News In Detail

ALARGAN announces KD1.8 million in profit


Kuwait, March 26, 2017:  ALARGAN International Real Estate Company, one of the leading real estate developers in the Middle East region, today announced a net profit of KD1.8 million and earnings per share (EPS) of 7.09 fils for the year ending in December 31, 2016, in comparison to a net profit of KD16.7 million and earnings per share (EPS) of 65.32 fils in 2015. The Board of Directors also recommended the distribution of 10% cash dividends of the share nominal value (10 fils per share).

Commenting on the results, Khaled Al-Mashaan, CEO and Vice Chairman of the Board of Directors of ALARGAN International Real Estate Company, said: “Despite a significant increase in our operational earnings, our bottom line in 2016 shows a decrease in comparison to the previous year because of an exceptional one-time gain of KD26.2 million from a divestment that was accounted for in 2015.

“Putting the one-time gain aside, operating profit increased in 2016 to KD2.95 million in comparison to a KD7.07 loss in 2015. Revenues also increased to KD26.8 million in 2016 by 37% in comparison to KD19.5 million in 2015. Expenses decreased by 14% from KD29.1 million in 2015 to KD25.1 million in 2016.”

The increase in operational earnings were driven by the performance of the Company’s core income-generating assets, advancements in new developments and strong sales of residential units, as well as yields generated from real estate investments in prime locations in the world.

Al-Mashaan said: “ALARGAN continued to deliver on its strategy launched in 2015 which focuses on improving the performance of its core income-generating assets while operating through a combined developer and investor business model in an aim to deliver a sustainable business that adds value to shareholders, and provides life-enhancing and sustainable solutions in the region.”

2016 Financial and operational highlights:

  • Increase of revenues in developments, contracting and related services to KD0.3 million in comparison to a loss of KD1.9 million in 2015
  • Profit from rents and resorts was sustained at KD6.3 million
  • Profit from change in fair value of investment properties in 2016 increased to KD1 million in comparison to KD 5.3 million in loss in 2015
  • Total assets decreased by 2.4% and total liabilities decreased by 6.1%
  • Revenues from investments in real estate and securities portfolios and funds increased to KD218,000
  • Financing expenses decreased by 33.7%

Operational performance

ALARGAN’s high-profile resort and commercial developments continued to generate stable revenues from rents and leasing in Kuwait and Bahrain. The Company completed procedures to start leasing in its ALARGAN Business Park located in the Free Trade Zone, an area expected to boom with businesses following the completed transfer of the area’s management, and permissions provided to local investors and foreign investments bullishly supported. Developments in Kuwait, Bahrain and Oman continued to advance and sales of housing units under development in Bahrain and Oman saw a strong growth during the year.

Al-Mashaan said: “Our most significant mixed-use and residential developments in 2016 were without a doubt the Al Waha and Telal Al Qurm projects in Oman which received great acclaims last year and saw the delivery of the first residential phase in Telal Al Qurm. The new residential phases of our Jeyoun community in Bahrain followed in the success of ARGAN Village. Our commercial developments in Kuwait continue to attract demand thanks to the unique experiences they provide to visitors.”

International investments in real estate

Operating in a combined developer and investor model, ALARGAN has investment in the real estate sector in stable prime locations in Europe, the United States (US) and the United Kingdom (UK) to generate regular income and provide the opportunity for capital appreciation derived from asset values at exit.

Al-Mashaan added: “The shift in strategy to combine development and investments has aided the Company in establishing a larger portfolio of assets that generate recurring revenues while helping ALARGAN weather turbulences related to oil prices and geopolitical uncertainties. Our investments have started yielding returns and are scheduled to mature in 2020.”

Strong financial position

In 2016, Capital Intelligence (CI), the international credit rating agency, announced that it has raised its rating on the KD26.5 million bond issued by ALARGAN International Real Estate Company in April 2012 to “BBB” and revised the outlook to “stable”. The raise was supported by identified resources (cash plus unutilized committed funding lines) in place to repay the obligation. The rating upgrade also reflects the increase in equity and the fall in debt (and therefore leverage). The rating was followed by a cancellation of KD9.14 million in bonds which were repurchased ahead of their maturation in April 2017.

ALARGAN International has also consolidated its financial structure and rearranged risks related to debt instruments by converting short and medium-term obligations into long-term commitments to increase the Company’s financial solvency. This was achieved by undertaking credit facility to repay present debts and invest in future projects.

Company outlook

Al-Mashaan said: “With a solid financial position thanks to steady and sustainable income generating products, and a healthy funding structure with minimal reliance on short-term borrowing, ALARGAN is set to continue its growth in 2017 through the scheduled delivery of new projects that enhance our portfolio of assets generating recurring revenues, as well as through developments that continue to add value for the benefit of our society as we follow our motto “Life …as you love it”.”

Financially, ALARGAN’s bond will come to maturity in April 2017. Operationally, the Company prepares to launch its new ARGAN Square commercial complex in the Salmiya area and its ARGANIA commercial complex in Shuwaikh. It also continues the development of the Jeyoun community in Bahrain, Al Waha and Telal Al Qurm in Oman, as well as plans to move forward in two new projects in Oman. ALARGAN is also taking the next step to expand its operations though an upcoming community development in Morocco which is already at the design phase.