Its General Assembly Approved the Distribution of 10% Dividend for 2018
Al-Ali: Kuwait Investment Company distributed approximately one half of its capital as cash dividends to its shareholders in five years
- Al-Subaie: Envisaging a new strategy for facing coming challenges.
- KD 10 million in net profits for the shareholders, KD 2 million in funds under management, KD 253 million in total assets and KD 117 million in shareholders' equity.
- A positive performance by KIC's funds and portfolios.
- KIC has launched the electronic trading platform for its customers locally and will add regional and global markets in the future
- Liquidation of 4 international funds and merging them in the Diversified Funds Fund
Kuwait Investment Company Chairman, Dr. Yousef Al-Ali emphasized that the Company's five-year strategy, extending from 2014 to 2018, succeeded in achieving its desired goals and enabled it to distribute cash dividends to shareholders nearly equal to one half of its capital in the past five years.
At the annual meeting of the Company's ordinary general assembly held yesterday, at which the assembly approved the distribution of a cash dividend of 10% of the nominal value of the share, at the rate of 10 Fils per share for 2018, said that the Company's sustained application of its strategy contributed to achieving the highest return to its shareholders following years of fluctuating results caused by the oscillating performance of the various investment contents following the global financial crisis.
He added that the Company's strong performance last year contributed to the maintenance of its credit rating of Ba2 with a stable outlook according to the most recent update by Moody's credit rating agency last November, for the fourth year running.
Commenting on KIC's results until 31 December 2018, Al-Ali said that the Company attained good profit levels of KD 10 million, although showing a decline from their level of 2017, with a net profit of KD 16.4 million. He attributed this to the fact that the profits of 2017 contained several non-recurring profit elements such as the reversal of precautionary provisions as a result of the settlement of several debts.
Al-Ali went on to say that total assets amounted to KD 253 million, while shareholders' equity stood at KD 117 million, representing 212% of the Company's capital of KD 55.125 million. Consolidated revenues amounted to KD 28.219 million, maintaining a healthy ratio of income to costs. Furthermore the Company achieved a strong 18 Fils earnings per share in 2018, a remarkable performance given market conditions during the past year.
With regard to the stock exchange, Al-Ali stated that Boursa Kuwait is more optimistic following a number of qualitative steps in its shift toward becoming a global investment platform. He lauded the efforts of those involved with developing the file of the Boursa by promoting it to the FTSE Russel Index for emerging markets last year, and the expected promotion to the MSCI Index for emerging markets after the review scheduled to be made next June. This, he added, will be "a good opportunity for us at Kuwait Investment Company to play a bigger role when foreign investments start rolling in, thereby firmly placing Boursa on the map of the global capital markets.
Al-Ali expected Boursa Kuwait to post a better performance in 2019, having started the year with a highly liquid position. "An even better performance is expected if promotion to MSCI goes through", he said.
A Strategy Review
In turn, KIC Chief Executive Officer, Bader Al-Subaie, said that the Company is in the process of reviewing its strategy and forming a new
conception for facing future challenges as an new era of artificial intelligence, robotics, electric cars and digital currency markets dawns, all of which are new sectors in their own right, some might prove to be transients that would end in a bubble while others would be so real that the markets could not afford to ignore, as the Company continues to invest in such sectors as real estate and shares.
Al-Subaie added: "What we have before us is a new aspect of investment that calls for understanding, knowledge, entry and exit locating and timing and amount of risk taking. The availability of liquidity is no longer an advantage in these markets. In a case, the company is keen to keep pace with those shifts in a well-studied fashion within the bounds of its strategy without exposure to uncalculated risks in strict observance of that policy which enabled us to weather past global crises such the Silicon Valley crisis at the start of the Millennium and global financial crisis in 2008."
Al-Subaie went on to say: "Five years ago, Kuwait Investment Company commissioned global consulting office, Bain & Company to draw a strategy for KIC following several difficult years witnessed by local and global markets in the aftermath of the crisis which prompted us to make relentless efforts and tap our accumulated knowledge and experience to implement that strategy that was pivotal for us and under which we developed our business model to remain abreast with global changes after the global crisis ten years ago."
He explained: "By itself, the strategy presented us, as executive management, with a real challenge: We had to re-structure our assets, re-distribute our risks by diversifying our investments in the regional and global markets and undertake quality investments in European countries. Indeed, KIC managed to achieve many of its strategic goals given the prevailing market circumstances and conditions."
He said that the Company's team, in all KIC sectors, performed its mission that resulted in remarkable profits and cash distributions, ensuring that Kuwait Investment Company remain on the right track and weather a severe crisis that wiped out most investment companies. Al-Subaie lauded the efforts of the Board of Directors, Executive Management, and all the employees in making those achievements possible.
Performance of the Funds and Portfolios
Al-Subaie reviewed the performance of the Company's local investment funds during 2018: The leading Al-Raed Fund achieved a 7.49% return outperforming the General Market Index performance of 5.34%. The fund distributed 50 Fils per unit to the unit holders, which is equal to 5% of the nominal value of the unit. The Kuwait Investment Fund also outperformed the General Market Index with a return of 7.86%.
The local portfolios managed by Kuwait Investment Company had another year of outstanding performance in 2018, and outperformed Boursa Kuwait with a positive return of 12.13%. Likewise the GCC portfolios managed by the Company had a positive result during 2018. Total assets under management by KIC amounted KD 2 billion approximately.
Re-structuring of the International Funds
Al-Subaie stated that Kuwait Investment Company re-structured its international funds. Previously, he explained, KIC managed 5 international funds, but implemented a re-structuring plan during the year whereby it liquidated 4 funds and merged them into one fund, the Diversified Shares Fund, in order to maximize benefits for the KIC funds.
With regard to the Department of Direct Investments and Business Development, Al-Subaie said that the Department made relentless efforts toward reviewing and improving the performance of the investment portfolio and re-structuring it in line with Company's strategy. Several investments were divested for a total of KD 1.24 million. One income-generating property in Germany was acquired in Germany while a property was divested in Kuwait. The value of the portfolio ended with KD 11.6 million, with better future cash flow prospects. The Company continues to examine several opportunities in the real estate market in line with its trend to diversity investments.
Al-Subaie stated that the Electronic Trading Section commissioned the operation of Phase 1 of the electronic trading system which includes the Kuwaiti market. The system features many advanced trading features and more regional and global financial markets will be added in the forthcoming phase, a development expected to make it easier for KIC customers to trade in several markets through one trading platform.
Al-Subaie concluded his statement by saying: "Like several past years, 2018 had more than its share of fluctuations in the oil markets, caused by political consequences of the resolutions of the Organization of Petroleum Exporting Countries (OPEC), and in the currency and stock exchange markets as a result of currency rate fluctuations and the trade war between China and the USA, in addition to the main sectors in Europe, as a consequence of the United Kingdom leaving the European Union (Brexit), a much protracted process, now that no agreement has been reached in the second round of negotiations that ended a few weeks ago."