bayan investment - annual report 2007 · the remarkable improved performance witnessed by kuwait...

BAYAN Investment - Annual Report 2007

His Highness

Sheikh Sabah Al Ahmad Al-Jaber Al-SabahEmir of the state of Kuwait

His Highness

Sheikh Nawaf Al Ahmad Al-Jaber Al-SabahCrown Prince of the state of Kuwait

BAYAN Investment - Annual Report 2007 �

Board of Directors

Chairman’s Message

Management Report

Bayan Investment Subsidiaries

Auditors’ Report

Contents

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2 BAYAN Investment - Annual Report 2007

Board of Directors

Faisal Ali Al-MutawaChairman and Managinig Director

Board Members

3BAYAN Investment - Annual Report 2007

Adel Essa Hussein Al-YousifiVice Chairman

Ayman Bader Al-SultanBoard Member

Sheikh\Talal Ali AbdullahAl-Jaber Al-Sabah

Board Member

Fahad Othman Al-SaeedBoard Member

Fawzi Dauod Al-MutawaBoard Member

Khaled Faisal Al-MutawaBoard Member

BAYAN Investment - Annual Report 2007 5

Chairman’s Message Dear valued shareholders

On behalf of the Board of Directors, I am pleased to present to you the annual report of Bayan Investment Company, and to explore with you the achievements of your Company during 2007.

Upon examining the Company’s financial results, we would like to declare that during 2007 the Company has substantiated realized profits of KD 7.5 million as net profits by the end of December 31, 2007.

The main factors influenced the Company’s positive results, are the remarkable improved performance witnessed by Kuwait Stock Exchange during 2007 on the level of all sectors due to the price rise of most KSE listed companies. In addition, the efforts Bayan Investment Company has exerted to introduce new and unique investment opportunities by launching Al Themar Securities Fund, the Company’s second investment fund, which invests, in a Shariah compliant manner, in most prominent companies listed on Kuwait Stock Exchange and Gulf stock markets. Moreover, the Company has established Dar Al Dhabi Holding Company, and increased its capital from Kuwaiti Dinar one million to Kuwaiti Dinar one hundred million for the purpose of investing in Dar Al Dhabi Real Estate Company which has the attractive investment opportunity in Al Reem Island in Abu Dhabi Emirate. The said Company succeeded in owning 5 plots on Al Reem Island in “Najmat Abu Dhabi” project for developing and constructing distinguished multipurpose towers (residential, offices, commercial).

Furthermore, the outstanding performance of the portfolios managed by the Company was reflected on the overall performance during 2007. On the local level, Bayan Investment Company has solicited more clients and opened a number of new investment portfolios; which remarkably levered the volume of assets managed to the interest of the Company’s clients at a percentage exceeded �5.7% out of total assets managed to the interest of third parties. This accomplishment was a result of scrupulous planning and accurate analysis to developments, client needs and Kuwait Stock Exchange indices; together with the notable rise of the trading portfolio revenues that amounted to 2�%. In addition, the Company has converted the business of its present Fund “Ea’mmar & Estethmar” to comply with the provisions of Islamic Shariah in order to solicit a wider segment of shareholders to lever liquidity and realize the desired revenues to the Fund unit holders.

BAYAN Investment - Annual Report 2007�

On the international level, the Company has succeeded to expand and diverse of its investment base, add promising investments to its international portfolio and bolster its relations with international financial institutions renowned for goodwill and widespread.

On the Gulf and Arab level, the Company managed to conclude several agreements and establish a number of projects through its subsidiaries. In Arab Republic of Egypt, the Company started operating its first projects through execution of ferrite production project. In addition, approval was obtained to designate an industrial plot in State of Qatar to execute the silicon carbide production project. Moreover, there are preliminary agreements being signed in the present time to establish investment projects in Arab Republic of Libya and in different sectors.

