On behalf of my fellow Directors, I am delighted to present the annual report of United Oil Projects Co KSC (UOP) for the year ended December 31, 2016.

The report highlights the strong market position and the financial performance achieved by UOP through dynamic strategies and high quality investments. In lieu of the above, we tackled fresh challenges through flexible and effective responses thereby creating new opportunities.

The year 2016 witnessed a deep drop in oil prices impacting government expenditure and thus, buffeting the economy. Nevertheless, oil and gas sector accounted for 27% of the planned projects in Kuwait. This triggered a fresh level of activity in the Energy sector, thereby revalidating the business strategies of UOP. As result, we have registered a 13% growth (both upstream and downstream activities) in such a difficult year, which clearly ratifies the path that we have chosen.

Performance Highlights of the Year

• One of the flagship investments, Al Khorayef United Holding (AKUH), continued its growth in the -upstream sector. AKUH’s excellent track record and consistent performance has positioned itself as a prospective player for the upcoming opportunities.
• United Precision Drilling Co. (UPDC), had a challenging year in terms of operations. Nevertheless, through focused response from the management, UPDC has reinforced the strong foothold with Kuwait Oil Company, thereby making it well geared for growth in the upstream sector.
• The Projects division has successfully expanded its offerings to Kuwait Oil Company, by supplying various products and services.
• The Chemical industry faced significant headwinds in 2016 mainly due to slowing regional economies and rising raw material costs. Responding to the challenges, the Chemical Division modified its strategy and exited from unprofitable product segments. In addition to focusing on sustainably profitable grades, we have identified new supply gaps in the specialty markets, and thereby tapping into new opportunities.

In summary, the company managed to achieve growth, which has reflected positively on the financial results and other key performance indicators.

Financial Outcome

As of the year ending 2016, United Oil Projects reported a net profit of KD 2 million, as compared to KD 1.77 million in 2015, an increase of 13% in the net profit. The Comprehensive income for the year is KD 2.73 million compared to 2.39 million for the previous year.

Net shareholders’ equity has continued to grow for the eighth year continuously and the net increase in the current year is 11.9%. The total assets have increased by 12% to KD 21.12 million as compared to KD 18.86 million in 2015.

In view of the above, I am pleased to announce to you the recommendation of the board, to distribute cash dividends of 7 per cent of the company’s paid-up capital, equivalent to 7 fils per share, subject to the approval of the assembly and the related authorities.

In conclusion, I would like to seize this opportunity to thank our shareholders, clients, and partners alike for their appreciated support and to our management and staff for their dedication and relentless effort to achieve the Company’s goals. We would also like to extend our thanks to the government of Kuwait, especially the petroleum arm Kuwait Petroleum Corporation – KPC, its subsidiaries & affiliate companies, and the regulatory authorities for their continuous support to the industrial sector with sincere commitment to drive the country towards a better future.