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In the Name of Allah, the Most
Gracious,
the
Most
Merciful
Dear Shareholders,
It gives me and my colleagues the board members, great pleasure to welcome you today to your company's General Assembly Meeting, and present to you Coast's 2007 Annual Report including the company's financial highlights and achievements, along with the Auditors' Report for the year ended 31 December 2007.
It became evident that last year was another successive year of economic growth due to the unremitting rise in oil prices; given that the price of oil approached US$100 per barrel as a result of the increasing global demand that far exceeds the oil production rates. Although the record rise in oil prices might dampen economic growth in certain oil importing countries, or give rise to a recession in others, these rises have more than doubled the oil revenues and financial surpluses of the oil exporting countries, including GCC countries.
On the regional side, the relative easing of the nuclear stand-off between the US and Iran, and the improving security situation in Iraq have had a significant impact on the gradual restoration of stability to the Gulf region in general, and the State of Kuwait in particular.
The Kuwait Stock Exchange (KSE) has witnessed an unprecedented rise in terms of trading volume, chief amongst them those made on Mobile Telecommunications Company and the largest acquisition in KSE of a 51% stake of National Mobile Telecommunications Company by Qatar's Qtel, totaling KD 1.075 billion. This reinforced trust in the Kuwaiti market, which closed the year with a 25% increase compared to the passive performance of last year.
2007 was a remarkable year of growth for the Kuwaiti economy due to the growth of oil revenues. The price of Kuwaiti oil increased from US$ 59 per barrel in 2006 to hit US$ 85 per barrel in 2007 with an average of US$ 71 per barrel from April to December. Consequently, the oil revenue is expected to contribute approximately KD16.5 billion to the 07-08 State Budget i.e. KD 8.9 billion in excess of the projected figure. Gross Domestic Product "GDP" is expected to grow by 7.8% to reach KD 30 billion.
While a KD 3.8 billion deficit was expected in the 2007-2008 budget, the forecasted surplus may exceed KD 6 billion for the financial year ending April 2008, should the current levels of oil price and production continue.In spite of these favorable conditions, the State of Kuwait however, failed to realize any significant progress on the development programs and mega projects frequently announced in the past years.
The political complications between the National Assembly and the Government have unfortunately lead to numerous hearings and resignations that adversely affected Kuwait’s prosperity by delaying enactment of vital legislations and projects. Needless to say that a sound political environment should prevail to address such concerns and solicit the executive and technical expertise and hence, develop government performance to keep pace with the advancement of this era and revive the spirit of initiative-making by the Private Sector, which is driven by seriousness, innovation, and creativity.
I am proud to inform you that our financial highlights indicate a breakthrough in our performance attributable to the real success and developments, among which was the high growth in the portfolio of the high-revenue future deals presented by Coast to its clients in Kuwait Stock Exchange. Value of contracts entered into during the year increased by 300% compared to end of 2006. Moreover, the “Coast Investment Fund†outperformed the market, where the net assets increased by 37.71% against the market weighted index that reached 34.47% for 2007. Accordingly, the Fund Management decided to distribute to unit holders a cash dividend of 5% in addition to bonus units representing 15% of the capital. Furthermore, client funds under management grew more than KD 550 million, i.e. a 55% increase compared to last year.
Moreover, we completed the 1st and 2nd phases of the capital increase of the Kuwaiti German Holding Company up to KD 100 million, wherein the company's subscription amounted to 700 million shares, which accounts for 70%. The remaining 3rd phase (30% of the capital) is expected to be completed during the second quarter of 2008. In addition, the German Management Company (GMC) has been incorporated in Germany to monitor and follow up the company's investments.
Coast also continued with its growth and diversification policies in line with the preset programs, which aim to expand its direct local and foreign investments, through specialized investment funds that achieved outstanding results.
Among the achievements made during the year was the launch of FTSE Coast Kuwait Index 40 designed in cooperation with FTSE. Coast also initiated the incorporation of several unique funds to be the first of their kind in the Middle East in conjunction with leading Financial corporations.
To mitigate the severity of the money market fluctuations, and trading in the regular market, the Company's long-term strategic investments were re-arranged and re-categorized, from investments at fair value as expressed in the income statement, to available-for-sale investments.
The Consolidated Income Statement of Coast Investment & Development Company amply demonstrates a sound financial standing: Net profits of KD 25.88 million, Return on Capital (ROC) of 49.66%, and asset appreciation of KD 209 million with an increase of 41.00% compared to last year. Shareholders’ Equity reached KD 94.7million with an increase of 33.76% compared to last year.
These achievements would not have been made without clear objectives and strategic planning, as well as your support and the trust placed in us. We heavily rely on the loyalty of our clients, this being the key driver for development of the services we render. Appreciation should also be extended to the Management team and our precious employees for their dedication and devotion towards this excellent performance. We trust that they shall spare no effort to keep up the same spirit over the coming years.
Finally, I would like to express, on behalf of the Board of Directors and myself, gratitude to H.H. The Amir of the State of Kuwait, Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah, H.H. the Crown Prince, and H.E the Prime Minister, for their continuous support of the private sector. We pray to Allah to guide them towards the best for our dearest country.
Peace be upon you
Sulaiman Khalid Al Sahli
Chairman
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