale
2013
QR
As at 31 December, the ageing of unimpaired trade accounts receivable was as follows:
Total
Up to 30
days
31-60
days
61-90
days
91-120
days
>120
days
QR
QR
QR
QR
QR
QR
QR
408,180,691
222,197,686
73,174,740
25,964,086
23,817,278
10,564,995
52,461,906
2013
411,011,567
251,981,960
32,312,165
21,140,966
19,351,043
26,076,888
60,148,545
Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group
to obtain collateral over receivables.
AMOUNTS DUE FROM RELATED PARTIES
Name
38,388,307
8,649,899
19,944,678
Goods in transit
62,473,125
96,718,553
302,752,838
320,551,237
(2,182,407)
(3,851,692)
300,570,431
316,699,545
2014
QR
2013
QR
Less: Provision for obsolete and slow moving inventories
3,851,692
3,145,826
78,431
2,380,617
(1,227,254)
(535,695)
Amounts written off
(520,462)
(1,139,056)
At 31 December
2,182,407
3,851,692
At 1 January
Charge for the year (Note 18)
Reversals
8
2014
QR
2013
QR
EQUITY-ACCOUNTED INVESTEES
The Group has the following investments in equity-accounted investees.
154,124,064
El Sewedy Cables Qatar W.L.L.
129,179,996
34,644,615
678,817
1,445,012
El Sewedy Electric Egypt W.L.L.
4,359,010
9,538,116
Interests in associates
Maintenance Management Group Qatar W.L.L.
1,048,749
4,014,727
EL Sewedy Cables - Dubai
2,887,101
At 31 December
Al Faisal International Trade and Investment Company W.L.L.
-
Al-Arabia Land Transporting Company W.L.L.
352,135
80,012
57,627
El Sewedy Holding Egypt
-
311,650
204,450
55,104
27,916
158,645
152,170
Qatar Bahrain International Cinema W.L.L.
78,302
33,500
Gulf English School
44,557
6,259
18,714,551
7,589,624
5,157,788
2,267,835
318,597,869
214,439,950
Frijns Structural Steel Middle East W.L.L.
Al Farman for Investment & International Trading Company W.L.L.
Al Rayyan Tourism Investment Company W.L.L.
Other related parties
165,499,699
55,494,154
155,825,487
Gettco International
176,135,660
Work in progress
Raw materials and spare parts
Al Faisal Holding Company W.L.L.
Al Jazi Real Estate Investment Company W.L.L.- Al Jazi Real Estate Branch
2013
QR
Movements in the provision for obsolete and slow moving inventories were as follows:
Past due but not impaired
Neither past
due nor
impaired
2014
6
2014
QR
2014
QR
2013
QR
144,371,432
129,462,184
5,933,244
3,644,723
150,304,676
133,106,907
Profit share from investment in joint venture
15,834,033
17,330,368
Profit share from investment in associates
2,288,521
1,169,533
18,122,554
18,499,901
Interests in joint venture
Group’s share of profits from the equity-accounted investees are as follows:
Country of
incorporation
Relationship
Proportion of ownership and voting power held
by the Group
2014
2013
El Sewedy Cables Qatar W.L.L.
Qatar
Joint venture
55%
55%
Frijns Structural Steel Middle East W.L.L.
Qatar
Associate
20%
20%
Notes
a. Transactions with related parties are carried out through open account and Directors do not consider any receivables to be
past due or impaired.
b. Related party transactions are disclosed in Note 25.
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Aamal Annual Report 2014 Aamal Company Q.S.C.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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3,216,107
4,773,017
247,387,895
42,191,020
23,206,040
Notes:
187,750,313
At 31 December 2014
Net carrying amounts:
(i) Depreciation charge for the year amounting to QR 35,568,019 (2013: QR 33,164,382) is included in the direct costs and an amount of QR 157,621 (2013: QR 60,055)
has been capitalised under capital work in progress.
(ii) The capital work in progress includes capitalised borrowing costs amounting to QR 302,789 (2013: QR 125,645).
(iii) The buildings are constructed on a plot of land taken on a long term operating lease.
553,338,058
44,813,666
252,865,543
14,786,476
16,738,268
113,551,993
54,371,046
22,934,476
30,483,284
At 31 December 2014
(2,147,500)
(136,991)
(374,984)
(93,697)
(1,541,828)
-
7,289,564
Relating to disposals/write-off
44,295,485
1,620,684
2,837,020
23,337,150
5,751,561
13,302,783
14,276,232
90,308,540
50,161,313
Charge for the year
3,459,506
210,717,558
806,203,601
44,813,666
18,002,583
21,511,285
360,939,888
22,950 (172,125,472)
87,657,272
-
(2,897,358)
(392,026)
78,412,511
730,688,448
152,456,037
64,875,127
1,176,948
16,978,319
(175,634)
(554,835)
(123,944)
(1,650,919)
QR
96,562,066
46,140,516
19,474,970
23,193,720
10
• The identification of the transacted evidence for the same or similar type of property within nearby vicinity;
• Comparative analysis of the listed properties in the market;
• Discussions with active real estate agents within the locality.
