STRENGTH THROUGH DIVERSITY

Aamal Company Q.P.S.C.

Annual Report 2017
In the Name of Allah Most Gracious Most Merciful
His Highness Sheikh
Tamim Bin Hamad
Al Thani, Emir of the
State of Qatar
Aamal Company Q.P.S.C.  Annual Report 2017 Overview
1

Overview
3 Highlights of the Year
4 Board of Directors
6 At a Glance

Strategic Report
8 Business Strategy
10 Chairman’s Statement
11 Market Review by Sector
12 Vice Chairman and Managing Director’s Report
13 Investment Rationale
14 Aamal Sustainability Framework and ESG Disclosures
18 Operational Review
32 Corporate Social Responsibility

Corporate Governance
34 Objective
34 Achievements and activities planned
35 Board of Directors
35 Board Composition
36 Board Committees
37 Executive Management
38 Organisational Structure
39 Annual Ordinary and Extra Ordinary General Assembly Meeting

Financials
40 Independent Auditor’s Report
44 Financial Statements and Notes
2 Aamal Company Q.P.S.C.  Annual Report 2017

Generating revenues of QAR 1,604.2m (US$ 440.5m) in

2017, Aamal Company is one of the Gulf region’s largest
and fastest-growing diversified conglomerates, offering
investors a high quality and balanced exposure to Qatar’s
economic growth and development.

Aamal’s Industrial Trading and

four
segments Manufacturing Distribution
More information in Operational Review on page 19 More information in Operational Review on page 24

Property Managed
Services
More information in Operational Review on page 28 More information in Operational Review on page 30

Segmental Revenue (QAR)* Net Profit (QAR)**

contributions

1,604.2m 421.0m
-43.3% -15.7%
5.3% 1.3%
19.8%
 Property  Property 30.0%
48.0%
  Trading and Distribution 35.9%   Trading and Distribution
  Industrial Manufacturing   Industrial Manufacturing
  Managed Services 39.0%   Managed Services 20.7%

* Before deduction of inter-segmental revenue

** Net profit before share of net profits of associates and joint ventures
accounted for using the equity method and fair value gains on investment
properties

Shareholders Shareholders Structure

Structure
 Corporate 19%
(minus AFH shares)
 Individual 45%
11%
(minus Sheikh Faisal shares)
 Major Shareholder
25%
(Sheikh Faisal Bin Qassim Al Thani)
 Major Shareholder
(Al Faisal Holding)
Aamal Company Q.P.S.C.  Annual Report 2017
Highlights of the Year
Financial Highlights
–– Total revenue down 43.3% to QAR 1,604.2m (2016: QAR 2,829.1m),
primarily due to the reclassification of two business entities within the
Industrial Manufacturing segment from subsidiaries to joint ventures,
with a consequent change in their accounting presentation
–– Gross profit down 20.2% to QAR 545.6m (2016: QAR 683.4m)
–– Net profit before share of net profits of associates and joint ventures
accounted for using the equity method and fair value gains on
investment properties (‘net underlying profit’) down 15.7% to QAR
421.0m (2016: QAR 499.2m)
–– Net underlying profit margins have increased by 8.7 percentage points
to 26.3% (2016: 17.6%)
–– Share of net profits from associates and joint ventures accounted
for using the equity method increased 69.4% to QAR 102.0m
(2016: QAR 60.2m)
–– There were no fair value gains on investment properties during 2017
(2016: QAR 0.9m)
–– Total Company net profit 1 down 6.6% to QAR 523.1m (2016: QAR
560.2m), with net profit attributable to Aamal equity holders up 8.4%
to QAR 500.9m (2016: QAR 462.3m)
–– Reported earnings per share increased 9.6% to QAR 0.80 (2016: QAR 0.73)
–– Net capital expenditure down 16.8% to QAR 106.5m (2016: QAR
128.0m), reflecting fluctuations in contractor billing profiles that are
milestone-based
–– Net positive cash position of QAR 113.1m (30 June 2017: net positive
cash of QAR 134.7m)
Total Company net profit is before the deduction of net profit attributable to non-
1
controlling interests.
Overview
3
Non-Financial Highlights
–– Establishment of new supply chains to help overcome the challenges
in terms of importing materials and products related to the businesses
within the Industrial Manufacturing and Trading & Distribution
segments
–– City Center Doha shopping mall Phase 2 development is on budget
and on track for completion by the end of 2018 that will lead to an
increase in total retail space of around 12%. During the fourth quarter
of 2017, renovation of the East Food Court was completed and the
restaurants were handed over to the tenants to be fitted out
–– In early 2018, Aamal Real Estate announced the conclusion of
negotiations which had started in 2017 to acquire additional property
assets located in prime Doha locations, valued at approximately QAR
179.5 million (USD 49.3 million).
–– In early 2018, announcement of three major new industrial projects
for the production of aluminium, copper and drums through the
Senyar Industries joint venture, having applied for the necessary
approvals in 2017. These will be the first of their kind in Qatar and are
expected to become operational by the end of 2018 and 2019
–– Aamal Trading and Distribution expanded its geographic presence
in Doha with the opening of two additional showrooms, the
introduction of a new ‘Dial a Tire’ service and the launch of Qatar’s
first Bridgestone Fleet Point Center
–– Our investor relations website has been ranked third amongst the 45
companies listed on the Qatar Stock Exchange (‘QSE’), as part of the
2017 Annual Investor Relations Excellence Program. This program,
now into its third year, is an initiative introduced under the auspices
of the QSE and is widely regarded as a hallmark of excellence. It is
designed to recognise those QSE-listed companies for the quality and
effectiveness of their investor relations websites, whilst encouraging
alignment with international best practice
–– Initiatives taken to appoint a liquidity provider during 2017, taking
effect from 25 February 2018. This is designed to improve the liquidity
of Aamal shares traded on the QSE by facilitating increased market
depth and trading volumes, through an obligation to provide
constant bid and offer prices
–– Aamal initiated enhancing its Corporate Governance framework in
compliance with QFMA new code (Corporate Governance code for
companies and legal entities listed on the main market issued by
QFMA Board of Directors’ decision No. (5) of 2016
–– Aamal Company has completed the conversion of all its branches
to sole trader companies fully owned by Aamal Q.P.S.C. with
limited liability status. This in compliance with Law No. 20 of the
year of 2014 amending the provisions of Law No. 25 of the year of
2005 promulgating the Law of the Commercial Register
–– Over the course of 2017, Aamal commissioned the start of Phase 1
of ORACLE Cloud Applications ERP (Enterprise Resource Planning),
covering HR, while Phase 2 will encompass all aspects of financial
control, procurement and supply chains. The benefits of using a
single integrated platform include enhancement to the Company’s
security and governance, workflows, and business process
reporting and analysis. Full development and testing is expected
to be concluded by the end of 2018, ready for implementation
by Q1 2019 by which time Aamal Company will be operating in a
totally paperless working environment
4 Aamal Company Q.P.S.C.  Annual Report 2017

Board of Directors

Sheikh Faisal Bin Qassim Al Thani

Chairman of the Board of Directors
Non-Executive

–– Founder and Chairman of Aamal Company

–– The Chairman of the Board since the listing
on Qatar Stock Exchange in 2007
–– Chairman of the Qatari Businessmen Association
–– Member of the Board of Trustees at Qatar University
–– Founder and Chairman of Al Faisal without
Borders Foundation
–– Founder and Chairman of the board of trustees
of Sheikh Faisal Bin Qassim Al Thani Museum
–– Chairman of the Gulf Qatari Classic Cars Association
–– Member of the Board of Trustees at the College
of Business in DePaul University in Chicago

Sheikh Mohamed Bin Faisal Bin Qassim Al Thani

Vice Chairman and Managing Director
Executive

–– Vice Chairman and Managing Director

–– Appointed to the Board of Aamal Company in 2009
–– Sits on the Board of Directors of Al Khaliji Bank Q.P.S.C.
–– Holds a Bachelor’s degree in business administration
from Carnegie Mellon University, Qatar
–– Member of the Board of Trustees at the American
University of Sharjah (UAE)
–– Honorary President of the Italian Chamber of Commerce
in Qatar
–– Member of the Board of Trustees of the Arab Academy
for Banking and Financial Sciences – Egypt
Aamal Company Q.P.S.C.  Annual Report 2017 Overview
5

Sheikh Abdullah Bin Hamad Al Thani Sheikha Al Jazi Bint Faisal Al Thani
Board Member Board Member
Non-Executive Non-Executive

–– A member of the Board of Aamal Company since 2010
as a representative of Al Jazi Real Estate Investment
Company W.L.L.
–– A member of the Qatari Businessmen Association and
attained the rank of Major in the Qatari Armed Forces
–– Sheikh Abdullah holds a Bachelor’s degree in business
from Kingston University (UK)
–– Board member since 2016 representing Al Rayyan
for Education
–– Holds a Master’s degree in International Peace and
Security from King’s College London
–– Holds a Bachelor’s Degree in Culture and Politics from
Georgetown University, Qatar

Sheikh Jabor Bin Abdulrahman Bin Mohamed Al Thani Mr Kamel Mohamed El Egla
Board Member Board Member
Non-Executive Non-Executive

–– Board Member at Aamal Company since February 2017 –– Board Member at Aamal Company since February 2017
representing Al Faisal Holding representing City Limousine
–– Vice Chairman and Managing Director of Transind Group –– Chief Real Estate Officer of Al Faisal Holding since 2005
since 2004 –– Mr. Kamel has joined Al Faisal Holding since 1985, where
–– Founder and Managing Director of Al-Bayan Insurance he spearheaded most of Al Faisal construction projects
Broker since 2011 –– General Manager of Derwind Trading and Contracting
–– Managing Director of Al Arabi Sports Club –– Holds a Bachelor’s Degree in Civil Engineering, Al Azhar
–– Holds a Bachelor of Business Administration from University Egypt
European University, Geneva, Switzerland, 2009
–– Certified Financial Analyst from American Academy
of Financial Management, 2007
–– Holds Professional Diploma in Financial Management
and Banking from The Arab Academy for Banking and
Financial Sciences, 2006
6 Aamal Company Q.P.S.C.  Annual Report 2017

At a Glance

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

diversity
Geographical focus on Qatar at present with intentions to
expand further in the region.
Operations across 26 active business units with market
leading positions in key sectors including: industrial
manufacturing, retail, real estate, managed services and the
medical equipment and pharmaceutical sectors.
Strategy focused on three pillars for sustained,
profitable growth: 
Our corporate strategy has always been to create and i) Increasing focus on industrial manufacturing and related
high growth sectors; 
enhance long term shareholder value through the ii) Continued growth, diversification and innovation across
continued profitable operations and expansion of its other existing businesses to enhance market positions and
optimise performance; and 
diversified business platform, with particular reference to: iii) Continued application of clear and disciplined operational
and financial principles underlying our strategic
• Offering high quality products and services growth initiatives.

• Being alert and responsive to the markets’ Uniquely positioned to benefit from increased private and
public sector demand, particularly for infrastructure
evolving needs development, as Qatar is transformed into an advanced and
self-sustaining economy.
• Acting as a socially responsible member of society, Strong backing from Al Faisal Holding Company, a long term
adopting ethical and sustainable policies geared major shareholder of Aamal.

towards protecting the environment and looking

after the welfare of its employees

Five-year financial summary

QAR m 2017 2016 2015 2014 2013

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

Gross Profit 545.6 683.4 642.1 506.0 420.5

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

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

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

Fair Value Gains on Investment Properties 0.0 0.9 135.4 251.7 245.1

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

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

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

Rebased EPS2 0.80 0.73 0.95 0.922 0.802

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

1. Excluding share of profit from equity accounted for investments in associates and joint ventures.
2. Reported EPS for prior years have been re-based using the current number of shares in issue (630 million) to facilitate like-for-like comparisons
3. Assume payable in cash unless otherwise stated
4. Subject to approval at the Annual Ordinary General Assembly Meeting (22 April 2018)
5. Comprised of two elements: QAR 1.0 in cash and QAR 0.5 in bonus shares (i.e. 5% of each share’s nominal value of QAR 10; total number of shares in issue increased
to 630 million (600 million previously))
Aamal Company Q.P.S.C.  Annual Report 2017 Overview
7

Our structure

Business units with effective

Aamal ownership (%)

Industrial Trading and Property Managed

Manufacturing Distribution Services
Aamal Readymix 100% Aamal Trading 100% City Center Doha 100% Aamal Travel 100%
and Distribution and Tourism
Aamal Cement 99% Aamal Real Estate 100%
Industries* Aamal Medical 100% Aamal Services 100%
Aamal – ECE** 51%
Ci-San Trading* 50% Ebn Sina Medical 100% ECCO Gulf* 51%

•• Aamal for Maritime

Transportation
74.7% Ebn Sina Pharmacy 100% Family
Entertainment
100%
Services* Foot Care Centre 100% Center

•• Gulf Rocks* 74.5 % Al Farazdaq

Company*
65% Winter Wonderland 100%
Senyar Industries 50% Johnson Controls 51%
Qatar Holding** Legend for Trading 100% Qatar****
and Distribution
•• El Sewedy
Cables Qatar**
38.3%
Aamal for Car 100%
Maintenance
•• Doha Cables** 47.3%
Aamal Optical 51%
Advanced Pipes 50% Supplies****
and Casts Company**

