(The Group’s Comments) Zad Holding Net Profit Up 7.6% to QR 213.48 Million in 2018

Ø  Profits: Zad Holding Group’s profits amounted to QR 213.5 million in 2018, an increase of 7.66%, compared to QR 198.3 million for the year 2017, while the company’s earnings per share reached QR9.01 in 2018 versus QR8.37 for the year 2017. On a quarter-on-quarter basis the company recorded a profit of QR66.5 million in Q4 2018, compared to QR 51.41 million for the same period in 2017.

Ø  Comprehensive income: The company has not recorded any assessment differences in the statement of comprehensive income for the year 2018, compared to 2017, when the company made an assessment profit of QR 4.85 million.

Ø  Revenues: The company makes revenues through several activities, including the import of wheat and the manufacturing of several flour byproducts such as pasta and baked goods, in addition to construction and contracting activities and the management of industrial projects, as well as real estate activities. Zad’s total revenues for the year 2018 amounted to about QR 1,165.5 million, in which the sales of manufactured products account to about 72% of revenues, while the construction and logistics revenues account for about 16%.

Ø  Gross profit (revenues - revenue costs): Despite the 2.8% increase in revenues mentioned above, the total profit dropped during this period by 8.4% to QR 26.5 million, as a result of higher operating costs, which climbed by 8% to QR72.5 million, than revenues, leading to a decline in gross profit.

The improvement in the valuation of a number of financial investments and profits from the Profit/Loss statement, contributed to QR 41.8 million in 2018 and the improvement of the net profit. It should be noted that the company recorded a loss on the same item in 2017 by about QR5.0 million.

Ø  Shareholders’ equity: amounted to about QR 1,533.6 million by the end of 2018, a stable outcome compared to the previous year, the company has applied Accounting Standard No. 9, which had a negative effect on the retained earnings of about QR 49.6 million.

Ø  Dividend distribution: The Board of Directors recommended the distribution of 85% of the nominal value of the share at QR 8.5 (6.40% dividend yield). Dividends in 2017 were QR5.91 per share or 59.1% of the nominal value of the share.

Ø  Market ratios: The share is currently traded at a PE multiple of 14.9 times and a book value multiple of 2.10 times.