Table of Contents. Board of Directors 1. Chairman's Introduction 2. Board of Directors Background 3. Board of Directors Report 7

Transcription

1 Cover

2 Inner cover

3 Table of Contents Board of Directors 1 Chairman's Introduction 2 Board of Directors Background 3 Board of Directors Report 7 Board of Directors Report Annual General Meeting 8 Company Overview 11 Historical Background 12 Company Direction 13 Company's Major Investments 16 Corporate Social Responsibility 18 Subsidiaries & Head Office 20 Financial Results 23 Independent Auditor s Report 24 Balance Sheet 27 Income Statement 28 Statement of Changes in Shareholders Equity 29 Statement of Cash Flows 31 Notes to the Consolidated Financial Statements 33

4 Chairman's Introduction On behalf of the Board of Directors, Management and Staff of Salam International Investment Limited (SIIL), it is my pleasure to present the Salam 2007 Annual Report. The Annual Report affords us the opportune moment to share our achievements of the past year with all our customers, stakeholders and the general public. Highlighted in the Annual Report, is the company s current success, illustrated by selected investments executed by various Salam companies in With the concerted efforts of our able management and our committed staff, we will endeavour to emulate the successful results of 2007 in the immediate and long-term future, guided by our corporate strategy that continually yields maximum value for our stakeholders as well as enabling us to deliver on the superlative standards of service we offer our valued customers. Board of Directors' Background We are fortunate to operate in a high growth region in the world, ensuring that we are primed to succeed through our constantly aligning operations - horizontally and vertically venturing into new spheres of business and entering new territories. In cognisance of our supportive communities, we highlight in the Annual Report our corporate social responsibility programmes and the strides we are making into bettering our society. I encourage you to read on the success that 2007 was and to peer into the future that we positively envisage at SIIL. Mr. Issa Abdul Salam Abu Issa, Chairman Chairman of the Board of Directors of Salam International, Chairman of the Board of Directors of Salam Bounian Development in Qatar, Vice Chairman of the Board of Directors of Serene Real Estate Development Company in Lebanon, Secretary General of the Qatari Businessman Association, member of the Board of Trustees at Al Shaqab Equestrian Academy, member of the World Economic Forum (Davos), member of the Arab Business Council and other prestigious organizations in the region. He is a Degree holder in Business Administration from the United States International University in the US with nearly thirty years of professional experience. Yours truly, Mr. Hussam Abdul Salam Abu Issa, Vice Chairman Issa Abdul Salam Abu Issa Chairman & CEO Vice Chairman of the Board of Directors of Salam International, member of the Board of Directors of Salam Bounian Development in Qatar, member of the Board of Directors of Doha Insurance Company, Advisory Council member of the College of Economy & Business at Qatar University, previous board member of Islam Online, member of the Dean s International Council Harris School at the University of Chicago, member of the Lebanese Qatari Business Association, and member of the German Business Council of Qatar. He has a Bachelor s of Science Degree in Marketing from the United States with more than twenty years of professional experience. 3

