CHAIRMAN'S INTERIM STATEMENT
MAKKAH & MADINAH HOLDINGS LIMITED
("MMH" or the "Company")
I am pleased to present MMH's financial results for the first half of 2014. The
condensed consolidated interim financial information which follows is unaudited
but the accounts from which it is derived have been reviewed by the Group's
auditor.
Financial Results
The underlying results continue the positive trend witnessed in the same period
of last year. Comprehensive income for the six month period ended 30 June 2014
was USD 12.76 million (H1, 2013: USD 19.00 million) and the net profit was USD
9.34 million (H1, 2013: USD 16.45 million), giving rise to diluted earnings per
share of 0.7 US cents (H1, 2013: 1.3 US cents). This profit derived mainly from
the USD 9.18 million contribution attributable to its associate, Makkah &
Madinah Commercial Investment Company JSC ("MMCI"), of which MMH currently owns
34.12%. The decrease of USD 7.11 million in the profit during the first half of
the current year vs. the same period of last year are attributable to the
non-recurrence of a USD 7.07 million one-off credit in the first half of 2013,
which arose from negative goodwill on MMCI's acquisition of a further 50%
interest in the Jebal Al Noor development in Makkah. Other comprehensive income
consists of USD 3.43 million, which represents the Company's share of fair
value change in MMCI's available for sale investment.
An increase in the value of MMH's investment in MMCI by 5.6 percent to USD
485.39 million (H1, 2013: USD 459.25 million) resulted in net assets standing
at the end of the period at USD 485.12 million (H1, 2013: USD 458.72 million);
or US cents 38 per share (H1, 2013: US cents 36 per share).
Business Environment and Outlook
The positive economic factors outlined in the outgoing Chairman's, Dr. Noor
Atatreh's, Annual Statement in respect of the year to 31 December 2013 appear
intact. The International Monetary Fund during the period under review upwardly
revised its forecast for growth in 2014 in the Kingdom of Saudi Arabia (KSA) to
over 4 percent. Much commercial activity in KSA centres on the principal port
city of Jeddah, where the majority of MMCI's property portfolio is. Demand for
well-located development land for commercial and residential use is expected to
increase.
Land values in the Holy city of Makkah remain buoyant. Any limitation this year
in the number of foreign tourist visas to visit the Holy cities of Makkah and
Al-Madinah during the Hajj pilgrimage (occurring in October 2014) is temporary
and is attributable to public safety considerations pending completion of the
major expansion works designed to increase visitor capacity at the Masjid
Al-Haram (Grand Mosque) in Makkah; and, to a minor extent, to restrictions on
travel to KSA from parts of West Africa owing to the Ebola epidemic there. The
long-term trend in religious tourism to KSA is rising strongly, which is
expected, in turn, to underpin property values.
Elsewhere in the Gulf Peninsula, there are property markets which are presently
benefitting from economic growth rates above the global average; and from
rising populations. My predecessor mentioned in his review of financial 2013
that the Company was evaluating other investment opportunities within the
region; this continues to be the case and I look forward in due course to
reporting to shareholders any initiatives, which arise from the Directors'
evaluation of such opportunities.
Board Changes
On 23 June 2014 immediately after the Company's AGM, I became a Director and
Chairman of MMH; at the same time, Mr. Khaled (Nicholas) Majdalani was
appointed to the Board and serves as an independent, non-executive Director. I
would like to convey my gratitude to the previous Chairman, Dr. Noor Atatreh,
and to Mr. Abdullah Al Hamiri, who each retired as Directors at the AGM, for
their valuable guidance and insights over past years.
Following the end of the period under review, it was announced that Dr.
Abdulaziz Alongary, a non-executive Director, had left the Board. I wish
likewise to thank Dr. Abdulaziz for his contribution to the Company since 2011.
Conclusion
The Directors remain committed to their vision of MMH as a property investment
and development company providing shareholders with solid, Shari'ah compliant,
long-term returns. I wish to thank the management and staff of MMH for their
continued efforts during the period under review; and the shareholders for
their support.
Khaled Al-Husseini,
Chairman,
Dubai, 24 September 2014
Important: the Notes numbered 1 to 8 which appear after the condensed
consolidated statement of cash flows below are an integral part of the
condensed consolidated interim financial information, which should be read in
the context of these Notes.
