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Chairman's Statement 

The Chairman of the Board’s Message

 

Dear Shareholders of Mabanee Real Estate Co.,

May the peace and blessings of Allah be upon you all…

On behalf of my fellow Members of the Board of Directors, it is my pleasure to present to you the 2017 Annual Report for Mabanee Real Estate Co. The Annual Report reflects the company’s financial results over the past year and highlights the company’s achievements, as well as the progress made on the company’s projects in Kuwait and the region.

 

Calculated expansion based on a clear strategy

The company’s expansion and development is proceeding based on our set vision and plans. The Avenues - Bahrain, the first of our projects outside Kuwait, has been inaugurated last October. Also, Phase IV of The Avenues - Kuwait has opened its doors to the visitors, while construction continues in the Waldorf Astoria and the Hilton Garden Inn. We will soon commence construction work on The Avenues - Riyadh, The Avenues- Khobar, Phase II of The Avenues Bahrain, as well as other expansion work in Shariqa Emirate.

As to the land plot on Salem Al Mubarak Street in Salmiya, overlooking 3 streets , enjoying a direct view of the Arabian Gulf, we are studying designs for this project to ensure that we get the maximum return from this project – which will span over an area of 9,600 sqm – and is in line with our plans.

In its local and regional expansion, Mabanee is following its set strategy of investing in the development of commercial malls in prime locations. This ensures the generation of strong and continuous return on investment, while also diversifying investments by tapping into the hospitality sector, as well as residential and medical projects.

These expansions are being implemented through direct investment and forging partnerships of varying stakes with some of the most prominent GCC investors. This serves to achieve our target of increasing returns to all stakeholders in the coming years.

We believe that many opportunities lie in the GCC and Arab markets, with global market fluctuations driving governments to seek the diversification of resources away from the oil sector. Partnerships between the public and private sectors are being facilitated, thus raising competitiveness in a manner that has a positive impact on economies and creates job opportunities.

What sets our projects apart is the fact that we are developing shopping, entertainment and hospitality destinations under the brand of ” The Avenues”, which has become an icon in the commercial and tourism sectors. The Avenues is a brand that has grown to be synonymous with success and distinguished design, and one that is attracting many investors in the region who seek to develop similar destinations in their countries.

Given this regional expansion, we are keen to maintain the quality of the shopping experience that has come to be known to our brand and its distinction from competitors across the area. We also continue to invest and develop our human capital to meet the international standards. We strive to hire the best local talent and make the retail sector attractive to them, especially as it provides thousands of job opportunities.

The Avenues - Kuwait

Inauguration of Phase IV and its new offerings

Phase IV of The Avenues Kuwait was recently inaugurated. With this, The Avenues has become the largest commercial and entertainment mall in Kuwait, and one of the largest in the region and the world. The mall has a total leasable area of 360,000 sqm and stretches over the length of 1.5 km. The mall houses more than 1,100 shops, restaurants, cafes and entertainment outlets in the whole phases.

Phase IV includes more than 300 stores located across new districts: Electra, The Forum, Grand Plaza, The Gardens and The Arcade, as well as the extensions of Prestige, The Grand Avenue and The Souk.

Construction continues on the four star Hilton Garden Inn, which will include 400 rooms and is expected to be open in 2019. The five star Waldorf Astoria will house 200 rooms and its completion is expected in 2020.

The Avenues - Bahrain

A successful inauguration and further expansions

The Avenues - Bahrain was inaugurated on October 28, 2017 by the Crown Prince, Deputy Commander of the Armed Forces and First Deputy Prime Minister of Bahrain, HRH Prince Salman bin Hamad Al-Khalifa. Since opening its doors, The Avenues - Bahrain has enjoyed much success and has attracted visitors from within and outside Bahrain.

