STRENGTH THROUGH DIVERSITY/media/Files/A/Aamal-V2/2018... · 11 Market Review by Sector 12 Vice Chairman and Managing Director’s Report ... – Over the course of 2017, Aamal commissioned

STRENGTH THROUGH DIVERSITY

Aamal Company Q.P.S.C.Annual Report 2017

Aam

al Company Q

.P.S.C. Annual Report 2017

ي 2017سنو

ق. التقرير الش.م.ع.

شركة أعمال

In the Name of Allah Most Gracious Most Merciful

His Highness Sheikh Tamim Bin Hamad Al Thani, Emir of the State of Qatar

OverviewAamal Company Q.P.S.C. Annual Report 2017 1

Overview

3 Highlights of the Year

4 Board of Directors

6 At a Glance

Strategic Report

8 Business Strategy

10 Chairman’s Statement

11 Market Review by Sector

12 Vice Chairman and Managing Director’s Report

13 Investment Rationale

14 Aamal Sustainability Framework and ESG Disclosures

18 Operational Review

32 Corporate Social Responsibility

Corporate Governance

34 Objective

34 Achievements and activities planned

35 Board of Directors

35 Board Composition

36 Board Committees

37 Executive Management

38 Organisational Structure

39 Annual Ordinary and Extra Ordinary General Assembly Meeting

Financials

40 Independent Auditor’s Report

44 Financial Statements and Notes

19.8%

39.0%

35.9%

5.3% 1.3%

48.0%

20.7%

30.0%

19%

11%

25%

45%

Aamal Company Q.P.S.C. Annual Report 20172

Generating revenues of QAR 1,604.2m (US$ 440.5m) in 2017, Aamal Company is one of the Gulf region’s largest and fastest-growing diversified conglomerates, offering investors a high quality and balanced exposure to Qatar’s economic growth and development.

Aamal’s four segments

Industrial Manufacturing

Property

Trading and Distribution

Managed Services

More information in Operational Review on page 19

More information in Operational Review on page 28 More information in Operational Review on page 30

More information in Operational Review on page 24

Segmental contributions

Shareholders Structure

Revenue (QAR)*

1,604.2m-43.3%

Net Profit (QAR)**

421.0m-15.7%

Property Trading and Distribution Industrial Manufacturing Managed Services

Property Trading and Distribution Industrial Manufacturing Managed Services

* Before deduction of inter-segmental revenue** Net profit before share of net profits of associates and joint ventures accounted for using the equity method and fair value gains on investment

properties

Shareholders Structure

Corporate (minus AFH shares)

Individual (minus Sheikh Faisal shares)

Major Shareholder (Sheikh Faisal Bin Qassim Al Thani)

Major Shareholder (Al Faisal Holding)


Highlights of the Year

Financial Highlights

– Total revenue down 43.3% to QAR 1,604.2m (2016: QAR 2,829.1m), primarily due to the reclassification of two business entities within the Industrial Manufacturing segment from subsidiaries to joint ventures, with a consequent change in their accounting presentation

– Gross profit down 20.2% to QAR 545.6m (2016: QAR 683.4m) – Net profit before share of net profits of associates and joint ventures

accounted for using the equity method and fair value gains on investment properties (‘net underlying profit’) down 15.7% to QAR 421.0m (2016: QAR 499.2m)

– Net underlying profit margins have increased by 8.7 percentage points to 26.3% (2016: 17.6%)

– Share of net profits from associates and joint ventures accounted for using the equity method increased 69.4% to QAR 102.0m (2016: QAR 60.2m)

– There were no fair value gains on investment properties during 2017 (2016: QAR 0.9m)

– Total Company net profit 1 down 6.6% to QAR 523.1m (2016: QAR 560.2m), with net profit attributable to Aamal equity holders up 8.4% to QAR 500.9m (2016: QAR 462.3m)

– Reported earnings per share increased 9.6% to QAR 0.80 (2016: QAR 0.73) – Net capital expenditure down 16.8% to QAR 106.5m (2016: QAR

128.0m), reflecting fluctuations in contractor billing profiles that are milestone-based

– Net positive cash position of QAR 113.1m (30 June 2017: net positive cash of QAR 134.7m)

1 Total Company net profit is before the deduction of net profit attributable to non-controlling interests.

Non-Financial Highlights

– Establishment of new supply chains to help overcome the challenges in terms of importing materials and products related to the businesses within the Industrial Manufacturing and Trading & Distribution segments

– City Center Doha shopping mall Phase 2 development is on budget and on track for completion by the end of 2018 that will lead to an increase in total retail space of around 12%. During the fourth quarter of 2017, renovation of the East Food Court was completed and the restaurants were handed over to the tenants to be fitted out

– In early 2018, Aamal Real Estate announced the conclusion of negotiations which had started in 2017 to acquire additional property assets located in prime Doha locations, valued at approximately QAR 179.5 million (USD 49.3 million).

– In early 2018, announcement of three major new industrial projects for the production of aluminium, copper and drums through the Senyar Industries joint venture, having applied for the necessary approvals in 2017. These will be the first of their kind in Qatar and are expected to become operational by the end of 2018 and 2019

– Aamal Trading and Distribution expanded its geographic presence in Doha with the opening of two additional showrooms, the introduction of a new ‘Dial a Tire’ service and the launch of Qatar’s first Bridgestone Fleet Point Center

– Our investor relations website has been ranked third amongst the 45 companies listed on the Qatar Stock Exchange (‘QSE’), as part of the 2017 Annual Investor Relations Excellence Program. This program, now into its third year, is an initiative introduced under the auspices of the QSE and is widely regarded as a hallmark of excellence. It is designed to recognise those QSE-listed companies for the quality and effectiveness of their investor relations websites, whilst encouraging alignment with international best practice

– Initiatives taken to appoint a liquidity provider during 2017, taking effect from 25 February 2018. This is designed to improve the liquidity of Aamal shares traded on the QSE by facilitating increased market depth and trading volumes, through an obligation to provide constant bid and offer prices

– Aamal initiated enhancing its Corporate Governance framework in compliance with QFMA new code (Corporate Governance code for companies and legal entities listed on the main market issued by QFMA Board of Directors’ decision No. (5) of 2016

– Aamal Company has completed the conversion of all its branches to sole trader companies fully owned by Aamal Q.P.S.C. with limited liability status. This in compliance with Law No. 20 of the year of 2014 amending the provisions of Law No. 25 of the year of 2005 promulgating the Law of the Commercial Register

– Over the course of 2017, Aamal commissioned the start of Phase 1 of ORACLE Cloud Applications ERP (Enterprise Resource Planning), covering HR, while Phase 2 will encompass all aspects of financial control, procurement and supply chains. The benefits of using a single integrated platform include enhancement to the Company’s security and governance, workflows, and business process reporting and analysis. Full development and testing is expected to be concluded by the end of 2018, ready for implementation by Q1 2019 by which time Aamal Company will be operating in a totally paperless working environment

4 Aamal Company Q.P.S.C. Annual Report 2017

Board of Directors

Sheikh Faisal Bin Qassim Al ThaniChairman of the Board of DirectorsNon-Executive

– Founder and Chairman of Aamal Company – The Chairman of the Board since the listing

on Qatar Stock Exchange in 2007 – Chairman of the Qatari Businessmen Association – Member of the Board of Trustees at Qatar University – Founder and Chairman of Al Faisal without

Borders Foundation – Founder and Chairman of the board of trustees

of Sheikh Faisal Bin Qassim Al Thani Museum – Chairman of the Gulf Qatari Classic Cars Association – Member of the Board of Trustees at the College

of Business in DePaul University in Chicago

Sheikh Mohamed Bin Faisal Bin Qassim Al Thani Vice Chairman and Managing DirectorExecutive

– Vice Chairman and Managing Director – Appointed to the Board of Aamal Company in 2009 – Sits on the Board of Directors of Al Khaliji Bank Q.P.S.C. – Holds a Bachelor’s degree in business administration

from Carnegie Mellon University, Qatar – Member of the Board of Trustees at the American

University of Sharjah (UAE) – Honorary President of the Italian Chamber of Commerce

in Qatar – Member of the Board of Trustees of the Arab Academy

for Banking and Financial Sciences – Egypt

5Aamal Company Q.P.S.C. Annual Report 2017 Overview

Sheikh Abdullah Bin Hamad Al Thani Board MemberNon-Executive

– A member of the Board of Aamal Company since 2010 as a representative of Al Jazi Real Estate Investment Company W.L.L.

– A member of the Qatari Businessmen Association and attained the rank of Major in the Qatari Armed Forces

– Sheikh Abdullah holds a Bachelor’s degree in business from Kingston University (UK)

Sheikh Jabor Bin Abdulrahman Bin Mohamed Al Thani Board Member Non-Executive

– Board Member at Aamal Company since February 2017 representing Al Faisal Holding

– Vice Chairman and Managing Director of Transind Group since 2004

– Founder and Managing Director of Al-Bayan Insurance Broker since 2011

– Managing Director of Al Arabi Sports Club – Holds a Bachelor of Business Administration from

European University, Geneva, Switzerland, 2009 – Certified Financial Analyst from American Academy

of Financial Management, 2007 – Holds Professional Diploma in Financial Management

and Banking from The Arab Academy for Banking and Financial Sciences, 2006

Sheikha Al Jazi Bint Faisal Al ThaniBoard MemberNon-Executive

– Board member since 2016 representing Al Rayyan for Education

– Holds a Master’s degree in International Peace and Security from King’s College London

– Holds a Bachelor’s Degree in Culture and Politics from Georgetown University, Qatar

Mr Kamel Mohamed El Egla Board MemberNon-Executive

– Board Member at Aamal Company since February 2017 representing City Limousine

– Chief Real Estate Officer of Al Faisal Holding since 2005 – Mr. Kamel has joined Al Faisal Holding since 1985, where

he spearheaded most of Al Faisal construction projects – General Manager of Derwind Trading and Contracting – Holds a Bachelor’s Degree in Civil Engineering, Al Azhar

University Egypt


At a Glance

Our corporate strategy has always been to create and enhance long term shareholder value through the continued profitable operations and expansion of its diversified business platform, with particular reference to:• Offering high quality products and services• Being alert and responsive to the markets’

evolving needs• Acting as a socially responsible member of society,

adopting ethical and sustainable policies geared towards protecting the environment and looking after the welfare of its employees

Five-year financial summary

QAR m 2017 2016 2015 2014 2013

Revenue 1,604.2 2,829.1 2,881.9 2,139.1 2,122.6

Gross Profit 545.6 683.4 642.1 506.0 420.5

Gross Profit Margin % 34.0% 24.2% 22.3% 23.7% 19.8%

Net Profit Before Fair Value Gains on Investment Properties 523.1 559.4 521.3 348.5 267.2

Net Underlying Profit Margin Before Fair Value Gain1 % 26.3% 17.6% 16.6% 15.4% 11.7%

Fair Value Gains on Investment Properties 0.0 0.9 135.4 251.7 245.1

Total Company Net Profit for the year 523.1 560.2 656.7 600.2 512.3

Profit attributable to equity holders of the parent 500.9 462.3 601.0 577.1 506.8

Reported EPS (based on the Disclosed Financial Statement) 0.80 0.73 0.95 0.96 0.85

Rebased EPS2 0.80 0.73 0.95 0.922 0.802

Dividend per share (QAR)3 0.604 0.604 Nil 1.505 Nil

1. Excluding share of profit from equity accounted for investments in associates and joint ventures.2. Reported EPS for prior years have been re-based using the current number of shares in issue (630 million) to facilitate like-for-like comparisons3. Assume payable in cash unless otherwise stated4. Subject to approval at the Annual Ordinary General Assembly Meeting (22 April 2018)5. Comprised of two elements: QAR 1.0 in cash and QAR 0.5 in bonus shares (i.e. 5% of each share’s nominal value of QAR 10; total number of shares in issue increased

to 630 million (600 million previously))

Incorporated in 2001 in Qatar and listed on the Qatar Stock Exchange in 2007.

Geographical focus on Qatar at present with intentions to expand further in the region.

Operations across 26 active business units with market leading positions in key sectors including: industrial manufacturing, retail, real estate, managed services and the medical equipment and pharmaceutical sectors.

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 positions and optimise performance; and

iii) Continued application of clear and disciplined operational and financial principles underlying our strategic growth initiatives.

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.

Strong backing from Al Faisal Holding Company, a long term major shareholder of Aamal.

Strength through diversity


* Subsidiaries not fully owned by Aamal ** Equity accounted for investment in Associates and Joint Ventures*** Inactive business unit currently under evaluation**** Business unit currently in liquidation

Business units with effective Aamal ownership (%)

Our structure



Property Managed Services

Aamal Readymix 100%

Aamal Cement 99% Industries*

Ci-San Trading* 50%

•Aamal for Maritime 74.7% Transportation Services*

•Gulf Rocks* 74.5 %

Senyar Industries 50% Qatar Holding**

• El Sewedy 38.3% Cables Qatar**

•Doha Cables** 47.3%

Advanced Pipes 50% and Casts Company**

Frijns Structural 20% Steel Middle East**

Aamal for Industrial 100% Projects ***

Innovative 70% Lighting****

IMO Company 100% Qatar ***

Aamal Trading 100% and Distribution

Aamal Medical 100%

Ebn Sina Medical 100%

Ebn Sina Pharmacy 100%

Foot Care Centre 100%

Al Farazdaq 65% Company*

Legend for Trading 100% and Distribution

Aamal for Car 100% Maintenance

Aamal Optical 51% Supplies****

City Center Doha 100%

Aamal Real Estate 100%

Aamal – ECE** 51%

Aamal Travel 100% and Tourism

Aamal Services 100%

ECCO Gulf* 51%

Family 100% Entertainment Center

Winter Wonderland 100%

Johnson Controls 51% Qatar****


Business Strategy

Delivering growth

The Company seeks to take advantage of the growth opportunities enabled by the 2030 National Vision, and to leverage its position as a leading participant across various key economic sectors through a focus on three pillars for sustained, profitable growth:

1. An increased focus on industrial manufacturing and related high growth sectors to capitalise on the significant demand arising from wider industrialisation of the Qatari economy;

2. Continued growth, diversification and innovation across other existing businesses to enhance market position and optimise performance; and

3. Continued application of clear and disciplined operational and financial principles underpinning our strategic growth initiatives.

Through leveraging its significant hydrocarbon surpluses, Qatar aims to transform itself into a diversified and knowledge-based economy. To date this has been in two major phases: the first phase spanned from 2000-2011 and was mainly driven by expansion of its LNG facilities; followed by the current phase which has seen a shift onto the non-hydrocarbon sector and a major program of infrastructure investment, designed to diversify the economy. Underpinning this has been the National Vision 2030 and preparation ahead of the FIFA World Cup to be hosted by Qatar in 2022.

As per the Qatar’s State Budget for Year 2018, QAR 29 billion (USD 8 billion) has been earmarked for new projects in 2018. The 2018 budget also focuses on supporting private investments, especially in the food and agricultural sectors, SMEs and the development of infrastructure in industrial areas and FTZs (Free Trade Zones). Through its existing scale and market leading positions, along with plans to expand its industrial manufacturing operations further, Aamal is very well positioned to capitalise on the business opportunities in Qatar that will be afforded and thereby create long-term shareholder value.

An increased focus on industrial manufacturing and related high growth sectors to capitalise on significant demand arising from wider industrialisation of the Qatari economy

Strategic pillar #1

See more on pages 19–23

9Aamal Company Q.P.S.C. Annual Report 2017 Strategic Report

Infrastructure projects drive GDP growth, not only through directly increasing the level of investment spend in the economy, but also indirectly through an expansion in population which in turn raises the level of consumption (a ‘multiplier’ effect).

Together, these factors help to expand the size of the non-hydrocarbon sector and contribute to the diversification of the economy. Aamal’s existing businesses are well placed to benefit from this structural transformation, with market leading positions across the economic spectrum.

Aamal maintains strong commitment to financial and operational progress supported by a clear corporate vision and strong management team who steer the Company towards achieving its goal. We believe the success and growth of our business can be attributed to consistency in terms of standards and policies; the ability to closely monitor and control costs allied with our focus on diversification; the efforts of our supportive local and international partners and our shareholders. Our commitment to corporate governance and business ethics remains at the forefront of everything we do.

A continued growth, diversification and innovation across other existing businesses to enhance market position and optimise performance

A continued application of clear and disciplined operational and financial principles underpinning our strategic growth initiatives

Strategic pillar #2 Strategic pillar #3

See more on pages 19–31 See more on pages 34–39


Chairman’s Statement

On behalf of myself and the Board of Directors, I am pleased to present a summary of the financial results of Aamal Company Q.P.S.C., with an approximate 10% increase in Earnings per share and a net profit attributable to equity holders QAR 500.9m, praise be to God.

Allied to this is Aamal’s strong financial position and cash generation which means that should we identify a potential value‐creating opportunity, we are able to act quickly, often giving us a competitive advantage over our peers. An excellent example of this is the decision we announced in early January to proceed with three major new industrial projects which will be the first of their kind in Qatar, having applied for the necessary approvals in 2017. Not surprisingly, we are also the partner of choice for those international blue‐chip names looking to enter the Qatari market for the first time.

I am also pleased to announce that Board of Directors has recommended a cash dividend QAR 0.60 a share (equivalent to 6% of paid‐up share capital), subject to the approval at the Annual General Assembly Meeting which is due to take place on April 22, 2018.

Furthermore, I would like to extend my thanks and appreciation to our valued shareholders for their trust and support in us, and we promise that we will continue giving our best efforts to further develop the activities of the Company, and to continue our search for further growth that benefits all stakeholders.

Finally, I would like to take a moment to express my gratitude and appreciation to all employees of the company, to our partners, our cooperative clients, and to all those who had a role in supporting any growth or prosperity Aamal Company has achieved, which is a reflection of the growth and prosperity of the Qatari economy, under the wise leadership of His Highness Sheikh Tamim bin Hamad Al Thani, Emir of the State of Qatar, and the esteemed Government who have the greatest role in overcoming any challenges facing the national economy.

Faisal Bin Qassim Al ThaniChairman

Looking at these results, I’m pleased to report that Aamal has been at the forefront here, which in the current climate is a very impressive result indeed. I should also highlight that in 2017 we have applied a change in the accounting presentation of a couple of business entities during the year, which has a direct impact on presentation of the numbers between this year and the previous year and in specific to the Revenue. The effects of this change will remain valid until after Q4 2018, by which time they will have reversed out.

Looking at the market conditions, while the continuing blockade by a number of neighbouring Gulf countries has undoubtedly created some challenging headwinds, I am very proud to say that Qatar as a nation is successfully navigating through them. I believe this is testimony not only to the resilience of the Qatari economy but also to the strong and clear leadership that our national Government provides as we strive to achieve the holistic goals set out in the Qatar National Vision 2030, including diversification of the economy. I must also mention the resourcefulness of the Qatari people in meeting these challenges head on, as they did in previously demanding times including the global slump post‐2007 and the oil price lows of early 2016.

