cover supplied as separate file

Transcription

1 cover supplied as separate file The Art of Investment Annual Report 2010

2 inside cover supplied as separate file ANNUAL REPORT 2010 Salam s success is built on a legacy of creative thinking, bold decision making and steadfast commitment to the principles that define us. At the heart of our ethos is a dedication to talent and entrepreneurship that has guided us through the most prosperous times and the leanest. The innovation and individuality that underpins the Salam name gives us a sense of belief that drives us to seek out the next opportunity, the latest technology, the new experience, and master the art of investment.

3 The Art of Investement 3

4 Table of Contents Chairman's Introduction 1 Board of Directors Background 2 Board of Directors Report 6 Corporate Governance 10 Company Overview 16 Future Direction 18 Corporate Social Responsibility 22 Subsidiaries & Head Office 24 Financial Results 28 Independent Auditor s Report 29 Statement of Financial Position 31 Income Statement 33 Statement of Comprehensive Income 34 Statement of Changes in Shareholders Equity 35 Statement of Cash Flows 37 Notes to the Consolidated Financial Statements 39

5 CHAIRMAN'S INTRODUCTION Dear Valued Shareholder, On behalf of the Board of Directors, it is my privilege once again to present to you, our Annual Report for SIIL s Annual Report stands as a testament to our inherent entrepreneurial culture, which has led to many an achievement and reinforced our position as a major regional conglomerate. The results recorded herein confirm that each of our business units have played a specific role in contributing to our overall growth, earnings and performance. By managing our vast business portfolios effectively, I am very pleased to say that during the period under review SIIL has achieved sustainable, effective growth over the long term and confident, steady, targeted growth over the short term. I am certain that as you study this report, the true picture of SIIL, as one of Qatar s oldest, strongest and most diversified business conglomerates will emerge, confirming that your confidence in us is well placed. Our achievements, as always, have been enabled and inspired by the positive business culture created for performers, in this beloved nation. Allow me to place on record our gratitude to His Highness Sheikh Hamad Bin Khalifa Al-Thani, Emir of the State of Qatar and the Heir Apparent, His Highness Sheikh Tamim Bin Hamad Al-Thani, for their wise and insightful leadership. Their vision for this nation is what creates the culture of achievement companies such as us thrive on, making Qatar a shining example of success on the global stage. In today s world, a company s achievements must not be judged in financial terms alone. On the contrary, at SIIL we hold ourselves to a higher standard by contemplating the value we provide to our society and ask ourselves how we meet the needs of the communities in which we live and work. Hence, as an integral part of this report, you will also find a snapshot of how we have partnered our community. As shareholders, while you spend time reading this report and studying the company s direction, you can rest assured, that at SIIL we are focusing our energies on accelerating smoothly into the next phase of our growth, aimed at delivering even greater success and value to you. Thank you for your partnership. Yours Truly, Issa Abdul Salam Abu Issa Chairman & CEO The Art of Investment 1

6 BOARD OF DIRECTORS BACKGROUND The Art of Leadership 2 Annual Report 2010

7 Mr. Issa Abdul Salam Abu Issa Chairman Chairman of the Board of Directors of Salam International and Salam Bounian. Mr. Issa Abdulsalam Abu Issa is also the Vice-Chairman of Serene Real Estate Co. Lebanon and the Secretary General of Qatari Businessmen Association. He is a member of the World Economic Forum Davos, the Arab Business Council and the Board of Trustees on the Al-Shaqab Equestrian Academy. He is also a Board Member in many other esteemed organizations in the region. Mr. Issa holds a degree in Business Administration from San Diego University - USA, and has more than 30 years of professional experience. Mr. Hussam Abdul Salam Abu Issa Vice Chairman Vice-Chairman of the Board of Directors for Salam International, and Board Member of Salam Bounian. He is one of Doha Insurance Company s Board of Directors, an active advisory council member to the College of Management & Economics at Qatar University, a former member of the Al-Ballagh Cultural Association Board of Directors, a member of the International Dean Council of Harris School of Public Policy at Chicago University, a member of the GCC Chamber of Commerce Manufacturing Committee. He is also a member of the Islamic Chamber of Commerce and the Qatari-Syrian Businessmen Council and German Business Council, Qatar. He holds a Bachelor s Degree in Marketing from the United States, and has more than 30 years of professional experience. Mr. Sharida Saad Jubran Al-Kaabi Member of the Board of Directors, held several governmental posts as Qatar s ambassador to India, Egypt and the United Kingdom, in addition to being Qatar s ambassador to the Arab League in Tunisia. He is a former Under Secretary of the Ministry of Labor and Social Affairs and a member of the Consultative Commission of the Gulf Cooperation Council. He is the Board Director for Al-Balagh Trading & Contracting Company, a former Vice- Chairman of the Mannai Corporation Board of Directors and a former board member of Ahli Bank Qatar. Mr. Al-Kaabi took part in numerous conferences in the Arab region and abroad. He holds a Law degree from Beirut Arab University and attended various training courses in senior and middle management. He has almost 50 years work experience. Sheikh Nawaf Bin Nasser Al-Thani Member of the Board of Directors, representing Doha Insurance Company. HE Sheikh Nawaf is considered one of the most important business figures in Qatar. He is an active participant in the real estate and economic renaissance witnessed in Qatar today. HE is credit for a great deal of experience sharing and collaboration building. He holds a number of Directorships, including being the Chairman of the Board of Directors of NBK Holding, ALWA AB City, and Doha Insurance Company. He is also a member of the Board of Directors in Abraaj Capital, Arabtec, and Samena Capital. He is also a member of the Board of Directors of the Qatari Businessmen Association and Vice President of the German Arab Friendship Society. He has been awarded the French Presidential Medal and bestowed a rank of a Knight, in appreciation of his unique efforts in promoting commercial relationships between Qatar and France. The Art of Investment 3