Frijns Structural 20%

Steel Middle East**

Aamal for Industrial 100%

Projects ***

Innovative 70%
Lighting****

IMO Company 100%

Qatar ***

* Subsidiaries not fully owned by Aamal

** Equity accounted for investment in Associates and Joint Ventures
*** Inactive business unit currently under evaluation
**** Business unit currently in liquidation
8 Aamal Company Q.P.S.C.  Annual Report 2017
Business Strategy
Delivering
growth
The Company seeks to take advantage of the
growth opportunities enabled by the 2030
National Vision, and to leverage its position
as a leading participant across various key
economic sectors through a focus on three
pillars for sustained, profitable growth:
1. An increased focus on industrial manufacturing
and related high growth sectors to capitalise
on the significant demand arising from wider
industrialisation of the Qatari economy;
2. Continued growth, diversification and innovation
across other existing businesses to enhance
market position and optimise performance; and
3. Continued application of clear and disciplined
operational and financial principles
underpinning our strategic growth initiatives.
Strategic pillar #1
An increased focus on
industrial manufacturing
and related high growth
sectors to capitalise
on significant demand
arising from wider
industrialisation of
the Qatari economy
Through leveraging its significant hydrocarbon
surpluses, Qatar aims to transform itself into a
diversified and knowledge-based economy. To date
this has been in two major phases: the first phase
spanned from 2000-2011 and was mainly driven by
expansion of its LNG facilities; followed by the
current phase which has seen a shift onto the non-
hydrocarbon sector and a major program of
infrastructure investment, designed to diversify the
economy. Underpinning this has been the National
Vision 2030 and preparation ahead of the FIFA World
Cup to be hosted by Qatar in 2022.
As per the Qatar’s State Budget for Year 2018,
QAR 29 billion (USD 8 billion) has been earmarked
for new projects in 2018. The 2018 budget also
focuses on supporting private investments,
especially in the food and agricultural sectors, SMEs
and the development of infrastructure in industrial
areas and FTZs (Free Trade Zones). Through its
existing scale and market leading positions, along
with plans to expand its industrial manufacturing
operations further, Aamal is very well positioned to
capitalise on the business opportunities in Qatar
that will be afforded and thereby create long-term
shareholder value.
See more on pages 19–23
Aamal Company Q.P.S.C.  Annual Report 2017
Strategic pillar #2
A continued growth,
diversification and
innovation across other
existing businesses to
enhance market position
and optimise performance
Infrastructure projects drive GDP growth, not
only through directly increasing the level of
investment spend in the economy, but also
indirectly through an expansion in population
which in turn raises the level of consumption
(a ‘multiplier’ effect).
Together, these factors help to expand the size
of the non-hydrocarbon sector and contribute to
the diversification of the economy. Aamal’s existing
businesses are well placed to benefit from this
structural transformation, with market leading
positions across the economic spectrum.
See more on pages 19–31
Strategic Report
9
Strategic pillar #3
A continued application
of clear and disciplined
operational and financial
principles underpinning
our strategic growth
initiatives
Aamal maintains strong commitment to
financial and operational progress supported by a
clear corporate vision and strong management
team who steer the Company towards achieving its
goal. We believe the success and growth of our
business can be attributed to consistency in terms
of standards and policies; the ability to closely
monitor and control costs allied with our focus on
diversification; the efforts of our supportive local
and international partners and our shareholders.
Our commitment to corporate governance and
business ethics remains at the forefront of everything
we do.
See more on pages 34–39
10 Aamal Company Q.P.S.C.  Annual Report 2017
Chairman’s Statement
A solid
performance
throughout
On behalf of myself and the Board of Directors, I am
pleased to present a summary of the financial results
of Aamal Company Q.P.S.C., with an approximate
10% increase in Earnings per share and a net profit
attributable to equity holders QAR 500.9m, praise
be to God.
Looking at these results, I’m pleased to report that Aamal
has been at the forefront here, which in the current climate is a
very impressive result indeed. I should also highlight that in
2017 we have applied a change in the accounting presentation
of a couple of business entities during the year, which has a
direct impact on presentation of the numbers between this
year and the previous year and in specific to the Revenue. The
effects of this change will remain valid until after Q4 2018, by
which time they will have reversed out.
Looking at the market conditions, while the continuing
blockade by a number of neighbouring Gulf countries has
undoubtedly created some challenging headwinds, I am very
proud to say that Qatar as a nation is successfully navigating
through them. I believe this is testimony not only to the
resilience of the Qatari economy but also to the strong and clear
leadership that our national Government provides as we strive
to achieve the holistic goals set out in the Qatar National Vision
2030, including diversification of the economy. I must also
mention the resourcefulness of the Qatari people in meeting
these challenges head on, as they did in previously demanding
times including the global slump post‐2007 and the oil price
lows of early 2016.
Aamal has always been noted for its practicality and
decisiveness, and no better is this demonstrated than by how
rapidly we moved to help establish alternative supply chains in
the face of the continuing embargo against Qatar. This resilience
is also borne out by the diversity of our business model, so that
if one sector is experiencing a tightening in general business
conditions for example, there will be others that are able to
more than compensate.
Allied to this is Aamal’s strong financial position and cash
generation which means that should we identify a potential
value‐creating opportunity, we are able to act quickly, often
giving us a competitive advantage over our peers. An excellent
example of this is the decision we announced in early January
to proceed with three major new industrial projects which will
be the first of their kind in Qatar, having applied for the
necessary approvals in 2017. Not surprisingly, we are also the
partner of choice for those international blue‐chip names
looking to enter the Qatari market for the first time.
I am also pleased to announce that Board of Directors has
recommended a cash dividend QAR 0.60 a share (equivalent to
6% of paid‐up share capital), subject to the approval at the
Annual General Assembly Meeting which is due to take place
on April 22, 2018.
Furthermore, I would like to extend my thanks and
appreciation to our valued shareholders for their trust and
support in us, and we promise that we will continue giving our
best efforts to further develop the activities of the Company,
and to continue our search for further growth that benefits all
stakeholders.
Finally, I would like to take a moment to express my
gratitude and appreciation to all employees of the company, to
our partners, our cooperative clients, and to all those who had a
role in supporting any growth or prosperity Aamal Company
has achieved, which is a reflection of the growth and prosperity
of the Qatari economy, under the wise leadership of His
Highness Sheikh Tamim bin Hamad Al Thani, Emir of the State of
Qatar, and the esteemed Government who have the greatest
role in overcoming any challenges facing the national economy.
Faisal Bin Qassim Al Thani
Chairman
Aamal Company Q.P.S.C.  Annual Report 2017
Market Review by Sector
Industrial Manufacturing Sector
(non-hydrocarbon sector)
The Qatari Government considers industrial development
to be an integral part of its plan to diversify the economy through
leveraging off its huge natural gas reserves, and is strongly
supporting local investment into the manufacturing sector. In
addition to the Government’s plan to invest in several downstream
industries related to Oil & Gas sector, the Government is also
encouraging private companies to invest in setting up local
manufacturing and assembly facilities, spurred on by the large-
scale infrastructure development that is happening in the country
including projects related to the Doha Metro and the 2022 FIFA
World Cup.
Achievement of self-sufficiency in food, dairy and
agricultural products has also been given more emphasis by the
authorities, which has encouraged significant private investment
into these segments.
One major advantage of Qatar is the presence of
competitively priced raw materials, including secure energy
supplies. Added to this is the full coming on-stream of the new
Hamad Seaport which has already started making a positive
impact on Qatar’s growth as a regional trading hub for various
industrial activities in the Middle East. By establishing new trading
routes and investing in new trading partners, this has helped to
underpin the economy’s impressive growth record.
Property Sector
Qatar is going through a phase of rapid growth in the retail
industry with several large size shopping malls launched already
with a combined area of over 1.3m sqm., and a further four mid-
size malls are expected to open during 2018. In addition to this
increased supply of retail space in Qatar, cost-cutting and
restructuring measures adopted both within the private and
public sectors in Qatar in response to the ongoing economic
blockade of the country by a number of neighbouring Gulf
countries has had a knock-on effect on consumer spending more
generally. To help withstand these challenges, positive attributes
of accessibility, location and size are more important than ever;
City Center Doha ticks all these boxes, remaining the premier mall
in the country.
In terms of rents, residential occupancy rates have dropped
marginally due to new housing stock recently coming onto the
market which has placed some downward pressure on rents, at
least until this additional supply has worked its way through the
system; in contrast however, commercial rents at major locations
have managed to remain fairly stable.
Strategic Report
11
Trading & Distribution Sector
This sector has been one of the strongest and fastest
growing sectors in Qatar for several decades, as the country
continues to develop healthy trade relations with the world’s
major economies. In terms of oil and gas products, Qatar is
currently tilting its export partnerships more towards the
emerging markets, south-east Asia in particular, whilst its imports
have grown and become more diverse, particularly in terms
of automobiles, building interiors and furniture, clothing,
electronic goods, food, infrastructure goods, medical equipment
and pharmaceuticals.
Opportunities for business in the trading sector have
continued to grow in line with the country’s ever-increasing
population and development of its infrastructure that includes
significant projects related to the Doha Metro and the 2022 FIFA
World Cup. Moreover, the core sectors emphasised by the
Government key to its National Vision 2030 (such as healthcare,
education, technology and social welfare development), are in
turn driving demand for several high value products that are
currently not manufactured in Qatar.
Managed Services Sector
The Services sector in Qatar is expected to grow strongly
over the next few years, reflecting the initiatives taken by the
Government to improve the general level of services. Healthcare,
education, tourism and software/technology related sub-sectors
have all been given greater strategic focus as part of the Qatar
National Vision 2030. As such, the services sector has experienced
strong structural growth in recent years, which has been
in contrast to the slump in global energy prices of recent times,
and is expected to sustain this positive momentum over the
coming years.
The Government’s steadfast commitment to transform
Qatar into a major tourist and entertainment destination in the
region by developing new and innovative tourist attractions is
expected to enhance inbound tourist flows from across the
globe. By hosting several global sporting events in Doha, and
with the continued support given by the Government to the
travel industry (such as easing in entry visa requirements for many
nationalities), this will help to underpin the sector’s growth
credentials, at least for the near term.
Furthermore, with more resources now being allocated to
improving the quality of education and healthcare in Qatar, partly
through making better use of technology, the level of demand for
local knowledge-based solutions should increase, and thereby
help to kick start an indigenous homegrown tech sector with
related supporting services.
12 Aamal Company Q.P.S.C.  Annual Report 2017
Vice Chairman and
Managing Director’s Report
Our resilient model
has absorbed
challenges
Aamal has performed very well this year, managing
to grow earnings per share by 9.6% in spite
of the challenges facing the market as a whole
on account of the ongoing economic blockade.
This impressive growth not only reflects the Company’s
structural resilience, but also its ability to adapt to changing
market conditions – not just in terms of finding alternative
sources of supplies for many of our businesses, but also seeking
opportunities to grow further. Moreover, we have the financial
flexibility too, on account of our strong financial position, to act
quickly and decisively should any such potential value-creating
opportunities be identified.
Total revenue was down 43.3% to QAR 1,604.2m which
was principally because of the change alone in the accounting
presentation of two business entities within the Industrial
Manufacturing segment (Senyar Industries, and Advanced
Pipes and Casts Industries). As the businesses are no longer
treated as subsidiaries but as joint ventures, their revenues are
now excluded from Aamal’s total revenue, hence the significant
fall (i.e. 43.3%). This fall in overall revenue does not reflect the
economic reality and should not conceal how important the
Industrial Manufacturing Segment remains – not just to Aamal’s
growth credentials, but also in terms of the vision that
Qatar has set for itself as the country seeks to diversify and
become progressively more self-sufficient through an industrial-
led strategy.
Looking at Aamal’s performance by Segment, Industrial
Manufacturing continues to be a strong contributor to Aamal’s
total revenues and net profit (at 35.9% and 30.0% respectively),
although these ratios have been distorted somewhat due to
the change in accounting treatment as previously mentioned.
This segment remains the core engine for Aamal’s future
growth, as it seeks not just to expand its existing operations, but
also to capitalise on future opportunities arising from the
ongoing development of Qatar’s infrastructure as the economy
continues to expand and diversify in response to market
demand; nor should the scope for significant synergies, at both
the strategic and operational levels, be overlooked either.
During the past year, we applied for approvals to develop
three key factories for copper, aluminium, and drums
production. The decision to proceed with these projects was
announced in early 2018. I’m confident that these projects will
consolidate our market-leading positions within the industrial
manufacturing sector, thereby boosting this segment’s and also
the wider Company’s performance as a whole. Once those
three projects are completed, we will have an integrated cycle
for cable manufacturing that will fulfil the local market needs as
a first step before our plans to export to other markets. We are
also studying a number of other new investments that will be
announced in due course.
The Trading and Distribution segment too is a significant
contributor, comprising 38.8% and 20.8% of total revenues and
net profit respectively. The marginal decline in sales, at 2.5%,
was the reason behind the small (i.e. 3.0%) drop in net profits.
Both Ebn Sina Medical and Aamal Medical signed a number of
new distribution agreements with a number of leading
pharmaceutical and medical equipment companies,
underscoring our position as the partner of choice for those
international companies wishing to enter the Qatari market.
Aamal Trading and Distribution saw an expansion of its current
operations and geographic presence in the market with the
introduction of new services, which will help to secure growth
going forward.
The Property segment, comprising 48.0% of overall
Company net profits, continued to be the main contributor. We
are looking forward to the completion of Phase 2 of the
redevelopment of Aamal’s flagship, City Center Doha (CCD)
shopping mall which is expected by the end of 2018. Visitors to
this destination will enjoy a completely enhanced shopping
experience with spacious aisles and tenant mix, along with an
expansion of both its retail space and the number of outlets.
Despite the increasing competition in Qatar, due to a number of
new retail developments coming on-stream, CCD maintains its
position as the premier mall in the country: a reflection of its
location, quality and size. Aamal will continue to invest in its real
estate portfolio that help to secure its leading positions and
underpin future growth.
Although revenue from the Managed Services Segment
dropped only marginally (2.2%), its net profits fell by over 28%
on account of margin compression. This was principally
attributable to an expected contraction in activity at Aamal
Travel following the strategic decision to focus on cash sales
because Aamal Travel tends to have a margin that is higher than
the average for this segment, this change in the business mix
naturally had an adverse effect on the overall segment margin.
We expect to see a pick-up in 2018 following the continuing
efforts of the Qatar Tourism Authority to promote the country’s
tourist credentials, along with greater flexibility around
entry visas.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
13

Investment Rationale

Why invest in
Aamal Company?

Looking ahead to this year, we remain confident about

the Company’s prospects. Qatar’s budget for 2018 is focused on
1. A powerful, cohesive
developing local industries and the private sector, with the growth platform
ultimate objective of achieving self-sufficiency whilst creating
new revenue streams to boost growth further. To help facilitate –– One of the fastest growing diversified companies in Qatar, offering a
this, the Qatari government is working hard to make the high-quality exposure to Qatar’s economic growth and development
business environment more attractive to foreign capital inflows. –– Diversified for balanced exposure across the Qatari economy
A healthy and strong local economy, of which we are such an –– Strong market positions in key sectors
integral player, can only be to the benefit of Aamal. –– Superior combination of a high quality asset base, strong operating
Looking beyond 2018, we continue to be optimistic as profitability and earnings visibility
we expect to see an increase in investment opportunities
arising in the market as Qatar continues to demonstrate not just 2. Financial strength
its resilience but its resolve to diversify and develop in line with
the 2030 Vision, for which the 2022 FIFA World Cup is just one –– Strong asset backing
important milestone. Aamal through its market leading –– Net cash position, little to no corporate indebtedness
positions across the economic spectrum and relentless focus –– Readily available access to debt capital markets, which in addition to strong
on seeking out avenues for growth is indeed very well placed to cash flow generation, provides significant scope for future growth in terms
take advantage of these opportunities. of financing
It should also be mentioned that never do we seek –– One of the highest dividend yield payers amongst QSE listed companies
growth at the expense of internal efficiencies and we are –– Al Faisal Holding Company and Sheikh Faisal Bin Qassim Al Thani are major
perennially looking at ways to streamline our current operations long-term supportive shareholders (49% foreign ownership limit)
and processes further; as such, I am pleased to mention that a
full revision of our Corporate Governance framework in
compliance with the new QFMA Code (Governance Code for
3. Experienced, proven senior
companies and legal entities listed on the main market issued management team
by QFMA Board of Directors’ decision No. (5) of 2016), has been
–– Strength in strategic asset allocation, corporate governance and risk control
completed, pending the approval at AGM on April 22, 2018.
–– Proven track record of historical profit growth and value creation driven
Also, we have initiated our first ESG (Environmental, Social and
by clear focus on returns on capital and capital discipline
Governance) reporting which are the non-financial factors that
–– Highly effective corporate decision-making with short lines of
help determine a company’s ability to create sustainable value.
communication with operational management
Moreover, we have now commissioned the start of Phase 1 of
ORACLE Cloud Applications ERP. Full completion of this project
is expected to be by the end of 2018, and will be ready for 4. Strength in depth
implementation in Q1 of 2019, where Aamal will be operating
in a totally paperless working environment. –– Development of shared services policy, allowing divisional management
So, in conclusion, we are committed to grow the to focus on core business
Company’s revenues and profitability by building on its already –– Each business entity managed as an individual entity, optimising
well-established foundations whilst maintaining a tight focus management’s operational focus and transparency
on operational efficiencies. We will continue to seek out new –– Talented and motivated managers with significant experience and customer
opportunities that will generate value and which are in the best relationships in their respective areas
interests of all our stakeholders. Supported by our market –– Clear segregation between management and ownership, reinforcing best
leading positions across the entire Qatari economy and a very practice corporate governance guidelines
strong financial position, we are able to move quickly to action
them should we decide to proceed after careful evaluation. We
remain a committed and integral part of our beloved country’s
aim to achieve its National Vision 2030, under the wise
leadership of H.H. the Emir, Sheikh Tamim Bin Hamad Al Thani,
may God bless and protect him.

Mohamed Bin Faisal Al Thani

Vice Chairman and Managing Director
14 Aamal Company Q.P.S.C.  Annual Report 2017

Aamal Sustainability Aamal Company is among the first listed companies in

Qatar to not only address this ESG or ‘sustainability’ guidance,
but also deploy a sustainability framework that embeds our

Framework and company core values and incorporates the four pillars of the
Qatar National Vision 2030.

ESG Disclosures Our Sustainability Framework

In December 2016, Qatar Stock Exchange (QSE)
introduced its ‘Guidance on ESG Reporting’ which
encouraged all listed companies to voluntarily report
on a set of Environmental, Social, and Governance
(ESG) performance indicators.
At Aamal, we recognise the value in aligning our
corporate strategies with sustainable development principles.
Integrating sustainability into our business model generates
financial value for our company while also creating economic
and social value for all of our key stakeholders. Sustainability
helps drive a deeper understanding of our stakeholders’ needs,
identify new market opportunities and other opportunities for
innovation, generate cost savings, and enhance market
differentiation and competitiveness. Aamal’s Sustainability
Framework covers our four sectors of focus and is structured
around four main elements:
–– Ensuring strong business ethics and transparency
–– Supporting the people in our workplace
–– Supporting the communities we operate in
–– Mitigate our environmental impact

Our Sustainability Performance

For our initial sustainability performance coverage, we
have collected performance data for 2017 from five of our
Business Ethics Environment Community Workplace portfolio companies that have the greatest impact on our most
and Transparency material ESG issues and key indicators. Our intent is to expand
our coverage to include results from all our companies over the
coming years. The companies included in our aggregated
Ethics Greener Products Community work Safety disclosure for 2017 are Aamal Company Q.P.S.C., Doha Cables,
Aamal Readymix, Ebn Sina Medical, Aamal Medical, and City
Transparency Energy Procurement Health Center Doha. They represent over 55% of our revenues*, 73% of
Accountability Emissions Youth Training net profit, and 25% of our employees. Unless otherwise stated,
the numbers presented specifically in this ESG section cover
Water Diversity these five portfolio companies plus Aamal Company staff and
Waste Women offices. Where the information presented aligns to the QSE
Guidance on ESG Reporting, we specifically state the relevant
QSE indicator number.

Industrial Trading and Property Managed

Manufacturing Distribution Services

Value Creation
* Revenue excludes Doha Cables as of 1 April 2017, as it is no longer treated
as subsidiary, but as a joint venture such that their results are now reflected
on an equity method basis rather than on a line-by-line full method basis.
Aamal Company Q.P.S.C.  Annual Report 2017
Business Ethics and Transparency
Aamal Company’s ongoing commitment towards high
levels of business ethics and transparency is shared across our
Board of Directors, our management, our portfolio companies,
and all our stakeholders. We know that sound governance and
ethical practices will contribute to long-term business success.
Aamal’s Corporate Governance Report covers the
procedures followed by the company to ensure good
governance practices. Our Board Charter covers critical
governance items including the role of the Board of Directors
and its committees , audit and internal control mechanisms,
remuneration, and shareholders’ rights. Aamal’s governance
framework abides with the provisions of the Governance Code
for Companies and Legal Entities Listed in the Main Market No.
(5) of 2016 (the “Code”) issued by the Qatar Financial Markets
Authority (“QFMA” or the “Authority”), and the Commercial
Companies Law No. (11) of 2015 (the “Companies Law”).
All of our portfolio companies and their employees abide
by a Code of Conduct (QSE#30). This also extends to our
suppliers – setting our high standards and expectations for
business integrity throughout our supply chain (QSE#31).
Aamal does not tolerate any form of bribery or corruption
in any of its portfolio companies. Our anti-corruption policy
includes clear anti-corruption rules and guidelines that are
strongly reinforced, including through awareness raising and
training programmes for key managers and staff (QSE#32).
Aamal Company is fully committed to respect all human
rights, as articulated in the Universal Declaration of Human
Rights, and the International Labor Organization’s (ILO) (QSE#16).
Governance aspect Performance
Board – Diversity 1 woman
Board – Separation of Powers CEO and chairman roles are separated
Workplace aspect
Number of full time employees
Percentage of women in the workforce
Percentage of Qatari nationals in the workforce
Percentage of employee turnover
Hours of training per employee per year
Total Number of Employees and Contractors Recordable Injuries 2
Total amount of employee wages and benefits, (in QAR)
Community and Society
Our interest in the well-being of people extends well
beyond our employees, into the community and society.
The very purpose of our Ebn Sina Medical and Aamal Medical
is to ensure the timely provision of pharmaceutical supplies
and medical equipment to the Qatar medical facilities,
pharmacies, and the people of Qatar. We also aim to contribute
directly to the economy: 29% of our procurement is from
local suppliers (excluding Doha Cables’ and Aamal
Medical’s procurement).
We also aim to support the next generation of talent –
our youth, with an emphasis on Qatari nationals and women.
Most of Aamal Company portfolio companies are
engaged in the community in one manner or another, through
various outreach programmes that take advantage of each
company’s financial and human resources to more effectively
benefit our communities.
Strategic Report
15
We also expect our business partners, including suppliers, to
adopt and adhere to similar principles (QSE#18). As of 2017, we
have no outstanding or recorded incidents or grievances related
to any of the above among our reporting companies (QSE#17).
Additional information that is recommended by the QSE
Guidance on ESG Reporting on the subject of governance can
be found in the governance section of this report.
Workplace
Aamal Company and its five portfolio companies
engaged in this ESG disclosure exercise have 1000 full time
employees. Aamal Company has an important responsibility for
ensuring a safe and welcoming environment for our people. We
put safety first and are committed to ensure compliance with
our occupational health policy and safety procedures (QSE#14).
Operational excellence at Aamal Company starts with the
personal and professional development of every member of
our team. We strive to provide our employees with the tools and
resources they need to be successful. Aamal Company’s Training
& Development Program & Policy encourages our employees to
develop themselves professionally and enhance their
knowledge through the development of new skills and
competencies. Aamal Company employees undertake training
courses, workshops, on the job training, self-study, seminars and
information technology training.
Aamal Company has recently established the ‘Employee
of the Year Award’ for employees in the non-management and
non-supervisory positions. The award will be presented to the
employee who has contributed to and/or achieved superior
business results for Aamal Company.
Corresponding QSE indicator Alignment to QNV
23 Economic
25 development
Corresponding to
Performance QSE Indicator Alignment to QNV
1,000 10 Human
7.30 19 development
0.0 20
4.40 12
11.34 13
15
78,553,709 11 Economic
development
Ebn Sina Medical: Supporting Youth
Ebn Sina Medical is firmly committed to developing
local talent and empowering women to enter the
workforce – talent that is required for our – and Qatar’s –
ongoing success well into the future. Ebn Sina invests in
scholarship programs and training for local pharmaceutical
students. On an annual basis Ebn Sina admits around 10
female students, of which approximately 30% are Qatari
nationals, for one month of training on all pharmaceutical
products, patient counselling and customer service. Many
of these graduates go on to find successful employment
upon graduation, with Ebn Sina and in other enterprises.
Ebn Sina also supports pharmaceutical students who
meet academic requirements by sponsoring 5 scholarships
per year, valued at 5,000 QAR each, for the past 7 years.
16 Aamal Company Q.P.S.C.  Annual Report 2017
Aamal Sustainability Framework
and ESG Disclosures continued
Environment
Aamal Company is committed to embed environmental
principles and practices in all aspects of our operations, to
protect the environment and minimise our environmental
footprint and waste through sound management of natural
resources including water, energy, materials, and biodiversity
(QSE#3-9). Our two reporting industrial manufacturing
companies, Doha Cables and Aamal ReadyMix, both conform to
Environmental aspect
Total amount of energy usage in MWh
Energy Intensity (kWh/m )2
Total greenhouse gas emissions (tonnes)
Primary source of energy used by the company
Specify percentage of energy used from renewable sources
Total water consumption (m ) 3
Total waste recycled or reused (tonnes)
Total waste water generated (m ) 3
Total non-hazardous waste produced (tonnes)
Total amount of waste water re-used (m3)
One key area of environmental improvement has been
our initiatives to reduce our energy consumption at our three
most significant operations. At Doha Cables manufacturing
facility, our electricity consumption in 2017 was 20.8 million
kWh, a reduction of 8% from 2016. Similar efficiencies were
achieved at Aamal Readymix where we reduced our electricity
consumption by 5.6% in 2017 to 2.7 million kWh. Initiatives at
City Center Doha mall to optimise our cooling systems and
reduce our cooling loads in non-core operating hours reduced
our consumption by 4% in 2017, to a total of 59 million kWh. We
have also committed to study the integration of renewable
energy into our City Center Doha operations.
Above and beyond improving our energy efficiency, one
of our portfolio companies, Aamal Readymix, has enhanced its
market leadership and differentiation by developing a product
with an environmental advantage: ‘Green Concrete’. This
continues to be an exciting and growing area of opportunity,
where we are able to not only enhance our business but
contribute directly to key objectives of both the Qatar National
Vision and the World Cup preparations (see caption). This
innovation is evidence of the increasingly necessary alignment
– and absolute importance – of business success with principles
of sustainable development.
the standards of ISO 14001, with environmental policies and
management systems that ensure operations comply with all
environmental regulations and guidelines as established by the
State of Qatar, including internal Environmental Impact
Registers to routinely evaluate our impacts on the environment
(QSE#1). No environment-related fines were incurred by any of
our operations in 2017 (QSE#2).
Corresponding
Performance to QSE Indicator Alignment to QNV
90,864 excluding Aamal Company Yes
100.7 excluding City Center Doha 4
and Aamal Company
51,426.944 5
electricity 6
0 7 Environmental
201,124 8 development
11,628 9
14,248 9
21,460.7 excluding Doha Cables 9
and Aamal Company
4,115 9
Aamal Readymix: Green concrete
Aamal Readymix was one of the first companies to
receive the first Qatar Sustainability Award from Qatar
Green Building Council for adopting to GSAS/LEED
practices to produce Green Concrete, which is composed
of contents sourced from industrial waste and byproducts
from other industries in its mix to reduce the CO2
emissions of its products while providing improved
durability and strength, as demanded by customers.
Green Concrete has proven a particular success, with
increasing demand year over year. We are proud to be the
supplier of choice for signature infrastructure projects
such as Al Bayt and Khalifa stadiums, built under GSAS
certification to meet the high standards of FIFA for the
World Cup 2022, as well as College of Engineering,
College of Education at Qatar University, Al Fazaa
Headquarters, and others.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
17