In conclusion, we hope that the performance of this year will exceed that of the last year, hoping to have appropriately presented the most prominent accomplishments of your renowned Company during 2007. We aspire towards your support in the forthcoming phase to advance the Company towards realizing your goals. We also extend appreciation to the efforts exerted by the Management and employees of Bayan Investment Company and its subsidiaries.

MAY ALLAH GRANT HIS BLESSINGS TO ALL OF US

Faisal Ali Al-MutawaChairman and Managing Director


Management ReportBayan Investment Company has realized a significant advancement during 2007; notwithstanding the challenges encountered. Moreover, the Company has maintained its stock performance due to implementation of its strategic plan, utilization of new investment instruments to expand the Company’s activities and to diverse the sources of its income in compatibility with the modern age requirements whilst adopting a conservative policy that aims at mitigating risks and growing profits.

This trend was reflected on the Company’s overall performance; the prominent results of which during 2007 are synopsized

herein below:

Local Investment Department

The Local Investment Department provides a set of varied investment services and products to the Company and its clientele under the supervision of a qualified management and a highly efficient team with extensive experience in the field in a manner that realized satisfaction of performance and solicited a huge number of clients. Moreover, the Department develops and expands investment and advisory services rendered to clients in compliance with the rules and regulations released by the supervisory and controlling bodies, and enhances meetings with clients to bolster relations and discuss new issues and developments in the investment arena; in addition to utilizing available elements and experiences. This has remarkably

contributed to the rise and growth of assets profile in comparison with the last year.

Third Party Asset Management

The value of assets managed to the interest of Bayan Investment Company’s clients during 2007 has remarkably risen and exceeded �5.7% out of total assets managed to the interest of third parties. This accomplishment was the fruit of scrupulous accurate analysis of developments, client needs and Kuwait Stock Exchange indices.

Company’s Portfolios Management

At the end of 2007, Kuwait Stock Exchange index has significantly changed compared to the end of 2006, which led to the rise of the trading portfolio revenues remarkably at a percentage of 21% in 2007. This rise has encouraged opening other trading portfolios to generate the optimal investment revenues to the Company and its clientele as well as to diverse investment opportunities.

Investment Funds Management

- The business of Ea’mmar & Estethmar Fund was converted to comply with the provisions of Islamic Shariah for purpose of soliciting a wider segment of shareholders in such a manner that helps support liquidity and realize higher revenues for the Fund unit holders.

- The Fund’s net asset value amounted to KD 1.075 in December 2007 realizing an annual return of 11.40%.

- The management board of the Fund decided to distribute profits to the Fund shareholders in the first half year of 2007 at KF 50 per unit.

- The investment scope was distributed to all real estate activities of their different types from inside State of Kuwait to inside & outside the country.

- Al Themar Securities Fund, which complies with the noble provisions of Islamic Shariah, was launched in October 2007. The Fund aims at investing in the biggest 25 companies listed on Kuwait Stock Exchange in State of Kuwait and Gulf Cooperation Council countries as well as the Islamic companies with small capitals and enterprises. In addition, the Fund invests in appropriate Islamic financial investment instruments with the purpose of realizing rewarding returns pursuant to the Shariah rules, conditions and controls approved by the Fatwa and Shariah Supervisory Board of the Fund.


Ea’mmar & Estethmar Fund

Turnover of net asset value (KD) during 2007:

Al Themar Securities Fund

Turnover of net asset value (KD) during 2007:

NAV

(2007)


Studies and Research Department

The Studies and Research Department continued providing a variety of reports during 2007 together with furnishing the readers with all information and data that can support their investment decisions. Moreover, the Department has polished and revised certain approved analytical methods used in its existing reports; particularly regarding connecting the financial indices with the companies’ weights. In such a manner, the Studies and Research Department has realized a qualitative and quantitative leap in the reports it provides; whilst maintaining quality simultaneously.The Studies and Research Department was able to provide a variety of new products during 2007, whether the reports prepared for publishing purposes or for internal use by the Company’s different departments. In this respect, various new reports have been presented such as the Main Ratios & Indicators of KSE listed companies, in addition to the Capital Increases of Listed Companies report. Furthermore, the Department has expanded its analytical reports provided to the Company’s different departments.

