The board members of Kuwait Real Estate Investment Consortium have the pleasure to submit you the 32 annual report, including the results of annual performance , consolidated financial data and the report of the Independent Auditor’s report for the financial year 2008.
We have witnessed the second half of 2008 a significant reduction in the trading of international financial and economic repercussions of the inevitable consequence of the global financial crisis that led to the emergence of a greater global recession in decades, most of which required the intervention of the Governments of the States to a policy of financial reform and to reduce the negative impact on the social life of the citizens of those States.
The intervention of the Central Bank of Kuwait, the biggest impact project approval to ensure bank deposits with the Kuwaiti government’s decision to form a specialized technical committee to study the problems of the market and develop successful solutions to them. The impact of a severe financial crisis due to the Kuwaiti economy, which suffered the negative effects the oil sector, which is the lifeblood of all economic activities in Kuwait, and the decline of the price of crude oil by 71% (from U.S. $ 140 to U.S. $ 40).
In addition to the significant decline rates and the value of stocks traded on the Kuwait Stock Exchange price index retreated significantly the loss of nearly 50% to close at 7782 points (15,054 points in June 2008).
Gentlemen shareholders. . .
As for your Kuwait Real Estate Investment Consortium, despite the effects of global economic financial crisis and the withdrawal of the public for investment (Main owner) of the investment portfolio managed for the benefit owned by KREIC, the efforts of the solidarity of KREIC was able to executive management and employees to overcome those obstacles and the difficult economic circumstances and was able to achieve a net profit of KD 1.1 million, despite the apparent decrease of the total annual revenues, which amounted to 3.38 million Kuwaiti dinars (5.24 million dinars in 2007) after KREIC with low values of some investments.
The items of income of KREIC focused on property management fees of $ 896 thousand non-Kuwaiti dinars, down 65.5% percent (2.6 million dinars in 2007) and the net rental income of KD 815 thousand, up 5.5% (772 thousand in 2007 to KD).
As for the results of KREIC’s share of associated companies, which rose by 63% to reach KD 718 thousand (486 thousand Kuwaiti dinars in 2007) as a result of the growing value of the company’s share of the Arab Group for the ceramics. In addition to the allocations, which no longer need the amount of KD 218 thousand.
This is in addition to bank interest income (246 thousand d. K) and the inclusion of non-real estate assessment (33 d A. K), as well as miscellaneous income, which reached the amount of KD 180 thousand (60 thousand in 2007 to KD), of which KD 142 thousand resulted from the collection of the output of the liquidation of the Arab Company for Top rental issues.
With regard to expenses and other charges, which amounted to KD 2.3 million, down 18% per hit (2.8 million dinars in 2007), of which 72% the cost of staff, down 11% from what it was in 2007, and public and administrative expenses amounted to KD 212 thousand, down 23% for the year 2007, and was dedicated to the formation of doubtful debts of $ 105 thousand dinars. In addition to the consumption of $ 206 thousand Kuwaiti dinars (KD 612 thousand in 2007), and there is evaluation of foreign exchange losses amounted to 55 thousand dinars (2007 to 28 thousand KD). The impact of financial crisis on investments was a negative loss amounted to KD 942 thousand.
Despite this progress, which we assure you the cash solvency of KREIC increased cash and cash equivalents of $ 5.1 million Kuwaiti dinars (3.6 million dinars in 2007), but the financial situation and general economic and financial obligations resulting from the construction projects for the headquarters compound of KREIC and the investment Residential Tower- Bneid Al Gar , as well as the infrastructure of the tourism project Sofer of the Republic of Lebanon to prevent the distribution of cash to shareholders this year.
Accordingly, the Board of Directors recommends the deportation of the profits for this year to the rights of shareholders.
This makes the members of the Governing Council commended the executive management for the results achieved this year, as well as the gentlemen of brotherhood in the General Authority for Investment for their group of fruitful cooperation in order to achieve better results.
Finally, we ask Allah Almighty to safe guard His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, His Highness the Crown Prince and His Highness the Prime Minister.
God bless them all.