In the name of Allah the most gracious, the most merciful…
Praise be to Allah, Lord of the Worlds, prayer and peace be upon Prophet Muhammad, his family and his companions.
On behalf of my fellow Board of Directors, myself and the executive management of Al-Madina for Finance and Investment Company I would like to extend my sincere regards, and I am pleased as grateful for your attendance and for your trust and commitment for the Company. For today, we will review together the Company’s performance for the year ended on 31st of December 2016.
It’s normal how the global economy effecting the Company’s performance, as a result of the nature of the Company’s operations, size of investments and its distribution in the GCC countries. Such investments includes real-estate and stocks, and in other profit-generating operations. It is well-known that the GCC countries are of the most important and influential economies of the global economy, because of the massive oil reserves and other unique resources.
The IMF (International Monetary Fund) forecasts an acceleration in the economic activities within the developed and developing economies, and a group of the emerging markets for the years 2017-2018. This forecast happens due to the return of the normal conditions gradually within big economies that currently experiencing economic tensions. In addition, expectations about the USA are being associated with group of many possible scenarios for growth, and are suggesting an increase in growth by 3.2% in 2017, and 5.2% in 2018.
The GCC countries are witnessing a rebound in the stock exchange markets, which is mounting upwards within the last period, boosted by the rise in oil prices lately, and which gave the GCC countries’ governments more confidence. It is also expected to witness an increase in the governments’ expenditures after the regression for the past two years, based on the recent data from government budgets.
Saudi Arabia, the United Arab Emirates, and Qatar all suggested to increase its expenditures for 2017, for enabling themselves to reach their short-term diversifications targets and plans. These plans and balances are adjusted to the price of US$50 per-barrel, and this will provide extra protection in case the oil prices sustain during 2017. This positively affects the expectations of the returns of banks and companies to keep pace with the expected growth movements for the GCC countries.
In regards of Kuwait, the new economic development plan (New Kuwait) has been initiated, which will extend to 2035. This initiative is aiming to transform Kuwait into a commercial, cultural and regional center. This plan is grounded on basic pillars with economic diversification far from the oil sector. The plan includes investment in big projects supported by the private sector, development in the educational, transportation, and tourism sectors. The main strategy includes a five-year development plan with a total expenditure of US$ 100 billion, of which US$ 15 billion will be spent during the years 2017-2018, which indicates an improvement in the economic activities in the coming years.
This came alongside with the highest recorded growth in the world for the Kuwait Stock Exchange Market during the month of January in 2017, which reached 18.9%. This is due to many positive elements including the change in the MSCI index for the emerging markets, which was found to be beneficial for Kuwait. Adding to it, the buying volume from the institutional investors end. As well as, the company’s annual profits, that gave an additional boost to investors due to the positive returns achieved by banks on an annual basis.
After reviewing the most important events and developments related to the global economy, and the performance of the Stock Markets in the region, and its impact on the Company’s performance. Now, we will review and discuss the main points of the Company’s financial statements the year 2016.
The cash and cash equivalents increased by KD 3,258,190 to reach KD 4,190,646 in 2016 from KD 932,456 in 2015. This shows the Company’s commitment in increasing its liquidity to increase the investment activities. Investments in associate companies decreased by 10% as compared to previous year to reach KD 21,946,282 in 2016 from KD 24,508,338 in 2015. This is because of the decrease in our ownership percentage in HITS Telecom Holding Company to 17.66% with its substantial balance of KD 6,263,283 in 2016 from being 29.26% with the value of KD 8,079,612 in 2015.
The Company’s assets are expected to increase by approximately AED 99 million, as a result of the issuance of the Court of Cassation in Abu Dhabi in one of the cases against external parties for the benefit of the group. Where the department of execution within Abu Dhabi confirmed that the total amount owed to the Company is equal to AED 99 million. Which will positively affect the increase in cash flow for the coming years.
With regard to the liabilities, a decrease by 31% was recorded, as it equaled KD 6,707,622 in 2016 from KD 9,721,150 in 2015, due to a the decrease in the Creditors and Other Credit Balances by 43% compared to previous year, as it reached KD 4,019,183 in 2016 from KD 7,034,559 in 2015.
Total Equity for the shareholders of the parent company witnessed an increase by 10% that equals KD 2,019,674 in 2016, because of the profit generated by the group that reached KD 782,645. The Company recorded profits attributable to shareholders of the parent company equals to KD 1,401,790 which overcomes the repercussions of the global
financial crisis and its impact in the GCC countries. Which also shows that the Company has emerged from the crisis and began to achieve positive profits in-line with its shareholders aspirations.
The Company’s revenue rose by a huge margin to reach KD 2,972,787 in 2016 after it was recording losses of KD 2,104,995 in 2015. That’s because of the reversal of provisions and impairments by KD 1,151,126 and the decrease in losses from investments in associate companies which equaled to KD 531,559 in 2016 after it was KD 3,627,837 in 2015.
We note that the expenditure and other charges items decreased to reach KD 2,156,143 in 2016 from KD 2,774,761 in 2015 as a result of the decrease in other expenses by KD302,579 compared to previous year, and the decrease in net real estate losses by KD316,039 from previous year, thus promising a good performance for the Company in the near future.
It’s worth noting, the Company will not distribute cash dividends or bonus shares for the year 2016 and no remuneration for the board members was paid during the year, and the Board of Directors didn’t enjoy any benefits or advantages during the year
Finally, I extend my great gratitude and appreciation for the trust you give us. I would also like to thank the Company’s board members and the executive staff, for their hard work and efforts to enhance the Company to reach new potentials, and protecting the shareholders equity. I also would like to extend my gratitude to the Shari’a Supervisory Board who were willing to carry the fidelity commitment we pledge to maintain, and to the auditors for their professional work. In addition, I would like to thank everyone who have helped continuing the Company’s achievements year after year.
We ask reconciliation from Allah to all in the interest of work and honesty, and praise be to Allah.
May Allah’s peace, mercy and blessings be upon you,,,