AAMAL COMPANY Q.P.S.C. FULL YEAR 2017 RESULTS 1
Contents • Key Full Year 2017 developments • Financial Summary • Segmental Review • Summary and Outlook • Additional information (breakdown by Segments) 2
Key FY 2017 developments • Growth momentum maintained - Earnings per share up 9.6% • Dividend of QAR 0.60 a share proposed - Equivalent to 6% of paid-up share capital - Subject to approval at the AGM, 22 April 2018 • Qatar’s response to the embargo - Despite the challenges created, Qatar is proving its robustness - Testimony to the resilience of the Qatari economy and its people, combined with strong and stable national leadership • Aamal’s response to the embargo - Practical and resourceful - Strength through diversity • Investing for future growth - First mover advantage, able to move quickly and decisively - Significant financial firepower - Allied to organic growth and partnership opportunities 3
Financial Summary QARm FY 2017 FY 2016 % change Revenue 1,604.2 2,829.1 (43.3)% • YoY comparisons Net profit before share of net profit of 421.0 499.2 (15.7)% distorted due to change associates and joint ventures accounted for using the equity method in consolidation April 1 and FV gains on investment properties 2017 (effects will reverse Net underlying profit margin % 26.3% 17.6% +8.7 ppts Q1 2019) • Eps most relevant Share of net profit of associates and 102.0 60.2 +69.4% joint ventures accounted for using the performance indicator, up equity method 9.6% Fair value gains on investment 0.0 0.9 (100.0)% properties • Excellent result against challenging backdrop Total Company net profit 523.1 560.2 (6.6)% Less: non controlling interests (22.1) (98.0) (77.4)% Attributable to Aamal shareholders 500.9 462.3 +8.3% Earnings per share (QR) 0.80 0.73 +9.6% 4
Sales breakdown • Up to 2017, Industrial Manufacturing steadily increased its share of overall revenue, Total Revenue (by Segment) driving Aamal’s growth 2,882.0 3,100 2,829.2 • 3.4% Change in accounting treatment 2,700 2.4% 11.3% 11.2% adversely distorts 2017 year-on- 2,139.1 2,122.6 2,300 year comparison 27.0% 23.0% 3.0% 4.1% 13.5% 12.3% 1,900 1,606.2 6.1% Senyar Industries and 27.6% 1,500 QAR million 34.1% 20.0% Advanced Pipes and Casts 1,100 Industries now equity 64.0% 39.4% 60.8% 700 accounted for, so their 59.4% 53.0% -1.5% revenue contributions are 300 -1.7% -1.7% 36.2% -3.6% -3.4% excluded -100 2013 2014 2015 2016 2017 • Industrial Manufacturing Industrial Manufacturing Trading and Distribution continues to be the principal Property Managed Services driver to Aamal’s growth, less: inter-divisional revenue profitability and shareholder return 5
Net profit breakdown Net profit, ex-FV gains (by Segment) 559.4 • Up to 2017, Industrial 600 523.0 521.4 Manufacturing steadily 1.1% 1.8% increased its share of 1.3% 500 overall net profit (as with 46.2% 348.5 revenue), again driving 51.3% 52.8% 2.4% 400 Aamal’s growth 1.9% 267.2 QAR million 300 • Industrial Manufacturing’s 64.1% 21.4% share fell back to 32.1% in 22.2% 75.1% 2017 200 28.2% reflection of supply sourcing 33.0% 37.6% 100 32.1% issues due to the continuing 32.4% 24.8% 14.8% 8.5% blockade; now largely 0 resolved 2013 2014 2015 2016 2017 -7.0% -6.9% -6.9% -14.3% -100 -17.9% Industrial Manufacturing Trading and Distribution Property (ex-FV gains) Managed Services less: Head Office costs 6
Rising profitability Net profit (ex-FV gains) and margin %, for fully consolidated operations • Net profit margins have 600 28.0% 559.4 523.1 been on a steadily rising 521.3 26.3% 60.2 500 42.4 trend over the years 24.0% 102.0 400 348.5 QAR million 18.1 % margin • 20.0% However, 2017 gain 17.6% 16.6% 300 267.2 distorted by change in the 499.2 18.5 16.0% 15.4% 478.9 consolidation method of 421.0 200 11.7% 330.4 two industrial 12.0% 100 manufacturing entities 248.7 0 8.0% (lower than company 2013 2014 2015 2016 2017 average margins) Axis Title Fully consolidated profits Equity accounted for profits Margins % (RHS) nb. consolidated net profit margins exclude equity accounted for profits, along with any fair value gains on investment properties 7