8 Mr. Nasser Suleiman Haidar Member of the Board of Directors and Chairman of the Board of Directors of Al Sulaiman Holding. He is also a member of Qatar s Advisory Council and member of the Registration Committee at the Qatari Chamber of Commerce and Industry. Mr. Nasser holds a Bachelor s Degree in Political Science and International Relationships from Aquinas University, Michigan. Mr. Mohammed Khaled Al Mana Member of The Board of Directors, Vice Chairman of Salam Bounian s Board of Directors, member of Board of Directors of Gulf Commercial Bank, former Chairman of the Qatari Chamber of Commerce & Industry, former member of the Board of Directors at The Supreme Education Council, member of the Advisory Board of the Gulf Excellence Forum, Mr. Al-Mana holds a Bachelor s Degree in Finance from Indiana State University, USA. Sheikh Hassan Bin Sultan Al-Thani Member of the Board of Directors, representing Abraj Real Estate and Chairman of the Board of Directors of Abraj Real Estate Company. He is the Managing Director and owner of Equinox in Qatar, Chairman of Inchcape Shipping Services Qatar, Chairman of the Board of Directors of DHL Global Forwarding Qatar, he previously held senior management positions in the Ministry of Finance and Petroleum, Qatar General Petroleum Corporation (QGPC), Qatar Petrochemical Company (QAPCO) and represented Qatar in OAPEC (Organisation of Arab Petroleum Exporting Countries). He is also a member of the US & Qatari Energy Committee, Canadian & Qatari Energy Committee, and Qatari & French Economic Trade Committee. He holds a Bachelor s Degree in Economics and Social Science from Portland State University in the US. Mr. Masoud Ibrahim Mohammed Nabina Member of the Board of Directors. He is the Executive Director of Nabco Group for Trading & Real Estate. Mr. Nabina holds a BA degree in Business Administration from the United States, with work experience spanning more than ten years. 4 Annual Report 2010

9 Mr. Bassam Abdul Salam Abu Issa Member of the Board of Directors and Member of Salam Bounian Board of Directors representing Salam International. He previously held senior management positions in Salam Group in Oman, Qatar and the United Arab Emirates. He is currently the Executive Director Corporate Business Development for Salam International Investment Ltd. He graduated with a Bachelor of Arts in Industrial Relations from the University of Kent at Canterbury, England and has more than 17 years of professional experience. Mr. Fouad Soliman Diab Member of the Board of Directors, representing Arab Jordan Investment Bank - Qatar. He is the General Manager of the Arab Jordan Investment Bank - Qatar. He held several Directorships, including Palestine Investment Bank - Palestine, Cairo Amman Bank, Palestine. He holds a Masters Degree in Office Management from Transworld College, UK. He has almost 29 years of experience. Sheikh Jassim Bin Mohammed Khaled Hamad Al-Thani Member of the Board of Directors. He is the owner and General Manager of Jassim Bin Mohammed Trading Company, General Manager of Mohammed Bin Khalid Trading & Contracting Company and member of the Board of Directors of Jassim Trading Company, in addition to being a member of the Board of Directors of Ishar Trading Company. Dr. Adnan Ali Steitieh, Secretary to the Board Executive Director, Investment and Real Estate at Salam International Investment Ltd. He is also the Secretary to the Board of Directors and advisor to the Board of Directors of Salam Bounian. He represents Salam International in various Boards of Directors at several companies in Qatar, Saudi Arabia, Jordan, Palestine and Lebanon. He held several senior managerial positions in different companies and countries. Dr. Steitieh is an International arbitrator appointed by The Qatari Int l Center for Arbitration. He is also a member of the Syrian - Qatari businessmen council. Dr. Steitieh holds a Ph.D in Economics and Business Administration from Leipzig University in Germany and a Bachelor s Degree in Law from the Arab University of Beirut, Lebanon, in addition to higher certificates in international relations, sustainable development, and public policy with over 30 years of professional experience. The Art of Investment 5

10 BOARD OF DIRECTORS REPORT The Art of Commitment 6 Annual Report 2010

11 BOARD OF DIRECTORS REPORT ANNUAL GENERAL MEETING FEBRUARY 28, 2011 Dear Shareholders, On behalf of Salam International Board of Directors, it is my pleasure to extend warmest welcome to you, to the delegates from the Ministry of Business and Trade - representatives of the Department of Companies Control as well as to Messer KPMG the company s external auditors. I wish also to thank you for your participation to this assembly meeting where I will present to you the annual report for the financial year 2010 on Company s activities and business performance together with our future plans. First- Business Activities The Company has pursued, over the course of the year, a conservative policy with regards to the financial practices and the risk management approach as well as to its major investment orientations duly elucidated during last year General Assembly meeting, which aimed at the pertinent pick of investment opportunities that complement the Companies types of activities and those of its subsidiaries. These orientations also mentioned favorably seeking growth in new horizons in order to expand the business and geographical diversification. The Company succeeded in maintaining its operating activities levels during 2010 by the means of sound cash flow management and forecasting practices, efficient exploitation of available production means and achievement betterment. Notwithstanding the aftermath of the global financial crisis, the Company undertook against all odds to preserve its skilled technical workforce and enable its human resources to achieve quantitative and qualitative performances. Second- Future Plans The Company s Future Plans reckon on seizing the opportunities emerging from three strategic cornerstones as follows: The growth plan in connection with Qatar National Vision 2030 The unprecedently expected GDP growth to be stemmed from Qatar Mondial 2022 Bringing into reality the vision of HH the Emir of Qatar with regards to reaching 77 million tons production of LNG per year Within the framework of its activities and through its available means and capabilities, the Company, as an active and efficient member of the private sector, will spare no efforts in its attempts to make Qatar Vision 2030 come true with the aim at developing The Art of Investment 7

