Alsalam Holding Company
Copyright © مجموعة السلام القابضة.
Al-Salam Group Holding Company
Chairman’s Message 2017
In the name of Allah, most gracious, most merciful and peace be upon the Prophet Muhammad, his family and his companions.
On behalf of my fellow Board of Directors, myself and the executive management of Al-Salam Group Holding Company, I would like to extend my sincere regards. I am pleased to welcome your presence to review the Company’s performance and discuss the most important developments during the year 2017.
Economic reports highlighted that global capital markets have seen further momentum in 2017, led by both emerging and developed markets. The MSCI Emerging Markets Index recorded the best performance of the year and gained 34.3 per cent after a one-digit high in the previous year. The most notable positive factors during the year was the 20.1 per cent growth in the developed markets index, as the large and medium-sized companies comprising the Morgan Stanley Global Market Index were able to add more than US $ 8 trillion to their market capitalization.
On the other hand, oil prices gained momentum in December 2017 after a period of stagnation as news spread that oil supplies were affected by producers. This pushed oil prices above US $ 60 per barrel and stabilized prices at those levels for an extended period of time, despite the risks associated with shale oil.
It is also expected that the most important factors and essential assumptions that will affect the global capital markets performance and the investments returns during 2018, as well as in the long-run, is the real GDP. Estimated to reach 1.5 per cent in developed countries and 4.5 per cent in emerging markets, there is a stable outlook, supported by the growth in the technology sector. This is a result of allocating high weight to the emerging stock markets in view of the continued stability of the business cycle in such markets. This is reinforced by the stability of trade data and the results of confidence surveys in the business sector, thereby contributing to strengthening corporate activities.
More specifically, Kuwait has performed well on the GCC level and has maintained this performance since the beginning of the year, supported by increased interest in buying blue-chip shares. The gains witnessed in the Kuwaiti market were mainly attributed to the rise that started at the end of last year with the momentum continuing at the beginning of 2017. Such increase was supported by the enthusiasm of adding the Kuwaiti market to the FTSE index, which pushed the indices up to a 17.1% growth in September 2017. However, the Kuwait market remained affected by the consequences of the geopolitical crisis surrounding the region.
In terms of trading activity, the market witnessed strong indicators since the beginning of 2017. The traded shares in terms of values doubled to KD 5.7 billion (US $ 19 billion), while in terms of volume increased 66% by trading 50.2 billion shares compared to the 30.3 billion shares traded in 2016.
Returning to your Company's financial statements for the year ended 31 December 2017, Al-Salam Group Holding was able to maintain a strong financing structure with 93% equity in return for only 7% of liabilities, reflecting the Company's reliance on internal source of funding to expand its activities. As a result of the restructuring plans the Company is experiencing, it is expected that new expansions be introduced in the near future aid in supporting its ambitious plans.
Al-Salam Group witnessed a decline in its assets by 11% in 2017 to reach KD 39,098,234 compared to KD 43,695,594 in 2016. In return, the ratio of total assets to total liabilities in 2017 increased to 14.70 times in comparison with 13.5 times for the previous year. This is ideal as it enabled the Company to capture new investments, and provide sufficient flexibility to cover its obligations without incurring additional burdens.
In general, Al-Salam Group reorganized some of its assets in order to generate more liquidity and flexibility in its future expansions. Accordingly, the Company acquired quoted/listed shares against selling unquoted/unlisted shares that it previously held. The Available for Sale Investments decreased by KD 5,433,684 to reach KD 2,032,444 in 2017, though it was KD 7,466,128 in 2016. Investments at Fair Value decreased by KD 4,524,959 to reach KD 2,925,957 in 2017 while in 2016 it accounted for KD 7,450,916, and finally, the investments in associates increased by KD 6,537,451 in 2017 as a result of acquiring 20.06% stake in a listed company with a value of KD 7,198,026.
In addition, the Company's liabilities dropped by 18% to reach KD 2,660,250 in 2017, decreasing from the previous year which accounted for KD 3,229,669.
Total equity also decreased by 10% to reach KD 36,437,984 in 2017 while it was KD 40,465,925 in 2016. This was due to the restructuring of the Company's assets (as mentioned previously), where the Company sold shares in unlisted subsidiaries and acquired listed investments against them. Accordingly, non-controlling interests decreased by KD 3,499,645 in 2017 to reach KD 2,426,513 compared to KD 5,926,158 in 2016, equivalent to a decline of more than 59% due to not consolidating the financial statements of the sold subsidiaries in Al-Salam Group. Lastly, the total equity attributable to the shareholders of the parent company went down by only 1.5%.
Al-Salam recorded total revenues of KD 949,383 in 2017 compared to KD 1,202,157 for 2016. This was mainly due to the losses from the sale of subsidiaries which amounted to KD 177,406 as well as the Group's losses on the results of its associates amounting to KD 453,105. However, Al-Salam Group compensated such losses by recording profits from the acquisition of a new associate amounting to KD 417,729. The total general and administrative expenses amounted to KD 744,451 in 2017 compared to KD 686,885 in 2016. Accordingly, the Company disclosed the results of the year with a net loss attributable to the shareholders of the parent company of KD 83,077 only.
It’s worth noting that Al-Salam Group chose not to distribute cash dividends or bonus shares for the year 2017. Furthermore, there was no remuneration or benefits distributed to the Board Members.
Finally, I extend my great gratitude and appreciation for the trust you have given us. I would also like to thank all the board members, and my sincere thanks and appreciation to the shareholders of Al-Salam Group, for their commitment to the Company's progress. I also would like to take this opportunity to thank the executive management and the staff for their sincere efforts and attentive work towards achieving the Company’s objectives and the aspirations of its shareholders.
May Allah’s peace, mercy and blessings be upon you,,,
Meshari Ahmad Al-Majed
Al-Murgab-Alsoor Street - Jasim Alasfoor Tower - Kuwait
Phone: (965) 22960777