Moreover, the Studies and Research Department has enhanced its role as one of the prominent pivots of promotion in Bayan Investment Company through the reports and studies published by various mass media and prepared by the Department. Such support was brought about by increasing the reports prepared by the Department for publishing, which was reflected on increasing the media presence in newspapers. In addition, the Department has continued to provide a number of its staff as guests in economic programs for a number of specialized satellite `

In addition to the above, the Department has expanded the process of publishing the reports focusing on the most renowned international agencies in the field of providing researches for subscribers. In this respect, publication contracts were concluded with Bloomberg and Capital IQ of Standard & Poor’s. The Department has added such two contracts to the contracts signed previously; chief of which that were signed with Reuters and Zawya.

International Investment Department

The International Investments Department at Bayan Investment Company acts as the main connecting link between the Company and various international financial institutions and banks outside the GCC. The Department primarily focuses on promoting the Company and its activities to these global institutions and maintaining strong relationships with them to ensure the Management and team are updated with the current market trends and products available. Further, the Department aims at diversifying the Company’s asset allocations appropriately in terms of sector, geography and currency to achieve the best possible returns whilst maintaining the threat of risks to a bare minimum.

The main functions of the Department include screening and short listing the best investment proposals to be presented to the Top Management. The Department then performs a thorough research on the short listed proposals and prepares recommendations for the Top Management in their regard. The Department also closely monitors international markets performance and carries out meticulous researches in order to identify promising sectors and regions with high potential which the Company could explore. Furthermore, in addition to regularly analyzing and monitoring the performance of the Company’s existing investments and presenting apt recommendations to the Top Management, the Department also prepares a monthly report for them which highlights the performance of the Company’s investments and details the asset allocation depth in terms of sector, geography and currency.

Achievements:

- During the year 2007, the Department was successful in adding some promising investments to the Company’s portfolio.

- The Department also succeeded in establishing new strong relationships with highly reputed global investment

powerhouses.

Marketing and Sales Department

The Marketing and Sales Department carries out the task of marketing, promoting and selling the Company’s different products while maintaining the Company’s identity and trademark. Moreover, the Department solicits clients and funds to the Company’s investment Funds, portfolios and products through participating in introducing new services with added values to the Company, as well as participating in events and activities that serves the corporate social, cultural and humanitarian responsibilities on the local and international levels.

BAYAN Investment - Annual Report 2007�0

The Department’s Participations and Accomplishments During 2007:

1. Participating in supporting coverage of the expenses of producing and developing the documentary film Jaber Al Khair “Jaber.. the benevolent man” which was distributed and played in certain schools in the memorial celebrations on the occasion of the first year after the demise of Late Emir of Kuwait. In addition, the film was played in the flag square and in the main tent in the flag square during the commemoration of the Late Emir. Moreover, the film was showed in the Arab Gulf University in Kingdom of Bahrain in the inauguration of the Academic Endowment of His Highness the Late Emir in January 2007.

2. Participating in sponsoring Kuwait Transparency Conference under the patronage of His Highness Sheikh Sabah Al Ahmad Al Jaber Al Sabah, Emir of Kuwait, organized by the Kuwaiti Transparency Society during January 2007.

3. Providing moral support through preparing an entertaining social activity, and the visit paid by a delegation from the Department to the Children Cancer Center in the National Bank of Kuwait’s hospital in February.

4. Contributing to sponsoring the documentary film “Business in Kuwait” produced by “BBC World Business Media & News” in March 2007.

5. Carrying out the arrangements and coordination necessary for holding the ordinary general assembly of Bayan Investment Company in March 2007.

�. Providing moral support through preparing an entertaining social activity, and the visit paid by a delegation from the Department to the “House for the Elderly” in March 2007.

