Esterad Investment BSC : Annual Report 2023 – English

Annual Report 2023

Half a century of

Nineteen 73

achievement

Two thousand 23

01	Annual Review
Corporate Overview	4
Key Milestones	6
Financial Highlights	8
Chairman's Report	10
Board of Directors	12
CEO's Report	15
Management team	16
Approach	17
Review of Operations	21
02	Corporate Governance
Governance Report	27
03	Financial Statements
Chairman's Statements	54
Independent Auditors' Report	57
Consolidated Statement of Financial	62
Position
Consolidated Statement of Profit of	63
Loss
Consolidated Statement of	64
Comprehensive Income
Consolidated Statement of Changes	65
in Equity
Consolidated Statement of Cash	67
Flows
Notes to the Consolidated Financial	68
Statements

His Majesty	His Royal Highness
King Hamad bin Isa	Prince Salman bin Hamad
Al Khalifa	Al Khalifa
The King of the Kingdom	Crown Prince and Prime
of Bahrain	Mnister of the Kingdom
of Bahrain

01 Corporate Overview

Established in 1973 and listed on the Bahrain Stock Exchange, Esterad Investment Company has pioneered the establishment of key national projects and industries and has a long-proven track record of secure investments across a variety of assets, regionally and internationally.

Half a century of

Nineteen 73

achievement

Two thousand 23

Esterad Investment Co. B.S.C. ("Esterad"), is one of the oldest, and leading investment firms in the Kingdom of Bahrain. Established in 1973 and listed on the Bahrain Stock Exchange, Esterad has pioneered the etablishment of key national projects and industries and has a long and proven track record of secure investments in a variety of assets, regionally and internationally. These include Saudi Cement Co, now the largest cement production company in the Kingdom of Saudi Arabia; Balexco, the first privatisation by the Government of Bahrain; and the Bahrain Livestock Firm, amongst many other notable investments.

Esterad investment divisions include Real Estate, Private Equity and Public Market investments. The company invests proprietary capital across a broad spectrum of real estate investments in lucrative locations and sought-after destinations. The company also leverages extensive experience and expertise in multi sector private equity, investing in diversified industries including Cement, Aluminum, Retail, Infrastructure and Technology across the

GCC. Esterad's Public Instruments division invests capital in both equities and fixed income securities in Bahrain, regionally and internationally.

With an ambition rooted in transformative investments in Bahrain and beyond, the Company's world class management team select investments based on stringent risk parameters, including the value added to its shareholders, and to the economies and societies in which we operate and serve.

01 A vibrant history of endeavour

Five decades ofperformance

1973 - 2023

Established in 1973, Esterad has pioneered the establishment of key investments across a variety of assets, both regionally and internationally. Most remarkably, it has performed strongly over a 50-year time-line of massive advancement in both technology and expectation.

The National Import and Export Co.

1973

Esterad was founded in Bahrain with a mandate for immediate expansion.

Established as "The National Imports and Exports Company", it was publicly listed the following year.

1976

Establishment of Saudi Cement Company

The Saudi Cement Company has developed to now become the largest cement production company in Saudi Arabia.

1991

Assisted in founding Bahrain Development Bank Alongside other companies, The National Imports and Exports Company assisted in the establishment of Bahrain Development Bank.

Balexco

1995

Balexco investment realised Investment of 25% shares in Balexco - The first privatization by the Government of Bahrain.

1996

National Concrete Company Investment

Acquisition of 25% of shares in National Concrete Company WLL - focusing on the manufacture and sale of ready-mix, blocks and hollow-core, dredging and sand-washing.

1998

Bahrain Stock Exchange donation

Esterad donated BD 300,000 to finance the automated trading system in the Bahrain Stock Exchange, thus enabling the bourse to improve performance with higher levels of efficiency.

United Cement Company

1999

United Cement Company Establishment of the United Cement Company, the largest importer and distributor of bulk cement in the Kingdom of Bahrain.

1999

Creation of Bahrain Livestock firm

Bahrain Livestock Company was formed as part of a plan to privatize the import and distribution of livestock and meat operations, presently handled by the government itself.

2001

Launched a new strategic direction in focusing on diversified minority investments

Sale of National Concrete Company WLL.

Bahrain Duty Free

2002

Bahrain Duty Free Acquisition A strategic acquisition of Bahrain Duty Free propelled Esterad into retailing of consumer and luxury goods.

2003

District Cooling Company (Tabreed) Acquisition Strategically acquired a 40% stake in District Cooling Company (Tabreed). The investment was exited in 2017.

2004

Strategic acquisition of Label Vie

Invested in Label Vie, a Moroccan retail chain, by acquiring a 12% stake and a seat on its Board of Directors. (Exited in 2007 with a 24% IRR).

2022

Venture Capital Bank Acquisition

2005

Investment in Lefebvre Invested in Lefebvre, a Canadian company that produces aluminum bus bars for smelters. Esterad's share was around 48%. (Exited in 2021 with a return of over 34% from the initial investment).