12 a competitive economy with diversified operations and income resources and which is capable of meeting the State Socio-economic requirements in terms of goods, services and standard of living. On the other hand the Company will capitalize on the unique growth opportunities offered by the forthcoming business flourish and international sports events headed by the Football World Cup With this respect it will participate into the implementation of the strategic mega-projects concerning the modernization of the infrastructure and the urban scenery in Qatar for the ten years to come, not to mention the company s primordial role to play in the maximization of Qatar LNG production. In conformity with its institutional performance legacy, the Company undertakes willingly to carry on with the implementation of the corporate governance policy and the assimilation of its discipline s processes in accordance with its own purposes and needs, in application of the Governance Code issued by Qatar Financial Markets Authority. Moreover the Board of Directors would like to reconfirm his dynamic commitment to the Company s Corporate Social responsibility program and hence carry on disbursing funds to the charitable activities and social services during It is noteworthy that, in 2010, we have allocated 2.5% of the Company s net profits to the abovementioned purpose as per the law (13)/2008. Third- disclosure on a court case Certain shareholder filed a case against the 8 Annual Report 2010 Company to call off the two mergers that took place in 2002 and 2005 successively. A preliminary court s verdict was issued, subject to an Appeal, stipulating the abrogation of the mergers executive procedures with no effect on The General Assembly resolutions. Worth to mention that the said plaintiff was not holding any Company shares prior to any of both mergers dates. He did purchase 1000 shares on 06/01/2010. Worth mentioning also that, following this transaction which provided him with inside information and data pertaining to SIIL, he stood as the attorney of another shareholder detaining 100 shares in the Company and against whom the company had instituted a process in Law. Standing on solid ground and provided with strong lawful reasons, the company have appealed the preliminary court s verdict within the specified period of time and sought to freeze the court decision till the appeal court final deliberating. With above respect, SIIL will as usually take all necessary legal measures to protect the interests of the Company and its shareholders. Fourth- Financial Results 2010 The consolidated financial statements for the fiscal year 2010 as of 31 of December 2010 showed a net profit of around QR Million 141.2, out of which QR Million are SIIL Shareholders equity rights. These profits are computed after deduction of devaluation provision in relation with certain Company s investments in the course of 2010, as well as provision for the Company s management bonuses and Board members incentives. As an inference the Company s earnings per share have reached QR 1.42.

13 In line with our conservative accounting practices, all the Company s real estate actual investments have been reflected in the consolidated financial chapters at their purchase value, irrespective of the substantial excess over their book value. The same has been contrived to avoid capital losses caused by eventual assets devaluation and which would pull down the registered bottom line. Explanatory notes are provided in addendum to the financial statements. Referring to the above subsequent financial outcome, the Board of Directors puts forward and recommends your esteemed Assembly to approve 15% of the paid up capital as profit distribution for the year 2010, to be splitted as follows: 10% Cash dividends 5% Bonus shares Following a capitalization of parts of profits generated in previous years. On your behalf, on behalf of the Board of Directors and personally, we wish to express our warmest gratitude to HH. The Emir Sheikh Hamad Bin Khalifa Al Thani, HH. The Heir Apparent, Sheikh Tamim Bin al Thani and HH. The Prime Minister Sheikh Hamad Bin Jassim Al Thani for their permanent support to the development of our beloved country, Qatar. My sincere thanks to H.E the Minister of Business and Trade, to the undersecretary and all the staff at the Department of Companies Control for their creative efforts to support the country s growth and prosperity. Issa Abdul Salam Abu Issa Chairman Note: This text has been translated from its original Arabic equivalent, which remains the official version The Art of Investment 9