At 1 January 2014
Valuation technique and significant unobservable inputs
The valuer has applied comparable method to determine the market value of the properties. The comparable method of valuation
comprises:
Depreciation:
The Group recognizes transfers between levels of fair value hierarchy as of the end of the reporting period during which the transfer
has occurred. There were no transfers between the fair value hierarchy during the year.
218,233,597
6,402,486,000
6,592,982
6,669,136,000
At 31 December 2014
At 31 December
77,852,268
245,051,107
PROPERTY, PLANT AND EQUIPMENT
Net gain from fair value adjustment
Transfer from capital work in progress
251,692,874
Gain included in profit and loss
-
44,087,875
QR
14,957,126
QR
6,113,347,018
Cost:
Additions and transfers from property, plant and equipment
6,402,486,000
Buildings
At 1 January
2013
Leasehold
improvements
2014
Truck mixers
and motor
vehicles
Investment properties - Level 3 fair value
-
Plant and
machinery
Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December are as follows:
Relating to disposals/write-off
Furniture,
fixtures
and office
equipment
The fair values of the Group’s investment properties as at 31 December 2014 and 31 December 2013 have been arrived at on the
basis of valuations carried out on the respective dates by professionally qualified, independent valuer not related to the Group. The
independent valuer has appropriate qualifications and recent experience in the valuation of properties in the relevant locations.
The fair value was determined based on market comparable approach that reflects recent transaction prices for similar properties.
2,365,255
Measurement of fair value
19,700,865
6,402,486,000
2,672,695
6,669,136,000
270,733,865
b)
245,051,107
4,027,250
At 31 December
251,692,874
Computers
and related
software
Net gain from fair value adjustment
34,519,828
94,185,735
-
2,289,343
Transferred from property, plant and equipment (Note 10)
37,258,191
9,568,047
1,005,893
14,957,126
139,375,436
Additions
Additions
6,113,347,018
At 1 January 2014
6,402,486,000
At 1 January
QR
2013
QR
QR
2014
QR
QR
Reconciliation of carrying amount
QR
a)
Total
INVESTMENT PROPERTIES
Capital work in
progress
9
For the year ended 31 December 2014
QR
For the year ended 31 December 2014
Aamal Annual Report 2014 Aamal Company Q.S.C.
69
70
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At 31 December 2013
Net carrying amounts:
At 31 December 2013
Relating to disposals/write-off
Charge for the year
At 1 January 2013
Depreciation:
At 31 December 2013
Transfer to investment properties (Note 9)
Transfer from capital work in progress
Relating to disposals/write-off
Additions
116,181,716
23,193,720
-
7,059,805
16,133,915
139,375,436
-
1,505,310
-
-
137,870,126
QR
Buildings
17,783,221
19,474,970
(664,709)
3,237,150
16,902,529
37,258,191
-
164,336
(1,042,642)
948,365
37,188,132
QR
Leasehold
improvements
PROPERTY, PLANT AND EQUIPMENT (continued)
At 1 January 2013
Cost:
10
44,024,422
50,161,313
(4,317,161)
5,390,767
49,087,707
94,185,735
-
-
(4,390,496)
2,618,100
95,958,131
QR
Truck mixers
and motor
vehicles
16,978,319
11,715,953
1,768,823
(181,993)
13,302,783
3,675,536
11,980,009
2,849,162
(552,939)
14,276,232
5,424,633
68,783,065
22,249,797
(724,322)
90,308,540
180,425,325
(771,571)
3,601,776
19,700,865
(184,075)
1,182,741
(589,150)
(150,000)
5,367,399
270,733,865
1,115,268
859,061
262,536,261
-
14,864,385
19,580,954
QR
-
QR
QR
Plant and
machinery
-
Computers
and related
software
Furniture,
fixtures
and office
equipment
152,456,037
-
-
-
-
152,456,037
(34,519,828)
(6,304,163)
-
137,147,581
56,132,447
QR
Capital work in
progress
519,970,890
210,717,558
(6,441,124)
42,555,504
174,603,178
730,688,448
(34,519,828)
-
(6,977,934)
148,055,774
624,130,436
QR
Total
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
11
12
ACCOUNTS PAYABLE AND ACCRUALS
Trade accounts payable
2014
QR
2013
QR
257,041,556
320,017,657
Advances from customers and tenants
35,378,605
30,486,837
Accruals
38,275,855
26,924,669
Social and sports activities levy
56,766,393
41,761,843
Other payables
26,111,361
25,855,567
413,573,770
445,046,573
2014
QR
2013
QR
AMOUNTS DUE TO RELATED PARTIES
Arab Company for Fiber Products
18,513,862
18,517,474
Egyplast Egypt
6,264,525
4,902,528
United Industries Company W.L.L.
5,430,856
6,531,231
Johnson Controls Air conditioning and Refrigeration Qatar W.L.L.
El Sewedy Cables Egypt
United Wire Company W.L.L.
Gettco Company W.L.L. – Gettco Refrigeration and Airconditioning
C&C Lightway, Inc.
