Mr. Ghazi Fahad Alnafisi, Chairman and Managing Director, said the end of the fiscal year 2006 announced the expansion in the scale of the company projects, which became bigger than before in the local and international levels, and that the company’s name is now familiar to all investors, architects and merchants concerned with the real estate field.
Further, Alnafisi explained that the company recognized more significant achievements within the course of its activities in light of the strategy laid down. Although the year 2006 did not resemble the previous year in terms of the market activity in Kuwait and GCC countries, Salhia Real Estate Company maintained its moderate growth and stability in light of the Company’s approved strategy.
Salhia Real Estate Company recognized profits of 49 million dinar, compared with 17.5 million dinar for 2005, i.e. an increase by 180 per cent over the past year. The earnings per share attributable to 163.2 fils, compared with 57.9 fils for 2005. The company’s total assets amounted to 242 million dinar, while their returns reached approximately 20 per cent, and shareholder’s equity reached 135 million dinar compared with around 103 million dinar in the past fiscal year, hence it recognized a return of 32 per cent.
Alnafisi said the Company real estate properties maintained an occupancy rate of 100 per cent. Further, hotel real estate (JW Marriott, Marriott Courtyard and Arraya Ballroom) maintained their remarkable performance and leading position in terms of luxury and offering all hotel services on the highest levels.
Alnafisi said all the local and foreign assets witnessed a great increase in their market value, which is attributed to their outstanding performance and the high returns they recognized. The book value of the local and foreign assets amounted to a total of 155 million dinar. As for the market value, it amounted to 464 million dinar, i.e. an increase in asset value by 200 per cent.
Alnafisi uncovered that the share book value of real estates and lands, as per the financial statements for 2006, amounted to 428 fils, while the share book value according to the market value for real estates and lands amounted to K.D.1.240.
New Arraya Tower
To benefit from Kuwait Municipality’s permission for the possibility of increasing building up to 100 floors, Al Salhia Real Estate Company developed Al Arraya Tower over an area of 1058 square meter and a height of 60 floors, making it one of the highest new towers in Kuwait City, and a prominent commercial and urban benchmark in this country.
The management addressed concern to incorporate in this project one of the constructive technology systems of the era, suitable with the nature of services offered by skyscraping office towers. This includes furnishing the tower with a package of communication services according to the latest technologies, 16 modern elevators and an advanced security system which is automatically connected with Al Arraya Commercial Center real estates to ensure the safety and comfort of both tenants and visitors in the same time.
The Company has started the construction stage, with the construction operations reaching the 25th floor now at a height of 110 meters from the ground level. The project is expected to be completed by the end of 2008.
As Salhia Real Estate Company is keeping abreast of the rapid construction boom in the country and as a result of the rapid economic opening and growth, with its shadows on the development climate in the State of Kuwait, this led to the abundance of a big quantity of promising real estate and investment opportunities and attracting a lot of capitals. As accustomed, the Company undertook the initiative to contribute in the flourishing of the construction and economic activity in Kuwait, and raised a pioneering idea to develop its real estates inside the Capital in Sharq area, amounting to an area of 21.414 square meters.
The properties are bordered by streets from the four sides, including two main streets: Abdulaziz Al Saqer Street and Khalid Bin Al Waleed Street.
Al-Asima Project is expected to become one of the most significant and biggest projects which the private sector aspires to execute in Kuwait City, in view of its massive size, beauty of its design, diversity and comprehensiveness of its components, which comprise:
•A commercial complex extending over the full area of the real estate.
•Car parking on three basements level, also covering he full area of the real estate.
•Coffee shops, restaurants and cinema houses.
•Hotel apartments with 4 star service, comprising multi purpose halls,
a health club, coffee shops and restaurants.
•Tower for office use, consisting of 70 floors, over an area of approximately 1400 to 1600 square meters per floor.
•Green areas, corridors and internal plaza.
For the purpose of project funding, the Al-Asima Real Estate Company (joint stock closed company) was established. An agreement was reached with the National Bank of Kuwait, as being one of the prestigious financial institutions on the Middle East level, to attract shareholders to the share of 50 per cent of the company capital, while the remaining half of the company will go to Salhia Real Estate Company. Al-Asima Project cost amounts to approximately 240 million Kuwaiti dinar, inclusive of the value of the project land and buildings to be constructed.
During the fourth quarter of 2006, Salhia Real Estate Company sold its land located in Sharq area, over an area of 21.414 square meters, to Al-Asima Real Estate Company, in which Salhia Real Estate Company’s shareholding amounts to 50 per cent of the capital amounting to 80 million Kuwaiti dinar. It recognized a profit of 98 million dinar.
However, in implementation of the international accounting standard No.28 (accounting for investments in affiliate companies) applicable on Salhia Real Estate Company, 50 per cent of this profit has been excluded. Hence, the profit included in the financial statements of Al-Asima Real Estate Company amounted to 49 million dinar, and the amount of 9 million dinar considered as deferred profits.