14 CORPORATE GOVERNANCE The Art of Administration 10 Annual Report 2010

15 First Annual Governance Report 2010 Salam International Investment Limited (The Company) has conducted an audit to verify its level of compliance with the rules and regulations of the governance code (The Code) of Qatar Financial Markets Authority (The Authority), and decided on a number of procedures to ensure this compliance, as follows: First: Procedures applied by the Company to ensure compliance with the Code: 1. The Company meets the Code s requirements in terms of structure and framework, according to article 9-2, which states: At least one third of the members of the Board of Directors are to be independent members, and the majority of members are to be non-executive. 2. A compliance officer was appointed to coordinate between the Company and the Authority, in all matters related to compliance with the Code s rules and regulations. Compliance Officer: Dr. Adnan Ali Steitieh Position: Executive Director, Secretary of the Board of Directors Telephone: Mobile a.steitieh@salaminternational.com 3. Developing a delivery code, in order to apply the Code s rules and regulations. All company s departments will participate in this code, including the Financial Department, Strategic Planning, Legal, and the Board of Directors, represented by its Secretary. 4. A Preparatory Governance Committee was established with a clear framework, and its authorities were determined. This committee aims at developing necessary plans to apply the Code, and enable the Company to adopt best practices in governance, in addition to observing the delivery of plans and decisions taken in this regard. The committee s responsibilities include: Developing and approving the company s own governance guide, and updating it regularly (determining governance standards and tools and measurable outcome). Regular review of all decisions and instructions issued from time to time by the Authority, regarding the regulations and practices of governance, and giving recommendations to the Board of Directors regarding the changes it deems necessary for the application and advancement of the new standards and practices. Ensuring the Board of Directors is always up to date regarding the Code, its implications, and its latest updates, in addition to observing the delivery of the Board s decisions in this regard. Giving recommendations to the Board of Directors regarding the type, structure, framework, authorities, motives, and framework of the committees emerging from the Board, as stated by the Code. Introducing the basic principles of governance and its application to the members of the Board of Directors, the executive management, and all staff. Coordination and communication between the Board and all staff, in order to apply best practices in governance. Members of the Governance Committee: - Mr. Hussam Abdul Salam Abu Issa, Vice-Chairman of the Board of Directors, Committee Chairman - Mr. Hikmat Abdulfattah Younes, Acting Chief Financial Officer, member - Dr. Adnan Ali Steitieh, Executive Director and Secretary of the Board, member The Art of Investment 11

16 - Mr. Suleiman Alkhateeb, Executive Director Strategic Planning, member - Mr. Alaa Tamneh, Head of the Commercial and Legal Department, member - Mr. Iyad Hasiba, Head of the Legal Department, member 5. Initiating the process of forming the committees specified in the Code: 5.1 An initial framework for the Auditing and Internal Auditing Management Committee was developed as outlined in the Code. This framework will be presented to the Board of Directors. This framework is being thoroughly studied, and it will be approved at a later stage. It will define the responsibilities and authority of the committee, which will include: Adopting a well defined policy for contracting external auditors, provided that all issues the committee deems to require specific arrangements are presented to the Board, giving recommendations regarding the arrangements or steps required, and supervising and maintaining the independence and objectivity of external auditors, and discussing the nature and domain of audit as per international criteria and benchmarks in issuing financial reports. Coordination with the company s Board of Directors, executive management, and financial manager, and conducting meetings with external auditors at least once a year. Studying any important or urgent issues that are included (or will be included) in financial 12 Annual Report 2010 reports and accounting, and thoroughly reviewing any issues raised by the financial manager, the compliance officer, or external auditors. Supervising auditing management, as well as the financial, operational, and risk management inspection units. Reviewing the financial, internal, and risk management inspection systems, and evaluating the efficacy and adequacy of the system and domain of internal training programs. Reviewing procedures with relevant stakeholders, and assuring that these procedures follow their respective guidelines. Verifying the results of internal inspection incidents assigned to the Committee by the Board, or conducted by the Committee upon the Board s approval. Maintaining coordination between internal and external auditors, providing required resources, and verifying the efficiency of the internal inspection authority and supervising its work. Reviewing the financial and accounting policies and procedures regularly. Providing timed reposes to all inquiries or issues raised by the Board of Directors regarding matters included in the reports or communications with external auditors. Supervising the company s compliance with professional conduct. Ensuring that all guidelines related to the committee s mission and authority are applied correctly as outlined by the Board.

17 Recommending an internal audit manager to the Board. 5-2 Remuneration Committee: The remuneration committee already exists, and it is acting on its duties. Its framework will be updated to be in line with the code requirements. The updated mission will include: Defining remuneration policy and principles, including the chairman and members board of directors remuneration, and reviewing it annually. The committee is to develop the remuneration policy taking into account the following principles: Long term company performance. Responsibilities and domain of tasks assigned to board members. Responsibilities and domain of tasks assigned to top executive management. The remuneration may include a fixed part and a performance based part, provided that the performance based part is linked to the company s long term performance. Presenting the remuneration policy and principles to the shareholders at the general association, to be approved and declared. Supervising the application of remuneration policy, principles, and standards. Developing a well defined succession policy for the company s management, and presenting it to the board members for approval and adoption. Committee was developed as outlined in the Code. This framework will be presented to the Board of Directors. This framework is being thoroughly studied, and it will be approved at a later stage. This committee s responsibilities include: - Nominating board members and renominating them to be elected by the general association. Managing nominations through a committee does not cancel each shareholder s right to nominate or be nominated. - The Nomination Committee recommends the nominees, taking into consideration membership conditions as per the company s statute, in addition to nominees skills, qualifications and experience. - The Nomination Committee determines each member s capacity as independent or executive or not, taking into consideration minimum requirements for each capacity. - The committee conducts an annual objective self evaluation of the board s performance, using the following criteria (these criteria are not final and still subject to amendment): Number of meetings per annum. Maintaining regular meetings. Attendance of meetings. Number and percentage of objections to decisions taken. Handling issues presented in meetings agendas. Abiding by disclosure and transparency, and declaring board decisions. 5-3: An initial framework for the Board Nomination The Art of Investment 13