5 Dr. Hamad Abdulaziz Al-Kawari Member of the Board of Directors of Salam International, previously the Qatari Minister of Information and Culture; and is currently a member of the Board of Directors of Salam Bounian Development in Qatar. He was previously Qatari Ambassador to various countries including France, the United Kingdom and the United Nations. He currently holds various positions including: Chairman of the Board of Directors of Bin Omran Group, Chairman of the Board of Arab Bridges Training & Consulting, member of the Consultative Authority for the High Council of GCC; member of the Board of Al Jazeera Network, member of the Board of Rand-Qatar Policy Institute and a member of the Qatari Businessman Association. Dr. Al-Kawari has a Ph. D. in Political Science from the State University of New York and has been decorated with the French Legion of Honour and presented with badges of Honour by Jordan, Italy, Spain, France and Syria. He makes numerous television appearances and addresses seminars and conferences around the world. Sheikh Hassan Bin Sultan Al-Thani Representing Abraj Real Estate Company and Chairman of its Board of Directors, he is Managing Director and owner of Equnox in Qatar,Chairman of Inchcape Shipping Services, and 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 (Organization 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 has represented the Qatari interests in bi-lateral meetings and cooperation and has participated in the World Bank annual meetings and International Monetary Fund. He has a Bachelor s Degree in Economics and Social Science from Portland State University in the US. Mr. Mustafa Khalil Miqdady Member of the Board of Directors of Salam International, and is a member of the Board of Directors of various companies in the Middle East, North Africa, and Europe. He is a Mechanical Engineer with a Bachelor s Degree from Dayton University in the US. Mr. Mohammed Khaled Al Mana Member of the Board of Directors of Salam International, Vice Chairman of the Board of Directors of Salam Bounian Development in Qatar, member of the Board of Directors of Al Khaleej Commercial Bank (Al Khaleeji), former Chairman of the Qatar Chamber of Commerce & Industry, former member of the Board of Directors of the Supreme Council for Education, member of the Advisory Board for the Gulf Excellence Forum, and is Managing Director of Al Mana & Partners. He has a Bachelor s Degree in Finance from the Indiana State University in the US. Mr. Nasser Suleiman Haidar Member of the Board of Directors of Salam International, Chairman of the Board of Directors of Al Sulaiman Group, member of Al Shura Council in Qatar, member of the Board of Directors of Qatar Technical Inspection Company, member of the Qatari-Sudani Businessman Association, the Qatari-Irani Businessman Association, the Qatari- Jordanian Businessman Association, the Qatari-Romanian Businessman Association, and the Qatari-Russian Businessman Association. He is also a founding member of the Travel and Tourism Association in Qatar and member of the Memberships and Registration Department at the Qatar Chamber of Commerce & Industry. He holds a Bachelor s Degree in Political Science and International Relations from the University of XXX in Michigan, US. Mr. Hani Abdul Qader Al Qady Representing Palestine Investment Bank; he is Acting Chairman of the Palestine Investment Bank and the General Manager/CEO of the Arab Jordan Investment Bank, Board Member of Mediterranean Tourism Investment Company (Four Seasons) in Jordan, and member of the Board of Visa International in San Francisco, USA, in addition to other positions held in prestigious companies in Jordan and the Middle East. He has a Master s of Business Administration Degree from Harvard Business School in the US and a Bachelor s of Science Degree in Engineering from the Imperial University in London. Sheikh Nawaf Bin Nasser Al-Thani Representing Doha Insurance Company and member of its Board of Directors, he is founder and Chairman of Doha Insurance Company, member of the Board of Directors of Qatar Navigation, member of the Board of Directors of Abraj Capital in the UAE, and others in the Middle East. He is also a member of the Qatari Businessman Association and Chairman of the Qatari-French Businessman Association. He has been decorated with the French Legion of Honour for his support and commitment to Qatari-French economic ties. Mr. Adel Abdulrahman Al Mannai Member of the Board of Directors of Salam International, member of the Board of the Qatar Chamber of Commerce & Industry since 2002, Managing Director of Computer Arabia (a Teyseer Group Company) and Managing Director of Teyseer Motors (a Teyseer Group Company). He holds a Master s Degree in Business Management and a Bachelor s Degree in Data Processing from the US. 4 5

6 Mr. Bassam Abdul Salam Abu Issa Member of the Board of Directors of Salam International and member of the Board of Directors of Salam Bounian Development in Qatar. He previously held senior management positions in Salam Group in Oman, Qatar and the United Arab Emirates and currently holds the position of Executive Director Corporate Business Development for Salam International. He graduated with a Bachelor of Arts Degree in Industrial Relations from the University of Kent at Canterbury, England with more than sixteen years of professional experience. Secretary to the Board Dr. Adnan Ali Steitieh Executive Director Investment & Real Estate at Salam International and advisor to the Board of Directors of Salam Bounian Development in Qatar, he represents Salam International on various Boards of Directors of many companies in different countries. He holds a Ph. D. in Economics and Business Administration from Germany in addition to higher certificates in international relations, sustainable growth and public policy with over 25 years of professional experience. 6 7

