MDA 2016

Celebrating 20 years of strategic partnerships Annual Report & Financials 2016

Annual Report & Financials 2016

Order of Content Chairman’s Message

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CEO’s Message

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Board of Directors

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Financial Highlights

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Management Discussion & Analysis

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Independent Auditor’s Report

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Consolidated Financial Statement

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Consolidated Profit or Loss Statement

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Consolidated Profit or Loss and Other Comprehensive Income Statement

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Consolidated Changes in Equity Statement

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Consolidated Cash Flows Statement

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Consolidated Financial Statements Notes

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adsb.ae

Annual Report & Financials 2016

Chairman’s Message

ADSB has been proudly building strategic partnerships with specialised maritime professionals and technical experts, from around the globe, for over 20 years.

It is because to these solid partnerhips, and thanks to the unwavering dedication of our people, that we are now recognised as the GCC’s leading ship builder and support contractor for all Naval, Military and Commercial operators.

On behalf of the ADSB Senior Management team and myself, to our partners and employees, we want to take this opportunity to acknowledge and celebrate your invaluable contribution to the long-term success of ADSB, and to our investor shareholders, we say thank you for your continued support.

Homaid Abdulla Al Shemmari Chairman of the Board of Directors

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2016 Consolidated Revenue (AED)

2016 Net Loss (AED –before foreign exchange)

2015 Consolidated Revenue (AED)

2015 Net Loss (Before foreign exchange)

701 Mn

(94.7) Mn

1.1 Bn

(31.7) Mn

I. Financial Highlights In 2016, the Group recorded a consolidated revenue and net loss before foreign exchange of AED 701million and AED (94.7) million, respectively , as compared to a consolidated revenue and net profit beforeforeign exchange of AED 1.1 billion and AED 31.7 million, respectively, in 2013.

The decline in revenue is attributable to the status of major existing contracts that are approaching completionstage, most notably in the Naval Ship Building (NSB) and Small Boat Construction (SBC) segments.

The decrease in net profit is mainly driven by delays faced in finalizing new projects and the total cost accruedfor additional support and services to be provided to the UAE Navy in lieu of delays faced in the overall Baynunah program to date.

However, Services segment has performed well in 2014 for which the maincontributor is Naval Support Services (NSS). ADSB meanwhile pursued cost optimization initiatives that resulted in an 8% reduction in business support costs in 2014 as compared to 2013. Foreign exchangeloss is mainly due to translation losses caused by the current weakening of the Euro.

II. Operational Highlights 1- Naval Ship Building (NSB): Include construction of vessels above thirty meter in length or vessels fitted with combat managementsystem. Currently, ADSB is progressing in the following NSB programs.

Baynunah Program ADSB’s flagship program to construct six state-of-the-art 72m corvette class Baynunah vessels for the UAE Navy has made significant progress in 2014. After successful delivery of three (3) corvettes, ADSB is now pursuing for the delivery of vessel 4 in the second quarter of 2015, originally planned to be delivered in Q42014, which is currently undergoing final Sea Acceptance Trials. Completion of the Platform and CombatSystems’ Harbor Acceptance Trials on vessel 5 and launch of vessel 6 were the other major milestonesachieved during the year 2014.

With respect of GHQ contract for the installation of ‘advanced satellite communication capability’ on Baynunah vessels, design phase is near completion and the first vessel , vessel 5, equipped with this system is scheduled for delivery in the second quarter of 2016

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Annual Report & Financials 2016

Board of Directors

Front Row (Left to Right)

Back Row (Left to Right)

1.

1. Abdulla Mohamed Shadid ADSB Board Member & Member of Audit Committee

Homaid Abdulla Al Shemmari Chairman of the Board of Directors

2. Mohamed Ali Rashed Al Marzooqi ADSB Board Vice Chairman,Advisor to the Board & Chairman for Investment, Projects & Operations Committee

2. Ali Saleh Al Yafei ADSB Board Member & Member of Nomination & Remuneration Committee

3. Khaled Saleh Al Rashedi ADSB Board Member & Member of Audit Committee & Member of Nomination & Remuneration Committee

3. Hussain Ibrahim

Al Hammadi ADSB Board Member& Member

of Investment, Projects & Operations

Committee

4. Matar Ali Al Romaithi ADSB Board Member & Member of Audit Committee & Member of Investment, Projects & Operations Committee

4. Ali Saleh Al Yafei ADSB Board Member & Member of Nomination & Remuneration Committee

5. Mansour Shams Khouri ADSB Board Member & Member of Investment, Projects & Operations Committee & Member of Nomination & Remuneration Committee 6. Salem Rashid Al Noaimi ADSB Board Member & Chairman,

Audit Committee

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Annual Report & Financials 2016

Financial Highlights 2016

Share Performance

2015

Share Price (AED)

476 Mn

409 Mn 72.9 Mn

50.7 Mn

Consolidated Profit

Consolidated Profit

Net Profit

Net Profit

For the six months ended 30June 2016, respectively.

