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Makkah & Madinah Holdings (MAMP)

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Thursday 28 May, 2015

Makkah & Madinah Holdings

Final Results for the Year Ended 31 December 2014


            Makkah & Madinah Holdings Limited and its subsidiaries             

       Re: Consolidated Financial Results for the Year Ended 31-12-2014        

                              Highlights for 2014                              

  * Carrying value of MMH's investment in MMCI as at 31 December 2014 was USD
    486.8 million; an increase of USD 14.0 million (3 %) over the year.

  * MMH's profit for the year was USD 8.11 million; basic and fully-diluted
    earnings per share were USD 0.0064.

  * MMCI's net asset value on 31 December 2014 was USD 1.429 billion compared
    with USD 1.174 billion on the date of MMH's acquisition of its 34.12 %
    interest in MMCI, an increase of 22% since acquisition in 2012.

Chairman's Statement

As the Chairman of Makkah & Madinah Holdings Limited (the "Company" or "Group"
or "MMH"), I would like to present the Company's Annual Report for 2014. I am
pleased to record that the Company has maintained a profitable performance for
the third consecutive year, generating total comprehensive income of USD 14.50
million for the financial year ended 31 December 2014 (2013: USD 32.49
million).

Since its acquisition in 2012, the Company's investment of 34.12 % interest in
Makkah & Madinah Commercial Investment Company JSC ("MMCI"), which operates in
the Kingdom of Saudi Arabia ("KSA"), has grown by 22% from USD 400 million to
USD 487 million owing to strong growth in the real estate market of KSA.

This investment in MMCI has proven to be a prudent one as it continues to
produce positive results, with the KSA real estate sector showing a continued
growth against a backdrop of strong macroeconomic fundamentals. Despite the
sustained downturn in the price of oil, ratings' agency, Fitch, recently
forecast economic growth in 2015 & 2016 of around 2% in KSA whilst reaffirming
the country's strong credit rating. MMCI's portfolio has seen a generalised
appreciation in land values, confirmed by the latest independent valuation as
at 31 December 2014. MMCI has capitalised on these growing trends in the market
by executing certain acquisition and disposal transactions which are discussed
in the Directors' report appearing in the full Report and Accounts.

During the financial year ended 31 December 2014, the Company has refined its
business strategies and has identified development and investment opportunities
in markets outside KSA but within the Gulf Cooperation Council ("GCC") region.
This is further explored below. The Company continued providing consultancy
services and maintained its revenue stream by extending the term of the
consultancy agreement. MMH's consultancy business is discussed in greater
detail in the Directors' report.


 

Financial results

The Group has posted profit for the year of USD 8.11 million (2013: USD 25.41
million), mainly derived from the share of profits from MMCI. In addition, the
Company derived revenues of USD 2.00 million (2013: USD 2.29 million) from its
advisory and consultancy services as stated above.

The positive result in the consolidated statement of profit or loss and other
comprehensive income has resulted in basic and diluted earnings per share
("EPS") of USD 0.0064 (2013: USD 0.020).

At 31 December 2014, net assets of the Company were USD 486.86 million (2013:
USD 472.36 million) or USD 0.38 per share (2013: USD 0.37 per share).

Business overview

The Company has evaluated certain markets within the GCC and in particular the
UAE, classified by MSCI as an "Emerging Market", offers some highly prospective
opportunities. The economic drivers include a high projected rate of population
growth, increasing demand for housing and hospitality, high disposable incomes,
a diversified economy partially insulated from the effects of low oil prices, a
well-regulated and transparent property market and the government's dedication
to improving the already well-developed infrastructure and services.

The UAE's growth rates are above the global average, a trend forecast to
continue in the current year and through to the end of the decade. There has
been a slight slowdown in the real estate market in the final quarter of 2014
due to tighter regulations being introduced and to a natural adjustment to new
residential supply entering the market. The Company believes these regulatory
changes to be positive for sustainable growth. The UAE's economy - and that of
Dubai in particular - is forecast to grow further. Political developments
elsewhere in the Middle East region may have a positive impact on the real
estate sector within the GCC.

Current Trading and Outlook

The Company has identified a number of real estate development and investment
opportunities in the UAE, which would provide attractive returns on investment.

Development opportunities and investment strategy regarding vacant development
lands in KSA owned by MMCI are being evaluated by MMCI Board.

The Company's ability to initiate new development projects may be dependent
upon fund raising.

