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A SOLID FOUNDATION
FOR GROWTH

A SOLID FOUNDATION
FOR GROWTH

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VISION, MISSION AND VALUES

VISION

VISION

Building our future

MISSION

MISSION

To develop social and economic infrastructure efficiently and sustainably, as the result of long-term relationships with our clients and partners

VALUES

VALUES

Commitment
Integrity
Accountability
Professionalism
Team Spirit

AT A GLANCE

The Group has now achieved eight consecutive quarters of profitability supported by cash from operating activities and a reduction in net debt.

aed
15.6 bn

Backlog

50 %

Infrastrcuture and
industrial

AED
9.9bn

Revenue

44

Years in business

31

Towers

750+

Projects

45,000+

Workforce

AED
256m

Net Profit

5

Operating entities

20k+

Villas

100+

Ongoing Projects

2005

1st construction company listed on DFM

2018 HIGHLIGHTS

Robust revenue growth and operational efficiency driving profitability

aed
11.9 bn

Total assets

KEY FIGURES
Revenue

AED Million9,853

+7.8% y-o-y compared to AED 9,141 mn in FY 2017

EBIT

AED Million364

+72.1% y-o-y compared to AED 212 mn in FY 2017


Margin improved from 2.3% to 3.7%

Net Profit 1

AED Million256

+72.1% y-o-y compared to AED 212 mn in FY 2017


Margin improved from 1.3% to 2.6%

Backlog

AED Million15.6

Solid pipeline of tender opportunities of
AED 48 bn

G&A Expenses

%3.0

G&A expenses as a percentage of revenue improved from 3.5% in FY 2017 to 3.0%

1 Net profit attributable to parent
MAJOR WINS (2018)
Project Name Value (AED mn) From Description
Gas Development* 3,160 ADNOC LNG Expansion of Phase II
AKOYA Oxygen 992 DAMAC Properties Construction & MEP of villas
Infrastructure Project 588 Dubai Municipality Industrial sewerage system
Bu Hasa Project 521 Tecnicas Reunidas MEP for ADNOC’s oil project
Public Realm 311 Expo 2020 Concourses & arrival plazas
Residential Towers 353 DAMAC Properties Construction of two towers
Opera District 250 TAV Tepe Akfen MEP for two towers
Villanova 222 Dubai Properties Construction of villas
Uptown Cairo 157 Emaar Misr Construction of Phase 3 & 4
Creekside Horizon 117 Emaar properties MEP
* Group share is 40-50%
PERFORMANCE HIGHLIGHTS
Contract Wins

Gas Development Expansion (ADNOC LNG), Villas at AKOYA Oxygen (DAMAC Properties), Sewerage Infrastructure (Dubai Municipality), MEP for Bu Hasa Oil Project (Tecnicas Reunidas)


Market Presence

Strengthening regional footprint in selected countries including UAE, KSA, Egypt and Bahrain as well as building presence in the infrastructure space

Productivity

G&A has seen a consistent reduction to reach 3.0% of revenue compared to 3.5% in FY 2017


Receivables

Improved receivables collection; debtor days reduced by 31 days from 186 in Q4 2017 to 155 in Q4 2018


Cash Flow

Net cash from operating activities improved to AED 924 mn in FY 2018 compared to negative cash from operating activities in FY 2017 of AED 1,337 mn

Balance Sheet

Net debt decreased by AED 702 mn from AED 1,490 mn in Q4 2017 to AED 787 mn in Q4 2018. Net debt to equity ratio decreased from 1.11x in Q4 2017 to 0.56x in Q4 2018


Emiratisation

Awarded in three categories of the Emiratisation Government Accelerator Programme and honoured by H.E. Nasser Thani Al Hameli, the Minister of Human Resources in the Emiratisation Government Accelerator Programme

BACKLOG
By sector
50%
Infrastrcture and industrial
  • Building 50%
  • Economic infrastructure 15%
  • Social infrastructure 19%
  • Industrial 15%
By subsidiary
69%
Arabtec Construction
  • Arabtec Construction 69%
  • Target 24%
  • EFECO 3%
  • Others 5%
MARKET OUTLOOK

Within the MENA region, UAE and KSA are the largest construction markets and are set to register the highest growth and offer maximum opportunities in the coming years. Egypt is showing huge potential, underpinned by political stability and population growth.

The majority of the opportunities in the Gulf Cooperation Council (GCC) have been in the Building and Industrial segments.

