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Chairman's Message

Dear Shareholders of Coast Investment and Development Co.

May the peace and blessings of Allah be upon you.

28/03/2023

Chairman’s Message                                     

It is my fellow members of the board of directors and my pleasure to meet with you and discuss the annual report of Coast Investment and Development Company for the financial year ending on 31 December 2022.

The year 2022 has been marked by continued global volatility. In response to the COVID-19 pandemic, many central banks around the world implemented expansionary monetary policies, including large-scale asset purchases and interest rate cuts, to support their economies. While these policies have helped to mitigate the worst effects of the pandemic on the economy, they have also created runaway secular inflation. This required coordinated quantitative tightening at the fastest pace since the 1980s, as central banks raised rates aggressively throughout the year. The Ukraine war further exasperated inflationary pressures, particularly in the price of energy and grains.

The effects of monetary tightening were immediately felt in the markets. Global equity markets were down almost 20% in the worst year since the global financial crisis of 2008. Compounding the problem was a large parallel decline in bond prices globally. U.S. Treasuries and German bonds, the benchmarks of global borrowing markets and traditional risk-off asset in troubled times, lost 17% and 25% respectively during the year.

Emerging markets faced a double threat. Not only were they exposed to inflationary headwinds, they also had to contend with an exceptionally strong US Dollar during 2022. This created unmanageable pressures on foreign exchange reserves and forced some countries to place monetary controls on their currencies.

Regionally, the GCC equity market index declined by -6.4%. This resilience in performance relative to international markets is attributed to the higher price of crude oil. Qatar reported the largest drop during 2022, with the DSM Index receding by -8.1%, followed by Saudi Arabia, which dropped by -7.1%. Abu Dhabi was once again the best-performing market in the GCC with a gain of 20.3%, followed by Oman and Bahrain with increases of 17.6% and 5.5%, respectively.

Boursa Kuwait recorded a mixed result during 2022, with the Premier Market Index closing the year with a gain of 6.24%, while the Main Market Index recorded a loss of -4.92% in 2022. The All-Share Index saw a gain of 3.53% for the year. Although the market performance was muted, the Kuwaiti economy flourished during 2022, with IMF projecting a significant rise in GDP to 8%. The rise in GDP growth in 2022 is supported by increased oil production, higher oil prices, and sustained improvement in domestic demand after the pandemic.

Crude Oil also saw increased volatility this year, in large part due to the Ukraine war. WTI crude oil peaked above $130 in March 2022 (less than two years after plunging into negative figures). For the year 2022, Crude Oil price increased by over 10% compared to an increase of 55% in 2021. Most global demand estimates support a continued elevated price of crude oil for the coming year.

On the internal frontier, after Coast has extinguished accumulated losses as at 31 December 2020 and achieved a profit of 3.9 MN KD in 2021, has again achieved a profit of 2.57 MN KD for the year 2022. Coast prime investment in associates, namely Weinig AG, Kuwaiti German Holding Company and Ricosta has generated a profit of KD 1.95 MN (2021: KD 1.465 MN) inspite of the war in Ukraine and the extreme challenges for their operations led by spiking increase in operating expenses in addition to commodity and energy prices. On the other hand, Coast also managed to reduce its operating expenses by 6.3%. Despite a very challenging environment during 2022.

Overall, the direct investment business along with the foreign and the local financial markets achieved revenues of Kuwaiti Dinars 3.98 MN (5.45 MN KD in 2021) and resulted in net profit of KD 2.57 MN (Net profit of 3.92 MN KD in 2021). As a result, Coast has achieved an EPS of 5.52 fils (8.43 fils in 2021).

Coast remains completely debt free and without any pending legal obligations. And, as it will always be, Coast will continue to endeavor new Investment opportunities available to diversify sources of income and optimize the utilization of financial surpluses as per the business plan.

On this occasion, I would like to extend my sincere appreciation to the shareholders of the company, the board members, and all the staff at Coast for their continued and unwavering support. We remain hopeful that Almighty Allah will continue to bestow more success in the future.

May Allah protect Kuwait and its people from all evil.

                                                                                                                                                  Faleh Abdullah Al-Ragabah

                                                                                                                                                                  Chairman