Dear Shareholders of Coast Investment & Development Company
Peace and Blessings of Allah be upon you,
It is our pleasure to welcome you to Coast’s annual general meeting, and present to you the annual report for the year ended 31 December 2010.
Despite the effects of the prolonged global financial crisis dampening the economies of the world over the past three years, there have been some positive indications of a recovery of the world economy, particularly in the European countries; chief amongst them is the Republic of Germany, which has resurged back to achieve strong growth rates through the increase of exports in line with the increase of the global consumption levels. This stabilization resulted from intervention with monetary and fiscal policies undertaken by the western countries. In addition, huge funds were spent to reinforce their economies, financial institutions, and capital markets, which started to recover and restore its activity with the improved future prospects of the global economy.
Another sign of the increase in consumption and return of motion to the global economic wheel was the continuous development of the global oil markets during the year and the consequent increase in demand and thus increase of prices. Kuwaiti oil prices reached US$ 76 per barrel in 2010, i.e. an increase of almost 25% compared to 2009, which was US$ 61 per barrel. However, it should be noted that part of this increase was due to the continuous decline of the US dollar exchange rate, affected by the global financial crisis. The increase in oil prices positively affected the State’s Budget, where the gross domestic product for 2010 is expected to exceed KD 36 billion compared to KD 31 billion in 2009, i.e. a surplus ranging between KD 3.5 and KD 5.3 billion.
On another front, legislating The Capital Markets Authority law in early 2010, the endorsement of State Development Plan, and the positive effects of the sale of Zain Africa assets, have combined to bolster confidence in the national economy and enhance the economic cycle. The Kuwait Stock Exchange performed well in 2010 compared to 2009 on the ground of several positive factors, most important of which was the improvement of the global economy and the increase in oil prices. The weighted index increased
by 25.8%, while the capital value of the listed companies’ stocks swelled by KD 6 billion. Nevertheless, liquidity remained low throughout the year as the daily trading average for 2010 was KD 51 million, with a decrease of 41% compared to last year.
Despite the good performance of Kuwait Stock Exchange during 2010, there are still many challenges facing mainly the companies in the investment and real estate sectors.
The amount of leverage granted to these companies concerns the creditor banks in light of the decrease in revenues, liquidity, and the fair values of assets. To confront and eliminate these concerns, companies strive to reduce their general expenses and adopt contractionary policies, leading to lower consumption levels and severe difficulties.
On the governmental level, the most important challenge in the foreseen future is the government’s ability to enforce the endorsed laws such as Financial Stability Law and Capital Markets Law, and deal with the political gridlock and numerous interpellations by the parliament members; not to mention the passage of the first year of the development plan with no remarkable achievement.
Coast continued it’s strictly conservative policy in terms of prioritizing its commitments through preservation of asset values and shareholders’ equity on one hand, and providing necessary funds to honor its obligations to creditors on the other hand. In spite of the significant improvement of the company’s Investments, nobody can deny that it is difficult to achieve such balance. Tough decisions taken at the beginning of the crisis and the restructuring of the company’s foreign investments, mitigated the impacts of the fluctuations in the markets over the last years.
Thanks to Allah, your company has recorded income of KD 12.887 million, and net profit of KD 5.800 million. Total assets have reached KD 144,101 million decreasing by 0.77% and the shareholders’ equity amounted to KD 56,336 million, i.e. growth by 16.25% over the year.
Finally, I would like to extend my deepest appreciation to the company’s shareholders for their trust and enduring support, the board members and all staff for their loyalty and extensive hard work, and express our hope for growth and prosperity.
May Allah Grant us success!
Sulaiman Khalid Al Sahli
Chairman
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