Abu Dhabi, 30th April, 2014 (WAM) -- The Annual General Meeting of Arabtec Holding today confirmed that, as per request from shareholders, a distribution of 40% dividends in bonus shares has been approved. This is a change from the previously proposed distribution of 10% in cash and 30% in bonus shares.
Meeting under the leadership of Hasan Ismaik, Arabtec 's Managing Director and CEO, and in the presence of Board Members and the Executive Management team, the AGM approved the Company's balance sheet for the year ended December 31, 2013, the profit and loss accounts, as well as the Board of Director's report on the Company's activities and financial position.
At the meeting, attended by shareholders as well as financial analysts and the media, the Company launched "Vision 2018", which will see Arabtec grow into one of the top 10 global companies, through its focus on specialised construction segments including energy, oil and gas, infrastructure, ports, airports, railways, and facility and heavy industry management, as well as low to medium income housing.
Hasan Ismaik, Managing Director and CEO of Arabtec Holding , expressed satisfaction at the high turn up. "We take this is as a vote of confidence in Arabtec . It echoes high optimism by the shareholders and observers in Arabtec 's programme," he said "2013 was a pivotal year for Arabtec , thanks to the continued backing of our shareholders. Throughout the year, our company and subsidiaries have witnessed significant growth of backlog, revenues, margins and profits, with performance exceeding market and analyst expectations."
"Our growth strategy is firmly on track in all areas, including our planned diversification into new sectors such as oil and gas, infrastructure, and property development." Vision 2018
In line with its Vision 2018, Arabtec plans a number of acquisitions and mergers with major international companies in the targeted sectors with a view to growing into a global leader in four years' time. We will draw on Arabtec 's long-standing experience to achieve sustainable growth for the benefit of the Company and its shareholders," Ismaik added.
Ismaik noted that the Company will push ahead with its plans for organic and geographical diversification to mitigate risks. "We are planning to do a series of acquisitions and mergers with global leaders in the targeted areas. This will go in tandem with streamlining and upgrading our internal organization and attracting the top notch professionals from around the world. We have unshaken confidence in our shareholders' loyalty and commitment, and we in the Board of Directors believe that, with the help the Almighty God, we will achieve the aspired goals," Ismaik added.
Arabtec 's acquisition of Target Engineering complements Arabtec -Samsung Engineering, ensuring that Arabtec is uniquely placed as a full service EPC player, addressing the medium to large-scale projects market.
Arabtec is making great strides into consolidating its presence in the MENA Region, banking on its strong brand and wide client base.
Ismaik noted that Arabtec was expanding in MENA very strongly through our excellent relationships and strong brand name. "We are entering new markets and this year alone we have expanded into Kazakhstan and Jordan and we are opening offices in Iraq, Serbia and Algeria. We plan to continue to focus on our core 'hot spots' going forward," he added.
2013 financial performance
Arabtec reported strong financial performance in 2013, with a net profit attributable to parent of AED377 million , marking an increase of 171% on 2012. The momentum of 2013 continued into the new year, which translated into superb results during the first quarter, with backlog skyrocketing to over AED200 billion, after a series of new contract wins to the tune of AED188 billion.
A number of factors have contributed to the strong overall financial performance for Arabtec in 2013, as the Company has emerged well from the downturn in the construction sector with a significant increase in project backlog, totalling AED24.1 billion in value at year end 2013, a 22% increase from the prior year.
The Company reported revenues up 30% to AED7.4 billion in 2013, compared to AED5.7 billion in 2012. Revenues were driven by the Company's growing backlog and continued strong performance in the UAE and Saudi Arabia markets, in addition to management's influence on the project delivery organization. Moreover, the Company's gross margins improved, increasing from 10% in 2012 to 12% in 2013 driven by a continued focus on project execution.
Arabtec 's focus in 2013 was the realignment of its businesses to enhance efficiency and position the Company for growth. Earlier in 2013, Arabtec launched cost management measures to optimise operational efficiency and project profitability. The measures employed have started to reflect positively on the results with the selling, general and administrative expenses (SG&A) margin reduced to 7% on costs of AED494 million in 2013 compared to a 2012 margin of 9% on costs of AED485 million. The SG&A margin decrease was partially due to the reallocation of project-related costs to the project delivery organization from overheads resulting in improved utilisation of resources, which provides a more accurate indication of project profitability.
