07 June 2015
Kuwait - The Chairman of Kuwait Finance and Investment Company
) Saleh Yacoub Al-Homaizi, announced that the company has succeeded before the end of last year to change the terms of its existing loans amounted to 20.6 million Kuwaiti Dinars, as in the September 30, 2014. Where its annual payments has been reduced from 8 million Kuwaiti Dinars to 4 million Kuwaiti Dinars, with an extended repayment period until 2018. The willingness of the banks to change the terms of KFIC's existing loans, comes as a confirmation of the banks' confidence in KFIC's business model. This step was also supported by KFIC's commitment of repaying 20 million Kuwaiti Dinars worth of loans in the past two years. It's noteworthy that the reduction of the annual payment will give KFIC the opportunity to develop its business.
Al-Homaizi explained during the Ordinary and Extraordinary General Assembly of the company that washeld yesterday with a number of attendees that reached, 90.35% That KFIC managed during 2014 to exit some of its unlisted investments. KFIC also liquidated part of its listed and classified investments; that is held for trading purposes andis available for sale. This in returngenerated a profit of 874 thousand Kuwaiti Dinars.
Al-Homaizi then added that for over two years KFIC was able to exit from its non- generating investments such as (Arab Finance House, GulfFinanceCorporation, and CINET Company).The company also has other existingplansto exit fromsome direct investments in 2015 and 2016.
Al-Homaizi pointed out that KFIC successfully entered into real estate investment activity by investing in new yielding assets in 2014 with an amount of 4.8 million Kuwaiti Dinars. Those investments are in medium and long term assets allocated in different geographic areas (Kuwait, GCC, and in the USA).This in return reflects KFIC's strategy to diversify its investment portfolio. In order to reduce risks and to ensure generating a return that's not less than the cost of the capital. Moreover, this step ensures generating a sustainable cash flows. It is forecasted that the positive impact of such investments on the company's business would materialize in the next fiscal years starting from 2015.
Al-Homaizi then explained that the companycurrentlyenjoysa strong financialposition that willempower KFIC for enormous business growth. Where thetotal number of assets is amounted to64.5million Kuwaiti Dinars,among whichcurrent assets held is amounted to30million Kuwaiti Dinars. On the other hand, the totalliabilities of the company is amounted to24million Kuwaiti Dinars,in which the current liabilitiesis amounted to 7 millionKuwaiti Dinars. And the property rightsof KFIC's shareholders isamounted to37million Kuwaiti Dinars.
Results of 2014
KFIC achieved a net operating profits amounted to 2.4 million Kuwaiti Dinars in 2014.Compared toa profit of 3.2 million Kuwaiti Dinars in 2013, with a decrease of 800 thousand Kuwaiti Dinars and at a reduction rate of 25%. Such decrease is mainly attributed to the decline of equity prices at capital markets in 2014 compared to the year of 2013. And despite of the decline, KFIC has continued to achieve positive results in its business. This in return reflects KFIC's successfulimplementation of its business model, and its ability to exit from some assets. Furthermore,KFIC successfully realized a net profit amounted to 1.5 million Kuwaiti Dinars in 2014, compared to 3.9 million Kuwaiti Dinars in 2013 with a decrease of 2.4 Kuwaiti Dinars.
It's noteworthy that the net profit of KFIC in 2013 included non-recurrent gain of 1.8 million Kuwaiti Dinars, resulting from the exit of its investments in Arab Finance Holding House.
KFIC's Financial Position
KFIC's total assets is amounted to 64.5 million Kuwaiti Dinars as of the 31st of December 2014 with a decrease rate of 8%, compared to the total assets amounted to 70.4 million Kuwaiti Dinars as of the 31st of December 2013.
And KFIC total liabilities is amounted to 24 million Kuwaiti Dinars as of the 31st of December 2014,with a decrease rate of 24%.Compared to the total liabilities amounted to 31.5 million Kuwaiti Dinars as of the 31st of December 2013. This is mainly due to KFIC's loans repayment to its creditorsduring this year, as per the terms of the restructuring plan. In which the repayment wasamounted to 8 million Kuwaiti Dinars.
In 2014 KFIC's equity has increased up to 40.4 million Kuwaiti Dinars, compared to 38.9 million Kuwaiti Dinars in 2013 at an approximate increase rate of 4%.