18 Interaction with all committees and acting on their recommendations. Achieving a minimum profit and EVA. Board evaluation also includes a review of areas of improvement. 6. A draft Board of Directors Charter was prepared, in accordance with article 4 of the Code. This charter defines: Board of Directors structure and membership conditions. Board of Directors meetings. Responsibilities of board members. Organization of board activities. Board members duties (executive and nonexecutive members). Chairman s duties. Board members duties (non-executive). Secretary of the Board of Directors duties. Board of Directors domain of responsibility. Remuneration standards. General articles. This draft will be distributed on members for discussion and approval in an upcoming board meeting. 7. Risk Management Policy: The Company is currently in the process of updating and documenting its risk management policy, so it includes the following risks: - Operational Risks, which includes several issues, such as: Products and services faults, halt of work, performance gap, efficiency and productivity, customer satisfaction, safety, unexpected market changes, and business regularity. - Financial risks, which includes pricing system, cash flow, credit, and debt risks. - Honesty and conduct risks, which includes forgery, illegal behavior, unauthorized use, and reputation. - Information Technology risks. - Environmental risks. - Crisis management. Risk management policy also includes a description of preventive and corrective procedures, which help prevent the risks or contain them once they occur, to avoid complications. Second: Board of Directors: 1-Board members per capacity: 1-1Independent members: - Mr. Sharida Saad Jubran Al-Kaabi - Sheikh Nawaf Bin Nasser Bin Khalid Al Thani (representing Doha Insurance Company). - Mr. Nasser Sulaiman Haidar Al Haidar - Mr. Mohammed Khaled Mohammed Al-Mana - Sheikh Hassan Bin Sultan Bin Hassan Al Thani (representing Abraj Real Estate). - Mr. Masoud Ibrahim Mohammed Nabina - Sheikh Jassim Bin Mohammed Khaled Hamad Al-Thani - Mr. Fouad Sulaiman Diab (representing Arab Jordan Investment Bank) 1-2 Non-independent non-executive members: - None 1-3 Executive members (non-independent): - Mr. Issa Abdul Salam Abu Issa (Chairman of The Board of Directors) - Mr. Hussam Abdul Salam Abu Issa (Vice- Chairman of the Board of Directors) - Mr. Bassam Abdul Salam Abu Issa (Executive Director) All memberships of the current board expire once the 2011 financial statement is approved. A new Board of Directors is expected to be elected during the first half of To read members curriculum vitae, please visit the company s website: 2- Board remuneration: Board members are not eligible for any remuneration for attending board meetings, but they are eligible for annual remuneration based on performance, subject to approval from the general association. Remuneration is counted as a percentage from net profit, as 14 Annual Report 2010

19 per article 118 of Commercial Companies Act Nevertheless, the company will adopt well defined criteria for performance evaluation, which may include some of the following recommended standards: Attendance of meetings. Handling issues presented in meetings agendas. Abiding by disclosure and transparency, and declaring board decisions. Interaction with all committees and acting on their recommendations. Achieving a minimum profit and EVA. Third: Abiding by all disclosure rules and regulations, and getting enlisted on Qatar Stock Market: 1- The company abides by all rules and regulations related to disclosure in Qatar Stock Market (the Stock Market), including disclosure of shares held by board members, executive managers, and main shareholders. 2- Disclosure of any essential information related to the company s current or prospected projects, or any projects or information that may influence share prices. 3- All financial reports are prepared in accordance with international standards (IFRS, IAS, ISA). The company publishes these reports in local newspapers, on the stock market website, and on the company s own website. The company will later disclose names of all committees once they are formed and their framework is established, 4- The company has developed and published a website that includes general information about it, along with its activities and investments, as well as a special section that covers shareholders affairs, which includes: The Emiri Decree by which the company was established, and the establishment contract. Company s Code. Company s financial statements. General association annual assembly calls, and annual reports. General information about share movements. The company will carry on publishing all information, declarations, or statements upon availability or on a regular basis. Four: Disclosure of a lawsuit: A shareholder has filed a lawsuit, by which he requested annulling the 2002 and 2005 mergers. A preliminary appealable court order was issued to annul the two forth-mentioned mergers, with no prejudice to decisions made by the General Association. It is worth mentioning that the plaintiff was not a shareholder at the time the first merger took place (2002), nor he was when the second merger took place (2005). The plaintiff first became a shareholder by buying 1000 shares on 06/1/2010. Moreover, he represented another shareholder as attorney at law, upon the company s lawsuit filed against this other shareholder. The plaintiff bought these shares right after he started representing the other shareholder, and viewing the facts and the company s classified documents. The company believes that it has strong reasons to appeal this court order, and it has already filed the appeal within legal deadlines, and requested withholding the order until the appeal is judged. The appeal is expected to be judged in the near future. The company, as usual, will do everything possible to protect its interests and the rights of its shareholders. Issa Abdul Salam Abu Issa Chairman of The Board of Directors Note: This text has been translated from its original Arabic equivalent, which remains the official version The Art of Investment 15

20 COMPANY OVERVIEW The Art of Endurance 16 Annual Report 2010

21 HISTORICAL BACKGROUND Salam s roots were founded by Abdul Salam Mohammed Abu Issa, an aspiring businessman who at a very early age left his birthplace in Palestine to seek better opportunities in the Arabian Peninsula. When he arrived in Doha in 1950 he brought with him a camera. More importantly, he brought a talent for capturing on film the personality of the land and its people a concept entirely new in Qatar which captured the imagination of Qataris. was made to larger premises. The next ten years saw a consolidation of business, with much travel to distant countries in pursuit of manufacturers and new products for an increasingly discerning clientele. The rapid growth of Salam Studio & Stores accelerated in tandem with the economy. The pace continued through an ever increasing programme of diversification and international expansion into the United Arab Emirates and Oman. The Late Abdul Salam Abu Issa The history of the Salam organisation dates back to 1952 when Abdul Salam Abu Issa opened the first studio and film processing laboratory in Doha with the name Salam Studio. In 1954 he converted the adjoining restaurant into a gift shop and jointly, the establishment was named Salam Studio & Stores. The business flourished. By 1963 the original showroom became too small and a move Within a few years, Salam s operations would encompass studios, stores and companies for wholesale, retail merchandise and services serving the entire Gulf region under the umbrella of Salam Holdings. In June of 2002, Salam Holdings merged into Salam International Investment Limited and furthermore, in October 2005, Salam Group merged into Salam International, both landmark examples in transforming family-owned businesses into public shareholding companies. The Art of Investment 17