Al Shaab Group of Companies
Other related parties
6,404,578
892,937
3,215,821
460
2,825,884
783,009
757,825
2,951,512
3,467,288
149,505
263,715
3,418,407
1,313,247
38,405,073
48,199,591
Note:
Related party transactions are disclosed in Note 25.
Aamal Annual Report 2014 Aamal Company Q.S.C.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
13
For the year ended 31 December 2014
13
INTEREST BEARING LOANS AND BORROWINGS
Notes
Maturity
2014
QR
2013
QR
Loan 1
(i)
June 2015
330,795,335
172,070,387
Loan 2
(ii)
September 2015
220,000,000
440,000,000
Loan 3
(iii)
January 2015
-
50,544,000
Loan 4
(iv)
November 2016
-
40,261,621
Loan 5
(v)
December 2016
50,084,375
81,387,109
Loan 6
(v)
April 2017
Loan 7
(vi)
November 2017
174,536,458
14,808,036
19,920,036
Loan 8
(vii)
December 2017
4,766,379
6,343,890
Loan 9
(viii)
October 2019
95,325,991
62,626,967
Loan 10
(ix)
September 2019
14,707,281
-
-
42,522,794
Bills discounted
Less: Deferred financing cost
905,023,855
915,676,804
(642,574)
(771,503)
904,381,281
914,905,301
Presented in the consolidated statement of financial position as follows:
2014
QR
2013
QR
Current portion
671,682,995
749,520,820
Non-current portion
232,698,286
165,384,481
904,381,281
914,905,301
(i)
Loan 1 is a USD 93,000,000 import loan facility obtained to refinance the letters of credit. The loan carries interest at
commercial rate and the interest is paid at monthly intervals. The facility is repayable within 180 days including the usage
period under letter of credits.
(ii)
Loan 2 is a secured bridge loan obtained to settle an existing loan and working capital requirements of the Company. The
loan carries interest at commercial rates and interest is to be paid on quarterly basis.
(iii)
Loan 3 was obtained for the purpose of financing capital expenditure and direct payment to suppliers, contractors and subcontractors. The loan carried interest at commercial rate and the interest was paid quarterly. The facility was repayable in
15 quarterly installments starting 1 July 2011 and ending 1 January 2015, which was fully settled during the year.
(iv)
Loan 4 was obtained for construction of an investment property. The loan was secured by a primary mortgage over the
same property and corporate guarantee of the Company. The loan carried interest at commercial market rate and was
payable in quarterly instalments. This loan was fully settled during the year.
(v)
Loan 5 and 6 represent a loan facility obtained in two separate tranches amounting to QR 309,583,750 (USD 85 million)
for the purpose of refurbishment and construction of facilities in one of the investment properties. The loan consist from
tranche A amounting to QR 100,168,750 (USD 27.5 million) and tranche B amounting to QR 209,415,000 (USD 57.5
million). The tranche A is repayable in 16 equal quarterly instalments and tranche B is repayable in 12 equal quarterly
instalments, commencing from March 2013 and July 2014 respectively. The loan carries interest at commercial rates.
(vi)
Loan 7 represents secured loans obtained from a commercial bank in the previous periods, for the purchase of heavy
equipment and machines and were merged on 15 November 2012 as a combined loan. This loan is payable by 59 equal
instalments of QR 426,000 with a last instalment of QR. 438,326 with effect from 01 October 2013. The loan carries
interest at commercial market rates.
(vii)
Loan 8 represents secured loans obtained from a commercial bank in the previous periods, for the purchase of delivery
trucks and machinery and were merged on 22 October 2012 as a combined loan. The loan carries interest at commercial
market rates and is payable by 59 equal instalments of QR 160,000 with a last instalment of QR 128,000 with effect from
31 December 2012.
(viii)
Loan 9 is an Islamic Financing Arrangement obtained for construction of a manufacturing plant. The yearend balance
represents partially drawn amount out of total facility of QR 182,501,000. The loan is secured by joint corporate guarantee
by the shareholders. The loan carries profit at Islamic Financing rates and re-payable in quarterly instalments starting from
the end of the 24 months grace period from the date of loan drawn.
(ix)
Loan 10 represents secured loans obtained from a commercial bank in the current year, to finance the purchase of heavy
equipment and machines. The loan is payable by 18 quarterly instalments with effect from 31 March 2015 and carries
interest at commercial market rates.
(x)
Bill discounting was a loan facility from banks. The purpose of the arrangement was to discount bills locally and carried
interest at current commercial rate. This loan facility was fully settled during the year.
The deferred financing costs consist of arrangement fees. The movements in the deferred financing costs were as follows:
2014
QR
At 1 January
Additions during the year
Amortised during the year
At 31 December
72
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2013
QR
771,503
897,148
2,500
2,062,565
(131,429)
(2,188,210)
642,574
771,503
INTEREST BEARING LOANS AND BORROWINGS (continued)
Aamal Annual Report 2014 Aamal Company Q.S.C.