Appendix: ESG Reporting Against Qatar Stock Exchange Guidance for ESG Reporting
ESG Categories QSE KPI # ESG Key Performance Indicators Measurement annual, unless indicated otherwise Page Reference/Comments

Environmental 1 Environmental Policy Does the company publish and follow an environmental policy? Yes
Yes/No
2 Environmental Impacts Any legal or regulatory responsibility for an environmental impact? No
Yes/No If yes, explain
3 Energy Consumption Total amount of energy usage in MWh or GJ p.16
4 Energy Intensity Amount of energy used per M3 of space, and per FTE p.16
5 Carbon/GHG Emissions Total amount of Carbon and Green House Gas emissions in metric tons p.16
6 Primary Energy Source Specify the primary source of energy used by the company p.16
7 Renewable Energy Intensity Specify the percentage of energy used that is generated from p.16
renewable sources
8 Water Management Total amount of water consumption, and details in respect of recycling p.16
if any, in M3
9 Waste Management Total amount of waste generated, recycled or reclaimed, by type and weight p.16
Social 10 Full Time Employees Number of full time employees p.15
11 Employee Benefits Total amount of employee wages and benefits p.15
12 Employee Turnover Rate Percentage of employee turnover p.15
13 Employee Training Hours Total number of hours of training for employees divided by the number p.15
of employees
14 Health Does the company publish and follow a policy for occupational and global Yes
health issues? Yes/No
15 Injury Rate Total number of injuries and fatal accidents relative to the number of FTEs p.15
16 Human Rights Policy Disclosure and adherence to a Human Rights Policy p.15
17 Human Rights Violations Number of grievances about human rights issues filed, addressed and resolved p.15
18 Child & Forced Labour Does the company prohibit the use of child or forced labour throughout the Yes
supply chain? Yes/No
19 Women in the Workforce Percentage of women in the workforce p.15
20 Qatarisation Percentage of Qatari nationals in the workforce p.15
21 Community Work Number of hours spent, and/or other community investments made p.15
as a percentage of pretax profit
22 Local Procurement Percentage of total procurement from local suppliers p.15
Governance 23 Board – Diversity Percentage of Board seats taken by women p.35
24 Board – Independence Percentage of Board seats taken by independent directors p.35
25 Board – Separation of Powers Specify whether the CEO is allowed to sit on the Board, act as the Chairman, p.36
or lead committees
26 Voting Results Disclosure of the voting results of the latest AGM Announced through
QSE’s website
27 CEO Pay Ratio Ratio of CEO salary and bonus against the median FTE salary and bonus N/A
28 Gender Pay Ratio Ratio of median male salary to median female salary N/A
29 Incentivised Pay Specify the links between (executive) remuneration and performance targets p.34
30 Ethics Code of Conduct Does the company publish and follow an Ethics Code of Conduct? Yes
Yes/No
31 Supplier Code of Conduct Does the company publish and follow a Supplier Code of Conduct? Yes
Yes/No
32 Bribery/Anti-Corruption Code Does the company publish and follow a Bribery/Anti-Corruption Code? Yes
Yes/No
ESG Reporting 33 Sustainable Reporting Does the company publish a GRI, CDP, SASB, IIRC or UNGC report? No
Generally Frameworks Yes/No
34 External Assurance Are the company’s ESG disclosures assured by an independent third party? No
Yes/ No
18 Aamal Company Q.P.S.C.  Annual Report 2017

Operational Review

Operational Review
– by Segment

REVENUE
QAR m 2017 2016 Change %

Industrial Manufacturing 582.2 1,811.7 (67.9)%

Trading and Distribution 633.3 649.9 (2.5)%
Property 320.9 317.9 +1.0%
Managed Services 95.3 97.4 (2.2)%
less: inter-divisional revenue 27.6 47.7 (42.1%
TOTAL 1,604.2 2,829.1 (43.3)%

NET PROFIT
QAR m 2017 2016 Change %

Industrial Manufacturing 167.8 210.4 (20.2)%

Trading and Distribution 116.2 119.8 (3.0)%
Property1 268.1 258.4 +3.8%
Fair value gains on investment properties 0.0 0.9 (100)%
Managed Services 7.0 9.8 (28.1)%
less: Head Office costs 36.1 39.0 (7.5)%
TOTAL 523.1 560.2 (6.6)%

1
Before fair value gains on investment properties.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
19

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

QAR m 2017 2016 Change %

Revenue 582.2 1,811.7 (67.9)%

Net profit – fully consolidated activities 71.2 156.5 (54.5)%
Net underlying profit margin % 12.2% 8.6% +3.6 ppts
Net profit – share of equity accounted for investee net profits 96.6 53.9 +79.2%
Total net profit 167.8 210.4 (20.2)%

From 1 April 2017, two business entities within the

Industrial Manufacturing segment (Senyar Industries and
Advanced Pipes and Casts Industries) were no longer treated as
subsidiaries, but as joint ventures such that their results are now
reflected on an equity method basis rather than on a line-by-
line full method basis. What this means in practice is that the
revenues from these entities are no longer included in Aamal’s
total revenue (the major factor behind this recorded 67.9%
drop), but rather Aamal’s share of their net profits is now
included as a single line item entitled ‘Share of net profit of
associates and joint ventures accounted for using the equity
method’ on the Statement of Comprehensive Income (hence its
recorded 79.2% rise).
On an overall basis, total net profit for the segment fell by
20.2%. This predominantly reflects the delays encountered in
sourcing raw materials as a consequence of the continuing
blockade on Qatar, which now have been largely rectified by
sourcing alternative supplies and supply routes, along with
expansion of warehouse storage facilities that gives greater
flexibility in fulfilling customer orders on time. Furthermore,
there have been some positive developments in terms of the
rolling out of new products and expansion of production capacity.
1. Senyar Industries Qatar Holding (‘Senyar’)
A 50:50 joint venture between Aamal and El Sewedy
Electric Company, a leading producer of integrated cables and
electrical products (such as transformers, tools and energy and
water measurement and management).
In early 2018, Senyar Industries Qatar announced the
decision to launch three major new industrial projects for the
production of aluminium, copper and drums, having applied for
the necessary approvals in 2017. These projects are currently
greenfield sites, but they’re expected to become operational by
2018/2019. Once completed, Senyar Industries will have an
integrated cycle for cable manufacturing and will be the first of
their kind in Qatar, thereby having a competitive advantage and
helping to underpin future growth. Senyar’s operations include:

Aamal Industrial Manufacturing operations

currently include:
1. Senyar Industries Qatar Holding: production and distribution
of electric cables, equipment and tools, as well as the
distribution of electromechanical equipment
2. Aamal Readymix: production of high quality ready-mixed
concrete
3. Aamal Cement Industries: production of interlocking paving
stones, concrete blocks and tiles
4. Ci-San Trading: importation and supply of high quality
gabbro aggregates through Gulf Rocks; and their shipping
through Aamal Maritime Transportation Services
5. Advanced Pipes and Casts Company: manufacturer of pipes
6. Frijns Structural Steel Middle East W.L.L.: produces steel for
the petrochemical and process industries, including all
associated engineering, production, anti-corrosion,
construction and assembly work
7. Innovative Lighting Company: currently in liquidation
20 Aamal Company Q.P.S.C.  Annual Report 2017

Operational Review continued

Doha Cables El Sewedy Cables Qatar

The first and largest cables manufacturing facility in Qatar, El Sewedy Cables Qatar commenced operations in 2006,
Doha Cables commenced operations in May 2010 specialising specialising in the distribution of electromechanical equipment
in the manufacturing of power cables, special cables, winding and cables for Doha Cables and third party manufacturers. A
wires and cable accessories. Senyar holds an 85% interest in 49% stake (with 55% share of profits/losses) was acquired by
Doha Cables, with El Sewedy Cables Qatar owning a 12.5% Senyar from El Sewedy Electric Company in January 2010.
interest (of which Senyar owns 76.6%), and an unaffiliated third During 2016, Senyar acquired 24.4% additional shares and the
party the remaining 2.5%. Effective ownership held by Aamal in remaining 26.6% with unaffiliated third parties. Effective
Doha Cables is thus 47.3%. ownership by Aamal in El Sewedy Cables Qatar is 38.3%.
In 2017, Doha Cables built a new testing lab that is the
first of its kind in the Gulf and the wider Middle East region for
the testing of flame retardant, low smoke and fire resistant
cables in accordance with US NFPA (National Fire Protection
Association) specifications and standards. Also during 2017,
Doha Cables applied for ISO 17025 Certificate status for this
testing facility and expects to receive this by the third quarter of
2018, which will enhance its commercial appeal.
Doha Cables also increased the production capacity of
Fire Resistant Cables by 300% to meet market demands, and
doubled the production of High Voltage (HV) and Medium
Voltage (MV) cables. Doha Cables completed the process of
acquiring the BASEC Product Certificate, which was received in
the first quarter of 2018, for Non-Fire Resistant Cables, which are
being manufactured as per BS 5467, BS 6724, BSEN 50525-2-31,
and BSEN 50525-3-41.
In 2018, Doha Cables aims to focus on infrastructure, oil &
gas, railway, ports, road projects and services. Introducing new
products and increasing production capacity are priorities, as
well as focusing on developing new export markets, including
south-east Asia and Eastern Europe.
Aamal Company Q.P.S.C.  Annual Report 2017
2. Aamal Readymix
An entity 100% owned by Aamal. It commenced
operations in 1994 and is one of the largest producers of quality
ready-mixed concrete in Qatar with an annual production
capacity of 600,000 cubic meters.
In 2017, Aamal Readymix developed a new type of
concrete called ‘green concrete’ and brought it to market. Green
concrete is made from recycled cementitious materials and has
a very high strength and durability. Also during the year, storage
capacity was increased through a doubling of
how much raw material can be stockpiled at the
manufacturing plants.
Furthermore, Aamal Readymix is in the final stages of
upgrading its facilities by adding a new recycling plant.
Strategic Report
21
3. Aamal Cement Industries (ACI)
Aamal Company owns 99%. It commenced production
of decorative interlocking paving stones and concrete blocks in
2010 with an annual production capacity of approximately 25
million blocks or two million square metres of paving stones.
The plant has one of the largest block and pavement making
machines in Qatar.
2017 was a busy year for ACI, with the introduction of
new products particularly in the road containment heavy duty
curbstone space. ACI is the first company within the GCC to
produce VBU (Vehicle Barrier Unit) curb on a hydraulic press
machine (normally these are precast produced). In addition, ACI
introduced the Trief Curb System (a heavy duty curbstone of
specific shape and height, used as a passive safety system
designed to contain and redirect vehicles back onto the
carriageway); and furthermore, ACI gained ASTM E119-A status,
a standard certification for the fire resistance of concrete blocks.
For 2018, ACI is planning two new paving products,
coupled with a shot blast line (a method used to clean, polish or
alter the surface texture to give decorative effects and to
enhance the aesthetic appearance of the paving) to increase
their added value. This can also be done across the range of
curbstone and concrete slab products.
22 Aamal Company Q.P.S.C.  Annual Report 2017

Operational Review continued

4. Ci-San Trading Aamal Maritime for Transportation Services (AMTS)

Aamal has a 50% interest in Ci-San Trading (the other 50%
is held by Masraf Al Rayan). A partnership agreement between
Aamal Company and Masraf Al Rayan was signed in 2008
creating Ci-San Trading Company. The Company was set-up to
evaluate investments in various sectors such as industrial, real
estate, trading both in local and international markets.
Aamal holds 1% of the shares directly, with the remaining
99% held by Gulf Rocks. Aamal has an overall effective interest
of 74.75% in AMTS and owns two vessels, ‘Um Al Hanaya’ and ‘Al
Rayyan’: both bulk carriers each with capacities in excess of
56,000 tonnes.
In 2017, both vessels were sent to the Far East region for a
few months to utilise their full operational capacity. Later on in
the year, an agreement with a leading local company ‘Milaha’
was signed to operate Al Rayyan for importing gabbro into
Qatar from India.

Gulf Rocks
Effective ownership by Aamal is 74.5%; in 2012, Ci-San
Trading purchased 51%, with Aamal directly acquiring the
remaining 49%. Gulf Rocks itself was established in 2000, and is
a leading importer and provider of high quality gabbro
aggregates, which are widely used in concrete products.
In 2017, Aamal Company commenced the sale of the
treasury shares owned by Gulf Rocks Company W.L.L. in
accordance with directives from Qatar Financial Market
Authority (QFMA) on this matter and complying with Article
(15) of the regulations concerning listed companies buying and
selling their own shares. The total number of treasury shares
owned by Gulf Rocks and approved by QFMA for sale is 157,066
shares. The sale process was fully completed in early 2018.
Gulf Rocks currently imports gabbro from Sohar, Oman.
Aamal Company Q.P.S.C.  Annual Report 2017
ADVANCED PIPES & CASTS CO.
5. Advanced Pipes and Casts Company (APC)
Aamal owns 50% of Advanced Pipes and Casts Company
(APC), established in July 2010 as a joint venture between the
Company and Lokma Group, a leading pipe manufacturer in the
Middle East. APC started commercial production at the end of
2014, with extensive production capacity that is largely
automated and has the flexibility to respond swiftly to changes
in end-market demand.
2017 was a challenging year for APC due to a tightening
in market conditions and raw material supply issues; as a result,
APC was neither able to increase its market share in concrete
pipes, nor expand its product range, so refrained from adding to
its GRP (glass fibre reinforced plastic) manufacturing capability.
Market conditions for 2018 appear to be more benign
however with the planned roll-out of new infrastructure
projects by the government; consequently, APC is planning
to add two new production lines for the manufacture of
GRP pipes.
Strategic Report
23
6. Frijns Structural Steel Middle East
Aamal has a 20% interest in Frijns Structural Steel (60% is
held by Frijns Industrial Group of the Netherlands, remaining
20% is by a third party). Frijns Structural Steel – Middle East
started operations in Qatar in 2009 by opening its first
production facility in the region, which produces steel for the
petrochemical and process industries, including all associated
engineering, production, anti-corrosion, construction and
assembly work.
7. Innovative Lighting
Aamal owns 70% of Innovative Lighting ‘QLEDs’, a joint
venture with C&C Lightway of South Korea, and a separate
third party.
This entity is currently in liquidation.
24 Aamal Company Q.P.S.C.  Annual Report 2017