7. Participating in the transparency bridge page organized by the Kuwaiti Alwatan newspaper during April 2007.

�. Participating in supporting the charitable ceremony held by “Mantor Arabia Institution” during April 2007 to support the mission and vision of the Institution and to execute its sublime projects.

9. Supporting the participation of the Chairman in the International Economic Forum on the Middle East held in the Dead Sea area in the Hashemite Kingdom of Jordan during May 2007.

�0. Participating in attending the programs of Qatar Second Economic Symposium and its social activities held during May 2007 in Doha - Qatar and organized by Al-Iktissal Wal’ Aamal Group and in cooperation with the Ministry of Economy and Commerce in State of Qatar.

��. Participating in the media campaign of the national project for developing environmental awareness “Mahmiya” with the purpose of highlighting the Company’s role in supporting and bolstering the national efforts for environment protection.

12. Participating in sponsoring the charitable ceremony of the Children Cancer Center affiliated to the American University in Beirut which was held during June 2007 in State of Kuwait.

13. Holding Quraish, Ghabga, Gerge’an (traditional social gatherings) for employees and families of Bayan Investment Company and its subsidiaries. In addition, the said gatherings were attended by press and media representatives during the Holy month of Ramdan.

14. Supporting the Chairman’s participation in attending the annual sixth conference of Arab thought “Fikr 6” held in Manama, Kingdom of Bahrain during December 2007.

�5. The Department has, in coordination and cooperation with the Information Technology Department, updated the Company’s website to keep pace with modern technological developments using up-to-the-minute methods for browsing and developing the Company’s website.

��. Building and updating a client relations management system and expanding the local and potential clients databases.

�7. Expanding the publishing base of the reports, studies and newsletters issued by Bayan Investment Company, its subsidiaries and various investment Funds to include newspapers, magazines, TV’s, news agencies, and the Internet web pages. Moreover, the number of entities interested in receiving and publishing such reports has risen and doubled approximately.

��. Intensifying efforts to represent Bayan Investment Company in media on TV, since the demand has increased by different media entities on availability of an economic reporter from the Company.

BAYAN Investment - Annual Report 2007 ��

Corporate Finance Department

Corporate Finance Department offers a wide range of activities and services which varies between direct investments, private placements, and employing the corporate finance services into the company’s joint ventures, such as valuations, internal investment analysis, and consulting services. In addition, the Department coordinates between the Company, its current

investment partners and the subsidiaries.

Summary of Activities

- Direct Investment & Joint Ventures

Studying and analyzing all investment opportunities of different fields and sectors in the region and direct investment in shares based on projects’ status and performance, and authorized investment strategy and standards of the Company.

- Private Placements

Leading the operations of studying the investment opportunities and preparation of articles and memorandums of offerings related to projects of reasonable feasibility studies and returns.

- Companies’ Valuation

Providing professional view of the Company fair value or its shares based on its income and assets’ market value in all sectos, locally and regionally through applying modern and classic valuation methods recognized globally.

Moreover ,the year 2007 has witnessed several developments in the Department; chief among which is accomplishing the establishment of “Bahri Media Network Company” ( Bahri ), Kuwaiti Shareholding Company, with a capital of Kuwaiti Dinar � million, where Bayan Investment Company owns the controlling share of the Company. Due to establishment of such Company, Bayan Investment could enhance its position and contribution in the locally and regionally growing media market. Furthermore, the Department succeeded in conducting the necessary communications pertinent to Bayan Investment Company’s acquisition of some shares of “Idea Marketing and Media Company, WLL’’, and concluded an agreement contract to operate the project of street advertisements in the Capital and Hawalli governorates according to the two tenders launched by Kuwait Municipality and that were awarded to Idea Company regarding utilization of street advertisements in the said governments.

Furthermore ,the Department continues its activity as to analyzing and evaluating investment opportunities available to Bayan Investment Company ,and presents recommendations regarding possibility of exploiting opportunities.