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
14
For the year ended 31 December 2014
18
EMPLOYEES’ END OF SERVICE BENEFITS
DIRECT COSTS
2014
QR
Movements in the provision reflected in the consolidated statement of financial position were as follows:
2014
QR
2013
QR
19,957,976
18,111,763
4,520,855
4,056,969
End of service benefits paid during the year
(2,467,649)
(2,210,756)
At 31 December
22,011,182
19,957,976
At 1 January
Provision made during the year
15
1,445,318,032
1,522,929,956
Direct salaries and wages
61,856,540
60,111,336
Operating expenses on real estate properties
39,383,866
36,070,316
Depreciation (Note 10)
35,568,019
33,164,382
Operator’s management fees
16,740,659
14,508,588
Cost of inventories recognised as an expense
Authorised
600,000,000 (2013: 600,000,000) shares of QR 10 each
6,000,000,000
19
Number of shares
600,000,000
Issue of bonus shares
At 31 December
600,000,000
6,000,000,000
6,000,000,000
1,702,139,177
QR
Miscellaneous income
544,500,000
5,445,000,000
55,500,000
555,000,000
600,000,000
6,000,000,000
20
2013
QR
3,315,399
2,824,216
287,032
737,647
8,183,482
7,954,825
11,785,913
11,516,688
Profit on disposal of property, plant and equipment
Issued and fully paid
At 1 January
1,633,072,684
2014
QR
6,000,000,000
2013
QR
2,380,617
32,973,982
OTHER INCOME
Interest income
2014
Number of shares
2013
QR
78,431
34,127,137
Provision for obsolete and slow moving inventories (Note 7)
Other operating expenses
SHARE CAPITAL
2014
QR
2013
QR
GENERAL AND ADMINISTRATIVE EXPENSES
2014
QR
2013
QR
All shares are of same class and carry equal voting rights.
Management and employees’ costs
58,468,791
55,170,302
Rent
25,501,638
23,590,799
16
Allowance for impairment of trade accounts receivable (Note 5)
2,694,547
2,294,590
Insurance and professional fees
2,841,518
2,109,263
LEGAL RESERVE
As required by Qatar Commercial Companies’ Law No. 5 of 2002, 10% of the profit for the year as a minimum should be transferred
to legal reserve until it reaches 50% of the share capital. The reserve is not normally available for distribution except in the
circumstances stipulated in the above mentioned law.
Communication costs
1,950,344
1,935,123
Training and business development
1,530,354
950,476
Repairs and maintenance
1,423,607
2,071,585
594,879
670,299
30,129,071
21,188,664
125,134,749
109,981,101
2014
QR
2013
QR
Postage, printing and stationery
17
Miscellaneous expenses
REVENUE
2014
QR
2013
QR
Sale of goods
1,745,712,619
1,726,893,265
Rental income
259,517,661
260,362,322
Service income
65,074,214
85,869,965
Commission, incentives and agency fees
68,800,120
49,469,581
2,139,104,614
2,122,595,133
74
w w w. a a m a l . c o m . q a A n n u a l R e p o r t 2 0 1 4
21
FINANCE COSTS
Interest expense
Amortization of deferred financing costs
30,106,612
42,742,667
131,429
2,188,210
30,238,041
44,930,877
Aamal Annual Report 2014 Aamal Company Q.S.C.
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
22
For the year ended 31 December 2014
BASIC AND DILUTED EARNINGS PER SHARE
24
Basic earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
2014
2013
Profit for the year attributable to equity holders of the parent (QR)
577,095,585
506,874,507
Weighted average number of shares outstanding during the year (i)
599,850,413
599,850,413
Basic and diluted earnings per share (QR)
0.96
0.85
Notes
(i)
The weighted average number of shares for the purpose of calculating earnings per share has been calculated as follows:
Qualifying shares at the beginning of the year
Effect of bonus shares issued and capitalised
Less: Treasury shares
Weighted average number of shares at the end of the year
(ii)
2014
QR
2013
QR
600,000,000
544,500,000
-
The Group had the following contingent liabilities from which it is anticipated that no material liabilities will arise.
Letters of guarantee
Letters of credit
2014
QR
2013
QR
337,600,323
474,551,239
24,148,721
7,678,499
Notes:
(i)
Letters of guarantee include performance, tender and bid bonds and payment guarantees given to suppliers and contractors
by the Group in the ordinary course of business, which will mature within twelve months from the reporting date.
(ii)
25
Letters of credit are provided by lodging documents to the bank for purchase of trading goods from foreign suppliers, which
will mature within three to six months from the date of the transaction.
RELATED PARTY DISCLOSURES
55,500,000
600,000,000
600,000,000
(149,587)
(149,587)
599,850,413
599,850,413
There were no potentially dilutive shares outstanding at any time during the year and hence the diluted earnings per share
is equal to the basic earnings per share.
23
CONTINGENT LIABILITIES
COMMITMENTS
Related party transactions
Related parties represent major shareholders, directors and key management personnel of the Group, and entities controlled,
jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the
Group’s management.