Condensed consolidated statement of profit or loss and other comprehensive income
for the six month period ended 30 June 2014
Note Six month Six month Year ended
period period 31
ended 30 ended 30 December
June 2014 June 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Revenue 8 1,000,000 1,089,918 2,289,918
Employee costs (534,441) (467,510) (322,858)
Share based payment expense - 683,675 -
Other operating expenses (247,327) (295,596) (578,910)
Legal and professional fees (42,367) (898,681) (1,276,785)
Depreciation (3,882) (3,754) (7,646)
Operating profit 171,983 108,052 103,719
Share of profit from associate 6 9,178,194 16,342,917 25,353,976
Finance expense (13,895) - (47,140)
Profit for the period 9,336,282 16,450,969 25,410,555
Other comprehensive income
Items that are or may be
reclassified subsequently to the
profit or loss
Share of fair value change in
available for sale investment held 3,427,524 2,552,131 7,078,900
by an associate
Total comprehensive income for the 12,763,806 19,003,100 32,489,455
period
Earnings per share attributable to
the equity holders of the parent
during the period
Basic earnings per share for the 5 0.007 0.013 0.0200
period
Diluted earnings per share for the 5 0.007 0.013 0.0200
period
Condensed consolidated statement of financial position
as at 30 June 2014
Note 30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
ASSETS
Non-current assets
Investment in an associate 6 485,394,063 459,250,517 472,788,345
Property, plant and equipment 20,759 27,853 24,641
485,414,822 459,278,370 472,812,986
Current assets
Trade receivables 8 428,100 261,053 224,523
Prepayments, advances and other
receivables 798,558 771,080 770,574
Cash and cash equivalents 62,631 339,310 340,134
1,289,289 1,371,443 1,335,231
Total assets 486,704,111 460,649,813 474,148,217
EQUITY
Share capital 7 10,226,655 10,220,614 10,226,655
Share premium 7 395,146,685 395,001,706 395,146,685
Reverse acquisition reserve - 1,636,894 1,636,894
Available for sale fair valuation 20,994,264 13,039,971 17,566,740
reserve
Retained earnings 58,758,002 38,825,240 47,784,826
485,125,606 458,724,425 472,361,800
LIABILITIES
Non-current liabilities
Provision for employees' end of
service benefits 128,208 73,513 100,448
128,208 73,513 100,448
Current liabilities
Trade and other payables 8 1,450,297 1,851,875 1,685,969
1,450,297 1,851,875 1,685,969
Total liabilities 1,578,505 1,925,388 1,786,417
Total equity and liabilities 486,704,111 460,649,813 474,148,217
Condensed consolidated statement of changes in equity
for the six month period ended 30 June 2014
Available
Reverse for sale
Share Share acquisition fair Retained
capital premium reserve valuation earnings Total
reserve
USD USD 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
(audited)
Total comprehensive
income for the period
Profit for the period - - - - 16,450,969 16,450,969
Other comprehensive - - - 2,552,131 - 2,552,131
income for the period
Other movement
Share based payment - - - - (683,675) (683,675)
Balance at 30 June 10,220,614 395,001,706 1,636,894 13,039,971 38,825,240 458,724,425
2013 (unaudited)
At 1 January 2014 10,226,655 395,146,685 1,636,894 17,566,740 47,784,826 472,361,800
(audited)
Total comprehensive
income for the period
Profit for the period - - - - 9,336,282 9,336,282
Other comprehensive - - - 3,427,524 - 3,427,524
income for the period
Other movement
Transferred to - - (1,636,894) - 1,636,894 -
retained earnings
Balance at 30 June 10,226,655 395,146,685 - 20,994,264 58,758,002 485,125,606
2014 (unaudited)
Condensed consolidated statement of cash flows
for the six month period ended 30 June 2014
Six month Six month Year ended
period ended period ended 31 December
30 June 2014 30 June 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Profit for the period 9,336,282 16,450,969 25,410,555
Adjustments for non-cash items:
Share of profit from associate (9,178,194) (16,342,917) (25,353,976)
Depreciation 3,882 3,754 7,646
Professional fees settled by issues
of ordinary shares - - 151,020
Share based payment expense - (683,675) (683,675)
Working capital changes:
Trade and other receivables (231,561) 396,673 433,710
Trade and other payables (207,912) 54,581 (84,390)
Cash used in operations (277,503) (120,615) (119,110)
Cash flows from investing activity
Purchase of property, plant and - (1,009) (1,690)
equipment
Net cash used in investing activity - (1,009) (1,690)
Net decrease in cash and cash (277,503) (121,624) (120,800)
equivalents
Cash and cash equivalents at
beginning of the period 340,134 460,934 460,934
Cash and cash equivalents at end of
the period 62,631 339,310 340,134
Notes to the condensed consolidated interim financial information
for the six month period ended 30 June 2014
1. Legal status and activity
Makkah & Madinah Holdings Limited ("the Company") was incorporated on 29 May
2007 under the International Business Companies Act, 2000, in the Commonwealth
of the Bahamas under registration number 148728 (B) on 29 May 2007.
The registered office address of the Company is Ocean Centre, East Bay Street,
P.O. Box SS19084, Nassau, Bahamas.
The condensed consolidated interim financial information of the Company for the
period ended 30 June 2014 comprise the Company and its subsidiaries
(collectively referred to as the "the Group"). There has been no change in the
Group structure since the date of most recent annual consolidated financial
statements for the year ended 31 December 2013.
The principal activities of the Group are property and real estate investments,
development and advisory services for projects related to the real estate and
infrastructure sectors.
