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Chairman's Statement 

The Chairman of the Board’s Message

 

Dear Shareholders of Mabanee Company K.P.S.C,

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

I would like to welcome you to the introduction of Mabanee’s Annual Report of the financial year 2019. On behalf of my fellow Members of the Board of Directors, it is my pleasure to present to you this report, which reflects the company’s financial results over the past year according to its performance, as well as the progress of the company’s projects in Kuwait and the region.

Kuwait

The Avenues – Kuwait

Mabanee still believes in diversifying its investments by developing projects in new sectors, such as the commercial projects encompassing hotels and offices in addition to residential projects in efforts to vary the sources of income. In this regard, the 4-star Hilton Garden Inn has opened its doors to guests and visitors. The hotel with 385 guestrooms is considered a pioneer in the hospitality sector as our plans consist of opening numerous hotels in Kuwait and the region together with renowned brands in the world of hospitality, such as the Four Seasons Hotels & Resorts and Hilton Worldwide.

Our approach comes from our belief that our projects are more than just shopping malls, but integrated destinations that cater to the families’ needs in the region and meet the requirements of each individual. Thus, we had no doubts about the success currently witnessed by Hilton Garden Inn - Kuwait, as it is experiencing an impressive turnout from both tourists and residents alike due to its attractive location (connecting to The Avenues), as well as its design that is consistent with the needs of the guests and supervised by a specialized team experienced in hotel management. As for the 5-star Waldorf Astoria Hotel, the construction is progressing, and recruitment for hotel staff managing the 200 rooms has begun; the hotel is expected to open at the beginning of next year.

The Avenues remains the first shopping and tourist destination in Kuwait, and one of the biggest malls in the region and the world, considering its occupancy rate is one of the highest in the commercial sector, in addition to an annual growth of visitors.

Jaber Al-Ahmad Project

Mabanee Co. K.P.S.C has been chosen as the “Preferred Investor” in alliance with the National Industries Group and the Privatization Holding Company to develop the third stage of Jaber Al-Ahmad within the project of Jaber Al-Ahmad City where we will develop a commercial center, gardens, and residential apartments with an attractive design, not only accommodating the region and its residents but also attracting visitors from other areas, as the commercial center includes cinemas, shops, supermarkets, restaurants and cafes that extend to over 100,000 sqm. The project is expected to open during the second half of 2024.

Salmiya Land

We are still studying the best investment opportunities for the land located on the Gulf Road.

Saudi Arabia

The Avenues – Riyadh

There has been a delay due to circumstances out of our control, but it has been overcome and the initial contract has been signed with the chosen contractor to create the required designs and preparations for the construction plan. The final signing will occur in the next few months, to begin with the construction with hopes of resolving the existing obstacles.

The implementation of the project coincides with the ambitious 2030 vision of the Kingdom of Saudi Arabia, which includes several objectives, including supporting the retail sector by attracting regional and international retailers and easing restrictions related to ownership and foreign investment.

An agreement has also been signed with the project’s funding banks from Kuwait and KSA. It will contribute SAR 5.6 Billion from the total cost of the mall totaling SAR 9 Billion, not including the tower construction.

The project, after its expected completion in 2024, will constitute a tangible addition to the city of Riyadh and Saudi Arabia’s economy, as it will, directly and indirectly, support multiple sectors, not only by boosting the retail, services tourism, and hospitality but also directly impacting the labor market by providing thousands of employment opportunity.

The Avenues - Riyadh, once opened, will be one of the world’s largest shopping malls, with a leasable area of about 400,000 sqm with more than 1,300 stores, in addition to four multi-purpose towers allocated to hotels (ranging from 3 to 5 stars).

The Avenues – Khobar

We have completed the project’s design and we are now in the process of working on the detailed designs. The tender for the project contractor will be raised during the second half of this year, provided the project starts during the first quarter of next year, which is scheduled to open in 2024.

The project is located in the Northwestern corner of King Saud Road and Prince Sultan Road. The land area covers 209,000 sqm, creating a leasable area of 180,000 sqm also including four towers housing a Four Seasons hotel and a Canopy by Hilton hotel.

The Avenues – Bahrain

The construction of the Hilton Garden Inn hotel, directly connected to The Avenues, has commenced and will include 197 rooms. It is expected to open at the beginning of next year and is intended to enhance the visitors’ shopping experience, especially for tourists who are looking for a distinguished destination in an attractive location.

Regarding Phase II of the project, some designs have been adjusted and thus its construction was postponed – a construction tender will be raised within the next few months to select the appropriate contractor. The expansion contains an additional 40,000 sqm of the leasable area by adding the following districts: The Forum, Grand Plaza, Electra, and The Souk as well as an expansion of the Grand Avenue.

The Avenues – Bahrain is the first commercial and leisure mall of its kind in the Kingdom of Bahrain, with a unique seafront that stretches over 1.5 kilometers located in a strategic area at the heart of the capital city Manama, as part of the Bahrain Gulf Project. The project was designed with the same character and concept as The Avenues – Kuwait, which is characterized by a fine geometrical and architectural design that gives the visitor a sense of outdoor atmosphere under a covered roof that allows the sunlight in and prevents the heat. The design also reflects an innovative recreational style that allows the public to access the charming waterfront.

The Avenues – Sharjah

We are still in the process of design modification, and a construction tender will be raised within the next few months to select the appropriate contractor as construction is expected to start at the end of this year. The project comes in cooperation with Sharjah Investment and Development Authority (Shurooq) to set up a commercial center in the Emirate of Sharjah in a land area of about 65,000 sqm. The project will offer a different shopping experience suited to the surrounding residential environment, which includes family areas and university students.

Financial Indicators

Financial Indicators

In the financial year 2019, Mabanee achieved a net profit of KD 56.41 Mn (around US$ 186.14 Mn) and EPS of KD 54.24 fils, compared to KD 52.53 Mn in 2018 and EPS of KD 50.57 fils.

Shareholders’ equity was at KD 473 Mn in December 2019, representing an increase of 11.25% over the same period in 2018. The total assets reached KD 965 Mn, with an increase of 11.9% over December last year.

Recommendations of the Board of Directors

In accordance with the financial results, the Board of Directors recommended in its meeting held on February 3rd, 2020 to submit the following recommendations to the Ordinary and Extraordinary General Assembly:

14% cash dividend of the nominal value of the shares (14 fils per share) after excluding the treasury shares. It also recommended the distribution of 6% stock dividends of issued and paid-up capital (6 shares per 100 shares)

10% of the net profit for the financial year ended on 31 December 2019 has been deducted from the statutory reserve.

10% of the net profit for the financial year ended on 31 December 2019 has been deducted for the voluntary reserve, provided that it is allocated to confront potential risk or crisis the company may encounter in the upcoming financial years.

The Board also recommended a bonus of KD 550 thousand, for the members of the Board of Directors for the ended financial year on 31 December 2019.

Acknowledgments

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 continues 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 continuous efforts to strengthen the company’s position, 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.

   

Mohammed Abdulaziz Alshaya

Chairman