Lefebvre

2006

Expansion of its Quoted Equity Plan

Reallocated a substantial part of its portfolio of Quoted Equity into new undervalued emerging markets such as Brazil, Russia, China, and South Korea seeking further diversification and stability in earnings.

2008

Strategic investment in Saudi Arabia

Established "Esterad Saudi Invest1 WLL" as a special purpose vehicle to invest in 48% of the shares in M. A. Al-Oraini & Partners Company for Trading & Contracting WLL (OTC), a company conducting corrosion treatment, coating and insulation in the petrochemical and the oil and gas industries. (Exited in 2010 to an international investor with 24% IRR).

2009

Esterad launched a new strategic approach to its business

The capital was expanded, and a highly liquid, low-risk, high-yield investing plan was implemented.

Amwaj Beachfront

2016

Exit from European Islamic Investment Bank (EIIB)

2018

Manarat Investment Holding Joined Esterad Investment Company as major shareholder,

Manarat becomes the largest shareholder in Esterad, turning point in Esterad growth story.

2019

Amwaj Gateway Project Acquisition

Acquired Amwaj Gateway Project, the largest divestment to-date of the Committee for the Settlement of Stalled Real Estate Projects. Rebranded to "Amwaj Beachfront" and launched first phase.

2020

Exit from United Cement Company (UCC),

Esterad was one of the founding shareholders, for BD 2.3 million.

Venture Capital Bank

2020

New Brand Image

Esterad presented an entirely revamped image, characterized by a heightened level of boldness and complete alignment with a fresh ambition to steer its trajectory in the forthcoming decade, symbolizing a strategic shift towards innovation and adaptability in anticipation of the opportunities and challenges ahead.

2021

Marriott Executive Apartments Acquisition Secured a position in the high yield hospitality real estate asset "Marriott Executive Apartments" in Bahrain. (Exit of Marriott Executive Apartments in 2021 with gains being used to purchase premium real estate in Bahrain's Reef Island).

Strategically acquired Venture Capital Bank (VC-Bank), an Islamic wholesale bank licensed by the Central Bank of Bahrain. The Company and shareholders will benefit from VC-Bank's large investor base and its strongly diversified private equity and global real estate portfolio.

Madeleine Preschool

2022

Investment in Education Sector

Commenced investment in the Education sector via Madeleine Preschool where the company will create value through operational improvements and a strategic expansion plan. This will not just create shareholder value, but also support the sustainable progress of the Kingdom of Bahrain through education.

2023

Blue Sky Acquisitions Strategic acquisition of Blue Sky for $135 million with a geographically diversified investment portfolio base of investments in and out of Bahrain to pave the way towards the journey of breakthrough growth in 2024.

01 Financial Highlights

Solid growth

Five-year highlights

Year on Year Financial Performance

2023

2022

2021

2020 2019

BD '000

Net Profit (BD)

5,524

2,161

1,701

754 2,700

Total Assets (BD)

119,859

53,601

50,300

46,878 43,000

Total Liabilities (BD)

71,996

18,099

15,597

12,529 6,403

Shareholders' Equity (BD)

40,199

35,502

34,241

33,863 36,110

Dividend per share (BD)

0.020

0.006

0.006

0.005 0.010

Book Value (BD)

0.274

0.255

0.245

0.243 0.259

Return on equity (%)

13.74

6.09

4.97

2.23 7.48

Return on Assets (%)

4.61

4.03

3.38

1.61 6.28

Three Asset Classes

01. Private Equity

02. Real Estate

03. Public Markets

Esterad is one of the oldest investment firms in Bahrain with 50 years experience in successful investment in Private Equity.

Esterad invests proprietary capital across a broad spectrum of Real Estate investments in lucrative locations and sought after destinations.

For half a century, Esterad has been investing capital across both Equities and Fixed Income markets in Bahrain, the region and overseas.

Financial Performance Overview

(BHD millions)

Net Profit 2023

BD '000

5,524

Total Income 2023

BD '000

7,977

120 100 80 60 40 20 0

2019

2020

2021

2022

2023

Total AssetsTotal Income

Total Assets BD '000

119,859

Asset Portfolio OverviewInvestment Securities

(as at 31 December 2023)

(as at 31 December 2023)

4% 4%

19%

Total Shareholders' Equity BD '000

27%

31%

40,198

11%

61%

43%

Investment Securities

Quoted Bonds and Sukuks

Real Estate

Bahrain Duty Free

Other Assets

Unquoted Equity Securities

Cash and Bank Balances

Quoted Equity Securities

120.0
54.0 50.0
43.0	47.0
4.4	1.9	3.3	3.6	7.9

01 Message from the Chairman

Hisham Alrayes Chairman

Esterad's investment strategy is now focused on 'Value Investing' in overlooked opportunities in the GCC.

10