Al-Salam Group Holding Company
Management Report on Activities 2017
In the following sections the management report on Al-Salam Group for the financial year of 2017 will be explained. This includes an analysis of the financial position and income statement according to the Company's performance over the year 2017 compared to 2016 will be discussed. The analysis contents are based on the audited financial statements for the years 2017 – 2016.
The restructuring plans that the Al-Salam Group is going through, which is expected to achieve new expansions that support its ambitious plan in the future, and reflecting the Company's reliance on internal source of funding to expand its activities instead of external financing and obligations. This all comes as a response to the Company’s eagerness to grow, expand, diversify its shareholder base and finally to provide the Company with the ability to capture more promising investment opportunities in a manner that translates the aspirations of its shareholders
Assets
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 to 13.5 times for the previous year. This enabled the Company to capture new investments, and provide sufficient flexibility to cover its obligations without incurring additional burdens.
Al-Salam Group restructured some of its assets in order to generate more liquidity and flexibility for future expansions. Accordingly, the Company acquired quoted/listed shares against selling unquoted/unlisted shares that it held previously. The Available for sale investments decreased by KD 5,433,684 to reach KD 2,032,444 in 2017 in comparison to KD 7,466,128 in 2016. Investments at fair value decreased by KD 4,524,959 to reach KD 2,925,957, a drop from its former KD 7,450,916 in 2016. While 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 7,198,02, as shown in Figure
Figure 1: Assets allocation 2017
Liabilities & Shareholder Equity
In addition, the Company's liabilities decreased by 18% reaching KD 2,660,250 in 2017, while it was KD 3,229,669 the previous year.
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 instead. 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, an equivalent decline of more than 59% due to not consolidating the financial statements of the sold subsidiaries. In addition, the total equity attributable to the shareholders of the parent company declined by only 1.5%.
Al Salam Holding Group has managed and maintained a strong financing structure with 93% equity in return for only 7% of liabilities.
Figure 2: Finance Structure 2017
Income Statement
The Company 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 Group disclosed the results of the year with a net loss attributable to the shareholders of the parent company of KD 83,077 only.