2.60

2.40

2.90

2.99

Dec’15

Mar’16

2.63

For the six months ended 30June 2016, respectively.

June’15

Gain on Foreign Exchange 2016

Gain on Foreign Exchange 2015

AED 0.2 Mn

AED 6.1 Mn

For the six months ended 30th June 2016, respectively.

For the six months ended 30th June 2015, respectively.

Sep’15

Jun’16

Market Capitalization Market Value (AED’M) & Market Value to Book Value (Ratio) Trend

Ratio

1.64 1.48

1.67

700 1.39

1.42

600

Revenue

Revenue

Consolidated Contract Revenues Trend Analysis (AED’M)

Consolidated Contract Revenues Segment Analysis (AED’M) 6 months: +16%

Q2 2016 vs. Q2 2015: +32%

500

476 409

476 409

YTD’16 322

286

YTD’15

400 300

283 215

221 162

193

156

509

551

615

634 558

200 131

100 Q2

Q3

Q4

Q1

Q2

YTD’16

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YTD’15

Total

Ship Building

Services

Elim

June’15

Sep’15

Dec’15

Mar’16

June’16

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Annual Report & Financials 2016

Consolidated Financial Statements

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Annual Report & Financials 2016

Consolidated Statement of Financial Position as at 31 December 2014

Consolidated Statement of Financial Position as at 31 December 2014

Assets

Assets

Notes

2014 AED ’000

2013 AED ’000

Notes

2014 AED ’000

2013 AED ’000

Non-current Assets Property, plant and equipment 6 Intangible assets 7 Investment in a joint venture 8 Advances to suppliers 11 Total non-current assets

250,610 9,981 7,792 152,859 421,242

270,466 14,046 8,493 33,674 326,679

Non-current Assets Property, plant and equipment 6 Intangible assets 7 Investment in a joint venture 8 Advances to suppliers 11 Total non-current assets

250,610 9,981 7,792 152,859 421,242

270,466 14,046 8,493 33,674 326,679

Current Assets Inventories 9 Contract work in progress 10 Trade and other receivables 11 Current derivatives in effective hedges 12 Cash and bank balances 13 Total current assets Total Assets

118,837 716,234 417,928 2,290 62,256 1,317,545 1,738,787

25,815 942,618 347,503 204,786 1,520,722 1,847,401

Current Assets Inventories 9 Contract work in progress 10 Trade and other receivables 11 Current derivatives in effective hedges 12 Cash and bank balances 13 Total current assets Total Assets

118,837 716,234 417,928 2,290 62,256 1,317,545 1,738,787

25,815 942,618 347,503 204,786 1,520,722 1,847,401

211,992 63,557 92,494 (11,694) (62,042)

211,992 63,557 92,494 (23,449) 91,756

Equity & Liabilities Capital and reserves Share capital 14 Statutory reserve 15 General reserve 16 Hedging reserve 12 (Accumulated losses)/retained earnings

211,992 63,557 92,494 (11,694) (62,042)

211,992 63,557 92,494 (23,449) 91,756

Equity & Liabilities Capital and reserves Share capital 14 Statutory reserve 15 General reserve 16 Hedging reserve 12 (Accumulated losses)/retained earnings

Equity attributable to owners of the Company Non-controlling interests Total equity

294,307 11,043 305,350

436,350 9,144 445,494

Equity attributable to owners of the Company Non-controlling interests Total equity

294,307 11,043 305,350

436,350 9,144 445,494

Non-current Liabilities Provision for end of service benefits 17 Advances from customers Other payables Total non-current liabilities

24,711 284,994 646 310,351

25,497 154,747 180,244

Non-current Liabilities Provision for end of service benefits 17 Advances from customers Other payables Total non-current liabilities

24,711 284,994 646 310,351

25,497 154,747 180,244

Current Liabilities Trade and other payables 18 Advances from customers Current derivatives in effective hedges 12 Bank borrowings 19

580,639 255,040 - 287,407

471,990 300,692 7,507 441,474

Current Liabilities Trade and other payables 18 Advances from customers Current derivatives in effective hedges 12 Bank borrowings 19

580,639 255,040 - 287,407

471,990 300,692 7,507 441,474

Total Current Liabilities Total Liabilities Total Equity & Liabilities

1,123,086 1,433,437 1,738,787

1,221,663 1,401,907 1,847,401

Total Current Liabilities Total Liabilities Total Equity & Liabilities

1,123,086 1,433,437 1,738,787

1,221,663 1,401,907 1,847,401

The accompanying notes form an integral part of these consolidated financial statements

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

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The accompanying notes form an integral part of these consolidated financial statements

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

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Annual Report & Financials 2016