Board Appointment

During 2014, there were certain changes to the Board of Directors in the
Company, which were discussed in the interim statement. Mr Khaled ("Nicholas")
Majdalani, a veteran in the field of real estate development and infrastructure
projects, has joined the Company as a senior independent Director. I have
replaced Dr Noor Atatreh as the chairman of the Board. Dr Abdulaziz Alongary
and Mr Abdulla Saeed Mohammed Al Hamiri have stepped down from the Board owing
to their external commitments.


 

Post- Balance Sheet Events

The Company's consultancy agreement with Al Salam Commercial Investment Co., a
related party, was renewed at the beginning of 2015.

In February 2015, advisers were retained to investigate and advise upon
non-equity financing options alluded to under "Current Trading and Outlook".

Information on Directors appointed in 2014

Mr Majdalani's and my biographies appear in the Directors' report and were
summarised in the announcement of 23 June 2014 informing the investment
community of our appointments.

Advisory Appointments

The Company appointed KPMG Lower Gulf Limited as the auditors, succeeding BDO
LLP.

The Company appointed Keith Bayley Rogers & Co Limited ("KBR") as Corporate
Adviser and stockbroker with effect from 1st March 2014. KBR is a member of the
London Stock Exchange and of ISDX.

Recommendation

The Directors of the Company consider that the proposals to be considered at
the AGM (notice of which will be uploaded onto the ISDX website http://
www.isdx.com/forcompanies/ourcompanies/companydetail/default.aspx?securityid=
1721262 and the Company's website at www.mm-holdings.com) are in the best
interests of the Company and recommend shareholders to vote in favour of them
as they intend, where relevant, to do in respect of their own shareholdings.

Conclusion

The focus for the Company will be to continue to manage any significant risk
factors that might affect the Company's performance and future operations, to
maintain strong corporate governance and transparency and to create the
environment for improved liquidity in the Company's shares. The additional
initiatives discussed above should enable MMH to broaden its footprint within
its regional theatre and to emerge as a more diversified property investor and
developer. The management of the Company will work actively to secure MMH's
continued, positive business performance. Finally, I wish to thank all our
shareholders and the management team for their support during the past year.

Chairman

Khaled Al Husseini,

28 May 2015


 

Consolidated statement of profit or loss and other comprehensive income

for the year ended 31 December 2014

                                                         2014           2013
                                                                            
                                          Note            USD            USD
                                                                            
                                                                            
Revenue                                             2,000,000      2,289,918
                                                                            
                                                 ------------   ------------
                                                                            
Employee costs                                    (1,002,038)      (322,858)
                                                                            
Other operating expenses                            (138,474)      (289,884)
                                                                            
Legal and professional expenses                     (356,180)    (1,565,811)
                                                                            
Depreciation                                          (7,829)        (7,646)
                                                    ---------       --------
                                                                            
Operating profit                                      495,479        103,719
                                                                            
Share of profit from an associate                   7,616,312     25,353,976
                                                                            
Finance expense                                       (1,342)       (47,140)
                                                 ------------  -------------
                                                                            
Profit for the year                                 8,110,449     25,410,555
                                                 ------------  -------------
                                                                            
Other comprehensive income                                                  
                                                                            
Items that are or may be reclassified                                       
subsequently                                                                
to the consolidated profit or loss                                          
                                                                            
                                                                            
Share of fair value change in available                                     
for sale investment held by an                      6,387,181      7,078,900
associate                                        ------------   ------------
                                                                            
Total comprehensive income for the year            14,497,630     32,489,455
                                                     ========       ========

   

Earnings per share attributable to the                                       
equity                                                                       
holders of the parent during the year                                        
                                                                             
Basic earnings per share for the year         1         0.0064         0.0200
                                                                             
Diluted earnings per share for the year       1         0.0064         0.0200
                                                         =====          =====


 

Consolidated statement of financial position

as at 31 December
2014                                                                    

                                                           2014            2013
                                                                               
                                                            USD             USD
                                                                               
ASSETS                                                                         
                                                                               
Non-current assets                                                             
                                                                               
Property and equipment                                   16,812          24,641
                                                                               
Investment in an associate                          486,791,838     472,788,345
                                                                               
                                                --------------- ---------------
                                                                               
                                                    486,808,650     472,812,986
                                                                               
                                                --------------- ---------------
                                                                               
Current assets                                                                 
                                                                               
Trade receivables                                       521,284         224,523
                                                                               
Prepayments, advances and other                         767,841         770,574
receivables                                                                    
                                                                               
Cash and cash equivalents                               268,945         340,134
                                                   ------------    ------------
                                                                               
