Aamal Company QPSC Annual Report 2020 Resilience Through Diversity
His Highness Sheikh Tamim Bin Hamad Al Thani
Emir of the State of Qatar 21 P.6 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 P.7 Aamal Company is one Table of Contents of the region’s largest and most diversified companies, offering Overview Strategic Report Corporate Governance Corporate Responsibility Highlights of the Year Chairman’s Statement Board of Directors Corporate Social 10 26 68 Responsibility (CSR) Activities investors a high quality 92 At a Glance Market Review Corporate Governance 14 28 71 Aamal Sustainability and balanced exposure Framework and ESG Our Assets Business Strategy Board of Directors report Disclosures 18 32 on Corporate Governance 94 78 to Qatar’s economic Our Story CEO and Managing 20 Director’s Report Independent Assurance 34 Report on Compliance with QFMA Laws and growth and development. Investment Rationale relevant legislations 22 Executive Management 80 Financial Statements 36
Board of Directors Report Independent Operational Review on Internal Controls over Auditor’s Report 38 Financial Reporting 110 83 Financial Statements Independent Assurance and Notes Report on Internal Control 114 over Financial Reporting Corporate Responsibility 85
AAMAL’S FOUR SEGMENTS Industrial Manufacturing Read more on page 38 Trading and Distribution Read more on page 50 Property Read more on page 56 Managed Services Read more on page 60 Overview Highlights of the Year 10
Operational Highlights 11
Financial Highlights 13
At a Glance 14
Our Assets 18
Our Story 20
Investment Rationale 22 P.10 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.2111 Highlights Operational of the Year Highlights
• Aamal has taken swift and effective action • Aamal’s healthcare subsidiaries, Ebn Sina in response to the COVID-19 pandemic Medical and Aamal Medical supported ensuring our businesses are operating Qatar’s efforts to minimise the impacts optimally through challenging times, while of the COVID-19 pandemic number one priority remains the health and wellbeing of the employees and customers, • Ebn Sina Pharmacy commissioned installation implementing social distancing measures of two large Robots by GPI Company at its across the business including a transition to warehouse, providing the facility to dispense remote working. Also several subsidiaries drugs accurately and with high volumes were able to launch innovative new services • Expansion of Ebn Sina Pharmacy with a new to support Qatar during pandemic. location at Msheireb Downtown
• Completed renovation work of phase 2 • Aamal Maritime Transportation Services at City Center Doha and commenced new completed a major upgrade for one of development work for frontage area and its vessels “Um El Hanaya” ballast water bridges linking to the mall. treatment system as per International • Established Aamal Cables for Trading and Maritime Organisation “IMO” regulation Contracting winning a three year contract • Aamal has been included in the MSCI Qatar with Kahrama worth 694 million Small Cap Index and QE 20 Index • Senyar Drums Factory commenced commercial manufacturing of drums for cables P.12 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.13
Generating Revenues Financial 21 of QAR 1,306.8 Highlights Aamal Company demonstrates resilience 2020 Segmental Breakdown: Revenue (%)* Three Year Financial Summary: Revenue (QAR) through diversity. Property 14.1% 2020 1,306.8 Trading and distribution 67.3%
Industrial 2019 1,294.1 manufacturing 15.1%
Managed services 3.5% 2018 1,286.6
*All percentages stated before elimination
Three Year Financial Summary: Net Profit (QAR) 2020 Segmental Breakdown: Net Profit (%)*
2020 121.7 Property 11.1% Trading and distribution 70.9%
2019 322.1 Industrial manufacturing 19.0% 2018 447.6 Managed services (1.0%) *All percentages stated after eliminations and before head office costs
Shareholders Structure Equity Attributable to Share Holders (QAR)
Al Faisal Holding 45% 2020 7,811.9 Corporate 20% Individual 10% 2019 7,943.6 Sheikh Faisal Bin Qassim al Thani 25% 2018 8,007.4 P.14 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.15 At a Glance
Aamal Company offers investors a high quality • Operations across 27 active business units with market • Acting as a socially responsible member of society, leading positions in key growth sectors including adopting ethical and sustainable policies geared and balanced exposure to Qatar’s growth and industrial manufacturing, real estate, managed services, towards protecting the environment and looking development. Our corporate strategy has always and the medical equipment and pharmaceutical sectors. after the welfare of our employees. • Offering high quality products and services. • Uniquely positioned to benefit from increased private been to create and enhance long-term shareholder and public sector demand, particularly for infrastructure value through profitable growth and diversification, • Being alert and responsive to the markets’ development, as Qatar transforms into an advanced and evolving needs. with particular reference to: self-sustaining economy. • Geographical focus on Qatar at present with • Strong backing from Al Faisal Holding Company, intentions to expand further in the region. a long-term major shareholder of Aamal.
• Focus: on industrial manufacturing, real estate and other high-growth sectors.
• Diversification & Innovation: continued growth, diversification and innovation across existing businesses to enhance market positions and optimize performance.
• Operational Excellence: continue application of clear and disciplined operational and financial principles underlying our strategic growth initiatives.
Business units with effective Segmental Breakdown Aamal ownership (%)
Fri ns A vance Pipes Ci San Tra ing City Cente Aamal Real Ebn Sina Aamal Aamal e ical Aamal ECCO G l Str ct ral Steel an Casts o a Estate e ical Tra ing an Services 50 100 Aamal Travel 51 i le East Company istrib tion 100 100 100 an To rism 100 20 50 100 G l Roc s 100 74.5 Ebn Sina Aamal or aritime P armacy Transportation Services 100 74.7
ndustrial Trading Manufacturing Property and Distribution Managed Services
Senyar n stries atar ol ing 50 El Se e y Cables atar 38.3 o a Cables 47.3 Aamal Senyar Factory or r ms Rea ymi 50 100 Senyar or Pro cing Copper Ro Aamal Cables Aamal 50 Aamal or Car Legen or Family or Tra ing an Cement Senyar or Pro cing aintenance Tra ing an Foot Care Al Fara a inter Entertainment Center Contracting n stries Al min m Ro Aamal ECE 100 istrib tion Center Company on erlan 100 99 50 51 100 100 65 100 100
* Equity accounted investee P.16 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.17
VISION
To be recognised as a leader and innovator within the industry sectors we operate in; excelling in service delivery and professionalism to meet and exceed Major Shareholder Number of Employees the expectations of all stakeholders. Al Faisal Holding 3,800 Mission
To deliver maximum growth at minimum risk, through a diversified structure, offering high quality exposure to the Qatar growth story. Operations Total (business units) Equity Values 27 QAR 7.8Bn
Applying excellence to all our activities by committing to the highest standards in governance, investment in human capital development, and encourage entrepreneurial spirit. P.18 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.19
Our Assets 24 ndustrial Managed Manufacturing Services
Aamal Readymix Aamal Rea ymi n strial Area Facility Aamal Services Aamal Rea ymi anate n strial 1 Aamal Services O ices 18 one in a ro a alila site Ne Al itmi
Aamal Cement ndustries n strial Area Facility 2 Al Farazdaq Al Fara a Company 19 City Center S opping all
Advanced Pipes and Casts Company APC Factory Al a ra nicipality 3 ECCO Gulf ECCO G l O ices 20 Frijns Structural Steel Middle East Aamal To er est ay esaiee Roa Al a ra 4
Doha Cables Aamal Travel esaiee Facility 5 Aamal Travel City Center 21 ar a Aven e S o room S opping all
25 Gulf Rocks 6 Winter Wonderland G l Roc s esaiee Facility inter on erlan City Center 22 S opping all
Aamal for Maritime Transportation Services 7 Fun City/Family AMTS Mesaieed – Hamad Sea Port Entertainment Center Family Entertainment Center 23 Aamal Cables for Trading City Center S opping all and Contracting 8 Messaieed Facility 1 Senyar Factory for Drums 16 Messaieed Facility 9 12 12 12 National 16 Senyar for Producing Copper Rod Messaieed Facility 10 Assets 26 14 18 14 27 17 7 16 19 Senyar for Producing Aluminium Rod 21 Messaieed Facility 11 13 22 13 Ruwais Port 24 16 23 31 ama Port esaiee Area 16 20 14 16 28 Trading and 16 Sidra Hospital Qatar Distribution Si ra ospital Al G arra a 25
29 Foot Care Center Foot Care Center e ina Centrale Pearl 14 3 Foot Care Center Al G arra a 12 Qatar Foundation atar Fo n ation ea arters 1 2 Foot Care Center City Center S opping all 26 1 15 E cation City Al o l St 30 Aamal Medical 4 Aamal e ical O ices Aamal To er 13 est ay Qatar Stock Exchange 7 SE est ay 27 Ebn Sina Medical are o se n strial Area ea O ice est ay 14 6 11 9 P armacy Ras Ab Abo ranc P armacy City Center ranc Hamad Medical City 10 P armacy s eireb ranc ama e ical City 28 5 Al R maila East 8 Aamal Trading and Distribution AT Sal a Roa S o room 15 AT n strial Area Pit Stop Services Hamad Port 29 ama Port esaiee Area 30
Manateq (Economic Free ones) anate ea arters Property T e Gate all 30 anate Ras o antas O ice Aamal Real Estate Al a ra nicipality est ay Lagoon So ara Na ma 16 Al assila a inat ali a Al ar iye in a mo Al Nasr
City Centre Hamad international Airport 31 City Center S opping all est ay 17 P.20 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.21 Our Story
A History of Excellence
1964 1969 1994 2000 2006 2010 2015 2019
Sheikh Faisal Bin Qassim Gettco Trading is founded, Gettco Readymix is created, Gulf Rocks Company, which Aamal Medical is formed Advanced Pipes and Casts Aamal for Maritime Aamal Company Q.P.S.C. Al Thani founds “Gettco” which would later become which now operates as currently operates under as a separate entity from Company is founded. Transportation Services implements a 10 for 1 stock a small trading company Aamal Trading and Aamal Readymix. Aamal’s subsidiary Ci-San Ebn Sina Medical W.L.L. is established. split, in full compliance providing the initial platform Distribution. Trading, is established. Aamal Cement Industries with the stock split for expansion across key commences commercial Aamal Company partners directive issued by the markets. Subsequently production. with the German Company Qatar Financial Market renamed Al Faisal Holding, ECE Project management Authority (QFMA). the business has since ECCO Gulf, a joint venture to launch Aamal – ECE grown rapidly, branching with ECCO Outsourcing, to undertake shopping Sheikh Mohamed Bin Faisal out into a number commences trading. centers management. Al Thani appointed as Chief of sectors. Executive Officer of Aamal Aamal Company acquires Company Q.P.S.C. 49% of El Sewedy Cables Qatar, through Senyar Industries Qatar Holding.
Doha Cables begins 1998 2007 commercial production. 2020 Established Aamal Cables 1971 Another major milestone in 2001 Aamal Company Q.P.S.C. for Trading and Contracting Al Faisal Holding’s evolution listed on the Qatar Stock The company makes its is reached with the Aamal Company is Exchange, with a market Start of Commercial first move into Qatar’s development and opening established as the holding capitalisation of QAR 3.0bn production of Senyar health sector through of City Center Doha, one company for a select Drums Factory the establishment of Qatar’s first malls and range of high quality Senyar Industries Qatar 2016 of Ebn Sina Medical. a powerful symbol of the operations across each Holding is established in Aamal company completes country’s economic success. of the main sectors partnership with El Sewedy the acquisition of Family of the Qatari economy Electric Group. Entertainment Center and Real Services Qatar is and with the future aim Winter Wonderland. founded, which now of independent listing on operates as Aamal Services. the Qatar Exchange.
1967 2008 Frijns Steel Construction- Gettco Travel is Middle East is launched 2018 founded, which in partnership with Frijns Aamal announces three would later become Industrial Group Aamal Travel. industrial projects through Senyar Industries Ci-San Trading is Qatar Holding. established in partnership 1993 with Masraf Al Rayan.
Development of Souq Haraj Najma, which now forms a part of Aamal Real Estate. P.22 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.23 Investment Why invest Rationale in Aamal?
We operate in an attractive, We are financially strong
growing market • We benefit from a strong balance sheet, low gearing and significant liquidity • We offer high quality exposure to Qatar’s economic growth and development. Driven by the Qatar National • We are strongly capitalised with QAR 7.8bn Vision 2030, Qatar has become one of the world’s fastest of shareholders’ funds at the end of 2020 growing and most successful economies; GDP is forecast to grow by 2.7% in 2021 according to the December 2020 • Our growth initiatives are underpinned by strong IMF report on GCC internal cash flow generation and readily available access to debt funding • We have leading positions across the key sectors and markets that are growing the fastest in line with • We benefit from the supportive backing of Al Faisal the evolution of Qatar’s economy. For example, we are Holding Company (our long term, majority shareholder) at the forefront in IT healthcare solutions and pharma distribution while also playing a significant role in Qatar’s broader industrialisation through our cables, pipes and readymix businesses
• We are strongly positioned to benefit from increasing We have an experienced and private and public sector demand, particularly for proven senior leadership team, infrastructure development where the Government has allocated a budget QAR 72 billion for major projects in both at Group level and across 2021, approximately 37% of total expenditures our subsidiaries, delivering:
• An agile, highly effective corporate decision-making process with short lines of communication between Group and operational management; and talented, Our business model provides experienced, and motivated managers with excellent strength through diversification customer relationships • A track record of value creation and sustainable growth • Through global and regional economic cycles, our diversified business model and unique asset portfolio • Strong, best practice corporate governance, internal provides resilience and balanced exposure across our controls and commitment to ESG best practice four segments: Industrial Manufacturing; Trading and Distribution; Managed Services; and Property • A proven track record of successful partnering with international leaders to build incremental revenue • Within each segment our subsidiaries are managed streams by meeting growing domestic demand as standalone entities, optimising their performance in new markets and sectors and maximising management’s operational focus, agility and transparency Strategic Chairman’s Statement Report 26 Market Review 28
Business Strategy 32
CEO and Managing Director’s Report 34
Executive Management 36
Operational Review 38
Industrial Manufacturing 38
Trading and Distribution 50
Property 56
Managed Services 60
P.26 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.27 Chairman’s On behalf of the Board of Directors, I am pleased Statement to present Aamal Company’s 2020 Annual Report.
In the face of unprecedented challenges globally due to the COVID-19 pandemic, I am hugely proud of Aamal Company’s response at every level during 2020. Our employees responded magnificently to the new ways of working, our subsidiaries played their part in supporting local communities through the pandemic, and our diversified business model again demonstrated its resilience and value to our overall performance, delivering year-on-year revenue growth despite the pandemic.
During 2020, the health and safety of our employees, partners and all our stakeholders has, of course, been our absolute priority. On behalf of the Board of Directors, I would like to thank all our employees for their hard work and flexibility which has ensured that, in exceptionally challenging circumstances, the quality of services provided across the Group has remained as high as ever.
Aamal’s total revenue increased marginally by 1% to I would also like to thank our government for its inspiring QAR 1,306.8m (2019: QAR 1,294.1m), driven by increased leadership during the pandemic and for their continuous revenue in our Industrial Manufacturing and Trading and support, including the QR75bn stimulus package to Distribution segments demonstrating the resilience of support the private sector, which has helped companies Aamal’s business model in an exceptionally challenging withstand the impact of the pandemic. I believe that our environment. Net profit decreased by 62.2% to QAR 121.7m, Government has taken the most effective steps to face the heavily impacted by the performance of our Property global pandemic. Under the wise leadership of HH Sheikh segment, which was affected by two factors, a drop in Tamim Bin Hamad Al Thani, the Emir of Qatar, the country property valuations and by our decision to waive rents has managed to control the spread of the virus, enabling for tenants at both City Center Doha and Souk Al Harraj. the gradual reopening of the majority of sectors and Despite the financial impact, this was absolutely the right allowing a timely return to almost normal levels of activity decision to take, one that was driven by our desire in the country. to support the economy in these challenging times and to support our tenants who we have always Although the pandemic means that these remain regarded as partners. uncertain times, Aamal will continue to capitalize on the opportunities generated by the government’s strategy Aamal’s financial strength and resilient business model to prioritize public spending and the many opportunities enabled us to continue to perform well at an operational provided by the Qatar National Vision 2030, leveraging our level across our Industrial Manufacturing, Property, and position as a leading participant across a number of key Trading and Distribution segments. Highlights included economic sectors. Aamal’s Board of Directors is pleased the completion of the redevelopment work at City to recommend for approval a 2020 cash dividend of 4%. Center Doha; the start of production at Senyar Drums We remain confident in the outlook for Aamal Company Factory, the first specialised cable drum manufacturer in and in our ability to deliver long term growth and value Qatar; investment in a new Glass Reinforced Pipe (GRP) creation for all our stakeholders. production line at Advanced Pipes and Casts; and the expansion of the Ebn Sina Pharmacy chain. Faisal bin Qassim Al Thani I am particularly proud of the performances of Ebn Sina Chairman Medical and Aamal Medical, both of which acted promptly and with enormous professionalism to support Qatar’s public healthcare sector in addressing the challenges of the pandemic to avoid a shortage of medical supplies. This is a great example of how the private and public sectors can successfully work together to overcome even the most difficult conditions. Aamal continues to support the community and has been proud to sign an agreement in support of the Qatar Cancer Society. P.28 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.29 Market Review
Framework for Economic Development in 2021
• Public expenditure totaling QAR 194.7bn has been • The government continues to take steps to encourage forecast for 2021, a decrease of 7.6% compared to 2020 both private and foreign investment in several sectors. as some of major projects near completion. These include amending work regulations, simplifying visa procedures, improving the services of the single • The Public Budget Statement 2021 from the Ministry window system, and developing free trade zones. of Finance, Qatar, conservatively based the 2021 budget on an oil price of USD 40 per barrel, less than the USD 55 • A well-established social development system, combined per barrel on which the 2020 budget was based. with the minimum wage program for expatriates coming into effect from Q2 2021, will ensure the overall economic • The private sector is reaping the benefits of the development reaches all corners of the society. government`s increased focus on the non-hydrocarbon sector and the execution of public-private partnership • Qatar`s strong IT and digital infrastructure, that has (PPP) projects. helped it to adapt easily to the demand for online services, digital virtual retail stores, digital transactions • QAR 72.1bn has been earmarked for major projects in and remote-working practices, will continue to play 2021, including QAR 28.4bn for road networks, housing a major role in 2021. projects for Qatari nationals, municipality, transport and communication projects. • Sustainable development within the Qatar National Vision 2030 framework continues to be the focus during 2021 and beyond.
• The global economy was severely affected in 2020 • The provision of QAR 75bn in financial support by the unprecedented COVID-19 pandemic. and liquidity to the private sector helped companies Government Allocations withstand the impact of the pandemic. Measures • Sectors such as construction, transportation, hospitality, included: retail and tourism were the hardest hit in most countries, by Sector impacting the financial performance of companies which o Deferment of bank loan payments; are heavily dependent on these sectors. o Waiver of lease rentals by government authorities; • Countries in the GCC were impacted by lower oil prices and due to the drop in global demand. o SME utility charges being waived for 6 months during 21.0 QR bn 17.3 QR bn • Conglomerates in the region managed to navigate the pandemic, enabling small businesses to operate through this difficult period, thanks to their active with reduced financial impact Muncipality and Environment Defence and Security presence in the healthcare and IT sectors which were not as negatively affected by the pandemic. • Qatar continued its development projects, especially in the infrastructure, education and healthcare sectors, • Qatar quickly reacted to the situation, and successfully as per the government’s approved strategies and plans. managed the impact by taking the appropriate 7.4 QR bn 4.0 QR bn control measures. • Despite Qatar`s Real GDP forecast drop of -2.6% in 2020, it is expected to recover to +2.7% growth Transportation and Communications Sports and Culture • Fiscal and monetary policy measures taken by the in 2021 according to the IMF report on the GCC issued government during the pandemic reduced the economic in December 2020. impact on Qatar compared to many countries across the globe. • In 2021, inflation is forecast to be 2.1%, up from -1.3% in 2020 according to the Qatar Planning & Statistics 1.6 QR bn 1.3 QR bn • During 2020 the government focused on improving Authority. Education Health the efficiency of public spending and on providing the necessary financial support to the private sector.
Source: Budget Statement 2021, Government of Qatar P.30 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.31 How Aamal is responding to these trends Aamal is capitalizing on the opportunities generated by the government’s strategy to prioritize public spending and the Property: Managed Services: many opportunities provided by the • Aamal’s City Center Doha continues to benefit from its • Visitors to Qatar are expected to increase in the period strategic location and from the completion of major leading up to the FIFA 2022 World Cup tournament, Qatar National Vision 2030, leveraging expansion works. with a peak of 1.7m expected during the event, pandemic restrictions permitting. This will drive the demand for IT • Further development work at City Center include the support services, business process outsourcing, and other its position as a leading participant across development of the frontage, completion of the Gold back-office services offered by ECCO Gulf. Souq and the building of pedestrian bridges to the Metro various key economic sectors. station and over Conference street, connecting a major • The impetus given to the tourism sector by the business district to ensure easier access for the public. government, supported by simplified entry visa policies with more than 80 countries, is expected to support • The government’s strategy to develop and expand the travel industry. social amenities such as community centers, health centers and schools in the peripheral areas of Doha • With the expansion of Hamad International Airport will create demand for residential properties during and Sea Port, the improvement of public transport the coming years. systems, and the development of new bus stations, Industrial Manufacturing: Trading and Distribution: public parks, etc, there will be increased demand • The property segment is expected to see steady demand for facility management services, specifically cleaning • The second National Development Strategy 2018-22, • A major part of budget allocation for 2021 is for the from the local population, from businesses and from and waste management. development of the internal road network, housing within the framework of Qatar National Vision 2030, Qatar’s increasing population during 2021. projects for nationals, Qatar’s sanitary network, aims to sustain economic prosperity through • While 2020 had very few conference and sporting its communications network, etc. infrastructure development, economic diversification events due to travel restrictions, Qatar is expected and private sector development. to bounce back as a major Meetings, Incentives, • Specifically, QAR 20.4bn is earmarked during 2021 for Conferences and Events (‘MICE’) destination as the • While some sectors were severely affected by highways, internal road networks, and drainage systems. COVID-19 pandemic recedes. the pandemic, Aamal Medical and Ebn Sina • Looking beyond 2022, more than 150 large-scale projects Medical businesses (both major players in Qatar in are expected; these will be focused on roads, hospitals pharmaceutical and medical devices and diagnostic References: and schools. distribution activities) benefited from increased demand for healthcare services and products. • Qatar Budget 2021, Ministry of Finance • Major projects such as the North Gas Field expansion, the multi-phased expansion of Hamad International • Out of QAR 16.5bn allocated by the government • Qatar Planning & Statistics Authority Airport, and Hamad Sea Port expansion are driving for the healthcare sector, the QAR 1.3bn for major • IMF forces in the manufacturing sector. projects is expected to continue to benefit Aamal’s • QNB Capital Trading and Distribution division. • Aamal can capitalize on the demand for concrete, • Bloomberg drainage pipes, cement blocks and power cables which • With projected new vehicle sales growth in 2021 • Oxford Business Group these projects require. of 4.1%, Aamal’s tyre and lubricants businesses • Gulf Times are expected to see healthy future growth. • Peninsula • Support given to the sports sector via initiatives such as Qatar SportsTech by Qatar Development Bank will increase the demand for products and services related to sports and healthcare. P.32 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.33 Business Strategy
Delivering Growth
We are one of Qatar’s largest and most diversified We have a clear strategy for long term, companies, offering high quality and balanced exposure profitable growth: to Qatar’s economic growth and development.