Aamal has always been noted for its practicality and decisiveness, and no better is this demonstrated than by how rapidly we moved to help establish alternative supply chains in the face of the continuing embargo against Qatar. This resilience is also borne out by the diversity of our business model, so that if one sector is experiencing a tightening in general business conditions for example, there will be others that are able to more than compensate.

A solid performance throughout

Strategic ReportAamal Company Q.P.S.C. Annual Report 2017 11

Market Review by Sector

Industrial Manufacturing Sector (non-hydrocarbon sector)

The Qatari Government considers industrial development to be an integral part of its plan to diversify the economy through leveraging off its huge natural gas reserves, and is strongly supporting local investment into the manufacturing sector. In addition to the Government’s plan to invest in several downstream industries related to Oil & Gas sector, the Government is also encouraging private companies to invest in setting up local manufacturing and assembly facilities, spurred on by the large-scale infrastructure development that is happening in the country including projects related to the Doha Metro and the 2022 FIFA World Cup.

Achievement of self-sufficiency in food, dairy and agricultural products has also been given more emphasis by the authorities, which has encouraged significant private investment into these segments.

One major advantage of Qatar is the presence of competitively priced raw materials, including secure energy supplies. Added to this is the full coming on-stream of the new Hamad Seaport which has already started making a positive impact on Qatar’s growth as a regional trading hub for various industrial activities in the Middle East. By establishing new trading routes and investing in new trading partners, this has helped to underpin the economy’s impressive growth record.

Property Sector

Qatar is going through a phase of rapid growth in the retail industry with several large size shopping malls launched already with a combined area of over 1.3m sqm., and a further four mid-size malls are expected to open during 2018. In addition to this increased supply of retail space in Qatar, cost-cutting and restructuring measures adopted both within the private and public sectors in Qatar in response to the ongoing economic blockade of the country by a number of neighbouring Gulf countries has had a knock-on effect on consumer spending more generally. To help withstand these challenges, positive attributes of accessibility, location and size are more important than ever; City Center Doha ticks all these boxes, remaining the premier mall in the country.

In terms of rents, residential occupancy rates have dropped marginally due to new housing stock recently coming onto the market which has placed some downward pressure on rents, at least until this additional supply has worked its way through the system; in contrast however, commercial rents at major locations have managed to remain fairly stable.

Trading & Distribution Sector

This sector has been one of the strongest and fastest growing sectors in Qatar for several decades, as the country continues to develop healthy trade relations with the world’s major economies. In terms of oil and gas products, Qatar is currently tilting its export partnerships more towards the emerging markets, south-east Asia in particular, whilst its imports have grown and become more diverse, particularly in terms of automobiles, building interiors and furniture, clothing, electronic goods, food, infrastructure goods, medical equipment and pharmaceuticals.

Opportunities for business in the trading sector have continued to grow in line with the country’s ever-increasing population and development of its infrastructure that includes significant projects related to the Doha Metro and the 2022 FIFA World Cup. Moreover, the core sectors emphasised by the Government key to its National Vision 2030 (such as healthcare, education, technology and social welfare development), are in turn driving demand for several high value products that are currently not manufactured in Qatar.

Managed Services Sector

The Services sector in Qatar is expected to grow strongly over the next few years, reflecting the initiatives taken by the Government to improve the general level of services. Healthcare, education, tourism and software/technology related sub-sectors have all been given greater strategic focus as part of the Qatar National Vision 2030. As such, the services sector has experienced strong structural growth in recent years, which has been in contrast to the slump in global energy prices of recent times, and is expected to sustain this positive momentum over the coming years.

The Government’s steadfast commitment to transform Qatar into a major tourist and entertainment destination in the region by developing new and innovative tourist attractions is expected to enhance inbound tourist flows from across the globe. By hosting several global sporting events in Doha, and with the continued support given by the Government to the travel industry (such as easing in entry visa requirements for many nationalities), this will help to underpin the sector’s growth credentials, at least for the near term.

Furthermore, with more resources now being allocated to improving the quality of education and healthcare in Qatar, partly through making better use of technology, the level of demand for local knowledge-based solutions should increase, and thereby help to kick start an indigenous homegrown tech sector with related supporting services.


Our resilient model has absorbed challenges

Vice Chairman and Managing Director’s Report

Aamal has performed very well this year, managing to grow earnings per share by 9.6% in spite of the challenges facing the market as a whole on account of the ongoing economic blockade.

This impressive growth not only reflects the Company’s structural resilience, but also its ability to adapt to changing market conditions – not just in terms of finding alternative sources of supplies for many of our businesses, but also seeking opportunities to grow further. Moreover, we have the financial flexibility too, on account of our strong financial position, to act quickly and decisively should any such potential value-creating opportunities be identified.

Total revenue was down 43.3% to QAR 1,604.2m which was principally because of the change alone in the accounting presentation of two business entities within the Industrial Manufacturing segment (Senyar Industries, and Advanced Pipes and Casts Industries). As the businesses are no longer treated as subsidiaries but as joint ventures, their revenues are now excluded from Aamal’s total revenue, hence the significant fall (i.e. 43.3%). This fall in overall revenue does not reflect the economic reality and should not conceal how important the Industrial Manufacturing Segment remains – not just to Aamal’s growth credentials, but also in terms of the vision that Qatar has set for itself as the country seeks to diversify and become progressively more self-sufficient through an industrial-led strategy.

Looking at Aamal’s performance by Segment, Industrial Manufacturing continues to be a strong contributor to Aamal’s total revenues and net profit (at 35.9% and 30.0% respectively), although these ratios have been distorted somewhat due to the change in accounting treatment as previously mentioned. This segment remains the core engine for Aamal’s future growth, as it seeks not just to expand its existing operations, but also to capitalise on future opportunities arising from the ongoing development of Qatar’s infrastructure as the economy continues to expand and diversify in response to market demand; nor should the scope for significant synergies, at both the strategic and operational levels, be overlooked either.

During the past year, we applied for approvals to develop three key factories for copper, aluminium, and drums production. The decision to proceed with these projects was announced in early 2018. I’m confident that these projects will consolidate our market-leading positions within the industrial manufacturing sector, thereby boosting this segment’s and also the wider Company’s performance as a whole. Once those three projects are completed, we will have an integrated cycle for cable manufacturing that will fulfil the local market needs as a first step before our plans to export to other markets. We are also studying a number of other new investments that will be announced in due course.

The Trading and Distribution segment too is a significant contributor, comprising 38.8% and 20.8% of total revenues and net profit respectively. The marginal decline in sales, at 2.5%, was the reason behind the small (i.e. 3.0%) drop in net profits. Both Ebn Sina Medical and Aamal Medical signed a number of new distribution agreements with a number of leading pharmaceutical and medical equipment companies, underscoring our position as the partner of choice for those international companies wishing to enter the Qatari market. Aamal Trading and Distribution saw an expansion of its current operations and geographic presence in the market with the introduction of new services, which will help to secure growth going forward.

The Property segment, comprising 48.0% of overall Company net profits, continued to be the main contributor. We are looking forward to the completion of Phase 2 of the redevelopment of Aamal’s flagship, City Center Doha (CCD) shopping mall which is expected by the end of 2018. Visitors to this destination will enjoy a completely enhanced shopping experience with spacious aisles and tenant mix, along with an expansion of both its retail space and the number of outlets. Despite the increasing competition in Qatar, due to a number of new retail developments coming on-stream, CCD maintains its position as the premier mall in the country: a reflection of its location, quality and size. Aamal will continue to invest in its real estate portfolio that help to secure its leading positions and underpin future growth.

Although revenue from the Managed Services Segment dropped only marginally (2.2%), its net profits fell by over 28% on account of margin compression. This was principally attributable to an expected contraction in activity at Aamal Travel following the strategic decision to focus on cash sales because Aamal Travel tends to have a margin that is higher than the average for this segment, this change in the business mix naturally had an adverse effect on the overall segment margin. We expect to see a pick-up in 2018 following the continuing efforts of the Qatar Tourism Authority to promote the country’s tourist credentials, along with greater flexibility around entry visas.

Strategic Report 13Aamal Company Q.P.S.C. Annual Report 2017

Why invest in Aamal Company?

Investment Rationale

1. A powerful, cohesive growth platform

– One of the fastest growing diversified companies in Qatar, offering a high-quality exposure to Qatar’s economic growth and development

– Diversified for balanced exposure across the Qatari economy – Strong market positions in key sectors – Superior combination of a high quality asset base, strong operating

profitability and earnings visibility

2. Financial strength – Strong asset backing – Net cash position, little to no corporate indebtedness – Readily available access to debt capital markets, which in addition to strong

cash flow generation, provides significant scope for future growth in terms of financing

– One of the highest dividend yield payers amongst QSE listed companies – Al Faisal Holding Company and Sheikh Faisal Bin Qassim Al Thani are major

long-term supportive shareholders (49% foreign ownership limit)

3. Experienced, proven senior management team

– Strength in strategic asset allocation, corporate governance and risk control – Proven track record of historical profit growth and value creation driven

by clear focus on returns on capital and capital discipline – Highly effective corporate decision-making with short lines of

communication with operational management

4. Strength in depth – Development of shared services policy, allowing divisional management

to focus on core business – Each business entity managed as an individual entity, optimising

management’s operational focus and transparency – Talented and motivated managers with significant experience and customer

relationships in their respective areas – Clear segregation between management and ownership, reinforcing best

practice corporate governance guidelines

Looking ahead to this year, we remain confident about the Company’s prospects. Qatar’s budget for 2018 is focused on developing local industries and the private sector, with the ultimate objective of achieving self-sufficiency whilst creating new revenue streams to boost growth further. To help facilitate this, the Qatari government is working hard to make the business environment more attractive to foreign capital inflows. A healthy and strong local economy, of which we are such an integral player, can only be to the benefit of Aamal.

Looking beyond 2018, we continue to be optimistic as we expect to see an increase in investment opportunities arising in the market as Qatar continues to demonstrate not just its resilience but its resolve to diversify and develop in line with the 2030 Vision, for which the 2022 FIFA World Cup is just one important milestone. Aamal through its market leading positions across the economic spectrum and relentless focus on seeking out avenues for growth is indeed very well placed to take advantage of these opportunities.

It should also be mentioned that never do we seek growth at the expense of internal efficiencies and we are perennially looking at ways to streamline our current operations and processes further; as such, I am pleased to mention that a full revision of our Corporate Governance framework in compliance with the new QFMA Code (Governance Code for companies and legal entities listed on the main market issued by QFMA Board of Directors’ decision No. (5) of 2016), has been completed, pending the approval at AGM on April 22, 2018. Also, we have initiated our first ESG (Environmental, Social and Governance) reporting which are the non-financial factors that help determine a company’s ability to create sustainable value. Moreover, we have now commissioned the start of Phase 1 of ORACLE Cloud Applications ERP. Full completion of this project is expected to be by the end of 2018, and will be ready for implementation in Q1 of 2019, where Aamal will be operating in a totally paperless working environment.

So, in conclusion, we are committed to grow the Company’s revenues and profitability by building on its already well-established foundations whilst maintaining a tight focus on operational efficiencies. We will continue to seek out new opportunities that will generate value and which are in the best interests of all our stakeholders. Supported by our market leading positions across the entire Qatari economy and a very strong financial position, we are able to move quickly to action them should we decide to proceed after careful evaluation. We remain a committed and integral part of our beloved country’s aim to achieve its National Vision 2030, under the wise leadership of H.H. the Emir, Sheikh Tamim Bin Hamad Al Thani, may God bless and protect him.

Mohamed Bin Faisal Al ThaniVice Chairman and Managing Director


In December 2016, Qatar Stock Exchange (QSE) introduced its ‘Guidance on ESG Reporting’ which encouraged all listed companies to voluntarily report on a set of Environmental, Social, and Governance (ESG) performance indicators.

Aamal Sustainability Framework and ESG Disclosures

Aamal Company is among the first listed companies in Qatar to not only address this ESG or ‘sustainability’ guidance, but also deploy a sustainability framework that embeds our company core values and incorporates the four pillars of the Qatar National Vision 2030.

Our Sustainability FrameworkAt Aamal, we recognise the value in aligning our

corporate strategies with sustainable development principles. Integrating sustainability into our business model generates financial value for our company while also creating economic and social value for all of our key stakeholders. Sustainability helps drive a deeper understanding of our stakeholders’ needs, identify new market opportunities and other opportunities for innovation, generate cost savings, and enhance market differentiation and competitiveness. Aamal’s Sustainability Framework covers our four sectors of focus and is structured around four main elements:

– Ensuring strong business ethics and transparency – Supporting the people in our workplace – Supporting the communities we operate in – Mitigate our environmental impact

Our Sustainability PerformanceFor our initial sustainability performance coverage, we

have collected performance data for 2017 from five of our portfolio companies that have the greatest impact on our most material ESG issues and key indicators. Our intent is to expand our coverage to include results from all our companies over the coming years. The companies included in our aggregated disclosure for 2017 are Aamal Company Q.P.S.C., Doha Cables, Aamal Readymix, Ebn Sina Medical, Aamal Medical, and City Center Doha. They represent over 55% of our revenues*, 73% of net profit, and 25% of our employees. Unless otherwise stated, the numbers presented specifically in this ESG section cover these five portfolio companies plus Aamal Company staff and offices. Where the information presented aligns to the QSE Guidance on ESG Reporting, we specifically state the relevant QSE indicator number.

* Revenue excludes Doha Cables as of 1 April 2017, as it is no longer treated as subsidiary, but as a joint venture such that their results are now reflected on an equity method basis rather than on a line-by-line full method basis.

Business Ethics and Transparency

Ethics

Transparency

Accountability

Environment

Greener Products

Energy

Emissions

Water

Waste

Community

Community work

Procurement

Youth

Workplace

Safety

Health

Training

Diversity

Women



Value Creation

Property Managed Services


Business Ethics and TransparencyAamal Company’s ongoing commitment towards high

levels of business ethics and transparency is shared across our Board of Directors, our management, our portfolio companies, and all our stakeholders. We know that sound governance and ethical practices will contribute to long-term business success.

Aamal’s Corporate Governance Report covers the procedures followed by the company to ensure good governance practices. Our Board Charter covers critical governance items including the role of the Board of Directors and its committees , audit and internal control mechanisms, remuneration, and shareholders’ rights. Aamal’s governance framework abides with the provisions of the Governance Code for Companies and Legal Entities Listed in the Main Market No. (5) of 2016 (the “Code”) issued by the Qatar Financial Markets Authority (“QFMA” or the “Authority”), and the Commercial Companies Law No. (11) of 2015 (the “Companies Law”).

All of our portfolio companies and their employees abide by a Code of Conduct (QSE#30). This also extends to our suppliers – setting our high standards and expectations for business integrity throughout our supply chain (QSE#31).

Aamal does not tolerate any form of bribery or corruption in any of its portfolio companies. Our anti-corruption policy includes clear anti-corruption rules and guidelines that are strongly reinforced, including through awareness raising and training programmes for key managers and staff (QSE#32).

Aamal Company is fully committed to respect all human rights, as articulated in the Universal Declaration of Human Rights, and the International Labor Organization’s (ILO) (QSE#16).

Community and SocietyOur interest in the well-being of people extends well

beyond our employees, into the community and society. The very purpose of our Ebn Sina Medical and Aamal Medical is to ensure the timely provision of pharmaceutical supplies and medical equipment to the Qatar medical facilities, pharmacies, and the people of Qatar. We also aim to contribute directly to the economy: 29% of our procurement is from local suppliers (excluding Doha Cables’ and Aamal Medical’s procurement).

We also aim to support the next generation of talent – our youth, with an emphasis on Qatari nationals and women.

Most of Aamal Company portfolio companies are engaged in the community in one manner or another, through various outreach programmes that take advantage of each company’s financial and human resources to more effectively benefit our communities.

Ebn Sina Medical: Supporting YouthEbn Sina Medical is firmly committed to developing

local talent and empowering women to enter the workforce – talent that is required for our – and Qatar’s – ongoing success well into the future. Ebn Sina invests in scholarship programs and training for local pharmaceutical students. On an annual basis Ebn Sina admits around 10 female students, of which approximately 30% are Qatari nationals, for one month of training on all pharmaceutical products, patient counselling and customer service. Many of these graduates go on to find successful employment upon graduation, with Ebn Sina and in other enterprises. Ebn Sina also supports pharmaceutical students who meet academic requirements by sponsoring 5 scholarships per year, valued at 5,000 QAR each, for the past 7 years.

We also expect our business partners, including suppliers, to adopt and adhere to similar principles (QSE#18). As of 2017, we have no outstanding or recorded incidents or grievances related to any of the above among our reporting companies (QSE#17).

Additional information that is recommended by the QSE Guidance on ESG Reporting on the subject of governance can be found in the governance section of this report.

WorkplaceAamal Company and its five portfolio companies

engaged in this ESG disclosure exercise have 1000 full time employees. Aamal Company has an important responsibility for ensuring a safe and welcoming environment for our people. We put safety first and are committed to ensure compliance with our occupational health policy and safety procedures (QSE#14).

Operational excellence at Aamal Company starts with the personal and professional development of every member of our team. We strive to provide our employees with the tools and resources they need to be successful. Aamal Company’s Training & Development Program & Policy encourages our employees to develop themselves professionally and enhance their knowledge through the development of new skills and competencies. Aamal Company employees undertake training courses, workshops, on the job training, self-study, seminars and information technology training.

Aamal Company has recently established the ‘Employee of the Year Award’ for employees in the non-management and non-supervisory positions. The award will be presented to the employee who has contributed to and/or achieved superior business results for Aamal Company.

Workplace aspect PerformanceCorresponding to QSE Indicator Alignment to QNV

Number of full time employees 1,000 10 Human developmentPercentage of women in the workforce 7.30 19

Percentage of Qatari nationals in the workforce 0.0 20

Percentage of employee turnover 4.40 12

Hours of training per employee per year 11.34 13

Total Number of Employees and Contractors Recordable Injuries 2 15

Total amount of employee wages and benefits, (in QAR) 78,553,709 11 Economic development

Governance aspect Performance Corresponding QSE indicator Alignment to QNV

Board – Diversity 1 woman 23 Economic developmentBoard – Separation of Powers CEO and chairman roles are separated 25


EnvironmentAamal Company is committed to embed environmental

principles and practices in all aspects of our operations, to protect the environment and minimise our environmental footprint and waste through sound management of natural resources including water, energy, materials, and biodiversity (QSE#3-9). Our two reporting industrial manufacturing companies, Doha Cables and Aamal ReadyMix, both conform to

One key area of environmental improvement has been our initiatives to reduce our energy consumption at our three most significant operations. At Doha Cables manufacturing facility, our electricity consumption in 2017 was 20.8 million kWh, a reduction of 8% from 2016. Similar efficiencies were achieved at Aamal Readymix where we reduced our electricity consumption by 5.6% in 2017 to 2.7 million kWh. Initiatives at City Center Doha mall to optimise our cooling systems and reduce our cooling loads in non-core operating hours reduced our consumption by 4% in 2017, to a total of 59 million kWh. We have also committed to study the integration of renewable energy into our City Center Doha operations.