Operational Review continued

Trading and Distribution

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

QAR m 2017 2016 Change %

Revenue 633.3 649.9 (2.5)%

Net profit 116.2 119.8 (3.0)%
Net profit margin % 18.3% 18.4% (0.1) ppts

These results demonstrate the flexibility and resilience of

the segment’s businesses to the unique and unprecedented
challenges brought about by the continuing blockade on Qatar
by neighbouring countries: not just in withstanding them but
also adapting to and at times thriving in this new environment.
This segment’s business promptly adjusted to the new Branch of Aamal Q.S.C.
circumstances through finding alternative supply chains,
1. Ebn Sina Medical
expanding their business partnerships and introducing new
Aamal owns 100% of Ebn Sina Medical, the leading
products and services to the market.
provider of pharmaceutical, hospital supplies and consumer
health products in Qatar, representing in excess of 50
Aamal Trading and Distribution operations currently
international leading healthcare manufacturers from more than
include:
20 countries including Roche, AstraZeneca, Novartis Pharma,
1. Ebn Sina Medical: the leading pharmaceutical distribution
B-Braun, Boston Scientific and Nuxe. Ebn Sina Medical also
company in Qatar
operates a retail chain that includes a pharmacy and three Foot
2. Aamal Medical: a leading medical equipment supplier
Care Centres providing a range of clinical foot care services, foot
3. Aamal Trading and Distribution: a leading distributor of
care products and specialist footwear.
automotive products and home appliances
2017 was considered to be a good year for Ebn Sina
4. Foot Care Centre: provider of a range of foot care services
Medical as it successfully managed the blockade by finding
and products
alternative sources of drug supplies, through countries such as
5. Ebn Sina Pharmacy: a modern chain of pharmacies located
Turkey and Pakistan, and avoided any shortage of drugs in both
in City Center Doha
the private and public sectors. The sales and distribution
6. Al Farazdaq Company: provider of printing solutions and
operations were very closely monitored by the Company in
trader of office supply products
collaboration with the local health authorities, with the Qatari
7. Aamal Optical Supplies: currently in liquidation
government lending close support in terms driving through
several new arrangements and policies. Furthermore, a number
of improvements were implemented by the Company to
its internal processes, resulting in improved levels of
operating efficiency.
During the year, Ebn Sina Medical acquired new business
partnerships with leading international consumer health and
pharmaceutical names, including:
–– Getz Company and Martindow Company, branded
generic products (both Pakistan)
–– Medcomp Company, hospital consumables (USA)
–– Pierre Fabre Company, consumer health products (France)
–– Pharma House Company, pharmaceutical wholesaler (UK)
–– Fidia Pharma Company, pharmaceutical and consumer
health products (Italy)
–– Maddox Pharma Company, branded generic products
(Switzerland)
Aamal Company Q.P.S.C.  Annual Report 2017
1. Ebn Sina Medical (continued)
Furthermore, Ebn Sina Medical secured a number of new
business contracts with the Qatar Red Crescent and Sidra
Hospital, whilst it also implemented the internationally
recognised GS1 (Global Standards) drug coding system with
HMC (Hamad Medical Corporation) and completed that
system’s pilot study with the Qatar Ministry of Health.
Finally, a new warehouse facility was acquired at Manateq
with plans to implement the latest technologies and levels
of automation.
For 2018, Ebn Sina Medical is planning to expand its
supplier base (for generic, branded and biosimilar drugs) and to
work closely with the local health authorities to fast track their
registration. This will not only help to ensure continuing security
of supply, but also to broaden our offering.
Strategic Report
25
2. Aamal Medical
Aamal owns 100% of Aamal Medical, a leading medical
equipment supplier in Qatar. Aamal Medical has exclusive
distribution agreements with a number of leading international
medical equipment suppliers. In addition to sales of medical
equipment, Aamal Medical also provides consultancy on,
and builds operating room theatres, and installs hospital
information systems.
In 2017, Aamal Medical performed in line with
expectations and met its targets. The Company has signed
several exclusive representation agreements for the first time
with several leading international brands, including: Arcomed,
Scalan and Novo Surgical, with additional brands from the
Medtronic range of products. Furthermore, Aamal Medical has
expanded its product lines for ambulance stations in different
areas, and provided equipment for the Sidra Dialysis Center.
In 2018, the outlook looks favourable with several new
opportunities arising related to new projects, including: Workers
Hospitals, MOI Hospitals, Army Hospital and Military Medical
Complex. Aamal Medical aims to continue to strengthen its
market presence further by moving into new specialisms such
as cardiology and sterilisation equipment and technology
(CSSD), and evaluating potential new opportunities such as
bidding for new hospital turnkey projects.
26 Aamal Company Q.P.S.C.  Annual Report 2017
Operational Review continued
3. Aamal Trading and Distribution
Aamal owns 100% of Aamal Trading and Distribution, the
exclusive distributor in Qatar of Bridgestone tyres since 1971
and a non-exclusive distributor of TOTAL oil and lubricant
products since 1990. It is also involved with the supply,
installation, commissioning of own brand GETTCO home
appliances and maintenance of air conditioning and
refrigeration equipment.
In 2017 Aamal Trading and Distribution launched two
First Stop centres in Qatar, located on Salwa Road and in
Muaither area. The two centres provide a ‘one-stop-shop’ model
which allows car owners to meet the majority of their everyday
motoring needs at a single location with the facility of ‘DIAL A
TYRE’ which provides doorstep services to customers. Aamal
Trading and Distribution also inaugurated Bridgestone Fleet
Point Center, a high-quality commercial tires services center for
fleet customers.
GETTCO Home Appliances also launched a new product,
the Curved TV in two different sizes (39- and 55-inch), into the
Qatari Market during 2017.
4. Foot Care Centre
Aamal has a 100% interest in Foot Care Centre, offering a
broad range of biomechanical, orthopedic and therapeutic
services for feet along with a variety of foot care products from
the well-known brand SCHOLL. Foot Care Centre is managed by
Ebn Sina Medical and it has two operating branches, with a
third one scheduled to open in the second quarter of 2018 at
City Center Shopping Mall (the lease contract was agreed and
signed in 2017).
Foot Care Centre is a registered trademark in Qatar.
Branch of Aamal Q.S.C.
5. Ebn Sina Pharmacy
Aamal has a 100% interest in Ebn Sina Pharmacy which
was formerly known as Ebn Sina Health Care Solutions. Ebn Sina
Pharmacy is managed by Ebn Sina Medical and the rebranding
was carried out – ahead of expansion plans that are expected
for this pharmacy chain.
In 2017, a lease contract was signed for a new pharmacy
located in Ras abu Aboud, which is due to open in the second
quarter of 2018.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
27

6. Al Farazdaq Company W.L.L. 7. Aamal Optical Supplies W.L.L.

Aamal Company holds 65% of Al Farazdaq Company Aamal has a 51% interest in Aamal Optical Supplies. A
which started its operations in 2013 to provide printing partnership agreement between Aamal Company and Qatar
solutions and trade in various office supply products. The Optics was signed in 2014 establishing Aamal Optical Supplies
printing press is equipped with state of the art printing W.L.L., the intention being to import and distribute both
machines, offering innovative digital printing solutions to the contact and prescription lenses (and their manufacture), along
business community. with other eye care products and services. However, this
Al Farazdaq is also the sole agent of ‘GETTCO Office business never become operational and is currently
Supplies’, offering a wide range of a high quality stationery that in liquidation.
is durable, innovative, reliable and competitively priced.
In 2017, Al Farazdaq increased its market share through
the securing of new and significant contracts whilst improving
the quality of both its products and customer services. The
Company invested in a large format flatbed printer and cutter,
which provided the scope to cut costs on large format printing
jobs by allowing for printing in-house rather than having to
outsource, and greater opportunities commercially. The
Company also successfully recycled over 70% of paper as
certified by the Forest Stewardship Council.
In 2018, Al Farazdaq aims to introduce new printing
solutions to cater for special requirements related to hospitality
businesses, event management companies, and strengthen its
business relations with advertising companies.
28 Aamal Company Q.P.S.C.  Annual Report 2017

Operational Review continued

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

QAR m 2017 2016 Change %

Revenue 320.9 317.9 +1.0%

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

* before fair value gains on investment properties

Against the general backdrop of an increasingly

competitive Qatari retail sector, due in part to the coming on-
stream of a number of new shopping centres, this is a very
positive performance indeed which underscores the enduring
strength and quality of our portfolio, with City Center Doha
(CCD) retaining its position as the leading shopping mall in
Qatar. Aamal Real Estate, our residential and retail property
subsidiary that excludes CCD, performed well too over the year,
with further growth expected following the acquisition of
certain real estate assets and completion of a number
of projects under development.
1. City Center Doha
Aamal owns 100% of City Center Doha (CCD), which was
one of the first shopping malls in Doha having opened in 2000.
CCD is widely regarded as the leading mall in Qatar, supported
by its twin virtues of size and prime location in the heart of the
West Bay area of Doha, considered to be the city’s central
business district and with a high density of both residential
towers and hotels. Against a backdrop of increased market
competition in the retail sector due to the opening of the new
shopping centres and a general weakening in consumer spend
per head, CCD was able to maintain its leading status, with no
change to overall footfall levels.
In 2017, City Center continued the work of Phase 2 of the
redevelopment, which will significantly expand both the retail
space and number of outlets and is due to be completed later
this year, on time and within budget.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
29

QATAR GERMAN MALL MANAGEMENT

2. Aamal Real Estate

Aamal owns 100% of Aamal Real Estate which comprises 3. Aamal ECE (Qatar German Mall Management)
a) the Souq Najma (Al Haraj) which was built in 1993 as a A partnership agreement between Aamal and ECE
traditional Middle Eastern souq comprising 347 shops, 25 kiosks Projektmanagement, commercially known as Qatar German
and 24 residential flats; b) the Markhiya residential complex; and Mall Management. The Company specialises in the property
c) four other residential buildings. management of shopping centres and offering consultancy
In 2017, Aamal Real Estate commenced the construction services both within Qatar and the wider MENA Region.
of a 63 apartment residential building which is progressing on
schedule and is expected to be completed at the end of the
third quarter of 2018. The Company also completed negotiations
to acquire new assets that include three residential compounds
which comprise 24 villas and two buildings containing 20
apartments. These assets are located in prime locations in Doha
including West Bay Lagoon, Al Waab, Abu Hamour and Madinat
Khalifa. This acquisition was announced in early 2018.
30 Aamal Company Q.P.S.C.  Annual Report 2017
Operational Review continued
Managed Services
Although revenues fell marginally year-on-year, a contraction in margins led to a 28.1%
drop in net profit.
QAR m
Revenue
Net profit
Net profit margin %
The primary driver behind this was an expected reduction
in activity at Aamal Travel following the strategic decision to
restrict sales to be on a cash-only basis in order to minimise bad
debt impairment risks; and also the temporary closure of the
East Food Court of City Center Doha as this is adjacent to
the Family Entertainment Center.
The Managed Services operations focus primarily
on providing commercial facilities management,
outsourcing and other business support services,
and currently include:
1. ECCO Gulf: business process outsourcer
2. Aamal Services: general housekeeping services provider
3. Aamal Travel: travel agency
4. Family Entertainment Center: an indoor amusement center
with a mixed range of rides
5. Winter Wonderland: features winter themed activities
6. Johnson Controls Qatar: currently in liquidation
2017 2016 Change %
95.3 97.4 (2.2)%
7.0 9.8 (28.1)%
7.3% 10.1% (2.8) ppts
1. ECCO Gulf W.L.L.
Aamal Company owns 51% of ECCO Gulf which is a joint
venture with ECCO Outsourcing, one of the region’s leading
contact center operators and business process outsourcers.
ECCO Gulf commenced operations in 2010 offering the
outsourcing of business processes, professional services and
human resources to clients in Qatar.
In 2017, ECCO Gulf succeeded in expanding its work
within the existing sectors of banking and government, and
penetrated new ones including technology and retail.
In 2018, the Company is planning to increase service
offerings to existing clients, expand into new sectors (including
automotive and telecom), and to invest in developing in-house
IT solutions.
2. Aamal Services
Aamal owns 100% of Aamal Services which provides a
wide range of services including cleaning, hotel and hospitality
services, waste collection and disposal (including medical
waste and solid waste), ground maintenance and landscaping,
pest control and fleet/car washing.
In 2017, Aamal Services was able to secure new and
higher value contracts. The Company’s aim in 2018 is to focus
on providing a wider range of services, and targeting
educational and healthcare institutions in order to help open
up these markets more.
Furthermore, to focus on the pest control business as a
standalone business offering, rather than just as an ‘add-on’
service which it is currently.
Aamal Company Q.P.S.C.  Annual Report 2017 Strategic Report
31

3. Aamal Travel (also known as Aamal Travel Lufthansa 5. Winter Wonderland

City Center) Aamal has a 100% interest in Winter Wonderland, and is
Aamal owns 100% of Aamal Travel, which is an located in CCD. Winter Wonderland was acquired in 2016 and
International Air Transport Association (IATA) accredited travel is a family-friendly place devoted to the pursuit of excitement,
agency providing a range of travel services, including airline fun and comfort. It features winter adventures for the entire
reservations and ticketing, worldwide hotel bookings and family to enjoy indoor and includes an ice skating rink, a 10-pin
holiday packages. strike bowling alley and billiard tables.
The year 2017 was a challenging year for Aamal Travel,
and the business performance was below expectations.
However, towards the end of the year market conditions started
to improve and we expect this positive momentum to continue
into 2018. Aamal Travel is expected to benefit from the expected
growth in inbound tourism to Qatar following an easing in entry
visa restrictions and the ongoing efforts of the Qatar Tourism
Authority in promoting the country’s tourism credentials.
6. Johnson Controls Qatar
Aamal Company owns 51% of Johnson Controls Qatar
which provided facility improvement and energy solutions
to customers in Qatar. This entity is currently in liquidation.

4. Family Entertainment Center

Aamal has a 100% interest in Family Entertainment
Center, otherwise known as ‘Fun City’, located on the
entertainment level of City Centre Doha. With a reputation for
hi-tech entertainment, Fun City offers a varied mix of rides,
games and sports. Aamal acquired Family Entertainment in
2016, along with Winter Wonderland in order to enhance the
customer appeal of CCD.
32 Aamal Company Q.P.S.C.  Annual Report 2017
Corporate Social Responsibility
Aamal Company has supported several activities that aimed to increase awareness of best
business practice, governance and cultural exchange.
–– Qatar Business Continuity Conference: The
conference discussed best practices within ‘Business
Continuity and Risk Management’ (including crisis
management responses) across various public and
private entities operating in Qatar.
–– Corporate Governance Conference: The Corporate
Governance Conference, was organised under the
guidance of Qatar Financial Markets Authority (‘QFMA’),
and aimed to encourage Qatari publicly listed
companies to develop a governance report under the
provisions of the Governance Code issued by the QFMA.
–– Belgian King’s Day: Aamal Company sponsored the
Belgian Embassy’s celebrations of their national day to
encourage cultural exchanges between Belgium and
Qatar. This event took place in partnership with the
Flanders Investment and Trade Agency and the Belgian
Business Club Qatar.
–– Road to Qatar 2022: The Road to Qatar 2022 is a guide
that reflects Qatar’s progress in preparation for the FIFA
World Cup 2022, reporting on major projects that are
taking place and transforming the face of the country.
–– Gulf English School Career Day: Aamal supports
the Gulf English School during its Annual Career Fair.
An event that serves as a networking and knowledge
exchange platform whereby, students are able to learn
about the changing job market dynamics across Qatar’s
key growth sectors, explore potential career choices
and connect with the country’s leading players and
organisations for future employment opportunities.
Key CSR activities by Segment
Industrial Manufacturing Segment
Doha Cables
–– Doha Cables are partners with Qatar Water and
Electricity Company ‘Kahramaa’ to support ‘Kahramaa
Awareness Park’ project which aims to enhance the
awareness of the consumer on the importance of
adopting steps towards the consumption of both
electricity and water, with a particular focus on school
and university students.
–– Doha Cables has built a new testing lab as per NFPA
specifications and standards which is the first of its kind
in the Gulf and the wider Middle East for flame retardant
cables testing, low smoke and fire resistant cables as per
USA Standards.
–– Doha Cables applied for ISO 17025 Certificate status for
its testing facility and expects to receive this by the third
quarter of 2018, which would make Doha Cables an
independent licensed laboratory, thereby enhancing its
commercial credentials
–– Increased number of students attending the summer
internship program where aspiring engineers can attend
full training programs to help them prepare for a career
in electrical engineering.
–– Doha Cables hosted a blood donation campaign in
cooperation with Hamad Medical Corporation on
16 January 2017, at Mesaieed Factory.
Aamal Readymix
–– To meet its CSR target of 0% dust emissions from its
operations, Aamal Readymix is in the final stages of
completing the concrete flooring works and water
recycle/reuse facilities.
–– Aamal Readymix is in process of finalising the installation
of a new recycling plant at its industrial area factory. This
will enable the company to recycle all the waste/leftover
quantities of the readymix concrete.
Aamal Cement Industries W.L.L.
–– Water recycling unit installed to reduce further the
environmental impact on consumption
–– Obtained certification OHSA 14001. Environmental
management/Occupational Health and Safety 18001.
Aamal Company Q.P.S.C.  Annual Report 2017
Key CSR activities by Segment (continued)
Trading and Distribution Segment
Ebn Sina Medical
–– Continued its focus on education through the adoption
of two programs:
–– Support of pharmacy students at the University
of Qatar and the College of the North Atlantic,
through the provision of collaborative training
work experience opportunities within the Ebn
Sina pharmacy chain
–– Support of the scholarship program for the
Bachelor’s, Master’s and PhD Pharmacy students
at Qatar University
Aamal Medical
–– Sponsorship of several events organised by Hamad
Medical Corporation (HMC) for developing and
enhancing healthcare services in Qatar
Al Farazdaq
–– Usage of recycled and eco-friendly materials in
production and printing such as Xanita Board
Strategic Report
33
Managed Services Segment
ECCO Gulf
–– ECCO Gulf is aiming to become a paperless organisation
by the end of 2018
Aamal Services
–– Using chemical materials and equipment with the least
environmental impact. Ensuring the use of degradable
materials and environmentally friendly chemicals that
have minimal impact on water resources
–– Aamal Services is also looking to focus on using
chemical fluids that are ready to be used rather than
requiring preparation (so as to eliminate the scope for
wastage), a reduction in water usage through using
steam machines rather than jet pressure washers),
the reuse of microfiber cloths so to limit wastage, and
persuading customers to opt for air flow dryers rather
than paper towels
–– Aamal Services is engaged with a government initiative
to improve computer literacy skills whereby laptops and
computer training for all its employees within the
industrial area are provided free of charge
Aamal will continue to build upon its core values of
responsibility and sustainability implementing strategies that
address environmental issues, empower people and provide
training and safety awareness programs to all its employees.
34 Aamal Company Q.P.S.C.  Annual Report 2017
Corporate Governance
Objective
The Board of Directors (the ‘Board’ or ‘BOD’) and the
Executive Management of Aamal Company Q.P.S.C. (the
‘Company’ or ‘Aamal’) believes that a strong Corporate
Governance is crucial to ensure high performance across all the
Company’s activities and its subsidiaries (together the ‘Group’)
and is essential to build investor trust and to guarantee a
safeguard against any misguided corporate activity.
The Board of Directors of Aamal has adopted a Corporate
Governance Manual which relates to the way in which the
affairs of Aamal are governed and managed by the board, the
committees of the board and the executive management team.
It is a system by which Aamal is directed and controlled taking
into account the interests of its shareholders and stakeholders.
The Corporate Governance Manual of Aamal is drafted to
comply with the provisions of the company’s Articles
of Association and Memorandum of Association (together,
the ‘Articles of Association’), the provisions of the Governance
Code for Companies and Legal Entities Listed in the Main
Market No. (5) of 2016 (the ‘Code’) issued by the Qatar Financial
Markets Authority (‘QFMA’ or the ‘Authority’),
and the Commercial Companies Law No. (11) of 2015 (the
‘Companies Law’).
Achievements during 2017 and activities planned for
2018 to enhance levels of corporate governance
In order to improve the corporate governance culture
across the Company, Aamal has developed its practices and
provisions including the organisational aspects amongst others.
In connection with the adoption and implementation of
the new regulatory developments issued during the year 2017,
Aamal has developed and started implementing numerous
regulatory initiatives in line with the new requirements of the
Governance Code for Companies and Legal Entities Listed in
the Main Market under decision No. (5) of 2016 of the QFMA.
Details of these initiatives are provided in the full Corporate
Governance Report available on the Company’s website.
The planned activities for 2018 are as follows:
1. Develop a documented strategy, key business plans and
performance objectives.
2. The Corporate Governance Committee was cancelled and
the responsibility to draft the corporate governance report
will be delegated to the Executive Management.
3. The Nomination Committee will be replaced by the
Compensation Committee to constitute a sole committee
referred to as the Nomination and Remuneration Committee.
4. Create a new Risk Management and Compliance Unit
to handle the risk management of the Company and to
ensure the compliance with the legal and regulatory
requirements and manage compliance as well as corporate
governance matters.
5. Review the organisation structure of the Company.
6. Review the composition of the board and appoint new
independent directors.
7. Update the Corporate Governance Manual
8. Develop and implement a Corporate Governance Manual
and other related policies such as Board and Committee
Performance, Shareholders Policy, Related Parties Policy,
Dividend Policy, Insider Trading Policy, Remuneration Policy,
Whistle Blowing Policy, Board Code of Conduct, Disclosure
Policy, Conflict of Interest Policy, External Audit Appointment
Policy, Succession plan and authority matrices.
9. Implement the training and induction for the board
members.
10. Develop the risk management framework and its
subsequent implementation. This would be cascaded down
to the subsidiaries during the coming years.
11. Develop a formal internal control system and implement it.
This will be cascaded down to our subsidiaries over the
short to medium term.
12. Establish a compliance framework.
13. Amend the Articles of Association to comply with the Code.
Aamal Company Q.P.S.C.  Annual Report 2017 Corporate Governance
35