Transactions with related parties included in the consolidated financial statements were as follows:
2014
QR
2013
QR
623,028,207
419,034,048
2,456,945
1,980,473
Purchase of goods and services
48,468,965
159,138,018
Rental expense
13,922,708
21,780,078
Sale of goods and services
2014
QR
Rental income
2013
QR
Estimated capital expenditure approved and contracted for at the year end but
not provided for:
Investment properties
14,000,000
2,964,000
Property, plant and equipment
23,632,758
16,386,500
37,632,758
19,350,500
4,079,410
990,806
4,079,410
990,806
Operating lease commitments, under non-cancellable lease agreements:
Payable within one year
76
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Aamal Annual Report 2014 Aamal Company Q.S.C.
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
25
For the year ended 31 December 2014
RELATED PARTY DISCLOSURES (continued)
27
Related party balances
Amounts due from and due to related parties are disclosed in Notes 6 and 12 respectively. These balances do not carry interest
and are repayable on mutually agreed dates, generally within one year.
The Group did not record any impairment of receivables relating to amounts due from related parties in either year. This assessment
is undertaken each financial year through examining the financial position of the related party and the market in which the related
party operates.
Parent
The Group’s ultimate parent is Al Faisal Holding Company W.L.L.
Compensation of key management personnel
The remuneration of key management during the year was as follows:
2014
QR
Short-term benefits
Employees’ end of service benefits
26
2013
QR
8,835,615
7,904,794
753,514
408,934
9,589,129
8,313,728
DIVIDEND
The Board of Directors of the Company proposed bonus shares of 5% of the share capital amounting to QR 300,000,000
(30,000,000 shares) (2013: Nil) and cash dividend of 10% of the share capital amounting to QR 600,000,000 from the retained
earnings as at 31 December 2014 (2013: Nil).
27
SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their nature of activities and has four reportable
segments and the Head Office as follows:
For management purposes, the Group is organised into business units based on their nature of activities and has four reportable
segments and the Head Office as follows:
SEGMENT INFORMATION (continued)
Trading and distribution:
The segment involves wholesale and/or retail distribution of pharmaceutical and consumable items, home appliances, medical
equipment, tyres and lubricants and industrial printing. The segment includes the following entities:
•
•
•
•
•
•
•
Ebn Sina Medical Branch
Aamal Medical Branch
Aamal Trading and Distribution Branch
Foot Care Center Branch
Ebn Sina Health Care Solutions City Center Pharmacy (Good Life Pharmacy Branch)
Al Farazdaq Company W.L.L.
Aamal Optical Supplies Company W.L.L.
Industrial manufacturing:
The segment involves manufacturing, wholesale and/or retail distribution of electric cables and tools, aggregates, ready-mix
concrete and cement blocks and provision of services in relation to industrial investment, repair and construction of power plants,
trading of LED lighting products and management of industrial enterprises. The segment includes the following entities:
•
•
•
•
•
•
•
•
Aamal Cement Industries W.L.L.
Aamal Readymix Branch
Doha Cables Qatar W.L.L. Senyar Industries Qatar Holding W.L.L.
Advanced Pipes and Casts Company W.L.L.
Gulf Rocks Company W.L.L.
Ci-San Trading Company W.L.L.
Innovative Lighting Company W.L.L.
Managed services:
The segment involves provision of housekeeping and cleaning services, facilities management services, energy services, call
centre services, building maintenance and acting as travel agents. The segment includes the following entities:
•
•
•
•
Aamal Service Branch
Aamal Travels Branch
Ecco Gulf Co. W.L.L.
Johnson Controls Qatar W.L.L.
Head Office:
It provides corporate services to the branches and subsidiaries of the Group.
The managing director of the Group monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or
loss of these segments. Transfer pricing between operating segments are on arm’s length basis in a manner similar to transactions
with third parties.
Property:
The segment consists of City Center Qatar Branch and Aamal Real Estate Branch which are involved in leasing the facilities of
retail outlet complex, real estate investments and property rental businesses.
78
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Aamal Annual Report 2014 Aamal Company Q.S.C.
79
80
SEGMENT INFORMATION (continued)
w w w. a a m a l . c o m . q a A n n u a l R e p o r t 2 0 1 4
114,887,356
114,887,356
4,168,646
223,323,839
251,692,874
475,016,713
1,487,984
Operating results
Fair value gains
Profit/(loss) for the year
QR
QR
(i)
Note:
Inter-segment revenues are eliminated on consolidation.