Al-Homaizi then reviewed each of theperformance in the company's sectors, as follow:
Finance Services Division
The finance portfolio underwent a slight increase,amounted to 24.9 million Kuwaiti Dinars as of the 31st of December 2014.Compared to the finance portfolio in the 31st of December 2013 that was amounted to 23.2 million Kuwaiti Dinars. The revenues of the finance services division have decreased from 2.8 million KD in 2013 to 2.3 million KD in 2014. This was due to the decrease in the volume of high risk corporate financing during this year in comparison with last year.The decrease is also due to the collecting of the debts interest in 2013for some irregular commercial debts due from clients.
And despite the decrease in the volume of revenues.The finance services division has been able to achieve good profitability levels in 2014.As the division's net profit has amounted to 1.8 million KD, compared to a profit of 1.7 million KD in 2013. This profitability was due to the settlement of debts of some delinquent clients during this year, and the recovery of provisions formed for such clients with an amount of 700,000Kuwaiti Dinars.
Al-Homaizi then clarified that KFIC's plans in this division is to continue the efforts to reach settlements with the other delinquent clients until the collection process is finalized; and this can be achieved either through amicable solutions or via legal channels. Moreover, the division is looking to maintain acceptable growth levels of portfolios' volume. In order to have the sufficient amount to cover the operating costs, and achieve a return that exceeds the cost of the capital. This can be achieved by the expansion in retail finance.
Asset Management Division
The amounts of funds under management and custody have amounted to 292 million KD in 2014. Compared to 334 million KD in 2013 with a decrease rate of 14% compared to 2013. This is due to the decrease in the prices of stocks at the financial markets during the last quarter of this year.
Despite the ongoing difficult circumstances that such division is facing in the State of Kuwait and in the region in general, KFIC was still able to achieve a growth in this division. Where in 2014 the total management fees was amounted to 1.2 million KD, compared to 1 million KD in 2013. During 2014, the division has been supported by the necessary human resources competencies; specialized in researches, strategies, and investment management in international markets. Such measures were taken in order to improve the division performance, and to have the necessary competitive advantages, to enable it to provide better services to the clients.
On another note the funds managed by KFIC have made acceptable performance levels during the year. In which Al Wasm Fund (Dedicated for equity investment in Kuwait Stock Exchange Market) had a negative return of 4.4% by the end of the year. While Kuwait market's weighed index was down at the rate of 3.1% by the end of the year.
Brokerage and Online Trading Division
KFIC through its affiliate, KFIC financial brokerage company KFICB,was able to occupy a leading position amongst 14 brokerage companies operating in Kuwait. Where KFIC came in the 6th position in terms of trading volume in 2014, in comparison with the 7th position in 2013. The revenues of this division witnessed a steep decline in 2014 compared to 2013. This was due to the severe decline of trading volume in Kuwait Stock Exchange Market.Where the trading volume declined from 11 billion KD in 2013 to about 6 billion KD in 2014. This in return negatively affected the business results of this division. The brokerage revenues of this division amounted to 822 thousand Kuwaiti Dinars in 2014.Compared to 1.4 million Kuwaiti Dinarsin 2013, with a decline rate of 41%. Due to the decrease of trading volume in Kuwait Stock Exchange Market.
Investment and Corporate Finance Division
In 2014, KFIC exited from some of its unlisted investments and liquidated a part of its listed investments classified as held for trading, and available for sale.This resultedin a profitamounted to 874 Thousand Kuwaiti Dinars.
The investment and corporate finance division has achieved positive results this year.Whereits net profit in 2014 was amounted to 548 thousand Kuwaiti Dinars, compared to a profit amounted to 369 thousand KD in 2013. This development is due to the improved performance of associate companies during this year. In which the associate companies have not posted any material losses during this year compared to the previous year.
KFIC Private Equity Fund
During this year the fund has managed to exit from its investments in Gulf Financial Company, resulting to a profit amounted to 182 thousand Kuwaiti Dinars. On the other hand, the fund recoded a decrease in the fair value of some other listed investments of the fund. Resulting to unrealized losses of change of fair value amounted to 339 thousand Kuwaiti Dinars. The fund has a plan to exit from some of its significant investments in 2015. It is forecasted that the profitswould be distributed to the unit holders upon the completion of the exit in 2015 and 2016.
The General Assembly
TheGeneral Assemblyratified allthe clauses listedon the agenda, including approving the Board of Directors' recommendation of distributingdividends to shareholdersamounted to 5% shares. After the strengtheningof KFIC's reserves,amounted to400thousand Kuwaiti Dinars.
© Press Release 2015