Sector Focus Focusing on key industrial manufacturing, 1 real estate, healthcare and other high- growth sectors
Strategic Pillars Diversification and Innovation Building on our strong, established market 2 positions and optimising our performance through continued diversification, innovation and high product and service quality Operational Excellence
Maintaining strict financial and operational 3 discipline across our businesses and pursuing our pipeline of strategic growth initiatives P.34 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.35 CEO and Managing Director’s Report
Revenue in the Property segment fell 34.8% to QAR 189.2 sustainability management. By aligning our management million, while net profit was down by 91.6% to QAR 18.9 approach with the Qatar National Vision, we are contributing million. The performance of the Property segment continued to our nation’s goal of transforming Qatar into an advanced to be impacted by the waiving of rents for commercial country by 2030, one that is able to sustain its own tenants at both City Center Doha and Souk Al Harraj, development and provide a high standard of living for a decision which negatively impacted the segment by current and future generations. Our ESG framework approximately QAR 85 million but which was taken by summarizes what sustainability means to Aamal by Aamal to support tenants during these challenging times. identifying the key pillars which need to be addressed and While most of City Center Doha reopened in June, following balanced. Sustainability across Aamal means maintaining closure due to the pandemic, Aamal continued to provide the highest standards in Business Ethics and Transparency, financial support to tenants while footfall recovered. Serving our Communities, Empowering our Workforce, Developments within this segment included the completion and Protecting the Environment. of Phase two of the redevelopment of City Center Doha, increasing the leasable area by approximately 7%, 34 shops I would like to welcome a new member to the Executive dedicated for a unique Gold Souk area and the completion Management team. Mr. George Fawaz was recently appointed of the refurbishment of East Food Court. as Chief Operating Officer at Aamal, bringing with him over 25 years of valuable experience in leading regional Trading and Distribution delivered strong results with and international companies. Mr. Fawaz’s considerable know- revenue increasing by 13.5% year-on-year to QAR 907.9 how will add value to our operational model, enhancing million, while net profit increased 22% year-on-year to QAR efficiencies and synergies across our businesses. 120.6 million. This reflects strong performances in particular by Aamal Medical and Ebn Sina Medical. As major players Although the pandemic situation remains fluid both in Qatar’s pharmaceutical and medical devices sector, both internationally and at a local level, I am confident that In an exceptionally challenging year, Aamal’s strong played a key role in supporting the government’s response Aamal will be able to successfully navigate through the to the pandemic and benefited from increased demand for negative effects of the pandemic by having the right performance was underpinned by our financial strength, healthcare services and products. The Ebn Sina Pharmacy growth strategies in place, by growing our businesses by our diversified business model that provides resilience, chain expanded its footprint by opening in a new location both organically and through new revenue streams, and at Msheireb Downtown. The chain of pharmacies also joined by creating synergies between our different businesses. and by our excellent leadership team which performed an online application (Rimads) where customers can order medicine from the comfort of their own home. Key initiatives of 2021 will include building upon the admirably in such demanding circumstances, both at Group strong performances of Ebn Sina Medical and Aamal level and across our subsidiaries. The Managed Services segment was heavily impacted Medical and expanding into IT healthcare solutions; further by the global pandemic and saw revenue decrease by 26% enhancing our property portfolio through the continued to QAR 46.7 million and net profit decrease by QAR 7.4 refurbishment of our residential properties and completing Demonstrating the strength of our diversified Despite the challenges we faced during 2020, our strong million year-on-year to a loss of QAR 1.7 million. Restrictions development of the frontage at City Center; and starting business model, 67.3% of Aamal’s total revenue financial position and solid foundations allowed us to due to the pandemic significantly impacted Aamal Travel commercial production of Advanced Pipes and Casts’ Glass complete many operational initiatives at subsidiary level and Aamal Services, while lockdown restrictions meant Reinforced Pipe. and approximately 70.9% of net profit came which will enhance business efficiency as the market that Family Entertainment Center and Winter Wonderland from the strong performance of our Trading recovers. The performance of Aamal’s four segments is set remained closed for the majority of 2020. ECCO Gulf Moving forward, we will continue to evaluate all and Distribution segment, partly offsetting the out in more detail under Operational Review but highlights managed to deliver a strong performance, winning several opportunities that will add value to our businesses and contracts and seeing profits increase by almost 8%. deliver long-term shareholder and stakeholder value. negative impact of the pandemic and imposed were as follows. restrictions on our other segments. Aamal Industrial Manufacturing saw an increase in revenue of 19.8% Our immediate strategic objectives are to maintain our Mohammed Bin Faisal Al Thani Medical and Ebn Sina Medical are major players year-on-year to QAR 202.7 million, while net profit fell by leading market positions in the areas in which we operate, Chief Executive Officer and Managing Director in Qatar’s pharmaceutical and medical devices 38.4% to QAR 32.4 million, primarily due to postponed as well as to explore new opportunities that can add value deliveries and orders due to a slowdown in market activity to all our stakeholders. One aspect which we are keen sector and both played a key role in supporting and fierce price competition. Developments in this segment to further develop is the digital transformation of our the government’s response to the pandemic and during 2020 included establishing a new subsidiary, Aamal businesses and internal operations, given the even greater benefited from increased demand for healthcare Cables for Contracting and Trading; winning a QAR 694 importance of digitization for companies in all sectors and services and products. million three-year contract with Kahramaa; Advanced regions as a result of the COVID-19 crisis. Pipes and Casts investment in a new production line, Glass Reinforced Pipe (GRP); the start of production An important highlight of 2020 was Aamal’s inclusion at Senyar Drums Factory, the first specialised cable drum in both the MSCI Qatar Small Cap Index and in the QSE 20 manufacturer in Qatar; Aamal Maritime Transport Services Index, so boosting the Company’s investment profile on completing a major upgrade for one of its vessels a local, regional, and international level. “Um El Hanaya” ; and Frijns Structural Steal Frijns expanding its production facility in Mesaieed area to 29,000 sqm. Aamal Aamal’s continued commitment to implementing a robust Readymix achieved strong sales volumes, up by almost 38%. ESG framework across the Company is fundamental to our P.36 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.37 Executive Management
Sherif Shehata Baris Sezen Parveez Aslam Aamal Medical, Ebn Sina Medical, City Center Doha Aamal Readymix, Aamal for Maritime Ebn Sina Pharmacy, Foot Care Center Transportation Services, CI-San Trading
Keith Smith Ahmed F. Elsewedy Joseph McMullan Aamal Cement Industries Senyar Industries Qatar Holding, Aamal Services Elsewedy Cables
Sheikh Mohammed Bin Faisal Al Thani CEO and Managing Director
Yehia Djafari Rob Frijns Nabil Shehada Aamal Trading & Distribution Frijns Structural Steel Middle East Advanced Pipes and Casts Company
Chris Pakhanian Ehab Abd El- Galil Al Farazdaq Company ECCO Gulf
Mohammad Ramahi Imran Chughtai George Fawaz Advisor to the CEO Chief Financial Officer Chief Operating Officer P.38 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.39
In the Industrial These numbers The Industrial Manufacturing segment Operational Review – by Segment Manufacturing primarily reflect comprises the following operations: segment, revenue a significant revenue was up 19.8% year- increase at Aamal 1. Senyar Industries Qatar Holding on-year to QAR 202.7 Readymix, increased 2. Aamal Cables for Trading and Contracting million, while net profit competition and 3. Aamal Readymix Industrial fell by 38.4% to QAR pandemic impacting 4. Aamal Cement Industries 32.4 million. margins and profits, 5. Ci-San Trading and a drop in net 6. Advanced Pipes and Casts Company profit at Senyar 7. Frijns Structural Steel Middle East Manufacturing Industries as a result of lower sales volumes.
Rm C an e Revenue* 1 9.1 19.8
* Before intersegment eliminations
Rm C an e
Net profit / loss - fully consolidated activities 1. 3.
Rm C an e
Net underlying profit mar in 0.9 .8 ppts
Rm C an e
Share of net profit of associates and joint ventures accounted .1 18.9 for using the equity method
Rm C an e Total net profit 2. 38. P.40 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.41
Operational Review – by Segment continued In 2020, Doha Cables won its first project for power cables with aluminum conductors (project 800 MW Al Kharasaa Solar IPP). The supply contract includes 235Kms of LV AC Industrial Manufacturing cable and 195Kms of 33KV cable. This is the first project in Qatar where aluminum conductors are used in place of copper conductors.
Doha Cables also received new export orders from Italy and Hong Kong and obtained an ICV (In Country Value) certificate for the Qatar Petroleum Tawteen Program. Doha Cables also successfully completed two new type tests for Kahramaa: cable 4 x 300mm2CU/XLPE/ Senyar is a 50:50 joint venture between Aamal 1. Senyar Industries Qatar Holding (‘Senyar’) 1. Senyar Industries Qatar SWA+TCW/PVC 0.6/1 kV by KEMA (DNV-GL), Netherlands; Holding (‘Senyar’) Company and El Sewedy Electric Company, Doha Cables and 3 x 300mm2CU/XLPE/SWA/PVC 11 kV by KEMA a leading producer of integrated cables (DNV-GL), Netherlands. and electrical products such as transformers, Doha Cables is the first and largest cables manufacturing facility in Qatar. The company In 2021, Doha Cables aims to focus on new sectors such tools, and energy and water measurement as Oil and Gas and Retail. It also aims to further develop specialises in the manufacture of power and management. its export activities to new markets and incorporate new cables, special cables, winding wires and product ranges such as Hypron cables, instrumentation Senyar’s operations comprise: cable accessories. cables, and fire alarm cables.
a) Doha Cables
b) El Sewedy Cables Qatar
c) Senyar Factory for Drums
d) Senyar for Producing Copper Rod
e) Senyar for Producing Aluminium Rod P.42 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.43
Operational Review – by Segment continued
Industrial Manufacturing 1. Senyar Industries Qatar Holding (‘Senyar’) Senyar Drums Factory
Specialised in the production of wooden and steel cable drums and the first of its kind in Doha, Senyar Drums Factory started commercial production in the third quarter of 2020.
1. Senyar Industries Qatar Holding (‘Senyar’) 2. Aamal Cables for Trading Aamal Cables was established in 2020 El Sewedy Cables Qatar and Contracting as a subsidiary of Aamal Company Q.P.S.C to supply the Qatari market with locally produced, El Sewedy Cables Qatar specialises in the high quality power cables. The Company distribution of electromechanical equipment, provides different types of power cables - high, cables of Doha Cables and third-party medium, and low voltage. manufacturers, as well as in turn-key projects where design, testing and commissioning are required by customers.
In 2020, El Sewedy Cables began using state-of-the-art Partial Discharge testing equipment from OMICRON, Austria, the globally renowned brand of testing equipment. This augmented the existing HV and LV testing equipment for carrying out testing, as per Kahramaa’s requirements and international standards.
1. Senyar Industries Qatar Holding (‘Senyar’) Senyar for Producing Copper Rod
Specialized in producing copper rods, the main raw material for copper wires. The installation of production lines is expected to be in place in the third quarter of 2021, production will depend on obtaining the necessary permits and licenses. P.44 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.45
Operational Review – by Segment continued
Industrial Manufacturing 4) Aamal Cement Industries (ACI)
3) Aamal Readymix (ARM) 2020 started well for Aamal Readymix as it was awarded ACI is one of the largest producers of ACI tendered for all major upcoming projects, in the private the iconic projects of Lusail Boulevard and the expansion of interlocking paving stones, concrete blocks sector as well as for Public Works Authority (Ashgal) Doha Port where the required quantities surpassed 2019 total projects, for 2020 and beyond. ACI is one of seven approved production by approximately 35%. However, despite the higher and tiles in Qatar, with an annual production manufacturers by Ashghal for the manufacture and supply of volumes supplied to the market, fierce competition, price capacity of approximately 25 million blocks interlock and is currently the sole supplier of radius curbstone, cuts and the outbreak of the COVID-19 pandemic all severely or two million square metres of paving stones. which was newly launched in third quarter of the year. ACI affected ARM’s planned targets for 2020. Due to lockdown currently supplies three major projects - Katara Towers, Yasmin and the non-availability of technical services and spare parts, City, the Boulevard - and has been awarded seven major resulting in delivery capabilities being severely affected. In 2020, to further develop its presence in the market, locations to supply interlock for the next two years. Further ACI expanded in core areas to focus on curbstone, radius curb, projects for bus stations and depots, Government medical ARM has a positive outlook for 2021 with QAR72 billion varied slab designs, and color options to improve its existing facilities, and commercial projects also under tender. Aamal Readymix is one of the largest allocated for major projects in the Government’s 2021 budget. portfolio of products. Highway curbstone, trief curb / transition producers of quality, ready-mixed concrete in This includes allocation for new projects along with on-going system and bus stop curb are all seeing significant demand The overall efficiency improvement of the plant will continue are well-established within ACI’s portfolio. Qatar, supplying high strength concrete, high development projects in various sectors and those related to in 2021, a key factor in maintaining consistently high output. hosting the 2022 World Cup and related infrastructure. Several performance concrete, shotcrete, light weight projects have been awarded to ARM, while several other ACI was negatively affected by the COVID-19 pandemic, as less concrete and sustainable green concrete with projects are still under tender. The Company is upgrading its demand in product volumes coupled with intense competition severely impacted prices. an annual production capacity of 600,000 fleet of concrete pumps and transit mixers. New machines will be added in the first quarter of 2021. This new fleet addition will cubic meters. have a considerable effect on efficiency and supply capabilities. P.46 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.47
Operational Review – by Segment continued AMTS owns and operates two shipping vessels, ‘Um El Hanaya’ and ‘El Rayyan’, which Industrial Manufacturing are bulk carriers, each with capacity in excess of 56,000 tonnes.
AMTS’s operations were affected by restrictions imposed on the international ports during the COVID-19 lockdown and by the drastic fall of charter rates, especially from China as well as the dry-docking of Um El Hanaya
During first quarter of 2020, AMTS completed a major Ci-San Trading Company focuses on 5) Ci-San Trading: upgrade for its Um El Hanaya vessel as per International 5) Ci-San Trading: Maritime Organisation “IMO” regulation. investments in various sectors such as Aamal For Maritime industrial, real estate and trading, in both Transportation Services AMTS is well placed for offering its services to global local and international markets. Ci-San customers due to its newer vessel, the Company is Trading owns two subsidiaries, Gulf Rocks and (AMTS) witnessing higher demands in the international market. AMTS is planning to carry out refurbishment of its second Aamal for Maritime Transportation Services. vessel namely Al Rayyan in the first quarter of 2021.
5) Ci-San Trading: Gulf Rocks
Gulf Rocks is a leading importer and provider of high-quality gabbro aggregates, which are widely used in concrete products. Despite the difficult market conditions in 2020, Gulf Rocks has been able to retain its customers and has continued to regularly supply materials, although fewer quantities were sold during the year due to the impact of COVID-19. P.48 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.49
Operational Review – by Segment continued
Industrial Manufacturing
6) Advanced Pipes and Casts APC is a leading pipe manufacturer in the Middle 7) Frijns Structural Steel Frijns Structural Steel – Middle East produces (APC) East. The company’s extensive production Middle East steel for the petrochemical and process capacity is largely automated and has the industries, including all associated engineering, flexibility to respond swiftly to changes in end- production, anti-corrosion, construction, market demand. and assembly work.
APC substantially improved its market share in 2020, In 2020, Frijns expanded its production facility in the despite challenges including compressed price levels due Mesaieed area to 29,000 sqm and closed its Shahanya to the aggressive competition. COVID-19 placed severe production facility due to land regulatory issues. restrictions on APC’s ability to import raw materials on Signs of recovery from the challenges of COVID-19 began a timely basis. This also applied to the local resources, to be seen in the third quarter and the Company managed including the shortage of manpower due to travel to secure a strong pipeline for 2021. restrictions and changes in the labor law. The market for structural steel in Qatar is shifting from Within 2020, APC started work on a new production line infrastructure and civil to industrial. The majority of the to make “Glass Reinforced Pipe” (GRP) to reduce product current infrastructure and building activities are finishing cost and vertically integrate production. GRP is a composite regarding the 2022 World Cup. However, the expansion fiberglass pipe that is used as a protective liner for existing of the LNG production capacity in Ras Laffan and the Reinforced Concrete Pipe (RCP), as specified by the local general focus on the energy markets, will present new Public Works Authority “Ashghal”. GRP can also be used opportunities in the coming years. Frijns Structural Steel separately as a stand-alone pipe in water and wastewater enjoys a good reputation for its quality which will help municipal applications. APC will be able to produce this pipe in the company benefit from upcoming opportunities. diameters ranging from 300mm up to 4000 mm. Commercial production is scheduled to start in the second quarter of 2021.
Plans are in place to grow the business, to secure a greater share of the concrete pipe market. Competition is expected to remain fierce for the concrete pipe manufacturing sector, with the entry of more competitors in 2021 also placing more pressure on the availability of resources such as raw materials and manpower. P.50 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.51
Revenue in the This reflects strong The Trading and Distribution segment Operational Review – by Segment Trading and performances in comprises the following operations: Distribution segment particular by Aamal increased by 13.5% Medical and Ebn Sina 1. Ebn Sina Medical year-on-year to QAR Medical. As major 2. Ebn Sina Pharmacy 907.9 million, while players in Qatar’s 3. Foot Care Centre net profit increased pharmaceutical and 4. Aamal Medical Trading 22% year-on-year to medical devices 5. Aamal Trading and Distribution QAR 120.6 million. sector, both played a 6. Legend for Trading key role in supporting the government’s and Distribution response to the pandemic and benefited from increased demand for healthcare services and products.
Rm C an e Revenue* 99. 13.
* Before intersegment eliminations
Rm C an e Net profit 98.9 22.0
Rm C an e Net profit margin % 12. 0.9 ppts P.52 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.53
Operational Review – by Segment continued Ebn Sina Pharmacy, which is managed by Ebn Sina Medical, is a modern chain Trading and Distribution of pharmacies in several locations around Doha.
In 2020 a new contract was signed adding a fourth pharmacy to the chain of Ebn Sina Pharmacy, which is located at Msheireb Downtown and scheduled to open by the end of the first quarter of 2021.
Branch of Aamal Q.S.C. During the year, Ebn Sina Pharmacy expanded its home 1. Ebn Sina Medical Ebn Sina Medical continued to improve its warehouse 2. Ebn Sina Pharmacy delivery services for medicines by contracting with multiple efficiency where it commissioned the installation delivery applications such as Talabat, Rafeeq and Snoonu, of two large robots manufactured by GPI Company Italy. as well as current service provider, Rimads Stock System. Full installation will be completed during the first quarter of 2021. There will be secure storage of more than 155,000 packs of drugs accurately dispensed at high speed, accelerating and developing the warehouse operation. The Company has successfully passed pharmaceutical audits by several multinational partners on its warehouse and operations departments. Ebn Sina Medical is the leading provider Ebn Sina Medical has established new ties with the Turkish of pharmaceutical, hospital supplies and company, Tiga Company, which specializes in Information consumer health products in Qatar, and Technology & Software Solutions. It has registered with represents more than 50 international leading the Ministry of Health several new pharmaceutical & herbal healthcare manufacturers from more than companies and pharmaceutical products and has classified a large number of consumer health products. Ebn Sina also 20 countries. Such healthcare manufacturers registered a number of very important and lifesaving drugs include Roche, AstraZeneca, Novartis Pharma, from multinational suppliers under “Fast Track Registration” B-Braun, Boston Scientific and Nuxe. Ebn Sina with the MOH. Medical also operates a chain of pharmacies In 2021 the Company aims to expand its supplier and three-Foot Care Centres. network for generic, branded and biosimilar drugs, introduce new pharma and consumer health products In 2020 Ebn Sina focused on supporting Qatar’s healthcare to the market, and increase its focus on the potential sector in its fight against COVID-19, successfully securing of the consumer mass market. It will also maintain its Foot Care Centre provides a range of foot care local strategic stock to cover market needs such as successful Fast Track Registration of lifesaving drugs services and products including a broad range medicines and baby milk, and safety items such as face with the local Health Authorities. masks, gloves, and hand sanitizers. of biomechanical, orthopedic and therapeutic services for feet. Foot Care Centre is managed by Ebn Sina Medical and has three branches.
In 2020, closure of all three branches from mid-March until the beginning of September affected performance. However, early in 2020 a unique new service was introduced at the City Center branch using new equipment for checking for flat feet and pressure points, as well as arranging specific 3. Foot Care Centre customized insoles for customers. P.54 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.55
Operational Review – by Segment continued
Trading and Distribution
4. Aamal Medical Despite challenging market conditions, Aamal Medical 5. Aamal Trading and ATD was heavily affected by the COVID-19 pandemic managed to achieve good results for the year, receiving restrictions and the closure of many areas in Qatar. Plans for orders for new suppliers such as Traka, Automated System, Distribution (ATD) any expansion or launch of new products were postponed. AceTech RFID Tracking and expanding its network through Aamal Medical is a leading medical equipment new partnership agreements with ECG Electrodes and In challenging market conditions, ATD won two major three- supplier in Qatar. The company has exclusive Medico. The Company successfully delivered new orders year contracts for the supply of tyres for the construction of operating tables in IVF rooms, hemodialysis machines and healthcare sectors and was also awarded a major distribution agreements with several leading and diagnostic sets. lubricants supply contract in the construction and raw international medical equipment suppliers. materials space. The Company also acquired mobile wheel Aamal Medical also provides consultancy For 2021 the Company is planning to further diversify into alignment machinery, enabling wheel alignment services ATD is a leading distributor of automotive services focused on the development of the IT healthcare, expand its service business, implement to be made available at a customer’s premises through its product development strategy, and benefit from products and is the exclusive distributor the Truck Assist Van. operating room theatres and the installation opportunities related to new hospitals (Aman Hospital of Bridgestone tyres and distributor for of hospital information systems. and Tenbek Project, Army and Military Medical Complex). In 2021, the Company is expected to benefit from the Total lubricants in Qatar. The company is normalization of relations between Qatar and its GCC also involved in the supply, installation, neighbours, from improving costs and efficiency of the commissioning and maintenance of air supply chain. Together with the collective efforts of the sales force and the launch of aggressive marketing strategies, conditioning and refrigeration equipment. Aamal Trading expects a stronger performance.
Legend Trading and Distribution
Aamal owns 100% of Legend Trading and Distribution. The company specializes in trading in oils and lubricants, as well as automobile parts. P.56 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.57
Revenue in the The performance of The Property segment comprises Operational Review – by Segment Property segment the Property segment the following operations: fell 34.8% to QAR continued to be impacted 189.2 million (2019: by the waiving of rents for 1. City Center Doha Shopping Mall QAR 290.1 million), commercial tenants at both 2. Aamal Real Estate while net profit was City Center Doha and Souk 3. Aamal ECE down by 91.6% to Al Harraj, a decision which Property QAR 18.9 million. negatively impacted the segment by approximately QAR 85 million but which was taken by Aamal to support tenants during these challenging times. While most of City Center Doha reopened in June, following closure due to the pandemic, Aamal continued to provide financial support to tenants while footfall recovered.
AR 2020 20 Revenue* 290.1 3 .8 * Before intersegment eliminations
AR 2020 20
Net profit - fully consolidated activities 218. 3 . before fair values losses on investment properties
AR 2020 20
N profit margin % .3 3.0 ppts
AR 2020 20
Share of net profit of associates and joint . 32.2 ventures accounted for using the equity method
AR 2020 20
Net profit before fair value losses 223.9 3 .3
AR 2020 20
Fair value losses on investment properties 100
AR 2020 20 Net profit* 223.9 91. P.58 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.59
Operational Review – by Segment continued Aamal Real Estate comprises Souq Haraj Najma, a traditional souq comprising 376 shops and Property 24 residential flats; four residential compounds with 69 villas; and six residential buildings with 227 apartments.
In line with COVID-19 restrictions Aamal Real Estate closed some of its commercial properties and services in 2020 and consequently exempted those tenants from paying rent for four and a half months. 1. City Center Doha In 2020 phase two of CCD redevelopment was completed, 2. Aamal Real Estate During this time, Aamal Real Estate performed simple increasing the mall’s leasable area by approximately 7% repairs and upgrades to those commercial properties, such despite the closure of the mall in line with Government as the repair of roads and common areas, the installation restrictions led to City Center providing tenants with of signs for the awareness of traffic regulations and safety support during Q2 and Q3 2020. The phase two precaution that need to be followed during the pandemic, redevelopment included the full renovation of the East and the installation and repair of high-powered lights for Food Court and the introduction of a unique concept for City Center Doha (‘CCD’) is one of the first lighting the streets inside the Souq and other properties’ jewelry retail, the “Gold Souq” with 34 units. The Company shopping malls in Doha and is still widely common areas. also started the development of the frontage at City Center regarded as a leading mall in Qatar. This is Doha which will see the launch of new outdoor cafes and supported by its twin virtues of size and prime restaurants, as well as landscaping once completed in 2021. location in the heart of the West Bay area In 2021 CCD will have many new shop openings with well- of Doha, the city’s central business district known anchor tenants strengthening the mall’s leading with a high density of both residential towers position in the market. Ongoing improvement works in and hotels. the car park will also be finalized in first quarter of 2021, together with works on two bridges connecting the mall to the metro station and the central business district, further improving the customer experience at City Center Doha.
3. Aamal ECE (Qatar German A partnership agreement between Aamal Mall Management) and ECE Projekt management, commercially known as Qatar German Mall Management. The company specialises in the property management of shopping centres and offers consultancy services in Qatar and the wider MENA Region. P.60 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.61
The Managed Businesses within The Managed Services segment Operational Review – by Segment Services segment this segment were comprises the following operations: was hit hard by the impacted heavily global pandemic by the pandemic as 1. Aamal Services and saw revenue clients closed their 2. ECCO Gulf decrease by 26% to locations and more 3. Aamal Travel QAR 46.7 million and people worked from 4. Al Farazdaq Managed net profit decrease home, by related 5. Family Entertainment Center by QAR 7.4 million travel restrictions, 6. Winter Wonderland year-on-year to a loss the closure of of QAR 1.7 million. entertainment and Services play areas for the majority of 2020
AR 2020 20 Revenue* 3.1 2 .0
* Before intersegment eliminations
AR 2020 20
Net profit / loss - fully consolidated activities 3.1 2 2.
AR 2020 20
Net underlying profit .0 1 . ppts
AR 2020 20
Share of net profit of associates and joint ventures accounted 2. . for using the equity method
AR 2020 20 Net profit / (loss) . 129. P.62 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.63
Operational Review – by Segment continued
Managed Services
ECCO Gulf is one of the region’s leading contact center operators and business process outsourcers. The company offers the outsourcing of business processes, professional services and human resources to clients in Qatar. 1. Aamal Services While the first quarter of 2020 saw an encouraging start 2. ECCO Gulf W.L.L. for Aamal Services as it continued to successfully focus on ECCO Gulf won several big new contracts in 2020 in hospitality services, the pandemic significantly impacted telecommunications and contracting sectors, overcoming the business as clients closed workspaces and moved to the challenges of travel restrictions which impacted working from home. The unit invested in new sanitization recruitment and access to work visas. ECCO Gulf’s outlook equipment and inventory to meet the increased demand for 2021 is positive as the market is witnessing growth for sanitary services across all client sectors and benefitted in BPO (Business Processes Outsourcing) business, from a return to normalised operations in the fourth quarter, with a higher emphasis on customer engagement and winning a significant contract starting in the last quarter satisfaction and new technologies and verticals. of 2021 to support the FIFA 2022 World Cup.
The soft services of Facilities Management market has many competitors resulting in a high degree of price competition. The opportunities within Qatar are growing, and Aamal Services is focusing to move away from solely price Aamal Services provides a wide range of to delivery-based outcomes. Hospitality services are set housekeeping services including cleaning, hotel to grow across the country and are perceived locally as and hospitality services, waste collection and more valued services, especially where staff are usually disposal (including medical waste and solid being used as in-office work support. Aamal Services’ experience and employee numbers mean it is among waste), ground maintenance and landscaping, the top companies in the market and in a good position pest control and fleet/car washing. to benefit from opportunities in this sector. P.64 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.65
Operational Review – by Segment continued
Managed Services
3. Aamal Travel (aka Aamal 4. Al Farazdaq Company 5. Family Entertainment Center 6. Winter Wonderland Travel Lufthansa City Center)
Al Farazdaq Company provides printing Family Entertainment Center, otherwise known Winter Wonderland, which is also located in City solutions and trades in various office supply as ‘Fun City’, is an indoor amusement center Center Doha, is a family-friendly place devoted products. The printing press is equipped with with a mixed range of rides. It is located to the pursuit of excitement, fun and comfort. state-of-the-art printing machines enabling on the entertainment level of City Centre Doha. It features winter adventures for the entire family the Company to offer innovative digital printing With a reputation for hi-tech entertainment, to enjoy indoors and includes an ice-skating Aamal Travel is an International Air Transport solutions to the business community. Fun City offers a varied mix of rides, games rink, a 10-pin bowling alley and billiard tables. Association (IATA) accredited travel agency and sports. providing a range of travel services, including Al Farazdaq was negatively affected by the pandemic Winter Wonderland was closed for the majority of 2020. as working from home led to reduced demand for New plans to transform it by introducing new fun and airline reservations and ticketing, worldwide Family Entertainment was closed for the majority printing services, as well as the cancellation of events engaging concepts are under evaluation of 2020 hotel bookings and holiday packages. and gatherings.
Aamal Travel was impacted heavily by pandemic related travel restrictions; however it expects to recover once Qatar resumes its status as a major Meetings, Incentives, Conferences and Events (‘MICE’) destination as the situation normalizes.