Arabtec 's growth strategy and the realignment of the business have enabled the Company to take advantage of a stronger macroeconomic environment. In turn, this has delivered a substantial increase in net profit attributable to the owners of Arabtec of 171% to AED377,777 thousand compared to AED139,171 thousand in 2012.
Oil and Gas and Related Infrastructure
Oil and gas and infrastructure projects accounted for 27% of the Company's backlog by the end of 2013, which is consistent with 2012; however, in value the oil, gas and infrastructure backlog has increased 19% to AED6.4 billion at the end of 2013 compared to AED5.4 billion at the end of 2012.
High-value infrastructure projects awarded in 2013 included an AED3.3 billion contract to build a new 358,000 square metre hospital in Al Ain, enabling the Company to expand into new high-margin areas of construction.
Residential projects awarded in 2013 include a contract award for AED180 million at the Dubai Silicon Oasis, and a contract award for AED240 million to construct 253 new residential villas at the 'Casa' district in Dubai's Arabian Ranches.
Real Estate Development and Affordable Housing
Arabtec continued to implement its strategy of diversifying across the MENA region and other selected markets. In Saudi Arabia, the Company maintained the expansion of its constructions activities in this high-growth market, which complements Arabtec 's existing operations at El Hasa in the Eastern Province, where the Company is building a large-scale residential project comprising 5,000 villas.
In December 2013, Arabtec launched a new subsidiary to lead Arabtec 's expansion into property development, Arabtec Real Estate is focused on developing lifestyle communities through strategic joint ventures with leading real estate developers and investors in the UAE, with plans to expand to other GCC countries and the wider MENA region. Arabtec Real Estate will take advantage of the higher-margin development segment of the industry. The Company looks to leverage niche opportunities available in addition to the underserved medium and low-income sector in key high-growth markets across all countries in the MENA region with emphasis on the UAE, Saudi Arabia, Egypt, Algeria, Morocco, and some European countries
Arabtec has further grown its already extensive portfolio of projects in the hospitality sector having won a series of new contracts. In addition to the construction of the prestigious AED2.4 billion Louvre and AED1 billion Fairmont Hotel and Serviced Apartments in Abu Dhabi, Arabtec was selected to construct the final phase of the Tiara Hotel on Palm Jumeirah, valued at AED200 million.
Further afield, the Company expanded its reach into Central Asia, by signing a deal to take part in the construction of the AED4 billion Abu Dhabi Plaza project in Kazakhstan, as part of a joint venture.
In addition, Arabtec expanded into Jordan, having won an AED720 million contract to build The St. Regis Amman and The Residences at The St. Regis Amman project. The Company then further grew its presence in the country by signing a deal for AED770 million to construct four international hotels as part of the Saraya Aqaba project. These projects re-emphasizes the Company's commitment to geographic expansion as well as its ability to construct complex, large-scale projects.
The gross value of new contracts awarded to Arabtec in 2013 totalled AED9.9 billion. This growth presents a solid reflection of the potential available in markets across the region, and stands as testament to the trust that Arabtec 's customers and partners place in the work of the Company.
Ismaik commented: "Since the start of 2014, our Company's subsidiaries have been selected to execute a series of new projects, with a total value of AED180 billion, which gives us visibility on our earnings growth for many years to come. The strong foundations that we have built over the past year have allowed Arabtec to continue driving its growth strategy by further expanding the Company's reach into new sectors through new subsidiaries, joint ventures and office locations."
"We look ahead with optimism and excitement as our Company continues to grow and evolve, fast becoming a pillar in the growth of key markets across the region. We have great confidence in our highly skilled team, which will drive the Company as it delivers on current and future projects on time and to the highest of standards. We aim to continue exploring potential opportunities across the region, as part of our commitment to ensuring that Arabtec continues on its path to becoming a globally recognised Company. "