In The Name of God, Most Gracious, Most Merciful

 

Honorable Shareholders,

 

Peace and God’s Mercy and Blessings be upon you,

 

On behalf of my colleagues, members of the Board and myself, it is my pleasure to meet and present to you the ‘Annual Report’ of TAMDEEN REAL ESTATE COMPANY. It illustrates the Company’s performance during the year 2008, and also includes the financial statements and the auditors’ report for the fiscal year ended on 31^st December 2008.

 

 

The year 2008 witnessed fundamental changes of all types and at all levels, both locally and internationally. In the aftermath of the world financial crisis, the second half of the year witnessed unprecedented global economic and financial transformation. Consequently, there were adverse effects on the performance of the economic and financial sectors in the State of Kuwait which clearly reflected in the decline of oil prices to less than $40 per barrel. This decline severely impacted the performance of the Kuwait Stock Exchange and resulted in the subsequent drop in the capitalization of the Exchange. Moreover, there was a downturn in the operational performance of both the private and public sectors, in general. This downturn culminated in a decline in all indicators of financial performance for companies operating within the various sectors, and several investment companies incurred significant losses. Such losses ultimately resulted in the implementation of more conservative policies by the financial and banking sectors in terms of expanding facilities and granting loans.

 

Whereas the repercussion of the downturn in the world’s economy was clearly reflected on the performance of all economic sectors, the real estate sector in particular experienced a noticeable contraction during the last quarter of 2008, reaching 33% as compared to the previous year’s performance.

 

 

The emergence of these indicators compelled several private institutions to reconsider current and future conditions of their projects in order to study alternative options. This step would enable them to confront the consequences of the world’s financial crisis which could lead to a prolonged period of economic downturn, the likes of which has never been witnessed.

Honorable Shareholders,

 

TAMDEEN GROUP owns several distinct assets of good returns that enable the company to confront difficult economic conditions while continuing the implementation of its required growth plans to support and develop its assets. As one of the leading institutions in the Kuwait market, TAMDEEN GROUP has conducted a review on the general status of its subsidiaries and affiliates to ensure that existing procedures and plans are capable of absorbing the financial crisis impact on all Group investments. The aim of the review was also to continue to enhance the operational performance of the Group’s companies, in accordance with predetermined plans that have continuously supported the Company’s strategic policy, which is based on emphasis of real estate development and delegation of the management and operation tasks to specialized companies within the Group.          

 

The implementation of this strategy has assisted the Company’s management in realizing that the timing was appropriate to sell Al Fanar Complex to signify the launch of a new phase within the Company’s operational activities. This transaction realized 36,227 Million Kuwaiti Dinars in profits and was considered one of the largest real estate transactions in Kuwait during the year 2008.

 

By underwriting the surplus of the capital increase offering, the Company increased its stake in the capital of TAMDEEN SHOPPING CENTERS COMPANY, to 30% in the year 2008. TAMDEEN SHOPPING CENTERS COMPANY owns a group of exclusive assets, most significantly, the 360 Mall Project, which has now completed its development and leasing phases. This project is expected to open during the first half of 2009, with a total leasing area of about 80,000 square meters and size of investments in excess of 90 Million Kuwaiti Dinars. 360 Mall is one of the most distinctive shopping centers that reflect a new vision in the shopping center industry in Kuwait. TAMDEEN SHOPPING CENTERS COMPANY also owns the Al Maysam Project in Messila area, which is situated in a unique location overlooking the Arabian Gulf. The project comprises exclusive residential and commercial spaces. The company is also currently undergoing development of various commercial plots in Salmiya, Jahra and Sulaibkhat areas. This is in addition to another plot within the Alareen developmental project in the Kingdom of Bahrain.

 

TAMDEEN GROUP also invested in a number of fundamental initiatives that serve the overall strategy of the Company, providing integration in the services rendered to shopping malls. This is represented by TAMDEEN ENTERTAINMENT COMPANY whose primary role is to render superlative entertainment services to the shopping centers owned by TAMDEEN GROUP of companies. Fucom Company is another core investment established in partnership with the International Geant Company for Supermarkets.