In 2020, Aamal Travel Lufthansa City Center has been awarded the “Top Performer” Certificate by Lufthansa City Center International, for its high level of quality of its processes, and commitment within the global network of Lufthansa City Center International. Corporate Board of Directors Governance 68 Corporate Governance 71
Board of Directors report on Corporate Governance 78
Independent Assurance Report on Compliance with QFMA Laws and relevant legislations 80
Board of Directors Report on Internal Controls over Financial Reporting 83
Independent Assurance Report on Internal Control over Financial Reporting Corporate Responsibility 85 P.68 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.69 Board of Directors
1 2 3 4 5 6 7 8 9
Sheikh Faisal Bin Qassim Sheikh Mohammed Bin Sheikha Al Jazi Bint Faisal Sheikh Abdullah Bin Sheikh Jabor Bin Mr. Kamel Muhammad Mr. Yousef Bin Rashid Mr. Faisal Bin Abdulla Sheikh Faisal Bin Fahed Al Thani Faisal Al Thani Al Thani Hamad Al Thani Abdulrahman Al Thani Al Agla Al Khater Bin Zaid Al Mahmoud Bin Jassim Al Thani Chairman of the CEO and Managing Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board of Directors Director
Non-Executive Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive
Term of office Term of office Joined the Board in 2007. Joined the Board in 2009. Joined the Board in 2016. Joined the Board in 2010. Joined the Board Joined the Board Joined the Board Joined the Board Joined the Board in 2017. in 2017. in 2018. in 2018 in 2019. Independent No No No No Independent Committee membership No No Yes Yes Yes Committee membership
Board Committees Chair Audit Executive Nomination and Remuneration
1 2 4 6 8
3 5 7 9 P.70 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.71 Organisational Corporate Governance Structure Framework
1. 1.1. Objective Board of Directors Corporate Governance The Board of Directors (the “Board”) and the Executive Management of Aamal Company Framework Q.P.S.C. (the “Company” or “Aamal”) believe that a strong corporate governance framework is critical to ensuring high performance across all activities of the Company and its subsidiaries (together the “Group”), and is essential to building investor trust and providing safeguards against any misguided corporate activity.
The Board has adopted a Corporate Governance Framework 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 governance ecosystem which directs Aamal and takes into consideration the interests of all its stakeholders, not just its shareholders.
Board Nomination & Board Executive Committee Board Audit Committee Aamal’s Corporate Governance Framework, together with its associated policies, Remuneration Committee comply with all relevant rules and regulations issued by the Qatar Financial Markets Authority (“QFMA” or the “Authority”) including the Governance Code for Companies and Legal Entities Listed in the Main Market No. (5), 2016 (the “Code”), the Company’s Articles of Association (or “AoA”), and the Commercial Companies Law No. (11), 2015 (the “Companies Law”).
1.2. Commitment to comply with Corporate Governance The Board and Executive Management are committed to the best practices detailed in CEO and Managing Director Aamal’s Corporate Governance Framework, in order to achieve the Company’s objectives.
Advisor to the CEO Internal Audit Manager 1.3. Scope The goal of the Annual Corporate Governance Report is to ensure transparency and disclosure of the governance practices within Aamal. It represents the values of the Company and the policies that all parties must abide by.
2. In order to enhance the Corporate Governance culture across the Group, Aamal has Corporate Governance developed its corporate governance practices. These developments target both milestones for the year organizational aspects as well as other governance processes. ended 31 December 2020 Chief Operating Chief Financial Chief Business In connection with the adoption and implementation of the new regulatory developments Head of Legal, Officer Officer Support Officer Head of Human issued by the QFMA, Aamal has developed and implemented numerous initiatives in line Risk & Compliance Resources with the new requirements of the Code, including but not limited to the following:
Risk Legal Industrial Accounting Marketing & Talent Acquisition 1. Continuous enhancement of the Corporate Governance Framework to ensure Management Affairs Manufacturing Communication compliance with the Code. Financial Planning Payroll & People Internal Compliance Medical & Trading & Budgeting Information Services 2. Improvement of the Company’s Internal Control over Financial Reporting Framework, Controls Technology modifying workflows and processes and updating policies and procedures, among Corporate Real Estate and Treasury & Performance & other initiatives. Investor Governance Managed Services Corporate Finance Admin & Talent Relations Procurement Management 3. 3.1. Size and charter Board of Directors Members of the Board are elected by the shareholders at the Annual General Assembly for a three-year term. As at 31 December 2020, the Board has nine (9) Board members, of which three (3) are independent, as required by the Articles of Association and the Code.
The Board members of Aamal, whether in person or representing a legal entity, do not hold directorship roles on the boards of more than three (3) publicly listed companies in total that have headquarters located in the State of Qatar, or combine two directorships of two companies that conduct similar business activities.
The Chairman does not hold any executive position in the Company. P.72 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.73
Corporate Governance Framework continued
The Board meets as often as necessary, but not less than six times a year and three months Party Date of Election/ Reelection / Member have not elapsed without convening a meeting. Director Name Represented Appointment/Release/leave Position classification Breakdown of shares Units % The Board members shall act in good faith, exercise diligence and care, speak out and be loyal to the Company. The Board members should also take all reasonable steps to be fully Sheikha Al Jazi Bint Al Rayyan Elected on 17 April 2016, re-elected Ordinary Non-executive 31,500,0001 1.5 2 aware of potential issues in the Company. Faisal Al Thani International on 15 April 2019 until the date of the Members 63,000,000 Educational General Assembly for the financial year Company W.L.L. ending 31 December 2021 The Board Charter of Aamal, in compliance with the Code, defines the respective roles, 2 responsibilities and authorities of the Board of Directors, both individually and collectively, Mr. Kamel Muhammad City Limousine Elected on 4 February 2017, re-elected Ordinary Non-executive 63,000,000 1.00 Al Agla Company W.L.L. on 15 April 2019 until the date of the Members and includes the following: General Assembly for the financial year ending 31 December 2021 • Key functions and tasks of the Board Sheikh Faisal Bin In his personal Elected on 15 April 2019 until the Independent Non-executive 200,0001 0 • Induction program for the new Board members Fahed Bin Jassim Al capacity date of the General Assembly for the Member • Board responsibilities Thani financial year ending 31 December • Chairman responsibilities 2021 • Formation and composition of committees Mr. Yousef Bin Rashed In his personal Elected on 21 April 2018, re-elected Independent Non-executive 0 0 • Conflicts of interest Al Khater capacity on 15 April 2019 until the date of the Member • Share dealing General Assembly for the financial year • Financial reporting ending 31 December 2021 Mr. Faisal Bin In his personal Elected on 21 April 2018, re-elected Independent Non-executive 0 0 3.2. Board qualifications Abdullah Bin Zaid Al capacity on 15 April 2019 until the date of the Member The directors of the Board have the required expertise and management skills to conduct Mahmoud General Assembly for the financial year their duties in the Company’s best interests. The Board members have been selected based ending 31 December 2021 on these skills. 1 Held directly in personal capacity 2 Held by the business entity of which the director is the representative The Board members demonstrate commitment by devoting the necessary time and care towards performing their duties for the duration of their term. 3.4. Changes in Board directors during 2020 3.3. Board composition There were no changes to the Board of Directors for the year ended 31 December 2020. The Board is composed of the following members for the year ended 31 December 2020: 3.5. Non-Executive Board members During the year ended 31 December 2020, the majority of the Board members were non- executive members. The Company applies the strict definition of “Non-Executive Board Director Name Party Date of Election/ Reelection / Position Member Breakdown of shares Represented Appointment/Release/leave classification member” according to the Code i.e. “Non-Executive Board members are those who are Units % not performing executive management duties in the Company, who are not dedicated full time, and who do not receive monthly or yearly remuneration from the Company other than Sheikh Faisal Bin In his personal Elected in 2007, re-elected on 15 April Chairman Non-executive 1,594,452,526 25.31 remuneration received as a Board member.” Qassim Al Thani capacity 2019 until the date of the General Assembly for the financial year ending 31 December 2021 3.6. Independence The Company acknowledges that as per the corporate governance rules, at least one Sheikh Mohammed In his personal Elected in 2009, re-elected on 15 April Chief Executive 63,000,0001 1.00 Bin Faisal Al Thani capacity 2019 until the date of the General Executive third of the Board members are independent. During the year ended 31 December 2020, Assembly for the financial year ending Officer and the Board comprised of nine members, of which three members are independent. 31 December 2021 Managing Director The current independent Board members are not under the influence of any factor that Sheikh Jabor Bin Al Faisal Holding Elected on 4 February 2017, re-elected Ordinary Non-executive 10,5001 45.00 limits their capacity to deliberate on Company matters in an unbiased and objective manner Abdulrahman Al Company W.L.L. on 15 April 2019 until the date of the Members 2,835,000,0002 based on known and existing facts. Thani General Assembly for the financial year ending 31 December 2021 3.7. Prohibition of combining positions Sheikh Abdullah Bin Al Jazi Real Elected in 2010, re-elected on 15 April Ordinary Non-executive 63,000,0002 1.00 The Board members will refrain from combining positions, in compliance with Article 7 Hamad Al Thani Estate Investment 2019 until the date of the General Members of the Code. Company W.L.L. Assembly for the financial year ending 31 December 2021 The Board members provide the Board secretary with an Independence and Conflict of Interest Declaration annually, to declare whether they hold any legally prohibited positions. P.74 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.75
Corporate Governance Framework continued
3.8. Board members’ experience and membership of other boards Director Name Experience and membership of other boards Yousef Bin Rashid Al Khater • Board member of Aamal since April 2018 Director Name Experience and membership of other boards • Over 29 years experience in executive and public management, and project management Sheikh Faisal Bin Qassim Al Thani • Founder and Chairman of Aamal with Qatar Petroleum Company (QP) and several other international companies in the oil and • Chairman of the Board since the listing on the Qatar Stock Exchange in 2007 gas industry such as Exxon Mobil and Conoco Philips, Occidental Petroleum Qatar, and Total • Chairman of Al Faisal Holding Company W.L.L. • In 2011, appointed as an Economic Consultant in HE’s the Prime Minister’s Office in Qatar to • Chairman of the Qatari Businessmen Association manage Elan Company and the restructuring of the company from June 2012 to April 2014 • Member of the Board of Trustees at Qatar University • CEO of Barwa Real Estate from April 2009 to March 2011 • Founder and Chairman of Al Faisal without Borders Foundation • CEO and Board member of Gulf Drilling International and Board member of Gulf International • Founder and Chairman of the Board of Trustees of Sheikh Faisal bin Qassim Al Thani Museum Services Company from December 2004 to April 2009 • Chairman of the Gulf Qatari Classic Cars Association • Board member of Qatar’s Advisory Council (Shura Council) since October 2004 • Member of the Board of Trustees at the College of Business in DePaul University in Chicago • Member of Arab Interim Parliament and International Union Parliament • Holds a Bachelor’s degree in Industrial Engineering (with honors) from Fairleigh Dickinson University, New Jersey, USA Sheikh Mohammed Bin Faisal Al Thani • Board member of Aamal since 2009 • Aamal’s Chief Executive Officer and Managing Director since February 2019 • Board member of Al Khaliji Bank Q.P.S.C. Mr. Faisal Bin Abdullah Bin Zaid Al • Board member of Aamal since April 2018 • Chairman of Optimized Solutions W.L.L. Mahmoud • Owner of Baytak for Development Company • Holds a Bachelor’s degree in Business Administration from Carnegie Mellon University, Qatar • Board member in Al Madaen Company • Honorary President of the Italian Chamber of Commerce in Qatar • Previously held the roles of Minister of the Ministry Endowments and Islamic Affairs, Deputy Minister of the Ministry of Endowments and Islamic Affairs • Chairman of the Administration of the General Authority of Endowments, Chairman of the Sheikh Jabor Bin Abdulrahman Al Thani • Board member of Aamal since February 2017 Administration of the General Authority for Minors and their rule (Representative of Al Faisal Holding • Vice Chairman and Managing Director of Transind Group • Chairman of Mawashi Company and a Board member of Al Jazerah for Investments Company W.L.L.) • Founder and Managing Director of Al-Bayan Insurance Broker • Holds a Bachelor’s degree in Sharia and Islamic Studies from the College of Sharia and • Managing Director of Al Arabi Sports Club Islamic Studies at Qatar University, Qatar • Holds a Bachelor of Business Administration from European University, Geneva, Switzerland • Certified Financial Analyst from the American Academy of Financial Management • Holds a Professional Diploma in Financial Management and Banking from the Arab Academy for Banking and Financial Sciences 3.9. Board’s Role The Board independently oversees the activities of the Company with the objective Sheikh Abdullah Bin Hamad Al Thani • Board member of Aamal since 2010 (Representative of Al Jazi Real Estate • Attained the rank of Major in the Qatari Armed Forces of sustainable value creation, considering the interests of the shareholders, its employees Investment Company W.L.L.) • Holds a Bachelor’s degree in Business from Kingston University, UK and other stakeholders.
The Board members act in good faith and in such a manner as they reasonably believe Sheikha Al Jazi Bint Faisal Al Thani • Board member of Aamal since 2016 (Representative of Al Rayyan International • Holds a Master’s degree in International Peace and Security from King’s College London, UK to be in the best interests of the Company. The Directors also: Educational Company W.L.L.) • Holds a Bachelor’s degree in Culture and Politics from Georgetown University, Qatar • Comply with all applicable laws, regulations, confidentiality obligations and other Mr. Kamel Muhammad Al Agla • Board member of Aamal since February 2017 corporate policies of the Company. (Representative of City Limousine • Chief Real Estate Officer of Al Faisal Holding • Follow all policies, procedures and internal control systems of the Company. Company W.L.L.) • Joined Al Faisal Holding in 1985, since when he has spearheaded most of Al Faisal’s construction projects, including the development of the company’s iconic real estate assets • Act with honesty, good faith and in the best interests of the Company, and not in the • Holds a Bachelor’s degree in Civil Engineering from Al Azhar University, Egypt interests of the group they represent, or who voted for them.
Sheikh Faisal Bin Fahed Bin Jassim Al • Board member of Aamal since April 2019 Thani • Over 30 years of experience working in several international companies in the Oil and Gas The Board commits to complying with the principles of justice and equality among industry, including Shell, Qatar Petroleum, Arco Petroleum, British Petroleum, Anadarko stakeholders without discrimination among them on the basis of race, gender, religion Petroleum, and Maersk Oil Qatar and transparency. • Board member at Commercial Bank Qatar • Board member and Chairman of the Audit Committee at United Development Company • Chairman of Qatar Petroleum Engineers Society 3.10. Segregation of the Chairman and the Chief Executive Officer and Managing • Chairman of Doha Petroleum Club Director roles • Chairman of Al Namaa Real Estate In accordance with the QFMA Code, the role of the Chairman and Managing Director • Chairman of Al Wataniya International Holding Company • Chairman of Qatar National Import and Export (QNIE) are distinct and separate. The same person should not hold or exercise the positions of Chairman and Managing Director at the same time. There is a clear segregation of responsibilities between the two positions in Aamal.
All Board members are compliant with Article 7 of QFMA’s Code regarding their abstinence from holding or combining prohibited positions.
The Board’s composition is balanced and the Company’s structure limits having one person in the company holding unfettered powers to make decisions. P.76 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.77
Corporate Governance Framework continued
4. The Board forms committees with appropriate expertise. The committees serve to increase the 4.4. Nomination & Remuneration Committee Board Committees efficiency of the Board’s work and the handling of complex issues. The nominated committee The Nomination and Remuneration Committee shall identify, screen and recommend chairmen report regularly to the Board on the work of their respective committees. nominees for Board elections and recommend nominees for Executive Management positions. The Committee aims to sustain long-term value for shareholders by ensuring In order to comply with the Code, the Board has constituted the following three (3) that the Company can attract, develop and retain high-performing and motivated directors sub-committees of the Board: and senior executive management in a competitive, international market.
• Executive Committee The Committee was composed of the following members for the year ended • Audit Committee 31 December 2020: • Nomination & Remuneration Committee Name of Director Position Member status The Board has approved the committees’ charters and has nominated the Chairman and members of each committee, identifying responsibilities, duties, work provisions Mr. Kamel Muhammad Al Agla Chairman Non-Independent and procedures. Sheikh Mohammed Bin Faisal Al Thani Member Non-Independent
4.1. Changes in the committees’ membership during 2020 Mr. Faisal Bin Abdullah Bin Zaid Al Mahmoud Member Independent There have been no changes in the membership of the committees in 2020 and the committees will serve until the General Assembly meeting for the financial year ending 31 December 2021. 5. 5.1. Key personnel Senior Management Chief Executive Officer (CEO) and Managing Director (MD) – The CEO and MD is responsible 4.2. Executive Committee for the day-to-day management of the Company and coordinating with the Board on the The Executive Committee is largely responsible for handling the Company’s strategy, Company’s strategy and tactical plans, ensuring the fulfilment of the strategic objectives investments and financing by reviewing, evaluating and recommending the strategic plans of the Company and that business processes are aligned with shareholder interests. and decisions taken by the Board.
Sheikh Mohammed Bin Faisal Al Thani has held the position of Managing Director since 4 The Committee was composed of the following members for the year ended February 2017. On 26 February 2019, Sheikh Mohammed Bin Faisal Al Thani was appointed 31 December 2020: as the CEO of Aamal in addition to his current capacity as the Company’s MD.
Name of Director Position Member status Advisor to the CEO – Responsible for advising the CEO on strategic matters related to the Company’s activities. The position of Advisor to the CEO is held by Mohammed Abdulkader Sheikh Mohammed Bin Faisal Al Thani Committee Chairman Non-independent Al-Ramahi, the previous CFO of Aamal. His appointment took effect on 25 April 2019. Sheikha Al Jazi Bint Faisal Al Thani Member Non-independent Chief Operating Officer (COO) – The COO is responsible for overseeing the activities Sheikh Jabor Bin Abdulrahman Al Thani Member Non-independent and performance of the subsidiary companies. The COO ensures that annual business plans Mr. Faisal Bin Abdullah Bin Zaid Al Mahmoud Member Independent and targets are in place and follows up on the execution of these by managing the reporting from subsidiary companies on a monthly/quarterly/annual basis in terms of operational During the year ended 31 December 2020, the Executive Committee did not convene and management performance. and therefore no formal reports or recommendations were submitted to the Board. The position of the COO was recently filled by Mr. George Fawaz who joined the Company 4.3. Audit Committee on 10 December 2020. Mr. Fawaz brings over 25 years of experience in Fortune companies The Audit Committee handles issues related to financial reporting, risk management, in the USA and GCC. 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, Chief Financial Officer (CFO) – The CFO is responsible for the finance, treasury, determining auditing focal points and negotiating the fee agreement with the external administration and investors relation activities of Aamal, under the supervision auditor subject to the approval of the General Meeting). of the CEO and MD.
The Committee was composed of the following members for the year ended The position of CFO is held by Mr. Imran Chughtai who has over 30 years’ corporate finance 31 December 2020: experience and who replaced Mohammed Abdulkader Al-Ramahi. The appointment took effect on 25 April 2019.
Name of Director Position Member status Chief Legal Officer (CLO) – The CLO is responsible for helping the Company to minimize Mr. Yousef Bin Rashid Al Khater Chairman Independent its legal risks by advising the Company’s other officers and Board members on any major legal and regulatory issues the Company encounters. He/she also oversees the Company’s Sheikh Faisal Bin Fahed Bin Jassim Al Thani Member Independent in-house attorneys and is under the direct supervision of the CEO and MD. The position was
Mr. Kamel Muhammad Al Agla Member Non-independent vacant for the year ended 31 December 2020. However, these services are provided by Al Faisal Holding’s Legal Department and governed by the Service Level Agreement.
P.78 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.79 Board of Directors’ Report on Corporate Governance Board of Directors’ Assessment of Compliance with QFMA’s Requirements For the Year Ended 31 December 2020
Report on compliance with the Qatar Financial Markets Authority’s (QFMA’s) law, related 2.4. Compliance exceptions legislation, including the Governance Code for Companies & Legal Entities Listed on the As at 31 December 2020, there are no matters identified that are not in compliance Main Market (the “Code”) Issued by the QFMA’s Board pursuant to the QFMA’s Decision No. with QFMA’s Corporate Governance Code, and that there is a process in place to ensure (5) of 2016, and on the suitability of design and operating effectiveness of internal controls compliance with QFMA’s relevant regulations. over financial reporting 2.5. Board of Directors’ Conclusion Based on our assessment of and results of procedures performed, the Board of Directors 1. The Board of Directors of Aamal Company Q.P.S.C (“Aamal” or the “Parent”) and its confirm compliance with the Compliance Requirements as at 31 December 2020. Board of Directors’ subsidiaries (together are referred to as the “Group”) has carried an assessment Assessment of Compliance of compliance as at 31 December 2020 with the Qatar Financial Market Authority (‘QFMA’) with the QFMA’s law and relevant legislations, Governance Code for Companies & Legal Entities Listed Faisal Bin Qassim Al Thani Requirements on the Main Market (“QFMA’s Requirements”) issued pursuant to Decision No. (5) of 2016 Chairman of the Board (the ‘Code’) and other relevant legislations where applicable. Doha, 23 February 2021
2. 2.1. Responsibilities of the Board The Board The Board of Directors is committed to implement the following Governance principles set out in the Code: • Justice and equality among Stakeholders without discrimination among them on basis of race, gender, and religion; • Transparency, disclosure, and providing Information to the QFMA and Stakeholders at the right time and in the manner that enables them to make decisions and undertake their duties properly; • Upholding the values of corporate social responsibility; • Providing for the interest of the Group and Stakeholders over the personal interest; and • Performing duties, tasks and functions in good faith, with integrity, honour and sincerity and taking the responsibility arising therefrom to Stakeholders and society.
2.2. Management evaluation of compliance In accordance with Article 2 of the Code, we have conducted an evaluation of the Group’s compliance with the QFMA’s Law, the Code and other relevant legislations. The Compliance function of the Group has completed an extensive checklist, which enumerates the articles of the QFMA’s Law, the Code and other relevant legislations to establish bases for our conclusion.
2.3. External auditors In accordance with the Code, PricewaterhouseCoopers Qatar Branch, the external audit firm of the Group, has been appointed to issue a limited assurance report on the management’s assessment of compliance with the QFMA’s law, the Code and other relevant legislations as at 31 December 2020 in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Assurance Standards Board (‘IAASB’). P.80 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.81 Independent Assurance Report on Compliance with Qatar Financial Markets Authority Laws and relevant legislations Independent Assurance Report to the Board of Directors of Aamal Company Q.P.S.C
Report on Compliance with Qatar Financial Markets Authority’s (QFMA’s) law and relevant A limited assurance engagement involves assessing the risks of material misstatement legislation, including the Governance Code for Companies & Legal Entities Listed on the of the “Board of Directors’ Assessment of Compliance with the QFMA’s Requirements”, Main Market Issued by the QFMA’s Board pursuant to the QFMA’s Decision No. (5) of 2016, whether due to fraud or error and responding to the assessed risks as necessary in the as at 31 December 2020. circumstances. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response Introduction In accordance with the requirements of Article 24 of the Governance Code for Companies to the assessed risks. Accordingly, we do not express a reasonable assurance conclusion & Legal Entities Listed on the Main Market (the “Governance Code” or the “Code”) issued about whether the “Board of Directors’ Assessment of Compliance with the QFMA’s by the Qatar Financial Markets Authority (QFMA) Board pursuant to Decision No. (5) of Requirements”, taken as a whole has been prepared, in all material respects, in accordance 2016, we have carried out a limited assurance engagement over the accompanying “Board with the QFMA’s law and relevant legislations, including the Code. of Directors’ Assessment of Compliance with the QFMA’s Requirements” of Aamal Company Q.P.S.C. (the “Company”) and its subsidiaries (together the “Group”) as at 31 December The procedures we performed were based on our professional judgment and included 2020, as presented in the Corporate Governance section of the Annual Report. inquiries, observation of processes performed, inspection of documents, evaluating the appropriateness of reporting policies for the Group and agreeing with underlying records.
Responsibilities of the The Board of Directors of the Group is responsible for preparing the accompanying Given the circumstances of the engagement, in performing the procedures listed above we: directors and those ‘Corporate Governance Report’ that covers at a minimum the requirements of Article 4 charged with governance of the Code. • made inquiries of management to obtain an understanding of the processes followed to identify the requirements of the QFMA law and relevant legislations, including the The Board of Directors is also responsible for ensuring the Group’s compliance with the Code (the ‘Requirements’); the procedures adopted by management to comply with QFMA’s law and relevant legislations and the Governance Code (the “QFMA’s Requirements”, these Requirements and the methodology adopted by management to assess compliance the “Requirements”) for Companies & Legal Entities Listed on the Main Market issued by with these Requirements, to understand the key processes and controls for reporting the QFMA’s Board pursuant to Decision No. (5) of 2016 and preparing the accompanying compliance with the Requirements; “Board of Directors’ Assessment of Compliance with the QFMA’s Requirements”. • considered the disclosures by comparing the contents of the ‘Corporate Governance The Board of Directors is also responsible for identification of areas of non-compliance Report’ against the requirements of Article 4 of the Code; and related justifications, where mitigated. • agreed the relevant contents of the ‘Corporate Governance Report’ to the underlying records maintained by the Group; and These responsibilities include the design, implementation and maintenance of adequate internal financial controls that if operating effectively would ensure the orderly and efficient • performed limited substantive testing on a selective basis, when deemed necessary, conduct of its business, including compliance with applicable laws and regulations. to assess compliance with the Requirements, and observed evidences gathered by management; and assessed whether violations of the Requirements, if any, have been disclosed by the Board of Directors, in all material respects. Responsibilities of the Our responsibilities are to issue a limited assurance conclusion on whether anything has Assurance Practitioner come to our attention that causes us to believe that the accompanying “Board of Directors’ Our limited assurance procedures do not involve assessing the qualitative aspects or Assessment of Compliance with the QFMA’s Requirements” – as presented in the Corporate effectiveness of the procedures adopted by management to comply with the Requirements. Governance section of the Annual Report – do not present fairly, in all material respects, the Therefore, we do not provide any assurance as to whether the procedures adopted by Group’s compliance with the QFMA’s law and relevant legislations, including the Code, based management were functioning effectively to achieve the objectives of the QFMA’s law on our limited assurance procedures. and relevant legislations, including the Code.
We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements Other Than Audits or Reviews Our independence and In carrying out our work, we have complied with the independence and other ethical of Historical Financial Information’ issued by the International Auditing and Assurance quality control requirements of the Code of Ethics for Professional Accountants issued by the International Standards Board (‘IAASB’). This standard requires that we plan and perform our procedures Ethics Standards Board for Accountants (“IESBA”), which is founded on fundamental to obtain limited assurance about whether anything has come to our attention that causes principles of integrity, objectivity, professional competence and due care, confidentiality us to believe that the “Board of Directors’ Assessment of Compliance with the QFMA’s and professional behaviour and the ethical requirements that are relevant in Qatar. We have Requirements”, taken as a whole, is not prepared, in all material respects, in accordance fulfilled our other ethical responsibilities in accordance with these requirements and the with the QFMA’s law and relevant legislations, including the Code. IESBA Code.