Above and beyond improving our energy efficiency, one of our portfolio companies, Aamal Readymix, has enhanced its market leadership and differentiation by developing a product with an environmental advantage: ‘Green Concrete’. This continues to be an exciting and growing area of opportunity, where we are able to not only enhance our business but contribute directly to key objectives of both the Qatar National Vision and the World Cup preparations (see caption). This innovation is evidence of the increasingly necessary alignment – and absolute importance – of business success with principles of sustainable development.

the standards of ISO 14001, with environmental policies and management systems that ensure operations comply with all environmental regulations and guidelines as established by the State of Qatar, including internal Environmental Impact Registers to routinely evaluate our impacts on the environment (QSE#1). No environment-related fines were incurred by any of our operations in 2017 (QSE#2).

Environmental aspect PerformanceCorresponding to QSE Indicator Alignment to QNV

Total amount of energy usage in MWh 90,864 excluding Aamal Company Yes

Environmental development

Energy Intensity (kWh/m2) 100.7 excluding City Center Doha and Aamal Company

4

Total greenhouse gas emissions (tonnes) 51,426.944 5

Primary source of energy used by the company electricity 6

Specify percentage of energy used from renewable sources 0 7

Total water consumption (m3) 201,124 8

Total waste recycled or reused (tonnes) 11,628 9

Total waste water generated (m3) 14,248 9

Total non-hazardous waste produced (tonnes) 21,460.7 excluding Doha Cables and Aamal Company

9

Total amount of waste water re-used (m3) 4,115 9

Aamal Readymix: Green concreteAamal Readymix was one of the first companies to

receive the first Qatar Sustainability Award from Qatar Green Building Council for adopting to GSAS/LEED practices to produce Green Concrete, which is composed of contents sourced from industrial waste and byproducts from other industries in its mix to reduce the CO2 emissions of its products while providing improved durability and strength, as demanded by customers. Green Concrete has proven a particular success, with increasing demand year over year. We are proud to be the supplier of choice for signature infrastructure projects such as Al Bayt and Khalifa stadiums, built under GSAS certification to meet the high standards of FIFA for the World Cup 2022, as well as College of Engineering, College of Education at Qatar University, Al Fazaa Headquarters, and others.

Aamal Sustainability Framework and ESG Disclosures continued


Appendix: ESG Reporting Against Qatar Stock Exchange Guidance for ESG Reporting

ESG Categories QSE KPI # ESG Key Performance Indicators Measurement annual, unless indicated otherwise Page Reference/Comments

Environmental 1 Environmental Policy Does the company publish and follow an environmental policy? Yes/No

Yes

2 Environmental Impacts Any legal or regulatory responsibility for an environmental impact? Yes/No If yes, explain

No

3 Energy Consumption Total amount of energy usage in MWh or GJ p.16

4 Energy Intensity Amount of energy used per M3 of space, and per FTE p.16

5 Carbon/GHG Emissions Total amount of Carbon and Green House Gas emissions in metric tons p.16

6 Primary Energy Source Specify the primary source of energy used by the company p.16

7 Renewable Energy Intensity Specify the percentage of energy used that is generated from renewable sources

p.16

8 Water Management Total amount of water consumption, and details in respect of recycling if any, in M3

p.16

9 Waste Management Total amount of waste generated, recycled or reclaimed, by type and weight p.16

Social 10 Full Time Employees Number of full time employees p.15

11 Employee Benefits Total amount of employee wages and benefits p.15

12 Employee Turnover Rate Percentage of employee turnover p.15

13 Employee Training Hours Total number of hours of training for employees divided by the number of employees

p.15

14 Health Does the company publish and follow a policy for occupational and global health issues? Yes/No

Yes

15 Injury Rate Total number of injuries and fatal accidents relative to the number of FTEs p.15

16 Human Rights Policy Disclosure and adherence to a Human Rights Policy p.15

17 Human Rights Violations Number of grievances about human rights issues filed, addressed and resolved p.15

18 Child & Forced Labour Does the company prohibit the use of child or forced labour throughout the supply chain? Yes/No

Yes

19 Women in the Workforce Percentage of women in the workforce p.15

20 Qatarisation Percentage of Qatari nationals in the workforce p.15

21 Community Work Number of hours spent, and/or other community investments made as a percentage of pretax profit

p.15

22 Local Procurement Percentage of total procurement from local suppliers p.15

Governance 23 Board – Diversity Percentage of Board seats taken by women p.35

24 Board – Independence Percentage of Board seats taken by independent directors p.35

25 Board – Separation of Powers Specify whether the CEO is allowed to sit on the Board, act as the Chairman, or lead committees

p.36

26 Voting Results Disclosure of the voting results of the latest AGM Announced through QSE’s website

27 CEO Pay Ratio Ratio of CEO salary and bonus against the median FTE salary and bonus N/A

28 Gender Pay Ratio Ratio of median male salary to median female salary N/A

29 Incentivised Pay Specify the links between (executive) remuneration and performance targets p.34

30 Ethics Code of Conduct Does the company publish and follow an Ethics Code of Conduct? Yes/No

Yes

31 Supplier Code of Conduct Does the company publish and follow a Supplier Code of Conduct? Yes/No

Yes

32 Bribery/Anti-Corruption Code Does the company publish and follow a Bribery/Anti-Corruption Code? Yes/No

Yes

ESG Reporting Generally

33 Sustainable Reporting Frameworks

Does the company publish a GRI, CDP, SASB, IIRC or UNGC report? Yes/No

No

34 External Assurance Are the company’s ESG disclosures assured by an independent third party? Yes/ No

No


Operational Review – by Segment

Operational Review

REVENUE

QAR m 2017 2016 Change %

Industrial Manufacturing 582.2 1,811.7 (67.9)%Trading and Distribution 633.3 649.9 (2.5)%Property 320.9 317.9 +1.0%Managed Services 95.3 97.4 (2.2)%less: inter-divisional revenue 27.6 47.7 (42.1%

TOTAL 1,604.2 2,829.1 (43.3)%

NET PROFIT


Industrial Manufacturing 167.8 210.4 (20.2)%Trading and Distribution 116.2 119.8 (3.0)%Property1 268.1 258.4 +3.8%Fair value gains on investment properties 0.0 0.9 (100)%Managed Services 7.0 9.8 (28.1)%less: Head Office costs 36.1 39.0 (7.5)%

TOTAL 523.1 560.2 (6.6)%

1 Before fair value gains on investment properties.



It is important when looking at these figures to be fully aware that the year-on-year comparisons have been distorted by an accounting change that took place during the year.


Revenue 582.2 1,811.7 (67.9)%Net profit – fully consolidated activities 71.2 156.5 (54.5)%Net underlying profit margin % 12.2% 8.6% +3.6 pptsNet profit – share of equity accounted for investee net profits 96.6 53.9 +79.2%

Total net profit 167.8 210.4 (20.2)%

From 1 April 2017, two business entities within the Industrial Manufacturing segment (Senyar Industries and Advanced Pipes and Casts Industries) were no longer treated as subsidiaries, but as joint ventures such that their results are now reflected on an equity method basis rather than on a line-by-line full method basis. What this means in practice is that the revenues from these entities are no longer included in Aamal’s total revenue (the major factor behind this recorded 67.9% drop), but rather Aamal’s share of their net profits is now included as a single line item entitled ‘Share of net profit of associates and joint ventures accounted for using the equity method’ on the Statement of Comprehensive Income (hence its recorded 79.2% rise).

On an overall basis, total net profit for the segment fell by 20.2%. This predominantly reflects the delays encountered in sourcing raw materials as a consequence of the continuing blockade on Qatar, which now have been largely rectified by sourcing alternative supplies and supply routes, along with expansion of warehouse storage facilities that gives greater flexibility in fulfilling customer orders on time. Furthermore, there have been some positive developments in terms of the rolling out of new products and expansion of production capacity.

Aamal Industrial Manufacturing operations currently include:1. Senyar Industries Qatar Holding: production and distribution

of electric cables, equipment and tools, as well as the distribution of electromechanical equipment

2. Aamal Readymix: production of high quality ready-mixed concrete

3. Aamal Cement Industries: production of interlocking paving stones, concrete blocks and tiles

4. Ci-San Trading: importation and supply of high quality gabbro aggregates through Gulf Rocks; and their shipping through Aamal Maritime Transportation Services

5. Advanced Pipes and Casts Company: manufacturer of pipes6. Frijns Structural Steel Middle East W.L.L.: produces steel for

the petrochemical and process industries, including all associated engineering, production, anti-corrosion, construction and assembly work

7. Innovative Lighting Company: currently in liquidation

1. Senyar Industries Qatar Holding (‘Senyar’)A 50:50 joint venture between Aamal and El Sewedy

Electric Company, a leading producer of integrated cables and electrical products (such as transformers, tools and energy and water measurement and management).

In early 2018, Senyar Industries Qatar announced the decision to launch three major new industrial projects for the production of aluminium, copper and drums, having applied for the necessary approvals in 2017. These projects are currently greenfield sites, but they’re expected to become operational by 2018/2019. Once completed, Senyar Industries will have an integrated cycle for cable manufacturing and will be the first of their kind in Qatar, thereby having a competitive advantage and helping to underpin future growth. Senyar’s operations include:


Operational Review continued

Doha CablesThe 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 cable accessories. Senyar holds an 85% interest in Doha Cables, with El Sewedy Cables Qatar owning a 12.5% interest (of which Senyar owns 76.6%), and an unaffiliated third party the remaining 2.5%. Effective ownership held by Aamal in Doha Cables is thus 47.3%.

In 2017, Doha Cables built a new testing lab that is the first of its kind in the Gulf and the wider Middle East region for the testing of flame retardant, low smoke and fire resistant cables in accordance with US NFPA (National Fire Protection Association) specifications and standards. Also during 2017, Doha Cables applied for ISO 17025 Certificate status for this testing facility and expects to receive this by the third quarter of 2018, which will enhance its commercial appeal.

Doha Cables also increased the production capacity of Fire Resistant Cables by 300% to meet market demands, and doubled the production of High Voltage (HV) and Medium Voltage (MV) cables. Doha Cables completed the process of acquiring the BASEC Product Certificate, which was received in the first quarter of 2018, for Non-Fire Resistant Cables, which are being manufactured as per BS 5467, BS 6724, BSEN 50525-2-31, and BSEN 50525-3-41.

In 2018, Doha Cables aims to focus on infrastructure, oil & gas, railway, ports, road projects and services. Introducing new products and increasing production capacity are priorities, as well as focusing on developing new export markets, including south-east Asia and Eastern Europe.

El Sewedy Cables QatarEl 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. During 2016, Senyar acquired 24.4% additional shares and the remaining 26.6% with unaffiliated third parties. Effective ownership by Aamal in El Sewedy Cables Qatar is 38.3%.


2. 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 meters.

In 2017, Aamal Readymix developed a new type of concrete called ‘green concrete’ and brought it to market. Green concrete is made from recycled cementitious materials and has a very high strength and durability. Also during the year, storage capacity was increased through a doubling of how much raw material can be stockpiled at the manufacturing plants.

Furthermore, Aamal Readymix is in the final stages of upgrading its facilities by adding a new recycling plant.

3. Aamal Cement Industries (ACI)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.

2017 was a busy year for ACI, with the introduction of new products particularly in the road containment heavy duty curbstone space. ACI is the first company within the GCC to produce VBU (Vehicle Barrier Unit) curb on a hydraulic press machine (normally these are precast produced). In addition, ACI introduced the Trief Curb System (a heavy duty curbstone of specific shape and height, used as a passive safety system designed to contain and redirect vehicles back onto the carriageway); and furthermore, ACI gained ASTM E119-A status, a standard certification for the fire resistance of concrete blocks.

For 2018, ACI is planning two new paving products, coupled with a shot blast line (a method used to clean, polish or alter the surface texture to give decorative effects and to enhance the aesthetic appearance of the paving) to increase their added value. This can also be done across the range of curbstone and concrete slab products.



4. Ci-San TradingAamal has a 50% interest in Ci-San Trading (the other 50%

is held by Masraf Al Rayan). A partnership agreement between Aamal Company and Masraf Al Rayan was signed in 2008 creating Ci-San Trading Company. The Company was set-up to evaluate investments in various sectors such as industrial, real estate, trading both in local and international markets.

Gulf RocksEffective 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, and is a leading importer and provider of high quality gabbro aggregates, which are widely used in concrete products.

In 2017, Aamal Company commenced the sale of the treasury shares owned by Gulf Rocks Company W.L.L. in accordance with directives from Qatar Financial Market Authority (QFMA) on this matter and complying with Article (15) of the regulations concerning listed companies buying and selling their own shares. The total number of treasury shares owned by Gulf Rocks and approved by QFMA for sale is 157,066 shares. The sale process was fully completed in early 2018.

Gulf Rocks currently imports gabbro from Sohar, Oman.

Aamal Maritime for Transportation Services (AMTS)Aamal holds 1% of the shares directly, with the remaining

99% held by Gulf Rocks. Aamal has an overall effective interest of 74.75% in AMTS and owns two vessels, ‘Um Al Hanaya’ and ‘Al Rayyan’: both bulk carriers each with capacities in excess of 56,000 tonnes.

In 2017, both vessels were sent to the Far East region for a few months to utilise their full operational capacity. Later on in the year, an agreement with a leading local company ‘Milaha’ was signed to operate Al Rayyan for importing gabbro into Qatar from India.

ADVANCED PIPES & CASTS CO.


5. Advanced Pipes and Casts Company (APC)Aamal owns 50% of Advanced Pipes and Casts Company

(APC), established in July 2010 as a joint venture between the Company and Lokma Group, a leading pipe manufacturer in the Middle East. APC started commercial production at the end of 2014, with extensive production capacity that is largely automated and has the flexibility to respond swiftly to changes in end-market demand.

2017 was a challenging year for APC due to a tightening in market conditions and raw material supply issues; as a result, APC was neither able to increase its market share in concrete pipes, nor expand its product range, so refrained from adding to its GRP (glass fibre reinforced plastic) manufacturing capability.

Market conditions for 2018 appear to be more benign however with the planned roll-out of new infrastructure projects by the government; consequently, APC is planning to add two new production lines for the manufacture of GRP pipes.

6. Frijns Structural Steel Middle EastAamal has a 20% interest in Frijns Structural Steel (60% is

held by Frijns Industrial Group of the Netherlands, remaining 20% is by a third party). Frijns Structural Steel – Middle East started operations in Qatar in 2009 by opening its first production facility in the region, which produces steel for the petrochemical and process industries, including all associated engineering, production, anti-corrosion, construction and assembly work.

7. Innovative LightingAamal owns 70% of Innovative Lighting ‘QLEDs’, a joint

venture with C&C Lightway of South Korea, and a separate third party.

This entity is currently in liquidation.



Revenue for the Trading and Distribution segment fell marginally, by 2.5% year-on-year, which allied with a slight (0.1%) decline in margins, led to a 3.0% drop in net profits.


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

These results demonstrate the flexibility and resilience of the segment’s businesses to the unique and unprecedented challenges brought about by the continuing blockade on Qatar by neighbouring countries: not just in withstanding them but also adapting to and at times thriving in this new environment. This segment’s business promptly adjusted to the new circumstances through finding alternative supply chains, expanding their business partnerships and introducing new products and services to the market.

Aamal Trading and Distribution operations currently include:1. Ebn Sina Medical: the leading pharmaceutical distribution

company in Qatar2. Aamal Medical: a leading medical equipment supplier3. Aamal Trading and Distribution: a leading distributor of

automotive products and home appliances4. Foot Care Centre: provider of a range of foot care services

and products5. Ebn Sina Pharmacy: a modern chain of pharmacies located

in City Center Doha6. Al Farazdaq Company: provider of printing solutions and

trader of office supply products7. Aamal Optical Supplies: currently in liquidation

Branch of Aamal Q.S.C.

1. Ebn Sina MedicalAamal owns 100% of Ebn Sina Medical, the leading

provider of pharmaceutical, hospital supplies and consumer health products in Qatar, representing in excess of 50 international leading 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 that includes a pharmacy and three Foot Care Centres providing a range of clinical foot care services, foot care products and specialist footwear.

2017 was considered to be a good year for Ebn Sina Medical as it successfully managed the blockade by finding alternative sources of drug supplies, through countries such as Turkey and Pakistan, and avoided any shortage of drugs in both the private and public sectors. The sales and distribution operations were very closely monitored by the Company in collaboration with the local health authorities, with the Qatari government lending close support in terms driving through several new arrangements and policies. Furthermore, a number of improvements were implemented by the Company to its internal processes, resulting in improved levels of operating efficiency.

During the year, Ebn Sina Medical acquired new business partnerships with leading international consumer health and pharmaceutical names, including:

– Getz Company and Martindow Company, branded generic products (both Pakistan)

– Medcomp Company, hospital consumables (USA) – Pierre Fabre Company, consumer health products (France) – Pharma House Company, pharmaceutical wholesaler (UK) – Fidia Pharma Company, pharmaceutical and consumer

health products (Italy) – Maddox Pharma Company, branded generic products

(Switzerland)



2. Aamal MedicalAamal 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 2017, Aamal Medical performed in line with expectations and met its targets. The Company has signed several exclusive representation agreements for the first time with several leading international brands, including: Arcomed, Scalan and Novo Surgical, with additional brands from the Medtronic range of products. Furthermore, Aamal Medical has expanded its product lines for ambulance stations in different areas, and provided equipment for the Sidra Dialysis Center.

In 2018, the outlook looks favourable with several new opportunities arising related to new projects, including: Workers Hospitals, MOI Hospitals, Army Hospital and Military Medical Complex. Aamal Medical aims to continue to strengthen its market presence further by moving into new specialisms such as cardiology and sterilisation equipment and technology (CSSD), and evaluating potential new opportunities such as bidding for new hospital turnkey projects.

1. Ebn Sina Medical (continued)Furthermore, Ebn Sina Medical secured a number of new

business contracts with the Qatar Red Crescent and Sidra Hospital, whilst it also implemented the internationally recognised GS1 (Global Standards) drug coding system with HMC (Hamad Medical Corporation) and completed that system’s pilot study with the Qatar Ministry of Health.

Finally, a new warehouse facility was acquired at Manateq with plans to implement the latest technologies and levels of automation.

For 2018, Ebn Sina Medical is planning to expand its supplier base (for generic, branded and biosimilar drugs) and to work closely with the local health authorities to fast track their registration. This will not only help to ensure continuing security of supply, but also to broaden our offering.


4. Foot Care CentreAamal has a 100% interest in Foot Care Centre, offering a

broad range of biomechanical, orthopedic and therapeutic services for feet along with a variety of foot care products from the well-known brand SCHOLL. Foot Care Centre is managed by Ebn Sina Medical and it has two operating branches, with a third one scheduled to open in the second quarter of 2018 at City Center Shopping Mall (the lease contract was agreed and signed in 2017).