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

Board composition
The board is composed of the following members as of 31 December 2017:
Number of
Director Name Party represented Date of Election/Appointment Position Member classification shares owned 1, 2 %

Sheikh Faisal Qassim Faisal In his personal capacity Re-elected on Chairman Non-executive 157,373,554 1
24.97
Al Thani 17 April 2016
Sheikh Mohamed Faisal In his personal capacity Re-elected on Vice-Chairman Executive 6,300,000 2 1.00
Qassim Al Thani 17 April 2016 Managing Director
Sheikh Jabor Abdulrahman Al Faisal Holding Re-elected Ordinary Member Non-executive 1,090 1 1.10
Jabor Al Thani Company W.L.L. on 17 April 2016 283,500,000 2
Representative 45.00
appointed on
5 February 2017
Sheikh Abdullah Hamad Al Jazi Real Estate Re-elected on Ordinary Member Non-executive 6,300,000 2 1.00
Qassim Al Thani Investment Company W.L.L. 17 April 2016
Sheikha Al Jazi Faisal Qassim Al Rayyan International Re-elected on Ordinary Member Non-executive 3,150,000 1 1.00
Al Thani Educational 17 April 2016 6,300,000 2 1.20
Company W.L.L.
Kamel Muhammad Al Agla City Limousine Re-elected on Ordinary Member Non-executive 6,300,000 2 1.30
Company W.L.L. 17 April 2016
Representative 1.00
appointed on
5 February 2017
1. Held directly in a personal capacity
2. Held by the business entity whom the director is the representative

Prohibition of combining positions

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

Starting from 2018, the Board members will provide the Board Secretary with the Independence and Conflict of Interest Declaration to declare whether they
undertake any legally prohibited positions. The Board Secretary will then keep safe custody of these declarations.
36 Aamal Company Q.P.S.C.  Annual Report 2017

Corporate Governance continued

Experience and membership in other boards

Director Name Position in Aamal Membership in other boards

Sheikh Faisal Qassim Faisal Al Thani
Sheikh Mohamed Faisal Qassim Al Thani
Sheikh Jabor Abdulrahman Jabor Al Thani
Sheikh Abdullah Hamad Qassim Al Thani
Sheikha Al Jazi Faisal Qassim Al Thani
Mr. Kamel Muhammad Al Agla
Chairman Chairman of Al Faisal Holding W.L.L.
Chairman of Al Rayyan Tourism Investment Company ‘ARTIC’
Chairman of Al Faisal International Investment
Board Member of International Financial Securities
Vice-Chairman and Sits on the Board of Directors of Al Khaliji Bank Q.P.S.C.
Managing Director Vice Chairman of Al Faisal Holding W.L.L.
Vice Chairman of Al Rayyan Tourism Investment Company ‘ARTIC’
Vice Chairman of International Financial Securities
Chairman of Optimized Holding
Member Board Member at Aamal Company since February 2017 representing Al Faisal Holding W.L.L.
Vice Chairman and Managing Director of Transind Group since 2004
Founder and Managing Director of Al-Bayan Insurance Broker since 2011
Member A member of the Board of Aamal Company since 2010 as a representative
of Al Jazi Real Estate Investment Company W.L.L.
Member Board member since 2016 representing Al Rayyan International Education
Member Board Member at Aamal Company since February 2017 representing City Limousine
Company W.L.L.
Board Member of Derwind Trading and Contractor

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

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

Segregation of the Chairman and Chief Executive Officer (CEO) roles

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

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

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

As of 31 December 2017, there were 5 Board Committees:

1. Executive Committee
2. Audit Committee
3. Nomination Committee*
4. Compensation Committee*
5. Corporate Governance Committee**

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

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

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

Nomination and Remuneration Committee

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

* Nomination and Compensation Committees were combined into one unified committee ‘Nomination and Remuneration’ with effect 28 February 2018.
** The Corporate Governance Committee was cancelled and the responsibility to draft the corporate governance report will be delegated to the Executive Management, with effect 28 February 2018.
Aamal Company Q.P.S.C.  Annual Report 2017 Corporate Governance
37

Executive Management:

Sheikh Mohamed Bin Mr. Mohammad

Faisal Al Thani Ramahi
Vice Chairman and Chief Financial Officer
Managing Director

General Managers of Companies:

Parveez Aslam Sherif Shehata Ahmed El Sewedy Amr Gohar

Aamal Readymix, Aamal Medical, and El Sewedy Cables ECCO Gulf
Aamal Cement Ebn Sina Medical Qatar and
Industries, Gulf Rocks Doha Cables
and Aamal Maritime for
Transportation Services

Keith Smith Rob Frijns Osama Al Hajj Joseph McMullan

Aamal Cement Frijns Structural Steel Aamal Real Estate Aamal Services
Industries Middle East

Chris Pakhanian Syed Rashid Hassan Baris Sezen Ahmed Ali

Al Farazdaq Company Aamal Trading City Center Doha Advanced Pipes
and Distribution and Casts Company
38 Aamal Company Q.P.S.C.  Annual Report 2017

Corporate Governance continued

Organisational Structure

Executive
Committee SHAREHOLDERS

Audit
Committee BOARD OF DIRECTORS

Corporate Board of Directors

Governance Chairman
Secretary
Committee*

Managing Director
Compensation
Committee**

Nomination
Committee**

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

Business Development
Legal Department
Department

Information
Aamal Subsidiaries Subsidiaries Human Capital Corporate Procurement
Technology
General Managers Operations Development Communications Department
Department***

Finance Department,
Investor Administration Treasury
Head Office, Branches
Relations Department Department
and Subsidiaries

* The Corporate Governance Committee was cancelled and the responsibility to draft the corporate governance report will be delegated to the Executive Management with reference to the Board
Meeting dated 28 February 2018
** The roles and responsibilities of the Nomination Committee and the Compensation Committee have been combined into one single committee ‘Nomination and Remuneration Committee’,
with reference to the Board Meeting dated 28 February 2018
*** IT Solutions are outsourced
Aamal Company Q.P.S.C.  Annual Report 2017 Corporate Governance
39

Annual Ordinary and Extra Ordinary General Assembly Meeting

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

Agenda of the Extra-Ordinary General Assembly Meeting

1. To discuss and approve the new Articles of Association of the Company drafted in accordance with the requirements of the Corporate Governance Code for
listed companies and legal entities issued by Qatar Financial Markets Authority’s Board directive no. (5) for the year 2016.
2. Referencing the above mentioned point (1) to authorise the Chairman of the Board to sign the new Articles of Association for the purposes of authenticating
the new Articles of Association by the relevant authorities, and to approve the Chairman delegating to the Company’s staff undertaking the necessary steps to
complete the authentication and registration of the new Articles of Association with the relevant authorities.

Agenda of the Ordinary General Assembly Meeting

1. To hear and approve Chairman’s report on the Company’s activities and the financial position for the financial year ended December 31, 2017, and hearing the
Company’s future business plan
2. To hear and approve the External Auditor’s report on the Company’s financial statements for the year ended December 31, 2017
3. To discuss and approve the Company’s Financial Statements, profits and losses for the financial year ended December 31, 2017
4. To discuss and approve the proposal of the Board of Directors to distribute dividends to the current shareholders the sum of 6% (QAR 0.6 for each Share) of the
nominal value (i.e. QAR 10) of each share of the Company that they own
5. To discharge members of the Board of Directors from their directorship responsibilities having been met for the financial year ended December 31, 2017 and
to determine their bonus
6. To discuss and approve the Company’s Corporate Governance Report for the year of 2017
7. To vote on the candidates nominated for the independent directorship seats on the Board in accordance with the requirements of the Corporate Governance
Code for listed companies and legal entities issued by Qatar Financial Markets Authority’s Board pursuant to Decision No. (5) of the year 2016
8. To appoint the external auditor for the financial year 2018 and decide its fees
40 Aamal Company Q.P.S.C.  Annual Report 2017

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

Report on the audit of the consolidated financial statements

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

What we have audited

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

Basis for opinion

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

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

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

Our audit approach

Overview
Key Audit Matters:
–– Valuation of investment properties
–– Business combination – loss of control on subsidiaries

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

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

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

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

Key audit matters

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 period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Aamal Company Q.P.S.C.  Annual Report 2017
Key audit matter
Valuation of investment properties
As mentioned in note 5 to the consolidated financial statements, the Group
has investment properties recorded under the fair value model and the fair
value gains or losses are recorded in the consolidated statement of profit
or loss and other comprehensive income.
The Group’s investment properties are based in the State of Qatar. The
carrying value of investment properties in the consolidated statement
of financial position is QAR 6,892,214,727 at 31 December 2017.
The valuations of properties were carried out by independent third party
valuers with experience of the particular markets in which the properties
are held. rates against external market data, where available and re-calculating
The fair value of the investment properties of the Group was determined
as follows:
–– Lands: Comparable market approach;
–– Income generating assets: Depreciated replacement cost method.
–– Properties under development: Cost method where fair value cannot
be reliably measured
In determining the property’s value, the valuers have taken into account
property specific information, such as useful life and comparable market rate
to arrive at the final valuation.
We focused on this area because the valuation of the Group’s investment
property portfolio is subject to significant judgement, assumptions
and estimates.
The total assets of the Group amount to QAR 8,669,826,481 out of which the
investment property account forms 79% of the total assets. The reported
results and financial position of the Group could be materially affected if the
estimates and judgements change.
Business combination – loss of control on subsidiaries
As mentioned in note 31 to the consolidated financial statements, the Group
has lost control over two of its subsidiaries as a result of changing shareholders
agreements, so that the Group will only be able to exercise joint control over
these two entities.
The accounting for this change in control status is governed by IFRS 3
‘Business Combinations’ and IFRS 11 ‘Joint arrangements’, requirements of
which can be complex and require management to exercise judgement.
The most significant area of judgment is the determination of fair value of
net assets disposed, which involves the determination of identifiable assets
and liabilities disposed and use of assumptions to measure their fair values.
Management engaged external experts to assist with the determination
of the fair value.
The fair value of the net assets of these subsidiaries were determined using
the income approach by adopting a discounted cash flow model, which
resulted in recognition of QAR 22,191,741 as gain on disposal of subsidiaries
in the consolidated statement of profit or loss and other comprehensive
income for the year ended 31 December 2017.
Due to the value of the net assets of the subsidiaries and the level of
judgement and estimate involved in arriving at its fair value, the accounting
for business combinations has been identified as a key audit area of focus.
Financials
41
How our audit addressed the Key audit matter
Our audit procedures in relation to the valuation of investment
properties included:
–– Obtaining and reviewing the latest valuation reports prepared by the
external valuers, and assessing their independence and competencies;
–– Verifying on test basis the key assumptions (i.e. useful life of the asset
and comparable market rate), valuation methodologies adopted,
and the appropriateness of the valuation outcomes;
–– Using our own property valuation experts to independently review
the appropriateness of the valuation methodologies adopted and the
comparable evidence for all valuation assumptions to ensure alignment
to the real estate market;
–– Comparing useful life of the assets, depreciated build rates and the land
the external valuations using our own valuation models; and
–– Evaluating the sensitivity analysis performed by management and the
disclosures relating to the valuation.
Our audit work included the following:
–– Obtaining and reviewing the latest audited financial statements of
the entities;
–– Reviewing and discussing the changes to shareholders agreements with
management to assess the change of control status and reasonableness
of derecognition of subsidiary companies and recognition of them as
joint ventures;
–– We obtained the external experts valuation model and discussed the
critical assumptions used with management. The discussion focussed
on the growth rates used to estimate future cash flows and the discount
rates used;
–– Our internal valuation experts reviewed the appropriateness of the model
and the inputs selected to calculate the fair value. They independently
recalculated the discount rates applied to the cash flows in the model
based on their assessment of the Group’s specific financing and capital costs;
–– We tested the inputs used in the determination of the assumptions for
the calculation of the fair value to third-party sources, where available,
including using external data from analysts’ reports;
–– We tested the mathematical accuracy of the model; and
–– We also tested the de-consolidation entries and adequacy of disclosures
included in the consolidated financial statements of the Group.
42 Aamal Company Q.P.S.C.  Annual Report 2017

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

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

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

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

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

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

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

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

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

Auditor’s responsibilities for the audit of the consolidated financial statements

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. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
–– Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
–– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
–– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
–– Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
–– Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
–– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion
on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
43

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

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

Report on other legal and regulatory requirements

Further, as required by the Qatar Commercial Companies Law number 11 of 2015, we report that:
–– We have obtained all the information we considered necessary for the purpose of our audit;
–– The Company has carried out a physical verification of inventories at the year-end in accordance with observed principles;
–– The Company has maintained proper books of account and the consolidated financial statements are in agreement therewith;
–– The financial information included in the Board of directors’ report is in agreement with the books and records of the Company; and
–– Nothing has come to our attention, which causes us to believe that the Company has breached any of the provisions of the Qatar Commercial Companies
Law number 11 of 2015, or of its Articles of Association, which would materially affect the reported results of its operations or its consolidated financial
position as at 31 December 2017.

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

For and on behalf of PricewaterhouseCoopers – Qatar Branch

Qatar Financial Market Authority registration number 120155

Mohamed Elmoataz
Auditor’s registration number 281
Doha, State of Qatar
28 February 2018
44 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Consolidated Statement of Financial Position

at 31 December
Notes 2017 2016

Assets
Non-current assets
Retention and other non-current assets 3 – 160,545,562
Investments accounted for using the equity method 4 336,063,352 19,021,908
Investment properties 5 6,892,214,727 6,899,679,999
Property, plant and equipment 6 330,309,035 599,745,480
Total non-current assets 7,558,587,114 7,678,992,949
Current assets
Cash and bank balances 7 349,747,554 554,941,666
Trade and other receivables 8 479,824,138 1,386,376,942
Amounts due from related parties 9 134,777,767 61,506,302
Inventories 10 146,889,908 333,048,849
Total current assets 1,111,239,367 2,335,873,759
Total assets 8,669,826,481 10,014,866,708
Equity and liabilities
Equity
Share capital 11 6,300,000,000 6,300,000,000
Legal reserve 12 592,264,928 542,173,250
Treasury shares (739,279) (2,075,865)
Retained earnings 1,115,338,115 1,055,035,931
Equity attributable to equity holders of the parent 8,006,863,764 7,895,133,316
Non-controlling interests 39,680,909 420,008,282
Total equity 8,046,544,673 8,315,141,598
Liabilities
Non-current liabilities
Borrowings 13 5,491,116 130,827,739
Employees’ end of service benefits 14 25,259,237 31,502,689
Total non-current liabilities 30,750,353 162,330,428
Current liabilities
Bank overdrafts 7 – 1,458,876
Accounts payable and accruals 15 350,676,747 895,795,875
Amounts due to related parties 16 13,622,338 19,191,961
Borrowings 13 228,232,370 620,947,970
Total current liabilities 592,531,455 1,537,394,682
Total liabilities 623,281,808 1,699,725,110
Total equity and liabilities 8,669,826,481 10,014,866,708

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

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

Sheikh Faisal Bin Qassim Al Thani Sheikh Mohamed Bin Faisal Al Thani Mohammad Ramahi
Chairman Vice Chairman and Managing Director Chief Financial Officer
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
45

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December
Notes 2017 2016

Revenue 17 1,604,237,441 2,829,134,600

Direct costs 18 (1,058,643,691) (2,145,765,778)
Gross profit 545,593,750 683,368,822
Other income 19 23,904,275 16,556,259
Marketing and promotion expenses (13,302,839) (18,088,558)
General and administrative expenses 20 (138,991,792) (154,690,015)
Gain on loss of control of subsidiaries 31 22,191,741 –
Net fair value gains on investment properties – 866,688
Operating profit for the year 439,395,135 528,013,196
Finance costs 22 (18,355,976) (27,967,699)
Share of net profit of investments accounted for using the equity method 4 102,025,210 60,189,128
Profit for the year 523,064,369 560,234,625
Other comprehensive income – –
Total comprehensive income for the year 523,064,369 560,234,625
Attributable to:
Equity holders of the parent 500,916,782 462,270,283
Non-controlling interests 22,147,587 97,964,342
523,064,369 560,234,625
Basic and diluted earnings per share
(attributable to equity holders of the Company)
(expressed in QAR per share) 23 0.80 0.73

The notes on pages 48 to 77 are an integral part of these consolidated financial statements.
46 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Consolidated Statement of Changes in Equity

For the years ended 31 December
Attributable to equity holders of the parent
Share Legal Treasury Retained Non-controlling Total
capital reserve shares earnings Total interests equity

Balance at 1 January 2017 6,300,000,000 542,173,250 (2,075,865) 1,055,035,931 7,895,133,316 420,008,282 8,315,141,598
Profit for the year – – – 500,916,782 500,916,782 22,147,587 523,064,369
Other comprehensive income – – – – – – –
Total comprehensive income
for the year – – – 500,916,782 500,916,782 22,147,587 523,064,369
Transfer to legal reserve – 50,091,678 – (50,091,678) – – –
Contribution to social and sports
activities fund (Note 28) – – – (12,522,920) (12,522,920) – (12,522,920)
Transactions with owners in their
capacity as owners
Dividends paid – – – (378,000,000) (378,000,000) – (378,000,000)
Disposals of subsidiaries (Note 31) – – – – – (402,474,960) (402,474,960)
Reissue of treasury shares – – 1,336,586 – 1,336,586 – 1,336,586
– – 1,336,586 (378,000,000) (376,663,414) (402,474,960) (779,138,374)
Balance at 31 December 2017 6,300,000,000 592,264,928 (739,279) 1,115,338,115 8,006,863,764 39,680,909 8,046,544,673
Balance at 1 January 2016 6,300,000,000 495,946,222 (2,075,865) 655,528,295 7,449,398,652 275,219,843 7,724,618,495
Profit for the year – – – 462,270,283 462,270,283 97,964,342 560,234,625
Other comprehensive income – – – – – – –
Total comprehensive income
for the year – – – 462,270,283 462,270,283 97,964,342 560,234,625
Transfer to legal reserve – 46,227,028 – (46,227,028) – – –
Contribution to social and sports
activities fund (Note 28) – – – (7,673,412) (7,673,412) – (7,673,412)
Transactions with owners in their
capacity as owners
Business acquisition – – – (13,363,061) (13,363,061) – (13,363,061)
Recognition of subsidiaries with
non-controlling interest – – – – – 50,274,951 50,274,951
Recognition of non-controlling
interest without a change
in control – – – 4,500,854 4,500,854 (4,500,854) –
Contribution from
non-controlling interest – – – – – 1,050,000 1,050,000
– – – (8,862,207) (8,862,207) 46,824,097 37,961,890
Balance at 31 December 2016 6,300,000,000 542,173,250 (2,075,865) 1,055,035,931 7,895,133,316 420,008,282 8,315,141,598

