ALARGAN International Real Estate Company announced a net profit of KD 16.7 million and65.32 fils earnings per share for the year 2015, this is equal to an increase of by259.34 %, compared to a net profit of KD 4.7 million and 18.17 fils earnings per share for the year 2014, despite reducing the value of the Company’s real estate investment properties by KD 5.3 million in 2015 compared to KD 2.3 million for the fiscal year 2014.
The rise in net profit in 2015 resulted primarily from the concluded deal of selling 92.5% of the total shares owned by a real estate fund (wholly owned by the parent company and its subsidiaries) in an associate company in Saudi Arabia, which resulted in a gain in the amount of 26.4 million Kuwaiti dinars. The transaction is considered within the framework of the company's strategy to exit some investments and restructuring its real estate portfolio.
Commenting on the Company’s positive performance, Eng. Khaled Al-Meshaan, CEO and Vice Chairman of the Board of Directors, said: “ALARGAN International’s success mirrors the company’s commitment to being a top-tier real estate investor and developer, with all the services and experience required to be the perfect “one-stop-shop”. Simply put, we have a strong drive to serve our clients in the best possible way and go a long way in meeting their needs. For every development we construct, there’s something very recognizable and people understand that it’s an ALARGAN project because of the way we implement it and the quality it withholds.”
Total revenue increased to KD 45.9 million in 2015 with a 73.8% increase compared to 2014, as well as total expenses rising to KD 29.2 million, a35 % increase, mainly resulting from unrealized losses from the revaluation of the company’s real estate investment properties by 5.3 million Kuwaiti dinars, compared to 2.7 million Kuwaiti dinars during the past year.
Also, the group’s total liabilities decreased by 19.16% compared to the year 2014. While equity attributable to the parent company rose by 17% compared to last year; despite distributing a cash dividend of 20 fils (20% of the share’s nominal value) amounting to 5.1 million Kuwaiti dinars for the fiscal year 2014, which reduced the equity by the same amount.
Focusing on optimizing the best use of financial resources, and to enhance shareholders value, the company reduced its banking facilities by 19 million Kuwaiti dinars, with a decrease of 31% compared to last year.
Based on the above financial results of the fiscal year ending December 31, 2015, the Board of Directors recommended a cash dividend of 10% from the share’s nominal value (10 fils per share), while this recommendation remains subject to the approval of the General Assembly of the company.
Despite setbacks affecting major global institutions, ALARGAN International was able to affirm its bond rating at "BBB-". According to the report issued by international credit rating agency Capital Intelligence, the outlook for the Rating was upgraded and raised to ‘Positive’, which confirms the success of the company's business model, improved funding structure, and little reliance on short-term borrowing, which lead to growth in liquidity.
Regarding the Company’s upcoming projects, ALARGAN is developing in Kuwait a new commercial project, “ARGAN Square,” which is expected to be an important addition to the group’s stable income generating assets. Similarly, it has begun development on a commercial complex located in Shuwaikh area, serving the surrounding areas.
Regionally, ALARGAN International launched in the Kingdom of Bahrain the internationally renowned and award winning project “Argan Village”, the commercial component of the company’s Jeyoun development, and successfully provided Omani families with approximately 290 housing units across its various projects in the Sultanate of Oman.
Al-Meshaan stressed, “To diversify our investment portfolio on both categorical and geographical levels and in order to continue growth and shore up a portfolio of revenue incurring developments we are considering appealing investments in the United Kingdom and the USA.” Al-Mashaan added, "We are currently looking to enter the North African market to provide middle income housing due to the high demand there.”
Al-Meshaan concluded, “We are committing to our Corporate 2020 Strategy, which sets a target to be the leading real estate developer in the region, and to deliver superior value to our stakeholders by achieving 40 fils earnings per share and distributing 20 fils per share by 2020, while retaining our transparency with stakeholders about all financial matters.”