7 Board of Directors Report Annual General Meeting March 10, 2008 Dear Shareholders, On behalf of the Board of Directors of Salam International Investment Limited it gives me great pleasure to welcome you to this meeting. I also welcome the representatives of the Ministry of Economy and Commerce/ Department of Trade Affairs, Deloitte and Touche, the company s financial auditors and representatives from the Doha Securities Market. The Board of Directors is pleased to present, hereunder, its ninth annual report on Company s performance, activities, projects and financial results for the financial year 2007 and the company s future business plans. 1- Company s Investments Based on the company s general strategy that aims towards sustainable and profitable growth, during 2007, the company persisted identifying and exploring potential investments opportunities or entering new joint venture agreements to complete the company s activities and subsidiaries and seized growth opportunities in new activities and fields which opened horizons for the company and enhanced diversified operations, geographic distribution and balance of investment s portfolio. 2- Company s Future business Plans Beyond 2007, the company will continue implementing its corporate strategy that aims to achieve profitable, sustainable growth through exploiting all available resources, expansion, and extending regional growth to achieve highest shareholder value and maximize targeted returns from the company s activities. The company seeks to execute its future plans and achieve growth targets through the following three main expansion sources: Operating profit generated from activities of business units and subsidiaries Capital gains generated from direct and indirect investment portfolio locally and regionally Real estate generated gains from company's real estate projects and value appreciation of owned properties or from the utilization of these properties The company will depend on diversified operations and consequently profit resources, with the aim to achieve balance and highest level of possible protection, and to minimize the possible risk of economic downturns locally and regionally. Whereas, the company s future plans include geographic expansion, in which the company operates its activities throughout new geographic regions and evolving markets that have considerable potentials in growth and diversification through seizing strategic growth opportunities. The company s future plans aim to maximize benefits and to seize available expansion and growth opportunities in Qatar and other GCC countries, which is considered the most growing region in the world. This is all reflected by revenues and net profit growth, return on equity and maximized shareholder values. In addition to the company s plans that aim towards growth, expansion & financial performance enhancement; SIIL will continue enhancing and empowering its human capital to ensure optimal performance standards. SIIL is committed to strengthen the implementation of long term corporate governance initiative to formulate the overall corporate governance plans and procedures, including instituting specialized committees responsible for overseeing the enforcement of corporate governance plans to ensure accountability, transparency, disclosure and equal opportunities. The initiative will look into restructuring the BOD in order to maximize its participation and effective representation of minority shareholders. Moreover, the Board of Directors would like to inform your assembly that 2.5% of 2007 net profit (QRs 3.5 million) has been allocated to be spent on charitable activities and social services; this is considered part of the general and administrative expenses for This is in accordance to the company s corporate strategy that aims to develop and service communities that the company operates in. 3- Financial Results for the year 2007 The consolidated financial statements for the year ended on 31/12/2007, showed a net profit around QR million, mostly from the company s core operations. These profits are net profit after taking approximately QR 5.2 million as provision to cover part of the value decrease of some investments during Bearing in mind that the above profits were achieved in spite of the increase in wages and salaries and general administrative expenses (G&A) during 2007, due to salaries and increments raised in order to be at par with living expenses and to hire new qualified employees. Wages and salaries increased by around QR 30 million, a percentage of 25% compared to last year s wages and salaries, and G&A increased by QR 14 million. It is worth mentioning that 2006 profits included an exceptional profit which resulted from the sale of real estate property. In case excluding the mentioned profit, the profit of 2007 would be increased by a considerable percentage compared to the achieved profits in In addition, some of the company s assets recorded considerable growth in its market value. The consolidated financial statements did not reflect this growth; however it is disclosed in the notes of the financial statements. Based on achieved financial results, the Board of Directors recommends to your esteemed assembly to approve the distribution of 12.5% bonus shares of paid up capital, (one share for every eight shares), and retain the remainder of the profits for the following year. 8 9

8 I would like to avail myself of this opportunity on your behalf and on behalf of the Board of Directors to express my deep gratitude to H.H. the Emir, Sheikh Hamad Bin Khalifa Al Thani, H.H. the Heir Apparent, Sheikh Tamim Bin Hamad Al Thani and H.H. the Prime Minister, Sheikh Hamad Bin Jassim Al Thani for their continuous support in the development of our beloved country, Qatar. Also, I would like to take this opportunity to extend my thanks to His Excellency the Minister of Economy & Commerce, the Director of Trade Affairs and all the staff in the Department of Affairs for their continuous efforts in supporting the private sector to improve its institutions and economic developments of our beloved country, Qatar. In conclusion, I would like to extend my thanks to the members of the Board of Directors and all the company s staff for their sincere efforts in exerting their utmost efforts for the best interests of the company and its shareholders. Issa Abdul Salam Abu Issa Chairman and CEO Note: This text has been translated from its original Arabic equivalent, which remains the official version

9 Company Direction 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. The Late Abdul Salam Abu Issa The history of the Salam organization 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 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 program of diversification and international expansion into the United Arab Emirates and Oman. 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 familyowned businesses into public shareholding companies. Corporate Overview and Direction for Overview Salam continues its successful march in growth and expansion thanks to its strong heritage of visionary entrepreneurial excellence in identifying business opportunities well ahead of others and empowerment of its people to make it happen. The company s direction is driven by its corporate strategy of sustained profitable growth in the Middle East which entails organic growth and growth by way of mergers and acquisitions. Subsequent to becoming a public shareholding company, Salam successfully transformed itself by institutionalizing the key elements of its astounding success for more than five decades. This was mainly achieved through the implementation of a set of critical core processes, in order to percolate and integrate the corporate strategy into all the business areas. Salam s long term growth strategy inherently balances between seizing of attractive market opportunities and mitigation of associated business risks in a way that maximizes shareholder value and return on investment. Our diversification and investment strategy is designed to provide maximum protection against economic downturns in specific industries through a sagacious spread. The diversification and expansion is guided by specific key performance indicators such as turnover, net profit, ROE and shareholder value. Strategic Planning Process The implementation of a structured and clearly orchestrated strategic planning process has helped us translate the corporate vision into detailed strategies. All operating business units provide Salam Head Office with 3 years strategic plans on standard templates, which link into the Corporate Strategic Plan. The degree of success in execution of the same are measured by a set of well defined corporate KPI s. The basic guiding principles of our strategic planning process are as follows: Corporate Vision & Strategy Shareholder Value Accuracy and Relevance Sustainable Profitable Growth Maximizing Market Opportunities Developing Human Capital Cost vs. Turnover & Profit Regional vs. Local Business Revenue 12 13

