Aamal financial results for the quarter ended 31 March 2011

Press release

Published April 24th, 2011 - 09:30 GMT

Al Bawaba

Aamal Company QSC (Aamal), one of the GCC’s fastest growing diversified conglomerates, announced its first quarter financial results for the period ended 31 March 2011 to the Qatar Exchange on 21 April 2011.

Financial Highlights*

- Revenue up 36.5% to QAR 356.6m (Q1 2010: QAR 261.2m)

- Gross profit up 22.4% to QAR 103.7m (Q1 2010: 84.7m)

- Net profit** down 1.8% to QAR 59.1m (Q1 2010: QAR 60.2m)

- Net profit margins*** decreased to 16.5% (Q1 2010: 23.0%): principally due to temporary weakness in the pricing environment for Qatari ready mix concrete for the period

- Low financial gearing**** at 11.2% (31 December 2010: 11.2%)

- Reported earnings per share of QAR 0.12 (Q1 2010: QAR 0.13)

- Net investment in capital expenditure of QAR 8.8m (Q1 2010 QAR 59.2m)

* 2010 net profit has been restated to QAR 60.2m (previously QAR 56.6m)

** There were no fair value gains on investment properties in either Q1 2011 or Q1 2010; total net profit stated is after deduction of Head Office costs whilst net profit shown by division is before deduction of Head Office costs

*** Excluding income from associates

**** Net debt to net debt plus equity

Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal, commented: “I am delighted to report that we have made a very encouraging start to 2011 delivering another quarter of double-digit revenue growth. Strong foundations have been laid that position the Group for robust and sustainable growth with our diversified business model continuing to provide a high quality and balanced exposure across the rapidly developing Qatari economy."

Branches and subsidiaries within the Industrial Manufacturing division for the period include Senyar Industries Qatar Holding (El Sewedy Cables Qatar and Doha Cables), Aamal Readymix and Aamal Cement Industries.

This division has seen significant growth in its revenue principally due to the ramp-up in production at Doha Cables (which commenced production in May 2010) and growth at El Sewedy Cables Qatar (which was acquired by Senyar Industries in July 2010, with effect from 1 January 2010), as well as to a lesser extent, at Aamal Cement Industries (which commenced production in January 2010).

Net profit margins for the division have fallen from 7.7% to 6.3%: this has been mainly due to a significant fall in net profit margins at Aamal Readymix. The market for ready mix concrete in Qatar has continued to be very competitive with sale prices remaining under pressure. However, management expects this pricing environment to improve as infrastructure projects which have been delayed are resumed and new projects associated with the 2030 National Vision come on line, stimulated further by the award of the 2022 FIFA World Cup. Aamal Readymix is one of the strongest players in the sector (with respect to available capacity and the quality of its products), so is well placed to benefit from the anticipated improvement in margins in 2011: furthermore, a fourth batching plant is under construction which is expected to become operational June 2011 and will be the largest in The Middle East, taking total capacity from 374,000 cu m to 600,000 cu m.

Branches within the Trading and Distribution division primarily comprise, but are not limited to, Aamal Trading, Ebn Sina Medical and Aamal Medical.

The increase in revenue has been driven by particularly strong performances from Aamal Trading and Ebn Sina Medical. Aamal

Trading continued to win a number of major tenders with the Qatari Government, semi Government and private clients, supported by a new strategy introduced in the fourth quarter of 2010 to deliver a more customer focused after-sales service. Ebn Sina Medical saw high double-digit revenue growth, driven by the strong underlying growth of the Qatar pharmaceutical market and the retention and award of several exclusive distribution agreements with blue-chip international companies such as AstraZeneca, Novartis Pharma, Sanofi Aventis and Novo Nordisk.

Branches in the Property division comprise City Center Doha and Aamal Real Estate.

Occupancy at City Center Doha, which makes up over 75% of this division’s revenues has been high at 97%, with 3% strategically held back to allow for the active management of the centre. An additional 7,000 sq m of retail space is on course to be added by Q4 2011. The centre is also expected to benefit from the planned physical connections to 5 hotels by 2012.

Occupancy at Aamal Real Estate has also been high at 99% (excluding the Markhiya residential complex which has only just come to market). These assets are expected to benefit from increased demand for residential rental properties and the repositioning of Souq Al Haraj Najma to upscale its profile.

Net profit margins have risen from 74.8% to 79.0% due to an uplift in lease rentals.

Branches and subsidiaries in the Managed Services division comprise Aamal Services, ECCO Gulf and Aamal Travel & Tourism.

Revenues have increased due to the commencement of operations of ECCO Gulf in February 2010. Currently ECCO Gulf has 200 regular clients and is looking to expand its customer base, including through international expansion into the UAE, Oman and Yemen.

Net profit margins have fallen from 32.2% to 23.4% due to Aamal Services’s expansion into lower margin activities, a strategic move in order to increase the attractiveness of Aamal Services’s customer offering through providing a broader range of services and thereby becoming the first point of call for a wider range of clients.

Branches and subsidiaries in the Managed Services division comprise Aamal Services, ECCO Gulf and Aamal Travel & Tourism.

Tarek M. El Sayed, Managing Director of Aamal, commented: “This has been another strong period of trading for us and we believe that new business lines launched during the prior year are bedding down well. Solid contributions have been made from all of our operating divisions and in particular our industrial manufacturing division which is expected to be the primary focus for growth going forward.“

Background Information

Aamal

Aamal Company was formed on 13^th January 2001 as a private shareholding company with limited liability (W.L.L.) registered in the State of Qatar.

On 2^nd July 2007, Aamal Company became a public shareholding company and was listed on the Qatar Stock Exchange on 5th December 2007 with a paid up capital of QAR3.45 billion, making it one of the largest public shareholding companies in Qatar. Aamal has since increased its paid up capital to QAR 6.3 billion.

Aamal is widely diversified with operations across 26 active business units, some of which have been operating in Qatar for almost 40 years, achieving strong market-leading positions. Aamal runs a successful group, staffed with over 2,300 employees and is considered to be a role model for many other companies in the region.