Dear Present Shareholders,
Peace and blessings of Allah be upon you,
For myself and on behalf of my fellow BOD members, executive board members, and all company staff, I hereby would like to thank you for honoring us with your presence in the ordinary and extraordinary general assembly of M/s. KUWAIT BUSINESS TOWN REAL ESTATE CO., for the fiscal year ending as at 31 December 2016. I would like also to present to you the annual report for the year 2016, on our achievements over the past year, which all led to realize excellent profits and revenues for shareholders. This truly confirms the correct flexible strategic vision of the company, and its ultimate commitment towards its shareholders. We seek Allah’s guidance for permanent success.
First – Key Financial Indicators
- All of you undoubtedly know that we are still working in an environment marked for permanent changes in terms of regulations, rules and laws, aside from such disturbed economic atmosphere and financial crises reaching out all sectors. This is also coupled with such unprecedented regional and global geopolitical developments. However, we are still insisting on making our progress a success despite all these challenges. We are all confident that our achievements for the year 2016 marks a future launching base thanks to an authoritative professional strategy aiming to fulfill all needs of our shareholders, clients, and staff.
- We shall review with your respected selves the BOD’s Report tackling the following points:
- The company maintained real estate investment returns surpassing local and regional performance indicators, through such ongoing occupancy ratios of real estate investments exceeding 99%, as well as rentals increase to match with such rates prevailing within the local and regional markets, as well as decreasing operational expenditures, and preserving the highest professional level of real estate services offered to tenants of these real estates.
- As for the consolidated financial outcomes, we list below the most significant indicators for the fiscal year ending as at 31 December 2016, compared to the fiscal year ending as at 31 December 2015:
- Rentals revenues hit KD 3.137.291, compared to KD 2.848.311, rising by KD 288.980.
- Net investment profits reached KD 2.435.471, compared to losses totaled KD 36.870; rising by KD 2.472.341.
- Changes in the fair value of investment real estates totaled KD 5.255, compared to KD 3.967.194; a difference by KD 3.961.939.
- Total revenues hit KD 5.705.982, compared to KD 6.860.009; declining by KD 1.154.027.
- Total assets amounted KD 69.673.980, compared to KD 66.258.165; rising by KD 3.415.815.
- Total current assets totaled KD 28.611.436, compared to KD 5.776.060; rising by KD 22.835.376.
- Total liabilities totaled KD 6.796.433, compared to KD 6.522.016; rising by KD 274.417.
- Total current liabilities hit KD 3.412.682, compared to KD 4.785.916; declining by KD 1.373.234.
- Total equities reached KD 62.877.548, compared to KD 59.736.149; rising by KD 3.141.398.
- Total expenditures hit KD 2.424.522, compared to KD 1.683.734; rising by KD 740.788.
- Total net profits hit KD 3.156.979, compared to KD 4.948.530; declining by KD 1.791.551.
- Share profitability totaled 5.83 fils, compared to 9.13 fils; declining by 3.30 fils.
- Decline of this current year’s net profits compared to the previous year is attributable to amending the assumptions used by independent real estate appraisers, who appraised properties within the GCC, adopting a precautionary approach by the company’s management.
Second – Governance of Companies
- KUWAIT BUSINESS TOWN REAL ESTATE CO. keeps good and profitable assets, enjoys cash flows allowing it to proceed further with the implementation of its investment and strategic policy to achieve more diversification and expansion of its real estate portfolio, along with geographical and sectorial distribution professionalism, all to ensure the company’s ongoing realization of targeted profits—God Willing.
- The management succeeded in withdrawing from non-profitable investments, and further providing alternative assets and sustainable resources of future income, to the best interest of shareholders.
- Restructure of loans, short-term and long-term credit facilities, as well as replacement of current debts with others of lesser interests and sureties; thus leading to provide for periodical cash liquidity necessary for fulfilling commitments arising from financial instruments, decreasing financing costs and increasing profitability margins.
- BOD recommended to distribute cash dividends of 2% and 5% as watered stock, subject to the shareholders’ approval during the annual and extraordinary general assembly meetings, respectively.
- Whereas governance of companies is a set of rules, practices, and processes via which an organization shall be directed and controlled. Also, governance of companies shall balance between all stakeholders within an organization, and better define the responsibilities and duties of BOD, senior management, and establishment, taking into consideration protecting interests of the shareholders and stakeholders.
- The company arranged and prepared all policies, documentations, and committees formation mechanism required as per the governance of companies rules, which are approved by the BOD accordingly, in compliance with the instructions issued by the Capital Markets Authority.
- It is noteworthy that the company is was one of the first ten leading companies to comply with the governance of companies model announced by the Capital Markets Authority. This is truly evident for implementing rational governance by the company in different activities.
BOD and senior management shall also observe an effective level of governance, and top level surveillance over conduct, promotion of integrity, and maintaining the highest ethical codes in all activities of the company, through complying with the key elements of sound governance, including transparency, responsibility, justice, and integrity.
Third – Corporate Social Responsibility (CSR)
Fourth – Human Resources
- As for the Corporate Social Responsibility (CSR), the company contributed to achieving sustainable development of the society through a campaign for blood donation in cooperation with the Blood Bank of Kuwait, launched on 07/12/2016. This campaign succeeded thanks to the effective participation of staff and other persons. This truly represents only part of the company’s efforts and vision fostering the development of society.
- On the level of human resources, who we deem to be our strategic assets, and pursuing to build a team capable of confronting challenges, developing sustainable level of performance up to the best international practices, executive board is structured based on selecting efficient candidates with vast expertise capable of enhancing the company’s progress and businesses targeting profitable levels in conformity with the next five-year strategic action plan, seeking to diversify sources of income, ideally exploiting financial surpluses and assets of the company, through setting standard performance indicators to be measured periodically, which shall best reflect the actual outcomes in comparison to forecasts, so as deviations shall promptly adjusted.
Finally, we pray to Allah, the Almighty, to grant us success to achieve the company’s strategic aspirations and targets, to the best interest of our beloved country and our kind shareholders. I also would like to express my deep appreciation for our shareholders, my dear fellow BOD members, executive board, and staff, for their sincere efforts and dedication in support for our company.
Salem Khudhur Mohammad Al-Hasawi