The procedures performed in a limited assurance engagement vary in nature and timing Our firm applies International Standard on Quality Control 1 and accordingly maintains from, and are less in extent than for, a reasonable assurance engagement. Consequently, a comprehensive system of quality control including documented policies and procedures the level of assurance obtained in a limited assurance engagement is substantially lower than regarding compliance with ethical requirements, professional standards and applicable legal the assurance that would have been obtained had a reasonable assurance engagement been and regulatory requirements. performed. We did not perform procedures to identify additional procedures that would have been performed if this were a reasonable assurance engagement. P.82 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.83 Independent Assurance Report on Compliance with Qatar Board of Directors’ Report on Internal Financial Markets Authority Laws and relevant legislations continued Controls over Financial Reporting Board of Directors’ Assessments of Sustainability and Operating Effectiveness of Internal Controls over Financial Reporting of Significant Processes For the Year Ended 31 December 2020
Inherent limitations Many of the procedures followed by entities to adopt governance and legal requirements Report on compliance with the Qatar Financial Markets Authority’s (QFMA’s) law, related depend on the personnel applying the procedure, their interpretation of the objective legislation, including the Governance Code for Companies & Legal Entities Listed on the of such procedure, their assessment of whether the compliance procedure was implemented Main Market (the “Code”) Issued by the QFMA’s Board pursuant to the QFMA’s Decision effectively, and in certain cases would not maintain audit trail. It is also noticeable that No. (5) of 2016, and on the suitability of design and operating effectiveness of internal the design of compliance procedures would follow best practices that vary from one controls over financial reporting. entity to another and from one country to another, which do not form a clear set of criteria to compare with. 1. The Board of Directors of Aamal Company Q.P.S.C (“Aamal” or the “Parent”) and its Non-financial performance information is subject to more inherent limitations than financial Requirements Board subsidiaries (together are referred to as the “Group”) has carried an assessment of internal information, given the characteristics of the ‘Corporate Governance Report’ and the methods of Directors’ Assessment control framework over financial reporting as at 31 December 2020 in accordance with used for determining such information. of Internal Control the Governance Code for Companies & Legal Entities Listed on the Main Market Issued Framework over Financial by the Qatar Financial Markets Authority’s (QFMA’s) Board pursuant to Decision No. (5) Because of the inherent limitations of internal financial controls over compliance Reporting of Significant of 2016 (the ‘Code’). with relevant laws and regulations, including the possibility of collusion or improper Processes management override of controls, material misstatements due to error or fraud may occur and not be detected.
2. 2.1. Responsibilities of the Board Other information The Board of Directors are responsible for the other information. The other information The Board The Board of Directors of the Group is responsible for establishing and maintaining effective comprises the Annual Report (but does not include the accompanying “Board of Directors’ internal controls over financial reporting. assessment on compliance with QFMA’s Requirements” report which we obtained prior to the date of this assurance report). Internal control over financial reporting is a process designed by, or under the supervision of the Group’s Chief Executive Officer and Chief Financial Officer, and approved and Our conclusions on the accompanying “Board of Directors’ assessment on compliance monitored by the Group’s Board of Directors, management and other competent personnel, with QFMA’s Requirements” do not cover the other information and we do not and will not to provide reasonable assurance regarding the reliability of financial reporting and the express any form of assurance conclusion thereon. preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards In connection with our assurance engagement on the accompanying “Board of Directors’ Board (“IASB”) and includes those policies and procedures that: assessment on compliance with QFMA’s Requirements”, our responsibility is to read the other information identified above and, in doing so, consider whether the other information • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly is materially inconsistent with the ‘Corporate Governance Report’ or our knowledge obtained reflect the transactions and dispositions of the assets of the Group; in the engagement, or otherwise appears to be materially misstated. • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and If, based on the work we have performed, on the other information that we obtained prior expenditures of the Group are being made only in accordance with the authorizations to the date of this report, we conclude that there is a material misstatement of this other of management and Board of Directors of the Group; and information, we are required to report that fact. We have nothing to report in this regard. • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Group’s assets that could have a material effect on Conclusion Based on our limited assurance procedures described in this report, nothing has come to our the financial statements. attention that causes us to believe that the “Board of Directors’ assessment on compliance with QFMA’s Requirements”, do not present fairly, in all material respects, the Group’s The Board of Directors of the Group are responsible for design, implementation and compliance with the QFMA’s law and relevant legislations, including the Code as at 31 maintenance of adequate internal controls that when operating effectively, would ensure December 2020. the orderly and efficient conduct of its business, including:
For and on behalf of PricewaterhouseCoopers – Qatar Branch • Adherence to Group’s policies; Qatar Financial Market Authority registration number 120155 • The safeguarding of its assets; • The prevention and detection of frauds and errors; • The accuracy and completeness of the accounting records; Mark Menton • The timely preparation of reliable financial information; and Auditor’s registration number 364 • Compliance with applicable laws and regulations, including the QFMA’s law and relevant legislations and the Code, applicable to Companies & Legal Entities Listed on the Main Doha, State of Qatar Market issued by the QFMA’s Board pursuant to Decision No. (5) of 2016. P.84 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.85 Board of Directors’ Report on Internal Controls Independent Assurance Report on over Financial Reporting continued Internal Controls over Financial Reporting Independent Assurance Report to the Shareholders of Aamal Company Q.P.S.C.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material Report on the suitability of design and operating effectiveness of internal controls over misstatements due to error or fraud may not be prevented or detected on a timely basis. financial reporting of significant processes as at 31 December 2020 Further, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or Introduction In accordance with the requirements of Article 24 of the Governance Code for Companies procedures may deteriorate. & Legal Entities Listed on the Main Market (the “Governance Code” or the “Code”) Issued by the Qatar Financial Markets Authority (QFMA) Board pursuant to Decision No. (5) of 2.2. Management assessment 2016, we have carried out a reasonable assurance engagement over the accompanying In this section, we provide a description of the scope covered by the assessment “Board of Directors’ Assessment of Internal Control over Financial Reporting of Significant of the suitability of design and operating effectiveness of the Group’s internal control over Processes” – as presented in the Corporate Governance section of the Annual Report of financial reporting, including the significant processes addressed, control objectives and Aamal Company Q.P.S.C. (the “Company”) and its subsidiaries (together the “Group”) as the approach followed by management to conclude its assessment. at 31 December 2020, based on the framework issued by the Committee of Sponsoring Organisations of the Treadway Commission “COSO framework”. The Group is required to report on the suitability of the design and operating effectiveness of internal controls over financial reporting (“ICOFR”) in connection with the Governance Code for Companies & Legal Entities Listed on the Main Market (the “Code”) issued by the Responsibilities of the The Board of Directors of the Group is responsible for presenting the accompanying “Board Qatar Financial Markets Authority’s (QFMA’s) Board pursuant to Decision No. (5) of 2016. directors and those of Directors’ Assessment of the Suitability of Design and Operating Effectiveness of Internal We have conducted an evaluation of the design of internal control over financial reporting, charged with governance Controls over Financial Reporting of Significant Processes” report, and the report includes: as of December 31, 2020, based on the framework and the criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring • the Board of Directors’ assessment of the suitability of design of internal controls Organizations of the Treadway Commission (“COSO”). framework over financial reporting;
• description of the identification of significant processes and internal controls over 2.3. Scope of assessment financial reporting: Our internal control framework over financial reporting is the process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of • A process is considered significant if a misstatement due to fraud or error in the stream the Group’s consolidated financial statements for external reporting purposes in accordance of transactions or financial statement amount would reasonably be expected to impact with International Financial Reporting Standards (IFRS). ICOFR includes controls over the decisions of the users of financial statements. The processes that were determined disclosure in the financial statements and procedures designed to prevent misstatements. as significant are: revenue and receivables, investment properties, purchasing, payables and payments, cash and treasury management, property and equipment management, In assessing suitability of design and operating effectiveness of ICOFR, Management has inventory management, human resources and payroll, entity level controls, information determined significant processes as those processes in respect of which misstatement in the technology, and general ledger and financial reporting (“significant processes”). stream of transactions including those caused by fraud or error would impact the financial • the control objectives; including identifying the risks that threaten the achievement of the statement amounts, including those caused by fraud or error would reasonably be expected control objectives; to impact the decisions of users of the financial statements. • designing and implementing controls that are suitably designed and operating effectively The significant processes of the Group at 31 December 2020 are: revenue and receivables, to achieve the stated control objectives; and investments properties, purchasing, payables and payments, cash and treasury management, property and equipment management, inventory management, human resources and • identification of control gaps and failures; how they are remediated; and procedures set payroll, entity level controls, corporate governance, information technology, and general to prevent such failures or to close control gaps. ledger and financial reporting. The Group’s Board of Directors is also responsible for establishing and maintaining internal 2.4. External auditors financial controls based on COSO framework selected by them as a suitable criteria for In accordance with the Code, PricewaterhouseCoopers Qatar Branch, the Group’s internal control over financial reporting. independent external audit firm has issued a reasonable assurance report on Management’s assessment and the suitability of design and operating effectiveness of the Group’s internal These responsibilities include the design, implementation and maintenance of adequate control framework over financial reporting. internal financial controls that if operating effectively would ensure the orderly and efficient conduct of its business, including: 2.5. Board of Directors’ Conclusion Based on Management’s assessment, the Board of Directors concluded that, as at 31 • adherence to Group’s policies; December 2020, the Group’s internal control over financial reporting is appropriately • the safeguarding of its assets; designed and operating effectively to achieve relevant control objectives based on the • the prevention and detection of frauds and errors; criteria established in Internal Control — Integrated Framework (2013) issued by the • the accuracy and completeness of the accounting records; Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). • the timely preparation of reliable financial information; and • compliance with applicable laws and regulations. Faisal Bin Qassim Al Thani Chairman of the Board
Doha, 23 February 2021 P.86 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.87
Independent Assurance Report on Internal Controls over Financial Reporting continued
Responsibilities of the Our responsibilities are to express a reasonable assurance conclusion based on our An assurance engagement of this type also includes evaluating Board of Directors’ Assurance Practitioner assurance procedures on the accompanying “Board of Directors’ Assessment of Suitability assessment of the suitability of the control objectives stated therein. It further includes of Design and Operating Effectiveness of Internal Controls over Financial Reporting performing such other procedures as considered necessary in the circumstances. of Significant Processes” report, as presented in the Corporate Governance section of the Annual Report, based on the COSO framework. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion on the Board of Directors’ assessment of the suitability of design We conducted our engagement in accordance with International Standard on Assurance and operating effectiveness of the Group’s internal financial controls over financial reporting. Engagements 3000 (Revised) ‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Assurance Standards Board (‘IAASB’). This standard requires that we plan and perform our procedures Our independence In carrying out our work, we have complied with the independence and other ethical to obtain reasonable assurance on the Board of Directors’ assessment of suitability and quality control requirements of the Code of Ethics for Professional Accountants issued by the International of the design and operating effectiveness of the internal controls over financial reporting Ethics Standards Board for Accountants (“IESBA”), which is founded on fundamental of significant processes of revenue and receivables, investment properties, purchasing, principles of integrity, objectivity, professional competence and due care, confidentiality payables and payments, cash and treasury management, property and equipment and professional behaviour and the ethical requirements that are relevant in Qatar. We have management, inventory management, human resources and payroll, entity level controls, fulfilled our other ethical responsibilities in accordance with these requirements and the information technology, and general ledger and financial reporting, as presented in the IESBA Code. Corporate Governance section of the Annual Report, in all material respects, to achieve the related control objectives stated in the description of the relevant processes Our firm applies International Standard on Quality Control 1 and accordingly maintains by management, based on the COSO framework. a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal A process is considered significant if a misstatement due to fraud or error in the stream and regulatory requirements. of transactions or financial statement amount would reasonably be expected to impact the decisions of the users of financial statements. For the purpose of this engagement, the processes that were determined as significant are: revenue and receivables, investment Meaning of internal An entity’s internal control over financial reporting is a process designed to provide properties, purchasing, payables and payments, cash and treasury management, property controls over financial reasonable assurance regarding the reliability of financial reporting and the preparation and equipment management, inventory management, human resources and payroll, reporting of financial statements for external purposes in accordance with International Financial entity level controls, information technology, and general ledger and financial reporting. Reporting Standards (“IFRSs”). An entity’s internal control over financial reporting includes those policies and procedures that: An assurance engagement to report on the design and operating effectiveness of controls at an organisation involves performing procedures to obtain evidence about the suitability (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly of design and operating effectiveness of the controls. Our procedures on internal controls reflect the transactions and dispositions of the assets of the entity; over financial reporting included: (2) provide reasonable assurance that transactions are recorded as necessary to permit • obtaining an understanding of internal controls over financial reporting of significant preparation of financial statements in accordance with the generally accepted processes; accounting principles, and that receipts and expenditures of the entity are being made only in accordance with authorizations of the management of the entity; and • assessing the risk that a material weakness exists; and
• testing and evaluating the design and operating effectiveness of internal control based (3) provide reasonable assurance regarding prevention or timely detection of unauthorized on the assessed risk. acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements. In carrying out our engagement, we obtained understanding of the following components of the control system: Inherent limitations Non-financial performance information is subject to more inherent limitations than financial • Control Environment information, given the characteristics of the “Board of Directors’ Assessment of Internal • Risk Assessment Controls over Financial Reporting” report and the methods used for determining such • Control Activities information. • Information and Communication • Monitoring Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material The procedures selected depend on our judgement, including the assessment of the risks misstatements due to error or fraud may occur and not be detected. Also, projections of of material misstatement of the suitability of design and operation, whether due to fraud or any evaluation of the internal financial controls over financial reporting to future periods are error. Our procedures also included assessing the risks that the controls were not suitably subject to the risk that the internal financial control over financial reporting may become designed to achieve the related control objectives stated in the accompanying “Board of inadequate because of changes in conditions, or that the degree of compliance with the Directors’ Assessment of Suitability of Design and Operating Effectiveness of the Internal policies or procedures may deteriorate. Controls over Financial Reporting of Significant Processes”. Our procedures included testing the operating effectiveness of those controls that we consider necessary to provide reasonable assurance that the related control objectives were achieved. P.88 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.89
Independent Assurance Report on Internal Controls over Financial Reporting continued
Furthermore, the controls activities designed, implemented and operated as of 31 December 2020 covered by our assurance report will not have retrospectively remedied any weaknesses or deficiencies that existed in relation to the internal controls over the financial reporting for significant processes prior to the date those controls were placed in operation.
Other information The Board of Directors is responsible for the other information. The other information comprises the Annual Report (but does not include the “Board of Directors’ assessment on the suitability of design and operating effectiveness of internal controls over financial reporting for significant processes”, and our report thereon), which we obtained prior to the date of this assurance report.
Our conclusions on the accompanying “Board of Directors’ assessment of suitability of the design and operating effectiveness of internal controls over financial reporting of significant processes” do not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our assurance engagement on the accompanying “Board of Directors’ assessment of suitability of the design and operating effectiveness of internal controls over financial reporting of significant processes”, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with our knowledge obtained in the engagement, 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 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.
Conclusion In our opinion, based on the results of our reasonable assurance procedures, the “Board of Directors’ Assessment of Suitability of Design and Operating Effectiveness of the Internal Controls over Financial Reporting of Significant Processes”, based on the COSO framework and as presented in the Corporate Governance section of the Annual Report is presented fairly, in all material respects, as at 31 December 2020.
For and on behalf of PricewaterhouseCoopers – Qatar Branch Qatar Financial Market Authority registration number 120155
Mark Menton Auditor’s registration number 364 Corporate Corporate Social Responsibility (CSR) Responsibility Activities 92
Aamal Sustainability Framework and ESG Disclosures 94 P.92 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.93 Corporate Social Responsibility
Aamal Company Q.P.S.C. Aamal Company Subsidiaries Aamal Cement Industries: CSR initiatives 9 Aamal Cement continued its recycling policy for all During the year ended 31 December 2020, Aamal Company of the waste generated by its factories. These activities Q.P.S.C. (“Aamal” or the “Company”) supported several Doha Cables: included: initiatives aimed at increasing awareness of best practice in business, governance and cultural exchange. These included: 9 Doha Cables held a blood donation drive in partnership • Continuing to recycle water and reusing it for with Hamad Medical Corporation (HMC) at Mesaieed production. Qatar Stock Exchange Financial Education Competition Factory in January 2020. The campaign’s objective was • Segregating solid concrete waste into its ingredients to contribute and support the Blood Bank in Qatar and and reusing it. Aamal was chosen as the “Case Study” for the QSE Financial to raise awareness of the importance of donating blood. Education Competition 2020. The Competition was titled • Used oil and filters sent to recycling factories. 9 Sports Day Event: Doha Cables’ staff, accompanied by “Importance of Financial Analysis in Stock Valuation” 9 ACI has been re-certified for continuation of ISO 9001, their families, celebrated Qatar’s National Sports Day on and took place during February and March 2020. Nine 14001, and 45001 standards after a successful audit February 11 2020 at Al Wakra Sports Club. The program universities around Qatar arranged for students in teams of its implemented standards. to prepare research papers through applying academic featured a variety of sporting activities such as Volleyball, principles and tools to real life problems in financial analysis. Badminton, Football and Marathon. Representatives from Aamal met with students from each Ebn Sina 9 COVID-19: Doha Cables has supported the efforts university to answer questions and provide guidance on of Kahramaa (Qatar Electricity & Water Authority) how to respond to the set questions. This is the second time 9 Continued to support the Scholarships Program at Qatar in the fight against the COVID-19 pandemic in Qatar. the Competition has been held by Qatar Stock Exchange, University, which has been started in 2011. To promote the use of face masks and hand hygiene, encouraging students to apply theory into practice. Doha Cables donated funds to Kahramaa to organize the distribution of masks and sanitizers to workers Aamal Signs a Cooperation Agreement with the Qatar Aamal Medical at various project sites. Cancer Society 9 Sponsored the Qatar Health 2020 event organized by 9 Internship Program: Doha Cables successfully Hamad Medical Corporation in January 2020, which Aamal has recently signed a cooperation agreement with organized internship programmes for 20 students aimed to developing and enhancing healthcare service the Qatar Cancer Society (QCS) through which Aamal will in the sales, commercial, tendering and planning level in Qatar be one of the supporters of QCS in its efforts to provide departments, while following strict safety and COVID-19 cancer patients in Qatar with the cure they need, helping precautionary measures. them cope with the disease, and raising society-wide Aamal Services awareness about the best practices to prevent cancer. Aamal Readymix 9 Aamal Services remained very focused on its impact Safety Measures During the COVID-19 Crisis on the environment, by using only friendly biodegradable 9 Aamal Readymix strictly implemented the recycling chemicals, that cause no harm to the environment . Aamal and all its subsidiaries have prioritised taking all policy for all the waste generated by its factories. necessary safety measures to ensure employees’ safety, These activities included: while mitigating the negative impact the pandemic might Aamal Trading and Distribution: have on the business. The Company has adopted safety • Recycling wastewater and reusing it for washing mixer vehicles. measures such as working from home, social distancing, 9 Aamal Trading and Distribution held a theoretical and cancelling meetings and facilitating them online instead, and • Segregating solid concrete waste into its ingredients practical training program on automotive maintenance instructing all employees to constantly wear face masks and and reusing it. for the Boy Scouts of America - Qatar Troop 400, where use hand sanitizers while on the premises. scouts were introduced to the basics of mechanical • Using oil and filters sent to recycling factories. operations of motor vehicles, focusing on aspects related The Company has utilized the latest technological 9 Aamal Readymix was re-certified for continuation of ISO to safety and preventive maintenance. Scouts have advancements to run the business from home with minimal 9001, 14001, and 45001 standards after a successful audit also attended a practical demonstration on automotive interruption to workflow, maintaining the safety of both the of its implemented standards. maintenance and tyre care, with the presence of employees and wider stakeholders. Bridgestone Dial-A-Tire van. 9 Aamal Readymix was certified for ISO 31000:2018 Aamal Organizes Sports Day Event for the implementation of Risk Management standard.
Aamal and its subsidiaries participated in 2020’s National Sport’s Day event. Held at Sheikh Faisal Bin Qassim’s Museum, the event included various sports and interactive activities in which employees and their families engaged and enjoyed themselves. P.94 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.95 Aamal Sustainability Framework and ESG Disclosures
Sustainability at Aamal Our ESG framework
Implementation of a robust ESG framework across Aamal is Each pillar of our ESG framework is comprised of sub- Aamal Company Q.P.S.C. (“Aamal” or “the Company”) was The information presented in the ESG Report is aligned fundamental to our sustainability management. By aligning elements of our most important topics. This allows us to among the first listed companies in Qatar to embrace the with the QSE ESG Guidance requirements, and references our management approach with the Qatar National Vision, effectively identify and prioritize the most significant ESG Qatar Stock Exchange (QSE) Guidance on Environment international best practices including the GRI Standards, we are contributing to our nation’s goal of transforming issues to guide our strategic direction and focus, which and Social governance (ESG) Reporting, encouraging other the Sustainability Accounting and Standards Board (SASB), Qatar into an advanced country by 2030, capable of helps us to generate financial value for our business as well listed companies to voluntarily report on a set of ESG and the United Nations Sustainable Development Goals (UN sustaining its own development and providing a high as economic and social value for our key stakeholders. performance indicators. SDGs), as well national standards and initiatives including standard of living for its current and future generations. the Qatar National Vision 2030 (QNV).
Our ESG framework summarizes what sustainability means to Aamal by identifying the key pillars of focus which need to be addressed and balanced. Sustainability across Aamal means having the utmost level of Business Ethics and Transparency, Serving our Communities, Empowering our Workforce and Protecting the Environment. GUIDANCE ON ESG REPORTING
01 03 Subsidiaries in focus Business Ethics & Empowering Transparency our Workforce Since 2019, we have maintained the coverage of our ESG reporting to a total of ten of our subsidiary companies Ethics Diversity & Equality and Aamal: Transparency & Accountability Training & Development Health & Safety Aamal Aamal Ebn Sina Aamal City Center Company Doha Cables Readymix Medical Medical Doha Q.P.S.C. 02 04 Aamal Ci San Ebn Sina Foot Care Cement Aamal ECE Serving our Environmental Trading Pharmacy Center Industries Communities Protection
Community Development Energy & Emissions Sustainable Procurement Water & Waste Our aim is to gradually expand coverage across Together, Aamal and its in scope subsidiary companies, all of subsidiaries over the coming years. represent 89.5% of our revenues and 99.8% of our net profit. Unless otherwise stated, the numbers presented in this ESG section cover these ten subsidiary companies and Aamal. P.96 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.97 Business Ethics and Transparency
Aamal is committed to applying corporate governance Code of Conduct Policy Transparency & Accountability Human Rights practices of the highest standards, which emphasize honesty, integrity, ethical dealing, transparency, and Across Aamal we have implemented and abide by our Code Respecting human rights helps us better serve our accountability. We believe that strong corporate governance Board of Directors of Conduct Policy (QSE #30), to ensure that we are able customers, attend to our communities, and value our is a crucial factor to achieving high performance, as well to act in an ethical manner, should any potential breaches In accordance with the QFMA Code, the role of the employees. Aamal abides by the Qatari Labor Law which as to maintaining investors’ trust. We work diligently of our standards occur. We have zero tolerance for bribery Chairman and Chief Executive Officer (CEO) and Managing is aligned with the International Labor Organization’s to eliminate all kinds of fraud, bribery, corruption, and all and corruption-related matters. Our anti-corruption policy Director (MD) are distinct and separate. There is a clear Declaration on Fundamental Principles and Rights at Work forms of financial crime, while advocating human rights. includes clear anti-corruption rules and guidelines that are segregation of responsibilities between the two positions and the United Nations Universal Declaration of Human We believe that all employees have the right to be treated strongly reinforced through awareness raising and training in Aamal. Both the Chairman and CEO are part of the Board Rights (QSE #16). fairly and consistently, while working in an environment programs for key managers and staff (QSE #32). free from discrimination and harassment. of Directors (QSE #25). In addition, Ebn Sina Medical has its own Code of Conduct Anti-discrimination Our Board of Directors is composed of nine members, which is readily accessible to all employees. The Code Ethics of which one is a female. The Board independently oversees prohibits the use of child and forced labour. Our employees have the right to work in an environment the activities of Aamal with the objective of sustainable Corporate Governance free from discrimination and harassment. Each employee creation of value, considering the interests of the We follow a zero-tolerance policy with regards to abuse is entitled to be treated fairly, consistently, with dignity shareholders, its employees, and other stakeholders. of human rights within our company and within our value and respect. chain. We reserve the right to terminate business with At Aamal, we believe that a strong corporate governance is suppliers that breach these policies as well as suppliers critical to ensuring high performance across all our activities The Board Charter of Aamal, is in compliance with our We have a zero-tolerance policy towards any kind of that fail to take corrective action (QSE #17, QSE #18). Any and is essential to building investor trust and providing Code of Conduct Policy, and defines the respective roles, harassment. Our Anti-discrimination policy prohibits employee that participates, becomes aware of, or fails to safeguards against any misguided corporate activity. responsibilities and authorities of the Board of Directors and discrimination and harassment, while explaining how the remit of its three committees: the Executive Committee, report any of the activities listed will be subject to stringent to prevent and/or control related incidents. Reporting disciplinary action, including dismissal. Across Aamal, we As such, we have adopted a Corporate Governance the Audit Committee and the Nomination and Remuneration discrimination or non-compliance to this policy on any have an Employee Reporting Hotline as well as a dedicated Framework which is related to the way in which the affairs Committee. The CEO is also the lead of the Nomination and grounds is welcomed, encouraged, and should be done anonymous email correspondence scheme for reporting any of Aamal are governed and managed. Our Corporate Remuneration Committee (QSE #25). through formal channels. Concerns are dealt with promptly activities that go against our standard operating procedures Governance Framework takes into consideration the and confidentially. If an employee is found discriminating and policies. interests of all stakeholders and shareholders. The The latest annual general meeting of Aamal was held or harassing, they may be subject to disciplinary action, Framework was enhanced with additions to executive on April 1, 2020. Based on the voting outcomes at that including dismissal. Reports and investigations of the As part of our employee orientation information sessions, management members, and maintaining effective Board and meeting all Aamal’s Board members continue to serve the alleged incidents will be conducted while respecting the every new employee receives training on human rights, committees structure. company in accordance with their terms of appointment rights of the parties involved. Our grievance procedure (QSE #26). Further details regarding the results employee rights, and other related company policies. is a formal channel between management and employees Our Corporate Governance Report covers the procedures of the annual general meeting are published on Aamal’s and is available to all employees. During 2020, there were no identified significant risks followed by Aamal to ensure good governance practices website (www.aamal.com.qa) and the QSE website related to corruption or bribery in the supply chain. that we continue to adopt, which go above and beyond just (www.qse.com.qa). In addition, there were no performance or employee compliance with regulatory requirements. During 2020, the ratio of the of CEO salary and bonus grievances filed during 2020. This year, Aamal Cement and Aamal Readmix were against the median FTE salary and bonus was 7:1 (QSE #27). successfully re-certified for ISO 9001 Quality Management Furthermore, the ratio of median male salary to median Economic Performance standards and ISO 31000 Risk Management standards, female salary was 1.8:1 (QSE #28). No remuneration has been following the successful completion of the respective paid to the Board of Directors for the year 2020 (QSE #29). The COVID-19 pandemic had unprecedented impacts ISO audits. on the global financial market, however, the long-term Over the past three years, our Board of Directors maintained economic outlook for Aamal is encouraging and we expect a composition of 11% female. We have a total of nine board the company to leverage opportunities generated by Qatar’s members, of which one is a female and a total of three of hosting of the 2022 FIFA World Cup and the QNV 2030, these members are independent (QSE #23 and QSE #24). to continue to enhance its economy performance. The Aamal corporate strategy remains clear and consistent and Aamal continues to focus on generating shareholder QSE QNV Board of Directors 2018 2019 2020 KPI # Pillar value through profitable growth and diversification. Full details on our financial performance is presented Percentage 11% 11% 11% 23 Social in the Aamal 2020 Annual Report. of Board seats taken by women
Percentage of Board 33% 33% 33% 24 Social seats taken by independent directors P.98 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.99 Serving our Communities
Aamal plays a vital role in the development of the country future generations. The Competition titled “Importance Sustainable Procurement The outbreak of the COVID-19 pandemic posed and society through its initiatives aimed at benefitting the of Financial Analysis in Stock Valuation”, invited students continuous challenges for the procurement of goods community while developing the company’s operational from nine Qatari universities to prepare research papers and services across Aamal. We witnessed issues such as At Aamal, we are dedicated to achieving excellence efficiency. These initiatives are focused on increasing through applying academic principles and tools of broken supply-chains, workers unable to report to their across our activities and operations. Through the use awareness of best business practice, governance, and financial analysis on real life cases. Aamal was chosen duties, and restrictions and delays at borders that affected of innovative technological advancements, we seek to cultural exchange. We also attempt to practice meaningful as the case study of the year, due to management’s pre- contractors and suppliers’ ability to implement contracts. offer unique products are services in a sustainable manner. youth engagement through tailored programmes. disposition to support the QSE and local universities as Measures were implemented to overcome and minimise In line with the Qatar National Vision 2030’s pillar for Additionally, we are committed to making great efforts well as its informative website, providing comprehensive disruptions and these methods will be useful in addressing social development, we are committed to the sustainable in terms of local procurement, by sourcing and selecting information on investor relations, particularly useful similar future challenges that included an Emergency procurement of products and services. leading local suppliers, wherever possible. to investors and financial analysts. Committee with the authority to pass quick decisions, to avoid interferences in operations. Our Central Procurement Department Policy and Procedures As the COVID-19 pandemic impacted Qatar our health extends to our suppliers – setting our high standards care companies such as Ebn Sina and Aamal Medical As part of procurement planning, Aamal will focus on and expectations for business integrity throughout our swiftly and effectively directed its operations to support conducting regular local and International market studies, supply chain (QSE #31). This covers general principles of Qatar’s communities during the pandemic, including in order to identify and select the most viable suppliers/ purchasing ethics, including anti-bribery, anti-corruption, launching services for the home delivery of medicines. contractors/consultants available. The procurement plan and fair practices. As the pandemic peaked in Qatar during last year, will be essential in minimizing purchasing costs, while Ebn Sina Medical and Aamal Medical in particular maintaining the quality and quantity of goods/services. We actively support local suppliers, in line with the Qatar continued to work tirelessly and assiduously to ensure National Vision 2030’s pillar for economic development. that customers continued to receive a reliable supply In 2020, our proportion of spending on local suppliers was of critical medicines and medical equipment. 65% (QSE #22). Nevertheless, we strive to maintain our preference and focus on procuring local suppliers. In addition, we actively supported our valued tenants during these hugely challenging times by granting a waiver of rents at City Center Doha and Souq Al Heraj during the second Local QSE QNV • In January 2020, Doha Cables yet again held its annual 2018 2019 2020 and third quarter of 2020. While this decision negatively Procurement KPI # Pillar blood donation drive in partnership with Hamad Medical impacted Aamal’s financial results for the period, we believe Proportion of 83% 72% 65%1 22 Economic Corporation (HMC) at Mesaieed Factory. The campaign that supporting our tenants in this way coincides with our spending on local aimed at raising awareness of blood donations through national responsibility towards our community and fellow suppliers (%) supporting the Blood Bank in Qatar. citizens and stakeholders in general.