The notes on pages 48 to 77 are an integral part of these consolidated financial statements.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
47

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Consolidated Statement of Cash Flows

For the years ended 31 December
Notes 2017 2016

Operating activities
Profit for the year 523,064,369 560,234,625
Adjustments for:
Net fair value gains on investment properties 5 – (866,688)
Depreciation 6 36,699,944 61,778,293
Provision for employees’ end of service benefits 14 5,002,724 6,778,132
Allowance for impairment of trade accounts receivable 8 13,768,958 6,234,841
Gain on disposal of property, plant and equipment (1,591,661) (324,406)
Provision for slow moving inventories 708,944 200,562
Interest income (3,018,453) (3,372,590)
Finance costs 22 18,355,976 27,967,699
Gain on loss of control of subsidiaries 31 (22,191,741) –
Share of profit of equity-accounted investees 4 (102,025,210) (60,189,128)
Operating profit before working capital changes: 468,773,850 598,441,340
– Inventories (111,603,999) 36,779,174
– Trade and other receivables 106,201,698 (23,135,483)
– Accounts payable and accruals (14,184,818) 52,113,357
– Net movement in amounts due from and due to related parties (39,766,941) (403,297,689)
Cash flows from operations 409,419,790 260,900,699
Finance costs paid 22 (18,355,976) (27,967,699)
End of service benefits paid 14 (2,949,060) (4,136,683)
Net cash generated from operating activities 388,114,754 228,796,317
Investing activities
Interest income received 19 3,018,453 3,372,590
Proceeds from disposal of property, plant and equipment 2,563,833 1,349,491
Dividends received from equity accounted investees 4 129,597,230 6,696,591
Cash surrendered on deconsolidation of subsidiaries 31 (91,898,938) –
Acquisition of subsidiaries, net of cash acquired – (20,235,323)
Additions to investment properties 5 (51,169,919) (66,481,204)
Additions to property, plant and equipment 6 (55,302,724) (61,510,085)
Net cash used in investing activities (63,192,065) (136,807,940)
Financing activities
Change in restricted deposits 7 (2,920,000) –
Repayments of borrowings (151,994,511) (180,464,160)
Dividends paid (378,000,000) –
Reissue of treasury shares 1,336,586 –
Contributions from non-controlling interests – 1,050,000
Net cash used in financing activities (531,577,925) (179,414,160)
Net decrease in cash and cash equivalents (206,655,236) (87,425,783)
Cash and cash equivalents at beginning of year 553,482,790 640,908,573
Cash and cash equivalents at end of year 7 346,827,554 553,482,790

The notes on pages 48 to 77 are an integral part of these consolidated financial statements.
48 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements

1. Corporate information and principal activities

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

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

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

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

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

2. Basis of preparation and consolidation

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

2.1. Basis of preparation

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

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

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

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

2.1.1. New and amended standards adopted by the Group

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the
consolidated financial statements for the years presented, The Group has applied the following standard and amendment for the first time for their annual
reporting year commencing 1 January 2017:
–– Disclosure initiative – amendments to IAS 7.

2.1.2. New standards and interpretations are effective for annual periods beginning after 31 December 2017 and not yet adopted by the Group
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2017 reporting periods and have not been
early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:
–– IFRS 9, ‘Financial instruments’ (Annual periods beginning on or after 1 January 2018)

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

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

The Group’s financial assets comprise of the following:

–– Trade and other receivables
–– Amounts due from related parties
–– Bank balances

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

Cash and cash equivalents definition as per IAS 7 remains unchanged with the application of IFRS 9, short-term investments and time deposits will continue to be
presented under cash and cash equivalents, being highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
49

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

2. Basis of preparation and consolidation continued

2.1. Basis of preparation continued

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

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

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

Date of adoption by the Group

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

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

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

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

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

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

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

Date of adoption by the Group

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

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

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

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

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

Date of adoption by Group

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

The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.
50 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

2. Basis of preparation and consolidation continued

2.2. Principles of consolidation and equity accounting

2.2.1. Business combinations

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

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

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

Acquisition-related costs are expensed as incurred.

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

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

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

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

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

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

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

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in
their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(c) Disposal of subsidiaries

When the group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying
amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are
reclassified to profit or loss.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
51

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

2. Basis of preparation and consolidation continued

2.2. Principles of consolidation and equity accounting continued

2.2.2. Associates
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 for using the equity method of accounting. Under the equity method, the investment
is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date
of acquisition.

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

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

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

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

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

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

2.2.3. Joint arrangements

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 joint arrangement. The Group has joint ventures.

A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to
its assets and obligations for its liabilities. Interests in joint ventures are accounted for using the equity method. Under the equity method, the interests in joint
ventures are initially recognised at cost and adjusted thereafter to recognise the group’s share of the post-acquisition profits or losses and movements in other
comprehensive income.

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

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

The reporting dates of the equity-accounted investees and the Group are identical and the equity-accounted investees’ accounting policies conform to those used
by the Group for like transactions and events in similar circumstances.
52 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

2. Basis of preparation and consolidation continued

2.2. Principles of consolidation and equity accounting continued

2.2.4. Group companies

Set out below are the Group’s principal subsidiaries at 31 December 2017. Unless otherwise stated, the subsidiaries as listed below have share capital consisting
solely of ordinary shares, which are held directly by the Group and the proportion of ownership interests held equals to the voting rights held by Group. The
country of incorporation or registration is also their principal place of business:

The principal subsidiaries of the Group are as follows:

Group effective shareholding
Country of percentage
Name of the subsidiary incorporation Principal activities 2017 2016

City Center Company L.L.C.* Qatar Leasing the facilities of a retail outlet complex in City Center Doha. 100% 100%
Aamal Real Estate L.L.C.* Qatar Residential and commercial real estate investment and property rental. 100% 100%
Aamal Readymix L.L.C.* Qatar Production and sale of readymix concrete. 100% 100%
Ebn Sina Medical L.L.C.* Qatar Wholesale and retail distribution of pharmaceuticals and general 100% 100%
consumable products.
Aamal Medical L.L.C.* Qatar Wholesale distribution of medical equipment. 100% 100%
Aamal Trading and Distribution Qatar Sale of tyres, lubricants, batteries and home appliances. 100% 100%
Company L.L.C.*
Aamal Services L.L.C.* Qatar Providing facilities management and cleaning services. 100% 100%
Aamal Travel and Tourism L.L.C.* Qatar Operating a travel agency. 100% 100%
Foot Care Center L.L.C.* Qatar Sale of footwear, clinical activities and general commercial trading products. 100% 100%
Ebn Sina Health Care Pharmacy Qatar Sale of pharmaceuticals, baby care products, medicine and general 100% 100%
Solutions L.L.C.* consumable products.
Aamal Cement Industries W.L.L. Qatar Development and management of factories and the production of curb stone, 99% 99%
interlock slabs and cement bricks.
IMO Qatar Company W.L.L. Qatar Construction and repair of power plant, establishment and management of 100% 100%
industrial enterprises and acting as a representative for the international
companies.
Ci-San Trading W.L.L. Qatar Holding company of Gulf Rocks. 50% 50%
The Group controls Ci-San Trading W.L.L. by virtue of a shareholders’ agreement.
Gulf Rocks Company W.L.L. Qatar Retail distribution of aggregates 74.5% 74.5%
Innovative Lighting W.L.L.** Qatar Trading of Light Emitting Diode (LED) Lamps and other lighting products. 70% 70%
Aamal Maritime Transportation W.L.L. Qatar Purchasing and leasing of ships for transportation of goods 74.7% 74.7%
Al Farazdaq Company W.L.L. Qatar Trading of office supplies and providing printing and laminating services. 65% 65%
Aamal Optical Supplies W.L.L.** Qatar Trading of optical supplies 51% 51%
Family Entertainment Center Qatar Providing family entertainment park facilities in City Center Doha Mall. 100% 100%
Company W.L.L.
Winter Wonder Land W.L.L. Qatar Providing entertainment facilities in City Center Doha Mall. 100% 100%
Ecco Gulf Company W.L.L. Qatar Offers professional and business process outsourcing and call centre services. 51% 51%
Johnson Controls Qatar W.L.L.** Qatar Provision of facilities management services, energy services, 51% 51%
and building maintenance and cleaning services to corporate clients
Aamal for Industrial Projects L.L.C.* Qatar Industrial investments 100% 100%
Legend Trading and Distribution Qatar Trading of automobile products 100% 100%
W.L.L.
Aamal for Car Maintenance W.L.L. Qatar Trading of car spare parts 100% –

* Company was previously operated as a Branch. During the year, the Branch was converted to a Limited Liability Company under Qatar Commercial Companies Law No. 11 of 2015.
** These entities are under liquidation.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
53

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

2. Basis of preparation and consolidation continued

2.2. Principles of consolidation and equity accounting continued

Details of the equity-accounted investees of the Group are as follows:
Proportion of ownership and
Country of voting power held by the Group
Company name incorporation Principal activity 2017 2016

Senyar Industries Qatar Holding W.L.L. Qatar Owning of patents, businesses and subletting them and provision of 50% 50%
(Joint Venture)*** investment portfolio management for its subsidiaries and associates.
Doha Cables Qatar W.L.L. Qatar Maintenance and manufacture of electric cables, equipment and tools. 47.3% 47.3%
(subsidiary of Senyar industries
Qatar Holding W.L.L.)***
El Sewedy Cables Qatar W.L.L. Qatar Trading in electro-mechanical equipment and providing related services. 38.3% 38.3%
(subsidiary of Senyar industries
Qatar Holding W.L.L.)***
Frijns Structural Steel Middle East Qatar Steel fabrications. 20% 20%
W.L.L. (Associate)
Aamal ECE L.L.C. (Joint Venture) Qatar Property management. 51% 51%
Advanced Pipes and Casts Industries Qatar Manufacturing of wide cement and glass reinforced pipes systems for 50% 50%
W.L.L. (Joint Venture)*** infrastructure and pipeline projects.

*** refer to Note 31 for further details.

2.3. Foreign currency translation

2.3.1. Functional and presentation currency

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

2.3.2. Transactions and balances

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

2.4. Investment properties

Land and buildings are considered as investment properties only when they are being held to earn rentals or for capital appreciation or for both.

Investment properties are measured initially at cost, including transaction costs and borrowing costs that are directly attributable to construction of the asset. The
carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and
excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects
market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the consolidated statement
of profit or loss and other comprehensive income in the year in which they arise.

Investment properties are de-recognised when either they have been disposed off or when the investment property is permanently withdrawn from use and no
future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the consolidated
statement of profit or loss and other comprehensive income in the year of retirement or disposal.

Property under construction is dealt with under IAS 40 and recorded at cost less accumulated impairment losses until either its fair value becomes reliably
determinable or construction is completed (whichever is earlier). At that time, it is reclassified as investment property and a fair value adjustment is recognised in
the consolidated statement of profit or loss and other comprehensive income.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the
deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the difference
between the carrying value and the fair value at the date of transfer is recognised as a revaluation reserve in the equity and is released to the consolidated
statement of profit or loss and other comprehensive income upon disposal of such property.
54 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

2. Basis of preparation and consolidation continued

2.5. Property, plant and equipment

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

Depreciation is provided on a straight-line basis on all property, plant and equipment. The rates of depreciation are based upon the following estimated useful lives:

Buildings 20 years
Leasehold improvements 2-8 years or over the period of lease term, whichever is shorter
Truck mixers and motor vehicles 4-15 years
Plant and machinery 8-25 years
Motor vehicles 4-5 years
Furniture, fixtures and office equipment 3-5 years
Computers and related software 3-5 years
Vessel 20 years

Construction work in progress is not depreciated.

The carrying amounts are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such
indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the
higher of their fair value less costs to sell and their value in use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain
or loss arising on derecognition of the asset is included in the consolidated statement of profit or loss and other comprehensive income in the year the asset
is derecognised.

The asset’s residual values, useful lives and method of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

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

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

2.6. Cash and cash equivalents

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

2.7. Trade and other receivables

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

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

2.8. Inventories
Raw materials, work in progress, finished goods and goods for resale are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are
assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and
discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
55

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

2. Basis of preparation and consolidation continued

2.9. Contributed equity

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

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

2.10. Treasury shares

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

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

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

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

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

2.12. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the year these are incurred. Borrowing
costs consist of the interest and other costs that the Group incurs in connection with the borrowing of funds.

2.13. Accounts payable and accruals

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

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

2.14. Tenant deposits

Tenant deposit liabilities are initially recognised at fair value and subsequently measured at amortised cost where material. Any difference between the initial fair
value and the nominal amount is included as a component of rental income and recognised on a straight-line basis over the lease term.
56 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

2. Basis of preparation and consolidation continued

2.15. Financial asset

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

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

(a) Loans and receivables

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

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

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

2.15.3. Recognition and derecognition

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 have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.

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

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

2.15.5. Offsetting financial instruments

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

2.15.6. Impairment of financial assets

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

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

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

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated
statement of profit or loss and other comprehensive income.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
57

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

2. Basis of preparation and consolidation continued

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

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

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

2.17. Employees’ end of service benefits

2.17.1. Defined contribution plan

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

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

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

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

2.17.2. Other short-term employees benefits

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 present legal or constructive obligation to pay this amount as a result of past
service provided by the employee, and the obligation can be measured reliably.

2.18. Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received excluding discounts, rebates and duty. The following specific recognition criteria must also be met before
revenue is recognised:

(a) Sale of goods

Sales are recognised when significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably.

(b) Rental income

Rental income from investment properties is accounted for on a time proportion basis over the period of tenancy. Incentives for leases to enter into lease
agreements are spread evenly over the lease term using straight line method, even if the payments are not made on such basis. Income arising from expenses
recharged to tenants is recognised in the year in which the expenses can be contractually received. Service charges and other such receipts are included gross of
related costs in revenues as the Group acts as principal in this regard. Premiums received to terminate leases are recognised in the consolidated statement of profit
or loss and other comprehensive income when they arise.

(c) Service income

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

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

(e) Income on travel agencies

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

(f ) Interest income
Interest income is recognised as the interest accrues using the effective interest rate method.
58 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

2. Basis of preparation and consolidation continued

2.19. Fair value measurement

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 the transaction to sell the asset or transfer the liability takes place either:
–– In the principal market for the asset or liability, or
–– In the absence of a principal market, in the most advantageous market for the asset or liability

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

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

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

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

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

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

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

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

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

3. Retention and other non-current assets

2017 2016

Retention – 56,813,163
Goodwill – 102,724,852
Other non-current assets – 1,007,547
– 160,545,562

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

4. Investments accounted for using the equity method

The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration
is also the principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.
% of ownership
Name of entity Place of business 2017 2016 Nature of relationship 2017 2016

Aamal ECE L.L.C. Qatar 51% 51% Joint Venture 5,613,301 6,450,232
Frijns Structural Steel Middle East W.L.L. Qatar 20% 20% Associate 14,864,935 12,571,676
Advanced Pipes and Casts Industries W.L.L. (see Note 31) Qatar 50% 50% Joint Venture 5,276,848 –
Senyar Industries Qatar Holding W.L.L. (see Note 31) Qatar 50% 50% Joint Venture 310,308,268 –
336,063,352 19,021,908
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
59

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

4. Investments accounted for using the equity method continued

Summarised financial information of equity accounted investees:

Reconciliation to carrying amounts

Frijns Structural Advanced Pipes Senyar Industries
Steel Middle East and Casts Qatar Holding
Aamal ECE L.L.C. W.L.L. Industries W.L.L. W.L.L. Total
2017 2017 2017 2017 2017

Opening net assets 12,647,513 62,858,380 – –

Net assets at fair value arising from deconsolidation due to loss of
control of subsidiary (Note 31) – – 17,000,000 672,226,928
Profit (loss) for the period/year 10,706,473 10,442,315 (6,446,305) 194,989,607
Dividends paid (12,347,513) – – (246,600,000)
Other adjustments – 1,023,982 – –
Closing net assets 11,006,473 74,324,677 10,553,695 620,616,535
Group share in % 51% 20% 50% 50%
Group share 5,613,301 14,864,935 5,276,848 310,308,268 336,063,352
Carrying amount 5,613,301 14,864,935 5,276,848 310,308,268 336,063,352
Group share in profit (loss) including other adjustments 5,460,300 2,293,259 (3,223,152) 97,494,803 102,025,210

Summarised statement of financial position

Frijns Structural Steel Advanced Pipes and Senyar Industries Qatar
Aamal ECE L.L.C. Middle East W.L.L. Casts Industries W.L.L. Holding W.L.L.
31 December 2017 31 December 2017 31 December 2017 31 December 2017

Current assets 14,089,274 174,573,183 20,127,205 316,887,175

Non-current assets 15,185 52,751,092 158,611,410 1,304,114,152
Current liabilities (3,035,858) (108,544,390) (80,980,797) (950,741,423)
Non-current liabilities (62,128) (44,455,208) (92,671,425) (9,022,974)
Non-controlling interest – – – (78,765,014)
Net assets 11,006,473 74,324,677 5,086,393 582,471,916

Frijns Structural Steel

Aamal ECE L.L.C. Middle East W.L.L.
31 December 31 December
2016 2016

Current assets 15,333,615 70,950,826

Non-current assets 22,049 70,629,266
Current liabilities (2,614,644) (40,261,757)
Non-current liabilities (93,507) (38,459,955)
Net assets 12,647,513 62,858,380
60 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

4. Investments accounted for using the equity method continued

Summarised statement of profit or loss and other comprehensive income

Frijns Structural Steel Advanced Pipes and Senyar Industries
Aamal ECE L.L.C. Middle East W.L.L. Casts Industries W.L.L. Qatar Holding W.L.L.
2017 2017 2017 2017

Revenue 14,588,970 172,964,767 33,054,645 2,179,649,512

Direct costs – (132,374,031) (35,698,197) (1,856,056,005)
Gross profit/(loss) 14,588,970 40,590,736 (2,643,552) 323,593,507
Other income – 2,855,651 – 1,591,059
General expenses (3,900,274) (31,725,722) (3,299,787) (34,361,243)
Finance costs – (1,278,350) (5,278,093) (20,561,520)
Net profit/(loss) 10,688,696 10,442,315 (11,221,432) 270,261,803
Other comprehensive income 17,777 – – –
Total comprehensive income/(loss) 10,706,473 10,442,315 (11,221,432) 270,261,803

Frijns Structural Steel

Aamal ECE L.L.C. Middle East W.L.L.
2016 2016

Revenue 16,514,342 123,562,775

Direct costs – (78,983,761)
Gross profit 16,514,342 44,579,014
Other income – 310,706
General expenses (4,182,790) (25,185,814)
Finance costs – (1,454,729)
Net profit 12,331,552 18,249,177
Other comprehensive income 15,961 –
Total comprehensive income 12,347,513 18,249,177

5. Investment properties

(a) Reconciliation of carrying amount

2017 2016

At 1 January 6,899,679,999 6,832,332,107

Additions 51,169,919 66,481,204
Net transfers to property, plant and equipment (58,635,191) –
Net gain from fair value adjustment – 866,688
At 31 December 6,892,214,727 6,899,679,999

(b) Significant estimate – measurement of fair value

The fair values of the Group’s investment properties as at 31 December 2017 and 2016 have been arrived at on the basis of valuations carried out on the respective
dates by professionally qualified, independent valuer not related to the Group. The independent valuer has appropriate qualifications and recent experience in the
valuation of properties in the relevant locations. The fair value was determined based on market comparable approach that reflects recent transaction prices for
similar properties.

Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December are as follows:
2017 2016

Vacant land 128,500,000 128,500,000

Completed properties
Commercial properties 4,129,112,517 4,226,500,000
Residential properties 727,927,500 727,927,500
Mixed (residential and commercial) 1,744,373,500 1,744,373,500
Properties under construction 162,301,210 72,378,999
Total at 31 December 6,892,214,727 6,899,679,999

All investment properties are located in the State of Qatar and are measured at level 3 fair value (using significant unobservable inputs).
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
61

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

5. Investment properties continued

(b) Significant estimate – measurement of fair value continued

Movement in properties under construction is as follows:
2017 2016

Beginning at 1 January 72,378,999 5,897,795

Additions during the year 51,169,919 66,481,204
Transfers from capital work in progress (Note 6) 38,752,292 –
Ending at 31 December 162,301,210 72,378,999

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

Commercial Market approach 2,750 to 3,250 QAR/sqft Land rate

properties Depreciated replacement cost 2,231 to 4,228 QAR Depreciated rebuild rate
Residential Market approach 600 to 1,700 QAR Land rate
properties Depreciated replacement cost 2,200 to 4,263 QAR Depreciated rebuild rate
Vacant land Market approach 575 to 750 QAR/sqft Land rate

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

Minimum lease receivables under non-cancellable operating leases of investment properties not recognised in the financial statements are as follows:
2017 2016

Within one year 157,412,559 174,197,433

Between 1 and 5 years 398,707,393 530,124,428
More than 5 years 19,911,449 45,906,974
Total at 31 December 576,031,401 750,228,835

6. Property, plant and equipment

Furniture,
Truck mixers fixtures and
Leasehold and motor Plant and office Computers and Capital work
Buildings improvements vehicles machinery equipment related software Vessels in progress Total

Cost:
At 1 January 2017 227,097,527 60,651,175 140,586,880 411,998,358 32,086,470 19,989,696 73,507,640 21,918,335 987,836,081
Additions – 2,926,382 4,632,653 8,506,483 1,064,670 9,601,307 – 28,571,229 55,302,724
Disposals of subsidiaries (227,097,527) (1,762,523) (14,263,532) (277,416,556) (6,436,203) (2,010,851) – (6,349,517) (535,336,709)
Disposals/write-off – – (6,817,192) (3,878,127) (65,518) (1,044,796) – – (11,805,633)
Transfer from investment
properties (Note 5) 97,387,483 – – – – – – – 97,387,483
Transfer from capital work
in progress (Note 5) – – – 359,128 – – – (39,111,420) (38,752,292)
At 31 December 2017 97,387,483 61,815,034 124,138,809 139,569,286 26,649,419 26,535,356 73,507,640 5,028,627 554,631,654
Accumulated depreciation:
At 1 January 2017 50,237,681 32,148,408 70,133,613 190,735,846 26,236,570 16,298,225 2,300,258 – 388,090,601
Charge for the year 2,673,678 4,836,373 8,826,242 14,235,116 1,484,275 2,575,340 2,068,920 – 36,699,944
Disposals of subsidiaries (52,911,359) (631,155) (7,051,094) (123,899,822) (3,645,224) (1,495,811) – – (189,634,465)
Disposals/write-off – – (6,432,993) (3,302,423) (64,710) (1,033,335) – – (10,833,461)
At 31 December 2017 – 36,353,626 65,475,768 77,768,717 24,010,911 16,344,419 4,369,178 – 224,322,619
Net carrying amounts:
At 31 December 2017 97,387,483 25,461,408 58,663,041 61,800,569 2,638,508 10,190,937 69,138,462 5,028,627 330,309,035

Notes:
(i) Depreciation charge for the year amounting to QAR 26,801,233 (2016: QAR 52,194,800) is included in the direct costs and no amount has been capitalised under capital work in progress (2016: Nil).
(ii) The capital work in progress does not include capitalised borrowing in the current year (2016: Nil).
(iii) The buildings are constructed on a plot of land taken on a long term operating lease.
62 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

6. Property, plant and equipment continued

Furniture,
Truck mixers fixtures and
Leasehold and motor Plant and office Computers and Capital work in
Buildings improvements vehicles machinery equipment related software Vessels progress Total

Cost:
At 1 January 2016 224,744,848 47,776,135 126,383,500 378,771,268 23,397,913 18,420,381 45,698,382 20,336,152 885,528,579
Additions 60,973 810,527 8,833,167 11,830,168 2,261,894 2,006,881 27,809,258 7,897,217 61,510,085
Acquired through
business combinations – 11,940,513 5,682,091 26,065,915 7,506,854 1,149,103 – – 52,344,476
Disposals/write-off – – (4,160,453) (4,668,993) (1,080,191) (1,586,669) – (50,753) (11,547,059)
Transfer from capital work
in progress 2,291,706 124,000 3,848,575 – – – – (6,264,281) –
At 31 December 2016 227,097,527 60,651,175 140,586,880 411,998,358 32,086,470 19,989,696 73,507,640 21,918,335 987,836,081
Accumulated depreciation:
At 1 January 2016 39,847,695 20,610,386 61,717,985 141,403,013 19,098,576 15,524,362 517,230 – 298,719,247
Charge for the year 10,389,986 4,426,948 9,294,629 32,127,850 2,321,482 1,434,370 1,783,028 – 61,778,293
Acquired through
business combination – 7,111,074 2,858,512 21,330,104 5,889,183 926,162 – – 38,115,035
Disposals/write-off – – (3,737,513) (4,125,121) (1,072,671) (1,586,669) – – (10,521,974)
At 31 December 2016 50,237,681 32,148,408 70,133,613 190,735,846 26,236,570 16,298,225 2,300,258 – 388,090,601
Net carrying amounts:
At 31 December 2016 176,859,846 28,502,767 70,453,267 221,262,512 5,849,900 3,691,471 71,207,382 21,918,335 599,745,480

Significant estimate – useful lives of property, plant and equipment

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

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

7. Cash and bank balances

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following balances:
2017 2016

Cash on hand 24,274 –

Bank accounts 240,043,597 432,484,680
Short term bank deposits 106,759,683 122,456,986
Restricted deposits relating to letters of guarantee 2,920,000 –
Cash and bank balances 349,747,554 554,941,666
Restricted deposits relating to letters of guarantee (2,920,000) –
Bank overdrafts – (1,458,876)
Cash and cash equivalents 346,827,554 553,482,790

The short term bank deposits are made for varying periods between one day and three months, depending on the immediate cash requirements of the Group,
and earn interest at the respective short term deposit rates.

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

Credit rating Rating Agency 2017 2016

P-1 Moody’s 309,966,179 515,022,042

P-2 Moody’s 38,586,640 39,633,901
Unrated – 1,170,461 285,723
349,723,280 554,941,666
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
63

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

8. Trade and other receivables

2017 2016

Trade accounts receivable 422,473,070 972,112,336

Less: Impairment of trade accounts receivable (42,624,373) (31,750,735)
379,848,697 940,361,601
Advances to suppliers and prepayments 63,663,889 147,056,054
Retention receivables 18,949,984 211,297,204
Other receivables 17,361,568 87,662,083
479,824,138 1,386,376,942

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

At 1 January 31,750,735 26,815,749

Charges net of recoveries for the year (Note 20) 13,768,958 4,934,986
Amounts written-off (2,895,320) –
At 31 December 42,624,373 31,750,735

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

Past due but not impaired
Neither past due Up to 30 31-60 61-90
nor impaired days days days 91-120 days > 120 days Total

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

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

Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group to obtain collateral over receivables.

An estimate of the collectible amount of trade receivables are made when collection of the full amount is no longer probable. For individually significant amounts,
this estimation is performed on an individual basis.

Amounts which are not individually significant, but which are past due, are assessed collectively based on the provisioning policy applied by the Group,
and a provision is applied according to the length of time past due, based on historical recovery rates.

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

9. Amounts due from related parties

Nature of relationship 2017 2016

Al Faisal Holding Company W.L.L. Ultimate parent 101,646,435 40,319,182

Advanced Pipes and Casts Company W.L.L. Joint venture 18,521,480 –
Al Rayyan Tourism Investment Company W.L.L. Entities controlled by ultimate parent 8,161,084 9,976,336
Maintenance Management Group Qatar W.L.L. Entities controlled by ultimate parent 926,947 3,172,692
Al Jazi Real Estate Investment Company W.L.L. Entities controlled by ultimate parent 777,562 463,469
Al-Arabia Land Transporting Company W.L.L. Entities controlled by ultimate parent 230,865 248,490
Al Farman for Investment & International Trading Company W.L.L. Entities controlled by ultimate parent 173,235 169,125
Gulf English School Entities controlled by ultimate parent 82,277 122,103
Deliopolis W.L.L. Entities controlled by ultimate parent 1,965 36,338
Other related parties Entities controlled by ultimate parent 4,255,917 6,998,567
134,777,767 61,506,302
64 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

9. Amounts due from related parties continued

Transactions with related parties included in the consolidated statement of profit or loss and other comprehensive income were as follows:
2017 2016

Sale of goods and services to:

Ultimate parent 3,382,384 3,975,597
Entities controlled by ultimate parent 9,674,535 11,059,176
Associate – 549,672,915
13,056,919 564,707,688
Rental income from:
Ultimate parent 398,400 398,400
Entities controlled by ultimate parent 174,000 266,500
572,400 664,900

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

10. Inventories
2017 2016

Goods for resale 131,943,113 161,584,337

Raw materials and spare parts 14,025,786 56,791,610
Work in progress 750,681 62,795,864
Goods in transit 1,531,613 54,695,112
148,251,193 335,866,923
Less: write-down of inventories to net realisable value (1,361,285) (2,818,074)
146,889,908 333,048,849

Movements in the provision for obsolete and slow moving inventories were as follows:
2017 2016

At 1 January 2,818,074 3,285,147

Charges net of reversals during the year (Note 18) 708,944 (467,073)
Disposal of subsidiaries (2,165,733) –
At 31 December 1,361,285 2,818,074

Significant estimate – Write-down of inventories to net realisable value

Inventories are stated at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or
obsolete, are assessed collectively and written down according to the inventory type and the degree of ageing or obsolescence, any difference between the amounts
actually realised in future periods and the amounts expected will be recognised in the consolidated statement of profit or loss and other comprehensive income.

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

11. Share capital

2017 2016

Authorised, issued and paid

630,000,000 (2016: 630,000,000) shares of QAR 10 each 6,300,000,000 6,300,000,000

All shares are of same class and carry equal voting rights.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
65

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

12. Legal reserve

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

13. Borrowings
Notes Maturity 2017 2016

Loan 1 (i) September 2017 – 194,350,178

Loan 2 (i) October 2022 – 136,532,154
Bills payable (i) – 140,782,411
Loan 3 (ii) February 2018 220,000,000 220,000,000
Loan 4 (iii) April 2017 – 34,907,292
Loan 5 (iv) November 2017 – 4,584,036
Loan 6 (v) December 2017 – 1,414,453
Loan 7 (vi) April 2019 11,641,448 17,245,366
Loan 8 (vii) May 2022 2,082,038 2,364,095
233,723,486 752,179,985
Less: Deferred financing cost – (404,276)
233,723,486 751,775,709

Presented in the consolidated statement of financial position as follows:

2017 2016

Current portion 228,232,370 620,947,970

Non-current portion 5,491,116 130,827,739
233,723,486 751,775,709

The deferred financing costs consist of arrangement fees. The movements in the deferred financing costs were as follows:
2017 2016

At 1 January 404,276 547,914

Amortised during the year (30,277) (143,638)
Disposal of subsidiaries (373,999) –
At 31 December – 404,276

Notes:
(i) On 31 March 2017, Loan 1, Loan 2 and Bills payable were derecognised due to loss of control on subsidiaries (Note 31).
(ii) Loan 3 is a secured bridge loan obtained to settle an existing loan and working capital requirements of the Group. The loan carries interest at commercial rates and a single repayment at the end
of the tenor along with the interest is to be made.
(iii) Loan 4 represents a loan facility obtained in two separate tranches amounting to QAR 309,583,750 (USD 85 million) for the purpose of refurbishment and construction of facilities in one of the
investment properties. The loan consists of QAR 100,168,750 (USD 27.5 million) from tranche A and QAR 209,415,000 (USD 57.5 million) from tranche B. Tranche A has been fully paid during the year
and the tranche B is repayable in 12 equal quarterly instalments, commencing from July 2014. The loan carries interest at commercial rates and the loan was fully settled in 2017.
(iv) Loan 5 represents a secured loan which is payable by 50 equal monthly instalments of QAR 426,000 with a last instalment of QAR 324,036 with effect from 01 October 2013. The loan carries interest
at commercial rates and the loan was fully settled in 2017.
(v) Loan 6 represents a secured loan which carries interest at commercial market rates and is payable by 59 equal instalments of QAR 160,000 with a last instalment of QAR 128,000 with effect from
31 December 2012 and the loan was fully settled in 2017.
(vi) Loan 7 represents a secured loan obtained on 04 May 2014, to finance the purchase of heavy equipment and machines. The loan is payable by 18 quarterly instalments with effect from 26 February
2015, previously QAR 1,672,058 until June 2017 and revised to QAR 1,940,241 until the last instalment in April 2019. The loan carries interest at commercial market rates.
(vii) Loan 8 represents a secured loan obtained on 12 July 2016, to finance the purchase of vehicles, plant and machinery. The loan is payable by 51 monthly instalments of QAR 46,355 in the first month
with effect from 1 June 2017 and QAR 39,284 in the subsequent months. The loan carries interest at commercial market rates.
66 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

13. Borrowings continued

Net debt reconciliation

Borrowings – Borrowings –
Cash/overdraft due within one year due after one year Total

Net debt as at 1 Jan 2016 640,908,573 (751,312,750) (180,927,119) (291,331,296)

Cash flows (87,425,783) 130,364,780 50,099,380 93,038,377
Net debt as at 31 Dec 2016 553,482,790 (620,947,970) (130,827,739) (198,292,919)

Borrowings – Borrowings –
Cash/overdraft due within one year due after one year Total

Net debt as at 1 Jan 2017 553,482,790 (620,947,970) (130,827,739) (198,292,919)

Cash flows (206,655,236) 151,994,511 – (54,660,725)
De-recognition due to loss of control on subsidiaries – 240,721,089 125,336,623 366,057,712
Net debt as at 31 Dec 2017 346,827,554 (228,232,370) (5,491,116) 113,104,068

14. Employees’ end of service benefits

Movements in the provision reflected in the consolidated statement of financial position were as follows:
2017 2016

At 1 January 31,502,689 25,013,967

Provision made during the year (Note 21) 5,002,724 6,778,132
Disposals of subsidiaries (8,297,116) –
End of service benefits paid during the year (2,949,060) (4,136,683)
Acquisition through business combinations – 3,847,273
At 31 December 25,259,237 31,502,689

15. Accounts payable and accruals

2017 2016

Trade accounts payable 155,271,274 527,953,910

Advances from customers and tenants 49,774,798 131,304,428
Accruals 34,241,240 94,400,484
Other payables 111,389,435 142,137,053
350,676,747 895,795,875

16. Amounts due to related parties

Nature of relationship 2017 2016

Aamal ECE L.L.C. Joint venture 9,190,193 14,192,705

Gettco Company W.L.L. – Gettco Refrigeration and Air-conditioning Entities controlled by ultimate parent 672,056 650,556
Gettco Services Entities controlled by ultimate parent 579,081 –
Integrated Information Systems W.L.L. Entities controlled by ultimate parent 415,563 779,179
Other related parties Entities controlled by ultimate parent 2,765,445 3,569,521
13,622,338 19,191,961
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
67

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

16. Amounts due to related parties continued

Transactions with related parties included in the consolidated statement of profit or loss and other comprehensive income were as follows:
2017 2016

Purchase of goods and services from:

Entities controlled by ultimate parent 3,992,919 4,533,459
Associate – 19,628,968
3,992,919 24,162,427
Rental expense:
Ultimate parent 5,971,953 6,374,182
Entities controlled by ultimate parent 4,316,883 9,535,405
10,288,836 15,909,587
Operator’s management fees
Joint venture 14,588,970 16,514,342

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

17. Revenue
2017 2016

Sale of goods 1,137,565,873 2,364,469,015

Rental income 304,623,517 291,138,986
Service income 116,023,222 100,154,466
Commission, incentives and agency fees 46,024,829 73,372,133
1,604,237,441 2,829,134,600

18. Direct costs

2017 2016

Cost of inventories recognised as an expense 862,542,715 1,875,869,717

Direct salaries and wages (Note 21) 69,383,122 101,301,067
Depreciation (Note 6) 26,801,233 52,194,800
Operator’s management fees 14,588,970 16,514,342
Operating expenses on real estate properties 36,919,712 37,442,849
Provision for obsolete and slow moving inventories (Note 10) 708,944 (467,073)
Other operating expenses 47,698,995 62,910,076
1,058,643,691 2,145,765,778

19. Other income

2017 2016

Interest income 3,018,453 3,372,590

Gain on disposal of property, plant and equipment 1,591,661 324,406
Miscellaneous income 19,294,161 12,859,263
23,904,275 16,556,259
68 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

20. General and administrative expenses

2017 2016

Management and employees’ compensation (Note 21) 74,378,725 78,793,741

Depreciation 9,898,711 9,583,493
Donations 9,479,531 10,733,076
Rent 9,106,862 13,899,234
Allowance for impairment of trade accounts receivable (Note 8) 13,768,958 4,934,986
Insurance and professional fees 3,220,074 2,831,744
Repairs and maintenance 2,021,420 2,967,369
Communication costs 1,724,968 1,718,038
Bank charges 1,478,345 3,337,169
Postage, printing and stationery 923,068 986,949
Training and business development 56,072 2,061,786
Miscellaneous expenses 12,935,058 22,842,430
138,991,792 154,690,015

21. Staff costs

2017 2016

Salaries and wages 134,790,206 172,479,734

Employee end of service benefits (Note 14) 5,002,724 6,778,132
Other employee benefits 3,968,917 836,942
143,761,847 180,094,808

Staff costs are presented as follows:

2017 2016

Direct costs (Note 18) 69,383,122 101,301,067

General and administrative expenses (Note 20) 74,378,725 78,793,741
143,761,847 180,094,808

22. Finance cost

2017 2016

Interest expense 18,325,699 27,824,061

Amortisation of deferred financing costs 30,277 143,638
18,355,976 27,967,699

23. Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year.
2017 2016

Profit for the year attributable to equity holders of the parent (QAR) 500,916,782 462,270,283
Weighted average number of shares outstanding during the year(i) 629,897,032 629,842,934
Basic and diluted earnings per share (QAR) 0.80 0.73

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

No. of shares outstanding Weighted average no. of shares

2017 2016 2017 2016

Outstanding shares, beginning of year 630,000,000 630,000,000 630,000,000 630,000,000

Less: average outstanding treasury shares (55,936) (157,066) (102,968) (157,066)
Average outstanding shares, end of year 629,944,064 629,842,934 629,897,032 629,842,934
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
69

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

24. Commitments
2017 2016

Estimated capital expenditure approved and contracted for at the year-end but not provided for:
Investment properties 166,680,958 225,312,488
Property, plant and equipment 2,731,156 52,565,455
169,412,114 277,877,943
Operating lease commitments, under non-cancellable lease agreements:
Payable within one year 9,678,559 3,122,296
Payable after one year but not more than five years 4,291,141 1,497,599
13,969,700 4,619,895

25. Contingent liabilities

The Group had the following contingent liabilities from which it is anticipated that no material liabilities will arise.
2017 2016

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

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

Notes:
(i) Letters of guarantee include performance, tender and bid bonds and payment guarantees given to suppliers and contractors by the Group in the ordinary course of business, which will mature
within twelve months from the reporting date.
(ii) Letters of credit are provided by lodging documents to the bank for purchase of trading goods from foreign suppliers, which will mature within three to six months from the date of the transaction.