2,066,290
445,863,051
Profit / (Loss) for the year
Depreciation
245,051,107
Fair value gains
4,345,438
86,492,834
-
86,492,834
261,614,086
200,811,944
585,753,101
1,253,914
- Inter segments
Operating results
6,843,118
260,360,172
578,909,983
Trading and
distribution
Property
33,049,089
22,636,250
-
22,636,250
1,261,162,641
29,639,873
1,231,522,768
QR
1,760,305
5,157,436
-
5,157,436
86,252,731
34,450,521
51,802,210
QR
1,334,382
(47,864,882)
-
-
-
-
-
-
42,555,504
512,284,689
245,051,107
267,233,582
2,122,595,133
-
2,122,595,133
QR
Total
44,295,485
600,182,014
251,692,874
348,489,140
2,139,104,614
(72,187,426)
-
QR
Eliminations
QR
Total
2,139,104,614
(72,187,426) (i)
-
-
-
-
(76,816,588)
(76,816,588) (i)
-
QR
Eliminations
(47,864,882)
-
-
-
QR
Head Office
1,338,268
(49,660,918)
-
(49,660,918)
-
-
-
QR
Head Office
Managed services
1,913,213
8,254,874
-
8,254,874
64,197,962
472,800
63,725,162
QR
Managed services
Industrial
manufacturing
35,387,374
51,683,989
-
51,683,989
1,134,167,251
65,223,136
1,068,944,115
QR
Industrial
manufacturing
For the year ended 31 December 2014
- External parties
Revenues
For the year ended 31 December 2013
Operating segments: (continued)
27
SEGMENT INFORMATION (continued)
728,805,513
288,750,476
Depreciation
5,137,889
5,982,763
- Inter segments
-
723,667,624
QR
QR
282,767,713
Trading and
distribution
Property
- External parties
Revenues
For the year ended 31 December 2014
Operating segments:
The operating segment, after elimination of inter-branch and inter-company transactions, is presented as follows:
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
Aamal Annual Report 2014 Aamal Company Q.S.C.
81
82
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153,055,092
8,215,884
318,607,747
130,826,815
449,434,562
27,066,263
Current liabilities
Non-current liabilities
Total liabilities
Capital expenditure (ii)
353,696,897
47,024,050
Total liabilities
Capital expenditure (ii)
(i)
(ii)
8,290,870
121,519,645
8,008,485
113,511,160
375,511,194
12,604,763
362,906,431
QR
Trading and
distribution
100,743,008
734,419,720
100,016,943
634,402,777
1,243,194,217
622,386,238
620,807,979
QR
Industrial
manufacturing
57,158,174
1,397,742
29,252,470
3,181,668
26,070,802
65,698,291
4,348,876
61,349,415
QR
Managed services
2,246,493
19,915,735
3,471,610
16,444,125
60,727,918
4,674,236
56,053,682
QR
Managed services
Inter-segment balances are eliminated on consolidation.
Capital expenditures consist of additions to property, plant and equipment and investment properties
72,701,562
Non-current liabilities
Note:
280,995,335
6,639,420,498
Total assets
Current liabilities
6,411,868,160
227,552,338
QR
Property
6,880,155
731,936,340
110,401,603
621,534,737
1,289,934,359
658,951,631
630,982,728
QR
Industrial
manufacturing
168,151
497,693,984
1,433,799
496,260,185
513,011,470
6,624,548
506,386,922
QR
Head Office
18,552
282,892,643
1,793,556
281,099,087
388,921,306
7,593,353
381,327,953
QR
Head Office
QR
Total
9,065,018,778
-
(301,636,995)
-
157,623,821
1,434,945,721
185,342,457
(301,636,995) (ii) 1,249,603,264
(303,880,800)
8,532,954,870
7,055,588,780
(2,243,805)
1,477,366,090
(i)
QR
Total
93,369,637
1,380,717,626
254,709,468
(301,636,995) (i)
QR
Eliminations
-
(264,732,630)
-
(264,732,630) (i) 1,126,008,158
(267,006,848)
(2,272,226) (i) 7,372,778,734
(264,734,622) (i) 1,692,240,044
QR
Eliminations
For the year ended 31 December 2014
Non-current assets
Current assets
At 31 December 2013
Assets and liabilities: (continued)
27
SEGMENT INFORMATION (continued)
512,402,876
7,080,039,167
Total assets
161,270,976
14,711,495
6,689,120,245
Current assets
Non-current assets
QR
QR
497,691,381
Trading and
distribution
390,918,922
At 31 December 2014
Property
SEGMENT INFORMATION (continued)
Assets and liabilities:
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
Aamal Annual Report 2014 Aamal Company Q.S.C.
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
28
For the year ended 31 December 2014
FINANCIAL RISK MANAGEMENT
28
Objectives and policies
The Group’s principal financial liabilities comprise interest bearing loans and borrowings, bank overdrafts, amounts due to related
parties and trade accounts payable. The main purpose of these financial liabilities is to raise finance for the Group’s operations.
The Group has various financial assets such as trade accounts receivable, amounts due from related parties, bank balances,
retention receivable and other receivables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The Board of Directors
reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign currency exchange rates will affect the
Group’s profit, equity or value of its holding of financial instruments. The objective of market risk management is to manage and
control the market risk exposure within acceptable parameters, while optimising return.
Equity price risk
Equity price risk is the risk that the Group’s earnings will be affected as a result of fluctuations in fair value of equity instruments.
Equity price risk arises from available-for-sale investments. However the Group’s exposure to equity price risk is minimal as it
doesn’t hold significant available-for-sale investments.
Interest rate risk
The Group’s financial assets and liabilities that are subject to interest rate risk comprise bank deposits, interest bearing loans and
borrowings and bank overdrafts. At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments
was as follows:
2014
QR
FINANCIAL RISK MANAGEMENT (continued)
Foreign currency risk
Foreign currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.