Community Development
Aamal plays a vital role in the development of the country and the society through engagement in several corporate activities to promote community development (QSE #21).
Case Study: QSE Financial Education Competition 2020
• This year, Doha Cables also supported the Qatar Electricity and Water Authority (Kahramaa) in the fight against the COVID-19 Pandemic in Qatar. The joint action promoted hygiene and the usage of face mask. Doha cables also made a considerable donation to Kahramaa for organizing the distribution of masks and sanitizers to workers at various project sites in the country. We are proud to give back to the communities where we operate.
• In 2020, the Qatar Stock Exchange (QSE) kick-started the second edition of its Financial Education Competition (FEC) for university students, as part of its commitment to improve financial and investment awareness among 1 Data includes Aamal HQ, Doha Cables, Aamal Readymix, Ebn Sina Medical, City Center Doha, Aamal Cement Industries, and Ci-San Trading P.100 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.101 Empowering our Workforce
Health and safety are of utmost importance to us, and we Diversity & Equality Aamal provides discretionary bonuses to Executive are dedicated to ensuring that our workforce is not only Management team members based on outstanding work Case Study: Aamal Organizes National Sports motivated but also work in a safe and healthy environment. performances. In addition, qualifying Board members Day Event Aamal is a diverse company. We strive to treat everyone To ensure workplace safety, we make it mandatory for receive annual performance based payments that are fairly and without discrimination, creating value for our our subsidiary companies and contractors to comply with approved during the Annual General Assembly meeting. employees by supporting them in reaching their potential. our occupational health policy and safety procedures. In line with QNV 2030, we push to include women in the We consider training and development as an important Our subsidiaries manage a ‘Benefit and Compensation workforce to, bridging the gender gap in employment. factor in contributing not only to employee engagement Scheme’ which consists of a basic salary and package but also to the overall success of Aamal and all our of benefits including, housing, transportation and mobile operating subsidiaries. We encourage gender diversity Women in the Workforce allowance, yearly tickets, end of service benefits, workmen within our workforce to improve team performance and compensation insurance, medical cards, yearly bonus and success, unlocking the full potential of women within the Aamal supports gender equality in the workforce as yearly increment (based on the performance evaluation) organization, encouraging them to showcase leadership indicated by the percentage of women in the workforce depending on the role and subsidiary. Annual leave and through high-visibility initiatives. As a company, we have (QSE #19). In 2020 the percentage of women in the maternity leave for all employees are in accordance with also implemented new enhancements to our HR systems workforce stood at 5.6%, decreasing from 7.8% in 2019, the Qatar Labour laws (QSE #11). in 2020, further raising business standards, transparency, owing to the COVID-19 impact which have reduced the Above: Aamal organises National Sports Day Event for employees and families. and employee satisfaction. total workforce across the company and its subsidiaries. The wages and benefits distributed in 2020 reflect Nonetheless, we are optimistic that together we will the impact of COVID-19 and a reduced overall workforce. • In February 2020, Aamal and its subsidiaries’ employees The impact of the COVID-19 pandemic and containment overcome the challenges of COVID-19 and increase the The instability of the 2020 economic situation has resulted and families participated in the National Sports Day measures led to a contraction in the company workforce. proportion of women in the workforce. in a decrease in the total amount of employee wages event, held at Al Wakra Sports Club. The event featured In 2020, a 2% reduction in the total workforce was noted and benefits distributed to our employees (QSE #11). a variety of sporting activities, engaging, employees from 2019 (QSE #10). Although there were numerous global Employee turnover, however, was limited in 2020 (QSE and their families. During the event, novelty gifts challenges faced by the economy, we managed to control 0 #12), demonstrating the commitment of our people to the and certificates to participants were distributed. our workforce size and limit the decrease to merely 2%. company despite the economic challenges faced globally. The experience was hugely beneficial, in terms of employee wellbeing, engagement and boosting morale. 200 0 000 000 0 0 0 0 000 000 Qatarisation 2 2
00 0 0 000 000 Aamal fully endorses the Qatarisation initiative by the 0 20 20 2020 Government of Qatar to provide employment for its 0 citizens (QSE #20). We support the initiative by enlisting 0 0 Percentage o women in t e wor orce SE 20 000 000 in the Qatar Nation Employment Platform or also known
as ‘Kawader’, which aims to raise the rate of employment 000 0 20 20 2020 20 20 2020 of Qataris in all sectors. We are continuously introducing Employee Wellness and Satisfaction programs that ensure that Qataris are recognized, well Total N m er o emplo ees SE 0 Total amount of employee wages and benefits (%) (QSE #11) trained, and informed. Data provided for Aamal head office and 10 portfolio Aamal is committed to engaging and motivating its companies included in this report. employees and celebrating their successes. Hence, every As part of our CSR program, we offer company-wide year Aamal awards an ‘Employee of the Year’ for employees Internship Programmes for University students especially, in the non-management and non-supervisory positions. Qatar nationals. Under Aamal Medical, Ebn Sina Pharmacy The award is presented to the employee who has made and Ebn Sina Medical, Qatari students from local universities an exceptional contribution to the Company in terms of job are provided technical training by company experts. excellence, customer satisfaction, business growth, quality and/or continuous improvement (QSE #11). P.102 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.103
Training & Development Aamal Medical, including Ebn Sina Pharmacy and Ebn Sina This year, the total number of employee and contractor COVID-19 Impact Medical employees undergo annual performance evaluations recordable injuries remained at a minimum level, amounting against the criteria in the company’s Employee Appraisal to a total of 4 recorded cases, all of which were handled in Aamal abides by the directives and recommendations Empowering our Workforce Form, this includes annual training evaluations to assess accordance with the company’s health and safety protocols from the Qatar Ministry of Interior and the Qatar Ministry the current standing of all employees and assessment to ensure the wellbeing of our people including our partner of Public Health to ensure our people’s health and safety We place a significant effort and focus on the for further training requirements which are filed in the contractors (QSE #15). as well as to keep everyone abreast with the latest updates development and growth of our workforce. We are company’s Training Needs Request Form and evaluated and guidelines. committed to enhancing the competencies and knowledge by the executive management team through the Training QSE QNV of our employees by offering them various training and Health & Safety 2018 2019 2020 Nomination Form. KPI # Pillar During 2020, we formed an Emergency Management Team development programs, aligned with our comprehensive (EMT) and an Emergency Response Team (ERT) dedicated Training Procedure. Total number 4 1 43 15 Human Youth Development of employee and to tackling and managing the COVID-19 pandemic and its contractor recordable impacts on our operations, activities and our workforce. We Every year, we develop a set of mandatory training and In 2020, Doha Cables launched an internship program injuries (#) launched a policy on working safely during COVID-19. We development sessions for all our employees which aim aimed at supporting Qatari youth transition into the also developed a systematic contingency plan, in the case to develop our people professionally, socially, and mentally. workforce. Doha Cables successfully organized internship of an employee contracting the virus. The plan allows the We gather our people’s feedback on all training and programs for 20 students across various departments Case Study: Aamal Signs a Cooperation employee(s) an extended quarantine period, while intensive awareness sessions and evaluate them for improvements within the company. Despite the COVID-19 impacts, Doha sanitization of the workplace is carried out in parallel. to consider in the following year. Currently, we are in Agreement with Qatar Cancer Society (QCS) Cables managed to efficiently and safely host the program, the process of building our 2021 training modules in following strict precautionary safety measures to support Aamal along with its subsidiaries, have taken extreme collaboration with reputable professional institutions to university students to explore the corporate world and safety measures to ensure employees health and safety, cater to our employees needs and requirements to empower identify potential career opportunities for them. while mitigating the negative effects of the crisis on our workforce and generate significant value (QSE #13). business operations. We have reviewed our risk assessment On average the number of trainings delivered per employee Furthermore, Ebn Sina Medical supports a scholarship framework, in order to better manage the anticipated in 2020 increased by 23%2 since 2019 (QSE #13). program in collaboration with Qatar University and North impacts of COVID-19 on our activities. Atlantic University for Bachelor, Masters and PhD degrees. 0 Ebn Sina Medical also hosts training programmes for Our medical subsidiaries have placed additional measures 2 undergraduate pharmaceutical and sciences students to ensure the health and safety of its people and customers 0 through the implementation sanitation gates across their 0 by providing them internship opportunities that include comprehensive training across its pharmacies. offices and warehouses in addition to regular disinfection 0 treatment cycles across pharmacies and warehouses. Above: HE Sheikh Faisal bin Qassim al-Thani, Chairman of Aamal In response to the COVID-19 pandemic, Aamal and its 20 with HE Dr Sheikh Khaled bin Jabor al-Thani, Chairman of QCS, Health & Safety signing a cooperation agreement. subsidiaries implemented the government of Qatar’s phase-1 directive with only 20% of our employees attending 0 • Aamal Company has recently signed a cooperation our offices and the remainder working from home in line 20 20 2020 The health and safety of our people is of utmost importance. agreement with Qatar Cancer Society (QCS), a charitable with the in effort to stop the virus spread. Additionally, We are dedicated to ensuring that our employees are not Average training per emplo ee o rs SE association that focuses on implementing awareness we adopted measures such as social distancing, video only motivated in the workplace but can also exert their and prevention programs aimed at raising awareness conferencing, distribution of awareness circulars to work in a safe and healthy environment. about cancer among the community and health employees and mandatory face mask usage while on care employees, have signed a joint cooperation the company premises. All our employees, including at our subsidiary companies are Across Aamal Medical, including Ebn Sina Pharmacy and agreement. The agreement will see Aamal provide Ebn Sina Medical, all employees abide by our Standard required to abide by our Occupational Health and Policy and financial support to QCS to help support cancer We are proud to have utilized the latest technological Operating Procedures (SOPs) for Training. The Training Safety Procedures. In addition, our subsidiary companies treatment for patients who cannot afford it otherwise advancements necessary to run the business remotely Procedure provides a framework on training requirements Aamal Cement Industries, Aamal Readymix and Doha Cables and see Aamal work with QCS to prevent cancer, with minimal interruption to the workflow. This included both soft skills and technical trainings based on the are ISO 45001 certified for Occupational Health and Safety develop early detection processes, and support and the conversion of necessary training requirements for our employee’s role and responsibilities within the company, (QSE #14). This year, Aamal Readymix was re-certified for empower those fighting cancer. employees to online platforms to ensure that we continue which is intended to enhance the overall work performance continuation of ISO 45001 Certification for Occupational to meet the business requirements and expectations from and is aligned with international guidelines and best Health and Safety standards after a successful audit of the our customers maintaining the safety and integrity of our practices, including European Union Commission Guidelines implemented standards. employees, and stakeholders. on Good Distribution Practice of Medicinal Products for
Human Use, World Health Organization Good Distribution Practice for Pharmaceutical Products and ISO 9001 standards covering Control of Records and Competence Training and Awareness.
3 Data includes Aamal HQ, Doha Cables, Aamal Readymix, Ebn Sina Medical (including Ebn Sina Pharmacy), Aamal Medical, 2 Data includes Aamal HQ, Doha Cables, Aamal Readymix, Ebn Sina Medical, Aamal Medical and Aamal Cement Industries. City Centre Doha and Aamal Cement Industries. P.104 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.105 Environmental Protection
Our commitment to protect the environment, is reflected Aamal Medical incorporated a software that reduces Energy QSE 2018 2019 2020 QNV Pillar Water & Waste in our adherence to environmental related principles and Consumption KPI # paper consumption, in several HR functions including practices in all aspects of our operations. We have been leave applications, business trips applications and work Total energy 509,610 399,774 303,5134 3 Environment We are conscious of our environmental responsibilities consistently minimizing our environmental footprint resumption. The software will also help automate various consumption and seek to limit our environmental footprint. Ensuring and waste disposal through sound management functions in the warehousing, purchasing and accounting (kWh) sustainable consumption, preventing, and reducing of natural resources including water, energy, materials, units, that will further decrease the usage of office supplies. waste generation is a critical aspect of our environmental and biodiversity. Energy 0.60 0.57 0.43 4 Environment Similarly, Ebn Sina Medical has also signed an agreement Intensity impact. We seek to boost our waste recycling, achieved with Canon to reduce and limit paper consumption across (kWh/m3) by reusing equipment and reducing our waste. We have In 2020, Aamal Cement and Aamal Readymix were all its facilities. Currently, Ebn Sina Medical is working on the installed recycling and waste segregation facilities across successfully re-certified for continuation of ISO 14001 Energy 447.81 373.27 289.89 4 Environment implementation of a new warehouse delivery system which Intensity several locations in Qatar to handle and process the waste Environmental Management System standards, following reduced invoicing and paper consumption by converting the (kWh/full time generated by our subsidiaries operations’ and activities. the successful completion of the ISO audit. employee) manual operations to digital, electronic systems connected to its customers. Aamal is committed to reducing our water consumption and using water more responsibly. Therefore, our water Energy & Emissions Doha Cables has also followed suit and reduced consumption has decreased by 16% in 2020 (QSE #8). In line 0 000 consumption of paper as well as wooden pallets, Aamal is a capital-intensive company, as a result we are with Aamal’s commitment to water reduction, Doha Cables by transferring the disposal and recycling to a third-party exposed to various types and degrees of regulatory, physical 2 0 reduced its 2020 fresh water consumption by nearly 7%. 0 000 service provider. As part of Doha Cables recycling initiative, and socio-economic risks associated with climate change. 0 Low Smoke Halogen Free (LSHF) and polyvinyl chloride Climate change has widespread economic, political and Water QSE materials which are abundantly used for cabling and social consequences. We feel that it is important for us to 0 000 2018 2019 2020 QNV Pillar Consumption KPI # reused when degraded. In partnership with the Ministry show leadership in the worldwide efforts to mitigate the 5 Total water N/A 225,314 189,554 8 Environment of Environment, Doha cables transfers recyclable waste adverse effects of climate change, by reducing our carbon 20 000 consumption to the Recycling and Waste Treatment Department in emissions. As Aamal operates in an energy intensive sector, (m3) Mesaieed City. therefore, we concentrate our efforts to reduce energy 0 Total 19,839 15,779 12,5796 8 Environment 20 20 2020 consumption and implement initiatives that positively wastewater impact the environment. generated (m3) 000 Total G G emissions tons o C02e SE Total amount 6,651 6,295 7,170 7 8 Environment As part of Doha Cables 2021 objectives, the company has 0 000 of wastewater 0 set a target to reduce its diesel consumption by 10,000 re-used (m3) 000 Litres (L) per annum. In addition, Doha Cables are affiliate Case Study: Al Kharsaah Solar Power Project members of the Gulf Organisation for Research and 0 In 2020, our total waste generation amounted to 93,586 0 000 Development (GORD), which have collectively committed tons (QSE #9). We are committed to the responsible waste to support sustainability and climate related actions. 000 management practices. Our subsidiaries employ series of initiatives related to recycling and waste management. Ebn Sina Medical has implemented a Global Positioning 0 000 20 20 2020 System (GPS) for tracking its delivery vehicle routes. The Aamal Cement and Aamal Readymix continued to initiative’s goal is to decrease vehicle trips and thus reduce participate in the annual series of recycling initiatives Total waste generate tons SE fuel consumption to promote more environmentally friendly aligned with the company’s recycling policy which was operations. Furthermore, Ebn Sina Medical utilises energy published in 2019 and endured in 2020. The initiatives saving lighting across all its facilities and units to preserve included recycling wastewater and reusing it for production energy consumption and reduce its carbon footprint. purposes, segregating solid concrete into its relative components for reuse and reusing oil and filters from In 2020, we managed to reduce our overall energy recycling and reuse facilities. consumption by 24% partially due to the impact of the COVID-19 pandemic, which similarly reduced our energy • In 2020, Doha Cables won the contract to deliver intensity (QSE #3, QSE #4). The primary energy use the cabling network for the 800-Megawatt (MW) across our space is electricity, we are not currently utilising Al Kharsaah photovoltaic (PV) power project, using renewable energy (QSE #6, QSE #7). As a result of our Aluminum conductors. This is the first large-scale solar overall decrease in energy consumption, we have reduced power plant being developed in Qatar. The 350 MW first our greenhouse gas (GHG) emissions by 21% (QSE #5). phase will be grid-connected by the first quarter of 2021
and the project is expected to be fully commissioned in April 2022.
5 Data Excludes Aamal ECE 6 Data includes Ebn Sina Medical, Aamal Medical, City Center Doha, Ci-San Trading, Aamal ECE 4 Data excludes Aamal ECE 7 Data includes Doha Cables, Ebn Sina Medical, Aamal Medical, City Center Doha, Ci-San Trading, Aamal ECE P.106 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.107 ESG Reporting Against QSE ESG Guidance
Location Location QSE ESG Key Performance QSE ESG Key Performance Measurement annual, unless indicated otherwise QNV Pillar in Report / Measurement annual, unless indicated otherwise QNV Pillar in Report / KPI # Indicators KPI # Indicators Comment Comment
Environmental Diversity & 19 Women in the Workforce Percentage of women in the workforce Social Equality Does the company publish and follow 1 Environmental Policy Environment Yes an environmental policy? Diversity & 20 Qatarisation Percentage of Qatari nationals in the workforce Human Equality Any legal or regulatory responsibility for 2 Environmental Impacts Environment No an environmental impact? Number of hours spent, and/or other community Community 21 Community Work Social investments made as a percentage of pretax profit Development Energy and 3 Energy Consumption Total amount of energy usage in MWh or GJ Environment Emissions Sustainable 22 Local Procurement Percentage of total procurement from local suppliers Economic Procurement Energy and 4 Energy Intensity Amount of energy used per m3 of space, and per FTE Environment Emissions Governance
Total amount of Carbon and Green House Gas emissions Energy and Transparency & 5 Carbon/GHG Emissions Environment 23 Board – Diversity Percentage of Board seats taken by women Social in metric tons Emissions Accountability
6 Primary Energy Source Specify the primary source of energy used by the company Environment Electricity Transparency & 24 Board – Independence Percentage of Board seats taken by independent directors Social Accountability Renewable Energy Specify the percentage of energy used that is generated Energy and 7 Environment Intensity from renewable sources Emissions Board – Separation Specify whether the CEO is allowed to sit on the Board, 25 Social Yes of Powers act as the Chairman, or lead committees Total amount of water consumption, and details in respect 8 Water Management Environment Water & Waste of recycling if any, in m3 Announced on 26 Voting Results Disclosure of the voting results of the latest AGM Social QSE’s website Total amount of waste generated, recycled or reclaimed, 9 Waste Management Environment Water & Waste by type and weight Ratio of CEO salary and bonus against the median FTE 27 CEO Pay Ratio Social 7:1 salary and bonus Social 28 Gender Pay Ratio Ratio of median male salary to median female salary Social 2:1 Diversity & 10 Full Time Employees Number of full time employees Human Equality Specify the links between (executive) remuneration and Transparency & 29 Incentivized Pay Economic performance targets Accountability Diversity & 11 Employee Benefits Total amount of employee wages and benefits Human Equality Does the company publish and follow an Ethics Code 30 Ethics Code of Conduct Social Yes of Conduct? Diversity & 12 Employee Turnover Rate Percentage of employee turnover Human Equality Does the company publish and follow a Supplier Code 31 Supplier Code of Conduct Social Yes of Conduct? Total number of hours of training for employees divided Diversity & 13 Employee Training Hours Human by the number of employees Equality Bribery/Anti-Corruption Does the company publish and follow a Bribery/Anti- 32 Social Yes Code Corruption Code? Does the company publish and follow a policy for 14 Health Human Health & Safety occupational and global health issues? ESG Reporting Generally
Total number of injuries and fatal accidents relative Sustainable Reporting Does the company publish a GRI, CDP, SASB, IIRC 15 Injury Rate Human Health & Safety 33 Social No to the number of FTEs Frameworks or UNGC report?
16 Human Rights Policy Disclosure and adherence to a Human Rights Policy Social Ethics Are the company’s ESG disclosures assured by 34 External Assurance Social No an independent third party? Number of grievances about human rights issues filed, 17 Human Rights Violations Social Ethics addressed and resolved
Does the company prohibit the use of child or forced 18 Child & Forced Labour Social Yes labour throughout the supply chain? Financial Independent Auditor’s Report Statements 110
Financial Statements and Notes 114 P.110 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.111
Independent auditor’s report to the shareholders of Aamal Company Q.P.S.C.
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Key audit matter
Our opinion Key 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 year. These matters were addressed in the context of our audit In our opinion, the consolidated financial statements of Aamal Company Q.P.S.C. (the “Company”) and its subsidiaries of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate (together the “Group”) present fairly, in all material respects, the consolidated financial position of the Group as at 31 opinion on these matters. December 2020 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”). Key audit matter How our audit addressed the Key audit matter
What we have audited Fair valuation of investment properties The Group’s consolidated financial statements comprise: • the consolidated statement of financial position as at 31 December 2020; The fair value of investment properties comprises the fair Our audit procedures in relation to the valuation • the consolidated statement of profit or loss and other comprehensive income for the year then ended; value of land, commercial and residential properties and of investment properties included: • the consolidated statement of changes in equity for the year then ended; properties under construction. The Group’s properties are • the consolidated statement of cash flows for the year then ended; and based in the State of Qatar. • Obtaining and reviewing the latest valuation reports • the notes to the consolidated financial statements, which include a summary of significant accounting policies and other prepared by the external valuers, and assessing their explanatory information. The fair value of the investment properties were determined independence and competencies; as follows: • Vacant land: comparable market approach • Verifying on a test basis the key assumption Basis for opinion • Income generating assets: depreciated replacement cost (i.e. useful life of the asset, rebuild cost and the method and comparable market approach comparable market rate for the land value), valuation We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those • Properties under development: cost method where fair methodologies adopted, and the appropriateness standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section value cannot be reliably measured. of the valuation outcomes; of our report. • Using our own property valuation experts to The fair valuation of investment property is inherently independently review the appropriateness of the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. subjective and impacted by, among other factors, valuation methodologies adopted and the comparable prevailing market conditions, the individual nature and evidence for all valuation assumptions to ensure Independence condition of each property and its location. The following alignment to the real estate market; We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants key assumptions are used in the valuation of investment (including International Independence Standards) issued by the International Ethics Standards Board for Accountants properties amongst others: • Comparing useful life of the assets, depreciated (IESBA Code) and the ethical requirements that are relevant to our audit of the consolidated financial statements in the • Life of the assets build rates and the land rates against external market State of Qatar. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. • Rebuild cost data, where available and re-calculating the external • Comparable market rate for the land value. valuations; and
Our audit approach We considered this a key audit matter because of the: • Evaluating the sensitivity analysis performed • financial significance of the investment property balance by management and the appropriateness of the Overview in the consolidated statement of financial position and of disclosures relating to the valuation, including the the impact of changes in the fair value of the investment material valuation uncertainty in relation to the impacts As part of designing our audit, we determined materiality and assessed the risks properties on the Group’s profit or loss. The value of the of COVID-19 as disclosed in Note 5 of the consolidated of material misstatement in the consolidated financial statements. In particular, we Group’s investment properties of QR 7.1 billion accounts financial statements. considered where the Directors made subjective judgements; for example, in respect for 80% of the Group’s total assets of QR8.9 billion as at Materiality of significant accounting estimates that involved making assumptions and considering 31 December 2020. The net fair value loss on investment future events that are inherently uncertain. As in all of our audits, we also addressed properties during the year of QR 122 million is equivalent the risk of management override of internal controls, including among other matters to 100% of the profit for the year. consideration of whether there was evidence of bias that represented a risk of material • sensitivity of valuations to key input assumptions, Group misstatement due to fraud. specifically inputs based upon comparable market scoping transactions. This is further exacerbated by Covid-19, We tailored the scope of our audit in order to perform sufficient work to enable us to that resulted in the external valuations obtained by the provide an opinion on the consolidated financial statements as a whole, taking into Group noting material valuation uncertainty in relation account the structure of the Group, the accounting processes and controls, and the Key audit to the impacts of Covid-19 as disclosed in note 5 of the industry in which the Group operates. matters consolidated financial statements.