  • Building Sector: accounts for 42% of the addressable market with mixed use projects contributing 78% of the sector.
  • Economic Infrastructure Sector: accounts for 24% of the addressable market with rail & metro projects contributing 45% of the sector followed by roads & bridges contributing 29%.
  • Industrial Sector: accounts for 32% of the addressable market with healthcare projects contributing 39% of the sector followed by sports and recreation contributing 35%.

The UAE construction market is estimated at AED 169 billion in 2019 and expected to grow at a CAGR of 6.8% over the coming five years.

Growth in the UAE construction market is driven by a number of factors including rising oil prices, a growing economy and Expo 2020.

Key drivers include:
  • Infrastructure investments in relation to Ghadan 21 stimulus plan, Abu Dhabi Economic Vision 2030 and UAE Vision 2021;
  • Efforts for economic diversification and focus on non oil sectors such as tourism and finance;
  • Government-supported infrastructure projects in transport and utilities; and
  • The UAE is becoming a hub for renewables and green technologies, with Masdar spearheading new ventures.
THE UAE CONSTRUCTION MARKET IS ESTIMATED TO GROW AT 6.8% CAGR (2019-23)
MENA Construction Awards (avg. 2013-17, AED bn)
MENA Pre-execution Pipeline (AED bn)
UAE Contract Awards (AED)

CHAIRMAN’S MESSAGE

Arabtec is well-positioned to capitalise on the UAE Government’s strategy for economic diversification and the Abu Dhabi Economic Vision 2030.

CHAIRMAN’S MESSAGE

Prospects for the social and economic
infrastructure sector are positive, with
continued infrastructure spending in transport
and utilities leading up to Expo 2020

Download Chairman’s Message
Download Board of Directors & Committees

GROUP CEO’S MESSAGE

Our focus is aligned to the UAE’s national agenda, with productivity and efficiency being a key driver in positioning Arabtec as a competitive and sustainable business.

GROUP CEO’S MESSAGE

The Group has now achieved two
full years of profitability supported by
positive cash from operating activities
and a reduction in net debt

Download Group CEO’s Message
Download Executive Management

CFO’S MESSAGE

In 2019 our focus continues to be on the collection of legacy receivables, shortening payment cycles, improvement of working capital and strengthening our balance sheet.

CFO’S MESSAGE

EBIT profit margin also saw a
positive improvement as we
continued to selectively
onboard higher margin projects

Download CFO’s Message
Download Financial Statements

STRATEGIC OVERVIEW

STRATEGIC ROADMAP

Key focus on strategic alignment of the
Group to its vision, mission and values

2019+
Phase - 3: Grow
  • Consistent growth in net profit and improve cash flow generation
  • Attract, retain and develop appropriate resources to deliver growth
  • Continue to improve project gross margins and ensure on-time delivery
  • Grow capabilities in Mechanical, Electrical and Plumbing (MEP), EPCM, infrastructure and special construction
  • Grow from existing capital base
  • Dispose of non-core assets
2018
Phase - 3: Prepare
  • Consistently secure annual backlog of new projects of at least AED 8-9 billion at Group level
  • Maintain leaner organisation with G&A expenses at target benchmark level
  • Ensure on-time and on-budget delivery of projects
  • Risk management framework
  • Remuneration framework
  • Capital recycling
Completed Progressing
2017
Phase - 1: Stabilise
  • Implement the Recapitalisation Programme
  • Establish Arabtec Holding as a strategic management company
  • Build and implement a strong risk management approach
  • Stabilise the Group’s organisation structure and role
  • Embed a performancebased culture
  • Resolve legacy project claims, receivables and WIP
  • Dispose of non-core assets
STRATEGIC PRIORITIES – 2019