26. Related party disclosure

a. Related party transactions

Related parties represent major shareholders, directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly
influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management.

b. Related party balances

Amounts due from and due to related parties are disclosed in Notes 9 and 16, respectively. These balances do not carry interest and are repayable on mutually
agreed dates, generally within one year.

The Group did not record any impairment of receivables relating to amounts due from related parties in either year. This assessment is undertaken each financial
year through examining the financial position of the related party and the market in which the related party operates.

c. Compensation of key management personnel

The remuneration of key management during the year was as follows:
2017 2016

Short-term benefits 1,020,000 2,092,500

Employees’ end of service benefits 63,750 98,750
1,083,750 2,191,250

d. Board of Directors remuneration

Remuneration proposed for Board of Directors for the year amounts to QAR 1,200,000 (2016: QAR 1,200,000).
70 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

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

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

28. Contribution to social and sports fund

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

29. Income tax

Certain subsidiaries of the Group, which have non-GCC ownership, are subject to income tax under Qatar Income Tax Law No. 21 of 2009. The income tax is
charged on the share of profits attributable to non-GCC shareholders. For the purpose of these consolidated financial statements, the income tax liability of the
foreign shareholders has been excluded, given that the non-GCC shareholders have agreed, under the shareholder agreements signed with the Group, to bear the
full liability and make necessary payments.

30. Segment information

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:

Property:
The segment involves leasing the facilities of retail outlet complex, real estate investments and property rental businesses.

Trading and distribution:

The segment represents wholesale and/or retail distribution of pharmaceutical and consumable items, home appliances, medical equipment, tyres and lubricants
and industrial printing.

Industrial manufacturing:
The segment involves manufacturing, wholesale and/or retail distribution of electric cables and tools, aggregates, ready-mix concrete and cement blocks and
provision of services in relation to industrial investment, repair and construction of power plants, trading of LED lighting products and management of
industrial enterprises.

Managed services:
The segment involves provision of housekeeping and cleaning services, entertainment and amusement services, call center services and acting as travel agents.

Parent company:
It provides corporate services to the subsidiaries of the Group.

For each of the strategic divisions, the Group’s managing director (the chief operating decision maker) reviews internal management reports on a regular basis.
The managing director monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on the financial position and operating profit or loss of these segments. Transfer pricing
between operating segments are on arm’s length basis in a manner similar to transactions with third parties.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
71

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

30. Segment information continued

Operating segments:
The operating segment, after elimination of inter-company transactions, is presented as follows:
Trading and Industrial Managed Head
Property distribution manufacturing services Office Eliminations Total

For the year ended 31 December 2017

Revenues
– External parties 316,917,932 625,845,973 576,333,547 85,139,989 – 1,604,237,441
– Inter segments 4,022,765 7,588,347 5,882,829 10,136,016 – (27,629,957)(i) –
320,940,697 633,434,320 582,216,376 95,276,005 – (27,629,957) 1,604,237,441
Operating results 262,660,354 116,164,335 77,176,607 7,124,849 (23,731,010) – 439,395,135
Profit/(loss) for the year 268,120,654 116,164,335 167,801,552 7,043,069 (36,065,241) – 523,064,369
Depreciation 2,646,630 5,231,249 24,958,102 3,821,924 42,039 – 36,699,944
For the year ended 31 December 2016
Revenues
– External parties 310,534,900 639,863,302 1,783,554,643 95,181,755 – – 2,829,134,600
– Inter segments 7,364,181 9,993,824 28,102,443 2,238,095 – (47,698,543)(i) –
317,899,081 649,857,126 1,811,657,086 97,419,850 – (47,698,543) 2,829,134,600
Operating results 253,446,051 119,769,615 171,303,832 9,948,026 (26,454,328) – 528,013,196
Profit/(loss) for the year 259,264,218 119,769,615 210,397,058 9,789,543 (38,985,809) – 560,234,625
Depreciation 1,372,956 4,870,015 51,351,886 3,541,680 641,756 – 61,778,293

Note:
(i) Inter-segment revenues are eliminated on consolidation.
72 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

30. Segment information continued

Assets and liabilities:

Trading and Industrial

Property distribution manufacturing Managed services Head Office Eliminations Total

At 31 December 2017
Current assets 199,652,050 541,324,525 198,558,926 96,845,486 178,842,791 (103,984,411)(i) 1,111,239,367
Non-current assets 7,008,221,806 11,500,594 528,469,579 10,765,319 115,339 (485,523)(i) 7,558,587,114
Total assets 7,207,873,856 552,825,119 727,028,505 107,610,805 178,958,130 (104,469,934) 8,669,826,481
Current liabilities 79,724,424 151,558,551 119,854,140 26,514,506 326,164,308 (111,284,474)(i) 592,531,455
Non-current liabilities 1,255,243 10,331,597 12,573,644 4,785,422 1,804,447 – 30,750,353
Total liabilities 80,979,667 161,890,148 132,427,784 31,299,928 327,968,755 (111,284,474) 623,281,808
Capital expenditure (ii) 84,743,902 3,320,699 15,131,107 3,167,639 109,296 – 106,472,643
At 31 December 2016
Current assets 201,012,411 619,623,548 1,412,615,381 98,901,490 123,009,621 (119,288,692)(i) 2,335,873,759
Non-current assets 6,926,964,284 13,420,596 729,165,084 11,419,604 164,189 (2,140,808)(i) 7,678,992,949
Total assets 7,127,976,695 633,044,144 2,141,780,465 110,321,094 123,173,810 (121,429,500) 10,014,866,708
Current liabilities 123,491,087 155,162,080 1,042,415,457 23,001,056 312,612,964 (119,287,962)(i) 1,537,394,682
Non-current liabilities 1,106,213 9,534,861 145,502,989 4,659,313 1,527,052 – 162,330,428
Total liabilities 124,597,300 164,696,941 1,187,918,446 27,660,369 314,140,016 (119,287,962) 1,699,725,110
Capital expenditure (ii) 69,903,815 1,477,703 50,956,147 5,552,844 100,780 – 127,991,289

Notes:
(i) Inter-segment balances are eliminated on consolidation.
(ii) Capital expenditures consist of additions to property, plant and equipment and investment properties.

31. Loss of control of subsidiaries

On 31 March 2017, the Group lost control in two of its subsidiaries: 1) Senyar Industries Qatar Holding W.L.L. and 2) Advanced Pipes and Casts Company W.L.L.
Financial information relating to the loss of control on subsidiaries for the period to the date of the loss on control is set out below.

The group ceases to consolidate the two subsidiaries referred to above because of a loss of control and classified them as joint ventures as agreements with other
shareholders provide joint controls to the Group. The retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised
in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a joint venture.
In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed
of the related assets or liabilities.

The financial performance and cash flow information presented are for the three months ended 31 March 2017 and the year ended 31 December 2016.
31 March 31 December
2017 2016
(Reviewed) (Audited)

Revenue 361,189,075 1,476,949,092

Other income 165,182 51,802,566
Expenses (317,968,340) (1,354,141,680)
Profit before income tax 43,385,917 174,609,978
Net cash inflow from operating activities 120,471,905 122,903,370
Net cash (outflow)/inflow from investing activities (3,661,005) 846,992
Net cash (outflow) from financial activities (106,734,116) (81,713,801)
Net increase in cash generated 10,076,784 42,036,561
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
73

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

31. Loss of control of subsidiaries continued

Details of the loss of control on the subsidiaries:
31 March
2017

Consideration received or receivable

– Cash –
– Fair value of contingent consideration –
– Fair value of net assets of de-consolidated subsidiaries 344,613,459
Total fair value of consideration received as a result of loss of control of subsidiaries 344,613,459

The profit of QAR 22,191,741 occurring from measuring the investment retained in the subsidiary is included in the consolidated statement of profit or loss and
other comprehensive income under ‘gain on loss of control of subsidiaries’.

31. Loss of control of subsidiaries continued

The carrying amounts of assets and liabilities at deconsolidation date were:
31 March
2017
(reviewed)

Retention and other non-current assets 55,327,126

Property, plant and equipment 345,702,244
Goodwill 102,724,852
Cash and bank balances 92,232,063
Accounts receivable and prepayments 789,075,732
Amounts due from related parties 35,670,842
Inventories 297,053,996
Total assets derecognised due to loss of control of subsidiaries 1,717,786,855
Employees’ end of service benefits 8,297,116
Bank overdrafts 333,125
Accounts payable and accruals 543,457,216
Amounts due to related parties 74,745,008
Interest bearing loans and borrowings 366,057,712
Total liabilities derecognised due to loss of control of subsidiaries 992,890,177
Net assets 724,896,678
Carrying amount of non-controlling interests in the subsidiary derecognised when control is lost (402,474,960)
Investment retained in the subsidiary at its fair value at the date when control is lost (344,613,459)
Fair value gain on loss of control of subsidiaries 22,191,741

The cash and bank balances net of bank overdrafts amounting to QAR 91,898,938 represents the cash surrendered on deconsolidation of subsidiaries.

32. Financial risk management

32.1. Financial risk factors

The Group’s principal financial liabilities comprise interest bearing loans and borrowings, bank overdrafts, amounts due to related parties and trade accounts
payable. The main purpose of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial assets such as trade accounts
and other receivables, amounts due from related parties and bank balances which arise directly from its operations.

The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The Board of Directors reviews and agrees policies for
managing each of these risks, which are summarised below.

(a) Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign currency exchange rates will affect the Group’s profit, equity or value of its
holding of financial instruments. The objective of market risk management is to manage and control the market risk exposure within acceptable parameters, while
optimising return.
74 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

32. Financial risk management continued

32.1. Financial risk factors continued

(i) Interest rate risk

The Group’s financial assets and liabilities that are subject to interest rate risk comprise bank deposits, interest bearing loans and borrowings and bank overdrafts.
At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments was as follows:
2017 2016

Fixed interest rate instruments:

Financial liabilities – (136,127,878)
Floating interest rate instruments:
Financial assets 106,759,683 117,909,266
Financial liabilities (233,723,486) (658,101,081)
(126,963,803) (540,191,815)

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s financial assets and liabilities with floating interest rates.

The following table demonstrates the sensitivity of the consolidated statement of profit or loss and other comprehensive income to reasonably possible changes
in interest rates by 25 basis points, with all other variables held constant. The sensitivity of the consolidated statement of profit or loss and other comprehensive
income is the effect of the assumed changes in interest rates for one year, based on the floating rate financial assets and financial liabilities held at 31 December.
The effect of decreases in interest rates is expected to be equal and opposite to the effect of the increases shown.
Effect
Changes in basis points on profit

2017
Floating interest rate instruments +25 b.p. (952,229)
2016
Floating interest rate instruments +25 b.p. (1,350,480)

(ii) Foreign currency risk

Foreign currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

Trade accounts payable and accrued expenses include amounts due in foreign currencies, mainly US Dollar, UAE Dirham, Great Britain Pound (GBP) and Euro,
of which the Group has a currency risk primarily on the balances payable in Euro and GBP.

The Group does not hedge its foreign currency exposure. As both Qatari Riyal and UAE Dirham are pegged to the US Dollar, balances in US Dollars and
UAE Dirhams are not considered to represent significant currency risk to the Group.

In the opinion of the management, the Group’s exposure to currency risk as at 31 December 2017 and 2016 is minimal as the foreign currency financial liabilities
denominated in Euro and GBP represent 4% (2016: 3%) of total liabilities. Hence, not considered to represent significant risk.

(b) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group’s
exposure to credit risk is indicated by the carrying amount of its financial assets, which consist principally of trade accounts receivable, retention receivable,
amounts due from related parties, other receivables and bank balances.

The Group sells its products and provides services to various parties. It is the Group’s policy that all customers who wish to obtain on credit terms are subject to
credit verification procedures to ensure credit worthiness. Each new customer is analysed individually for creditworthiness before the delivery of products or
services. Customers that fail to meet the creditworthiness may transact with the Group only on prepayment basis. Property rentals are mostly received in advance
or contracted with post-dated cheques. In addition, receivable balances are monitored on an ongoing basis and the purchase limits are established for each credit
customer, which are reviewed regularly based on the level of past transactions and settlement. The Group’s maximum exposure with regard to trade accounts
receivable, net of allowance reflected at the reporting date, was as follows:
Business segment: 2017 2016

Property 34,523,673 14,636,469

Trading and distribution 235,147,184 252,077,802
Industrial manufacturing 86,071,996 645,599,268
Managed services 24,105,844 28,048,062
Net trade accounts receivable 379,848,697 940,361,601
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
75

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

32. Financial risk management continued

32.1. Financial risk factors continued

(b) Credit risk continued

With respect to credit risk arising from the other financial assets of the Group, the Group’s exposure to credit risk arises from default of the counterparty,
with a maximum exposure equal to the carrying amount of these instruments as follows:
2017 2016

Bank balances 349,723,280 554,941,666

Amounts due from related parties 134,777,767 61,506,302
Retention and other receivables 36,311,552 355,772,450
Other financial assets 520,812,599 972,220,418
Total credit risk exposure 900,661,296 1,912,582,019

The group reduces the exposure of credit risk arising from other financial assets by maintaining bank accounts in reputed banks and providing services only to
creditworthy related parties.

The management considers the bank balances and amounts due from related parties as high grade financial assets and trade accounts receivable and other
receivables as standard grade financial assets. When a financial asset is identified to be impaired, the management downgrades such assets to impaired category
and provides adequate allowances.

(c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity risk is to ensure,
as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation and is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts and bank loans and borrowings.

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of financial assets (e.g. accounts
receivable) and projected cash flows from operations. The Group’s terms of sales or services require amounts to be paid within 30-90 days from the invoiced date.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted payments.
0 to 3 to
3 months 12 months 1 to 5 years > 5 years Total

2017
Borrowings 222,058,092 6,174,278 5,491,116 – 233,723,486
Trade accounts payable 155,271,274 – – – 155,271,274
Other payables 111,389,435 – – – 111,389,435
Amounts due to related parties 13,622,338 – – – 13,622,338
502,341,139 6,174,278 5,491,116 – 514,006,533
2016
Borrowings 293,540,841 381,973,861 149,098,538 3,509,578 828,122,818
Bank overdrafts 1,458,876 – – – 1,458,876
Trade accounts payable 463,445,576 64,508,334 – – 527,953,910
Other payables 124,642,650 17,494,403 – – 142,137,053
Amounts due to related parties 16,304,810 2,887,151 – – 19,191,961
899,392,753 466,863,749 149,098,538 3,509,578 1,518,864,618
76 Aamal Company Q.P.S.C.  Annual Report 2017

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

Notes to the consolidated financial statements continued

32.2. Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Board of Directors monitors the capital, which the Group defines as total shareholders’ equity, excluding non-controlling interests and the level of dividends
to ordinary shareholders.

The Board also seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security
afforded by a sound capital position. The Group’s target is to achieve a return on shareholders’ equity (excluding non-controlling interests) greater than the
weighted average interest expense on interest bearing loans and borrowings.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic and business conditions and shareholders’ expectation.
No changes were made in the objectives, policies or processes during the years ended 31 December 2017 and 2016.

The Group monitors the capital using a gearing ratio, which is debt divided by capital plus debt. The Group’s policy is to keep the gearing ratio below 40%.
The Group includes within debt, interest bearing loans and borrowings, less cash and cash equivalents. Capital includes equity attributable to the equity holders
of the parent.
2017 2016

Borrowings 233,723,486 751,775,709

Less: Cash and cash equivalents (346,827,554) (553,482,790)
Net debt/(cash and cash equivalents) (113,104,068) 198,292,919
Total capital 8,006,863,764 7,895,133,316
Capital and net debt 7,893,759,696 8,093,426,235
Gearing ratio (1.4%) 2.5%

Significant change in the gearing ratio from last year was due to decrease in borrowings as a result of loss of control on subsidiaries (notes 13 and 31).

33. Fair values of financial instruments

Financial instruments comprise financial assets and financial liabilities.

Financial assets consist of bank balances, short term bank deposits, amounts due from related parties, retention and other receivables and trade accounts
receivable. Financial liabilities consist of bank overdrafts, borrowings, amounts due to related parties and trade accounts payable.

The fair values of these financial instruments except for borrowings approximate their carrying values due to the short term maturities of these instruments.

The fair value of borrowings is estimated based on discounted cash flows using interest rate currently available for the debt or similar terms and remaining
maturities. As all borrowings carry variable interest rates, the fair value of borrowings approximates their carrying values.

34. Critical judgements and key sources of estimation uncertainty

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 from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised.

34.1. Critical judgments in applying accounting policies

There are no critical judgments, apart from those involving estimations that management has made in the process of applying the entity’s accounting policies.

34.2. Key sources of estimation uncertainty

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)

–– Estimated useful lives of property, plant and equipment (Note 6)
–– Estimation of inventory net realisable value (Note 10)
–– Estimate the recoverability of receivables and other receivables (Note 8)

The estimates and underlying assumptions are reviewed regularly. Revisions to accounting estimates are recognised in the period in which the estimate is revised
if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Aamal Company Q.P.S.C.  Annual Report 2017 Financials
77

Consolidated Financial Statements for the Year ended 31 December 2017

(all amounts expressed in Qatari Riyals unless otherwise stated)

35. Comparative information

The comparative figures for the year ended 31 December 2016 have been reclassified in order to conform with the presentation for the current year. Such
reclassifications have been made by the Group to improve the quality of information presented and did not have any impact on the previously reported equity
and profits. Below is a summary of significant reclassifications made during the year:

Statement of financial position

Previous
presentation at Current
31 December 2016 Reclassifications presentation

Trade and other receivables 1,346,700,976 39,675,966 1,386,376,942

Amounts due from related parties 101,182,268 (39,675,966) 61,506,302
Accounts payable and accruals 837,872,216 57,923,659 895,795,875
Amounts due to related parties 77,115,620 (57,923,659) 19,191,961

Reclassifications were due to transactions with the other partners of entities jointly controlled by the group and entities related to those partners, which do not
qualify as related parties under IAS 24, Related Party Disclosures. Therefore, balances due to and from these entities were reclassified as part of Trade and other
receivables and Accounts payable and accruals as at 31 December 2016.
78 Aamal Company Q.P.S.C.  Annual Report 2017

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