Dear Shareholders of Coast Investment & Development Company,
Peace and blessings be upon you,
On behalf of the board members , I have the pleasure to welcome you to the meeting of the Company’s Annual General Meeting and to present to you the annual report of Coast Investment & Development Company for the year ended 31st December 2015.
The world economic activity was stagnant and slow in 2015, and the Gross Domestic Product grew at 3.1% less than year 2014 which was about 3.3%. Although the growth rate of developing countries and emerging markets economies represents 70% of the growth rate of the world economy, this average remained sluggish over the last five years particularly in China, Russia and Brazil which had a negative impact on the world
economy despite of the relative improvement in USA and the Euro zone.
On the level of GCC countries, the slowing world growth and the oil oversupply have contributed to the continuous decline of oil prices in 2015. The Brent mix average rate was US$ 52 /barrel in 2015 down to US$ 36 /barrel at the end of the year despite of the continuous political unrest and tensions in the MENA region which usually raises concerns of interruptions in oil supplies. Furthermore, the increase of shale oil
production in the USA and the increasing supply from outside OPEC has a clear impact on the deterioration of oil prices from the peak of US$ 115 / barrel in the mid 2014 down to 36 US$ / barrel at the end of 2015, down by 68%. Despite the decline of oil prices and the deficit of GCC countries budgets, they managed to maintain their financial positions and continued their capital expenditure and infrastructure development relying on their strong reserves.
Political tensions and decline of oil prices have shadowed the GCC stock markets. All markets ended 2015 with sharp declines , led by the Saudi index which was down by 17.8% followed by Dubai index at the rate of 16.5%.
On the domestic level, it is forecasted that the state budget at the rate of US
25/barrel would post deficit of more than KD 12 billion in the fiscal year
2016-2017 and if the Government does not initiate immediate reforms of the
domestic economy in terms of diversification of revenue sources and
rationalization of expenses and expenditures, the budget deficit would continue
for several years, thus depleting the financial reserves and posting great
challenges in the future.
Kuwait stock exchange was not secluded from the other GCC markets as all market indexes declined in the year 2015. The weighted index was down by 13% while the price index was down by 14.1%. The daily trading rate was down from KD 29 million in 2014 to KD 11 million in 2015 down by 62% and the market’s capitalization lost more than KD 3.2 billion down by 11% in comparison with the year 2014.
Dear Share holders,
The slow growth of world economy and the decline of oil prices combined with the continuous political struggles and tensions particularly in the Middle East region have increased the challenges for local companies and business Therefore, it is essential that all concerned parties should extent their best efforts and cooperation to sustain and improve the business environment in the absence of promising opportunities and low revenues.
The company faced several challenges over the last year, notably the lawsuit filed by one party in the year ended 31st December 2011 and the delivery of court judgment cassation on 17th June 2015 ruling the nullification of the sale and purchase agreement of one of the assets available for sale signed on 23rd June 2008 and obligating the company to refund an amount of KD 8,544,000 to the plaintiff purchaser and return the disputed shares to the company. In execution of this judgment, 29.7% of the company’s holding in Kuwaiti German Holding Company was sold through auction to settle the stated lawsuit incurring the company’s losses by KD 11,659,151. As the company had made a provision for this full amount in 2014, it has realized profit of KD 2,200,000 as a result of the disputed shares.
However, the company is now more capable of continuation and growth after settling all its debts , liabilities and reduction of its overall expenses with the improvement of the values and revenues of its overseas investments.
The company’s results this year are impacted with the forcible sale of significant share of the company’s main investment. The company posted losses of KD 8,739,121 in comparison with the profit of KD 9,696,924 in 2014. The total assets amounted to KD 57,298,524 in comparison with KD 193,574,226 in 2014 at a decrease of 70% due to reclassification of some subsidiaries as associates.
Finally, we extend sincere thanks to the company’s shareholders and the members of board of directors and all staff.
We pray to Almighty Allah to guide us to
prosperity and success.
Khalid Al Sahli
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