22 FUTURE DIRECTION Corporate Overview and Direction for Overview Driven by its innate entrepreneurial culture and the overarching corporate strategy of sustained profitable growth, Salam further reinforced its position as a major regional conglomerate during the year While the existing business units within and outside Qatar delivered a steady performance, the company continued to keep its eyes and ears open for other attractive business opportunities and this approach will continue in the coming years as well. We will pursue both organic growth in terms of adjacencies, and by entering into new business frontiers that would be complementary to our existing business activities, and suit our culture and value system, while offering long term growth potential. The year also saw some strategic capital investments being made in some of our business units to strengthen their technological capabilities so that they can compete for more challenging customer engagements and deliver them successfully. We pursue strategic growth in such a prudent manner that inherently balances between the seizing of attractive market opportunities, and mitigation of associated business risks so as to optimize value for our shareholders and sustained return on their investment. Our diversification & investment strategy is designed to provide maximum protection against economic downturns in specific industries through a sagacious spread. We monitor the success of our strategies with the help of a broad set of key performance indicators such as turnover, net profit, ROE and shareholder value. Strategic Business Planning Process Over the years, we have evolved a structured and clearly orchestrated strategic planning process that ensures that despite our diversified portfolio, all our business units are strategically aligned to the corporate vision and mission and uphold the Salam values. All operating business units provide Salam Head Office with 3 years strategic plans on standard templates, which form part of the Corporate Strategic Plan. The basic guiding principles of our strategic planning process are as follows: Corporate Vision & Strategic Alignment Shareholder Value Sustainable Profitable Growth Maximising Market Opportunities Developing Human Capital Identification of most likely business scenarios and preparedness to exploit them Short Term Vs. Long Term balance Regional vs. Local Business Revenue With Qatar s successful bid to host World Cup 2022, the business optimism in the country is touching newer heights. Even as the country s visionary administration gears itself to prepare for the mega event, we have identified specific areas where Salam companies could make significant 18 Annual Report 2010

23 contribution and benefit from the same. The GMs of the business units in Qatar are being motivated and empowered to seize the profitable business opportunities that are likely to emerge in the coming years. At the same time, keeping in mind the volatile situation in UAE, the business units there would strive to optimize their business operations yet remain as competitive as before. These business units will also look to seize opportunities outside UAE, using their Dubai base as the launch pad. Wherever possible, they will also lend their expertise and resources to their sister organizations in Qatar. SIIL generates profits through three broad sources, namely: Operational profits: Generated from investments in SIIL business units that possess excellent competence and distinct competitive advantage Investment Portfolio profits: Generated from management of a balanced portfolio of investments in both local shares and direct investments and additional indirect investment in selected companies Real Estate profits: Generated from the value appreciation of existing assets and development of new assets Corporate Restructuring Initiatives The Salam management realises that in order to sustain and build on its profitable growth, there are certain pre-requisites: There should be adequate strategic focus in all the sectors & territories of operation We must derive synergistic advantage through collaboration and interaction among business units in related or complementary businesses Each of the business units must have sufficient autonomy to function as a stand-alone organisation, while maintaining the Salam identity and upholding the corporate values the group is renowned for In order to achieve these, we have been carefully restructuring our organization, while ensuring that such changes are managed and implemented successfully. Some of the key aspects of this restructuring are: Logical grouping of the operational business units into four broad sectors, viz, Salam Group (Retail & Distribution), Salam Energy and Industry, Salam Development and Contracting & Salam Technologies. Appointment of Managing Directors for each of the sectors of operation, who will provide strategic direction to the business units under their purview Decentralisation of Accounting & Personnel activity at Business Unit/Divisions level, with the central Finance & HR departments continuing to provide strategic & policy directions The centre will directly look after acquisition and management of profit generating assets, investment portfolio management and management of mega projects and JVs, besides the corporate support functions like Corporate Finance, Corporate Business Development, Corporate Strategic Planning, Corporate HR, Corporate Legal & Corporate Marketing and Communication The Art of Investment 19

24 Salam One Our Diversified Investments Types The full potential of a diversified organisation such as Salam can only be achieved by creating a win-win synergy among the different business units, using their complementarities. To this end, we have recently launched the Salam One initiative whereby a number of SIIL companies can come together and work-offering a unified set of services. This is expected to help us bid, win and successfully execute large turnkey projects that draw upon the core competencies of two or more of SIIL companies. Investment in Operation The first set of Business Units have already started using the Financial module of Oracle ERP & they will be using the HRMS module as well. Meanwhile, work is progressing at rapid pace to roll out these modules to the other Business Units and to implement the other modules of the Oracle ERP System. The company wide ERP implementation will: Enable top management to efficiently & effectively monitor the execution of strategies Achieve data integrity & consistency through seamless integration of all operations under one umbrella Automate & standardise business processes throughout the organisation 20 Annual Report 2010 The main operational activity of SIIL is represented in four sectors as outlined in the preceding paragraph. SIIL has managed to be safe from the effects of the global economic crisis so far, thanks to the diversity of its operations both geographically and across several sectors, which helps Salam balance the investment risk and also increase return in areas of competence and clear value added services. The company aims to tide over any further effects of the crisis by exploiting available resources, enhancing performance, optimising expansion in the region and by carefully seizing strategic investment opportunities resulting from this crisis. SIIL intends to keep its technical & specialised workforce intact, as they represent one of the most important intangible assets of the company SIIL will continue enhancing & empowering its human capital to ensure optimal performance standards and enhanced competitive advantage. The company has adopted a very sound cash management policy that ensures a healthy cash flow so that all its operations are safe from the financial crunch. The long experience of the company has endowed it with all the resilience needed to survive and grow in turbulent times.