P.112 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.113
Other information Auditor’s responsibilities for the audit of the consolidated financial statements (continued)
The directors are responsible for the other information. The other information comprises Board of Directors’ Report and the • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the complete Annual Report. disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. • 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, In connection with our audit of the consolidated financial statements, our responsibility is to read the other information supervision and performance of the group audit. We remain solely responsible for our audit opinion. identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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 also provide those charged with governance with a statement that we have complied with relevant ethical requirements we conclude that there is a material misstatement of this other information, we are required to report that fact. We have regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought nothing to report in this regard 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 Responsibilities of management and those charged with governance for the consolidated financial statements 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 Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report with IFRS and with the requirements of the Qatar Commercial Companies Law number 11 of 2015, and for such internal because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of control as management determines is necessary to enable the preparation of consolidated financial statements that are free such communication. 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 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Further, as required by the Qatar Commercial Companies Law number 11 of 2015, we report that:
Those charged with governance are responsible for overseeing the Group’s financial reporting process. • 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;
Auditor’s responsibilities for the audit of the consolidated financial statements • The Company has maintained proper books of account and the consolidated financial statements are in agreement therewith; Our 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. • The financial information included in the Board of Directors’ Report is in agreement with the books and records of the Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs Company; and 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 • Nothing has come to our attention, which causes us to believe that the Company has breached any of the provisions of taken on the basis of these consolidated financial statements. 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 2020. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: For and on behalf of PricewaterhouseCoopers – Qatar Branch Qatar Financial Market Authority registration number 120155 • 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 Mark Menton in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Auditor’s registration number 364
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related Doha, State of Qatar disclosures made by management. 23 February 2021
• 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. P.114 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.115
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME at 31 December for the year ended 31 December
Notes 2020 2019 Notes 2020 2019
Assets Revenues 17 1,306,840,888 1,294,116,605 Non-current assets Direct costs 18 (965,867,117) (860,103,578) Retention receivables 8 4,031,144 5,712,228 Gross profit 340,973,771 434,013,027 Equity-accounted investees 4 266,447,909 294,656,891 Investment properties 5 7,118,342,519 7,208,113,690 Other income 19 13,703,858 8,004,104 Property, plant and equipment 6 274,769,914 292,844,360 Marketing and promotion expenses (6,351,611) (6,752,739) Right-of-use assets 3.1 43,574,390 84,022,917 General and administrative expenses 20 (133,123,065) (134,944,046) Total non-current assets 7,707,165,876 7,885,350,086 Net impairment losses on financial assets 8 (77,403) (14,515,887) Net fair value loss on investment properties 5 (121,591,633) - Current assets Operating profit for the year 93,533,917 285,804,459 Cash and bank balances 7 290,351,283 519,317,377 Trade and other receivables 8 502,193,447 413,063,705 Finance income 2,385,939 2,548,527 Amounts due from related parties 9 237,304,489 38,922,231 Finance costs 22 (24,632,293) (28,487,328) Inventories 10 161,144,301 163,980,453 Finance costs - net (22,246,354) (25,938,801) Total current assets 1,190,993,520 1,135,283,766 9,020,633,852 Total assets 8,898,159,396 Share in results of equity-accounted investees 4 50,427,494 62,265,318 Profit for the year 121,715,057 322,130,976 Equity and liabilities Other comprehensive income - - Equity Total comprehensive income for the year 121,715,057 322,130,976 Share capital 11 6,300,000,000 6,300,000,000 Legal reserve 12 660,684,612 658,717,197 Attributable to: Retained earnings 851,173,400 984,930,201 Equity holders of the parent 123,292,937 322,266,953 Equity attributable to equity holders of the parent 7,811,858,012 7,943,647,398 Non-controlling interests (1,577,880) (135,977) Non-controlling interests 11.1 35,552,780 37,130,660 121,715,057 322,130,976 Total equity 7,847,410,792 7,980,778,058 Basic and diluted earnings per share Liabilities (attributable to equity holders of the parent) Non-current liabilities (expressed in QR per share) 23 0.02 0.05 Borrowings 13 443,938,592 400,203,929 Lease liabilities 3.2 31,194,380 68,676,670 Employees’ end of service benefits 14 26,057,048 26,093,077 Total non-current liabilities 501,190,020 494,973,676
Current liabilities Accounts payable and accruals 15 363,387,897 400,469,842 Amounts due to related parties 16 30,740,984 13,333,177 Borrowings 13 139,474,580 114,719,958 Lease liabilities 3.2 15,955,123 16,359,141 Total current liabilities 549,558,584 544,882,118 Total liabilities 1,050,748,604 1,039,855,794 Total equity and liabilities 8,898,159,396 9,020,633,852
The consolidated financial statements on pages 114 to 156 were authorised for issue by the Board of Directors on 23 February 2021 and were signed on its behalf by:
Sheikh Faisal Bin Qassim Al Thani Sheikh Mohamed Bin Faisal Al Thani Imran Chughtai Chairman Chief Executive Officer and Managing Director Chief Financial Officer
The notes on pages 118 to 156 are an integral part of these consolidated financial statements. The notes on pages 118 to 156 are an integral part of these consolidated financial statements. Independent auditor’s report set out on pages 110 to 113. Independent auditor’s report set out on pages 110 to 113. P.116 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.117
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December Attributable to equity holders of the parent
Share capital Legal reserve Retained Total Non-controlling Total equity 2019 earnings interests Notes 2020
Cash flows from operating activities Balance at 1 January 2019 6,300,000,000 636,791,992 1,070,645,127 8,007,437,119 41,170,165 8,048,607,284 Profit for the year 121,715,057 322,130,976 Adjustments for: Profit for the year - - 322,266,953 322,266,953 (135,977) 322,130,976 Net fair value loss on investment properties - Other comprehensive income ------121,591,633 Total comprehensive income Depreciation 6 28,738,383 30,562,665 for the year - - 322,266,953 322,266,953 (135,977) 322,130,976 Amortisation of right-of-use assets 19,488,775 10,899,774 Net movement in provision for employees’ end of service benefits 14 (36,029) 1,535,389 Transfer to legal reserve - 21,925,205 (21,925,205) - - - Net impairment losses on financial assets 8 77,403 14,515,887 Contribution to social and sports fund (Note 28) - - (8,056,674) (8,056,674) - (8,056,674) (Gain)/Loss on disposal of property, plant and equipment 19 (499,996) 23,950 - 21,925,205 (29,981,879) (8,056,674) - (8,056,674) Other adjustments - (5,734,548) Provision for obsolete and slow-moving inventories 10 1,400,430 1,750,088 Transactions with owners in Interest income (2,548,527) their capacity as owners (2,385,939) Finance costs 25,213,599 Dividends (Note 27) - - (378,000,000) (378,000,000) - (378,000,000) 16,929,877 Interest expense on leases 22 3,273,728 Other adjustments - - - - (3,903,528) (3,903,528) 7,702,416 Share in results of equity-accounted investees 4 (50,427,494) (62,265,318) Total transactions with owners - - (378,000,000) (378,000,000) (3,903,528) (381,903,528) Operating profit before working capital changes: 264,294,516 339,357,663 Balance at 31 December 2019 6,300,000,000 658,717,197 984,930,201 7,943,647,398 37,130,660 7,980,778,058 Trade and other receivables (87,526,061) (29,479,600) Inventories 1,435,722 5,748,411 Balance at 1 January 2020 6,300,000,000 658,717,197 984,930,201 7,943,647,398 37,130,660 7,980,778,058 Accounts payable and accruals (40,164,268) 42,050,026 (2,281,442) Profit for the year - - 123,292,937 123,292,937 (1,577,880) 121,715,057 Net movement in amounts due from and due to related parties (193,474,451) Cash (used in)/generated from operations (55,434,542) 355,395,058 Other comprehensive income ------Total comprehensive income Finance costs paid (16,929,877) (25,213,599) for the year - - 123,292,937 123,292,937 (1,577,880) 121,715,057 Net cash (used in)/generated from operating activities (72,364,419) 330,181,459
Transfer to legal reserve - 1,967,415 (1,967,415) - - - Cash flows from investing activities Contribution to social and Interest income received 2,385,939 2,548,527 sports fund (Note 28) - - (3,082,323) (3,082,323) - (3,082,323) Proceeds from disposal of property, plant and equipment 608,276 14,964 - 1,967,415 (5,049,738) (3,082,323) - (3,082,323) Dividends received from equity-accounted investees 91,136,475 105,795,817 Transactions with owners in Additions to investment properties 5 (31,820,462) (39,523,956) their capacity as owners Additions to property, plant and equipment 6 (10,772,217) (8,804,292) Dividends (Note 27) - - (252,000,000) (252,000,000) - (252,000,000) Net cash generated from investing activities 51,538,011 60,031,060 Other adjustments ------Total transactions with owners - - (252,000,000) (252,000,000) - (252,000,000) Cash flows from financing activities Changes in restricted deposits 2,607,860 1,391,537 Balance at 31 December 2020 6,300,000,000 660,684,612 851,173,400 7,811,858,012 35,552,780 7,847,410,792 Principal elements of lease payments (24,628,971) (13,160,608) Repayments of borrowings (114,485,715) (85,629,582) Proceeds from borrowings 182,975,000 - Dividends paid 27 (252,000,000) (378,000,000) Net cash used in financing activities (205,531,826) (475,398,653)
Net decrease in cash and cash equivalents (226,358,234) (85,186,134) Cash and cash equivalents at beginning of year 514,703,723 599,889,857 Cash and cash equivalents at end of year 7 288,345,489 514,703,723
The notes on pages 118 to 156 are an integral part of these consolidated financial statements. The notes on pages 118 to 156 are an integral part of these consolidated financial statements. Independent auditor’s report set out on pages 110 to 113. Independent auditor’s report set out on pages 110 to 113. P.118 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.119
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS 2.2. Principles of consolidation and equity accounting
1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES 2.2.1. Business combinations
Aamal Company was formed on 13 January 2001 as a private shareholding company under the Commercial Registration (a) Subsidiaries 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” or “Parent Company”). Accordingly, the Company was listed on Qatari Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity Stock Exchange on 5 December 2007. The Company’s registered office is at P.O. Box 22477, Doha, State of Qatar. 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 principal business activities of the Company and its subsidiaries (collectively the “Group”) are disclosed in note 2.2.4 the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. of the consolidated financial statements. The acquisition method of accounting is used to account for business combinations by the Group. The ultimate parent and controlling shareholder of the Company is Al Faisal Holding Company W.L.L., which is controlled by Sheikh Faisal Bin Qassim Al Thani. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree, the equity interests issued by the Group, the fair value The consolidated financial statements were authorised for issue by the representatives of the Board of Directors of Aamal of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing Company Q.P.S.C. on 23 February 2021. equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes 2. BASIS OF PREPARATION AND CONSOLIDATION 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. The consolidated financial statements comprise the financial statements of Aamal Company Q.P.S.C. (the “Company”) and its subsidiaries. Acquisition-related costs are expensed as incurred.
2.1. Basis of preparation 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. 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 Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability
is recognised in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive income. The consolidated financial statements have been prepared under the historical cost convention, except for investment properties which have been measured at fair value. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. The consolidated financial statements have been presented in Qatari Riyals (QR), which is the Group’s functional and presentation currency and have been rounded to the nearest Qatari Riyal. 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 The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. interest recognized and previously held interest measured at fair value is less than the fair value of the net assets of the The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to subsidiary acquired, in the case of a bargain purchase, the difference is recognized directly in the profit or loss. consolidated financial statements are disclosed in note 32. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs 2.1.1. New and amended standards adopted by the Group or group of CGUs that is expected to benefit from the synergies of the combination. Goodwill impairment testing is undertaken annually. Any impairment is recognized immediately as an expense and is not subsequently reversed. The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020: Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. • Definition of Material Amendments to IAS 1 and IAS 8; Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. • Definition of a Business Amendments to IFRS 3; Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted • Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7; by the Group. • Revised Conceptual Framework for Financial Reporting. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements The Group has also elected to adopt the following amendments early: of profit or loss and other comprehensive income, changes in equity and financial position respectively. • Annual improvements to IFRS standards 2018-2020 cycle; and • COVID-19 related rent concessions. (b) Changes in ownership interests in subsidiaries without change of control
The amendments listed above did not have any impact on the amounts recognized in prior and current periods and are not Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions expected to significantly affect the future reporting periods. – 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 2.1.2. New standards and interpretations not yet adopted losses on disposals to non-controlling interests are also recorded in equity.
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting period and have not been early adopted by the Group. The management is in the process of evaluating the impact of these standards on the Group in the current or future reporting periods and on foreseeable future transactions. P.120 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.121
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. 2. BASIS OF PREPARATION AND CONSOLIDATION continued 2.2. Principles of consolidation and equity accounting continued Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest 2.2.1. Business combinations continued in the joint ventures. Unrealized 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 (c) Disposal of subsidiaries the policies adopted by the Group.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when The reporting dates of the equity-accounted investees and the Group are identical and the equity-accounted investees’ control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for accounting policies conform to those used by the Group for like transactions and events in similar circumstances. 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 2.2.4. Group companies 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. Set out below are the Group’s principal subsidiaries at 31 December 2020. 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 2.2.2. Associates ownership interests held equals to the voting rights held by Group. The country of incorporation or registration is also their principal place of business. Associates 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 The principal subsidiaries of the Group are as follows: 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. Group effective Country of shareholding Name of the subsidiary incorporation Principal activities percentage If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share 2020 2019 of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. City Center Company W.L.L. Qatar Leasing the facilities of a retail outlet complex 100% 100% The Group’s share of post-acquisition profit or loss is recognised in the consolidated statement of profit or loss and other in City Center Doha comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in other Aamal Real Estate W.L.L. Qatar Residential and commercial real estate investment 100% 100% comprehensive income with a corresponding adjustment to the carrying amount of the investment. and property rental Aamal Readymix W.L.L. Qatar Production and sale of readymix concrete 100% 100% 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 Ebn Sina Medical W.L.L. Qatar Wholesale and retail distribution of pharmaceuticals 100% 100% or made payments on behalf of the associate. and general consumable products Aamal Medical W.L.L. Qatar Wholesale distribution of medical equipment 100% 100% Profits and losses resulting from upstream and downstream transactions between the Group and its associates are Aamal Trading and Distribution Qatar Sale of tyres, lubricants, batteries and 100% 100% recognised in the Group’s consolidated financial statements only to the extent of unrelated investor’s interests in the Company W.L.L. home appliances associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset Aamal Services W.L.L. Qatar Providing facilities management and cleaning services 100% 100% transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Aamal Travel and Tourism W.L.L. Qatar Operating a travel agency 100% 100% Foot Care Center W.L.L. Qatar Sale of footwear, clinical activities and general 100% 100% The Group determines at each reporting date whether there is any objective evidence that the investment in the associate commercial trading products is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable Ebn Sina Health Care Pharmacy Qatar Sale of pharmaceuticals, baby care products, 100% 100% amount of the associate and its carrying value and charges the amount to the consolidated statement of profit or loss and Solutions W.L.L. medicine and general consumable products other comprehensive income. Aamal Cement Industries W.L.L. Qatar Development and management of factories 99% 99% Dilution gains and losses arising in investments in associates are recognised in the consolidated statement of profit or loss and the production of curb stone, interlock slabs and other comprehensive income. and cement bricks IMO Qatar Company W.L.L.** Qatar Construction and repair of power plant, establishment 100% 100% 2.2.3. Joint arrangements and management of industrial enterprises and acting as a representative for the international companies Under 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 Ci-San Trading W.L.L. Qatar Holding company of Gulf Rocks. 50% 50% joint arrangement. The Group has joint ventures. The Group controls Ci-San Trading W.L.L. by virtue of a shareholders’ agreement A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets Gulf Rocks Company W.L.L. Qatar Retail distribution of aggregates 74.5% 74.5% of the arrangement, rather than rights to its assets and obligations for its liabilities. Interests in joint ventures are accounted Aamal Maritime Qatar Purchasing and leasing of ships for transportation 74.7% 74.7% for using the equity method. Under the equity method, the interests in joint ventures are initially recognized at cost Transportation W.L.L. of goods and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. P.122 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.123
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2.3. Foreign currency translation 2. BASIS OF PREPARATION AND CONSOLIDATION continued 2.3.1. Functional and presentation currency 2.2. Principles of consolidation and equity accounting continued 2.2.4. Group companies continued 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 Group effective Country of shareholding presented in Qatari Riyal which is the Parent Company, all subsidiaries, and all equity accounted investees’ functional Name of the subsidiary incorporation Principal activities percentage and presentation currency. 2020 2019 2.3.2. Transactions and balances Al Farazdaq Company W.L.L. Qatar Trading of office supplies and providing printing 65% 65% and laminating services Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates Family Entertainment Center Qatar Providing family entertainment park facilities 100% 100% of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the Company W.L.L. in City Center Doha Mall settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities Winter Wonder Land W.L.L. Qatar Providing entertainment facilities in City Center 100% 100% denominated in foreign currencies are recognised in the consolidated statement of profit or loss and other comprehensive Doha Mall income. Foreign exchange gains and losses that relate to borrowings are also presented in the consolidated statement of profit or loss and other comprehensive income, within ‘finance costs – net’. All foreign exchange gains and losses are Aamal for Industrial Qatar Industrial investments 100% 100% presented in the consolidated statement of profit or loss and other comprehensive income within ‘other income’. Projects W.L.L.** Legend Trading and Qatar Trading of automobile products 100% 100% 2.4. Investment properties Distribution W.L.L. Aamal for Car Maintenance W.L.L. Qatar Trading of car spare parts 100% 100% Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the consolidated Group, is classified as investment property. Investment property also includes property Innovative Lighting W.L.L.* Qatar Trading of Light Emitting Diode (LED) Lamps 70% 70% that is being constructed or developed for future use as investment property. and other lighting products
Johnson Controls Qatar W.L.L.* Qatar Provision of facilities management services, 51% 51% Before 1 January 2019, all land held under operating leases was classified and accounted for by the Group as investment energy services, and building maintenance property when the rest of the definition of investment property is met. Therefore, the operating leases were accounted and cleaning services to corporate clients for as if they were a finance lease. Aamal Cables for Trading Qatar Trading of cables 100% - and Contracting After 1 January 2019, all leases that meet the definition of investment property are classified as investment property and measured at fair value. * These entities are under liquidation. ** Inactive operations. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing Details of the equity-accounted investees of the Group are as follows: costs. After initial recognition, investment property is carried at fair value.
