June 29, 2017
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Message from the Chairman

2016 saw a succession of challenges and unexpected events that directly and indirectly impacted the performance of global, regional and local financial markets. Amongst which were the unanticipated BREXIT and the subsequent changes that precipitated from the results following the presidential elections in the United States (US). However, we began to see a positive turnout after the oil-reduction agreement between OPEC and non-OPEC oil producers took effect, committing Russia and other non-OPEC members to cut their production levels.

The GCC markets saw severe fluctuations during 2016, mainly due to diverging oil prices as well as geopolitical instabilities but to a lesser extent in comparison to previous years. Although these factors continued to affect some economies in the region, equity markets were able to recover in the last quarter of the year following the declines registered in the first nine months of 2016.

The Dubai Financial Market was the only market in the GCC to witness an upsurge in 2016, following the sharp declines during 2015. On the contrary, the Saudi and Kuwaiti markets recorded negative performances that continued from the beginning of 2016 up until the end of the third quarter. The increase in oil prices at the end of 2016 restored optimism and led to a hike in trading activity especially in the Dubai Financial Market, which registered the highest increase among other GCC stock markets, recording a growth rate of 12.1%. The Muscat Securities MSM Index 30 also registered a satisfactory growth rate of 7.0%.

As for Boursa Kuwait, indicators showed a mixed performance during 2016 as the price index increased by 2.4%. While the weighted index closed the year without an appreciable change due to the poor performance of high market value stocks. This was also evident in the Kuwait 15 index that slipped by 1.7% as a result of a weak performance during the first half of the year, which was partly offset by a 9% rise in the index during the last quarter.

On a global level, markets experienced significant improvements in comparison to previous years. The MSCI World Index saw the steepest incline in 18 months during December 2016. Investor confidence remained high, particularly in the United States, with the US dollar and Dow Jones Industrial Average attaining their highest levels in 14 years, driven by a forecast of an accelerated economic growth following the US presidential election and the inauguration of the new Government.

The GCC governments continued to restructure their public spending policies in order to mitigate budget deficits, driven by the fluctuations witnessed in asset classes throughout the world. Austerity measures were undertaken to accelerate their efforts and consecutively mend budget imbalances and reduce deficits via diversifying the local economies and fostering non-oil sectors, in an effort to achieve sustainable growth and to create more work opportunities.

 

Dear valued shareholders and attendees, despite the backdrop of successive challenges faced in 2016, KAMCO recorded a revenue of KD 8.3 million and sustained operational growth bolstered by an upsurge in investment activity across diverse markets. Thus, further asserting KAMCO’s leadership position in the asset management sector. The Company also opened its first regional office in Dubai International Financial Centre (DIFC), which was one of the highlights of 2016. Servicing a broad international client base, KAMCO’s DIFC operations will advise on financial products and credit along with arranging for credit or deals in investments. In addition, the Company succeeded in acquiring GE’s Global Operation Center in the United States. This newly established development, which is categorized as a Class A trophy property with state-of-the-art facilities.

 

KAMCO finally rounded up the year by attaining local and international recognition amongst which were:

•  Recognized as the “Asset Manager of the Year – Kuwait” from Global Investor

•  Recognized as the “Best Wealth Management Company - Kuwait” from International Finance Magazine

•  Winning the title of “Best Bond Issuance Manager of the Year GCC” by Global Business Outlook

 

An Account of Gains and Losses for the Fiscal Year Ended December 31, 2016

KAMCO’s prudent business model is rooted in diversifying its investment activities. It focuses on continuously developing its asset management strategy via introducing innovative and revenue-generating products that meet the clients’ needs and help them achieve their investment objectives. This is complimented by KAMCO’s strategic vision, the expertise of our Investment Banking team along with their capability to execute successful return-yielding transactions for the company and its shareholders, as well as our ever-growing network of valued relationships that our Wealth Management team diligently fosters, serves and strengthens across generations.