25 Investment Portfolio Real Estate Sector: One of the key profit generating streams is the investment portfolio owned and managed by Salam based on a corporate investment strategy where again multi-level protection is generated by the diversification of the type and geographical spread of shares, locally, regionally and internationally. Investments in real estate provide a solid asset base where, SIIL has adopted a conservative financial & investment policy in stating the company s properties investment and fixed assets at cost value without revaluation, which strengthens the company in mitigating the negative effects of the real estate sector turmoil. Salam s Investment portfolio is of two kinds, direct and indirect. The direct portfolio represents the strategic investments that Salam regularly makes by way of equity stakes in some promising companies in the region, thereby enabling it to have an influential role in the management of such companies through participation of Salam s top executives in their boards. The Indirect portfolio consists of the broad-based equity shares held by Salam in the local, regional, and international stock markets. As a result of the Global economic crisis the market value of local shares portfolio decreased. In this regard, appropriate provisions have been taken into the financial statements for the period ending on 31/12/2010 based on IAS. The Art of Investment 21

26 CORPORATE SOCIAL RESPONSIBILITY 2010 POLICE SPORTS FEDERATION Salam International signed a cooperation agreement with the Police Sports Federation (PSF). The agreement confirmed that SIIL will sponsor all PSF activities. Mr. Hussam Abu Issa expressed joy over this partnership and stressed SIIL s responsibility for supporting the development of sports in Qatar. He praised the sports renaissance witnessed by Qatar in different fields through organizing continental and international sports activities. SIIL cooperation with PSF means also supporting the community in light of various PSF activities that raise huge interest throughout the season which reflects the support and cooperation of SIIL with the whole society through PSF and its successful activities. QATAR VOLLEYBALL ASSOCIATION Qatar Volleyball Association organized a Mini Volleyball festival. Being an organization with a firm commitment to support the development of sports in the nation and an organization that doesn t hesitate to invest in youth SIIL came forward as the sole sponsor of the event. The festival took place in the presence of HE Sheikh Saoud Bin Abdul Rahman Al Thani, Secretary General Qatar National Olympic Committee. A number of QVBA senior officials, administrators, representatives of local clubs, parents, media, referees and coaches attended the festival. SIIL was happy to provide the participants with Volleyball Equipment and kits and encouraged them to display the highest values of sportsmanship. QATAR FOUNDATION FOR ELDERLY CARE QF for the Elderly Care s mission is caring for the elderly and maintaining their social and moral rights. In addition, it institutionalizes the methodology of social support which is being provided for the elderly in Qatar. Salam International was pleased to donate funds to Qatar Foundation for Elderly Care and support it s activities. QF for Elderly Care held a special series of competitions in support of their cause. SIIL was delighted to sponsor the event by coming forward to offer prizes to the winners of the competitions. The contest was organized with the aim of increasing awareness and finding creative ways to honour the elderly among us. Using the mediums of photography, Powerpoint, short story, and drawing a large number of contestants took part in the competition and submitted their creations to a panel of judges. Salam International is always ready to support the community since social responsibility is something SIIL deeply committed to and will continue to support the work of the Foundation for Elderly Care. QATAR UNIVERSITY INTERNSHIP DAY Salam International fully supports Qatar s vision to build a knowledge based economy and appreciates the nation s commitment to invest in the education sector. SIIL seizes the opportunity to extend a hand of support to multiple initiatives associated with the education field. In this regard, SIIL was delighted to participate in Qatar University s 5th Internship Day. SIIL shared the potential opportunities for academic training and sponsorship opened in their organizations. The Salam International HR Team who represented SIIL at the event welcomed applications for internship during the event. SIIL as always was pleased to be part of developing and mentoring a future generation of professionals who will serve Qatar. QATAR RED CRESCENT Salam International expressed its utmost support to the people of Pakistan by donating a humanitarian relief package to them through the Qatar Red Crescent Society. The summer of 2010 produced Pakistan s worst flooding in 80 years. The devastation raised fears of further instability in the country. 20 million people, about one-ninth of the population, had been displaced by the disaster. Millions were left without food, shelter and clean water. With such scenarios being the background, SIIL did not hesitate to extend the maximum support to join hands with Qatar Red Crescent and reach out to the people of the struggling nation. QATAR SOCIETY FOR REHABILITATION OF PEOPLE WITH SPECIAL NEEDS Salam international is grateful to extend it s 22 Annual Report 2010