Rebasing the business through a range of initiatives

Productivity
  • Introduce measures to increase workforce productivity
  • Implement Group-level solution for manpower planning
  • Increase internal subcontracting of workforce
Efficiency
  • Remove duplicated functions and activities through shared services and outsourcing
  • Simplify and closely integrate the Group’s operating structure
  • Support international OPCOs through single support centre
Sustainability
  • Improve net debt to equity ratio
  • Continue to divest or develop non-core assets and investments
  • Create paperless work environment
Innovation
  • Implement innovative methods for construction
  • Improve cost savings and benefits through integrated supply chain management
  • Integrate BIM and 3D modelling into new projects
  • Explore opportunities to reduce waste through the modularisation of building design
Culture
  • Improve safety measures
  • Improve communication across stakeholders
  • Focus on increasing UAE nationals inworkforce
Responsible Supply Chain
  • Procure raw materials using Group’s strategic procurement platform
  • Develop approved supplier list by evaluating existing and new suppliers
  • Improve debtor days and creditor days
Market and Growth
  • Achieve target work winning rate
  • Pursue opportunities in the infrastructure sector
  • Diversify revenue through international projects
  • Develop framework & competency to offer other funding solutions for government projects
Governance
  • Complete roll-out of Business Standards across the Group
  • Roll-out policies and procedures to support Business Standards
  • Continue harmonisation of internal control systems
  • Establish risk management processes
  • Establish Group-wide compliance framework
  • Implement Oracle Fusion across the Group

GROUP STRUCTURE

Integrated Capabilities

Delivering a competitive advantage to the Group

Core Competencies
  • Economic Infrastructure
  • Residential
  • Hospitality
  • Social
    Infrastructure
  • Commercial
  • Industrial

OPERATING STRUCTURE

Arabtec Construction LLC

Established in 1975, Arabtec Construction LLC (Arabtec) is the largest subsidiary of Arabtec Holding PJSC and delivers social and economic infrastructure projects including high-rise developments, airport terminals, luxury villas and iconic landmarks. Arabtec has undertaken projects in the UAE, wider GCC, North Africa and Asia.

  • 243+ Completed projects
  • 37 Ongoing projects
  • 32,000 Workforce
  • 14Award winning projects
Target Engineering
Construction Company LLC

Target Engineering Construction Company LLC was established in 1975 and is a leading single source EPC contractor with standalone specialties. With operations in the UAE, Qatar and Saudi Arabia, it is part of Arabtec Holding PJSC (owning 98% equity in the Company), the largest UAE-based construction group.

  • 440+ Completed projects
  • 8,600 Workforce
  • 30Marine vessels
  • 52,000sqmASME certified facility
Emirates Falcon Electromechanical Co. (EFECO) LLC

Emirates Falcon Electromechanical Co. (EFECO) LLC was established in 2001 to serve the electromechanical building services sector of the construction industry in the Middle East. The company has branches in Abu Dhabi, Doha, Amman and Riyadh.

  • 90+ Completed projects
  • 21 Ongoing projects
  • 6,400 Workforce
  • 2018Contractor of the year

SUSTAINABILITY

Arabtec is fully committed to implementing the highest degree of corporate accountability across its business operations and towards its stakeholders. It proactively contributes to the UAE’s sustainability plans and targets and the sustainable development of other countries where it operates.

Arabtec’s Sustainability
Strategic Framework

Towards Responsible Construction

Arabtec aims to systematically and continuously improve its sustainability performance, taking into consideration the Group’s sustainability context and stakeholders’ input, as explained in the previous pages.

Arabtec aims to endorse Responsible Construction through its commitments to managing its core strategic responsibilities and the strategic foundations as shown in Arabtec’s sustainability framework:

RISK MANAGEMENT

Tender Risk Management

Arabtec implements a formalised 4-Gate Work-Winning Process that aims to better control the risks related to its commercial and contractual commitments and, by extension, to project execution.

This mandatory process allows Arabtec to optimise the commercial costs of the organisation, to support a tender decision-making process based on objective risk information and to ensure that contractual commitments are in line with the organisation’s objectives and its defined risk appetite.

At each stage, a decision is taken as to whether or not to pursue the commercial opportunity based on a thorough risk analysis that supports the decision-making process through objective risk criteria.

4-Gate Work-Winning Process

Gate 1
APPROVAL TO PURSUE OPPORTUNITIES

Determine how the opportunity compares with selective better quality opportunities where Arabtec can add value

Gate 2
APPROVAL TO PREPARE A TENDER

Consider tender strategies to reduce risk and improve financial outcomes

Gate 3
APPROVAL TO SUBMIT A TENDER

Prepare and review every tender in full detail, both technically and commercially

Do not submit a tender until the necessary reviews have been carried out and approvals are in place

Gate 4
APPROVAL TO
SIGN A CONTRACT

Ensure significant matters and changes to the tender and/or submission are signed off by an appropriate member of management under the original delegated approval process

Conduct final thorough review and approval prior to signing a contract