Information Technology Department

The Information Technology Department (IT Dept. here and after) mission is to provide technological strategic planning and Implementation services for Bayan Investment company’s departments and subsidiary companies to enable them achieve their business goals.

Due to the technological support needs for the diversity of the business processes in Bayan Investment Co. and its subsidiary companies; Year 2007 was full of activities and practices which can be segregated into Design & Development, Interactive Channels management, and lastly Network and Infrastructure management. In field of Design & Development, the IT Dept. has developed several applications In-house, thus permitting Bayan Investment Co. full control on these systems which in return provides the protection from the third party delays, allow the fast maintenance in addition to its cost effectiveness.

In field of Interactive Channels, the IT Dept. has launched a new bilingual corporate website which aims to enhance the relationship between Bayan Investment Co. and its clients, partners, investors and other stakeholders. The IT Dept. has also provided the corporate staff the ability to keep concurrent with their e-mails and other important applications through the online accessibility services to these applications.

In field of Network and Infrastructure, the increased amount of IT services for supporting the variety business processes requires stable, efficient and reliable network resources and appliances; thus the IT Dept. has highly prioritized the availability

BAYAN Investment - Annual Report 2007�2

of the networks and infrastructural resources through the implementation of proven backup policies and procedures. Also the IT Dept. has established “Business continuity plans” for keeping the business processes from stop or interrupt. In addition to that, the IT Dept. has implemented a secure and reliable communication channels with the third party organization such as CBK and other partners.

One of the strengths of the IT Dept. is the ability to provide consultation and advisory services therefore working as the corporate technology consultant for the investment opportunities.

Year 200� is expected to be an even busier year; as we gear our selves toward escalating our competitive edge IT services and ensuring timely delivery of business requirements and needs. We intend to continue the process of building the best in class technical environment, that will not only support the exponential demands of our business, but will also empower our

staff and facilitate providing high end value added services for our clients.

BAYAN Investment - Annual Report 2007 �3

Subsidiaries of Bayan Investment Company

Bonyan Real Estate Company, KSCC

Arkan Holding Company

Noor Holding Company


Bonyan Real Estate Company, KSCCBonyan Real Estate Company is considered the real estate arm of Bayan Investment Company. Bonyan was established in Kuwait in 2004, and has adopted, from the outset, a concept that keeps pace with the leap of the real estate sector and the momentum of real estate business in the Gulf and Middle East region to generate higher revenues on investments and to reach a pioneering position in the real estate sector with modern concepts in line with the latest international developments in this field by means of launching distinctive real estate edifices. Moreover, the Company has studied and analyzed several real estate investment opportunities inside Kuwait and abroad. Below is a synoptic review of the most prominent accomplishments of Bonyan Real Estate Company during 2007:

First: Kuwait Projects

In 2005, Bonyan Real Estate Company has acquired a plot of land whose area amounts to 3,��9 square meter in the heart of the capital in Sharq area with a strategic and vital location viewing the Arabian Gulf street. Moreover, the Company has prepared a concept of a varied and integrated contemporary real estate project that hinges on the development of such plot of land with the adjacent plots with the following principal components:

• Two towers one of 97 floors height, thus the highest in State of Kuwait.• Luxurious residential suites with sea view and city view.• Smart offices with the latest modern technology.• Superb five-star hotel with royal suites, international restaurants, clubs, health and entertainment resorts.• Conference center, ceremony hall equipped with up-to-date audiovisual apparatuses and international ceremonies

hospitality systems.• Car parkings to serve the project.

The cost of the above project is estimated at KD 128 million.

Since the present zoning opinion of the plot is investment residential only, Bonyan Company has been working since the land acquisition on modifying the zoning opinion of the plot in Kuwait Municipality to investment offices and commercial, and has further requested increasing the allowed investment percentage from 400% to above 800% so that it can derive the optimum benefit of such real estate investment opportunity. Yet, the official authorities’ approval has not been granted up to date. Moreover, Bonyan has participated in the Real Estate Owners Committee in Sharq area; which Committee that conducted a study on preparing a proposed zoning concept for the lands running in parallel with the Arabian Gulf street in the heart of the metropolis.