27 support by sponsoring the Rehabilitation International a generous amount for helping the elderly and the disabled, as well as all community initiatives in Qatar on their General Assembly. Rehabilitation International is one of the largest and most active organizations in the field, working hand in hand with all stake holders in promoting the rights of persons with disabilities and/or health problems, through means including advocacy, and rehabilitation to achieve an inclusive world where all people can enjoy active participation and full human rights. QATAR CENTER FOR VOLUNTARY ACTIVITIES Salam International was proud for the contribution and support it extended to the charity bazaar organized by Qatar Center for Voluntary Activities, under the kind patronage of Her Highness Sheikha Leena Bint Nasser Bin Khalid Al Thani. The organization s objective is to raise funds for cancer treatment at Al Amal Hospital, as well as treatment of some other serious diseases. Qatar Center for Voluntary Activities mission will always motivate SIIL to further our initiatives, serving our community and beloved country. QATAR NATIONAL DAY Salam International was delighted to come forward as a platinum sponsor for Qatar s National Day Celebrations. As a company born on this soil, SIIL takes immense pride in the successes and achievements of Qatar. We believe in the aspirations of Qatar and have every intention of participating and supporting its growth as it transforms itself into one of the world s leading and respected economic, educational, technological, sport, tourism and cultural hubs. SIIL looks on Qatar National Day as an occasion to celebrate this land s achievements and affirm its commitment to march into the future with confidence. One common objective we share with Qatar is to use the best available technologies in service of whatever we aspire to achieve. Hence, it was a pleasure for us to sponsor a unique, innovative, first of its kind technology solution to assist every member of the public who was intent on commemorating Qatar s National Day by participating in a myriad of activities. SIIL worked with one of our own companies, ADabisc, who exclusively designed and developed a versatile software application. SIIL was truly happy to have offered an inspiring, technology driven solution, which pived up to this challenge and enabled many people to join in the celebrations with ease. DOHArama Salam International was pleased to be the exclusive sponsor of the photographic encyclopedia DOHArama, a unique work of art documenting Doha s heritage of giving; peace and economical, social and cultural development. Sponsoring this work was a gesture to honor the heritage of the founder of Salam International, late Mohammed Abdul Salam Abu Issa, who is considered one of the pioneers of photography in the State of Qatar. Mr. Mohammed Abdul Salam Abu Issa introduced photography technology by bringing it into this nation. He took it upon himself to document the indigenous and impulsive nature of life by recording its developments, progress and cultural and urban renaissance, and participating in it as a photographer and as a developer. SIIL takes special pride in the fact that even after decades have passed, through the ongoing art of photography, our founder s vision lives on. Being recognized as an entity that constantly interacts in the fields of Qatar s economy and in the life of Qatar s society, SIIL felt the need to come forward and support the festivities of Doha as the Capital of Arab Culture. We were very happy to sponsor some of its activities, of which DOHArama, Maher Attar s book, is an important part. Maher s work has shown the modernity as well as the traditions of Doha as a City, and drawn an accurate picture of the twinning between traditions and modernity that encapsulates sustainable progress and a prosperous future. In spite of the contrasting colours and spacing of time, Doha s old and new photos are linked across time to recount the story of evolution, transformation and success. That story resonates with the long and continuous history of Salam International over sixty years of growth in this nation. The Art of Investment 23

28 SUBSIDIARIES & HEAD OFFICE Corporate Central Functions Office of the Chairman & CEO Salam Tower, 16th Floor TEL: FAX: P.O. BOX: 15224, DOHA - QATAR Office of the Vice Chairman & COO Salam Tower, 15th Floor TEL: FAX: P.O. BOX 15224, DOHA-QATAR h.abuissa@salaminternational.com Office of the Chief Financial Officer Salam Plaza Tower, 4th Floor TEL: FAX: (Qatar) TEL: FAX: (UAE) P.O. BOX 15224, DOHA-QATAR hikmat@salam.ae Corporate Marketing & Communications Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 12027, DOHA-QATAR E:mail: s.alkhateeb@salaminternational.com Corporate Personnel Department Bin Omran Building 2nd Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR e.alshaa@salaminternational.com Investor Relations Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 12026, DOHA-QATAR investor@salaminternational.com Corporate Human Resources Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 12027, DOHA-QATAR hr@salaminternational.com Corporate Strategic Planning Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 12027, DOHA-QATAR E:mail: s.alkhateeb@salaminternational.com Corporate Information Technology Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR k.mahgoub@salaminternational.com Salam Tower Salam Tower 3rd Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR i.ahmad@salaminternational.com Corporate Business Development TEL: FAX: P.O. BOX 10805, DOHA-QATAR y.hamad@salaminternational.com 24 Annual Report 2010

29 Legal Department Investment & Real Estate Sector Corporate Legal Department Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR INVESTMENT & REAL ESTATE DIVISION TEL: FAX: PO. BOX 12026, DOHA-QATAR Activity: Investments & Real Estate Commercial Legal Department Salam Plaza Tower, 3rd Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR Salam One Salam Tower 11th Floor TEL: FAX: P.O. BOX: 15224, DOHA-QATAR Technology & Communications Sector SALAM MEDIA CAST - QATAR TEL: FAX: P.O.BOX 22119, DOHA-QATAR Activity: Broadcast Telecommunication Systems info@salammediacast.com OMNIX QATAR TEL: FAX: P.O. BOX 22658, DOHA-QATAR Activity: Information Technology Solutions info@omnix.com SALAM MEDIA CAST - UAE TEL: FAX: P.O.BOX 91908, DUBAI-UAE Activity: Broadcast Telecommunication Systems mail@salammediacast.com SALAM TECHNICAL SERVICES TEL: FAX: P.O. BOX 24728, DOHA-QATAR Activity: Office Systems sales_bs@salam-tech.com SALAM MEDIA CAST - OMAN TEL: FAX: P.O.BOX 438, MUSCAT-OMAN Activity: Broadcast Telecommunication Systems info@salammediacast.com The Art of Investment 25