Board of Directors Report

Board of Directors Report 

Dear Shareholders,

On my behalf and on behalf of my fellow board members, I am pleased to welcome you to the 11th General Assembly meeting of Oula Fuel Marketing Company in which we will discuss the company's Financial Statements and Financial Report for the period that ended on December 31, 2015.

Development of Stations in 2015

Established ten years ago, this company has been keen on raising the efficiency of its services and applying its strategy that aims to raise its productivity and profitability. A range of stations was re-opened after being fully developed in 2015. This is part of the Company's plan to develop all its facilities. That plan was launched two years ago. Two stations in Khalidiya and Bayan have been fully developed.

Four new automatic car wash facilities were opened (in accordance with the highest international standards) in Mubarak Al-Kabeer, Al-Maseelah, Bayan, and Khalidiya. Moreover, Qurtuba car wash facility was fully renovated.

Other Services and Environmental Safety

The Company still pursues its plan to expand its services. Mini-market centres and car service facilities were introduced in four stations. Moreover, we continued our strategy which is based on changing the pricing of investment areas (both new and those with expired contracts). That resulted in direct benefits and yielded higher profits for the Company.

Anxious to provide and develop outstanding services to its customers, the Company signed a cooperation agreement with one of the electronic payment networks to enable customers to recharge their Oula Cards using devices scattered throughout Kuwait (in cooperative societies, groceries and phone shops). The Company also has a fast, safe and user-friendly smart phone application. It provides customers with convenience and comfort. Thanks to this cooperation our customers can re-charge their Fuel Cards anywhere and at any time. Furthermore, such cards can be recharged via the Company's website.

We continue to pursue our approach aimed at the application of environmental safety requirements and quality control at petrol stations and the Head Office. We are keen on expanding the use of solar energy and providing intensified training programs on the principles of safety and environmental programs, first aid, let alone the field inspection visits conducted by the key management staff to ensure the application of the environmental safety conditions and quality control in the stations.

Challenges in 2015

In 2015 the Company encountered a range of challenges, most notably in terms of investments. We suffered from red tape in the issuance of licenses because of the very slow official paperwork cycle, which is one of the main obstacles facing the performance in general terms. Getting a single license for a facility may take an entire year! Of course, this affects our investments and hinders our expansion strategy. Another challenge is the sale of diesel at two prices. That caused our company a loss of KD 855,000 in 2015. Subsidies were no longer given to diesel and kerosene producers. That made the Company lose a lot of customers, especially we have to sell at two prices. This poses a real problem and opens the door for black market and manipulation of diesel prices. Kindly be noted that we are still waiting for reconsideration of the decision of the Municipal Council regarding the classification of stations in order to expand our business investment in stations so as to increase the number of permitted activities in stations.

In 2015 we encountered many challenges which we hope to overcome in 2016 so that our Company can maintain its pioneering position in which we and you take pride. Please, rest assured that we are continuing our expansion and the development of our stations in accordance with the international quality standards so that we can meet your expectations.

Future Strategy:

The Company strategically tends to make value-added contributions to its assets by maximizing the development of the value of such assets and the rights of Shareholders thereto. The Company is keen on following the highest standards of safety and quality control. That's why we will continue to invest in infrastructure in line with the application of modernization and development of the stations plan. Therefore, these investments will be transferred using the Company's funds. In addition, available financial instruments will be used. This matter will be presented to you in accordance with the requirements of the activities.

Therefore, we are keen to meet all the requirements of the Company's corporate governance as that will help to protect small investors and will enhance the Company's performance.

Financial Results:

In 2015, the total fuel income was KD 108.25 M - an increase of 10.6% compared with 2014. However, part of this increase can be attributed to the increase in diesel and kerosene prices witnessed by the year 2015. The diesel and kerosene profit margin was less than that of the year 2014. That reduced profits by approx. KD 0.855 M, compared with 2014.

In spite of the low profit margin of diesel and kerosene sales, Oula managed to achieve a net profit of about KD 4.008 M, which is almost the same as in 2014, due to the Company's effective expenditure management efforts in increasing the target income resulting from other investments.

In 2015, the Company renewed four facilities as it plans to update all its facilities within the next five years. As you know, continuous renewal increases depreciation expenses and makes profits decline.

This would in return cause a decrease in the profit achieved due to the continuous renewal expenses.

Dears, in accordance to what has been mentioned earlier, the board members recommends to your respectful assembly to distribute 5% (5 fils for each share) to the registered shareholders on the date of this general assembly, and raise this recommendation to your general assembly for approval.

At the end, I would like to take this opportunity to express my deep gratitude to all board members, board of directors, public and private bodies for their fruitful cooperation and continuous support to our company.

I would like also to thank you for the ongoing support provided to your company which reflects the huge amount of faith you have in it.

And ask Allah to preserve Kuwait and its people from all harm under the leadership of His Highness, the Emir, Sheikh Sabah Al-Ahmad Al-Jaber Al -Sabah, His Highness the Crown Prince, Sheikh Nawaf Al-Ahmad Al-Jaber Al -Sabah and Prime Minister Sheikh Jaber Mubarak Al- Hamad Al-Sabah.

‎May Allah protect and save them all.‎