In spite of the multi-faceted turbulences, 2016 was yet again proof of KAMCO’s successful strategy, its resilience in securing positive growth amidst market challenges and uncertainties, as well as its ability to adapt to change as consistently demonstrated since the outbreak of the global financial crisis in 2008 up until now. As a result, the Company has achieved a net profit of KD 1,275,814 for the year ended December 31, 2016. Once and again highlighting the competence of its management and asserting that KAMCO’s name is and will remain a trademark for trust and security for its investors and shareholders.

We owe these results to the rigorous implementation of a clear long-standing strategy that had consistently ushered KAMCO towards enhancing operational performance and focusing on conservative yet maximum return-yielding investments.

 

Summary of Consolidated Financial Statements for the Year Ended December 31, 2016

All financial statements and reports relevant to the Company’s activities were prepared in compliance with International Financial Reporting Standards approved by the Capital Markets Authority, and are fairly presented.

This is a review of all the Company’s financial aspects including operational statements and results.

As such, KAMCO’s total assets for the year ended 31/12/2016 reached KD 71,010,334 in comparison to KD70,195,936 for the year ended 31/12/2015, registering an increase of KD 814,398. Whereas, the total equity for the year ended 31/12/2016 amounted to KD 40,388,784 in comparison to KD 38,920,234 for the year ended  31/12/2015, recording an increase of KD 1,468,550. KAMCO’s retained earnings reached KD 1,558,534 for the fiscal year ended 31/12/2016, opposed to KD 1,690,783 for the year ended 31/12/2015. The distributed cash dividends for the year ended 31/12/2015 amounted to KD 1,188,992.110 with a distribution rate of 5% (5 fils per share). The Board of Directors recommended a cash dividend from the retained earnings of KD 1,187,867, which is 5% of the nominal value per share (5 fils per share) for the year ended 31 December 2016 to registered shareholders in the company records on the date of the annual general assembly meeting, after the deduction of treasury shares.

 

Board and Executive Management Remuneration

The Board of Directors will not receive any rewards or benefits for the financial year ended 31/12/2016 nor had they received any rewards or benefits for the fiscal year ended 31/12/2015.

The following table details the benefits, remuneration and incentives received by Executive Management during the year:

 

Total (KD)

Number of Employees

Designation

KD 783,785/-

10

Executive Management at

KAMCO

 

Future Plans

Looking ahead, we embark on a new year with renewed vigor, an unwavering vision and a sustainable plan towards setting higher benchmarks for our company, our clients and our shareholders, backed by over 18 years worth of expertise in investment banking and asset management, a proven track record achieved by an ambitious team who are constantly seeking to reach new heights of success, and further consolidated by our robust reputation for solidity, transparency, prudence and product innovation.

In the near term, we intend to continue expanding our geographical presence by penetrating new markets in order to maximize our exposure and capitalize on our ever-expanding network base.

Finally, I would like to extend my deepest gratitude and appreciation to our respected shareholders for their relentless support and confidence during both hardship and prosperity, and I affirm our commitment to striving for greater mutual successes in the future.

I further extend my sincere appreciation to KAMCO’s Board of Directors, Executive Committee, Executive Management and all KAMCO employees for their hard work and dedication in achieving the best possible results amid the volatile economic conditions, which further affirmed our leadership position in the region.

I would like to recognize all decision makers in Kuwait and the region for their fundamental role in strengthening the local and regional investment framework and developing regulations and standards that immensely reformed and bolstered the investment sector as a whole. I must genuinely thank all the concerned parties working in the Dubai International Financial Centre and the Dubai Financial Services Authority for their uttermost support, which allowed for the seamless establishment of KAMCO’s first international office in the Dubai International Financial Centre. 

Lastly, I am profoundly indebted to all our valuable clients who remain our catalyst for growth and success.

 

 

Abdullah Nasser Al - Sabah

Chairman