Trade accounts payable and accrued expenses include amounts due in foreign currencies, mainly US Dollars, UAE Dirhams, Great
Britain Pounds (GBP) and Euros, of which the Group has a currency risk primarily on the balances payable in Euros and GBP
amounting to QR 52,640,528 (2013: QR 14,400,634).
The Group does not hedge its foreign currency exposure. As both Qatari Riyal and UAE Dirhams are pegged to the US Dollar,
balances in US Dollars and UAE Dirhams are not considered to represent significant currency risk to the Group.
The table below indicates the Group’s foreign currency exposure on its monetary assets and liabilities. The analysis calculates the
effect of a reasonably possible movement of the QR currency rate against the Euro and GBP, with all other variables held constant,
on the consolidated statement of income (due to the fair value of currency sensitive monetary assets and liabilities). The effect of
decreases in foreign currency exchange rates is expected to be equal and opposite to the effect of the increases shown.
Increase in foreign currency rate to the QR
2014
2013
Effect
on profit
QR
+5%
(2,632,026)
+5%
(720,032)
2013
QR
Fixed interest rate instruments:
Financial assets
Financial liabilities
-
113,035,962
(94,683,417)
(122,037,121)
(94,683,417)
(9,001,159)
Floating interest rate instruments:
Financial assets
Financial liabilities
376,877,117
127,024,345
(942,012,968)
(786,934,709)
(565,135,851)
(659,910,364)
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a
financial loss. The Group’s exposure to credit risk is indicated by the carrying amount of its financial assets, which consist principally
of trade accounts receivable, retention receivable, amounts due from related parties, other receivables and bank balances.
The Group sells its products and provides services to various parties. It is the Group’s policy that all customers who wish to obtain
on credit terms are subject to credit verification procedures to ensure credit worthiness. Each new customer is analysed individually
for creditworthiness before the delivery of products or services. Customers that fail to meet the creditworthiness may transact with
the Group only on prepayment basis. Property rentals are mostly received in advance or contracted with post dated cheques. In
addition, receivable balances are monitored on an ongoing basis and the purchase limits are established for each credit customer,
which are reviewed regularly based on the level of past transactions and settlement. The Group’s maximum exposure with regard
to trade accounts receivable, net of allowance reflected at the reporting date, was as follows:
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s financial assets and liabilities
with floating interest rates.
The following table demonstrates the sensitivity of the consolidated statement of income to reasonably possible changes in interest
rates by 25 basis points, with all other variables held constant. The sensitivity of the consolidated statement of income is the effect
of the assumed changes in interest rates for one year, based on the floating rate financial assets and financial liabilities held at
31 December. The effect of decreases in interest rates is expected to be equal and opposite to the effect of the increases shown.
Changes in basis
points
Effect on profit
QR
2014
Floating interest rate instruments
+25 b.p.
(1,412,840)
2013
Floating interest rate instruments
+25 b.p.
(1,649,776)
84
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Business segment:
2014
QR
2013
QR
14,083,250
15,478,832
Trading and distribution
240,890,368
194,343,597
Industrial manufacturing
129,982,358
183,119,753
23,224,715
18,069,385
408,180,691
411,011,567
Property
Managed services
Aamal Annual Report 2014 Aamal Company Q.S.C.
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
28
For the year ended 31 December 2014
28
FINANCIAL RISK MANAGEMENT (continued)
FINANCIAL RISK MANAGEMENT (continued)
86
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1,389,683,085
25,261,598
160,092,748
298,816,884
898,675,575
6,836,280
48,199,591
22,894,111
Amounts due to related parties
25,305,480
67,617,410
320,017,657
-
-
16,378,865
20,210,580
47,406,830
Other payables
303,638,792
Trade accounts payable
6,836,280
6,836,280
160,092,748
239,333,328
522,324,473
Interest bearing loans and borrowings
2013
Bank overdrafts
947,012,147
25,261,598
Total
QR
> 5 years
QR
1 to 5 years
QR
3 to 12 months
QR
Less than 3 months
QR
On demand
QR
1,302,664,963
6,355,957
349,936,144
341,656,529
602,370,013
2,346,320
38,405,073
757,825
25,862,892
Amounts due to related parties
11,784,356
82,877,754
2,860,385
74,982,626
-
5,034,743
257,041,556
2,346,320
-
100,922,626
-
27,622,221
Other payables
On demand
QR
Liquidity risk (continued)
FINANCIAL RISK MANAGEMENT (continued)
28
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of
financial assets (e.g. accounts receivable) and projected cash flows from operations. The Group’s terms of sales or services
require amounts to be paid within 30-90 days from the invoiced date.
Less than 3 months
QR
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation
and is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans and
borrowings.
-
3 to 12 months
QR
The management considers the bank balances and amounts due from related parties as high grade financial assets and trade
accounts receivable and other receivables as standard grade financial assets. When a financial asset is identified to be impaired,
the management downgrades such assets to impaired category and provides adequate allowances.
128,496,709
1 to 5 years
QR
Credit risk (continued)
The group reduces the exposure of credit risk arising from other financial assets by maintaining bank accounts in reputed banks
and providing services only to creditworthy related parties.