The Avenues - Bahrain is the first commercial and entertainment mall of its kind in the Kingdom of Bahrain, with a unique seafront location extending 1.5 km. It is strategically located in the heart of Manama, adjacent to the King Faisal Road. The design is inspired by The Avenues -Kuwait, giving visitors an outdoor feeling while remaining indoors, protected from the heat by a ceiling that allows sunlight in. It also has a unique design that allows visitors access to the mesmerizing seafront.

Phase II of the project will begin in the coming few months. The completed designs will add another 30,000 sqm in leasable space in the western part of the project, which is expected to open its doors in 2020. The new expansion will also see the construction of the Hilton Garden Inn hotel, which will have direct access to the mall and include 210 rooms .

The Avenues - Riyadh

The development that will change the face of the city

We will soon sign the development contractor, who will be selected from several contractors who qualify in the construction bid that will take place in the coming couple of months. The development is in line with the Kingdom of Saudi Arabia’s ambitious Vision 2030, where one of its goals is to support the retail sector by attracting regional and international retail merchants and ease some of the restrictions on foreign ownership and investments.

Once completed, The Avenues - Riyadh will be a contributor to the Saudi capital and the country’s national economy. The development will support many sectors directly and indirectly, and will give a boost to the sectors of retail, services, tourism and hospitality. Its impact will directly impact the job market by creating thousands of job opportunities.

When completed, The Avenues - Riyadh will be one of the world’s largest malls. With a leasable area of close to 400,000 sqm housing over 1,300 stores, the development will also have five multi-purpose towers. The towers will house three, four and five star hotels with some 2000 rooms in total, as well as exhibition and conference halls, residential apartments, offices, health and medical facilities.

The Avenues - Khobar

A unique icon in the Eastern Province

We are currently in the approval stage of the design of the project, which has been modeled around The Avenues - Kuwait in terms of design and components. We hope will be inaugurated in 2022.

The project is located at the northwestern corner of the intersection of Kind Saudi Road with Prince Sultan Road. It extends over an area of 209,000 sqm and includes a leasable area of 180,000 sqm. This includes commercial and entertainment areas, as well as four towers that will house residential apartments, hotels, offices, medical facilities, exhibitions, celebrations and conferences halls.

 

Financial indicators

In 2017, Mabanee achieved a net profit of KD 49.15 million (around US$ 163.7 million) and EPS of 52.66 fils, compared to KD 48.66 million in 2016 and EPS of 52.23 fils.

Shareholders’ equity was at KD 383.8 million as at December 2017,representing an increase of 11.68% over December 2016. Total assets reached KD 803.5 million , reflecting 9.8%  growth over December 2016 .

Recommendations of the Board of Directors

Mabanee’s Board of Directors met on February 7 , 2017 and based on the company’s financial results has made the following recommendations to the Ordinary General Assembly and Extraordinary General Assembly :

  • The distribution of 10% cash dividends, at 10 fils per share after excluding treasury shares.
  • The distribution of 5% bonus shares of issued and paid up capital (5 shares for every 100 shares).
  • The allocation of 10% of the net profit of the financial year ended December 31 , 2017 for the legal reserve account .
  • The allocation of 10% of the net profit of the financial year ended December 31, 2017 for the optional reserve account, to meet any risk or crisis the Company may face in the coming financial years.
  • The approval of Board members ‘ compensation at KD 200,000 for the financial year ended December 31, 2017.

Thanks and appreciation

To conclude, and on behalf of the Members of the Board of Directors and all Mabanee employees, I would like to express my deepest appreciation to H.H. the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and H.H. the Crown Prince Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah. We pray that Almighty Allah continue to guide our leaders on the path of advancement of our homeland, Kuwait.

On behalf of the Board Members, I would also like to thank all employees of Mabanee and the subsidiaries for their efforts, and our shareholders for placing their trust in us, which has motivated us to exert all efforts to achieve the goals, aspirations and strategies of the company.

 

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Mohammed Abdulaziz Alshaya

Chairman