DOHA: Industries Qatar's (IQ) ordinary and extra ordinary annual general meeting (AGM) has approved the Board of Director's report and balance sheet for the year ended 2011 and unveiled five-year business plan. The AGM also approved the recommendation of the Board for the distribution of dividend of QR4.1bn, equivalent to a payout of QR7.50 per share representing 75 percent of the nominal value.
Addressing the AGM, H E Dr Mohammed bin Saleh Al Sada, Minister of Energy and Industry who is also the Chairman and Managing Director, Board of Directors, IQ, said the Group has made great strides since its establishment in 2003 when revenue was a mere QR2.8bn and profit was QR1.1bn to the present when profits have increased seven-fold and assets by more than four times.
Since 2003, the group has completed a number of major capital projects and investments that have had a significant impact on the group's production capacity and revenue. These projects have involved all of the group's segments, and the most important of which were Qafco's train 4, Qapco's EP-1 expansion, Qafac's debottlenecking exercise, numerous steel expansions, the Ras Laffan Olefins Cracker unit, Qatofin and the melamine plant. All of these projects and investments have served to increase the group's production levels and sales capacity.
An increase in the number of companies in the group from 8 to 15, and the creation of more management positions to support and attract qualified nationals in line with the group's stance that its best assets and one of its competitive advantages are its human resources. The cumulative cash dividend distribution over the 8 years since the company's establishment was QR36.5per share, which is more than twice the value of each single share at the time of underwriting. Despite these distributions, net assets increased more than four times.
Also, the success of the investment programme is proven by the increase of the earnings per share by more than six times, from QR2.26 in 2003 to QR14.42 in 2011.
Dr Al Sada said: "With the inauguration of Qafco-5 late in 2011, our fertiliser joint venture became the largest, single site fertiliser producer in the world. The plant has now started its commercial operations and accordingly the production capacity of ammonia has increased by 75 percent and urea by almost 50 percent.. Furthermore, significant progress has been achieved in the LDPE-3 and Qafco-6 expansions, slated to launch in the second and third quarters of this year respectively."
On the other hand and as part of senior management's goal towards identifying new, cost effective sources of finance to support future investments, the group successfully completed debut credit ratings with two international credit rating agencies, Moody's and Standard & Poor's. As a result, the group was rated Aa3 and AA- respectively, reflecting its strong financial position and the pivotal role it plays in supporting key public policies. Both agencies placed IQ one notch below the sovereign rating of the State of Qatar and among distinguished international industrial conglomerates.
"As we approach the end of the phase of robust organic growth, senior management's concern is now directed to building a long term growth strategy and finding suitable, alternative sources of finance to fund the various growth opportunities that may emerge. This was the motive behind the group conducting a comprehensive review of its vision and mission statement, and in developing guiding principles for the long-term growth strategy to be prepared by an international consultant." Dr Al Sada said.
"These principles include the commitment to maintain the group's basic competitive features, especially the competitive cost structure, and the intension to remain primarily in businesses linked to the group's expertise, that is, the petrochemical, fertiliser and steel sectors. Priority will be given to domestic opportunities, with external opportunities to be assessed in coordination with Qatar Petroleum. In addition, the principles affirm the intention of the group to maintain a degree of decision-making control and continue to support the dividend distribution policy," he said.
The strategy is expected to be prepared through the third quarter of this year, with the highlights announced to the market in due course.
Unveiling the Group's five year business plans for the period 2012-2016, Dr Al Sada said : "Consideration should be made, however, for a number of pipeline projects and investments that are still under study that are expected to eventually further enhance the company's position through the added values to its operations. Once approved, the market and shareholders will be notified.
"Due to the impact on the future results of the business with regards to the cash flow and financial position, the business plan will be reissued in case of any major change in the basic assumptions or if new projects and / or investments are approved."
Qapco has entered into a 20 percent agreement with Qatar Petroleum to establish a large petrochemical complex of a total cost of approximately QR20bn and production of 3.65 million tonmes per annum of petrochemical products to support the leading competitive position of the group in the petrochemical market.
© The Peninsula 2012