10 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 both local shares and indirect investments and additional indirect investment in selected companies Real Estate profits: Generated from the existing assets and development of new assets Corporate Restructuring Initiatives The Salam management realize 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 and territories of operation We must derive synergistic benefits 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 standalone organization, while maintaining the Salam identity and upholding the corporate values the group is renowned for In order to achieve these, we are in the process of further restructuring our organization. The key aspects of this restructuring are: Logical grouping of the operational business units into five broad sectors, viz., Salam Energy, Salam Contracting (Qatar & UAE), Salam Group, Salam Trading and Salam Technologies Appointment of Managing Directors for each of the five broad sectors of operation, who will provide strategic direction to the business units under their purview Decentralization of Accounting and Personnel activity at Business Unit/Sector level, with the central Finance & HR departments continuing to provide strategic and 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 Communications The group is at an advanced stage in the first phase of Oracle suite implementation across all its business units & central functions, in order to: Enable top management to efficiently and effectively monitor the execution of strategies Achieve data integrity and consistency through seamless integration of all operations under one umbrella Automate and standardize business processes throughout the organization The first phase of implementation is expected to be completed by the third quarter of The diversification of our operations both geographically and across several sectors helps Salam balance the investment risk and also maximize return in areas of competence and clear value added services where we can command healthier margins. A good example of this is entering the branded jewelry market at a regional level, one of SIIL s new and very promising ventures. Investment Portfolio The other important profit generating stream 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 of share and geographical spread locally, regionally and internationally. 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 sizeable equity stakes in some promising companies in the region, thereby enabling it to be an active investor with 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 across different share classes in the local, regional and international equity markets. Salam actively engages in trading activity in a prudent manner to ensure optimal short-term and long-term gains. Investment in Real Estate Investments in real estate provide a solid asset based investment which returns a sizable amount of profits that we envisage will increase substantially in the coming few years thus providing shareholder value protection and management with solid platform for its growth strategies. True to its reputation as an investor, operator and developer, Salam has identified hospitality and leisure as a long-term growth opportunity. However, instead of entering into the traditional segments within this market, it has sets its eyes on the newly emerging waterfront and marina development segment. The company has already taken some strategic steps in this direction and more are on the cards. Characteristics of Growth: Most of our operational units will be achieving growth rates that significantly exceed the rate of growth in their respective industries in the economies that they operate in. The growth is expected to come from repeat business, new business opportunities and from new products and services. A major highlight of this year s plans is the expansion of our contracting capabilities in the UAE building on the construction boom the country is currently witnessing. We will witness the growth in our contracting business in Qatar, UAE as well as trading operations in Bahrain, availing of the flourishing infrastructure and construction activity in these countries. The UAE unit of Alu Nasa is expected to begin its production operations during the second half of Our Diversified Investments Types Investment in Operation We are determined to exploit to the maximum the unprecedented growth rate in the region by way of organic growth and expansion of existing operations within specific economic sectors where we have both sustained and newly acquired competence in addition to a clear competitive advantage