Foot Care Centre is a registered trademark in Qatar.

Branch of Aamal Q.S.C.

5. Ebn Sina PharmacyAamal has a 100% interest in Ebn Sina Pharmacy which

was formerly known as Ebn Sina Health Care Solutions. Ebn Sina Pharmacy is managed by Ebn Sina Medical and the rebranding was carried out – ahead of expansion plans that are expected for this pharmacy chain.

In 2017, a lease contract was signed for a new pharmacy located in Ras abu Aboud, which is due to open in the second quarter of 2018.

3. Aamal Trading and DistributionAamal 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. It is also involved with the supply, installation, commissioning of own brand GETTCO home appliances and maintenance of air conditioning and refrigeration equipment.

In 2017 Aamal Trading and Distribution launched two First Stop centres in Qatar, located on Salwa Road and in Muaither area. The two centres provide a ‘one-stop-shop’ model which allows car owners to meet the majority of their everyday motoring needs at a single location with the facility of ‘DIAL A TYRE’ which provides doorstep services to customers. Aamal Trading and Distribution also inaugurated Bridgestone Fleet Point Center, a high-quality commercial tires services center for fleet customers.

GETTCO Home Appliances also launched a new product, the Curved TV in two different sizes (39- and 55-inch), into the Qatari Market during 2017.



6. Al Farazdaq Company W.L.L.Aamal Company holds 65% of Al Farazdaq Company

which started its operations in 2013 to provide printing solutions and trade in various office supply products. The printing press is equipped with state of the art printing machines, offering innovative digital printing solutions to the business community.

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 2017, Al Farazdaq increased its market share through the securing of new and significant contracts whilst improving the quality of both its products and customer services. The Company invested in a large format flatbed printer and cutter, which provided the scope to cut costs on large format printing jobs by allowing for printing in-house rather than having to outsource, and greater opportunities commercially. The Company also successfully recycled over 70% of paper as certified by the Forest Stewardship Council.

In 2018, Al Farazdaq aims to introduce new printing solutions to cater for special requirements related to hospitality businesses, event management companies, and strengthen its business relations with advertising companies.

7. 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 intention being to import and distribute both contact and prescription lenses (and their manufacture), along with other eye care products and services. However, this business never become operational and is currently in liquidation.


Property

Net profits for the Property segment rose by 3.8% to QAR 268.1m, primarily attributable to an increase in the underlying margin to 81.8% compared to the previous year.


Revenue 320.9 317.9 +1.0%Net profit – fully consolidated activities 262.6 252.1 +4.2%Net underlying profit margin % 81.8% 79.3% +2.5 pptsNet profit – share of equity accounted for investee net profits 5.5 6.3 (13.3)%Net profit* 268.1 258.4 +3.8%

* before fair value gains on investment properties

Against the general backdrop of an increasingly competitive Qatari retail sector, due in part to the coming on-stream of a number of new shopping centres, this is a very positive performance indeed which underscores the enduring strength and quality of our portfolio, with City Center Doha (CCD) retaining its position as the leading shopping mall in Qatar. Aamal Real Estate, our residential and retail property subsidiary that excludes CCD, performed well too over the year, with further growth expected following the acquisition of certain real estate assets and completion of a number of projects under development. 1. City Center Doha

Aamal owns 100% of City Center Doha (CCD), which was one of the first shopping malls in Doha having opened in 2000. CCD is widely regarded as the leading mall in Qatar, supported by its twin virtues of size and prime location in the heart of the West Bay area of Doha, considered to be the city’s central business district and with a high density of both residential towers and hotels. Against a backdrop of increased market competition in the retail sector due to the opening of the new shopping centres and a general weakening in consumer spend per head, CCD was able to maintain its leading status, with no change to overall footfall levels.

In 2017, City Center continued the work of Phase 2 of the redevelopment, which will significantly expand both the retail space and number of outlets and is due to be completed later this year, on time and within budget.


QATAR GERMAN MALL MANAGEMENT


2. Aamal Real EstateAamal 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 347 shops, 25 kiosks and 24 residential flats; b) the Markhiya residential complex; and c) four other residential buildings.

In 2017, Aamal Real Estate commenced the construction of a 63 apartment residential building which is progressing on schedule and is expected to be completed at the end of the third quarter of 2018. The Company also completed negotiations to acquire new assets that include three residential compounds which comprise 24 villas and two buildings containing 20 apartments. These assets are located in prime locations in Doha including West Bay Lagoon, Al Waab, Abu Hamour and Madinat Khalifa. This acquisition was announced in early 2018.

3. Aamal ECE (Qatar German Mall Management)A partnership agreement between Aamal and ECE

Projektmanagement, commercially known as Qatar German Mall Management. The Company specialises in the property management of shopping centres and offering consultancy services both within Qatar and the wider MENA Region.


Managed Services

Although revenues fell marginally year-on-year, a contraction in margins led to a 28.1% drop in net profit.


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

The primary driver behind this was an expected reduction in activity at Aamal Travel following the strategic decision to restrict sales to be on a cash-only basis in order to minimise bad debt impairment risks; and also the temporary closure of the East Food Court of City Center Doha as this is adjacent to the Family Entertainment Center.

The Managed Services operations focus primarily on providing commercial facilities management, outsourcing and other business support services, and currently include:1. ECCO Gulf: business process outsourcer2. Aamal Services: general housekeeping services provider3. Aamal Travel: travel agency4. Family Entertainment Center: an indoor amusement center

with a mixed range of rides5. Winter Wonderland: features winter themed activities6. Johnson Controls Qatar: currently in liquidation

1. ECCO Gulf W.L.L.Aamal Company owns 51% of ECCO Gulf which is a joint

venture with ECCO Outsourcing, one of the region’s leading contact center operators and business process outsourcers. ECCO Gulf commenced operations in 2010 offering the outsourcing of business processes, professional services and human resources to clients in Qatar.

In 2017, ECCO Gulf succeeded in expanding its work within the existing sectors of banking and government, and penetrated new ones including technology and retail.

In 2018, the Company is planning to increase service offerings to existing clients, expand into new sectors (including automotive and telecom), and to invest in developing in-house IT solutions.

2. Aamal ServicesAamal 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.

In 2017, Aamal Services was able to secure new and higher value contracts. The Company’s aim in 2018 is to focus on providing a wider range of services, and targeting educational and healthcare institutions in order to help open up these markets more.

Furthermore, to focus on the pest control business as a standalone business offering, rather than just as an ‘add-on’ service which it is currently.



3. Aamal Travel (also known as Aamal Travel Lufthansa City Center)

Aamal owns 100% of Aamal Travel, 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.

The year 2017 was a challenging year for Aamal Travel, and the business performance was below expectations. However, towards the end of the year market conditions started to improve and we expect this positive momentum to continue into 2018. Aamal Travel is expected to benefit from the expected growth in inbound tourism to Qatar following an easing in entry visa restrictions and the ongoing efforts of the Qatar Tourism Authority in promoting the country’s tourism credentials.

4. Family Entertainment CenterAamal has a 100% interest in Family Entertainment

Center, otherwise known as ‘Fun City’, located on the entertainment level of City Centre Doha. With a reputation for hi-tech entertainment, Fun City offers a varied mix of rides, games and sports. Aamal acquired Family Entertainment in 2016, along with Winter Wonderland in order to enhance the customer appeal of CCD.

5. Winter WonderlandAamal has a 100% interest in Winter Wonderland, and is

located in CCD. Winter Wonderland was acquired in 2016 and is a family-friendly place devoted to the pursuit of excitement, fun and comfort. It features winter adventures for the entire family to enjoy indoor and includes an ice skating rink, a 10-pin strike bowling alley and billiard tables.

6. Johnson Controls Qatar Aamal Company owns 51% of Johnson Controls Qatar

which provided facility improvement and energy solutions to customers in Qatar. This entity is currently in liquidation.


Corporate Social Responsibility

Aamal Company has supported several activities that aimed to increase awareness of best business practice, governance and cultural exchange.

– Qatar Business Continuity Conference: The conference discussed best practices within ‘Business Continuity and Risk Management’ (including crisis management responses) across various public and private entities operating in Qatar.

– Corporate Governance Conference: The Corporate Governance Conference, was organised under the guidance of Qatar Financial Markets Authority (‘QFMA’), and aimed to encourage Qatari publicly listed companies to develop a governance report under the provisions of the Governance Code issued by the QFMA.

– Belgian King’s Day: Aamal Company sponsored the Belgian Embassy’s celebrations of their national day to encourage cultural exchanges between Belgium and Qatar. This event took place in partnership with the Flanders Investment and Trade Agency and the Belgian Business Club Qatar.

– Road to Qatar 2022: The Road to Qatar 2022 is a guide that reflects Qatar’s progress in preparation for the FIFA World Cup 2022, reporting on major projects that are taking place and transforming the face of the country.

– Gulf English School Career Day: Aamal supports the Gulf English School during its Annual Career Fair. An event that serves as a networking and knowledge exchange platform whereby, students are able to learn about the changing job market dynamics across Qatar’s key growth sectors, explore potential career choices and connect with the country’s leading players and organisations for future employment opportunities.

Key CSR activities by SegmentIndustrial Manufacturing Segment

Doha Cables – Doha Cables are partners with Qatar Water and

Electricity Company ‘Kahramaa’ to support ‘Kahramaa Awareness Park’ project which aims to enhance the awareness of the consumer on the importance of adopting steps towards the consumption of both electricity and water, with a particular focus on school and university students.

– Doha Cables has built a new testing lab as per NFPA specifications and standards which is the first of its kind in the Gulf and the wider Middle East for flame retardant cables testing, low smoke and fire resistant cables as per USA Standards.

– Doha Cables applied for ISO 17025 Certificate status for its testing facility and expects to receive this by the third quarter of 2018, which would make Doha Cables an independent licensed laboratory, thereby enhancing its commercial credentials

– Increased number of students attending the summer internship program where aspiring engineers can attend full training programs to help them prepare for a career in electrical engineering.

– Doha Cables hosted a blood donation campaign in cooperation with Hamad Medical Corporation on 16 January 2017, at Mesaieed Factory.

Aamal Readymix – To meet its CSR target of 0% dust emissions from its

operations, Aamal Readymix is in the final stages of completing the concrete flooring works and water recycle/reuse facilities.

– Aamal Readymix is in process of finalising the installation of a new recycling plant at its industrial area factory. This will enable the company to recycle all the waste/leftover quantities of the readymix concrete.

Aamal Cement Industries W.L.L. – Water recycling unit installed to reduce further the

environmental impact on consumption – Obtained certification OHSA 14001. Environmental

management/Occupational Health and Safety 18001.


Managed Services Segment

ECCO Gulf – ECCO Gulf is aiming to become a paperless organisation

by the end of 2018

Aamal Services – Using chemical materials and equipment with the least

environmental impact. Ensuring the use of degradable materials and environmentally friendly chemicals that have minimal impact on water resources

– Aamal Services is also looking to focus on using chemical fluids that are ready to be used rather than requiring preparation (so as to eliminate the scope for wastage), a reduction in water usage through using steam machines rather than jet pressure washers), the reuse of microfiber cloths so to limit wastage, and persuading customers to opt for air flow dryers rather than paper towels

– Aamal Services is engaged with a government initiative to improve computer literacy skills whereby laptops and computer training for all its employees within the industrial area are provided free of charge

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 programs to all its employees.

Key CSR activities by Segment (continued)Trading and Distribution Segment

Ebn Sina Medical – Continued its focus on education through the adoption

of two programs: – 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

– Support of the scholarship program for the Bachelor’s, Master’s and PhD Pharmacy students at Qatar University

Aamal Medical – Sponsorship of several events organised by Hamad

Medical Corporation (HMC) for developing and enhancing healthcare services in Qatar

Al Farazdaq – Usage of recycled and eco-friendly materials in

production and printing such as Xanita Board


Corporate Governance

ObjectiveThe Board of Directors (the ‘Board’ or ‘BOD’) and the

Executive Management of Aamal Company Q.P.S.C. (the ‘Company’ or ‘Aamal’) believes that a strong Corporate Governance is crucial to ensure high performance across all the Company’s activities and its subsidiaries (together the ‘Group’) and is essential to build investor trust and to guarantee a safeguard against any misguided corporate activity.

The Board of Directors of Aamal has adopted a Corporate Governance Manual which relates to the way in which the affairs of Aamal are governed and managed by the board, the committees of the board and the executive management team. It is a system by which Aamal is directed and controlled taking into account the interests of its shareholders and stakeholders.

The Corporate Governance Manual of Aamal is drafted to comply with the provisions of the company’s Articles of Association and Memorandum of Association (together, the ‘Articles of Association’), the provisions of the Governance Code for Companies and Legal Entities Listed in the Main Market No. (5) of 2016 (the ‘Code’) issued by the Qatar Financial Markets Authority (‘QFMA’ or the ‘Authority’), and the Commercial Companies Law No. (11) of 2015 (the ‘Companies Law’).

Achievements during 2017 and activities planned for 2018 to enhance levels of corporate governance

In order to improve the corporate governance culture across the Company, Aamal has developed its practices and provisions including the organisational aspects amongst others.

In connection with the adoption and implementation of the new regulatory developments issued during the year 2017, Aamal has developed and started implementing numerous regulatory initiatives in line with the new requirements of the Governance Code for Companies and Legal Entities Listed in the Main Market under decision No. (5) of 2016 of the QFMA. Details of these initiatives are provided in the full Corporate Governance Report available on the Company’s website.

The planned activities for 2018 are as follows:1. Develop a documented strategy, key business plans and

performance objectives. 2. The Corporate Governance Committee was cancelled and

the responsibility to draft the corporate governance report will be delegated to the Executive Management.

3. The Nomination Committee will be replaced by the Compensation Committee to constitute a sole committee referred to as the Nomination and Remuneration Committee.

4. Create a new Risk Management and Compliance Unit to handle the risk management of the Company and to ensure the compliance with the legal and regulatory requirements and manage compliance as well as corporate governance matters.

5. Review the organisation structure of the Company.6. Review the composition of the board and appoint new

independent directors.7. Update the Corporate Governance Manual 8. Develop and implement a Corporate Governance Manual

and other related policies such as Board and Committee Performance, Shareholders Policy, Related Parties Policy, Dividend Policy, Insider Trading Policy, Remuneration Policy, Whistle Blowing Policy, Board Code of Conduct, Disclosure Policy, Conflict of Interest Policy, External Audit Appointment Policy, Succession plan and authority matrices.

9. Implement the training and induction for the board members.

10. Develop the risk management framework and its subsequent implementation. This would be cascaded down to the subsidiaries during the coming years.

11. Develop a formal internal control system and implement it. This will be cascaded down to our subsidiaries over the short to medium term.

12. Establish a compliance framework.13. Amend the Articles of Association to comply with the Code.

35Aamal Company Q.P.S.C. Annual Report 2017 Corporate Governance

Board of DirectorsSize and charterAs of 31 December 2017, the board had six (6) Board members as required by the Articles of Association. The General Assembly elects members of the Board for 3 years. The tenure for the existing Board of Directors runs until 2019.

Board compositionThe board is composed of the following members as of 31 December 2017:

Director Name Party represented Date of Election/Appointment Position Member classificationNumber of shares owned 1, 2 %

Sheikh Faisal Qassim Faisal Al Thani

In his personal capacity Re-elected on17 April 2016

Chairman Non-executive 157,373,554 1 24.97

Sheikh Mohamed Faisal Qassim Al Thani

In his personal capacity Re-elected on17 April 2016

Vice-ChairmanManaging Director

Executive 6,300,000 2 1.00

Sheikh Jabor Abdulrahman Jabor Al Thani

Al Faisal Holding Company W.L.L.

Re-elected on 17 April 2016Representative appointed on 5 February 2017

Ordinary Member Non-executive 1,090 1

283,500,000 2

1.10

45.00

Sheikh Abdullah Hamad Qassim Al Thani

Al Jazi Real Estate Investment Company W.L.L.

Re-elected on 17 April 2016

Ordinary Member Non-executive 6,300,000 2 1.00

Sheikha Al Jazi Faisal Qassim Al Thani

Al Rayyan International Educational Company W.L.L.

Re-elected on 17 April 2016

Ordinary Member Non-executive 3,150,000 1

6,300,000 2

1.001.20

Kamel Muhammad Al Agla City Limousine Company W.L.L.

Re-elected on 17 April 2016Representative appointed on 5 February 2017

Ordinary Member Non-executive 6,300,000 2 1.30

1.00

1. Held directly in a personal capacity2. Held by the business entity whom the director is the representative

Prohibition of combining positionsAll Board members are compliant with Article 7 of the Code in regards to abstaining from combining prohibited positions.

Starting from 2018, the Board members will provide the Board Secretary with the Independence and Conflict of Interest Declaration to declare whether they undertake any legally prohibited positions. The Board Secretary will then keep safe custody of these declarations.


Experience and membership in other boards

Director Name Position in Aamal Membership in other boards

Sheikh Faisal Qassim Faisal Al Thani Chairman Chairman of Al Faisal Holding W.L.L.Chairman of Al Rayyan Tourism Investment Company ‘ARTIC’Chairman of Al Faisal International InvestmentBoard Member of International Financial Securities

Sheikh Mohamed Faisal Qassim Al Thani Vice-Chairman and Managing Director

Sits on the Board of Directors of Al Khaliji Bank Q.P.S.C.Vice Chairman of Al Faisal Holding W.L.L.Vice Chairman of Al Rayyan Tourism Investment Company ‘ARTIC’Vice Chairman of International Financial SecuritiesChairman of Optimized Holding

Sheikh Jabor Abdulrahman Jabor Al Thani Member Board Member at Aamal Company since February 2017 representing Al Faisal Holding W.L.L.Vice Chairman and Managing Director of Transind Group since 2004Founder and Managing Director of Al-Bayan Insurance Broker since 2011

Sheikh Abdullah Hamad Qassim Al Thani Member A member of the Board of Aamal Company since 2010 as a representative of Al Jazi Real Estate Investment Company W.L.L.

Sheikha Al Jazi Faisal Qassim Al Thani Member Board member since 2016 representing Al Rayyan International Education

Mr. Kamel Muhammad Al Agla Member Board Member at Aamal Company since February 2017 representing City Limousine Company W.L.L.

Board Member of Derwind Trading and Contractor

Board’s role The Board is responsible for independently overseeing the activities of the Company with the objective of sustainable creation of value, taking into account the interests of the shareholders, its employees and other stakeholders.

The Board members must act in good faith and in such manner as they reasonably believe to be in the best interests of the company. For more details, please refer to the full Corporate Governance Report available on the Company’s website.

Segregation of the Chairman and Chief Executive Officer (CEO) rolesIn accordance with the QFMA Code, the role of the Chairman and CEO are distinct and separate. The same person should not hold or exercise the positions of Chairman and CEO at the same time. The segregation of responsibilities between the two positions is made clear in Aamal, although at this current time, the CEO position is vacant.