The balance sheet of Salhia Real Estate Company for the fiscal year 2006 revealed an investment in Al-Asima Real Estate Company of the (zero) amount, which does not indicate under any condition that the investment value in Al-Asima Real Estate Company is (zero). Rather, Salhia Real Estate Company has a shareholding of 50 per cent of the company capital amounting to 80 million dinar, in harmony with the international accounting standards.
In the income statement in the future, Salhia Real Estate Company will reflect its share of the results recognized by Al-Asima Real Estate Company, as well as the change in its shareholders equities after Al-Asima Real Estate’s practice of its business.
KPI Company, which represents a joint venture between Salhia Real Estate Company and St. Modwen Properties PLC, with a well established real estate portfolio at present, comprises a group of income yielding investments, such as available opportunities for real estate restoration and re-development.
The real estates in this portfolio comprise of shopping centers, offices and industrial locations all over the United Kingdom, in addition to numerous industrial real estates, the uses of which may be amended to enhance their values through planning and development operations. The Company’s strategy is still represented in increasing income through asset development and management and redevelopment of real estate after completing the income and value gratification stages.
The purpose of incorporating Drawbridge Real Estate Company Limited is to acquire acquisition options over the lands, as well as gratify value through planning, negotiation and approvals. The company has at present portfolios which include major projects in the United Kingdom.
Haddia Company is a company specialized in the development, acquisition and management of welfare houses for the old in the northern part of the German Republic. The company was incorporated thirteen years ago in 1993. Each of Haddia Holding Company and its subsidiaries continued the merger operations according to the resolutions laid down by the board of directors and senior management. Merger operations became necessary after the remarkable expansion in the volume of the company’s businesses. The objectives determined for 2006 are represented in maintaining the promotion of occupancy rates and development of management structures in a better manner. This has included the execution of amendments in the procedures and the management itself, for the purpose of addressing the changes witnesses in the market requirements.
The focus on these aspects is to enhance occupancy rates through the adoption of the market’s requirements in terms of the efficiency of procedures on the management’s level, and in fact offering good products and services, hand in hand with the development of quality standards, form two main factors for reinforcing and maintaining a high occupancy percentage on the long run. Among the main products offered in the market in 2006 was the “mobile care service” or “household care service”. This product is not new to the market, but when it was offered side by side with the welfare for the elderly and household care service, it is considered as new.
The household care license formalities consumed a time longer than expected, which led to the delay in offering this service. However, the company expects to be the first to offer these combined services to customers this year. Another field of new services being offered is the good health/cosmetics, which is envisioned to add more “good health” factors, to make it an enjoyable experience for the residents and their visitors.
The volume of the company’s portfolio of non real estate investments, especially private equities, exceeded the value of 10 million Kuwaiti dinar, representing the results of work which lasted for approximately five years. As part of the new strategy which will be affected from the beginning of 2007, Salhia liquidated part of its investments in private equities.
As a step to divert from the prevailing state in the last years, the criteria of this new investment philosophy will be represented in assets with good returns and partially or completely assured capital, as well as liquid assets, we will be able to recognize similar returns for the remaining projects of the company.
Ghazi Alnafisi explained that Salhia Real Estate Company recognized the highest profitability per share in its history, which amounted to 163.2 fils despite the market fluctuations. Also, 50 cash fils were distributed and 15% bonus of the capital. These distributions are considered the highest in the history of Salhia Real Estate Company’s history.
The ordinary general assembly approved and ratified the financial statements, and recommended the board of directors to distribute cash dividends to the company shareholders recorded for the year ended on 31 December 2006 by 50 per cent (50 fils per share), and distribute bonus shares by 15 per cent per share (15 shares per 100 shares) of the company capital. Hence, the company’s total new capital increased from 31.4 million Kuwaiti dinar to 36.2 million dinar.
Further, the general assembly agreed to renew the board of directors’ authorization for the following items:
•Purchase of 10 per cent of the company’s shares as per the law No.132/86 and the ministerial decrees passed in this respect.
•Borrowing through the issuing of bonds.
•Approval of the general assembly to deal with related parties.
•Releasing the liability of members of the board of directors and discharging them for all their legal transactions for the fiscal year ended on 31/2/2006.
The ordinary general assembly of Salhia Real Estate Company was held with 93.61 per cent attendance and members of the company’s board of directors for the next three years are as follows: Mr. Ghazi Fahad Alnafisi, Mr. Salah Fahad Al-Marzouk, Mr. Anwar Abdul Aziz Al-Usaimi, Mr. Ahmad Faisal Al-Zabin, Mr. Abdul Rahman Abdul Aziz Al-Babtain, Mr. Hassan Abdullah Al-Mousa, Mr. Abdul Latif Abdul Karim Al-Munayyes,Mr. Faisal Abdul Mohsen Al-Khatrash, Mr. Marzouk Fajhan Al-Mutairi, Mr. Youssef Easa Al-Othman, Mr. Abdul Aziz Ghazi Alnafisi, and reserve member Mr. Abdul Aziz Saud Al-Babtain.
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