11 Company s Major Investments Real Estate Sector Salam Bounian for Development: During 2007, Salam International increased its participation percentage in Salam Bounian s paid up capital to 33%. Salam Bounian is developing many unique real estate projects, including The Gate project that is considered Bounian s first project, whereas the company executed the first phase of the project and the second phase is under implementation. In addition, other projects include the Joumana Tower project in Qatar s Pearl, Joumayra Village project in Dubai City and Salam 4 project (jointly with SIIL). Salam Leisure and Hospitality: During 2007, Salam International participated jointly with sister company Salam Bounian for Development, in the establishment of Salam Leisure and Hospitality (SLH) with a percentage of 50% of the company s paid up capital. SLH specializes in the development and management of hotels, restaurants, resorts, marinas, water front facilities and activities and provides related services. Jewelry: Salam International is the exclusive agent for De Beers brand in several geographic areas. De Beers own a significant market share in the diamond market, and is considered one of the leading companies in the world. During 2007, SIIL aimed to increase jewelry investments through launching new jewelry companies in the G.C.C region. In addition, SIIL signed several agreements for agencies distribution and marketing of seven new international jewelry brands. Indirect Investments Financial Investments Portfolio: Salam International invested in securities portfolio allocated on the Doha Securities Market and other regional markets, based on the company s corporate investment strategy and to minimize and diversify the company s investment risks. The portfolio s objectives are to achieve high capital gains in the long term and considerable returns in the short term. Real Estate Development Projects in Dubai: Salam International is developing real estate projects in Dubai, UAE. In addition, to many other properties used for commercial and residential purposes. Lusail Project: Salam International owns 4 distinct real estate plots in Qatar Lusail City project. During 2007, SIIL signed an agreement with sister company Salam Bounian to develop the 4 distinct offices and business towers at international standards over the mentioned plots. Investment Sector Direct Investments Solidaire International: During 2007, SIIL subscribed in Solidaire International Company, which is considered one of the promising companies in the real estate development field. Solidaire plans to develop several unique real estate projects. The Qatari Company for Aluminium Extrusion: During 2007, Salam International participated in the foundation of the Qatari Company for Aluminium Extrusion with many distinct companies in Qatar and Bahrain. The mentioned company specializes in aluminum extrusion and manufacturing different aluminum products. SIIL owns 15% of the company s paid up capital

12 Corporate Social Responsibility Salam International has taken a strategic decision to serve its communities through several initiatives: community outreach programs, business, education and sports development. The promotion of these four Salam International Pillars within the country and region has become a priority and Salam International s various sponsorships are in line with these objectives that are aimed at empowering the communities that nurture the group. Some of the corporate social responsibility initiatives carried out in 2007 include: Childhood Cultural Center (CCC) Salam International Investment Limited was pleased to support a pioneering international conference titled: Children between the mother tongue and communication with the times. The conference was organized by The Childhood Cultural Centre (CCC) of Qatar. Reaching across boarders in the region, CCC worked in cooperation with the National Council for Childhood and Motherhood in Egypt. The work was accomplished under the patronage of the wife of His Highness the Emir of Qatar. Her Highness Sheikha Moza Bint Nasser Al- Misnad is the Chairperson of the Supreme Council for Family Affairs, and the founder of the Childhood Cultural Center. The conference was held from the 21st to 23rd of February SIIL was delighted to support the Childhood Cultural Centre in their efforts to study modern methods for children s education. CCC s work aims to expand children s abilities and skills to enable them to communicate better with other people and ensure better integration with the community. These are values that SIIL wholeheartedly believes in. Social Development Center Salam International Investment Limited (SIIL) donated QR1 million as a contribution to the Social Development Centre s (SDC) Al Birr Residential Compound project. It is part of the company s mission to support the social activities and raise public awareness on the significance of such social initiatives. Salam would like to convey a message to the whole society about the necessity of partnership between companies and the community where they operate. The Al Birr Residential Compound, an endowment project, is one of the leading projects whose proceeds will be directed toward financing other social projects and services provided by the SDC which functions under the aegis of Qatar Foundation. Arab World Competitiveness Roundtable Discussing the impact of global growth and its inherent risks for Arab competitiveness, Salam International CEO and Chairman Issa Abu Issa pointed out the role of socioeconomic, cultural and geographic differences and the risks they pose for Arab economies expanding worldwide. As part of the World Economic Forum, the highly acclaimed Arab World Competitiveness Roundtable took place in April in Qatar for the second time and for the second time Salam International was one of its sponsors. Qatar University Business & Economics College As part of our policy of continuous support to the educational development in Qatar, Salam International presented Salam Excellence awards to two students from the Business & Economics College at Qatar University, as previously done in 2005 as well. The awards which consisted of financial recognition were granted during an awards ceremony that took place at Qatar University on April 18. The two awards certificates were presented to the fortunate students with the highest GPA at the female and male sections of the college: student Hiba Ali Abdallah and student Mohammed bin Hamad bin Qassem Al-Thani. Digital Photography Tradeshow & Seminar Based on the success of last year s Imaging Solutions event and the ever increasing demand for more sophisticated and professional imaging solutions, we are pleased to have introduced the Professional Digital Photography, trade show and seminar in April in Dubai, UAE. Convergence is the buzz word in the industry, with that in mind Salam with our valued business partners provided a platform for professional solutions for the commercial segment and presented an integrated solution to meet the demands of the commercial clients. The event was positioned as the platform for professionals to come face to face with new and innovative technology/solutions from leading brands in the industry and at the same time participate in workshop/seminar to become aware of trends, expertise and techniques that will enhance their profession and provide efficiency for greater productivity and profitability. Data & Knowledge Management in the Middle Eastern Oil & Gas Conference Omnix, one of Salam International s subsidiaries, was one of the sponsors for an important Middle East Oil & Gas exclusive Conference and Event which took place in Qatar from 30th April to 2nd of May. Data & Knowledge Management in the Middle Eastern Oil and Gas hosted delegates from most of the oil and gas companies in the Middle East. Omnix also delivered a presentation on one of the seminar days and had an exhibition stand organized along with three of their partners EMC, Microsoft and Assai Software to show case their products to delegates. Intilaaqah Qatar Intilaaqah Qatar, a wide-ranging entrepreneurial development program for Qatari youth was initiated in 2006, with Salam International as one of 6 sponsors. In 2007, Intilaaqah Qatar organized programs titled Launch Your Ambition in April and May to help young nationals explore business start-ups as a viable career choice by assisting them in acquiring the necessary skills to be successful entrepreneurs. The other partners in this educational endeavour are Qatar Shell, the Social Development Center, College of the North Atlantic Qatar, Microsoft, and HSBC. Spirit of Empowerment Sponsorship Spirit of Empowerment, a 1-day interactive conference held in Qatar was sponsored by Folio, a company established by Salam International. It was the result of two years research and study in order to establish the issues that women face in this region, at a grass-roots level. With the backing of Qatar Foundation and Pearl Qatar, Spirit of Empowerment was realized with other sponsors including CNBC and BBC World. The objectives of Spirit of Empowerment were to raise the awareness of women s issues and the challenges that are apparent in the region; to examine the issues and through hands-on experiences demonstrate how to meet the challenges and become empowered. Philippine Independence Invitational Golf Tournament Salam sponsored the 2nd Philippine Independence Invitational Golf Tournament held at the Championship Course of the Doha Golf Club and it was a resounding success. The event was organised by The Philippine Golf Association Qatar (PGAQ), who were able to donate funds to the event s beneficiary, Gawad Kalinga, for the construction of two modest size homes for the poor. Gawad Kalinga is a Filipino foundation which caters to the poorest of the poor Filipinos living in rural Philippines and in the slum areas of the major cities of the nation. Palestinian Night Salam International was the exclusive sponsor of the 2nd Annual Virginia Commonwealth University (VCU) Qatar Palestinian night. This event was held on November 9 to raise awareness of Palestine. Traditional dance such as the Dabkeh, a traditional Palestinian fashion show, Palestinian songs featured and a traditional dinner marked the occasion. Through these festivities, more than 400 guests celebrated the rich Palestinian culture and cause. Salam International commends VCU and the Al Dar Arabic Culture Club at VCUQ for keeping the Palestinian cause topical to the younger generation and indeed, the wider public. Investment Funds Conference The Ministry of Economy & Commerce, Qatar Central Bank, Qatari Businessmen Association, Qatar Financial Markets Authority, and the Doha Securities Market together organized a conference on investment funds on November 26 and 27, Salam International was the main sponsor of this Investment Funds Conference held at Sharq Village & Spa. The conference covered different aspects of investment funds and educated business owners and professionals about the types of investments funds and the benefits for investors, and gathered key fund managers and experts in order to demonstrate the vast investment opportunities related to those funds. It also explored the opportunities available in the market. The meeting was inaugurated by the Minister of Finance & Acting Minister of Economy and Commerce, HE Yousef Hussein Kamal. 8th Annual Gulf Marketing Forum Salam International was one of the main sponsors of the 8th Annual Gulf Marketing Forum Sustaining Innovation in Marketing held in Doha in December The sponsorship included high profile branding and networking opportunities in addition to attending the seminar discussing fresh insights, tools and techniques necessary to create new profit and sustainable strategies for future growth