In all circumstances, the Board composition must ensure there is a limitation on the concentration of powers in order to prevent one Board member alone having unfettered powers to make decisions as per Article 5 of the Code.

Board committeesThe Board shall form Committees with sufficient expertise. The Committees serve to increase the efficiency of the Board’s work and the handling of complex issues. The respective Committee Chairman shall report regularly to the Board on the work of their Committee.

As of 31 December 2017, there were 5 Board Committees: 1. Executive Committee2. Audit Committee3. Nomination Committee*4. Compensation Committee*5. Corporate Governance Committee**

The Board issues a decision to nominate the Chairman and members of each Committee, identifying its responsibilities, duties, and work provisions and procedures.The appointment of the Board Committees will take place after AGM/EGM in compliance with the new Corporate Governance Code.

Executive CommitteeThe Executive Committee is mainly responsible for handling the Company’s strategy, investments and financing by reviewing, evaluating and recommending the strategic plans and decisions to be taken by the Board.

Audit CommitteeThe Audit Committee shall handle issues of financial reporting, risk management and compliance, and the appointment and work of the external auditor (including determining the independence of the external auditor, issuing the audit mandate to the external auditor, determining auditing focal points and negotiating the fee agreement with the external auditor subject to the approval of the General Meeting).

Nomination and Remuneration CommitteeThe Nomination Committee shall identify, select and recommend nominees for appointments and re-nomination to the Board for election by the General Assembly.

* Nomination and Compensation Committees were combined into one unified committee ‘Nomination and Remuneration’ with effect 28 February 2018. ** The Corporate Governance Committee was cancelled and the responsibility to draft the corporate governance report will be delegated to the Executive Management, with effect 28 February 2018.

Corporate Governance continued


Sheikh Mohamed Bin Faisal Al Thani Vice Chairman and Managing Director

Parveez AslamAamal Readymix, Aamal Cement Industries, Gulf Rocks and Aamal Maritime for Transportation Services

Chris PakhanianAl Farazdaq Company

Baris Sezen City Center Doha

Ahmed El SewedyEl Sewedy Cables Qatar and Doha Cables

Rob FrijnsFrijns Structural Steel Middle East

Mr. Mohammad Ramahi Chief Financial Officer

Sherif ShehataAamal Medical, and Ebn Sina Medical

Syed Rashid HassanAamal Trading and Distribution

Ahmed AliAdvanced Pipes and Casts Company

Amr Gohar ECCO Gulf

Osama Al HajjAamal Real Estate

Keith Smith Aamal Cement Industries

Joseph McMullanAamal Services

Executive Management:

General Managers of Companies:


Organisational Structure

Corporate Governance Committee*

Compensation Committee**

Executive Committee

Audit Committee

NominationCommittee**

BOARD OF DIRECTORS

SHAREHOLDERS

Board of Directors Secretary

Chairman

Managing Director

Business Development Department

Chief Business Development Officer Chief Operating Officer Chief Legal Officer Chief Financial Officer

Legal Department

Aamal SubsidiariesGeneral Managers

SubsidiariesOperations

Human Capital Development

CorporateCommunications

ProcurementDepartment

Information Technology

Department***

Investor Relations

AdministrationDepartment

TreasuryDepartment

Finance Department, Head Office, Branches

and Subsidiaries

* The Corporate Governance Committee was cancelled and the responsibility to draft the corporate governance report will be delegated to the Executive Management with reference to the Board Meeting dated 28 February 2018

** The roles and responsibilities of the Nomination Committee and the Compensation Committee have been combined into one single committee ‘Nomination and Remuneration Committee’, with reference to the Board Meeting dated 28 February 2018

*** IT Solutions are outsourced

Corporate Governance continued


The Annual Ordinary & Extra-ordinary General Assembly meetings of the Company will be held on Sunday, April 22, 2018 at 5:30pm at City Center Rotana Doha Hotel, Al Massa Hall. In the event that a quorum is not achieved at either of the meetings, the meeting(s) will be then held on Sunday, April 29, 2018 at 4:30pm at the aforementioned location.

Agenda of the Extra-Ordinary General Assembly Meeting1. To discuss and approve the new Articles of Association of the Company drafted in accordance with the requirements of the Corporate Governance Code for

listed companies and legal entities issued by Qatar Financial Markets Authority’s Board directive no. (5) for the year 2016. 2. Referencing the above mentioned point (1) to authorise the Chairman of the Board to sign the new Articles of Association for the purposes of authenticating

the new Articles of Association by the relevant authorities, and to approve the Chairman delegating to the Company’s staff undertaking the necessary steps to complete the authentication and registration of the new Articles of Association with the relevant authorities.

Agenda of the Ordinary General Assembly Meeting1. To hear and approve Chairman’s report on the Company’s activities and the financial position for the financial year ended December 31, 2017, and hearing the

Company’s future business plan2. To hear and approve the External Auditor’s report on the Company’s financial statements for the year ended December 31, 20173. To discuss and approve the Company’s Financial Statements, profits and losses for the financial year ended December 31, 20174. To discuss and approve the proposal of the Board of Directors to distribute dividends to the current shareholders the sum of 6% (QAR 0.6 for each Share) of the

nominal value (i.e. QAR 10) of each share of the Company that they own 5. To discharge members of the Board of Directors from their directorship responsibilities having been met for the financial year ended December 31, 2017 and

to determine their bonus6. To discuss and approve the Company’s Corporate Governance Report for the year of 20177. To vote on the candidates nominated for the independent directorship seats on the Board in accordance with the requirements of the Corporate Governance

Code for listed companies and legal entities issued by Qatar Financial Markets Authority’s Board pursuant to Decision No. (5) of the year 2016 8. To appoint the external auditor for the financial year 2018 and decide its fees

Annual Ordinary and Extra Ordinary General Assembly Meeting


Independent Auditor’s Report to the Shareholders of Aamal Company Q.P.S.C.

Report on the audit of the consolidated financial statementsOur opinionIn our opinion, the consolidated financial statements of Aamal Company Q.P.S.C. (the ‘Company’) and its subsidiaries (together the ‘Group’) present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2017 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRS’).

What we have auditedThe Group’s consolidated financial statements comprise:

– the consolidated statement of financial position as at 31 December 2017; – the consolidated statement of profit or loss and other comprehensive income for the year then ended; – the consolidated statement of changes in equity for the year then ended; – the consolidated statement of cash flows for the year then ended; and – the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

IndependenceWe are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements that are relevant to our audit of the consolidated financial statements in the State of Qatar. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

Our audit approachOverviewKey Audit Matters:

– Valuation of investment properties – Business combination – loss of control on subsidiaries

We were appointed as auditors of the Group for the year ended 31 December 2017. When we are engaged to audit consolidated financial statements for the first time, including where the consolidated financial statements for the prior period were audited by another firm of auditors, we will not have previously obtained audit evidence in relation to the opening balances. Therefore, we are required by International Standards on Auditing to perform certain procedures on the opening balances in order to obtain sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s consolidated financial statements.

To fulfil this responsibility, we reviewed the working papers of the former auditors, to help familiarise ourselves with the controls on which they relied for the purposes of issuing their opinion, and to understand the evidence they obtained over key judgements.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the Directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

41Aamal Company Q.P.S.C. Annual Report 2017 Financials

Key audit matter How our audit addressed the Key audit matter

Valuation of investment propertiesAs mentioned in note 5 to the consolidated financial statements, the Group has investment properties recorded under the fair value model and the fair value gains or losses are recorded in the consolidated statement of profit or loss and other comprehensive income.

The Group’s investment properties are based in the State of Qatar. The carrying value of investment properties in the consolidated statement of financial position is QAR 6,892,214,727 at 31 December 2017.

The valuations of properties were carried out by independent third party valuers with experience of the particular markets in which the properties are held.

The fair value of the investment properties of the Group was determined as follows:

– Lands: Comparable market approach; – Income generating assets: Depreciated replacement cost method. – Properties under development: Cost method where fair value cannot

be reliably measured

In determining the property’s value, the valuers have taken into account property specific information, such as useful life and comparable market rate to arrive at the final valuation.

We focused on this area because the valuation of the Group’s investment property portfolio is subject to significant judgement, assumptions and estimates.

The total assets of the Group amount to QAR 8,669,826,481 out of which the investment property account forms 79% of the total assets. The reported results and financial position of the Group could be materially affected if the estimates and judgements change.

Our audit procedures in relation to the valuation of investment properties included:

– Obtaining and reviewing the latest valuation reports prepared by the external valuers, and assessing their independence and competencies;

– Verifying on test basis the key assumptions (i.e. useful life of the asset and comparable market rate), valuation methodologies adopted, and the appropriateness of the valuation outcomes;

– Using our own property valuation experts to independently review the appropriateness of the valuation methodologies adopted and the comparable evidence for all valuation assumptions to ensure alignment to the real estate market;

– Comparing useful life of the assets, depreciated build rates and the land rates against external market data, where available and re-calculating the external valuations using our own valuation models; and

– Evaluating the sensitivity analysis performed by management and the disclosures relating to the valuation.

Business combination – loss of control on subsidiariesAs mentioned in note 31 to the consolidated financial statements, the Group has lost control over two of its subsidiaries as a result of changing shareholders agreements, so that the Group will only be able to exercise joint control over these two entities.

The accounting for this change in control status is governed by IFRS 3 ‘Business Combinations’ and IFRS 11 ‘Joint arrangements’, requirements of which can be complex and require management to exercise judgement.

The most significant area of judgment is the determination of fair value of net assets disposed, which involves the determination of identifiable assets and liabilities disposed and use of assumptions to measure their fair values. Management engaged external experts to assist with the determination of the fair value.

The fair value of the net assets of these subsidiaries were determined using the income approach by adopting a discounted cash flow model, which resulted in recognition of QAR 22,191,741 as gain on disposal of subsidiaries in the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2017.

Due to the value of the net assets of the subsidiaries and the level of judgement and estimate involved in arriving at its fair value, the accounting for business combinations has been identified as a key audit area of focus.

Our audit work included the following: – Obtaining and reviewing the latest audited financial statements of

the entities; – Reviewing and discussing the changes to shareholders agreements with

management to assess the change of control status and reasonableness of derecognition of subsidiary companies and recognition of them as joint ventures;

– We obtained the external experts valuation model and discussed the critical assumptions used with management. The discussion focussed on the growth rates used to estimate future cash flows and the discount rates used;

– Our internal valuation experts reviewed the appropriateness of the model and the inputs selected to calculate the fair value. They independently recalculated the discount rates applied to the cash flows in the model based on their assessment of the Group’s specific financing and capital costs;

– We tested the inputs used in the determination of the assumptions for the calculation of the fair value to third-party sources, where available, including using external data from analysts’ reports;

– We tested the mathematical accuracy of the model; and – We also tested the de-consolidation entries and adequacy of disclosures

included in the consolidated financial statements of the Group.


Independent Auditor’s Report to the Shareholders of Aamal Company Q.P.S.C. (continued)

Other informationThe directors are responsible for the other information. The other information comprises Board of Directors’ Report (but does not include the consolidated financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the complete annual report, which is expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the complete annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the consolidated financial statementsThe management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS and with the requirements of the Qatar Commercial Companies Law number 11 of 2015, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statementsOur objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit

procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

– Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. – Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

– Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.


We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirementsFurther, as required by the Qatar Commercial Companies Law number 11 of 2015, we report that:

– We have obtained all the information we considered necessary for the purpose of our audit; – The Company has carried out a physical verification of inventories at the year-end in accordance with observed principles; – The Company has maintained proper books of account and the consolidated financial statements are in agreement therewith; – The financial information included in the Board of directors’ report is in agreement with the books and records of the Company; and – Nothing has come to our attention, which causes us to believe that the Company has breached any of the provisions of the Qatar Commercial Companies

Law number 11 of 2015, or of its Articles of Association, which would materially affect the reported results of its operations or its consolidated financial position as at 31 December 2017.

Other mattersThe consolidated financial statements of the Group for the year ended 31 December 2016 were audited by another firm of auditors who expressed an unqualified audit opinion in their report dated 15 March 2017.

For and on behalf of PricewaterhouseCoopers – Qatar Branch Qatar Financial Market Authority registration number 120155

Mohamed ElmoatazAuditor’s registration number 281Doha, State of Qatar28 February 2018


Consolidated Statement of Financial Positionat 31 December

Consolidated Financial Statements for the Year ended 31 December 2017 (all amounts expressed in Qatari Riyals unless otherwise stated)

Notes 2017 2016

AssetsNon-current assetsRetention and other non-current assets 3 – 160,545,562Investments accounted for using the equity method 4 336,063,352 19,021,908Investment properties 5 6,892,214,727 6,899,679,999Property, plant and equipment 6 330,309,035 599,745,480

Total non-current assets 7,558,587,114 7,678,992,949

Current assetsCash and bank balances 7 349,747,554 554,941,666Trade and other receivables 8 479,824,138 1,386,376,942Amounts due from related parties 9 134,777,767 61,506,302Inventories 10 146,889,908 333,048,849

Total current assets 1,111,239,367 2,335,873,759

Total assets 8,669,826,481 10,014,866,708

Equity and liabilitiesEquityShare capital 11 6,300,000,000 6,300,000,000Legal reserve 12 592,264,928 542,173,250Treasury shares (739,279) (2,075,865)Retained earnings 1,115,338,115 1,055,035,931

Equity attributable to equity holders of the parent 8,006,863,764 7,895,133,316Non-controlling interests 39,680,909 420,008,282

Total equity 8,046,544,673 8,315,141,598

LiabilitiesNon-current liabilitiesBorrowings 13 5,491,116 130,827,739Employees’ end of service benefits 14 25,259,237 31,502,689

Total non-current liabilities 30,750,353 162,330,428

Current liabilitiesBank overdrafts 7 – 1,458,876Accounts payable and accruals 15 350,676,747 895,795,875Amounts due to related parties 16 13,622,338 19,191,961Borrowings 13 228,232,370 620,947,970

Total current liabilities 592,531,455 1,537,394,682

Total liabilities 623,281,808 1,699,725,110

Total equity and liabilities 8,669,826,481 10,014,866,708

The notes on pages 48 to 77 are an integral part of these consolidated financial statements.

The consolidated financial statements on pages 44 to 77 were authorised for issue by the Board of Directors on 28 February 2018 and were signed on its behalf by:

Sheikh Faisal Bin Qassim Al ThaniChairman

Sheikh Mohamed Bin Faisal Al ThaniVice Chairman and Managing Director

Mohammad RamahiChief Financial Officer


Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December


Notes 2017 2016

Revenue 17 1,604,237,441 2,829,134,600Direct costs 18 (1,058,643,691) (2,145,765,778)

Gross profit 545,593,750 683,368,822

Other income 19 23,904,275 16,556,259Marketing and promotion expenses (13,302,839) (18,088,558)General and administrative expenses 20 (138,991,792) (154,690,015)Gain on loss of control of subsidiaries 31 22,191,741 –Net fair value gains on investment properties – 866,688

Operating profit for the year 439,395,135 528,013,196Finance costs 22 (18,355,976) (27,967,699)Share of net profit of investments accounted for using the equity method 4 102,025,210 60,189,128

Profit for the year 523,064,369 560,234,625Other comprehensive income – –

Total comprehensive income for the year 523,064,369 560,234,625

Attributable to:Equity holders of the parent 500,916,782 462,270,283Non-controlling interests 22,147,587 97,964,342

523,064,369 560,234,625

Basic and diluted earnings per share(attributable to equity holders of the Company)(expressed in QAR per share) 23 0.80 0.73



Consolidated Statement of Changes in EquityFor the years ended 31 December

Attributable to equity holders of the parent

Non-controlling interests

Total equity

Share capital

Legal reserve

Treasuryshares

Retained earnings Total

Balance at 1 January 2017 6,300,000,000 542,173,250 (2,075,865) 1,055,035,931 7,895,133,316 420,008,282 8,315,141,598Profit for the year – – – 500,916,782 500,916,782 22,147,587 523,064,369Other comprehensive income – – – – – – –

Total comprehensive income for the year – – – 500,916,782 500,916,782 22,147,587 523,064,369

Transfer to legal reserve – 50,091,678 – (50,091,678) – – –Contribution to social and sports

activities fund (Note 28) – – – (12,522,920) (12,522,920) – (12,522,920)Transactions with owners in their

capacity as ownersDividends paid – – – (378,000,000) (378,000,000) – (378,000,000)Disposals of subsidiaries (Note 31) – – – – – (402,474,960) (402,474,960)Reissue of treasury shares – – 1,336,586 – 1,336,586 – 1,336,586

– – 1,336,586 (378,000,000) (376,663,414) (402,474,960) (779,138,374)

Balance at 31 December 2017 6,300,000,000 592,264,928 (739,279) 1,115,338,115 8,006,863,764 39,680,909 8,046,544,673

Balance at 1 January 2016 6,300,000,000 495,946,222 (2,075,865) 655,528,295 7,449,398,652 275,219,843 7,724,618,495Profit for the year – – – 462,270,283 462,270,283 97,964,342 560,234,625Other comprehensive income – – – – – – –

Total comprehensive income for the year – – – 462,270,283 462,270,283 97,964,342 560,234,625

Transfer to legal reserve – 46,227,028 – (46,227,028) – – –Contribution to social and sports

activities fund (Note 28) – – – (7,673,412) (7,673,412) – (7,673,412)Transactions with owners in their

capacity as ownersBusiness acquisition – – – (13,363,061) (13,363,061) – (13,363,061)Recognition of subsidiaries with

non-controlling interest – – – – – 50,274,951 50,274,951Recognition of non-controlling

interest without a change in control – – – 4,500,854 4,500,854 (4,500,854) –

Contribution from non-controlling interest – – – – – 1,050,000 1,050,000

– – – (8,862,207) (8,862,207) 46,824,097 37,961,890

Balance at 31 December 2016 6,300,000,000 542,173,250 (2,075,865) 1,055,035,931 7,895,133,316 420,008,282 8,315,141,598




Consolidated Statement of Cash FlowsFor the years ended 31 December

Notes 2017 2016

Operating activitiesProfit for the year 523,064,369 560,234,625Adjustments for:

Net fair value gains on investment properties 5 – (866,688)Depreciation 6 36,699,944 61,778,293Provision for employees’ end of service benefits 14 5,002,724 6,778,132Allowance for impairment of trade accounts receivable 8 13,768,958 6,234,841Gain on disposal of property, plant and equipment (1,591,661) (324,406)Provision for slow moving inventories 708,944 200,562Interest income (3,018,453) (3,372,590)Finance costs 22 18,355,976 27,967,699Gain on loss of control of subsidiaries 31 (22,191,741) –Share of profit of equity-accounted investees 4 (102,025,210) (60,189,128)

Operating profit before working capital changes: 468,773,850 598,441,340– Inventories (111,603,999) 36,779,174– Trade and other receivables 106,201,698 (23,135,483)– Accounts payable and accruals (14,184,818) 52,113,357– Net movement in amounts due from and due to related parties (39,766,941) (403,297,689)

Cash flows from operations 409,419,790 260,900,699Finance costs paid 22 (18,355,976) (27,967,699)End of service benefits paid 14 (2,949,060) (4,136,683)

Net cash generated from operating activities 388,114,754 228,796,317

Investing activitiesInterest income received 19 3,018,453 3,372,590Proceeds from disposal of property, plant and equipment 2,563,833 1,349,491Dividends received from equity accounted investees 4 129,597,230 6,696,591Cash surrendered on deconsolidation of subsidiaries 31 (91,898,938) –Acquisition of subsidiaries, net of cash acquired – (20,235,323)Additions to investment properties 5 (51,169,919) (66,481,204)Additions to property, plant and equipment 6 (55,302,724) (61,510,085)

Net cash used in investing activities (63,192,065) (136,807,940)

Financing activitiesChange in restricted deposits 7 (2,920,000) –Repayments of borrowings (151,994,511) (180,464,160)Dividends paid (378,000,000) –Reissue of treasury shares 1,336,586 –Contributions from non-controlling interests – 1,050,000

Net cash used in financing activities (531,577,925) (179,414,160)

Net decrease in cash and cash equivalents (206,655,236) (87,425,783)Cash and cash equivalents at beginning of year 553,482,790 640,908,573

Cash and cash equivalents at end of year 7 346,827,554 553,482,790




Notes to the consolidated financial statements

1. Corporate information and principal activities Aamal was formed on 13 January 2001 as a private shareholding company under the Commercial Registration Number 23245 in the State of Qatar. On 12 July 2007, the shareholders resolved to transform Aamal into a Qatari Public Shareholding Company (Q.P.S.C.) (the ‘Company’ ‘Parent company). Accordingly, the Company was listed on Qatari Stock Exchange on 5 December 2007. The Company’s registered office is at P.O. Box 22477, Doha, State of Qatar.