                                                      1,558,070       1,335,231
                                                   ------------    ------------
                                                                               
Total assets                                        488,366,720     474,148,217
                                                      =========       =========
                                                                               
EQUITY                                                                         
                                                                               
Share capital                                        10,226,655      10,226,655
                                                                               
Share premium                                       395,146,685     395,146,685
                                                                               
Reverse acquisition reserve                                   -       1,636,894
                                                                               
Available for sale fair valuation                    23,953,921      17,566,740
reserve                                                                        
                                                                               
Retained earnings                                    57,532,169      47,784,826
                                                --------------- ---------------
                                                                               
                                                    486,859,430     472,361,800
                                                --------------- ---------------
                                                                               
LIABILITIES                                                                    
                                                                               
Non-current liabilities                                                        
                                                                               
Provision for employees' end of service                 118,573         100,448
benefits                                             ----------      ----------
                                                                               
                                                        118,573         100,448
                                                     ----------      ----------
                                                                               
Current liabilities                                                            
                                                                               
Trade and other payables                              1,388,717       1,685,969
                                                   ------------    ------------
                                                                               
                                                      1,388,717       1,685,969
                                                                               
                                                   ------------    ------------
                                                                               
Total liabilities                                     1,507,290       1,786,417
                                                ---------------  --------------
                                                                               
Total equity and liabilities                        488,366,720     474,148,217
                                                      =========       =========

The consolidated financial statements were approved by the Board of Directors
on 28 May 2015 and were signed on their behalf by:

Mr. Muin El Saleh

DIRECTOR

Consolidated statement of changes in equity          

for the year ended 31 December 2014         

                                                                    Available for                               
                                                                        sale fair                               
                                                           Reverse      valuation                               
                               Share   Share premium   acquisition        reserve       Retained                
                             capital             USD       reserve            USD       earnings           Total
                                 USD                           USD                           USD             USD
                                                                                                                
                                                                                                                
At 1 January 2013         10,220,614     395,001,706     1,636,894     10,487,840     23,057,946     440,405,000
                                                                                                                
                                                                                                                
Total comprehensive                                                                                             
income for the year                                                                                             
                                                                                                                
Profit for the year                -               -             -              -     25,410,555      25,410,555
                                                                                                                
Other comprehensive                                                                                             
income for the year                -               -             -      7,078,900              -       7,078,900
                                                                                                                
                                                                                                                
Transactions with                                                                                               
owners recorded                                                                                                 
directly in equity                                                                                              
                                                                                                                
Shares issued                  6,041         144,979             -              -              -         151,020
                                                                                                                
                                                                                                                
Other movement                                                                                                  
                                                                                                                
Share based payment                -               -             -              -      (683,675)       (683,675)
                                                                                                                
                      -------------- --------------- ------------- -------------- -------------- ---------------
                                                                                                                
At 31 December 2013       10,226,655     395,146,685     1,636,894     17,566,740     47,784,826     472,361,800
                                                                                                                
                      -------------- --------------- ------------- -------------- -------------- ---------------
                                                                                                                
At 1 January 2014         10,226,655     395,146,685     1,636,894     17,566,740     47,784,826     472,361,800
                                                                                                                
                                                                                                                
Total comprehensive                                                                                             
income for the year                                                                                             
                                                                                                                
Profit for the year                -               -             -              -      8,110,449       8,110,449
                                                                                                                
Other comprehensive                                                                                             
income for the year                -               -             -      6,387,181              -       6,387,181
                                                                                                                
Other movement                                                                                                  
                                                                                                                
Transferred to                                                                                                  
retained earnings                  -               -   (1,636,894)              -      1,636,894               -
                                                                                                                
                      -------------- --------------- ------------- -------------- -------------- ---------------
                                                                                                                
At 31 December 2014       10,226,655     395,146,685             -     23,953,921     57,532,169     486,859,430
                                                                                                                
                            ========       =========       =======       ========       ========       =========


 

Consolidated statement of cash flows

for the year ended 31 December 2014          

                                                                             
                                                          2014           2013
                                                                             
                                                           USD            USD
                                                                             
Operating activities                                                         
                                                                             
Profit for the year                                  8,110,449     25,410,555
                                                                             
                                                                             
Adjustments for:                                                             
                                                                             
Professional fees settled by issue of                        -        151,020
ordinary shares                                                              
                                                                             
Reversal of share based payment expense                      -      (683,675)
                                                                             
Share of profit from associate                     (7,616,312)   (25,353,976)
                                                                             