13 Subsidiaries & Head Office Construction & Development Sector ALU NASA TEL: , FAX: P.O.BOX: 22120, DOHA QATAR Activity: Aluminium Fabrication ATELIER 21 TEL: , FAX: P.O.BOX: 50797, DUBAI UAE Activity: Interior Designers GULF INDUSTRIES TEL: , FAX: P.O.BOX: 22028, DOHA QATAR Activity: Refrigeration & Catering Equipment INTERNATIONAL TRADING & CONTRACTING COMPANY TEL: , FAX: P.O.BOX: 15224, DOHA QATAR Activity: General Contracting MODERN DECORATION COMPANY SALAM ARABIA TRADING EST. TEL: , FAX: P.O.BOX: 22405, SAFAT 13085, KUWAIT Activity: Trading SALAM ENTERPRISES - QATAR TEL: , FAX: P.O.BOX: 15224, DOHA QATAR Activity: General Trading info@salamenterprises.com SALAM ENTERPRISES - UAE TEL: , FAX: P.O.BOX: 28326, DUBAI UAE Activity: Construction & Environment Specialists mail@salamenterprisesllc.com SALAM INDUSTRIES TEL: , FAX: P.O.BOX: 22120, DOHA QATAR Activity: Interior Decorators sind@qatar.net.qa Technology & Communications Sector OMNIX QATAR TEL: , FAX: P.O.BOX: 22658, DOHA QATAR Activity: Information Technology Solutions info@omnix.com SALAM MEDIA CAST - QATAR TEL: , FAX: P.O.BOX: 22119, DOHA QATAR Activity: Broadcast Telecommunication Systems info@salammediacast.com Luxury & Consumer Products Sector MIDDLE EAST MARKETING TEL: , FAX: P.O.BOX: 6970, DUBAI UAE Activity: Wholesale Marketing & Distribution info@mem-cp.com SALAM STUDIO & STORES - QATAR Salam Plaza TEL: , FAX: P.O.BOX: 121, DOHA - QATAR Activity: Luxury Retail info@salams.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: 22658, DOHA QATAR Activity: Office Systems sales_bs@salam-tech.com SALAM STUDIO & STORES UAE TEL: , FAX: P.O.BOX: 4199, DUBAI - UAE Activity: Luxury Retail sss@salam.ae SALAM STUDIO & STORES UAE TEL: , FAX: P.O.BOX: 417, ABU DHABI - UAE Activity: Luxury Retail sss@salam.ae TEL: , FAX: P.O.BOX: 10497, DUBAI UAE Activity: Specialized Joinery Manufacturers mail@mdc-salam.com Q GARDENS SALAM TRADING ENTERPRISES TEL: , FAX: P.O.BOX: , AMMAN 11185, JORDAN Activity: Trading salam@go.com.jo SALAM STUDIO & STORES - QATAR Mall Branch TEL: / , FAX: P.O.BOX: 121, DOHA - QATAR Activity: Luxury Retail info@salams.com SALAM STUDIO & STORES UAE TEL: , FAX: P.O.BOX: 1342, AL AIN - UAE Activity: Luxury Retail sss@salam.ae TEL: , FAX: P.O.BOX: 15224, DOHA QATAR Activity: Landscape Contracting info@qatargardens.com SALAM STUDIO & STORES OMAN TEL: FAX: P.O.BOX: 438, MUSCAT - OMAN Activity: Luxury Retail sss@salam.se Energy & Industry Sector Investment & Real Estate Sector SALAM PETROLEUM SERVICES STREAM INDUSTRIAL & ENGINEERING INVESTMENT & REAL ESTATE DIV. TEL: , FAX: P.O.BOX: 22084, DOHA QATAR Activity: Oilfield Equipment Products & Services sales@salam-petrol.com TEL: , FAX: P.O.BOX: 22647, DOHA QATAR Activity: Electro Mechanical Contracting info@stream-qatar.com TEL: , FAX: P.O.BOX: 15224, DOHA QATAR Activity: Investments & Real Estate a.steitieh@salaminternational.com 20 21