The principal business activities of the Company and its subsidiaries (collectively the ‘Group’) are disclosed in note 2.2.4 of the financial statements.

The ultimate parent and controlling shareholder of the Company is Al Faisal Holding Company W.L.L..

Qatar Companies Law No. 11 of 2015 (Companies Law) which is applicable to the Group has come into effect from 16 June 2015. The Ministry of Economy and Commerce (MOEC) had extended the transitional period determined for complying with the Companies Law till August 2018. The Company has converted its branches to Limited Liability Company to comply with the Companies Law (note 2). However, the Group is still in process of amending its Articles of Association.

The consolidated financial statements were authorised for issue by the representatives of the Board of Directors of Aamal Company Q.P.S.C. on 28 February 2018.

2. Basis of preparation and consolidation The consolidated financial statements comprise the financial statements of Aamal Company Q.P.S.C. (the ‘Company’) and its subsidiaries.

2.1. Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared under the historical cost convention, except for investment properties which have been measured at fair value.

The consolidated financial statements have been presented in Qatari Riyals (QAR), which is the Company’s functional and presentation currency and have been rounded to the nearest Qatari Riyal.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to consolidated financial statements are disclosed in note 34.

2.1.1. New and amended standards adopted by the Group The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the consolidated financial statements for the years presented, The Group has applied the following standard and amendment for the first time for their annual reporting year commencing 1 January 2017:

– Disclosure initiative – amendments to IAS 7.

2.1.2. New standards and interpretations are effective for annual periods beginning after 31 December 2017 and not yet adopted by the GroupCertain new accounting standards and interpretations have been published that are not mandatory for 31 December 2017 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:

– IFRS 9, ‘Financial instruments’ (Annual periods beginning on or after 1 January 2018)

Nature of changeIFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

ImpactThe Group has reviewed its financial assets and liabilities and is expecting the following impact from the adoption of the new standard on 1 January 2018:

The Group’s financial assets comprise of the following: – Trade and other receivables – Amounts due from related parties – Bank balances

Trade and other receivables, amounts due from related parties and cash at banks are debt instruments currently classified into the loans and receivables category and measured at amortised cost under IAS 39. The Group assessed that they meet the conditions for classification at amortised cost (AC) under IFRS 9 since they are cash flows solely payments of principal and interest (SPPI) and the Group’s business model is to hold and collect the debt instrument.

Cash and cash equivalents definition as per IAS 7 remains unchanged with the application of IFRS 9, short-term investments and time deposits will continue to be presented under cash and cash equivalents, being highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.



2. Basis of preparation and consolidation continued

2.1. Basis of preparation continuedThere will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at FVOCI, contract assets under IFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. Based on the assessments undertaken to date, the Group expects an increase of QAR 9,952 thousands in the allowance for receivables with a corresponding decrease in the retained earnings as of 1 January 2018.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

Date of adoption by the GroupIt must be applied for financial years commencing on or after 1 January 2018. The Group will apply the new rules retrospectively from 1 January 2018, with the practical expedients permitted under the standard. Comparatives for 2017 will not be restated.

– IFRS 15, ‘Revenue from contracts with customers’ (Annual periods beginning on or after 1 January 2018).

Nature of changeThe IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of goods or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the adoption.

ImpactManagement has assessed the effects of applying the new standard on the Group’s financial statements and has identified that the recognition and measurement of revenue for all the current ongoing contracts under the IFRS 15 ‘five-step model’ will not change as currently recognised under IAS 18. Based on the assessment undertaken to date, the Group expects an immaterial impact in the retained earnings as of 1 January 2018.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

Date of adoption by the GroupMandatory for financial years commencing on or after 1 January 2018. The Group intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognised in retained earnings as of 1 January 2018 and that comparatives will not be restated.

– IFRS 16, ‘Leases’ (Annual periods beginning on or after 1 January 2019)

Nature of changeIFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

ImpactThe standard will affect primarily the accounting for the Group’s operating leases as a lessee. As at the reporting date, the Group has non-cancellable operating lease commitments of QAR 13,969 thousands (see Note 24).

However, the Group has not yet assessed what other adjustments, if any, are necessary for example because of the change in the definition of the lease term and the different treatment of variable lease payments and of extension and termination options. It is therefore not yet possible to estimate the amount of right-of-use assets and lease liabilities that will have to be recognised on adoption of the new standard and how this may affect the Group’s profit or loss and classification of cash flows going forward.

Date of adoption by GroupMandatory for financial years commencing on or after 1 January 2019. At this stage, the Group does not intend to adopt the standard before its effective date.

The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.




2.2. Principles of consolidation and equity accounting

2.2.1. Business combinations

(a) SubsidiariesSubsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group.

The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in the consolidated statement of profit or loss and other comprehensive income.

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.

Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the profit or loss.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs or group of CGUs that is expected to benefit from the synergies of the combination. Goodwill impairment testing is undertaken annually. Any impairment is recognised immediately as an expense and is not subsequently reversed.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of profit or loss and other comprehensive income, changes in equity and financial position respectively.

(b) Changes in ownership interests in subsidiaries without change of controlTransactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(c) Disposal of subsidiariesWhen the group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Notes to the consolidated financial statements continued




2.2. Principles of consolidation and equity accounting continued

2.2.2. AssociatesAssociates are all entities over which the group has significant influence but not control or joint control. This is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The group’s share of post-acquisition profit or loss is recognised in the consolidated statement of profit or loss and other comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment.

When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Profits and losses resulting from upstream and downstream transactions between the group and its associates are recognised in the group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and charges the amount to the consolidated statement of profit or loss and other comprehensive income.

Dilution gains and losses arising in investments in associates are recognised in the consolidated statement of profit or loss and other comprehensive income.

2.2.3. Joint arrangementsUnder IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group has joint ventures.

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 joint ventures are accounted for using the equity method. Under the equity method, the interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the group’s share of the post-acquisition profits or losses and movements in other comprehensive income.

When the Group’s share of losses in a joint venture equals to or exceeds its interests in the joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

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.




2.2. Principles of consolidation and equity accounting continued

2.2.4. Group companiesSet out below are the Group’s principal subsidiaries at 31 December 2017. 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:

The principal subsidiaries of the Group are as follows:

Name of the subsidiaryCountry ofincorporation Principal activities

Group effective shareholding percentage

2017 2016

City Center Company L.L.C.* Qatar Leasing the facilities of a retail outlet complex in City Center Doha. 100% 100%Aamal Real Estate L.L.C.* Qatar Residential and commercial real estate investment and property rental. 100% 100%Aamal Readymix L.L.C.* Qatar Production and sale of readymix concrete. 100% 100%Ebn Sina Medical L.L.C.* Qatar Wholesale and retail distribution of pharmaceuticals and general

consumable products.100% 100%

Aamal Medical L.L.C.* Qatar Wholesale distribution of medical equipment. 100% 100%Aamal Trading and Distribution

Company L.L.C.*Qatar Sale of tyres, lubricants, batteries and home appliances. 100% 100%

Aamal Services L.L.C.* Qatar Providing facilities management and cleaning services. 100% 100%Aamal Travel and Tourism L.L.C.* Qatar Operating a travel agency. 100% 100%Foot Care Center L.L.C.* Qatar Sale of footwear, clinical activities and general commercial trading products. 100% 100%Ebn Sina Health Care Pharmacy

Solutions L.L.C.*Qatar Sale of pharmaceuticals, baby care products, medicine and general

consumable products.100% 100%

Aamal Cement Industries W.L.L. Qatar Development and management of factories and the production of curb stone,interlock slabs and cement bricks.

99% 99%

IMO Qatar Company W.L.L. Qatar Construction and repair of power plant, establishment and management ofindustrial enterprises and acting as a representative for the internationalcompanies.

100% 100%

Ci-San Trading W.L.L. Qatar Holding company of Gulf Rocks.The Group controls Ci-San Trading W.L.L. by virtue of a shareholders’ agreement.

50% 50%

Gulf Rocks Company W.L.L. Qatar Retail distribution of aggregates 74.5% 74.5%Innovative Lighting W.L.L.** Qatar Trading of Light Emitting Diode (LED) Lamps and other lighting products. 70% 70%Aamal Maritime Transportation W.L.L. Qatar Purchasing and leasing of ships for transportation of goods 74.7% 74.7%Al Farazdaq Company W.L.L. Qatar Trading of office supplies and providing printing and laminating services. 65% 65%Aamal Optical Supplies W.L.L.** Qatar Trading of optical supplies 51% 51%Family Entertainment Center

Company W.L.L.Qatar Providing family entertainment park facilities in City Center Doha Mall. 100% 100%

Winter Wonder Land W.L.L. Qatar Providing entertainment facilities in City Center Doha Mall. 100% 100%Ecco Gulf Company W.L.L. Qatar Offers professional and business process outsourcing and call centre services. 51% 51%Johnson Controls Qatar W.L.L.** Qatar Provision of facilities management services, energy services,

and building maintenance and cleaning services to corporate clients51% 51%

Aamal for Industrial Projects L.L.C.* Qatar Industrial investments 100% 100%Legend Trading and Distribution

W.L.L.Qatar Trading of automobile products 100% 100%

Aamal for Car Maintenance W.L.L. Qatar Trading of car spare parts 100% –

* Company was previously operated as a Branch. During the year, the Branch was converted to a Limited Liability Company under Qatar Commercial Companies Law No. 11 of 2015.** These entities are under liquidation.





2.2. Principles of consolidation and equity accounting continuedDetails of the equity-accounted investees of the Group are as follows:

Company nameCountry ofincorporation Principal activity

Proportion of ownership and voting power held by the Group

2017 2016

Senyar Industries Qatar Holding W.L.L. (Joint Venture)***

Qatar Owning of patents, businesses and subletting them and provision ofinvestment portfolio management for its subsidiaries and associates.

50% 50%

Doha Cables Qatar W.L.L. (subsidiary of Senyar industries Qatar Holding W.L.L.)***

Qatar Maintenance and manufacture of electric cables, equipment and tools. 47.3% 47.3%

El Sewedy Cables Qatar W.L.L. (subsidiary of Senyar industries Qatar Holding W.L.L.)***

Qatar Trading in electro-mechanical equipment and providing related services. 38.3% 38.3%

Frijns Structural Steel Middle East W.L.L. (Associate)

Qatar Steel fabrications. 20% 20%

Aamal ECE L.L.C. (Joint Venture) Qatar Property management. 51% 51%Advanced Pipes and Casts Industries

W.L.L. (Joint Venture)***Qatar Manufacturing of wide cement and glass reinforced pipes systems for

infrastructure and pipeline projects. 50% 50%

*** refer to Note 31 for further details.

2.3. Foreign currency translation

2.3.1. Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Qatari Riyal which is the Group, all subsidiaries and all equity accounted investees’ functional and presentation currency.

2.3.2. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss and other comprehensive income. All foreign exchange gains and losses are presented in the consolidated statement of profit or loss and other comprehensive income within ‘other income/(expense)’.

2.4. Investment propertiesLand 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 profit or loss and other comprehensive income in the year in which they arise.

Investment properties are de-recognised 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 profit or loss and other comprehensive 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 profit or loss and other comprehensive 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 profit or loss and other comprehensive income upon disposal of such property.




2.5. Property, plant and equipmentProperty, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items 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. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of profit or loss and other comprehensive income during the financial period in which they are incurred.

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 yearsLeasehold improvements 2-8 years or over the period of lease term, whichever is shorterTruck mixers and motor vehicles 4-15 yearsPlant and machinery 8-25 yearsMotor vehicles 4-5 yearsFurniture, fixtures and office equipment 3-5 yearsComputers and related software 3-5 yearsVessel 20 years

Construction work in progress is 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.

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 profit or loss and other comprehensive 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.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated statement of profit or loss and other comprehensive income.

2.6. Cash and cash equivalentsFor the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and bank balances, unrestricted balances held with banks and short term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts.

2.7. Trade and other receivablesTrade and other receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.8. InventoriesRaw materials, work in progress, finished goods and goods for resale are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.





2.9. Contributed equityOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any group company purchases the company’s equity instruments, for example as the result of a share buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Group as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the shareholders of the Group.

2.10. Treasury sharesWhen share capital recognised in equity is repurchased (by the Company or any of its subsidiaries), the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in the retained earnings.

2.11. BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are derecognised from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the statement of profit or loss and other comprehensive income as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the statement of profit or loss and other comprehensive income, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

2.12. Borrowing costsBorrowing 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 these are incurred. Borrowing costs consist of the interest and other costs that the Group incurs in connection with the borrowing of funds.

2.13. Accounts payable and accrualsTrade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.14. 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.




2.15. Financial asset

2.15.1. ClassificationThe Group classifies its financial assets into ‘loans and receivables’ category.

The classification depends on the purpose for which the financial assets were acquired. Management determined the classification of its financial assets at initial recognition.

(a) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’, ‘amounts due from related parties’, ‘retention’ and ‘cash at banks’ in the consolidated statement of financial position.

2.15.2. ReclassificationThe Group may choose to reclassify a non-derivative trading financial asset out of the held for trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

2.15.3. Recognition and derecognitionRegular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

2.15.4. MeasurementAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the statement of profit or loss and other comprehensive income.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

2.15.5. Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.15.6. Impairment of financial assetsThe Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of profit or loss and other comprehensive income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of profit or loss and other comprehensive income.





2.16. ProvisionsProvisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.17. Employees’ end of service benefits

2.17.1. Defined contribution planA defined benefit plan is a pension plan that is not a defined contribution plan. In accordance with Qatar Labour Law number 14 of 2004, the Group makes payments to non-Qatari employees on their retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the consolidated statement of financial position in respect of employees’ end of service indemnity is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by management using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related benefit obligation. Where there is no deep market in such bonds, the market rates on government bonds are used.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions (remeasurements) are charged or credited to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in the consolidated statement of profit or loss and other comprehensive income.

2.17.2. Other short-term employees benefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be measured reliably.

2.18. RevenueRevenue 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:

(a) Sale of goodsSales 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.

(b) Rental incomeRental 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 using straight line method, 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 profit or loss and other comprehensive income when they arise.

(c) Service incomeService income is recognised when the service is rendered and the outcome of the transactions can be estimated reliably.

(d) CommissionCommission is accounted for on an accrual basis, when the right to receive the income is established.

(e) Income on travel agenciesIncome on travel agencies is accounted for in the year in which the airline tickets are sold.

(f ) Interest incomeInterest income is recognised as the interest accrues using the effective interest rate method.




2.19. Fair value measurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

– In the principal market for the asset or liability, or – In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

– Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities – Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable – Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The group measures its investment properties at fair value at each reporting date.

The group’s management determines the policies and procedures for valuation of investment properties. External valuers are involved for the valuation of investment properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The management discusses and reviews, the group’s external valuers, valuation techniques and assumptions used for each property (note 5).

3. Retention and other non-current assets

2017 2016

Retention – 56,813,163Goodwill – 102,724,852Other non-current assets – 1,007,547

– 160,545,562

The balances were derecognised due to loss of control on subsidiaries (Note 31).

4. Investments accounted for using the equity methodThe entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also the principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

Name of entity Place of business

% of ownership

Nature of relationship 2017 20162017 2016

Aamal ECE L.L.C. Qatar 51% 51% Joint Venture 5,613,301 6,450,232 Frijns Structural Steel Middle East W.L.L. Qatar 20% 20% Associate 14,864,935 12,571,676 Advanced Pipes and Casts Industries W.L.L. (see Note 31) Qatar 50% 50% Joint Venture 5,276,848 –Senyar Industries Qatar Holding W.L.L. (see Note 31) Qatar 50% 50% Joint Venture 310,308,268 –

336,063,352 19,021,908




4. Investments accounted for using the equity method continuedSummarised financial information of equity accounted investees:

Reconciliation to carrying amounts

Aamal ECE L.L.C.2017

Frijns Structural Steel Middle East

W.L.L.2017

Advanced Pipes and Casts

Industries W.L.L.2017

Senyar Industries Qatar Holding

W.L.L.2017

Total2017

Opening net assets 12,647,513 62,858,380 – –Net assets at fair value arising from deconsolidation due to loss of

control of subsidiary (Note 31) – – 17,000,000 672,226,928Profit (loss) for the period/year 10,706,473 10,442,315 (6,446,305) 194,989,607Dividends paid (12,347,513) – – (246,600,000)Other adjustments – 1,023,982 – –

Closing net assets 11,006,473 74,324,677 10,553,695 620,616,535Group share in % 51% 20% 50% 50%Group share 5,613,301 14,864,935 5,276,848 310,308,268 336,063,352

Carrying amount 5,613,301 14,864,935 5,276,848 310,308,268 336,063,352

Group share in profit (loss) including other adjustments 5,460,300 2,293,259 (3,223,152) 97,494,803 102,025,210

Summarised statement of financial position

Aamal ECE L.L.C.31 December 2017

Frijns Structural Steel Middle East W.L.L.

31 December 2017

Advanced Pipes and Casts Industries W.L.L.

31 December 2017

Senyar Industries Qatar Holding W.L.L.