Consolidated Statement of Financial Position as at 31 December 2014

Consolidated Statement of Financial Position as at 31 December 2014

Assets

Assets

Notes

2014 AED ’000

2013 AED ’000

Notes

2014 AED ’000

2013 AED ’000

Non-current Assets Property, plant and equipment 6 Intangible assets 7 Investment in a joint venture 8 Advances to suppliers 11 Total non-current assets

250,610 9,981 7,792 152,859 421,242

270,466 14,046 8,493 33,674 326,679

Non-current Assets Property, plant and equipment 6 Intangible assets 7 Investment in a joint venture 8 Advances to suppliers 11 Total non-current assets

250,610 9,981 7,792 152,859 421,242

270,466 14,046 8,493 33,674 326,679

Current Assets Inventories 9 Contract work in progress 10 Trade and other receivables 11 Current derivatives in effective hedges 12 Cash and bank balances 13 Total current assets Total Assets

118,837 716,234 417,928 2,290 62,256 1,317,545 1,738,787

25,815 942,618 347,503 204,786 1,520,722 1,847,401

Current Assets Inventories 9 Contract work in progress 10 Trade and other receivables 11 Current derivatives in effective hedges 12 Cash and bank balances 13 Total current assets Total Assets

118,837 716,234 417,928 2,290 62,256 1,317,545 1,738,787

25,815 942,618 347,503 204,786 1,520,722 1,847,401

211,992 63,557 92,494 (11,694) (62,042)

211,992 63,557 92,494 (23,449) 91,756

Equity & Liabilities Capital and reserves Share capital 14 Statutory reserve 15 General reserve 16 Hedging reserve 12 (Accumulated losses)/retained earnings

211,992 63,557 92,494 (11,694) (62,042)

211,992 63,557 92,494 (23,449) 91,756

Equity & Liabilities Capital and reserves Share capital 14 Statutory reserve 15 General reserve 16 Hedging reserve 12 (Accumulated losses)/retained earnings

Equity attributable to owners of the Company Non-controlling interests Total equity

294,307 11,043 305,350

436,350 9,144 445,494

Equity attributable to owners of the Company Non-controlling interests Total equity

294,307 11,043 305,350

436,350 9,144 445,494

Non-current Liabilities Provision for end of service benefits 17 Advances from customers Other payables Total non-current liabilities

24,711 284,994 646 310,351

25,497 154,747 180,244

Non-current Liabilities Provision for end of service benefits 17 Advances from customers Other payables Total non-current liabilities

24,711 284,994 646 310,351

25,497 154,747 180,244

Current Liabilities Trade and other payables 18 Advances from customers Current derivatives in effective hedges 12 Bank borrowings 19

580,639 255,040 - 287,407

471,990 300,692 7,507 441,474

Current Liabilities Trade and other payables 18 Advances from customers Current derivatives in effective hedges 12 Bank borrowings 19

580,639 255,040 - 287,407

471,990 300,692 7,507 441,474

Total Current Liabilities Total Liabilities Total Equity & Liabilities

1,123,086 1,433,437 1,738,787

1,221,663 1,401,907 1,847,401

Total Current Liabilities Total Liabilities Total Equity & Liabilities

1,123,086 1,433,437 1,738,787

1,221,663 1,401,907 1,847,401

The accompanying notes form an integral part of these consolidated financial statements

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

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The accompanying notes form an integral part of these consolidated financial statements

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

Homaid Adbulla Al Shemmari Chairman of the Board of Directors

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Celebrating 20 years of strategic partnerships Corporate Governance Report 2016

Annual Report & Financials 2016

Governance Philosophy & Practice This report sets out a detailed status of Company’s compliance with the requirements for corporate governance, as set out in the UAE Ministry of Economy Ministerial Resolution No. 518 of 2009 as amended (the ‘Code’), in the prescribed format as approved by the authorities.

The Company recognizes that transparency, disclosure, financial controls and accountability are the pillars of any good system of corporate governance.

The Company has an effective and well informed Board, which fully complies with the Code’s requirement of Board composition in terms of mix of non-executive and independent directors.

The Board is assisted by Sub-Committees of the Board with well-defined charters.

The Company is governed by the Articles of Association embedded with strong corporate governance principles and standards with clearly defined roles and responsibilities to the Board, its members and executives.

The Company personnel are bound by ADSB’s Code of Conduct and guided by the Company’s Insider Trading Policy. There is also an effective Internal Control System in place.

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Governance Structure

Board of Directors

The Company complies with the rules and regulations and disclosure requirements of Securities & Commodities Authority (SCA) and Abu Dhabi Securities Exchange (ADX) and other relevant regulators and bodies.

Executive Committee Company complies with the governance requirement of the Code as envisaged in Ministerial Resolution No; 518 of 2009 and subsequent amendments.

The annual Corporate Governance Report is filed with SCA and published on the Company’s website for review and reference.

Shareholders

Nomination & Remuneration Communication

Audit Committee

Chief Executive Officer

Internal Audit

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