14 Joint Ventures & Franchises DE BEERS DUBAI STORE TEL: , FAX: P.O.BOX: 4199, DUBAI - UAE Activity: Luxury Retail FOLIO DESIGN HOUSE TEL: , FAX: P.O.BOX: 22531, DOHA - QATAR Activity: Fashion & Interior Design QATARI GERMAN SWITCHGEAR CO. TEL: , FAX: P.O.BOX: 23661, DOHA - QATAR Activity: Switchgear Manufacturing info@qgc-qatar.com Sister Company SALAM BOUNIAN TEL: , FAX: P.O.BOX: 15224, DOHA QATAR Activity: Investments & Real Estate info@salam-bounian.com Corporate Central Functions Office of the Chairman & CEO Salam Tower, 16th Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR i.abuissa@salaminternational.com 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 Bin Omran Offices, 2nd Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR i.farraj@salaminternational.com Deputy Chief Financial Officer TEL: , FAX: P.O.BOX: 50797, DUBAI UAE h.alyounis@salaminternational.com Human Resources Salam Plaza, Ground Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR s.alkhateeb@salaminternational.com Corporate Strategic Planning Salam Plaza, Ground Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR s.alkhateeb@salaminternational.com Corporate Business Development Salam Tower, 16th Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR y.hamad@salaminternational.com Corporate Marketing & Communications Salam Plaza, Ground Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR n.fattaleh@salaminternational.com Investor Relations Salam Plaza, Ground Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR a.steitieh@salaminternational.com Legal Bin Omran Offices, 2nd Floor TEL: , FAX: P.O.BOX: 15224, DOHA QATAR i.hasiba@salaminternational.com 22 23