31 December 2017

Current assets 14,089,274 174,573,183 20,127,205 316,887,175Non-current assets 15,185 52,751,092 158,611,410 1,304,114,152Current liabilities (3,035,858) (108,544,390) (80,980,797) (950,741,423)Non-current liabilities (62,128) (44,455,208) (92,671,425) (9,022,974)Non-controlling interest – – – (78,765,014)

Net assets 11,006,473 74,324,677 5,086,393 582,471,916

Aamal ECE L.L.C.31 December

2016


31 December2016

Current assets 15,333,615 70,950,826Non-current assets 22,049 70,629,266Current liabilities (2,614,644) (40,261,757)Non-current liabilities (93,507) (38,459,955)

Net assets 12,647,513 62,858,380




4. Investments accounted for using the equity method continued

Summarised statement of profit or loss and other comprehensive income



2017

Advanced Pipes and Casts Industries W.L.L.

2017

Senyar IndustriesQatar Holding W.L.L.

2017

Revenue 14,588,970 172,964,767 33,054,645 2,179,649,512Direct costs – (132,374,031) (35,698,197) (1,856,056,005)

Gross profit/(loss) 14,588,970 40,590,736 (2,643,552) 323,593,507Other income – 2,855,651 – 1,591,059General expenses (3,900,274) (31,725,722) (3,299,787) (34,361,243)Finance costs – (1,278,350) (5,278,093) (20,561,520)

Net profit/(loss) 10,688,696 10,442,315 (11,221,432) 270,261,803

Other comprehensive income 17,777 – – –

Total comprehensive income/(loss) 10,706,473 10,442,315 (11,221,432) 270,261,803



2016

Revenue 16,514,342 123,562,775Direct costs – (78,983,761)

Gross profit 16,514,342 44,579,014Other income – 310,706General expenses (4,182,790) (25,185,814)Finance costs – (1,454,729)

Net profit 12,331,552 18,249,177

Other comprehensive income 15,961 –

Total comprehensive income 12,347,513 18,249,177

5. Investment properties

(a) Reconciliation of carrying amount

2017 2016

At 1 January 6,899,679,999 6,832,332,107Additions 51,169,919 66,481,204Net transfers to property, plant and equipment (58,635,191) –Net gain from fair value adjustment – 866,688

At 31 December 6,892,214,727 6,899,679,999

(b) Significant estimate – measurement of fair valueThe fair values of the Group’s investment properties as at 31 December 2017 and 2016 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.

Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December are as follows:

2017 2016

Vacant land 128,500,000 128,500,000Completed properties

Commercial properties 4,129,112,517 4,226,500,000Residential properties 727,927,500 727,927,500Mixed (residential and commercial) 1,744,373,500 1,744,373,500

Properties under construction 162,301,210 72,378,999

Total at 31 December 6,892,214,727 6,899,679,999

All investment properties are located in the State of Qatar and are measured at level 3 fair value (using significant unobservable inputs).



5. Investment properties continued

(b) Significant estimate – measurement of fair value continuedMovement in properties under construction is as follows:

2017 2016

Beginning at 1 January 72,378,999 5,897,795Additions during the year 51,169,919 66,481,204Transfers from capital work in progress (Note 6) 38,752,292 –

Ending at 31 December 162,301,210 72,378,999

Description of valuation techniques used by the Group and key inputs to valuation on all of the investment properties are as follows:

Types of properties Valuation techniques Estimated value

Commercialproperties

Market approach Depreciated replacement cost

2,750 to 3,250 QAR/sqft2,231 to 4,228 QAR

Land rateDepreciated rebuild rate

Residentialproperties

Market approachDepreciated replacement cost

600 to 1,700 QAR2,200 to 4,263 QAR

Land rateDepreciated rebuild rate

Vacant land Market approach 575 to 750 QAR/sqft Land rate

Sensitivity analysis:At 31 December 2017, if the price per square foot for investment properties (valued using market approach) had been higher/lower by 1% with all other variables held constant, the calculated fair valuation gains (losses) on investment properties for the year would have been QAR 68,922 thousands lower/higher (higher/lower) mainly as a result of higher/lower fair value gain (loss) on investment properties.

Minimum lease receivables under non-cancellable operating leases of investment properties not recognised in the financial statements are as follows:

2017 2016

Within one year 157,412,559 174,197,433Between 1 and 5 years 398,707,393 530,124,428More than 5 years 19,911,449 45,906,974

Total at 31 December 576,031,401 750,228,835

6. Property, plant and equipment

BuildingsLeasehold

improvements

Truck mixers and motor

vehiclesPlant and

machinery

Furniture, fixtures and

office equipment

Computers and related software Vessels

Capital workin progress Total

Cost:At 1 January 2017 227,097,527 60,651,175 140,586,880 411,998,358 32,086,470 19,989,696 73,507,640 21,918,335 987,836,081Additions – 2,926,382 4,632,653 8,506,483 1,064,670 9,601,307 – 28,571,229 55,302,724Disposals of subsidiaries (227,097,527) (1,762,523) (14,263,532) (277,416,556) (6,436,203) (2,010,851) – (6,349,517) (535,336,709)Disposals/write-off – – (6,817,192) (3,878,127) (65,518) (1,044,796) – – (11,805,633)Transfer from investment

properties (Note 5) 97,387,483 – – – – – – – 97,387,483Transfer from capital work

in progress (Note 5) – – – 359,128 – – – (39,111,420) (38,752,292)

At 31 December 2017 97,387,483 61,815,034 124,138,809 139,569,286 26,649,419 26,535,356 73,507,640 5,028,627 554,631,654

Accumulated depreciation:At 1 January 2017 50,237,681 32,148,408 70,133,613 190,735,846 26,236,570 16,298,225 2,300,258 – 388,090,601Charge for the year 2,673,678 4,836,373 8,826,242 14,235,116 1,484,275 2,575,340 2,068,920 – 36,699,944Disposals of subsidiaries (52,911,359) (631,155) (7,051,094) (123,899,822) (3,645,224) (1,495,811) – – (189,634,465)Disposals/write-off – – (6,432,993) (3,302,423) (64,710) (1,033,335) – – (10,833,461)

At 31 December 2017 – 36,353,626 65,475,768 77,768,717 24,010,911 16,344,419 4,369,178 – 224,322,619

Net carrying amounts:At 31 December 2017 97,387,483 25,461,408 58,663,041 61,800,569 2,638,508 10,190,937 69,138,462 5,028,627 330,309,035

Notes:(i) Depreciation charge for the year amounting to QAR 26,801,233 (2016: QAR 52,194,800) is included in the direct costs and no amount has been capitalised under capital work in progress (2016: Nil). (ii) The capital work in progress does not include capitalised borrowing in the current year (2016: Nil).(iii) The buildings are constructed on a plot of land taken on a long term operating lease.



6. Property, plant and equipment continued

BuildingsLeasehold

improvements

Truck mixers and motor

vehiclesPlant and

machinery

Furniture, fixtures and

office equipment

Computers and related software Vessels

Capital work in progress Total

Cost:At 1 January 2016 224,744,848 47,776,135 126,383,500 378,771,268 23,397,913 18,420,381 45,698,382 20,336,152 885,528,579Additions 60,973 810,527 8,833,167 11,830,168 2,261,894 2,006,881 27,809,258 7,897,217 61,510,085Acquired through

business combinations – 11,940,513 5,682,091 26,065,915 7,506,854 1,149,103 – – 52,344,476Disposals/write-off – – (4,160,453) (4,668,993) (1,080,191) (1,586,669) – (50,753) (11,547,059)Transfer from capital work

in progress 2,291,706 124,000 3,848,575 – – – – (6,264,281) –

At 31 December 2016 227,097,527 60,651,175 140,586,880 411,998,358 32,086,470 19,989,696 73,507,640 21,918,335 987,836,081

Accumulated depreciation:At 1 January 2016 39,847,695 20,610,386 61,717,985 141,403,013 19,098,576 15,524,362 517,230 – 298,719,247Charge for the year 10,389,986 4,426,948 9,294,629 32,127,850 2,321,482 1,434,370 1,783,028 – 61,778,293Acquired through

business combination – 7,111,074 2,858,512 21,330,104 5,889,183 926,162 – – 38,115,035Disposals/write-off – – (3,737,513) (4,125,121) (1,072,671) (1,586,669) – – (10,521,974)

At 31 December 2016 50,237,681 32,148,408 70,133,613 190,735,846 26,236,570 16,298,225 2,300,258 – 388,090,601

Net carrying amounts:At 31 December 2016 176,859,846 28,502,767 70,453,267 221,262,512 5,849,900 3,691,471 71,207,382 21,918,335 599,745,480

Significant estimate – useful lives of property, plant and equipmentThe Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation as outlined in note 2.6. This estimate is determined after considering the expected usage of the asset, physical wear and tear, technical or commercial obsolescence. The estimated useful lives, residual values and depreciation methods are reviewed at each reporting date, with the effect of any changes in estimate accounted for on a prospective basis. At year-end, management assessed that no changes occurred to these estimates.

At year-end, if the useful life increased/decreased by 5% against the current useful life with all other variables held constant, profit for the year would have been lower by QAR 2,676,872 or higher by QAR 2,421,932 (2016: lower by QAR 4,207,776 or higher by QAR 3,807,036).

7. Cash and bank balances For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following balances:

2017 2016

Cash on hand 24,274 –Bank accounts 240,043,597 432,484,680Short term bank deposits 106,759,683 122,456,986Restricted deposits relating to letters of guarantee 2,920,000 –

Cash and bank balances 349,747,554 554,941,666Restricted deposits relating to letters of guarantee (2,920,000) –Bank overdrafts – (1,458,876)

Cash and cash equivalents 346,827,554 553,482,790

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.

Cash is held in banks with reputable credit ratings as follows:

Credit rating Rating Agency 2017 2016

P-1 Moody’s 309,966,179 515,022,042P-2 Moody’s 38,586,640 39,633,901Unrated – 1,170,461 285,723

349,723,280 554,941,666




8. Trade and other receivables

2017 2016

Trade accounts receivable 422,473,070 972,112,336Less: Impairment of trade accounts receivable (42,624,373) (31,750,735)

379,848,697 940,361,601

Advances to suppliers and prepayments 63,663,889 147,056,054Retention receivables 18,949,984 211,297,204Other receivables 17,361,568 87,662,083

479,824,138 1,386,376,942

As at 31 December 2017, trade accounts receivable amounting to QAR 42,624,373 (2016: QAR 31,750,735) were impaired. Movements in the allowance for impairment of trade accounts receivable were as follows:

2017 2016

At 1 January 31,750,735 26,815,749Charges net of recoveries for the year (Note 20) 13,768,958 4,934,986Amounts written-off (2,895,320) –

At 31 December 42,624,373 31,750,735

As at 31 December, the ageing of unimpaired trade accounts receivable was as follows:

Past due but not impaired

Neither past due nor impaired

Up to 30 days

31-60days

61-90days 91-120 days > 120 days Total

2017 222,569,457 30,060,765 44,393,262 18,089,112 12,346,722 52,389,379 379,848,697

2016 538,644,323 201,257,728 61,349,832 25,731,680 19,333,956 94,044,082 940,361,601

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.

An estimate of the collectible amount of trade receivables are 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 based on the provisioning policy applied by the Group, and a provision is applied according to the length of time past due, based on historical recovery rates.

At year-end, if the estimate used by management increased/decreased by 1% with all other variables held constant, profit for the year would have been lower by QAR 3,925,018 or higher by QAR 3,624,974 (2016: lower by QAR 3,818,992 or higher by QAR 3,000,740).

9. Amounts due from related parties

Nature of relationship 2017 2016

Al Faisal Holding Company W.L.L. Ultimate parent 101,646,435 40,319,182Advanced Pipes and Casts Company W.L.L. Joint venture 18,521,480 –Al Rayyan Tourism Investment Company W.L.L. Entities controlled by ultimate parent 8,161,084 9,976,336Maintenance Management Group Qatar W.L.L. Entities controlled by ultimate parent 926,947 3,172,692Al Jazi Real Estate Investment Company W.L.L. Entities controlled by ultimate parent 777,562 463,469Al-Arabia Land Transporting Company W.L.L. Entities controlled by ultimate parent 230,865 248,490Al Farman for Investment & International Trading Company W.L.L. Entities controlled by ultimate parent 173,235 169,125Gulf English School Entities controlled by ultimate parent 82,277 122,103Deliopolis W.L.L. Entities controlled by ultimate parent 1,965 36,338Other related parties Entities controlled by ultimate parent 4,255,917 6,998,567

134,777,767 61,506,302



9. Amounts due from related parties continuedTransactions with related parties included in the consolidated statement of profit or loss and other comprehensive income were as follows:

2017 2016

Sale of goods and services to:Ultimate parent 3,382,384 3,975,597Entities controlled by ultimate parent 9,674,535 11,059,176Associate – 549,672,915

13,056,919 564,707,688

Rental income from:Ultimate parent 398,400 398,400Entities controlled by ultimate parent 174,000 266,500

572,400 664,900

Notes:(i) Transactions with related parties are carried out through open account and Directors do not consider any receivables to be past due or impaired.(ii) Other related party transactions are disclosed in Note 26.

10. Inventories

2017 2016

Goods for resale 131,943,113 161,584,337Raw materials and spare parts 14,025,786 56,791,610Work in progress 750,681 62,795,864Goods in transit 1,531,613 54,695,112

148,251,193 335,866,923Less: write-down of inventories to net realisable value (1,361,285) (2,818,074)

146,889,908 333,048,849

Movements in the provision for obsolete and slow moving inventories were as follows:

2017 2016

At 1 January 2,818,074 3,285,147Charges net of reversals during the year (Note 18) 708,944 (467,073)Disposal of subsidiaries (2,165,733) –

At 31 December 1,361,285 2,818,074

Significant estimate – Write-down of inventories to net realisable valueInventories are stated at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 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 written down according to the inventory type and the degree of ageing or obsolescence, any difference between the amounts actually realised in future periods and the amounts expected will be recognised in the consolidated statement of profit or loss and other comprehensive income.

At year-end, if the estimate used by management increased/decreased by 1% with all other variables held constant, profit for the year would have been lower by QAR 1,359,229 or higher by QAR 926,728 (2016: lower by QAR 3,176,651 or higher by QAR 1,730,723).

11. Share capital

2017 2016

Authorised, issued and paid630,000,000 (2016: 630,000,000) shares of QAR 10 each 6,300,000,000 6,300,000,000

All shares are of same class and carry equal voting rights.




12. Legal reserve In accordance with the requirements of the Qatar Commercial Companies’ Law No. 11 of 2015 and the parent’s articles of association, an amount equal to 10% of the net profit for the year, as a minimum, should be transferred to legal reserve until this reserve is equal to 50% of the paid up share capital. The reserve is not available for distribution except in the circumstances stipulated in the above mentioned law and the parent’s articles of association.

13. Borrowings

Notes Maturity 2017 2016

Loan 1 (i) September 2017 – 194,350,178Loan 2 (i) October 2022 – 136,532,154Bills payable (i) – 140,782,411Loan 3 (ii) February 2018 220,000,000 220,000,000Loan 4 (iii) April 2017 – 34,907,292Loan 5 (iv) November 2017 – 4,584,036Loan 6 (v) December 2017 – 1,414,453Loan 7 (vi) April 2019 11,641,448 17,245,366Loan 8 (vii) May 2022 2,082,038 2,364,095

233,723,486 752,179,985Less: Deferred financing cost – (404,276)

233,723,486 751,775,709

Presented in the consolidated statement of financial position as follows:

2017 2016

Current portion 228,232,370 620,947,970Non-current portion 5,491,116 130,827,739

233,723,486 751,775,709

The deferred financing costs consist of arrangement fees. The movements in the deferred financing costs were as follows:

2017 2016

At 1 January 404,276 547,914Amortised during the year (30,277) (143,638)Disposal of subsidiaries (373,999) –

At 31 December – 404,276

Notes:(i) On 31 March 2017, Loan 1, Loan 2 and Bills payable were derecognised due to loss of control on subsidiaries (Note 31). (ii) Loan 3 is a secured bridge loan obtained to settle an existing loan and working capital requirements of the Group. The loan carries interest at commercial rates and a single repayment at the end

of the tenor along with the interest is to be made.(iii) Loan 4 represents a loan facility obtained in two separate tranches amounting to QAR 309,583,750 (USD 85 million) for the purpose of refurbishment and construction of facilities in one of the

investment properties. The loan consists of QAR 100,168,750 (USD 27.5 million) from tranche A and QAR 209,415,000 (USD 57.5 million) from tranche B. Tranche A has been fully paid during the year and the tranche B is repayable in 12 equal quarterly instalments, commencing from July 2014. The loan carries interest at commercial rates and the loan was fully settled in 2017.

(iv) Loan 5 represents a secured loan which is payable by 50 equal monthly instalments of QAR 426,000 with a last instalment of QAR 324,036 with effect from 01 October 2013. The loan carries interest at commercial rates and the loan was fully settled in 2017.

(v) Loan 6 represents a secured loan which carries interest at commercial market rates and is payable by 59 equal instalments of QAR 160,000 with a last instalment of QAR 128,000 with effect from 31 December 2012 and the loan was fully settled in 2017.

(vi) Loan 7 represents a secured loan obtained on 04 May 2014, to finance the purchase of heavy equipment and machines. The loan is payable by 18 quarterly instalments with effect from 26 February 2015, previously QAR 1,672,058 until June 2017 and revised to QAR 1,940,241 until the last instalment in April 2019. The loan carries interest at commercial market rates.

(vii) Loan 8 represents a secured loan obtained on 12 July 2016, to finance the purchase of vehicles, plant and machinery. The loan is payable by 51 monthly instalments of QAR 46,355 in the first month with effect from 1 June 2017 and QAR 39,284 in the subsequent months. The loan carries interest at commercial market rates.