Second: United Arab Emirates Projects

In the present time, investment opportunities in Abu Dhabi Emirate are similar to the investment opportunity that was available for investors in Dubai. Abu Dhabi has various advantages that make investing in it less costly and more attractive; particularly that it owns more than 200 natural islands, together with the oil Abu Dhabi owns which generate financial affluence to the Emirate. In addition, the Urban Development Committee in Abu Dhabi provides facilities that realize the development objectives. Furthermore, Bonyan has reviewed and studied several real estate investment opportunities in Abu Dhabi during the last year.

In November 2007, the Company’s efforts succeeded in concluding a remarkable real estate transaction by acquiring five plots of land with an area totaling 46,400 square meters in strategic locations in the heart of Al Reem Island within “Najmat Abu Dhabi Project” in agreement with “Al-Reem Development Company” to acquire and develop six residential and commercial towers. In this respect, the Company has contracted with “CAPM Management Advisory Company” to conduct the project’s feasibility study and market study in cooperation with “Ernst & Young”. Moreover, the “KEO International Consultants Office” has been selected to carry out the project management and construction management. “Dar Al-Dhabi Real Estate Company” was established to execute the project within a period not exceeding 4 years and at a total cost that may exceed USD �,500 million.

The area of the first plot No. 22 amounts to 23,757 square meters upon which two towers will be built, one of which will be residential and the other will be offices. Both towers will be 75 – 85 floors high, in addition to shopping and commercial centers to serve both towers. The area of the two towers totals 285,000 square meters. As for the second plot No. 14, its area amounts to 7,147 square meters upon which an offices tower of seven floors high will be built upon a built-up area of 33 thousand square meters. The third plot No. �2, with an area of 7,�07 square meter also, will include a residential building of 7 floors high and built up area of 33 thousand square meters. Moreover, another tower will be built on the fourth plot No. 10 whose area amounts to 4,239 square meters at a 32-floor height with a built up area of 50,700 square meters.

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The area of fifth plot No. 11 amounts to 4,150 square meters upon which a 32 floor high tower will be built with a built up area of 49,700 square meters. It is expected that the design works will start during the first quarter of 2008. In addition, the feasibility study results indicate that the projected internal rate of return (IRR) of the project will exceed 20%; which stresses the fact that it represents a great opportunity to benefit from the rapidly growing real estate market in Abu Dhabi; in spite of the fact that the study hinged on assumption that have overestimated the costs and underestimated the sales’ estimates.

Third: Bahrain Projects

Bonyan Real Estate Co. has started setting the technical bases that realizes the launch of the Gulf Holding Company by means of conducting the economic feasibility study, developing architectural plans, delineating integrated strategy for the Company’s future projects and preparing all necessary factors for the Company’s advancement in its business accompanying the successful placement campaign that resulted in increasing the Company’s capital from Kuwaiti Dinar (1) million to Kuwaiti Dinar (70) million. The Company’s launch was marked with the following first two projects:

1. Villamar at Bahrain Financial Harbor ProjectVillamar at Bahrain Financial Harbor Project is a residential and office project extended over five plots of land with an area totaling 32,�00 square meters and located in the southern part of Bahrain Financial Harbor. The project includes three residential towers to cater to citizens and residents of Kingdom of Bahrain as well as Gulf Cooperation Council countries, taken into consideration the integration between facilities, restaurants, entertainments, high class hospitality services and modern life style. Total estimated cost of the project amounts to USD 450 million. Moreover, the project is expected to be accomplished by June 2009.