15 Independent Auditor s Report To The Shareholders Salam International Investment Limited (Q.S.C.) Doha - Qatar Report on financial statements We have audited the accompanying consolidated financial statements of Salam International Investment Limited (Q.S.C.) (the Company ) which comprise the consolidated balance sheet as at December 31, 2007, consolidated income statement, consolidated statement of changes in equity and the consolidated cash flows statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statement Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation and fair presentation of the financial statements 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 company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the over all presentation of the financial statements. We believe that the audit evidence we have are sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and based on the reports of other auditors, the accompanying consolidated financial statements give a true and fair view of the financial position of Salam International Investment Limited (Q.S.C.), as of December 31, 2007, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Other Legal and Regulatory Requirements Furthermore, in our opinion the consolidated financial statements provide the information required by the Qatar Commercial Law No (5) of 2002 and the Company s Articles of Association. We are also of the opinion that proper books of accounts were maintained by the Company and the financial information included in the annual report of the board of directors is in agreement with the Company s financial statements. To the best of our knowledge and belief and according to information given to us, no contravention of the above mentioned law or the Company s Articles of Association were committed during the year which might have materially affected the Company s financial position of the Company or its financial performance. For Deloitte & Touche Samer Hussein Jaghoub Doha Qatar License No. 88 February 10, 2008 The consolidated financial statements include the assets, liabilities and results of operations of the subsidiaries which have been audited by other auditors who issued their unqualified audit reports on the respective financial statements. These audit reports were furnished to us, and our opinion in so far as it relates to the amounts included for these subsidiaries, is based solely on the reports of other auditors. These subsidiaries with a combined total assets of QR million (December 31, 2006: QR million), combined total liabilities of QR million (December 31, 2006: QR million) and net profits of QR 53.2 million (December 31, 2006: QR 77.6 million) are presented in these consolidated financial statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risk of material misstatement of the 24 25

16 Financial Statements SALAM INTERNATIONAL INVESTMENT LIMITED (Q.S.C.) DOHA QATAR CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007 Note ASSETS Current Assets: Bank balances and cash 5 54,272,331 76,393,380 Trade and other receivables 6 279,660, ,941,561 Due from related parties 7a 8,973,693 9,017,779 Retention receivables 10 30,621,427 22,531,668 Inventories 8 291,051, ,412,884 Excess of revenues over billings 116,435,528 70,478,467 Other assets 9 64,466,078 40,711,519 Total Current Assets 845,480, ,487,258 Non-Current Assets: Available for sale investments ,073, ,612,972 Loan to associate company 3,278,217 2,852,475 Investments in associates ,682, ,669,237 Retention receivables 10 18,891,938 14,896,427 Intangible assets ,305, ,043,757 Investment properties ,903, ,030,681 Property, plant and equipment ,424, ,373,988 Other assets 9 12,214,820 7,998, Total Non-Current Assets 1,522,774,262 1,297,478, Total Assets 2,368,254,883 1,978,965,611 ============= ============= These consolidated financial statements were approved by the Board of Directors on February 10, 2008 and signed on its behalf by: SALAM INTERNATIONAL INVESTMENT LIMITED (Q.S.C.) DOHA QATAR CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007 LIABILITIES AND EQUITY Current Liabilities: Note Borrowings ,163, ,540,186 Post-dated cheques payable 51,643,446 45,968,276 Trade and other payables 192,345, ,170,494 Retention payables 10 9,952,652 14,563,976 Advances from customers 16,564,184 16,447,620 Excess of billings over revenues 24,687,654 36,436,249 Due to related parties 7 b 8,368,668 4,260,463 Other liabilities ,478, ,213,541 Total Current Liabilities 730,204, ,600,805 Non-Current Liabilities: Borrowings ,444,861 52,590,265 Retention payables 10 11,899,951 2,775,272 Employees end of service benefits 20 15,812,723 11,923,743 Post-dated cheques payable 3,659,391 40,249,030 Other liabilities 45,465,758 42,690,853 Total Non-Current Liabilities 294,282, ,229,163 Capital and Reserves: Issued capital ,015, ,015,000 Legal reserve ,869, ,015,572 Investments revaluation reserve 20,457,490 3,674,705 Retained earnings 60,850,071 48,631,374 Property revaluation reserve 23 5,019,080 6,052,492 Proposed cash dividends ,801,500 Proposed issue of bonus shares ,501, Equity Attributable to Equity Holders 1,339,712,653 1,278,190,643 of the Parent Mr. Issa Abdul Salam Abu Issa Mr. Hussam Abdul Salam Abu Issa Chairman and Chief Executive Officer Vice Chairman and Chief Operating Officer Minority Interest 25 4,054,914 1,945, Total Equity 1,343,767,567 1,280,135, Total Liabilities and Equity 2,368,254,883 1,978,965,611 ============= ============= The accompanying notes are an integral part of these consolidated financial statements.- The accompanying notes are an integral part of these consolidated financial statements