On behalf of the Board of Directors, it is my honour and duty to present this Annual Report and Consolidated Financial Statements of First Bahrain for the year ended 31 December 2010.  

I am very pleased to announce that First Bahrain is reporting a net profit for the year, representing a significant reversal from the loss recorded in 2009.  

2010 was a landmark year for First Bahrain, representing the commencement of revenue generation from projects developed by the Company.  The Majaal Warehouse development opened its doors to its first tenants in February 2010 and by the end of the year, 70% of the facility was leased to a solid and diverse community of 14 different corporate tenants, a major achievement in a difficult and highly competitive market, still sluggish from the global financial crisis. 

The successes in the leasing process demonstrated the Company’s capabilities in the execution of a project from vision to reality, managing all phases of the development cycle from idea generation to design, construction, leasing and facilities management.  The success was also reflective of the Company’s consistent and effective marketing plan, which firmly established Majaal as the market leader for warehousing, as evidenced by attention received from several regional periodicals and news organizations. 

In direct reflection of Majaal’s success in the leasing process, the value of the Company’s investment property increased by KD 478 thousand, contrasted against a loss of KD 2.1 million during 2009.  This increase led to the positive results for the year, a gain of KD 182 thousand, a significant improvement from the KD 2.41 million loss reported in 2009. 

Thanks to the conservative approach adopted in 2009, the overall value of the remainder of the Company’s investment properties retained their value, despite continued downward market pressure and an environment where land transactions were virtually non-existent.  As a result, at the end of 2010, the Non-Current Assets of the Company had increased to KD 31.7 million from KD 31.0 million in 2009.  A 2.1% reduction in the Bahraini Dinar, the currency in which the majority of the Company’s Assets are held, relative to the Kuwaiti Dinar, led to a reduction in the overall value of the Company’s Assets to KD 41.3 million from KD 41.7 million at the end of 2009.

In a strong sign of support from the Company’s banking relationships, the Company completed payment of the construction of the first phase of the Majaal development with a KD 561 thousand extension of the existing debt finance facility previously extended by Kuwait Finance House - Bahrain, raising the overall long-term finance level to KD 989 thousand, up from KD 437 thousand in 2009. 

The Company’s solid liquidity has been maintained from 2009 into 2010.  Even with this new loan, the debt level for the Company remained nominal relative to Current Assets, which stood at 8.2 times Total Liabilities with Cash and Cash Equivalents representing 21% of Total Assets. 

Such liquidity metrics give continued evidence of the Company’s consistent, conservative and well-controlled approach to the management of the resources entrusted to it by the shareholders.  The Company continues to stand apart from its peers through its faithful commitment to its Sharia-guided investment philosophy and focus on domestic demand driven developments designed to bring enduring value and sustainable prosperity.

As we look ahead to 2011, the Board of Directors continues to take a conservative approach to growth and development, maintaining measured forward progress in a risky environment.  The approved business plan for the year ahead focuses primarily on the construction of Majaal Phase II while positioning the Company to use its cash-rich position to pursue any opportunistic investments which come available.

The Company will also be actively looking towards the expansion of Majaal beyond Bahrain during 2011.  First Bahrain has already been in contact with several investment banks which have expressed interest towards this end.  Now that Majaal has been operational for nearly a year, its existence as an active company with measurable cash flows enhances the offering substantially, and represents the reason for the interest received by potential investors.

In closing, on behalf of the Board of Directors, I extend my sincere best wishes to H.H. Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, the Amir of the State of Kuwait, and to H.H. Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, the Crown Prince of the State of Kuwait, for their wise leadership and dedication to advancing the prosperity and promising future of the State of Kuwait.

Likewise, I express appreciation to all governmental ministries, supervisory bodies, and regulatory authorities of the State, for their constructive support and sage guidance.

Finally, I also offer my sincere gratitude to our shareholders for their continued faith and confidence; to our tenants for their loyalty and trust; to our business partners for their counsel and support; and to our management and staff for their professionalism and dedication to duty.

Salah Ahmed Al Wuhaib
Chairman