2. Basis of preparation
The condensed consolidated interim financial information for the six month
ended 30 June 2014 has been prepared in accordance with IAS 34, `Interim
Financial Reporting'. The condensed consolidated interim financial information
should be read in conjunction with the annual consolidated financial statements
for the year ended 31 December 2013, which have been prepared in accordance
with International Financial Reporting Standards.
3. Estimates and assumptions
The preparation of condensed consolidated interim financial information
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates.
In preparing the condensed consolidated interim financial information, the
significant judgements made by the management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the same
as those that were applied to the consolidated financial statements for the
year ended 31 December 2013.
4. Significant accounting policies
The accounting policies adopted in the preparation of the condensed
consolidated interim financial information are consistent with those followed
in the preparation of the Group's annual consolidated financial statements for
the year ended 31 December 2013.
5. Earnings per share
a. Basic earnings per share
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 period.
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
Profit attributable to equity
holders of the parent (USD) 9,336,282 16,450,969 25,410,555
Weighted average number of ordinary
shares in issue 1,268,049,125 1,267,249,125 1,267,623,920
b. Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
ordinary shares. The Company has two categories of dilutive potential ordinary
shares: share warrants and share options. For the share warrants and share
options, a calculation is performed to determine the number of shares that
could have been acquired at fair value (determined as the average annual market
share price of the Company's shares) based on the monetary value of the
subscription rights attached to outstanding share warrants and share options.
The number of shares calculated is compared with the number of share that would
have been issued assuming the exercise of the share warrants and share options.
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
Profit attributable to equity
holders of the parent (USD) 9,336,282 16,450,969 25,410,555
Weighted average number of ordinary
shares in issue 1,268,049,125 1,267,249,125 1,267,623,920
Adjustments for:
Assumed conversion of share warrants
- 12,853,983 -
Assumed conversion of share options - 1,335,435 -
Weighted average number of ordinary
shares for diluted earnings per 1,268,049,125 1,281,438,543 1,267,623,920
share
6. Investment in associate
Name Country of Proportion of voting
incorporation rights held at
30 June 31 December
2014 2013
Makkah & Madinah Commercial Investment Saudi Arabia 34.121 % 34.121 %
Company (MMCI)
The Group's investment in associate accounted for on the equity basis is
summarised as follows:
30 June 31 December
2014 2013
USD USD
(unaudited) (audited)
Opening balance 472,788,345 440,355,469
Share of profit from associate 9,178,194 25,353,976
Share of fair value change of associate's
available for sale investment (refer note (i) 3,427,524 7,078,900
below)
Closing balance 485,394,063 472,788,345
i. The Company's associate has invested in the equity of an entity, which has
been classified as available for sale. Share of fair value change of
associate's available for sale investment represents change in fair value
of this investment as at 30 June 2014.
7. Share capital and share premium
Movement in share capital during the year:
The share capital of the Company has been allotted and issued of the following
classes of shares:
Number of Ordinary Share
shares shares premium Total
USD USD USD
At 1 January 2013 (audited) 1,267,249,125 10,220,614 395,001,706 405,222,320
Additional capital issued 800,000 6,041 144,979 151,020
At 31 December 2013 (audited) 1,268,049,125 10,226,655 395,146,685 405,373,340
At 30 June 2014 (unaudited) 1,268,049,125 10,226,655 395,146,685 405,373,340
The nominal value per share is GBP 0.005.
Share warrants
No share warrants were exercised by the share warrant holders and no new share
warrants were issued by the Group during the period ended 30 June 2014.
8. Related party transactions and balance
The Group enters into transactions in the normal course of business with
related parties at market rates and terms agreed between the parties.
During the period, the Group entered into the following transactions with
related parties:
30 June 30 June
2014 2013
(unaudited) (unaudited)
USD USD
Real estate advisory and consultancy fee 1,000,000 1,089,918
Key management compensation
30 June 30 June
2014 2013
(unaudited) (unaudited)
USD USD
Salaries and other short term benefits 352,500 281,250
Consultancy services - 68,748
Included in the statement of financial position are the following balances with
related parties:
30 June 31 December
2014 2013
(unaudited) (audited)
USD USD
Prepayments, advances and other receivables 717,751 698,452
Trade receivables 428,100 224,523
Trade and other payables 272,480 272,480
This announcement has been made after due and careful enquiry; the directors of
MMH accept responsibility for its content.
Enquiries:
Makkah & Madinah Holdings Ltd:
Victoria Arscott, Investor Relations Manager: tel: +971 (0)4 423 9033; e-mail:
[email protected]; further information on Makkah & Madinah Holdings Ltd. is
available from the Company's website: www.mm-holdings.com
Keith Bayley Rogers & Co. Limited:
Graham Atthill-Beck: tel: +44 (0)20 7464 4092; mobile: +971 (0)50 856 9408;
e-mail: [email protected]
Hugh Oram: tel: +44 (0)20 7464 4096; e-mail: [email protected]