After initial recognition, investment property is carried at fair value. Investment property that is being redeveloped Group effective Country of shareholding for continuing use as investment property, or for which the market has become less active, continues to be measured Company Name incorporation Principal activities percentage at fair value. Investment property under construction is measured at fair value if the fair value is considered to be reliably 2020 2019 determinable. Investment properties under construction for which the fair value cannot be determined reliably, but for which the Group expects the fair value of the property will be reliably determinable when construction is completed, are measured Joint ventures at cost less impairment until the fair value becomes reliably determinable or construction is completed - whichever is earlier. Senyar Industries Qatar Qatar Owning of patents, businesses and subletting them 50% 50% Holding W.L.L. and provision of investment portfolio management It may sometimes be difficult to determine reliably the fair value of the investment property under construction. In order for its subsidiaries and associates to evaluate whether the fair value of an investment property under construction can be determined reliably, management Advanced Pipes and Casts Qatar Manufacturing of wide range of cement and glass 50% 50% considers the following factors, among others: Industries W.L.L. reinforced pipes systems for infrastructure and pipeline projects • the provisions of the construction contract; • the stage of completion; Aamal ECE W.L.L.* Qatar Property management 51% 51% • whether the project/property is standard (typical for the market) or non-standard; Ecco Gulf Company W.L.L.* Qatar Offers professional and business process outsourcing 51% 51% • the level of reliability of cash inflows after completion; and call centre services • the development risk specific to the property; Associate • past experience with similar constructions; and • status of construction permits. Frijns Structural Steel Middle Qatar Steel fabrications 20% 20% East W.L.L. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. *Whilst the Parent Company’s ownership proportion in Aamal ECE W.L.L. and Ecco Gulf Company W.L.L. is 51%, the joint venture agreements between the All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, Company and other shareholders indicate joint control and hence, the investments are equity-accounted by the Parent Company. the cost of the replacement is included in the carrying amount of the property, and the fair value is reassessed. P.124 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.125
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 2. BASIS OF PREPARATION AND CONSOLIDATION continued profit or loss and other comprehensive income in the year the asset is derecognised. 2.4. Investment properties continued If a valuation obtained for a property held under a lease is net of all payments expected to be made, any related lease The asset’s residual values, useful lives and method of depreciation are reviewed, and adjusted if appropriate, at each liability recognised separately in the consolidated statement of financial position is added back to arrive at the carrying financial year end. value of the investment property for accounting purposes. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in Changes in fair values are recognised in the consolidated statement of profit or loss and other comprehensive income. the consolidated statement of profit or loss and other comprehensive income. Investment properties are derecognised when they have been disposed of. 2.6. Cash and cash equivalents Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the consolidated statement of profit or loss For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and bank balances, within net gain from fair value adjustment on investment property. unrestricted balances held with banks and short term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. 2.7. Trade and other receivables
If an item of owner-occupied property becomes an investment property because its use has changed, any difference Trade and other receivables are amounts due from customers for goods sold or services performed in the ordinary course of resulting between the carrying amount and the fair value of this item at the date of transfer is treated in the same way as business. They are generally due for settlement within 30 days and therefore are all classified as current. a revaluation under IAS 16. Any resulting increase in the carrying amount of the property is recognised in consolidated statement of profit or loss and other comprehensive income to the extent that it reverses a previous impairment loss, with Trade receivables are recognised initially at amount of consideration that is unconditional unless they contain significant any remaining increase recognised in other comprehensive income and increase directly to equity in revaluation surplus financing components, when they are recognised at fair value. The Group holds the receivables with the objective to collect within equity. Any resulting decrease in the carrying amount of the property is initially charged in other comprehensive the contractual cash flows and therefore measures them subsequently at amortised cost using effective interest method less income against any previously recognised revaluation surplus, with any remaining decrease charged to consolidated loss allowance. See note 30.1(b) for a description of the Group’s impairment policies. statement of profit or loss and other comprehensive income. 2.8. Inventories Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property’s deemed cost for subsequent accounting as inventories is its fair Raw materials, work in progress, finished goods and goods for resale are stated at the lower of cost and net realisable value. value at the date of change in use. 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 2.5. Property, plant and equipment 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 Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is the estimated costs necessary to make the sale. 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 2.9. Contributed equity 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. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated shown in equity as a deduction, net of tax, from the proceeds. statement of profit or loss and other comprehensive income during the financial period in which they are incurred. Where any Group company purchases the company’s equity instruments, for example as the result of a share buy-back or From time to time, the Group’s vessels are required to be dry-docked for inspection and re-licensing at which time major a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income repairs and maintenance that cannot be performed while the vessels are in operation are generally performed. The Group taxes) is deducted from equity attributable to the owners of the Group as treasury shares until the shares are cancelled or capitalises the costs associated with dry-docking as they occur by adding them to the cost of the vessel and amortises these reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable costs on the straight-line basis over 3-5 years, which is generally the period until the next scheduled dry-docking. incremental transaction costs and the related income tax effects, is included in equity attributable to the shareholders of the Group. 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: 2.10. Borrowings
Buildings 20-25 years Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at Leasehold improvements 2 - 8 years or over the period of lease term, whichever is shorter amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in Truck mixers and motor vehicles 4-15 years profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan Plant and machinery 8-25 years 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 Furniture, fixtures and office equipment 3-5 years 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 Vessels 20 years over the period of the facility to which it relates. 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. P.126 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.127
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2.14.3. Measurement 2. BASIS OF PREPARATION AND CONSOLIDATION continued At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair 2.10. Borrowings continued value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. 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 Debt instruments been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the consolidated statement of profit or loss and other comprehensive income as other Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash income or finance costs. flow characteristics of the asset. There are three measurement categories. The Group classifies all their debt instruments into the amortised cost category. 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 consolidated statement of profit or loss and • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely other comprehensive income, which is measured as the difference between the carrying amount of the financial liability and payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included the fair value of the equity instruments issued. in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability are presented as separate line item in the consolidated statement of profit or loss and other comprehensive income. for at least 12 months after the reporting period. • FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ 2.11. Borrowing costs cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). All other borrowing costs are expensed in the year these are incurred. Borrowing costs consist of the interest and other costs Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign that the Group incurs in connection with the borrowing of funds. exchange gains and losses are presented in other gains/(losses) and impairment expenses are included within the general and administrative expenses in the consolidated statement of profit or loss and other comprehensive income. 2.12. Accounts payable and accruals • FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/ business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less. (losses) in the period in which it arises. If not, they are presented as non-current liabilities. 2.14.4. Impairment Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. 2.13. Tenant deposits For trade receivables, the Group applies the simplified approach permitted by IFRS 9 for trade receivables and other Tenant deposit liabilities are initially recognised at fair value and subsequently measured at amortised cost where material. contract assets, which requires expected lifetime losses to be recognised from initial recognition of the receivables, Any difference between the initial fair value and the nominal amount is included as a component of rental income and see note 30.1(b) for further details. recognised on a straight-line basis over the lease term. 2.15. Provisions 2.14. Financial assets Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is 2.14.1. Classification 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. The Group classifies its financial assets as those to be measured at amortised cost. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined The classification depends on the Group’s business model for managing the financial assets and the contractual terms by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect of the cash flows. to any one item included in the same class of obligations may be small.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). increase in the provision due to passage of time is recognised as interest expense. The Group reclassifies debt investments when and only when its business model for managing those assets changes. 2.16. Employees’ end of service benefits 2.14.2. Recognition and derecognition 2.16.1. Defined benefit plan Regular 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 A defined benefit plan is a pension plan made in accordance with the Qatar Labour Law number 14 of 2004, where the have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. 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. P.128 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.129
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED cost plus margin. Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the 2. BASIS OF PREPARATION AND CONSOLIDATION continued circumstances that give rise to the revision become known by management. 2.16 Employees’ end of service benefits continued 2.16.1. Defined benefit plan continued In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered The liability recognised in the consolidated statement of financial position in respect of employees’ end of service by the Group exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract indemnity is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit liability is recognised. If the contract includes an hourly fee, revenue is recognised in the amount to which the Group has a obligation is calculated annually by management using the projected unit credit method. The present value of the defined right to invoice. Customers are invoiced on a monthly basis and consideration is payable when invoiced. 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 (iv) Financing components approximating to the terms of the related benefit obligation. Where there is no deep market in such bonds, the market rates The Group does not expect to have any contracts where the period between the transfer of the promised goods or services on government bonds are used. to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. 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. 2.18. Fair value measurement
Past-service costs are recognised immediately in the consolidated statement of profit or loss and other comprehensive income. Fair 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: 2.16.2. Other short-term employees benefits • 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 Short-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 The principal or the most advantageous market must be accessible by the Group. 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. 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. 2.17. Revenue A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic (i) Sale 0f goods manufactured by the Group benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset The Group manufactures and sells ready mix concrete, curb stone, interlock slabs and cement bricks. Sales are recognised in its highest and best use. when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised criteria for acceptance have been satisfied. 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: A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. • 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 (ii) Sale 0f goods is directly or indirectly observable The Group operates wholesale and retail distribution of pharmaceuticals and general consumable products, wholesale • Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement distribution of medical equipment, retail sale of tyres, lubricants, batteries, home appliances, footwear, general commercial is unobservable trading products, baby care products, medicine and general consumable products, aggregates, office supplies, automobile products and car spare parts. Revenue from the sale of goods is recognised when a Group entity sells a product to the For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the Group customer. Payment of the transaction price is due within 30 to 60 days when the customer purchases the goods. 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. (iii) Rendering of services The Group provides various services including installation of medical equipment, clinical activities, family entertainment park The Group measures its investment properties at fair value at each reporting date. facilities, facilities management and cleaning services, business process outsourcing and call centre services and printing and lamination services. The Group also operates a travel agency. 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 Revenue from providing services is recognised in the accounting period in which the services are rendered. Revenue is and whether professional standards are maintained. The management discusses and reviews, the Group’s external valuers, recognised based on the actual service provided to the end of the reporting period as a proportion of the total services valuation techniques and assumptions used for each property (note 5). to be provided, because the customer receives and uses the benefits simultaneously. For cleaning services and call centre services, this is determined using the input method approach and is based on the actual labour hours spent relative to the 2.19. Dividends total expected labour hours. Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of Some contracts include multiple deliverables, such as selling and installation of medical equipment. However, the installation the Group, on or before the end of the reporting period but not distributed at the end of the reporting period. is simple, does not include an integration service and could be performed by another party. It is therefore accounted for as a separate performance obligation. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected P.130 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.131
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 3.2. Lease liabilities 2. BASIS OF PREPARATION AND CONSOLIDATION continued 2020 2019
2.20. Earnings per share Balance at the beginning of the year 85,035,811 - Initial adoption at the beginning of the period - 74,513,282 (i) Basic earnings per share Additions during the period 38,524,965 20,409,409 Lease modification (64,426,829) - Basic earnings per share is calculated by dividing: Less: Lease payments made by the entity (19,686,860) (13,160,608) Interest expense 7,702,416 3,273,728 • the profit attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares • by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus Balance at the end of the year 47,149,503 85,035,811 elements in ordinary shares issued during the year and excluding treasury shares. Classification of: Current 15,955,123 16,359,141 (ii) Diluted earnings per share Non-current 31,194,380 68,676,670 Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: Total lease liabilities 47,149,503 85,035,811
• the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, 4. EQUITY-ACCOUNTED INVESTEES and • the weighted average number of additional ordinary shares that would have been outstanding assuming the The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The conversion of all dilutive potential ordinary shares. 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. 2.21. Income tax Summarised financial information of equity-accounted investees: The Group applies its income tax in accordance with the new Qatar Income Tax Law No. 24 of 2018. The new law has replaced the old Qatar Income Tax Law No. 21 of 2009. Reconciliation to carrying amounts Frijns Structural Steel Middle East Senyar Industries 3. RIGHT-OF-USE ASSETS / LEASE LIABILITIES W.L.L. Qatar Holding W.L.L. Others Total 31 December 2020 3.1. Right-of-use assets Opening net assets 80,241,852 532,443,587 21,267,644 633,953,083 2020 2019 Other adjustments 16,193,147 - (480,429) 15,712,718 Cost: Adjusted opening net assets 96,434,999 532,443,587 20,787,215 649,665,801 Balance at the beginning of the year 94,922,691 - Profit for the year 9,671,125 92,350,005 1,402,006 103,423,136 Initial adoption at the beginning of the year - 74,513,282 Capital contribution - - 25,000,000 25,000,000 Additions during the period 36,851,783 20,409,409 Dividends paid - (182,272,950) - (182,272,950) Lease modification (57,811,535) - Closing net assets 106,106,124 442,520,642 47,189,221 595,815,987 Balance at the end of the year 73,962,939 94,922,691 Group share in % 20% 50% Group share 21,221,225 221,260,321 23,966,363 266,447,909 Accumulated amortisation: Carrying amount 21,221,225 221,260,321 23,966,363 266,447,909 Balance at the beginning of the year 10,899,774 - Amortisation for the year 19,488,775 10,899,774 Group share in profit (loss) including other adjustments 5,172,854 46,175,003 (920,363) 50,427,494 Balance at the end of the year 30,388,549 10,899,774 31 December 2019 Net carrying amount: At the beginning of the year 84,022,917 - Opening net assets 50,558,816 616,899,409 6,911,890 674,370,115 At the end of the year 43,574,390 84,022,917 Other adjustments 42,090,527 - 23,643,676 65,734,203 Adjusted opening net assets 92,649,343 616,899,409 30,555,566 740,104,318 The amortisation charge for the period has been disclosed in the profit or loss and other comprehensive income as follows: Profit (loss) for the year (407,491) 111,519,352 1,316,451 112,428,312 Dividends paid (12,000,000) (195,975,174) (10,604,373) (218,579,547) 2020 2019 Closing net assets 80,241,852 532,443,587 21,267,644 633,953,083 Group share in % 20% 50% General and administrative expenses 19,267,123 10,199,574 Group share 16,048,370 266,221,794 12,386,727 294,656,891 Direct costs 221,652 700,200 Carrying amount 16,048,370 266,221,794 12,386,727 294,656,891 19,488,775 10,899,774 Group share in profit (loss) including other adjustments 8,336,607 55,759,676 (1,830,965) 62,265,318 P.132 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.133
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4. EQUITY-ACCOUNTED INVESTEES continued Summarised statement of profit or loss and other comprehensive income
Frijns Structural Senyar Industries Summarised statement of financial position Steel Middle East Qatar Holding 31 December 2020 W.L.L. W.L.L. Others Frijns Structural Steel Middle East Senyar Industries Revenue 114,312,580 1,395,953,232 106,275,319 31 December 2020 W.L.L. Qatar Holding W.L.L. Others Direct costs (67,222,121) (1,241,191,187) (91,163,601) Current assets Gross profit 47,090,459 154,762,045 15,111,718 Cash and bank balances 10,345,200 59,320,327 32,023,537 Other income (851,416) (470,268) 1,130,826 Other current assets 136,948,987 775,604,169 70,186,899 General expenses (27,490,063) (36,349,296) (10,150,243) Total current assets 147,294,187 834,924,496 102,210,436 Impairment losses on financial assets (7,347,793) - - Non-current assets 59,790,119 341,930,872 136,037,616 Finance costs (1,730,062) (16,345,938) (4,690,295) Current liabilities Net profit 9,671,125 101,596,543 1,402,006 Financial liabilities (excluding trade payables) (4,458,037) (542,894,479) (31,988,994) Other comprehensive income - - - Other current liabilities (58,477,225) (137,437,478) (46,655,580) Total comprehensive income 9,671,125 101,596,543 1,402,006 Total current liabilities (62,935,262) (680,331,957) (78,644,574) Total comprehensive loss attributable to Non- current liabilities non-controlling interests - (9,246,538) - Financial liabilities (excluding trade payables) (29,233,765) - (108,289,928) Total comprehensive income attributable to equity holders of the parent 9,671,125 92,350,005 1,402,006 Other non-current liabilities (8,809,155) (18,014,692) (4,124,329) Total non-current liabilities (38,042,920) (18,014,692) (112,414,257) 31 December 2019 Non-controlling interests - (50,656,055) - Revenue 97,623,150 1,455,122,773 100,087,285 Net assets 106,106,124 427,852,664 47,189,221 Direct costs (65,863,666) (1,280,005,027) (82,514,321) Gross profit 31,759,484 175,117,746 17,572,964 31 December 2019 Other income/(expense) 4,058,817 3,592,918 (5,757) Current assets General expenses (34,781,759) (33,470,331) (9,309,200) Cash and bank balances 3,414,251 65,556,042 18,136,774 Finance costs (1,444,033) (22,015,195) (6,941,556) Other current assets 121,682,854 804,909,610 41,455,503 Net profit/(loss) (407,491) 123,225,138 1,316,451 Total current assets 125,097,105 870,465,652 59,592,277 Other comprehensive income - - - Non-current assets 49,589,123 330,560,070 138,372,746 Total comprehensive income/(loss) (407,491) 123,225,138 1,316,451 Current liabilities Total comprehensive loss attributable Financial liabilities (excluding trade payables) (3,126,869) (453,230,169) (35,630,298) to non-controlling interest - (11,705,786) - Other current liabilities (50,749,915) (163,366,412) (59,114,128) Total comprehensive income/(loss) attributable Total current liabilities (53,876,784) (616,596,581) (94,744,426) to equity holders of the parent (407,491) 111,519,352 1,316,451 Non- current liabilities Financial liabilities (excluding trade payables) (29,720,445) (7,102,310) (78,765,882) Other non-current liabilities (10,847,147) (11,331,329) (3,187,071) Total non-current liabilities (40,567,592) (18,433,639) (81,952,953) Non-controlling interests - (55,945,617) - Net assets 80,241,852 510,049,885 21,267,644 P.134 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.135
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED Material valuation uncertainty
5. INVESTMENT PROPERTIES The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries. 2020 2019 Market activity is being impacted in many sectors. As at the valuation date, lesser weight can be attached to previous market At 1 January 7,208,113,690 7,168,589,734 evidence for comparison purposes to inform opinions of value. Indeed, the current response to COVID 19 means that an Additions during the year 31,820,462 39,523,956 unprecedented set of circumstances are encountered on which to base a judgement. Net loss from fair value adjustment (121,591,633) - COVID-19 impacted the retail sector during the year with the Group providing rent concessions to retailers during Q2 and Q3. At 31 December 7,118,342,519 7,208,113,690 As at 31 December 2020, no rent concessions are in place and the Group’s assets performance is returning to more normal levels.. Accordingly, no additional reduction in value has been applied in the valuation for any economic obsolescence. • Investment properties are located in the State of Qatar. The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase investment properties or repairs, maintenance and The valuations are therefore reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS enhancements. Red Book Global. Consequently, less certainty – and a higher degree of caution – should be attached to the valuations than would normally be the case. Given the unknown future impact that COVID-19 might have on the real estate market, the • The investment properties are stated at fair value, which has been determined based on valuations performed by Directors’ will ensure that the valuation of these properties are kept under frequent review. independent valuers as at 31 December 2020. Those valuers are accredited with recognised and relevant professional qualifications and with recent experience in the location and category of those investment properties being valued. In The inclusion of the ‘material valuation uncertainty’ declaration in the valuation reports does not mean that the valuation arriving at estimated market values, the valuers have used their market knowledge and professional judgement and not cannot be relied upon. It is used in order to be clear and transparent with all parties, in a professional manner that – in the only relied on historical transactional comparable. In the absence of current prices in an active market, the valuations are current extraordinary circumstances – less certainty can be attached to the valuation than would otherwise be the case. based on investment, comparable, and depreciated replacement cost (DRC) method with inputs based upon comparable market transactions on an arm’s length terms. Sensitivity analysis:
• Investment properties are measured at fair value using significant unobservable inputs (Level 3). At 31 December 2020, 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 • Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December are as follows: properties for the year would have been QR 71 million lower/higher mainly as a result of higher/lower fair value gain (loss) on investment properties. 2020 2019 Minimum lease receivables on leases of investment properties are as follows: Vacant land 134,370,000 134,334,955 Completed properties: 2020 2019 Commercial properties 4,081,665,698 4,221,170,750 Residential properties 845,562,519 806,284,145 Within one year 147,688,255 171,202,930 Mixed (residential and commercial) 1,727,570,000 1,748,970,000 Between 1 and 5 years 205,496,989 327,686,475 Properties under construction 329,174,302 297,353,840 Total at 31 December 353,185,244 498,889,405 Total at 31 December 7,118,342,519 7,208,113,690 Amounts recognised in profit or loss for investment properties are as follows: Movement in properties under construction is as follows: 2020 2019 2020 2019 Rental income 180,504,698 275,552,608 Beginning at 1 January 297,353,840 258,201,684 Direct operating expenses from properties that generated rental income 21,075,051 32,754,920 Additions during the year 25,540,768 27,837,927 Fair value loss recognised (121,591,633) - Borrowing costs capitalized during the year 6,279,694 11,314,229 Ending at 31 December 329,174,302 297,353,840
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
Commercial properties Market approach 2,750 to 3,300 QR/sqft Land rate Depreciated replacement cost 1,706 to 4,273 QR Depreciated rebuild rate
Residential properties Market approach 375 to 2,150 QR Land rate Depreciated replacement cost 2,041 to 5,031 QR Depreciated rebuild rate
Vacant land Market approach 575 to 775 QR/sqft Land rate P.136 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.137
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED The Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation as outlined in note 2.5. This estimate is determined after considering the expected usage of the asset, physical 6. PROPERTY, PLANT AND EQUIPMENT 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. Furniture, Buildings and Truck mixers fixtures Capital leasehold and motor Plant and and office work in At year-end, if the useful life increased / decreased by 5% against the current useful life with all other variables held improvements vehicles machinery equipment Vessels progress Total constant, profit for the year would have been lower by QR 1,382,860 or higher by QR 1,496,660 (2019: lower by QR 2,886,109 or higher by QR 2,611,242). Cost: At 1 January 2020 157,382,527 123,228,469 145,087,921 54,006,260 73,507,640 7,895,824 561,108,641 7. CASH AND BANK BALANCES Additions 71,460 111,500 853,786 1,526,866 5,524,626 2,683,979 10,772,217 For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following balances: Disposals/write-off (1,431,444) (6,012,383) (475,532) (2,295,526) - - (10,214,885) Transfer from capital work 3,442,524 - - - - (3,442,524) - in progress 2020 2019 Other adjustments ------Cash on hand 33,398 142,548 At 31 December 2020 159,465,067 117,327,586 145,466,175 53,237,600 79,032,266 7,137,279 561,665,973 Cash in banks – current accounts 184,512,205 362,431,384
Accumulated depreciation: Cash in banks – call accounts 100,847,398 143,682,112 At 1 January 2020 41,461,369 80,305,327 93,193,867 45,423,506 7,880,212 - 268,264,281 Short term fixed deposits 2,952,488 8,447,679 Charge for the year 6,352,568 7,760,369 8,269,216 4,600,714 1,755,516 - 28,738,383 Restricted deposits relating to letters of guarantee 2,005,794 4,613,654 Disposals/write-off (1,357,475) (6,012,382) (441,372) (2,295,376) - - (10,106,605) Cash and bank balances 290,351,283 519,317,377 Other adjustments 24,787 - (43,711) 18,924 - - - Restricted deposits relating to letters of guarantee (2,005,794) (4,613,654) At 31 December 2020 46,481,249 82,053,314 100,978,000 47,747,768 9,635,728 - 286,896,059 288,345,489 514,703,723
Net carrying amounts: 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. At 31 December 2020 112,983,818 35,274,272 44,488,175 5,489,832 69,396,538 7,137,279 274,769,914
Cash is held in banks with reputable credit ratings as follows: Notes: (i) Depreciation charge for the year amounting to QR 16,965,033 (2019: QR 17,671,735) is included in the direct costs. Credit rating Rating Agency 2020 2019 (ii) The capital work in progress does not include capitalised borrowing cost in the current year (2019: Nil). P-1 Moody’s 248,638,712 353,214,420 (iii) The buildings are constructed on a plot of land taken on a long term operating lease. P-2 Moody’s 37,822,581 160,573,898 Furniture, Others Moody’s 3,856,592 5,386,511 Buildings and Truck mixers fixtures Capital 290,317,885 519,174,829 leasehold and motor Plant and and office work in improvements vehicles machinery equipment Vessels progress Total
Cost: At 1 January 2019 162,380,612 124,939,409 142,291,265 55,492,756 73,507,640 8,397,001 567,008,683 Additions 1,001,950 - 3,385,876 3,617,926 - 798,540 8,804,292 Disposals/write-off (7,093,187) (1,740,940) (589,220) (1,793,218) - - (11,216,565) Transfer from capital work 1,093,152 30,000 - - - (1,123,152) - in progress Other adjustments - - - (3,311,204) - (176,565) (3,487,769) At 31 December 2019 157,382,527 123,228,469 145,087,921 54,006,260 73,507,640 7,895,824 561,108,641
Accumulated depreciation: At 1 January 2019 40,861,493 73,945,638 85,331,437 44,833,296 6,124,695 - 251,096,559 Charge for the year 7,683,604 8,100,624 8,451,649 4,571,271 1,755,517 - 30,562,665 Disposals/write-off (7,083,728) (1,740,935) (589,219) (1,763,769) - - (11,177,651) Other adjustments - - (2,217,292) - - (2,217,292) At 31 December 2019 41,461,369 80,305,327 93,193,867 45,423,506 7,880,212 - 268,264,281
Net carrying amounts: At 31 December 2019 115,921,158 42,923,142 51,894,054 8,582,754 65,627,428 7,895,824 292,844,360
Significant estimate - useful lives of property, plant and equipment P.138 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.139
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED Transactions with related parties included in the consolidated statement of profit or loss and other comprehensive income were as follows: 8. TRADE AND OTHER RECEIVABLES 2020 2019 2020 2019 Sale of goods and services to: Ultimate parent 2,471,919 7,780,865 Trade receivables 461,065,438 388,924,395 Entities controlled by ultimate parent 14,118,684 9,036,613 Less: Impairment of trade receivables (68,348,357) (75,636,730) Associate 284,697 1,356,715 392,717,081 313,287,665 Advances to suppliers and prepayments 72,593,080 48,716,686 16,875,300 18,174,193 Retention receivables – current portion 7,701,993 15,209,349 Rental income from: Other receivables 29,181,293 35,850,005 Ultimate parent 341,373 398,400 502,193,447 413,063,705 Entities controlled by ultimate parent 9,001,763 520,784 9,343,136 919,184 The total retention receivables as at 31 December is as follows: 2020 2019 Notes: (i) Transactions with related parties are carried out through open account and Directors do not consider any receivables to Current portion 7,701,993 15,209,349 be past due or impaired. Non-current portion 4,031,144 5,712,228 11,733,137 20,921,577 (ii) Other related party transactions are disclosed in Note 26.
As at 31 December 2020, trade receivables amounting to QR 68,348,357 (2019: QR 75,636,730) were impaired. Movements in 10. INVENTORIES the allowance for impairment of trade accounts receivable were as follows: 2020 2019 2020 2019
Opening loss allowance as at 1 January 75,636,730 88,266,099 Goods for resale 150,456,795 152,466,847 Other adjustments - (3,705) Raw materials and spare parts 11,865,701 11,862,774 Charges net of recoveries for the year 77,403 14,515,887 Work in progress 91,556 562,638 Amounts written-off (7,365,776) (27,141,551) Goods in transit 1,531,617 1,531,613 At 31 December 68,348,357 75,636,730 163,945,669 166,423,872 Information about the impairment on trade receivables can be found in note 30. Less: write-down of inventories to net realisable value (2,801,368) (2,443,419) 161,144,301 163,980,453 9. AMOUNTS DUE FROM RELATED PARTIES Movements in the provision for obsolete and slow-moving inventories were as follows: 2020 2019 2020 2019 Ultimate parent Al Faisal Holding Company W.L.L. 175,927,754 4,294,111 At 1 January 2,443,419 2,589,956 Charges net of reversals during the year (Note 18) 1,400,430 1,750,088 Entities controlled by ultimate parent Write-off during the year (1,042,481) (1,896,625) Al Rayyan Tourism Investment Company W.L.L. 6,809,985 8,707,997 At 31 December 2,801,368 2,443,419 Maintenance Management Group Qatar W.L.L. 353,268 197,965 Al-Arabia Land Transporting Company W.L.L. 882,090 864,625 Al Farman for Investment & International Trading Company W.L.L. 14,250 540,876 Gulf English School 33,989 773,012 Derwind Trading and Contracting Company W.L.L. 7,684,854 - Other related parties 26,318,974 3,695,373 42,097,410 14,779,848 Joint venture Advanced Pipes and Casts Company W.L.L. 15,006,291 17,462,175 ECCO Gulf Company W.L.L. 3,695,476 1,152,802 Senyar Industries W.L.L. 558,703 - Frijns Steel Construction Middle East W.L.L. 18,855 1,233,295 19,279,325 19,848,272 237,304,489 38,922,231
Outstanding related party balances are unsecured and are repayable in cash. Related party balance includes settlement made by the Company on behalf of their parent company during the year of QR 183 million. P.140 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.141
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 12. LEGAL RESERVE
11. SHARE CAPITAL 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 2020 2019 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. Authorised, issued and paid 6,300,000,000 shares of QR 1 each 6,300,000,000 6,300,000,000 13. BORROWINGS
All shares are of same class and carry equal voting rights. Notes Maturity 2020 2019
11.1 Non-controlling interests Loan 1 (i) November 2023 305,819,419 372,841,527 Loan 2 (ii) December 2022 97,039,348 145,207,659 Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to Loan 3 (iii) May 2022 667,823 1,139,228 the Group. The amounts disclosed for each subsidiary are before inter-company eliminations. Loan 4 (iv) November 2025 184,980,051 - 588,506,641 519,188,414 Summarised consolidated statement of financial position Ci-San Trading W.L.L. Less: Deferred financing cost (5,093,469) (4,264,527) 31 December 31 December 2020 2019 583,413,172 514,923,887
Current assets 59,381,545 66,341,147 Presented in the consolidated statement of financial position as follows: Current liabilities (4,613,727) (3,716,716) Current net assets 54,767,818 62,624,431 2020 2019
Non-current assets 69,762,894 65,646,881 Current portion 139,474,580 114,719,958 Non-current liabilities (137,049) (122,425) Non-current portion 443,938,592 400,203,929 Non-current net assets 69,625,845 65,524,456 583,413,172 514,923,887
Net Assets 124,393,663 128,148,887 The deferred financing costs consist of arrangement fees. The movements in the deferred financing costs were as follows:
Accumulated effective NCI 31,560,394 32,856,111 2020 2019 NCI of remaining subsidiaries 3,992,386 4,274,579 At 1 January 4,264,527 5,444,694 Total 35,552,780 37,130,660 Recognized during the year 2,016,227 - Summarised consolidated statement of profit or loss and other Amortised during the year (Note 22) (1,187,285) (1,180,167) comprehensive income Ci-San Trading W.L.L. At 31 December 5,093,469 4,264,527 2020 2019 Notes: Revenue 46,077,622 48,530,409 (i) Loan 1 represents a loan drawn down on 11 December 2018 to finance the working capital requirements and the (Loss)/Profit for the year (3,755,224) 1,075,690 investments of the Group. The loan is payable in 18 quarterly instalments with effect from August 2019. The loan carries Other comprehensive income/(loss) - - interest at commercial market rates. Total comprehensive (loss)/income (3,755,224) 1,075,690 (ii) Loan 2 represents a loan drawn down on 10 January 2018 to finance the reconstruction and refurbishment of City (Loss)/Profit allocated to NCI (Effective) (965,483) 257,056 Centre. The loan is payable in 17 quarterly instalments with effect from 24 December 2018. The loan carries interest at commercial market rates. Dividends paid to NCI - - (iii) Loan 3 was obtained on 12 July 2016, to finance the purchase of vehicles, plant and machinery. The loan is payable by 51 monthly instalments of QR 46,355 in the first month with effect from 1 June 2017 and QR 39,284 in the subsequent Summarised statement of consolidated cash flows Ci-San Trading W.L.L. months. The loan carries interest at commercial market rates. 2020 2019 (iv) Loan 4 was obtained on 10 December 2020 to finance the working capital requirements and the investments of the Cash flows from operating activities (15,206,635) 20,002,364 Group. The loan is payable in 57 monthly instalments with effect from 31 March 2021. The loan carries interest at Cash flows from investing activities (5,800,874) 67,960 commercial market rates. Net (decrease)/increase in cash and cash equivalents (21,007,509) 20,070,324 P.142 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.143
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. AMOUNTS DUE TO RELATED PARTIES 13. BORROWINGS continued 2020 2019
Entities controlled by ultimate parent The Group has complied with the financial covenants of its borrowing facilities during the 2020 and 2019 reporting period. Gettco Company W.L.L. – Gettco Refrigeration and Air-conditioning 1,494,790 660,486
Net debt reconciliation Al Jazi Real Estate Investment Company W.L.L. 943,761 317,710 Integrated Information Systems W.L.L. 1,061,540 535,566
Due within one year Due after one year AL Sawari Holding Company W.L.L. 7,145,966 -
Cash/ Lease Lease Other related parties 3,525,440 2,810,969 overdraft Borrowing liabilities Borrowing liabilities Total 14,171,497 4,324,731 Joint venture Net debt as at 1 January 2020 514,703,723 (114,719,958) (16,359,141) (400,203,929) (68,676,670) (85,255,975) Aamal ECE W.L.L. 16,569,487 9,008,446 Net movement in lease 30,740,984 13,333,177 acquisition and write-off - - (11,580,427) - 37,482,290 25,901,863 Non-cash movement of Transactions with related parties during the year were as follows: interest expense on IFRS 16 - - (7,702,416) - - (7,702,416) 2020 2019 New loan drawn - (24,637,501) - (158,337,499) - (182,975,000) Cash flows (226,358,234) (117,121) 19,686,861 114,602,836 - (92,185,658) Purchase of goods and services from: Net debt as at 31 December 2020 Entities controlled by ultimate parent 16,641,748 5,130,689 (Note 30.2) 288,345,489 (139,474,580) (15,955,123) (443,938,592) (31,194,380) (342,217,186) Rental expense: Net debt as at 1 January 2019 599,889,857 (85,665,476) - (514,887,993) - (663,612) Ultimate parent 4,737,355 6,225,924 Recognised on adoption of IFRS 16 - - (12,692,331) - (61,820,951) (74,513,282) Entities controlled by ultimate parent 9,444,739 2,292,676 Acquisition - leases - - (13,553,690) - (6,855,719) (20,409,409) 14,182,094 8,518,600 Non-cash movement of interest - - (3,273,728) - - (3,273,728) Corporate management fees expense on IFRS 16 Ultimate parent 8,100,000 - Cash flows (85,186,134) (29,054,482) 13,160,608 114,684,064 - 13,604,056 Net debt as at 31 December 2019 Purchase of property, plant and equipment (Note 30.2) 514,703,723 (114,719,958) (16,359,141) (400,203,929) (68,676,670) (85,255,975) Entities controlled by ultimate parent 14,500 -
14. EMPLOYEES’ END OF SERVICE BENEFITS Operator’s management fees Joint venture 8,802,219 13,457,440 Movements in the provision reflected in the consolidated statement of financial position were as follows: Note: 2020 2019 A joint venture manages the operations of City Centre Mall. Other related party transactions are disclosed in Note 26. At 1 January 26,093,077 26,204,583 Provision made during the year (Note 21) 3,326,429 3,677,343 17. REVENUES Other adjustments - (1,646,895) Commission, Service incentives and Rental End of service benefits paid during the year (3,362,458) (2,141,954) Sale of goods income agency fees Income Total At 31 December 26,057,048 26,093,077 2020: 15. ACCOUNTS PAYABLE AND ACCRUALS At a point in time 1,003,321,901 13,249,818 58,132,493 - 1,074,704,212 Overtime - 37,623,606 - - 37,623,606 2020 2019 Rental Income - - - 194,513,070 194,513,070 Total 1,003,321,901 50,873,424 58,132,493 194,513,070 1,306,840,888 Trade accounts payable 196,831,557 239,287,225 2019: Advances from customers and tenants 48,929,273 49,219,082 At a point in time 876,138,423 32,753,293 44,554,141 - 953,445,857 Accruals 53,558,611 38,771,844 Overtime - 39,915,249 776,234 - 40,691,483 Other payables 64,068,456 73,191,691 Rental Income - - - 299,979,265 299,979,265 363,387,897 400,469,842 Total 876,138,423 72,668,542 45,330,375 299,979,265 1,294,116,605
P.144 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.145
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 21. STAFF COSTS
18. DIRECT COSTS 2020 2019
2020 2019 Salaries and wages 89,839,139 96,056,433 Employees’ end of service benefits (Note 14) 3,326,429 3,677,343 Cost of inventories recognised as an expense 830,103,965 732,589,723 Other employee benefits 600,455 2,585,372 Direct salaries and wages (Note 21) 35,709,850 32,207,317 93,766,023 102,319,148 Depreciation (Note 6) 16,965,033 17,671,735 Staff costs are presented as follows: Operator’s management fees 21,284,170 13,454,180 2020 2019 Operating expenses on real estate properties 21,075,051 32,754,920 Direct costs (Note 18) 35,709,850 32,207,317 Provision for obsolete and slow moving inventories (Note 10) 1,400,430 1,750,088 General and administrative expenses (Note 20) 58,056,173 70,111,831 Right-of-use amortisation 221,652 700,200 93,766,023 102,319,148 Other operating expenses 39,106,966 28,975,415 22. FINANCE COSTS 965,867,117 860,103,578
2020 2019 19. OTHER INCOME Interest expense 15,742,592 24,033,433 2020 2019 Interest expense on leases 7,702,416 3,273,728 Amortisation of deferred financing costs (Note 13) 1,187,285 1,180,167 Foreign exchange (loss) (2,613,686) (76,835) 24,632,293 28,487,328 Gain/(Loss) on disposal of property, plant and equipment 499,996 (23,950) Miscellaneous income 15,817,548 8,104,889 23. BASIC AND DILUTED EARNINGS PER SHARE 13,703,858 8,004,104 Basic earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the 20. GENERAL AND ADMINISTRATIVE EXPENSES weighted average number of ordinary shares outstanding during the year.