Depreciation                                             7,829          7,646
                                                                             
Provision for employees' end of service                 20,749         53,145
benefits                                                                     
                                                                             
                                                                             
Working capital changes:                                                     
                                                                             
Trade and other receivables                          (294,028)        433,710
                                                                             
Trade and other payables                             (297,252)      (135,835)
                                                                             
Employees' end of service benefits paid                (2,624)        (1,700)
                                                                             
                                                     ---------    -----------
                                                                             
Net cash used in operating activities                 (71,189)      (119,110)
                                                                             
                                                     ---------    -----------
                                                                             
Investing activity                                                           
                                                                             
Purchase of property and equipment                           -        (1,690)
                                                                             
                                                   -----------       --------
                                                                             
Net cash used in investing activity                          -        (1,690)
                                                                             
                                                   -----------       --------
                                                                             
Net decrease in cash and cash                         (71,189)      (120,800)
equivalents                                                                  
                                                                             
Cash and cash equivalents at beginning                 340,134        460,934
of the year                                                                  
                                                                             
                                                     ---------     ----------
                                                                             
Cash and cash equivalents at end of the                268,945        340,134
year                                                                         
                                                                             
                                                        ======         ======

Basis of preparation

The financial information does not constitute the Group's consolidated
financial statements for either the year ended 31 December 2014 or the year
ended 31 December 2013, but is derived from those accounts. The Group's non
statutory accounts for 2014 are available from the Company's website from 28
May 2015. The auditor's reports on both the 2013 and 2014 accounts were
unqualified; did not draw attention to any matters by way of an emphasis; and
did not contain any statement in regard to matters reported on by exception.

The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The consolidated financial
statements have been prepared under the historical cost convention, except for
investment properties and available for sale investment which are stated at
fair values. The accounting policies used are consistent with those applied in
the 2013 annual consolidated financial statements and those that were applied
in the 2014 consolidated financial statements.


 

 1. Earnings per share

 a. Basic

Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the parent by the weighted average number of ordinary shares
in issue during the year.

                                                          2014           2013
                                                                             
Profit attributable to equity holders of the         8,110,449     25,410,555
parent (USD)                                           =======       ========
                                                                             
Weighted average number of ordinary shares in    1,268,049,125  1,267,623,920
issue (No.)                                         ==========     ==========
                                                                             

 a.  Diluted

Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding by the estimated conversion of all
potentially dilutive instruments. The Company has two categories of potentially
dilutive instruments: share warrants and share options. For the share warrants
and share options, a calculation is performed to determine the estimated number
of shares that could have been acquired at a pre-determined price.

The number of shares calculated as above, is compared with the number of shares
that would have been issued assuming the exercise of the share warrants and
share options.

                                                          2014           2013
                                                                             
Profit attributable to equity holders of the         8,110,449     25,410,555
parent (USD)                                           =======       ========
                                                                             
Weighted average number of ordinary shares in    1,268,049,125  1,267,623,920
issue (No.)                                         ==========     ==========
                                                                             
Adjustments for:                                                             
                                                                             
Assumed conversion of share warrants (refer                  -              -
note (i) below)                                                              
                                                                             
Weighted average number of ordinary shares for                               
diluted earnings per share                       1,268,049,125  1,267,623,920
                                                    ==========     ==========

 i. All share warrants outstanding at the reporting date are excluded from the
    diluted weighted average number of ordinary shares calculation because
    their effect would have been anti-dilutive.

Dubai, 28 May 2015

This announcement has been made after due and careful enquiry and the Directors
accept responsibility for its content.

Enquiries:

Makkah & Madinah Holdings Limited:

Reena Sebastian, Legal Manager: tel: +971 (0)4 423 9033; e-mail: 
[email protected]; further information on Makkah & Madinah Holdings Limited is
available from the Company's website: http://www.mm-holdings.com/

Keith Bayley Rogers & Co. Limited:

Graham Atthill-Beck: tel: +44 (0)20 7464 4092; mobiles: +971 (0)50 856 9408/+44
(0)750 643 4107; e-mail: [email protected]; 
[email protected]

Hugh Oram: tel: +44 (0)20 7464 4096; e-mail: [email protected]

Copies of the Annual Report for the year ended 31 December 2014 are available
during normal business hours for a period of one month from the date of this
announcement, by arrangement, from the offices of Keith Bayley Rogers & Co.
Limited, No. 1 Royal Exchange Avenue, London, EC3V 3LT. A soft copy of the
Annual Report is also downloadable from the Company's website at http://
www.mm-holding.com/.

a d v e r t i s e m e n t