13. Borrowings continued

Net debt reconciliation

Cash/overdraftBorrowings –

due within one yearBorrowings –

due after one year Total

Net debt as at 1 Jan 2016 640,908,573 (751,312,750) (180,927,119) (291,331,296)Cash flows (87,425,783) 130,364,780 50,099,380 93,038,377

Net debt as at 31 Dec 2016 553,482,790 (620,947,970) (130,827,739) (198,292,919)

Cash/overdraftBorrowings –

due within one yearBorrowings –

due after one year Total

Net debt as at 1 Jan 2017 553,482,790 (620,947,970) (130,827,739) (198,292,919)Cash flows (206,655,236) 151,994,511 – (54,660,725)De-recognition due to loss of control on subsidiaries – 240,721,089 125,336,623 366,057,712

Net debt as at 31 Dec 2017 346,827,554 (228,232,370) (5,491,116) 113,104,068

14. Employees’ end of service benefits Movements in the provision reflected in the consolidated statement of financial position were as follows:

2017 2016

At 1 January 31,502,689 25,013,967Provision made during the year (Note 21) 5,002,724 6,778,132Disposals of subsidiaries (8,297,116) –End of service benefits paid during the year (2,949,060) (4,136,683)Acquisition through business combinations – 3,847,273

At 31 December 25,259,237 31,502,689

15. Accounts payable and accruals

2017 2016

Trade accounts payable 155,271,274 527,953,910Advances from customers and tenants 49,774,798 131,304,428Accruals 34,241,240 94,400,484Other payables 111,389,435 142,137,053

350,676,747 895,795,875

16. Amounts due to related parties

Nature of relationship 2017 2016

Aamal ECE L.L.C. Joint venture 9,190,193 14,192,705Gettco Company W.L.L. – Gettco Refrigeration and Air-conditioning Entities controlled by ultimate parent 672,056 650,556Gettco Services Entities controlled by ultimate parent 579,081 –Integrated Information Systems W.L.L. Entities controlled by ultimate parent 415,563 779,179Other related parties Entities controlled by ultimate parent 2,765,445 3,569,521

13,622,338 19,191,961




16. Amounts due to related parties continuedTransactions with related parties included in the consolidated statement of profit or loss and other comprehensive income were as follows:

2017 2016

Purchase of goods and services from:Entities controlled by ultimate parent 3,992,919 4,533,459Associate – 19,628,968

3,992,919 24,162,427

Rental expense:Ultimate parent 5,971,953 6,374,182Entities controlled by ultimate parent 4,316,883 9,535,405

10,288,836 15,909,587

Operator’s management feesJoint venture 14,588,970 16,514,342

Note:A joint venture manages the operations of City Centre Mall.Other related party transactions are disclosed in Note 26.

17. Revenue

2017 2016

Sale of goods 1,137,565,873 2,364,469,015Rental income 304,623,517 291,138,986Service income 116,023,222 100,154,466Commission, incentives and agency fees 46,024,829 73,372,133

1,604,237,441 2,829,134,600

18. Direct costs

2017 2016

Cost of inventories recognised as an expense 862,542,715 1,875,869,717Direct salaries and wages (Note 21) 69,383,122 101,301,067Depreciation (Note 6) 26,801,233 52,194,800Operator’s management fees 14,588,970 16,514,342Operating expenses on real estate properties 36,919,712 37,442,849Provision for obsolete and slow moving inventories (Note 10) 708,944 (467,073)Other operating expenses 47,698,995 62,910,076

1,058,643,691 2,145,765,778

19. Other income

2017 2016

Interest income 3,018,453 3,372,590Gain on disposal of property, plant and equipment 1,591,661 324,406Miscellaneous income 19,294,161 12,859,263

23,904,275 16,556,259



20. General and administrative expenses

2017 2016

Management and employees’ compensation (Note 21) 74,378,725 78,793,741Depreciation 9,898,711 9,583,493Donations 9,479,531 10,733,076Rent 9,106,862 13,899,234Allowance for impairment of trade accounts receivable (Note 8) 13,768,958 4,934,986Insurance and professional fees 3,220,074 2,831,744Repairs and maintenance 2,021,420 2,967,369Communication costs 1,724,968 1,718,038Bank charges 1,478,345 3,337,169Postage, printing and stationery 923,068 986,949Training and business development 56,072 2,061,786Miscellaneous expenses 12,935,058 22,842,430

138,991,792 154,690,015

21. Staff costs

2017 2016

Salaries and wages 134,790,206 172,479,734Employee end of service benefits (Note 14) 5,002,724 6,778,132Other employee benefits 3,968,917 836,942

143,761,847 180,094,808

Staff costs are presented as follows:

2017 2016

Direct costs (Note 18) 69,383,122 101,301,067General and administrative expenses (Note 20) 74,378,725 78,793,741

143,761,847 180,094,808

22. Finance cost

2017 2016

Interest expense 18,325,699 27,824,061Amortisation of deferred financing costs 30,277 143,638

18,355,976 27,967,699

23. Basic and diluted earnings per share 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.

2017 2016

Profit for the year attributable to equity holders of the parent (QAR) 500,916,782 462,270,283

Weighted average number of shares outstanding during the year(i) 629,897,032 629,842,934

Basic and diluted earnings per share (QAR) 0.80 0.73

Notes:(i) The weighted average number of shares for the purpose of calculating earnings per share has been calculated as follows:

No. of shares outstanding Weighted average no. of shares

2017 2016 2017 2016

Outstanding shares, beginning of year 630,000,000 630,000,000 630,000,000 630,000,000Less: average outstanding treasury shares (55,936) (157,066) (102,968) (157,066)

Average outstanding shares, end of year 629,944,064 629,842,934 629,897,032 629,842,934




24. Commitments

2017 2016

Estimated capital expenditure approved and contracted for at the year-end but not provided for:Investment properties 166,680,958 225,312,488Property, plant and equipment 2,731,156 52,565,455

169,412,114 277,877,943

Operating lease commitments, under non-cancellable lease agreements:Payable within one year 9,678,559 3,122,296Payable after one year but not more than five years 4,291,141 1,497,599

13,969,700 4,619,895

25. Contingent liabilitiesThe Group had the following contingent liabilities from which it is anticipated that no material liabilities will arise.

2017 2016

Letters of guarantee 154,313,455 1,026,744,126

Letters of credit 9,349,460 4,883,318

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) 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.

26. Related party disclosure

a. 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.

b. Related party balancesAmounts due from and due to related parties are disclosed in Notes 9 and 16, 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.

c. Compensation of key management personnelThe remuneration of key management during the year was as follows:

2017 2016

Short-term benefits 1,020,000 2,092,500Employees’ end of service benefits 63,750 98,750

1,083,750 2,191,250

d. Board of Directors remunerationRemuneration proposed for Board of Directors for the year amounts to QAR 1,200,000 (2016: QAR 1,200,000).



27. Dividends The shareholders of the Company approved at the Annual General Meeting held on 17 April 2017 a cash dividend of 6% of the share capital amounting to QAR 378 million from the profit of 2016 (2016: Nil).

The Board of Directors proposed cash dividend of 6% of the share capital amounting to QAR 378 million for the year 2017 which will be submitted for formal approval at the Annual General Assembly Meeting.

28. Contribution to social and sports fund During the year, the Group appropriated an amount of QAR 12,522,920 (2016: QAR 7,673,412) representing 2.5% of the consolidated net profit attributable for the equity holders of the parent for the year as a contribution to the Social and Sports fund. In 2016, the appropriated amount of QAR 7,673,412 was after deducting the previous excess of provisions amounting to QAR 3,883,345.

29. Income taxCertain 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.

30. Segment informationFor management purposes, the Group is organised into business units based on their nature of activities and has four reportable segments as described below, which are the Group’s strategic divisions and the Head Office as follows:

Property:The segment involves leasing the facilities of retail outlet complex, real estate investments and property rental businesses.

Trading and distribution:The segment represents wholesale and/or retail distribution of pharmaceutical and consumable items, home appliances, medical equipment, tyres and lubricants and industrial printing.

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.

Managed services:The segment involves provision of housekeeping and cleaning services, entertainment and amusement services, call center services and acting as travel agents.

Parent company:It provides corporate services to the subsidiaries of the Group.

For each of the strategic divisions, the Group’s managing director (the chief operating decision maker) reviews internal management reports on a regular basis. The managing director 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 the financial position and 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.




30. Segment information continued

Operating segments:The operating segment, after elimination of inter-company transactions, is presented as follows:

PropertyTrading and distribution

Industrial manufacturing

Managed services

Head Office Eliminations Total

For the year ended 31 December 2017Revenues– External parties 316,917,932 625,845,973 576,333,547 85,139,989 – 1,604,237,441– Inter segments 4,022,765 7,588,347 5,882,829 10,136,016 – (27,629,957)(i) –

320,940,697 633,434,320 582,216,376 95,276,005 – (27,629,957) 1,604,237,441

Operating results 262,660,354 116,164,335 77,176,607 7,124,849 (23,731,010) – 439,395,135

Profit/(loss) for the year 268,120,654 116,164,335 167,801,552 7,043,069 (36,065,241) – 523,064,369

Depreciation 2,646,630 5,231,249 24,958,102 3,821,924 42,039 – 36,699,944

For the year ended 31 December 2016Revenues– External parties 310,534,900 639,863,302 1,783,554,643 95,181,755 – – 2,829,134,600– Inter segments 7,364,181 9,993,824 28,102,443 2,238,095 – (47,698,543)(i) –

317,899,081 649,857,126 1,811,657,086 97,419,850 – (47,698,543) 2,829,134,600

Operating results 253,446,051 119,769,615 171,303,832 9,948,026 (26,454,328) – 528,013,196

Profit/(loss) for the year 259,264,218 119,769,615 210,397,058 9,789,543 (38,985,809) – 560,234,625

Depreciation 1,372,956 4,870,015 51,351,886 3,541,680 641,756 – 61,778,293

Note:(i) Inter-segment revenues are eliminated on consolidation.



30. Segment information continued

Assets and liabilities:

PropertyTrading and distribution

Industrial manufacturing Managed services Head Office Eliminations Total

At 31 December 2017Current assets 199,652,050 541,324,525 198,558,926 96,845,486 178,842,791 (103,984,411)(i) 1,111,239,367Non-current assets 7,008,221,806 11,500,594 528,469,579 10,765,319 115,339 (485,523)(i) 7,558,587,114

Total assets 7,207,873,856 552,825,119 727,028,505 107,610,805 178,958,130 (104,469,934) 8,669,826,481

Current liabilities 79,724,424 151,558,551 119,854,140 26,514,506 326,164,308 (111,284,474)(i) 592,531,455

Non-current liabilities 1,255,243 10,331,597 12,573,644 4,785,422 1,804,447 – 30,750,353

Total liabilities 80,979,667 161,890,148 132,427,784 31,299,928 327,968,755 (111,284,474) 623,281,808

Capital expenditure (ii) 84,743,902 3,320,699 15,131,107 3,167,639 109,296 – 106,472,643

At 31 December 2016Current assets 201,012,411 619,623,548 1,412,615,381 98,901,490 123,009,621 (119,288,692)(i) 2,335,873,759Non-current assets 6,926,964,284 13,420,596 729,165,084 11,419,604 164,189 (2,140,808)(i) 7,678,992,949

Total assets 7,127,976,695 633,044,144 2,141,780,465 110,321,094 123,173,810 (121,429,500) 10,014,866,708

Current liabilities 123,491,087 155,162,080 1,042,415,457 23,001,056 312,612,964 (119,287,962)(i) 1,537,394,682

Non-current liabilities 1,106,213 9,534,861 145,502,989 4,659,313 1,527,052 – 162,330,428

Total liabilities 124,597,300 164,696,941 1,187,918,446 27,660,369 314,140,016 (119,287,962) 1,699,725,110

Capital expenditure (ii) 69,903,815 1,477,703 50,956,147 5,552,844 100,780 – 127,991,289

Notes:(i) Inter-segment balances are eliminated on consolidation.(ii) Capital expenditures consist of additions to property, plant and equipment and investment properties.

31. Loss of control of subsidiariesOn 31 March 2017, the Group lost control in two of its subsidiaries: 1) Senyar Industries Qatar Holding W.L.L. and 2) Advanced Pipes and Casts Company W.L.L. Financial information relating to the loss of control on subsidiaries for the period to the date of the loss on control is set out below.

The group ceases to consolidate the two subsidiaries referred to above because of a loss of control and classified them as joint ventures as agreements with other shareholders provide joint controls to the Group. The retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a joint venture. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities.

The financial performance and cash flow information presented are for the three months ended 31 March 2017 and the year ended 31 December 2016.

31 March2017

(Reviewed)

31 December2016

(Audited)

Revenue 361,189,075 1,476,949,092Other income 165,182 51,802,566Expenses (317,968,340) (1,354,141,680)

Profit before income tax 43,385,917 174,609,978

Net cash inflow from operating activities 120,471,905 122,903,370Net cash (outflow)/inflow from investing activities (3,661,005) 846,992Net cash (outflow) from financial activities (106,734,116) (81,713,801)

Net increase in cash generated 10,076,784 42,036,561




31. Loss of control of subsidiaries continuedDetails of the loss of control on the subsidiaries:

31 March2017

Consideration received or receivable– Cash –– Fair value of contingent consideration –– Fair value of net assets of de-consolidated subsidiaries 344,613,459

Total fair value of consideration received as a result of loss of control of subsidiaries 344,613,459

The profit of QAR 22,191,741 occurring from measuring the investment retained in the subsidiary is included in the consolidated statement of profit or loss and other comprehensive income under ‘gain on loss of control of subsidiaries’.

31. Loss of control of subsidiaries continuedThe carrying amounts of assets and liabilities at deconsolidation date were:

31 March2017

(reviewed)

Retention and other non-current assets 55,327,126Property, plant and equipment 345,702,244Goodwill 102,724,852Cash and bank balances 92,232,063Accounts receivable and prepayments 789,075,732Amounts due from related parties 35,670,842Inventories 297,053,996

Total assets derecognised due to loss of control of subsidiaries 1,717,786,855

Employees’ end of service benefits 8,297,116Bank overdrafts 333,125Accounts payable and accruals 543,457,216Amounts due to related parties 74,745,008Interest bearing loans and borrowings 366,057,712

Total liabilities derecognised due to loss of control of subsidiaries 992,890,177

Net assets 724,896,678Carrying amount of non-controlling interests in the subsidiary derecognised when control is lost (402,474,960)Investment retained in the subsidiary at its fair value at the date when control is lost (344,613,459)

Fair value gain on loss of control of subsidiaries 22,191,741

The cash and bank balances net of bank overdrafts amounting to QAR 91,898,938 represents the cash surrendered on deconsolidation of subsidiaries.

32. Financial risk management

32.1. Financial risk factorsThe 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 and other receivables, amounts due from related parties and bank balances 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.

(a) Market riskMarket 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.



32. Financial risk management continued

32.1. Financial risk factors continued

(i) Interest rate riskThe 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:

2017 2016

Fixed interest rate instruments:Financial liabilities – (136,127,878)

Floating interest rate instruments:Financial assets 106,759,683 117,909,266Financial liabilities (233,723,486) (658,101,081)

(126,963,803) (540,191,815)

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 profit or loss and other comprehensive 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 profit or loss and other comprehensive 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 pointsEffect

on profit

2017Floating interest rate instruments +25 b.p. (952,229)

2016Floating interest rate instruments +25 b.p. (1,350,480)

(ii) Foreign currency riskForeign 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 Dollar, UAE Dirham, Great Britain Pound (GBP) and Euro, of which the Group has a currency risk primarily on the balances payable in Euro and GBP.

The Group does not hedge its foreign currency exposure. As both Qatari Riyal and UAE Dirham are pegged to the US Dollar, balances in US Dollars and UAE Dirhams are not considered to represent significant currency risk to the Group.

In the opinion of the management, the Group’s exposure to currency risk as at 31 December 2017 and 2016 is minimal as the foreign currency financial liabilities denominated in Euro and GBP represent 4% (2016: 3%) of total liabilities. Hence, not considered to represent significant risk.

(b) Credit riskCredit 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:

Business segment: 2017 2016

Property 34,523,673 14,636,469Trading and distribution 235,147,184 252,077,802Industrial manufacturing 86,071,996 645,599,268Managed services 24,105,844 28,048,062

Net trade accounts receivable 379,848,697 940,361,601




32. Financial risk management continued

32.1. Financial risk factors continued

(b) Credit risk continuedWith 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:

2017 2016

Bank balances 349,723,280 554,941,666Amounts due from related parties 134,777,767 61,506,302Retention and other receivables 36,311,552 355,772,450

Other financial assets 520,812,599 972,220,418

Total credit risk exposure 900,661,296 1,912,582,019

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.

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.

(c) Liquidity riskLiquidity 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.

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.The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted payments.

0 to3 months

3 to 12 months 1 to 5 years > 5 years Total

2017Borrowings 222,058,092 6,174,278 5,491,116 – 233,723,486Trade accounts payable 155,271,274 – – – 155,271,274Other payables 111,389,435 – – – 111,389,435Amounts due to related parties 13,622,338 – – – 13,622,338

502,341,139 6,174,278 5,491,116 – 514,006,533

2016Borrowings 293,540,841 381,973,861 149,098,538 3,509,578 828,122,818Bank overdrafts 1,458,876 – – – 1,458,876Trade accounts payable 463,445,576 64,508,334 – – 527,953,910Other payables 124,642,650 17,494,403 – – 142,137,053Amounts due to related parties 16,304,810 2,887,151 – – 19,191,961

899,392,753 466,863,749 149,098,538 3,509,578 1,518,864,618



32.2. Capital managementThe 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.

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 2017 and 2016.

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.

2017 2016

Borrowings 233,723,486 751,775,709Less: Cash and cash equivalents (346,827,554) (553,482,790)

Net debt/(cash and cash equivalents) (113,104,068) 198,292,919

Total capital 8,006,863,764 7,895,133,316

Capital and net debt 7,893,759,696 8,093,426,235

Gearing ratio (1.4%) 2.5%

Significant change in the gearing ratio from last year was due to decrease in borrowings as a result of loss of control on subsidiaries (notes 13 and 31).

33. Fair values of financial instruments 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, borrowings, amounts due to related parties and trade accounts payable.

The fair values of these financial instruments except for borrowings approximate their carrying values due to the short term maturities of these instruments.

The fair value of borrowings is estimated based on discounted cash flows using interest rate currently available for the debt or similar terms and remaining maturities. As all borrowings carry variable interest rates, the fair value of borrowings approximates their carrying values.

34. Critical judgements and key sources of estimation uncertaintyIn the application of the Group’s accounting policies, which are described in note 2, management is required to make certain judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised.

34.1. Critical judgments in applying accounting policiesThere are no critical judgments, apart from those involving estimations that management has made in the process of applying the entity’s accounting policies.

34.2. Key sources of estimation uncertaintyThe following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

– Estimate the fair value of investment properties (Note 5) – Estimated useful lives of property, plant and equipment (Note 6) – Estimation of inventory net realisable value (Note 10) – Estimate the recoverability of receivables and other receivables (Note 8)

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.




35. Comparative informationThe comparative figures for the year ended 31 December 2016 have been reclassified in order to conform with the presentation for the current year. Such reclassifications have been made by the Group to improve the quality of information presented and did not have any impact on the previously reported equity and profits. Below is a summary of significant reclassifications made during the year:

Statement of financial position

Previouspresentation at

31 December 2016 ReclassificationsCurrent

presentation

Trade and other receivables 1,346,700,976 39,675,966 1,386,376,942Amounts due from related parties 101,182,268 (39,675,966) 61,506,302Accounts payable and accruals 837,872,216 57,923,659 895,795,875Amounts due to related parties 77,115,620 (57,923,659) 19,191,961

Reclassifications were due to transactions with the other partners of entities jointly controlled by the group and entities related to those partners, which do not qualify as related parties under IAS 24, Related Party Disclosures. Therefore, balances due to and from these entities were reclassified as part of Trade and other receivables and Accounts payable and accruals as at 31 December 2016.


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Aamal Company Q.P.S.C. Annual Report 201778

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