2020 2019 2020 2019
Management and employees’ compensation (Note 21) 58,056,173 70,111,831 Profit for the year attributable to equity holders of the parent (QR) 123,292,937 322,266,953 Right-of-use amortisation 19,267,123 10,199,574 Weighted average number of shares outstanding during the year 6,300,000,000 6,300,000,000 Depreciation 11,773,351 12,890,931 Basic and diluted earnings per share (QR) 0.02 0.05 Donations 9,445,154 5,758,689 Insurance and professional fees 9,359,134 8,329,049 24. COMMITMENTS Corporate management fees 8,100,000 - Rent (leases not capitalised) 2,831,030 6,118,449 2020 2019 Repairs and maintenance 2,542,200 3,221,552 Communication costs 1,515,068 1,475,676 Estimated capital expenditure approved and contracted for at the year-end but not provided for: Postage, printing and stationery 1,243,429 1,175,310 Investment properties 12,776,160 118,706,535 Bank charges 1,071,218 1,130,860 Property, plant and equipment 99,322 126,266 Training and business development 145,320 544,179 12,875,482 118,832,801 Miscellaneous expenses 7,773,865 13,987,946 133,123,065 134,944,046 P.146 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.147
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 27. DIVIDENDS
25. CONTINGENT LIABILITIES The shareholders of the Company approved at the Annual General Meeting held on 1 April 2020 a cash dividend of 4% of the share capital amounting to QR 252 million (QR 0.04 per share) from the profit of 2019 (2019: QR 378 million – QR 0.06 The Group had the following contingent liabilities from which it is anticipated that no material liabilities will arise. per share).
2020 2019 The Board of Directors proposed a cash dividend of 4% of the share capital amounting to QR 252 million (QR 0.04 per share) for the year 2020, which will be submitted for formal approval at the Annual General Assembly Meeting. Letters of guarantee 145,147,702 139,115,482 Letters of credit 22,424,562 31,745,312 28. CONTRIBUTION TO SOCIAL AND SPORTS FUND
Notes: During the year, the Group appropriated an amount of QR 3,082,323 (2019: QR 8,056,674) 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 (i) Letters of guarantee include performance, tender and bid bonds and payment guarantees given to suppliers and contractors Sports fund. The Group paid QR 8,056,674 to the Social and Sports fund during the year (2019: QR 13,131,766). by the Group in the ordinary course of business, which will mature within twelve months from the reporting date. 29. SEGMENT INFORMATION (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. For 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: 26. RELATED PARTY DISCLOSURE Property: A) RELATED PARTY TRANSACTIONS The segment involves leasing the facilities of retail outlet complex, real estate investments and property rental businesses. 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 Trading and distribution: the Group’s management. The segment represents wholesale and/or retail distribution of pharmaceutical and consumable items, home appliances, B) RELATED PARTY BALANCES medical equipment, tyres and lubricants and industrial printing.
Amounts due from and due to related parties are disclosed in notes 9 and 16, respectively. These balances consist of interest Industrial manufacturing: and non-interest bearing transactions and are repayable on mutually agreed dates, generally within one year. The segment involves manufacturing, wholesale and/or retail distribution of electric cables and tools, aggregates, ready-mix The Group did not record any impairment of receivables relating to amounts due from related parties in either year. This concrete and cement blocks and provision of services in relation to industrial investment, repair and construction of power assessment is undertaken each financial year through examining the financial position of the related party and the market in plants and management of industrial enterprises. which the related party operates. Managed services: C) COMPENSATION OF KEY MANAGEMENT PERSONNEL The segment involves provision of housekeeping and cleaning services, entertainment and amusement services, call center The remuneration of key management during the year was as follows: services and acting as travel agents.
Parent Company: 2020 2019
It provides corporate services to the subsidiaries of the Group. Short-term benefits 2,433,723 1,854,000 Employees’ end of service benefits 100,000 108,150 For each of the strategic divisions, the Group’s managing director (the chief operating decision maker) reviews internal 2,533,723 1,962,150 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 D) BOARD OF DIRECTORS REMUNERATION evaluated based on the financial position and operating profit or loss of these segments. Transfer pricing between operating segments are at amounts agreed between the parties. No remuneration has been proposed for Board of Directors for the year 2020 (2019: Nil). P.148 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.149
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 29.2 Assets and liabilities: 29. SEGMENT INFORMATION continued Trading and Industrial Managed Parent 29.1 Operating segments: Property distribution manufacturing services Company Eliminations (i) Total At 31 December 2020 The operating segment, after elimination of inter-company transactions, is presented as follows: Current assets 151,763,741 546,612,298 198,782,874 76,666,713 327,967,331 (110,799,437) 1,190,993,520 Non-current assets 7,219,183,934 32,011,988 171,954,488 41,097,413 289,534,502 (46,616,449) 7,707,165,876 Trading and Industrial Managed Parent Property distribution manufacturing services Company Eliminations Total Total assets 7,370,947,675 578,624,286 370,737,362 117,764,126 617,501,833 (157,415,886) 8,898,159,396 For the year ended 31 December 2020 Current liabilities 131,289,640 180,863,491 127,803,243 29,076,549 198,890,922 (118,365,261) 549,558,584 Revenues Non-current liabilities 50,180,880 24,195,053 8,946,612 36,525,115 418,963,136 (37,620,776) 501,190,020 - External parties 186,071,760 899,447,970 180,461,209 40,859,947 - - 1,306,840,886 Total liabilities 181,470,520 205,058,544 136,749,855 65,601,664 617,854,058 (155,986,037) 1,050,748,604 - Inter-segments (i) 3,111,151 8,406,702 22,192,681 5,863,167 - (39,573,701) - Capital expenditure (ii) 32,926,308 2,661,283 6,277,687 707,634 19,766 - 42,592,678 189,182,911 907,854,672 202,653,890 46,723,114 - (39,573,701) 1,306,840,886 - At a point in time 8,678,213 907,075,680 185,534,368 4,571,605 - (31,155,654) 1,074,704,212 At 31 December 2019 - Over time - 778,992 - 42,151,509 - (5,306,896) 37,623,605 Current assets 152,092,004 650,950,019 171,890,190 86,133,444 196,432,754 (122,214,645) 1,135,283,766 8,678,213 907,854,672 185,534,368 46,723,114 - (36,462,550) 1,112,327,817 Non-current assets 7,317,600,147 39,552,703 486,516,063 54,445,834 20,296,913 (33,061,574) 7,885,350,086 Rental income 180,504,698 - 17,119,522 - - (3,111,151) 194,513,069 Total assets 7,469,692,151 690,502,722 658,406,253 140,579,278 216,729,667 (155,276,219) 9,020,633,852 Operating results 14,984,740 121,836,810 (6,485,133) (2,693,840) (34,108,660) - 93,533,917 Current liabilities 141,880,846 231,051,063 101,023,437 28,997,608 166,515,701 (124,586,537) 544,882,118 Profit/(loss) for the year before share in results of Non-current liabilities 98,407,370 32,869,857 29,889,529 38,090,576 328,503,889 (32,787,545) 494,973,676 equity-accounted investees 15,111,253 120,629,094 (11,435,610) (4,484,045) 1,894,365 - 121,715,057 Total liabilities 240,288,216 263,920,920 130,912,966 67,088,184 495,019,590 (157,374,082) 1,039,855,794 Share in results of equity- Capital expenditure (ii) 40,322,873 3,118,745 2,728,093 2,123,454 35,083 - 48,328,248 accounted investees 3,783,122 - 43,854,801 2,789,570 (50,427,493) - - Profit/(loss) for the year 18,894,375 120,629,094 32,419,191 (1,694,475) (48,533,128) - 121,715,057 Notes: Depreciation 7,912,794 1,790,848 15,185,963 3,803,942 44,836 - 28,738,383 (i) Inter-segment balances are eliminated on consolidation. (ii) Capital expenditures consist of additions to property, plant and equipment and investment properties.
For the year ended 31 December 2019 Revenues 30. Financial risk management - External parties 283,690,725 794,766,311 160,777,130 54,882,439 - - 1,294,116,605 - Inter-segments (i) 6,418,134 4,846,492 8,341,044 8,259,537 - (27,865,207) - 30.1 Financial risk factors 290,108,859 799,612,803 169,118,174 63,141,976 - (27,865,207) 1,294,116,605 - At a point in time 14,556,251 793,142,682 138,273,383 15,917,770 - (14,138,116) 947,751,970 The Group’s principal financial liabilities comprise interest bearing loans and borrowings, bank overdrafts, amounts due to - Over time - 6,470,121 - 47,224,206 - (7,308,957) 46,385,370 related parties and trade accounts payable. The main purpose of these financial liabilities is to raise finance for the Group’s 14,556,251 799,612,803 138,273,383 63,141,976 - (21,447,073) 994,137,340 operations. The Group has various financial assets such as trade accounts and other receivables, amounts due from related Rental income 275,552,608 - 30,844,791 - - (6,418,134) 299,979,265 parties and bank balances which arise directly from its operations. Operating results 218,036,620 98,849,750 (40,757) 4,729,818 (35,770,972) - 285,804,459 The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The Board of Profit/(loss) for the year before share in results of Directors reviews and agrees policies for managing each of these risks, which are summarised below. equity-accounted investees 218,357,498 98,858,629 (1,478,520) 3,141,231 3,252,138 - 322,130,976 (a) Market risk Share in results of equity- accounted investees 5,578,756 - 54,096,283 2,590,279 (62,265,318) - - Market risk is the risk that changes in market prices, such as interest rates and foreign currency exchange rates will affect the Profit/(loss) for the year 223,936,254 98,858,629 52,617,763 5,731,510 (59,013,180) - 322,130,976 Group’s profit, equity or value of its holding of financial instruments. The objective of market risk management is to manage Depreciation 7,700,715 2,832,453 15,312,556 4,670,478 46,463 - 30,562,665 and control the market risk exposure within acceptable parameters, while optimising return.
Note: (i) Interest rate risk (i) Inter-segment revenues are eliminated on consolidation. The Group’s financial assets and liabilities that are subject to interest rate risk comprise bank deposits, interest bearing loans and borrowings and bank overdrafts. At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments was as follows: P.150 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.151
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED (i) Risk management 30. FINANCIAL RISK MANAGEMENT continued The Group sells its products and provides services to various parties. It is the Group’s policy that all customers who wish 30.1 Financial risk factors continued 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 2020 2019 creditworthiness may transact with the Group only on prepayment basis.
Fixed interest rate instruments: Property rentals are mostly received in advance or contracted with post-dated cheques. In addition, receivable balances Financial assets 2,952,488 8,447,679 are monitored on an ongoing basis and the purchase limits are established for each credit customer, which are reviewed Financial liabilities (667,824) (1,139,228) regularly based on the level of past transactions and settlement. Receivables amounting to QR 31,693,617 (2019: QR 2,284,664 7,308,451 24,038,483) are collaterised by tenant deposits of QR 45,553,218 (2019: QR 40,170,824). The fair value of the tenant deposits approximate its carrying amount. Floating interest rate instruments: Financial assets - - The Group’s maximum exposure with regard to trade receivables, net of allowance reflected at the reporting date, was as Financial liabilities (582,745,348) (513,784,659) follows:
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s financial assets and liabilities with floating interest rates. Gross trade Loss Net trade Business segment: receivables allowance receivables The following table demonstrates the sensitivity of the consolidated statement of profit or loss and other comprehensive 2020: income to reasonably possible changes in interest rates by 25 basis points, with all other variables held constant. The Property 31,894,649 (2,468,378) 29,426,271 sensitivity of the consolidated statement of profit or loss and other comprehensive income is the effect of the assumed Trading and distribution 292,496,670 (19,342,735) 273,153,935 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. Industrial manufacturing 121,378,252 (45,155,454) 76,222,798 Managed services 15,295,867 (1,381,790) 13,914,077 Changes in basis Net trade receivables 461,065,438 (68,348,357) 392,717,081 points Effect on profit
2020 Gross trade Net trade Business segment: receivables Loss allowance receivables Floating interest rate instruments +25 b.p. (846,282) 2019: 2019 Property 31,570,710 (7,532,227) 24,038,483 Floating interest rate instruments +25 b.p. (985,597) Trading and distribution 233,080,130 (25,450,514) 207,629,616
(ii) Foreign currency risk Industrial manufacturing 107,288,525 (40,935,921) 66,352,604 Managed services 16,985,030 (1,718,068) 15,266,962 Foreign currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange Net trade receivables 388,924,395 (75,636,730) 313,287,665 rates. With respect to credit risk arising from the other financial assets of the Group, the Group’s exposure to credit risk arises from Trade accounts payable and accrued expenses include amounts due in foreign currencies, mainly US Dollar, UAE Dirham, default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments as follows: Great Britain Pound (GBP) and Euro, of which the Group has a currency risk primarily on the balances payable in Euro and GBP. Out of the total borrowings, the Group has QR 582,745,349 of borrowings denominated in US Dollars, amounting 2020 2019 to USD 159,656,260 as of 31 December 2020 (31 December 2019: QR 513,784,659 of borrowings amounting to USD 140,862,353). Bank balances 290,317,885 519,174,829 Amounts due from related parties 237,304,489 38,922,231 The Group does not hedge its foreign currency exposure. As both Qatari Riyal and UAE Dirham are pegged to the US Dollar, Retention and other receivables 40,914,430 56,771,582 balances in US Dollars and UAE Dirhams are not considered to represent significant currency risk to the Group. Other financial assets 568,536,804 614,868,642 Total credit risk exposure 961,253,885 928,156,307 In the opinion of the management, the Group’s exposure to currency risk as at 31 December 2020 and 2019 is minimal as the foreign currency financial liabilities denominated in Euro and GBP represent 0.01% (2019: 1.14%) of total liabilities. Hence, not The Group reduces the exposure of credit risk arising from other financial assets by maintaining bank accounts in reputed considered to represent significant risk. banks and providing services only to creditworthy related parties.
(b) Credit risk (ii) Impairment of financial assets The Group has the following financial assets that are subject to IFRS 9’s expected credit loss model: Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party • Trade and retention receivables to incur a financial loss. The Group’s exposure to credit risk is indicated by the carrying amount of its financial assets, which • Other receivables consist principally of outstanding trade and retention receivables, amounts due from related parties, other receivables and • Amounts due from related parties cash and cash equivalents excluding cash on hand. • Cash in banks P.152 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.153
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED Other financial assets at amortised cost 30. FINANCIAL RISK MANAGEMENT continued Other financial assets at amortised cost include other receivables, amount due from related parties and cash and cash 30.1 Financial risk factors continued equivalents. The Group considers the probability of default upon initial recognition of an asset and whether there has (i) Risk management continued been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the reporting While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive was immaterial. forwarding-looking information, including actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower’s ability to meet its obligations. Trade and retention receivables The result of applying the expected credit risk model is immaterial and hence the Group has not recognised any loss allowance as of 31 December 2020. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and retention receivables. (iii) Significant estimates and judgments related to impairment of financial assets
To measure the expected credit losses, trade receivables and retention receivables have been grouped based on shared The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group credit risk characteristics and the days past due. The retention receivables relate to the billed works which were held by uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s the customer until the defect period is over and have substantially the same risk characteristics as the trade receivables past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are the expected loss rates used are disclosed in the table above. a reasonable approximation of the loss rates for the contract assets with the presumption that default does not occur later than when a financial asset is 90 days past due. (c) Liquidity risk
On that basis, the loss allowance was determined as follows for both trade receivables and retention receivables: Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when Expected loss rate Gross carrying amount Loss allowance 31 December 2020 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 Current 3.00% 360,328,170 10,814,674 bank loans and borrowings. More than 90 but less than 180 days past due 20.80% 16,105,546 3,350,662 More than 180 but less than 270 days past due 14.44% 25,251,518 3,647,350 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. trade receivables) and projected cash flows from operations. The Group’s terms of sales or services More than 270 but less than 360 days past due 75.33% 2,867,455 2,160,028 require amounts to be paid within 30-90 days from the invoiced date. The Group has facilities exposure from financial More than 360 days past due 85.60% 56,512,749 48,375,643 institutions which are also used to meet short term financing needs. Total 461,065,438 68,348,357 The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on contractual 31 December 2019 Expected loss rate Gross carrying amount Loss allowance undiscounted payments.
Current 4.75% 278,067,764 13,212,413 More than 90 but less than 180 days past due 16.34% 29,833,712 4,874,246 0 to 3 to More than 5 More than 180 but less than 270 days past due 21.42% 19,640,178 4,207,737 3 months 12 months 1 to 5 years years Total More than 270 but less than 360 days past due 28.14% 9,637,310 2,711,490 More than 360 days past due 69.68% 72,667,008 50,630,844 2020 Total 409,845,972 75,636,730 Borrowings 35,649,886 123,891,977 472,824,364 - 632,366,227 Lease liabilities 5,761,044 16,803,498 73,081,795 100,611,441 196,257,778 Trade accounts payable 196,831,557 - - - 196,831,557 Trade receivables and retention receivables are considered credit impaired or non-performing when it becomes probable Other payables 64,068,456 - - - 64,068,456 to the Group that a customer will enter bankruptcy. Trade receivables and retention receivables are written off when there Amounts due to related parties 30,740,984 - - - 30,740,984 is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst 333,051,927 140,695,475 545,906,159 100,611,441 1,120,265,002 others, the failure of a debtor to engage in a repayment plan with the Group. 2019 Borrowings 35,777,345 105,042,861 438,876,687 - 579,696,893 Lease liabilities 4,817,651 17,883,171 60,359,510 73,939,263 156,999,595 Trade accounts payable 239,287,225 - - - 239,287,225 Other payables 73,191,691 - - - 73,191,691 Amounts due to related parties 13,333,177 - - - 13,333,177 366,407,089 122,926,032 499,236,197 73,939,263 1,062,508,581 P.154 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020 Overview Strategic Report Corporate Governance Corporate Responsibility Financial Statements P.155
Consolidated Financial Statements Consolidated Financial Statements for the Year ended 31 December 2020 for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated) (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 31. FAIR VALUES OF FINANCIAL INSTRUMENTS 30. FINANCIAL RISK MANAGEMENT continued Financial instruments comprise financial assets and financial liabilities. 30.2 Capital management 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 The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to parties and trade accounts payable. 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 fair values of these financial instruments except for borrowings approximate their carrying values due to the short-term maturities of these instruments. 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 The fair value of borrowings is estimated based on discounted cash flows using interest rate currently available for the on shareholders’ equity (excluding non-controlling interests) greater than the weighted average cost of capital of the Group. debt or similar terms and remaining maturities. As all borrowings carry variable interest rates, the fair value of borrowings approximates their carrying values. 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 The fair value of the investment properties is disclosed in note 5. There have been no transfers into and out of Level 3 ended 31 December 2020 and 2019. measurements during the year.
The Group monitors the capital using a gearing ratio, which is debt divided by capital plus debt. The Group’s policy is to 32. CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY 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. In 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 2020 2019 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 Borrowings 583,413,172 514,923,887 reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised. Lease liabilities 47,149,503 85,035,811 Less: Cash and cash equivalents (288,345,489) (514,703,723) 32.1 Critical judgments in applying accounting policies Net debt/(cash and cash equivalents) 342,217,186 85,255,975 There are no critical judgments, apart from those involving estimations that management has made in the process of Total capital 7,811,858,012 7,943,647,398 applying the entity’s accounting policies. Capital and net debt 8,154,075,198 8,028,903,373 Gearing ratio 4.20% 1.06% 32.2 Key sources of estimation uncertainty The gearing ratio has increased from last year primarily due to decrease in cash and cash equivalents. The 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) • Estimate the recoverability of receivables and other receivables (Note 30)
The estimates and underlying assumptions are reviewed regularly. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. P.156 AAMAL COMPANY Q.P.S.C. ANNUAL REPORT 2020
Consolidated Financial Statements for the Year ended 31 December 2020 (all amounts are expressed in Qatari Riyals unless otherwise stated)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
33. IMPACT ASSESSMENT OF COVID-19
The COVID-19 pandemic has developed rapidly in 2020, with significant number of cases. Measures taken by various governments to contain the virus have affected economic activity. The Group has taken a number of measures to monitor and mitigate the effects of COVID-19, such as safety and health measures for its people (such as social distancing and working from home) and securing the supply of materials that are essential to its production process.
The Group has performed an assessment of whether it is a going concern in the light of current economic conditions and all available information about future risks and uncertainties. The projections have been prepared covering the Group’s future performance, capital and liquidity. The impact of COVID-19 may continue to evolve, but at the present time, management is managing liquidity and taking steps to reduce costs and does not expect a significant future impact on the Group. As a result, these financial statements have been appropriately prepared on a going concern basis.
The impact on the Group’s business and results has been a year on year net decrease in profit of QR 200 million mainly arising from fair value loss on investment properties of QR 122 million and lease concessions of QR 85 million.
We refer to Note 5 of the financial statements. The Group’s investment properties were valued by professionally qualified third-party valuation companies. The outbreak of COVID-19 during the year has resulted in the real estate market experiencing significantly lower levels of transactional activities and liquidity in the State of Qatar. The current response to COVID-19 means that the valuer is faced with an unprecedented set of circumstances on which to base a judgement. The valuation across all investment properties are therefore reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS Red Book Global. Given the unknown future impact that COVID-19 might have on the real estate market, the Directors’ will ensure that the valuation of these properties are kept under frequent review.
Subsequent to yearend and as at the date of issuing these financial statements, there have been no further lease concessions extended by the Group and the Group expects this to remain the same.
As the Group is operating in various industries, including in the health care sector, the Group has found an increased demand for its products/services and is expecting this to continue. The Group will continue to follow the various government policies and advice and, in parallel, the Group will do its utmost to continue its operations in the best and safest way possible without jeopardising the health of its people.
Aamal Company Q.P.S.C. P.O. Box 22477 Doha - Qatar City Tower, 15th floor Tel: +974 4435 0666 Fax: +974 4435 0777 Email: [email protected]
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