 

In addition to the above-mentioned, the Company’s management continued reinforcing the implementation of its conservative operational policy, aimed mainly to preserve the shareholders’ equity. Originating from this policy, the Company’s management decided on fundamental re-evaluation of all its real estate projects operating on the basis of either the leasing policies or Government regulations. The purpose is to assess the feasibility of these projects and cash flow efficiency in light of the significant and unjustifiable changes in the contractual conditions with the Government authorities as well as the vagueness of the Government’s rules and regulations. As such, the Company’s management found it necessary to record a provision on the full value of the Al Kout Fahaheel Waterfront project that is estimated at nearly 19 Million Kuwaiti Dinars, due to the fact that the Company is encountering non-encouraging decisions from the government authorities, the latest being the Company’s rent increment that has almost doubled from the amount initially agreed with the government, thus significantly impacting the project’s profit rates and cash flow.

 

Honorable Shareholders,

 

TAMDEEN GROUP has managed to attain several international prestigious awards in 2008, in continuation to what has been achieved during the previous years. These awards reflect the uniqueness of the Company’s projects as they continue to achieve outstanding awards since their initial operation until now. The most important awards TAMDEEN GROUP won the past year were the “Best Development & Best Architecture” awards in the Gulf region for Madinat Al Fahaheel Project and “Best Highrise Tower” for Al Manshar Rotana Hotel presented by CNBC Arabian Real Estate Channel. Additionally, the “Best Real Estate Project” award for the Fahaheel Waterfront – Al Kout that promotes restoration and innovation in the category of Islamic architecture was won from the Arabian Cities Award Institute.

 

Aside from the above, TAMDEEN GROUP has launched the new identity for TAMDEEN REAL ESTATE COMPANY and its subsidiaries under one corporate name, “TAMDEEN,” as a step towards complementing the Company’s growth and reinforcing its contemporary identity, thereby reflecting the integration between these companies. This transition greatly contributes to efficient implementation of the marketing and promotional strategies and techniques.

 

Honorable Shareholders,

 

Although it has faced many challenges to its investments and operations in recent times at the local and international levels, TAMDEEN GROUP has managed to achieve outstanding financial results during the year 2008. These results are clearly reflected in the growth of the earnings per share by realizing 36.5 Fils on average, representing an increase of 5.5 Fils as compared to the previous year. In spite of selling Al Fanar Complex during the first half of 2008, TAMDEEN GROUP was able to retain the same levels of operational revenues as the year before, about 11.6 Million Kuwaiti Dinars annually. In addition, the Company managed to maintain balanced growth rates in its current assets as well as its total assets as compared to last year, 2.9% and 3%, respectively.

 

Attaining these results is an excellent indicator in light of the economic crisis storming the world’s economies. As such, the Board of Directors of the Company decided to announce distribution of cash dividends for the fiscal year ended on 31^st December 2008 at the rate of 15% of the paid up capital for the shareholders recorded in the Company’s registers as on the date of holding the General Assembly Meeting.

 

Honorable Shareholders,

 

I would like to seize this opportunity to extend, on behalf of my colleagues, the board members and myself, the highest praises of thanks and immense gratitude to His Highness, the Amir, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, may God protect him, His Highness, the Crown Prince, Sheikh Nawaf Al-Ahmed Al-Jaber Al-Sabah, may God protect him, and His Highness, the Prime Minister Sheikh Naser Al-Mohammed Al-Ahmad Al-Sabah, may God protect him.

 

Also, I would like to extend my thanks to the honorable shareholders of the Company for the trust and support they have provided us through the year.

 

In conclusion, I would like to express my sincere thanks and appreciation to the board members and the management for their fruitful efforts in assisting the company achieve the desired results for the year 2008.

 

Peace and God’s mercy and blessings be upon you.