Segmental review – Industrial Manufacturing QARm FY 2017 FY 2016 % change Revenue 582.2 1,811.7 (67.9)% Net profit - fully consolidated 71.2 156.5 (54.5)% activities Net underlying profit margin % 12.2% 8.6% +3.6 ppts Share of net profit of 96.6 53.9 +79.2% associates and joint ventures accounted for using the equity method Total net profit 167.8 210.4 (20.2)% • Year-on-year comparisons distorted by change in accounting presentation (hard to make valid y-o-y comparisons) • Most relevant figure is total net profit, fell 20.2% y-o-y: due to delays with sourcing raw materials and fulfilling customer orders on account of the continuing blockade issues now largely rectified with alternative sourcing and expansion of warehouse storage facilities • Launch of three major new industrial projects in January 2018, due to come onstream by end 2018 and 2019 will be first of their kind in Qatar, Aamal to become the only integrated cable manufacturer 8
Segmental review – Trading & Distribution QARm FY 2017 FY 2016 % change Revenue 633.3 649.9 (2.5)% Net profit 116.2 119.8 (3.0)% Net profit margin % 18.3% 18.4% (0.1) ppts • Marginal decline in revenues leading to small decline in net profit (margins flat) • Ebn Sina Medical increase in sales due to new agreements signed with leading international pharma established alternative sources of supply, expanded domestic warehouse capacity and automated many internal processes • Aamal Medical drop in sales more than offset by margin expansion rotation into higher margin businesses at expense of lower margin • Aamal Trading and Distribution expansion of operations: opened two “First Stop” automotive centers - introduced “Dial a Tire Service” - launched Qatar’s first Bridgestone Fleet Point Center - 9
Segmental review – Property QARm FY 2017 FY 2016 % change Revenue 320.9 317.9 +1.0% Net profit - fully consolidated 262.6 252.1 +4.2% activities Net underlying profit margin % 81.8% 79.3% +2.5 ppts Share of net profit of 5.5 6.3 (13.3)% associates and joint ventures accounted for using the equity method Total net profit 268.1 258.4 +3.8% • City Center Doha remains Doha’s premier shopping mall strengths all too evident against a weaker consumer backdrop, prime location in West Bay Phase 2 expansion works on track and within budget (completion expected later this year) • Aamal Real Estate rise in both sales and margins expansion plans - 63 residential apartment building due for completion Q3 2018, on track and within budget - purchase of three residential compounds early 2018, all in prime Doha locations 10
Segmental review – Managed Services QARm FY 2017 FY 2016 % change Revenue 95.3 97.4 (2.2)% Net profit 7.0 9.8 (28.1)% Net profit margin % 7.3% 10.1% (2.8) ppts • Marginal decline in revenue matched with significant margin contraction led to 28.1% fall in net profits • Aamal Travel strategic decision to focus on cash sales to minimise risk of defaults signs of recovery vis à vis economic blockade (“staycations” and international pushing of Qatar’s tourism credentials) • ECCO Gulf revenue growth helped to offset contraction at Aamal Travel expansion of existing activities (banking and government sectors), entered new sectors (retail and technology) scale becoming increasingly important (cost to serve, breadth of service offering) • Aamal Services strategy to improve sales mix through newer and higher margin contracts (flat revenues, 2x net profits) 11
Capex and Financing Net financial gearing Net capex vs. operating cash flow 7% 1000 6.4% 6% 768.7 Net debt / total capital 800 5% QAR million 4.4% 4% 600 3.6% 3% 388.1 355.5 400 2.3% 2% 228.8 220.0 156.1 128.0 1% 114.6 200 106.5 91.8 0% 0 2013 2014 2015 2016 2017 -1% 2013 2014 2015 2016 2017 -1.4% -2% Net Capex Operating cash flow • Net capital expenditure easily and consistently covered by operating cash flow, resulting in positive free cash flow either retained for subsequent reinvestment into the business and/or distributed by way of dividends • Net financial gearing on downward trend, net cash position end-2017 12
Summary and Outlook • Very strong performance from Aamal despite obvious headwinds • Qatar has responded well to the challenges presented • Aamal is at the heart of this national resilience • Exposure across the economic spectrum, market leading positions • Quick to adapt and identify opportunities ahead of others • Significant financial firepower • Well positioned for future growth 13
Any further questions? Please contact: Aamal Company Mohammad Ramahi (Chief Financial Officer) mohd.ramahi@aamal.com.qa Arwa Goussous (Corporate Communications Manager) arwa.goussous@aamal.com.qa Arwa Hamdieh (Investor Relations and Compliance Manager) arwa.hamdieh@aamal.com.qa T: +974 4422 3888 www.aamal.com.qa Financial PR/IR advisers Nick Cox-Johnson nick.cox-johnson@citigatedewerogerson.com T: +44 20 7638 9571 www.citigatedewerogerson.com 14
APPENDIX BREAKDOWN BY SEGMENT 15
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