2. Al-Areen Desert Spa & Resort ProjectWithin the framework of this project, Al-Areen city center will be established in Bahrain on an area of 260,821 square meters and consists of deluxe flats with varied designs, in addition to a distinctive variety of superb villas and “townhouse” catering to residents of the center providing super services in a contemporary manner and a traditional touch that inspires the Bahraini traditions. In addition, the project encompasses uncovered cafes, cinema and splendid restaurants; which makes it a distinctive touristic and entertainment project in Kingdom of Bahrain. Total estimated cost of the project amounts to USD 450 million.

Fourth: Libya Projects

The Libyan Arab Republic witnesses a massive leap in development, advancement, keeping pace with the age and realizing all hopes and ambitions for the welfare of Libyan people. Therefore, and within that framework, Bonyan Real Estate Company has proposed a mega project to develop Al-Gheeran site as a symbol of such prominent development and in assurance of all meanings of urban development, features of cultural advancement and realization of all ambitions and aspirations of developments in its most sublime meanings.

The project represents an integrated area located on the Mediterranean coast on an area of one million square meters. The idea of developing such project hinges on creating a new integrated environment that benefits from such superb view over the Mediterranean with its civilization and depth of history. Moreover, the project includes residential areas on the highest levels of urban development and up-to-date necessaries of the age. In addition, the project encompasses commercial complexes, malls, education and health facilities; together with the touristic components that include hotel resorts, yachting club, different sporting facilities and modern shopping centers. All such components will record the pioneering position of such area in the realm of mega architectural projects not only in terms of the number of units, rooms and royal suites, but also in terms of their unique view over the Mediterranean coast. Furthermore, among the components of mega projects of such type, sport manifests its bright face in such area through health clubs and resorts (spa), tennis and squash playgrounds, physical therapy and massage center so that the project becomes the shrine of those seeking health and wellbeing. Noteworthy, the project touches give due importance to international conferences that could be provided in such area. In this respect, the design takes into account availability of big conference halls as well as halls for audience gatherings and international halls; together with entertainment facilities that include restaurants and cafes on up-to-date levels of magnificence, beauty, modern architecture and internal decoration elements. Chief among the features of such project is its highlight of the nature itself by making nature overwhelm the elements of architecture so that the sea, coast and heights become integral parts of the design that mingles greenness, sea, architecture in a marvelous symphony with harmonious colors that catch the eye and please every visitor of such area.

Within this framework, Bonyan Real Estate Company is still working with the parent company Bayan Investment Company to optimize the joint agreements with the International Libyan Holding Company and the United Libyan Touristic Investment Company that owns Al-Gheeran land.

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BAYAN Investment - Annual Report 2007��

Arkan Holding CompanyIn fact, the year 2007 witnessed the operation commencement of the Company’s first projects which is the ferrite production project in Arab Republic of Egypt. Moreover, the year 2007 has witnessed obtaining the zoning of an industrial plot of land in Qatar to execute the silicon carbide production project. Furthermore, the Company continued in implementing its investment plan which aims at identifying the best industrial investment opportunities in the Arab region; particularly the Gulf Cooperation

Council countries through studying the relative advantages, natural resources and markets of such countries.

Subsidiaries of Arkan Holding Company:

• Arkan Industry and Mining (Egypt)

Arkan Industry and Mining Company is a subsidiary of Arkan Holding Company. The Company was established in 2004 to execute and manage the Company’s project in Arab Republic of Egypt to produce and market ferrite (the raw material that forms the glass layer on the surface of ceramic).

The Company has established its factory and equipped it with up-to-date technologies in cooperation with two mega companies in Spain and Italy. The factory was established on an area of twenty thousand square meters in �0th of October City (near Cairo).

The factory was commissioned to operation at the outset of October 2007 and a contract has been concluded to sell the factory’s whole production in light of present production capacity. Furthermore, in light of the success the product realized in the markets, the Company decided to execute the second phase of the project which encompasses building three new kilns in addition to raw materials treatment unit; which will contribute to developing the project

revenues in 2008, God willing.