-
698,867,057
2,346,320
928,033,121
Trade accounts payable
48,290,351
Bank overdrafts
54,775,995
6,355,957
Retention and other receivables
245,395,308
214,439,950
297,215,209
318,597,869
373,027,786
Amounts due from related parties
-
436,136,756
Interest bearing loans and borrowings
554,659,257
2014
Bank balances
Total
QR
2013
QR
> 5 years
QR
2014
QR
921,994,260
With respect to credit risk arising from the other financial assets of the Group, the Group’s exposure to credit risk arises from default
of the counterparty, with a maximum exposure equal to the carrying amount of these instruments as follows:
Aamal Annual Report 2014 Aamal Company Q.S.C.
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
28
For the year ended 31 December 2014
30
FINANCIAL RISK MANAGEMENT (continued)
Impairment of accounts receivable
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and
to sustain future development of the business. The Board of Directors monitors the capital, which the Group defines
as total shareholders’ equity, excluding non-controlling interests and the level of dividends to ordinary shareholders.
The Board also seeks to maintain a balance between the higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position. The Group’s target is to achieve a
return on shareholders’ equity (excluding non-controlling interests) greater than the weighted average interest expense
on interest bearing loans and borrowings. 8
The Group manages its capital structure and makes adjustments to it, in light of changes in economic and business
conditions and shareholders’ expectation. No changes were made in the objectives, policies or processes during the
years ended 31 December 2014 and 31 December 2013.
The Group monitors the capital using a gearing ratio, which is debt divided by capital plus debt. The Group’s policy is
to keep the gearing ratio below 40%. The Group includes within debt, interest bearing loans and borrowings, less cash
and cash equivalents. Capital includes equity attributable to the equity holders of the parent.
2014
QR
2013
QR
904,381,281
914,905,301
(552,312,937)
(429,300,476)
352,068,344
485,604,825
Total capital
7,464,775,936
6,902,688,970
Capital and net debt
7,816,844,280
7,388,293,795
Interest bearing loans and borrowings
Less: Cash and cash equivalents
Net debt
4.5%
Gearing ratio
29
SIGNIFICANT ASSUMPTIONS, ACCOUNTING JUDGEMENTS AND ESTIMATES
6.6%
FAIR VALUES OF FINANCIAL INSTRUMENTS
An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no
longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts
which are not individually significant, but which are past due, are assessed collectively and an allowance applied
according to the length of time past due, based on historical recovery rates.
Impairment of inventories
Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate
is made of their net realisable value. For individually significant amounts this estimation is performed on an individual
basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a
provision is applied according to the inventory type and the degree of ageing or obsolescence, based on anticipated
selling prices.
Impairment of goodwill
Goodwill embedded in the cost of acquisition of subsidiaries and equity-accounted investees are tested for impairment
annually. The calculations of value in use for cash generating units relating to real estate projects are most sensitive
to the following assumptions:
Gross margin: Gross margins are based on average values achieved in the period preceding the start of the budget
period. These are increased over the budget period for anticipated efficiency improvements.
Discount rates: Discount rates represent the current market assessment of the risks specific to each cash generating
unit, regarding the time value of money and individual risks of the underlying assets which have not been incorporated
in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its
operating segments and derived from its weighted average cost of capital (WACC). The WACC takes into account both
debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost
of debt is based on the borrowings the Group is obliged to service. Segment-specific risk is incorporated by applying
individual beta factors. The beta factors are evaluated annually based on publicly available marked data.
Fair value of investment properties
The fair value of investment properties is determined by external, independent property valuers, having appropriate
recognised professional qualifications and recent experience in the location and category of the property being valued.
Useful lives of property, plant and equipment
The Group’s management determines the estimated useful lives of its property, plant and equipment for calculating
depreciation. This estimate is determined after considering the expected usage of the asset, physical wear and tear,
technical or commercial obsolescence.
Going concern
Financial instruments comprise financial assets and financial liabilities.
Financial assets consist of bank balances, short term bank deposits, amounts due from related parties, retention and
other receivables and trade accounts receivable. Financial liabilities consist of bank overdrafts, interest bearing loans
and borrowings, amounts due to related parties and trade accounts payable.
The fair values of these financial instruments except for interest bearing loans and borrowings approximate their
carrying values due to the short term maturities of these instruments.
The fair value of interest bearing loans and borrowings are estimated based on discounted cash flows using interest
rate currently available for the debt or similar terms and remaining maturities.
88
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The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied
that the Group has the resources to continue in business for the foreseeable future. Furthermore, the management is
not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going
concern. Therefore, the consolidated financial statements continue to be prepared on a going concern basis.
31
INCOME TAX
Certain subsidiaries of the Group, which have non-GCC ownership, are subject to income tax under Qatar Income
Tax Law No. 21 of 2009. The income tax is charged on the share of profits attributable to non-GCC shareholders. For
the purpose of these consolidated financial statements, the income tax liability of the foreign shareholders has been
excluded, given that the non-GCC shareholders have agreed, under the shareholder agreements signed with the
Group, to bear the full liability and make necessary payments.
Aamal Annual Report 2014 Aamal Company Q.S.C.
89