• Silicon Carbide Production Project (Qatar)

This project is considered the first of its type in the Arab region, and it aims at producing the silicon carbide substance that is used in thermal industries and emery and abrasion substances. Moreover, silicon carbide is used as an additional substance in iron and steel manufacturing.

The feasibility study proved that the Arabian Gulf region is the optimal place to establish such project due to availablity of energy at competitive rates since energy is one of the main inputs of the project.

In 2007, Arkan Silicon Carbide Production Company – Qatari Shareholding Company was established, and the Company is fully owned by Arkan Holding Company. Moreover, approval was obtained to zone an area of fifty thousand square meters for the project in Mesaiyed industrial city (near Doha). In addition, the necessary approvals were obtained to commission project execution.

• Arkan International Construction Materials Company (Kuwait)

In 200�, the Company obtained approval of the Public Authority of Industry to establish a project for producing insulating blocks on an area of twelve thousand square meters. Moreover, the Company expects zoning such plot of land in one of the new industrial areas being planned by the Public Authority of Industry.

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Noor Holding CompanyNoor Holding Company is a Kuwaiti shareholding Company (Holding) fully owned by Bayan Investment Company. The Company was established during 2004 with a capital of KD 1,000,000 and it works in the field of establishing and owning companies’ shares of different types, ownership of industrial copy rights including patents, industrial trademarks or industrial charges and subleasing them to other companies for utlization purposes. In addition, Company’s obejctives include owning transferrable assets and real estates necessary to carry out its business within the allowed limits, together with utilizing the financial surpluses available in the Company by means of investing them in financial portfolios to be managed by specialized companies and instutitions. In addition, the Company may carry out its businesses inside State of Kuwait or abroad.

Duties of the Management

Since its establishment, the Company strives to enhance its presence on the commercial and investment sectors’ level by means of creating a system of subsidiaries. To realize the objective behind its establishment, the Company has established Noor Skills Consultancy and Training, WLL, for purpose of opening private training institutions, rendering management consultancy, organizing exhibitions, conferences and sporting camps. In addition, Noor Search Consultancy and Market Studies Company, WLL, was established to run media, advertisement, publication, distribution, management and marketing consultancy, TV and satellite media, printing and journalism businesses. Furthermore, Noor Method Project Management Company, WLL, was established to provide economic and management consultancy; in addition to organizing conferences and sporting camps and carry out project management.

Company’s Achievements In 2007 and Future Plans:

1. Noor Holding Company’s capital has been increased to KD 5,000,000 with the objective of financing potential investment opportunities, diverse the Company’s investments by means of utilizing from the economic boom witnessed by Kuwait and most Gulf and Arab countries; and maximize investment revenues to the Company’s shareholders through diversification of income resources.

2. Noor Search Consultancy and Market Studies Company’s capital has been increased from KD 50,000 to KD 250,000 to cope with the Company’s expansive objectives since TV and satellite media, printing and journalism were added to the Company’s incorporation objectives.

3. The Company is working on establishment of a holding media company for purpose of acquiring and establishing media and advertising companies, own controlling shares in existing companies on the regional level as well as in companies operating in the field of advertising and media production, marketing and public relations.

4. The Company continues the action plan aiming at identifying the optimal investment and commercial opportunities in

the Arab region inside State of Kuwait and abroad; particularly Gulf Cooperation Council countries.

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BAYAN Investment Company - K.S.C. (CLOSED) and Subsidires - State of Kuwait

Consolidated Financial Statements for the Year Ended December 3�, 2007with Independent Auditors’ Report

Independent Auditors’ reportConsolidated balance sheet

Consolidated statement of incomeConsolidated statement of changes in equity

Consolidated statement of cash flowsNotes to consolidated financial statements

BAYAN Investment - Annual Report 2007 2�

BAYAN Investment

P.O. Box 104 Al-Dasmah 35151 Kuwait

Tel: +965-1840-000 , Fax: +965-2243-1435

bayaninvest.com

bayan investment - annual report 2007 · the remarkable improved performance witnessed by kuwait...

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